Canadian Pacific Kansas City (CP) Barclays 43rd Annual Industrial Select Conference summary

Industry consolidation and regulatory outlook

• Expressed concerns about the proposed UP-NS merger, citing risks of market power concentration and anti-competitive behavior, but noted minimal direct revenue exposure to east-west competition.

• Anticipates significant regulatory concessions if the merger is approved, potentially creating new market opportunities.

• Emphasized the importance of regulatory scrutiny under 2001 STB rules, which require mergers to enhance competition and serve the public interest.

• Plans to seek concessions for customer and shipper access in overlapping markets if the merger proceeds.

• Critical regulatory review period for the merger is expected from late April to mid-May.

Merger synergies and operational performance

• The 2023 network combination enabled end-to-end service across Canada, the U.S., and Mexico, enhancing competition and customer options.

• Achieved $1.2 billion in new revenue synergies from the merger, with an additional $200 million expected this year.

• Double-digit EPS growth and mid-single-digit RTM growth are forecasted for the year, supported by strong grain demand and intermodal growth.

• Automotive supply chain improvements have driven modal share gains, offering OEMs reliable, efficient service and guaranteed car supply.

• Laredo bridge expansion doubled cross-border capacity and improved security, attracting new commercial contracts and modal shifts from truck to rail.

Capital allocation and investment priorities

• Capital budget for 2024 is set at $2.6–$2.7 billion, a 15% year-over-year decline, reflecting a shift from infrastructure to locomotive investments.

• 100 new Tier 4 locomotives were added last year, with another 100 planned for this year.

• Increased free cash flow has enabled a 5% share buyback program.