10-QPeriod: Q1 FY2026

CANADIAN PACIFIC KANSAS CITY LTD/CN Quarterly Report for Q1 Ended Mar 31, 2026

Filed April 30, 2026For Securities:CP

Summary

Canadian Pacific Kansas City Ltd. (CP) reported its first-quarter results for 2026, showing a slight decrease in total revenues to $3.701 billion from $3.795 billion in the prior year, driven primarily by lower freight revenues per revenue ton-mile, despite an increase in overall revenue ton-miles. Diluted earnings per share (EPS) also saw a modest decline to $0.94 from $0.97 year-over-year. The company's operating ratio, a key measure of efficiency, slightly worsened to 66.0% from 65.3%, indicating higher operating expenses relative to revenues. Despite the revenue and EPS dip, CPKC highlighted a significant increase in its quarterly dividend declaration to $0.268 per share, a 17.5% rise from the previous quarter, signaling confidence in future performance and a commitment to returning capital to shareholders. The company also announced a new normal course issuer bid to repurchase up to approximately 44.9 million common shares. The financial results were impacted by a strengthening Canadian dollar and lower fuel prices, with notable increases in grain and intermodal volumes being partially offset by declines in coal and energy-related shipments.

Key Highlights

  • 1Total revenues decreased by 2% to $3.701 billion for Q1 2026 compared to $3.795 billion in Q1 2025.
  • 2Diluted EPS decreased by 3% to $0.94 in Q1 2026 from $0.98 in Q1 2025.
  • 3Operating ratio increased to 66.0% in Q1 2026 from 65.3% in Q1 2025, indicating a slight decrease in operational efficiency.
  • 4The company declared a quarterly dividend of $0.268 per share, an increase of 17.5% from the prior quarter, demonstrating a commitment to shareholder returns.
  • 5Gross ton-miles (GTMs) increased by 2%, driven by higher volumes in Grain and Intermodal segments.
  • 6The company's cash and cash equivalents increased significantly to $409 million as of March 31, 2026, from $184 million at December 31, 2025.
  • 7Share repurchases continued under a normal course issuer bid, with 5.7 million shares repurchased in Q1 2026.

Frequently Asked Questions

The decrease in total revenues was primarily driven by lower freight revenue per revenue ton-mile, which fell by 4%, partly due to the unfavorable impact of foreign exchange rates and lower fuel surcharge revenue. This was partially offset by an increase in revenue ton-miles (RTMs) by 2%, driven by higher volumes in Grain and Intermodal segments.

CPKC's liquidity remains strong, with cash and cash equivalents increasing to $409 million. The company repaid $339 million of notes at maturity and issued new notes totaling $1.642 billion (net of issuance costs). The company also has an undrawn revolving credit facility of $2.2 billion and an expanded commercial paper program up to $2.2 billion, indicating sufficient access to funds.

The company has demonstrated a commitment to shareholder returns by increasing its quarterly dividend by 17.5% to $0.268 per share. Additionally, a new normal course issuer bid was announced to purchase up to approximately 44.9 million common shares over the next year, and approximately $646 million was spent on share repurchases in Q1 2026.

The strengthening Canadian dollar unfavorably impacted total revenues by $82 million, operating expenses by $35 million, and net interest expense by $9 million. Lower fuel prices, partly due to the elimination of the Canadian federal carbon tax, resulted in a $23 million decrease in fuel expenses but also contributed to a $40 million decrease in fuel surcharge revenue.