Canadian Pacific Kansas City Ltd. Q3 FY2025 earnings call

• Keith Creel: Acknowledged team's strong performance with 5% volume growth, $3.7B revenue increase, 3% growth, 60.7% operating ratio, 11% EPS increase; highlighted safety improvements; expressed concerns over UP and NS merger, emphasizing need for conditions to protect competition.
• Mark Redd: Discussed operating metrics improvements (terminal dwell, velocity, train length/weight); technology cutover benefits; safety improvements; resources aligned with growth outlook.
• John Brooks: Talked about freight revenue growth, RTMs; pricing, mix, and volume growth in various segments; automotive and intermodal performance; industrial development projects and land bridge shipments.
• Nadeem Velani: Detailed financial results, operating ratio, EPS; expense variances, fuel and materials expenses; share repurchase program.

Bulk: Grain revenues up 4% on 6% volume growth (U.S. grain volumes up 13%, Canadian grain down 2%); Potash revenues and volumes up 15%; Coal revenue up 3% on 2% volume growth. Merchandise: Energy, Chemicals & Plastics down 2%; Forest Products down 3% and 1%; Metals, Minerals and Consumer Products up 2%. Automotive: Revenue up 2% and volume growth 9%, both records. Intermodal: Revenue up 7% on 11% volume growth (domestic Intermodal volumes up 13%, International Intermodal volumes up 10%).

Expect to deliver 10% to 14% earnings growth versus prior year. Confident in achieving mid-single-digit RTMs and sub-57% operating ratio with remaining weeks in the year.

• Concerns over UP and NS merger leading to reduced competition and potential anticompetitive behavior.
• Service disputes with NS regarding Meridian Speedway operations.
• Macroeconomic challenges and trade policy uncertainties impacting various segments.

Q: Discussion on UP/NS merger and its potential impact A: Keith Creel discussed STB review, conditions needed, and concerns over anticompetitive behavior Q: Strategy to leverage relationships amid merger uncertainty A: Keith Creel mentioned exploring alliances with competitors Q: Volume and operating ratio outlook for remaining weeks A: Nadeem Velani discussed easy compares in November/December and visibility to mid-single-digit RTMs Q: Grain opportunity and potash/intermodal traffic A: John Brooks talked about grain harvest and intermodal performance Q: M&A process and political pressure A: Keith Creel discussed STB review timeline and Nadeem Velani on cost synergies