(Source: Canadian Pacific Railway press release, January 23, 2019)
CALGARY — Canadian Pacific Railway Limited today announced its fourth-quarter results, including revenues of $2.0 billion, an operating ratio of 56.5 percent and record operating income of $874 million(1). Fourth-quarter diluted earnings per share (“EPS”) decreased 43 percent to $3.83 from $6.77, however, adjusted diluted EPS rose 41 percent to a new quarterly record of $4.55 from $3.22 a year ago.
FOURTH-QUARTER 2018 RESULTS
• Revenues increased 17 percent to $2.0 billion, from $1.7 billion
• Operating ratio improved by 370 basis points to 56.5 percent(1)
• Operating income rose 28 percent to $874 million, from $682 million(1)
“CP’s impressive fourth-quarter operating results are a testament to the hard work and dedication of our 13,000-strong CP family – who continue to safely and efficiently deliver for our customers and the North American economy,” said Keith Creel, CP President and CEO. “The power of the CP operating model is evident in the strong performance across the company. We set records across many lines of business in 2018, including Canadian grain, potash and domestic intermodal.”
CP continues to focus on a disciplined approach to sustainable, profitable growth – a plan rooted in the foundations of precision scheduled railroading. This approach in 2018 enabled CP to deliver its highest-ever revenues, lowest-ever yearly operating ratio and a 13th consecutive year leading Class 1 railways with the lowest train accident frequency.
FULL-YEAR 2018 RESULTS
• Revenues increased 12 percent to $7.3 billion from $6.6 billion
• Operating ratio improved to a record 61.3 percent(1)
• Diluted EPS decreased 17 percent to $13.61 from $16.44, while adjusted diluted EPS rose 27 percent to $14.51 from $11.39
“2018 was a record by almost every measure and will be remembered as a watershed year for our company,” said Creel. “Our record operating results are proof that the CP family is committed to making this company the best it has ever been.”
FULL-YEAR 2019 GUIDANCE
• Double-digit adjusted diluted EPS growth versus 2018 adjusted diluted EPS of $14.51
• Mid-single digit volume growth, as measured in revenue ton miles
• Capital expenditures of $1.6 billion
CP’s guidance is based on the following key assumptions:
• U.S.-to-Canadian dollar exchange rate of approximately 1.30
• Effective tax rate of 25.5 to 26 percent
• Other components of net periodic benefit recovery to increase by $11 million versus 2018
• No material land sales
“Each day I look at our team of railroaders and I am proud to be their CEO,” Creel said. “We are entering 2019 with tremendous momentum and a commitment to operating the precision scheduled railroading model in its true form.”
(1) 2017 comparative quarter’s operating ratio was restated from 56.1% to 60.2% and operating income was restated from $753 million to $682 million. 2017 comparative year’s operating ratio was restated from 57.4% to 61.6% and adjusted operating ratio was restated from 58.2% to 62.4%. These restatements reflect the adoption of the new accounting standard for the presentation of Other components of net periodic benefit recoveries, which is discussed further in Note 2 Accounting changes in CP’s Interim Consolidated Financial Information for the three months and year ended December 31, 2018.