Canadian Pacific Kansas City Ltd (CP) Q3 2023 Earnings: A Detailed Review
Canadian Pacific Kansas City Ltd (NYSE:CP) reported Q3 2023 revenues of $3.3 billion, a decrease from Q3 2022.
The company's diluted earnings per share (EPS) stood at $0.84, down from $0.96 in Q3 2022.
CPKC's operating ratio increased by 540 basis points to 64.9 percent from 59.5 percent in Q3 2022.
The company expects core adjusted combined diluted EPS to be flat to slightly positive versus 2022 core adjusted combined diluted EPS of $3.77.
Canadian Pacific Kansas City Ltd (NYSE:CP) released its third-quarter earnings report on October 25, 2023. Despite facing challenges due to a softer macro-economic environment and external labor disruptions, the company reported revenues of $3.3 billion. However, the reported diluted EPS decreased to $0.84 from $0.96 in Q3 2022.
Financial Performance and Challenges
The company's reported operating ratio (OR) increased by 540 basis points to 64.9 percent from 59.5 percent in Q3 2022. The core adjusted combined OR increased 190 basis points to 61.7 percent from 59.8 percent in Q3 2022. The Federal Railroad Administration (FRA)-reportable train accident frequency declined nine percent to 1.30 from 1.43 in Q3 2022 on a combined basis. The FRA-reportable personal injury frequency declined 35 percent to 0.97 from 1.50 in Q3 2022 on a combined basis.
Financial Tables and Analysis
The company's financial statements reveal a net income of $780 million for the third quarter of 2023, a decrease from $891 million in the same period in 2022. The total revenues for the period stood at $3.3 billion, with freight revenues contributing $3.26 billion. The total operating expenses were $2.16 billion, with compensation and benefits being the largest expense at $598 million.
CPKC's balance sheet as of September 30, 2023, shows total assets of $80.997 billion and total liabilities of $38.742 billion. The company's shareholders' equity stood at $41.310 billion, indicating a strong financial position.
Outlook and Guidance
CPKC has adjusted its near-term guidance due to economic headwinds and challenges, including the Port of Vancouver strike, which have weighed on volumes more than anticipated. The company now expects its core adjusted combined diluted EPS to be flat to slightly positive versus the 2022 core adjusted combined diluted EPS of $3.77.
Despite the near-term challenges, CPKC's enthusiasm for the combination and the long-term value it will produce remains unchanged. The company remains focused on executing its unique and undeniable growth opportunities.
About Canadian Pacific Kansas City Ltd (NYSE:CP)
With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States, and Mexico, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of Mexico to Lazaro Cardenas, Mexico. The company provides North American customers unparalleled rail service and network reach to key markets across the continent.
Explore the complete 8-K earnings release (here) from Canadian Pacific Kansas City Ltd for further details.
This article first appeared on GuruFocus.
