Skip to main content

CP demonstrates resiliency of the PSR operating model, reports record-low Q2 operating ratio

​Canadian Pacific Railway Limited (TSX:CP) (NYSE:CP) today announced second-quarter results, including revenues of $1.79 billion, diluted earnings per share ("EPS") of $4.66, adjusted diluted EPS of $4.07 and an operating ratio of 57.0 percent. 

"The CP family of railroaders has achieved these results during some of the most challenging conditions the world has experienced in recent memory," said Keith Creel, CP President and Chief Executive Officer. "Our second-quarter results showcase the resiliency of our people and of the precision scheduled railroading (PSR) operating model. The COVID-19 pandemic has created immense challenges, but CP has risen to the occasion, adapted and responded to the benefit of our customers, communities and shareholders. The pride I feel each day coming to work with this team has never been stronger."

Second-quarter highlights

  • Revenues decreased by 9 percent to $1.79 billion from $1.98 billion last year
  • Reported diluted EPS of $4.66, a 10 percent decrease from $5.17 last year, and adjusted diluted EPS of $4.07, a 5 percent decrease from $4.30 last year
  • Operating ratio was a second-quarter record 57.0 percent, a 140 basis point improvement over last year's second-quarter operating ratio of 58.4 percent

"While economic uncertainty remains, we're controlling what we can control – our costs," said Creel. "Our strong bulk franchise, which included record movements for Canadian grain and potash in the first half of the year, helped to offset some of the declines we experienced in other lines of business. Given our strong cost control measures, industry-leading execution of the PSR model, and improved clarity on the volume environment, we now expect positive adjusted diluted EPS growth for the year. As a result of the continued strength of our balance sheet, we have also restarted our share repurchase program."

Additionally, CP announced yesterday it was increasing the quarterly dividend payable to shareholders to $0.95 per share on CP's outstanding common shares, an increase of approximately 15 percent to the previous quarterly dividend of $0.83 per share, and marking the fifth consecutive year CP has increased its quarterly dividend. The announcement continues the path toward meeting CP's stated goal of achieving a 25 percent adjusted dividend payout ratio.

Updated outlook

Based on the strength of the company's performance to date, CP now expects to deliver adjusted diluted EPS growth year over year1. CP continues to expect capital expenditures of $1.6 billion and a mid-single digit decline in revenue ton-miles.

CP's revised earnings guidance assumes a Canadian-to-U.S. dollar exchange rate of approximately 1.35 as compared to 1.40 previously, other components of net periodic benefit recovery to decrease by approximately $40 million as compared to 2019 and an effective tax rate of approximately 24.8 percent as a result of the accelerated reduction of the Alberta corporate tax rate as compared to 25.0 percent previously.

"The completion of our recent acquisition of the Central Maine and Québec Railway, combined with our continuing pipeline of unique growth opportunities, provides me with optimism for the remainder of 2020 and into 2021," Creel said.

1 CP's expectation for positive growth in 2020 adjusted diluted EPS is relative to 2019's adjusted diluted EPS of $16.44. CP's reported diluted EPS was $17.52 in 2019.

Conference call details

CP will discuss its results with the financial community in a conference call beginning at 9:30 a.m. eastern time (7:30 a.m. mountain time) today.

Conference call access

Toronto participants dial-in number: 1-647-427-7450

Operator assisted toll-free dial-in number: 1-888-231-8191

Callers should dial in 10 minutes prior to the call.


We encourage you to access the webcast and presentation material in the Investors section of CP's website at

A replay of the second-quarter conference call will be available by phone through to July 29, 2020 at 416-849-0833 or toll-free 1-855-859-2056, password 6888887.

Non-GAAP measures

Although CP has provided a forward-looking non-GAAP measure (adjusted diluted EPS) and a target non-GAAP measure (adjusted dividend payout ratio), management is unable to reconcile, without unreasonable efforts, the forward-looking adjusted diluted EPS and target adjusted dividend payout ratio to the most comparable GAAP measures (diluted EPS and dividend payout ratio, respectively), due to unknown variables and uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value. In past years, CP has recognized significant asset impairment charges, management transition costs related to senior executives and discrete tax items. These or other similar, large unforeseen transactions affect diluted EPS but may be excluded from CP's adjusted diluted EPS. Additionally, the U.S.-to-Canadian dollar exchange rate is unpredictable and can have a significant impact on CP's reported results but may be excluded from CP's adjusted diluted EPS. In particular, CP excludes the FX impact of translating the Company's debt and lease liabilities, the impact from changes in income tax rates and a provision for uncertain tax item from adjusted diluted EPS. Please see Note on forward-looking information below for further discussion.

For information regarding non-GAAP measures, including reconciliations to the nearest GAAP measures, see the attached supplementary schedule Non-GAAP Measures.

Note on forward-looking information

This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words or headings such as "financial expectations", "key assumptions", "anticipate", "believe", "expect", "plan", "will", "outlook", "should" or similar words suggesting future outcomes. This news release contains forward-looking information relating, but not limited to, statements concerning 2020 volume including as measured in revenue ton-miles, adjusted diluted EPS growth, capital program investments, the U.S.-to-Canadian dollar exchange rate, annualized effective tax rate, other components of net periodic benefit recovery, target adjusted dividend payout ratio, cost control efforts, the success of our business, our operations, priorities and plans, anticipated financial and operational performance, including the anticipated performance of the Central Maine and Québec Railway, business prospects, demand for our services and growth opportunities.

The forward-looking information contained in this news release is based on current expectations, estimates, projections and assumptions, having regard to CP's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: North American and global economic growth; commodity demand growth; sustainable industrial and agricultural production; commodity prices and interest rates; foreign exchange rates (as specified herein); effective tax rates (as specified herein); performance of our assets and equipment; sufficiency of our budgeted capital expenditures in carrying out our business plan; geopolitical conditions, applicable laws, regulations and government policies; the availability and cost of labour, services and infrastructure; the satisfaction by third parties of their obligations to CP; our ability to realize upon business plans including cost control efforts; and the continued impact of COVID-19 on CP businesses, operating results, cash flows and/or financial condition. Although CP believes the expectations, estimates, projections and assumptions reflected in the forward-looking information presented herein are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty.

Undue reliance should not be placed on forward-looking information as actual results may differ materially from those expressed or implied by forward-looking information. By its nature, CP's forward-looking information involves inherent risks and uncertainties that could cause actual results to differ materially from the forward looking information, including, but not limited to, the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks associated with agricultural production, such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CP; inflation; geopolitical instability; changes in laws, regulations and government policies, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions or other changes to international trade arrangements; climate change; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; and the pandemic created by the outbreak of the novel strain of coronavirus (and the disease known as COVID-19) and resulting effects on economic conditions, the demand environment for logistics requirements and energy prices, restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions, and disruptions to global supply chains. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" in CP's annual and interim reports on Form 10-K and 10-Q.

The forward-looking information contained in this news release is made as of the date hereof. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.

About Canadian Pacific

Canadian Pacific is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. CP provides North American customers a competitive rail service with access to key markets in every corner of the globe. CP is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit to see the rail advantages of CP. CP-IR


Jeremy Berry
Tel: 403-319-6227

 Investment Community

Maeghan Albiston
Tel: 403-319-3591

See all news