On July 30, 2024, Canadian Pacific Kansas City Ltd (CP, Financial) released its 8-K filing for the second quarter of 2024, showcasing impressive financial results. The company reported revenues of $3.6 billion, surpassing the analyst estimate of $2.586 billion. Diluted earnings per share (EPS) came in at $0.97, exceeding the estimated $0.71. Core adjusted combined diluted EPS was $1.05.
Company Overview
Canadian Pacific Kansas City Ltd (CP, Financial) is a Class-1 railroad operating across Canada and parts of the Midwestern and Northeastern United States. Following its merger with Kansas City Southern in April 2023, CP now offers single-line-haul services from Canada and the Upper Midwest down through Texas, the Gulf of Mexico, and into Mexico. The company hauls a variety of shipments, including grain, intermodal containers, energy products, chemicals, plastics, coal, fertilizer, potash, automotive products, and other merchandise.
Performance Highlights
Canadian Pacific Kansas City Ltd (CP, Financial) demonstrated strong performance in Q2 2024, driven by synergies from the Kansas City Southern merger and robust revenue growth. The reported operating ratio (OR) improved significantly, decreasing by 550 basis points to 64.8% from 70.3% in Q2 2023. The core adjusted combined OR also saw a reduction, decreasing by 280 basis points to 61.8% from 64.6% in Q2 2023.
Volumes, as measured in Revenue Ton-Miles (RTMs), increased by 6% on a combined basis. Additionally, the Federal Railroad Administration (FRA)-reportable train accident frequency decreased to 0.77 from 0.80 in Q2 2023, and the FRA-reportable personal injury frequency decreased to 0.81 from 1.31 in Q2 2023.
Financial Achievements
Canadian Pacific Kansas City Ltd (CP, Financial) reported a net income of $903 million for Q2 2024, compared to $1,325 million in Q2 2023. Despite the decrease in net income, the core adjusted combined diluted EPS increased by 27% to $1.05 from $0.83 in Q2 2023. This improvement highlights the company's ability to generate higher earnings per share through operational efficiencies and revenue growth.
Income Statement Summary
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $3.6 billion | $3.1 billion |
| Operating Income | $1.267 billion | $944 million |
| Net Income | $903 million | $1.325 billion |
| Diluted EPS | $0.97 | $1.42 |
| Core Adjusted Combined Diluted EPS | $1.05 | $0.83 |
Balance Sheet and Cash Flow Highlights
As of June 30, 2024, Canadian Pacific Kansas City Ltd (CP, Financial) reported total assets of $82.8 billion, up from $79.9 billion as of December 31, 2023. The company's cash and cash equivalents increased to $557 million from $464 million at the end of 2023. Net cash provided by operating activities was $1.278 billion for Q2 2024, compared to $892 million in Q2 2023.
Commentary
"Our excellent second quarter results showcase how the advantages of this unrivaled North American network are being realized," said Keith Creel, CPKC President and Chief Executive Officer. "These results are a direct reflection of the dedication and hard work of our railroaders, whose commitment to safety, service, and efficiency remains the cornerstone of our achievements. We delivered robust revenue growth driven by synergies, along with strong operating and safety performance."
Analysis
Canadian Pacific Kansas City Ltd (CP, Financial) has demonstrated strong financial performance in Q2 2024, exceeding analyst estimates for both revenue and EPS. The significant improvement in the operating ratio and the increase in core adjusted combined diluted EPS indicate the company's successful integration of Kansas City Southern and realization of synergies. The company's focus on safety and operational efficiency has also contributed to its robust performance.
Investors and stakeholders can view the full earnings report and additional details in the 8-K filing.
Explore the complete 8-K earnings release (here) from Canadian Pacific Kansas City Ltd for further details.
