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- **Record Q2 Performance**: 7% RTM growth, 3% revenue increase, 110 bps OR improvement to 60.7%, and 7% EPS growth.
- **Strategic Differentiation**: Unique North American network drives 40% YoY growth in premium intermodal and 28% in international intermodal via Gemini.
- **Resilience to Tariffs**: Auto business growth offset steel volume loss; grain pipeline strong with 70-75M metric ton crop outlook.
- **UP-NS Merger Response**: Advocating for concessions to enhance competition; CPKC positioned to benefit from distracted competitors and customer hedging.
- **Financial Strength**: Sub-60% OR guidance for 2025, $605M free cash flow in Q2, and 44% share buyback program utilization.


**【CEO Summary Section】**
- **Revenue and Volume Growth**: Q2 revenue reached $3.7 billion (+3% YoY), driven by 7% RTM growth. Operating ratio improved 110 bps to 60.7%, with EPS up 7% YoY to $1.12.
- **Strategic Initiatives**: Expanded Gemini partnership, 40% YoY growth in 180/181 premium intermodal service, and launch of Southeast Mexico Express (SMX) with CSX.
- **Market Response to UP-NS Merger**: Emphasized CPKC's unique North American network and commitment to enhancing competition through concessions. Highlighted potential commercial opportunities from distracted competitors and customer hedging.

**【CFO Financial Commentary】**
- **Core Financials**: Core adjusted OR of 60.7%, up 110 bps YoY. Diluted EPS $1.33, core adjusted EPS $1.12 (+7% YoY). Q2 cash flow $1.36 billion, with $605 million free cash flow.
- **Expense Management**: Fuel expense down 12% YoY due to lower prices and carbon tax removal. Materials and equipment costs offset by productivity gains. System integration costs reduced to $0.03-$0.04 EPS impact in Q2.
- **Capital Allocation**: Repurchased 16.4M shares (44% of program). Guided for mid-single-digit volume growth and sub-60% OR for 2025.

**【Q&A Key Highlights】**
- **UP-NS Merger Regulatory Strategy**: Advocated for enhanced competition concessions, focusing on open access and downstream effects. Highlighted CPKC's ability to compete via unique network and partnerships (e.g., CSX, Gemini).
- **System Integration Progress**: Southern U.S. dwell improved 42% YoY, with service nearing pre-cutover levels. Q3 expected to fully recapture pre-integration momentum.
- **Growth Drivers**: Bulk business (grain, potash, coal) poised for strong H2. Intermodal volumes up 18% Q2, with MMX growing 40% YoY and 20% QoQ. Automotive and reefer growth from new facilities.
- **Tariff Impact**: Cross-border steel volumes halted at 50% tariff. Auto business resilient via closed-loop service. Grain outlook positive with 70-75M metric ton crop.


Canadian Pacific Kansas City Limited (CP) Q2 2025 Earnings Call Transcript

- **Q1 Strong Performance**: $3.8B revenue (+8% YoY), 62.5% OR (150bps improvement), and $1.06 EPS. New trade routes between Canada and Mexico offset U.S. tariff risks.
- **Operational Excellence**: Record March GTMs, 58% reduction in train accidents, and 3% locomotive productivity gains. FRA waivers cut dwell times at key hubs.
- **Dividend & Buyback**: 20% dividend increase and $3.5M shares repurchased in Q1. Targeting 20-30% payout ratio.
- **Growth Drivers**: Grain exports to Mexico (+12%), auto volumes up 24%, and LPG shipments hit record levels. Sub-60% OR target for 2025.
- **Risk Management**: <1% of business exposed to U.S. tariffs. $100M new wins from Canada-Mexico trade blitz offset cross-border volatility.


**【CEO Opening Remarks】**
- Q1 revenue of $3.8B, up 8% YoY, driven by 4% volume growth and strong pricing. Operating ratio improved to 62.5% (150bps YoY), with earnings per share of $1.06.
- Adjusted 2025 guidance due to macro uncertainty, including trade policy and currency headwinds. Emphasized focus on controllable factors like network optimization and cost control.
- Highlighted new opportunities in Canada-Mexico trade flows, including refined fuels, plastics, and grain shipments.
- Announced a 20% dividend increase and resumed share buybacks, reflecting confidence in long-term growth.

**【COO Operational Update】**
- Achieved record March performance, with daily GTMs up 5% YoY despite extreme winter weather. Locomotive productivity +3%, fuel efficiency flat, and train weight/length +4%/5%.
- Safety metrics: FRA train accidents down 58% YoY (0.38 per million miles), personal injuries down 14% (0.98 per million worker hours).
- Regulatory progress: FRA approved waivers for border air brake tests and optimized car order changes, reducing dwell times at key hubs.
- Capital investments focused on Mexico and Kansas City corridors, with new Tier 4 locomotives and safety equipment (hotbox/broken rail detectors).

