10-KPeriod: FY2021

CANADIAN PACIFIC KANSAS CITY LTD/CN Annual Report, Year Ended Dec 31, 2021

Filed February 23, 2022For Securities:CP

Summary

Canadian Pacific Kansas City Ltd. (CP) reported strong financial performance in 2021, with diluted earnings per share (EPS) increasing by 16% to $4.18. Total revenues grew 4% to $7,995 million, driven by higher freight rates, although volumes measured by revenue ton-miles (RTMs) saw a slight decrease. The company's operational efficiency improved, reflected in an operating ratio of 59.9%. A significant development was the successful closing of the acquisition of Kansas City Southern (KCS) on December 14, 2021, for approximately $36 billion (U.S. $28 billion). While KCS is currently in a voting trust pending regulatory approval, this strategic move is expected to create the first direct rail network connecting Canada, the U.S., and Mexico, enhancing market reach and competitive service options. CP also highlighted its commitment to sustainability, including progress on its Hydrogen Locomotive Program and recognition on global sustainability indices.

Key Highlights

  • 1Diluted EPS increased by 16% to $4.18 in 2021, up from $3.59 in 2020.
  • 2Total revenues grew 4% year-over-year to $7,995 million, primarily due to higher freight rates.
  • 3Completed the acquisition of Kansas City Southern (KCS) for approximately $36 billion, creating a significant transcontinental network.
  • 4Maintained a strong operating ratio of 59.9%, demonstrating operational efficiency.
  • 5Invested $1.53 billion in capital expenditures, focusing on track and roadway enhancements.
  • 6Demonstrated commitment to sustainability with advancements in its Hydrogen Locomotive Program and inclusion in key sustainability rankings.
  • 7Experienced a 1% decrease in revenue ton-miles (RTMs) due to lower volumes in specific commodities like Grain and Potash, partly impacted by severe weather events.

Frequently Asked Questions

In 2021, CP reported a 16% increase in diluted EPS to $4.18 and a 4% increase in total revenues to $7,995 million, driven by higher freight rates. The company's operating ratio improved to 59.9%.

CP completed the acquisition of KCS for approximately $36 billion on December 14, 2021. This strategic transaction is set to create the first direct rail network connecting the U.S., Mexico, and Canada, offering expanded market reach and new competitive transportation services. KCS is currently held in a voting trust pending regulatory approval.

CP demonstrated strong operational efficiency with an operating ratio of 59.9%. Key performance indicators showed improvements in average train weight and length, reflecting better asset utilization. However, average train speed slightly decreased due to weather conditions and wildfire impacts.

CP highlighted its progress on its Hydrogen Locomotive Program, aiming to develop North America's first hydrogen-powered line-haul freight locomotive. The company also noted its inclusion in the Corporate Knights Global 100 Index and the Dow Jones Sustainability North American Index, underscoring its commitment to environmental, social, and governance (ESG) factors.