(Source: Canadian Pacific Railway press release, July 21, 2015)
CALGARY, Alberta — Canadian Pacific Railway Limited today announced the highest-ever net income for the second quarter and the lowest operating ratio for the period in the company’s history.
Net income rose to a record quarterly high of $390 million, or $2.36 per diluted share, an improvement of 12 percent. Adjusted earnings per share gained 16 percent to $2.45. Revenues were little changed at $1.65 billion.
“CP remains disciplined during this period of economic uncertainty in identifying opportunities to control costs and improve efficiency to offset near-term headwinds,” said E. Hunter Harrison, CP’s Chief Executive Officer. “CP’s achievement on the bottom line came even as a sluggish North American recovery and stubborn global economic softness weighed on commodity prices, forcing producers to reduce output and cut shipments.”
SECOND-QUARTER 2015 HIGHLIGHTS
• Operating income climbed 10 percent to $646 million
• OR fell to a second-quarter record 60.9 percent, a 420-basis-point improvement
• Adjusted earnings per share advanced 16 percent to $2.45
“Even in the face of this economic slowdown, CP’s commitment to providing the best service at the lowest cost will continue to serve us well moving forward,” Harrison said. “The positive CP story is based on a business model that allows for flexibility – we are nimble, efficient, and able to respond to the ever-changing economic climate.”
(View the Q2 2015 earnings release and financial reports : http://www.cpr.ca/en/investors/earnings-releases)
UPDATED FINANCIAL EXPECTATIONS FOR 2015
The company expects revenue growth to be 2-3 percent, operating ratio to be below 62 percent, and 2015 annual adjusted diluted EPS of $10.00 to $10.40.
Key assumptions for the updated full year 2015 financial expectations include:
• Canadian to U.S. dollar average exchange rate of $1.25
• An effective income tax rate (excluding discrete items) of 27.5 percent
• Defined benefit pension expense of approximately $35 million, compared with 2014 pension income of $52 million
• Capital expenditures of approximately $1.5 billion
• Average On Highway Diesel (“OHD”) price of U.S. $2.80-$2.90
• Current share repurchase plan expected to be completed by calendar year-end
Further, CP will no longer be exempt from the regular SEC reporting requirements in 2016 because a majority of its board was comprised of U.S. citizens or residents as of June 30, 2015 (the relevant date for determining foreign private issuer status for U.S. SEC reporting purposes in 2016). This follows a determination that the resignation of Stephen Tobias from the board occurred on July 3, 2015.
Accordingly, CP plans to follow the regular SEC reporting requirements effective January 1, 2016, file an annual report on Form 10-K for the year ended December 31, 2015 and file regular periodic reports under both Canadian and U.S. law thereafter.