**【CMO Market Insights】**
- **Grain**: Record Q1 volumes (+3% Canadian, +12% exports to Mexico), supported by Canpotex contracts. U.S. grain exports down 5% but diversified into PNW, Canada, and Mexico.
- **Coal**: Revenue up 21% on 10% volume growth, driven by Canadian met coal exports.
- **Energy/Chemicals**: LPG shipments hit record levels, with refined fuels and plastics moving between Canada and Mexico. Auto volumes up 24% on closed-loop service and new Mexico-Canada trade routes.
- **Intermodal**: Domestic intermodal volumes +8%, with MMX180/181 service up 42% YoY. International intermodal flat due to mixed port volumes but growing with Gemini Alliance.

**【CFO Financial Highlights】**
- Core adjusted operating ratio 62.5%, up 150bps YoY. EPS $1.06 (+14% YoY), driven by cost synergies and volume growth.
- Key expense trends:
  - Compensation: $677M (-$15M YoY) due to efficiency gains, offset by higher GTMs.
  - Fuel: $481M (+3% YoY) from higher GTMs, partially offset by lower prices.
  - Materials: $123M (+$10M YoY) from parts agreements and weather-related maintenance.
- Free cash flow $456M, with $3.5M shares repurchased in Q1 (9% of 4% buyback program). Dividend increased to $0.20/share, targeting 20-30% payout ratio.

**【Q&A Key Themes】**
- **Trade Policy Impact**: <1% of business exposed to U.S. import tariffs. Canada-Mexico trade flows (+$100M new wins) offset U.S. cross-border headwinds.
- **Volume Cadence**: Q2 starting stronger than Q1, with mid-single-digit RTM growth expected. OR target: sub-60% for 2025 (62.5% in Q1).
- **Share Buyback**: 20% of 4% program completed in Q1, targeting 10% monthly pace. Stock undervalued vs. intrinsic value.
- **FRA Collaboration**: Cold wheel inspections and data-driven safety improvements expected to reduce costs and improve service reliability.


Canadian Pacific Kansas City Limited (CP) Q1 2025 Earnings Call Transcript

- **Record 2024 Performance**: $14.5B revenue (5% YoY), $4.25 EPS (11% YoY). 2025 targets: 12-18% EPS growth, mid-single-digit volume growth.
- **Network Expansion**: Laredo Bridge expansion doubles US-Mexico border capacity. GM Supplier of the Year for automotive logistics innovation.
- **Cost Efficiency**: 160bps OR improvement in Q4, $5.3B operating cash flow. 2025 CapEx: $2.9B for locomotives, sidings, Mexico infrastructure.
- **Risk Management**: Trade policy hedged by Mexico-to-Southeast US routes. 4-year labor agreements ensure operational stability.


**【CEO Summary Section】**
- Q4 2024 revenue: $3.9 billion (3% YoY growth), full-year revenue: $14.5 billion (5% YoY growth). Core EPS of $1.29 (9% YoY growth) and $4.25 annually (11% YoY growth). 
- 2025 guidance: Mid-single-digit volume growth and 12-18% EPS growth. Completed Laredo Bridge expansion, enabling 2x capacity for US-Mexico border crossings. Named GM Supplier of the Year for automotive logistics.
- Safety metrics: Lowest industry FRA train accident frequency for 2nd consecutive year. 26% YoY improvement in personal injury frequency.

**【CFO Financial Commentary】**
- Q4 2024 operating ratio: 57.1% (160bps YoY improvement). Full-year operating ratio: 61.3% (70bps YoY improvement). 
- Cost control: Fuel expenses down 13% YoY, materials expense up 6% due to in-sourcing maintenance. 2025 CapEx: $2.9 billion (includes $100M for 100 new Tier-4 locomotives). 
- Cash flow: $5.3 billion from operations, $2.7 billion free cash flow. Share buyback program to resume post-debt reduction.

**【COO Operational Highlights】**
- Network efficiency: 4% YoY improvement in train weight/length, 2% fuel efficiency gain. 8 new sidings added in 2024. 2025 investments: 100 new locomotives, merger sidings, Mexico infrastructure upgrades.
- Mexico growth: 11% Q4 grain volumes, 5% US grain growth. Potash volumes set record in 2024 despite strike impact.

**【Q&A Key Themes】**
- **Volume Growth Drivers**: 2-3% from synergies (e.g., MMX intermodal, automotive closed-loop), 2-3% from core business. 2025 weighted towards H2 due to grain/coal comps.
- **Tariff Risk Mitigation**: Network redundancy (e.g., Mexico-to-Southeast US routes) reduces trade policy exposure. 2025 guidance assumes cautious macro outlook.
- **Leverage & Buybacks**: Target leverage below 3x. Buyback pace will balance dividend (24.5% effective tax rate) and network reinvestment.
- **Labor Stability**: 4-year labor agreements signed with Unipor, BMWE. No work stoppages expected in 2025.


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