Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) today announced second quarter revenues of $1.75 billion, an increase of 7 percent from last year, and reported diluted earnings per share (EPS) of $3.04, or $3.16 on an adjusted diluted EPS basis.
"Overall, it was a good quarter that sets the franchise up well for the remainder of 2018 and beyond," said Keith Creel, CP President and Chief Executive Officer. "Our quarterly performance was impacted by service interruptions related to labour negotiations and strike notices. However, we were able to reach tentative long-term agreements with both the Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers which will serve the CP family, customers, shareholders and the North American economy well for years to come."
SECOND-QUARTER HIGHLIGHTS
- Volumes as measured by revenue ton-miles increased 4 percent and carloads increased 2 percent
- Revenue increased by 7 percent to $1.75 billion from $1.64 billion
- Reported diluted EPS was $3.04, down 7 percent from $3.27, and adjusted diluted EPS was $3.16, a 14 percent increase from $2.77 last year
- Operating ratio was 64.2 percent, an increase of 140 basis points compared to last year's restated operating ratio of 62.8 percent.(1)
"It is an exciting time to be at CP as we are well positioned for a strong second half of the year," Creel said. "With labour stability in place, strong underlying network performance and a robust demand environment, the path is clear and the opportunities are many. We will continue to take a disciplined and strategic approach to growing the franchise, but with our 12,800 strong CP family and our precision railroading model, there has never been a better time to be a CP railroader."
CP looks forward to hosting the financial community at its Investor Day on October 3-4, 2018 in Calgary, where the company will showcase how it is uniquely built to drive sustainable, profitable growth.
(1) Second quarter 2017 Operating ratio was restated from 58.7% to 62.8% to reflect the adoption of the new accounting standard for the presentation of net periodic benefit recoveries, which is discussed further in Note 2 Accounting changes in CP's Interim Consolidated Financial Statements for the three and six months ended June 30, 2018.
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
Webcast
We encourage you to access the webcast and presentation material in the Investors section of CP's website at http://investor.cpr.ca/financials/
A replay of the second-quarter conference call will be available by phone through to August 15, 2018 at 416-849-0833 or toll free 1-855-859-2056, password 3590738.
Non-GAAP Measures
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 within the meaning of applicable securities laws relating, but not limited, to our operations, priorities and plans, anticipated financial performance, including business prospects, planned capital expenditures, programs and strategies. This forward-looking information also 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. To the extent that CP has provided guidance using non-GAAP financial measures, the Company may not be able to provide a reconciliation to a GAAP measure, due to unknown variables and uncertainty related to future results.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CP's forward-looking information involves numerous assumptions, 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 in 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; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; 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; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. 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 "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information" in CP's annual and interim reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on forward-looking information. Forward-looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any 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, providing 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 cpr.ca to see the rail advantages of CP. CP-IR