CALGARY, Jan. 23, 2019 /CNW/ - Canadian Pacific Railway
Limited (TSX: CP) (NYSE: CP) 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."
CP will discuss its results with the financial community in a
conference call beginning at 4:30 pm eastern
time (2:30 pm mountain time)
on January 23, 2019.
(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.
|
Conference Call Access
Toronto participants dial in number:
1-647-427-7450
Operator assisted toll free dial in number: 1-888-231-8191
Callers should dial in 10 minutes prior to the call.
Webcast
We encourage you to access the webcast and
presentation material in the Investors section of CP's website at
investor.cpr.ca
A replay of the fourth-quarter conference call will be available
by phone through to February 13, 2019
at 416-849-0833 or toll free 1-855-859-2056, password 7988108.
Access to the webcast and audio file of the presentation will be
made available at investor.cpr.ca
Non-GAAP Measures
For information regarding non-GAAP
measures, including reconciliations to the nearest GAAP measures,
see the attached supplementary schedule Non-GAAP Measures. In this
news release, CP has provided a forward looking non-GAAP measure.
It is not practicable to provide a reconciliation to a
forward-looking reported diluted EPS, the most comparable GAAP
measure, due to unknown variables and uncertainty related to future
results.
Note on forward-looking information
This news release
contains certain forward-looking information and forward-looking
statements (collectively, "forward-looking information") within the
meaning of applicable securities laws. Forward-looking information
includes, but is not limited to, statements concerning
expectations, beliefs, plans, goals, objectives, assumptions and
statements about possible future events, conditions, and results of
operations or performance. Forward-looking information may contain
statements with words or headings such as "financial expectations",
"key assumptions", "anticipate", "believe", "expect", "plan",
"will", "outlook", "should" or similar words suggesting future
outcomes. To the extent that CP has provided guidance using
non-GAAP financial measures, the Company may not be able to provide
a reconciliation to a GAAP measure, due to unknown variables and
uncertainty related to future results. This news release contains
forward-looking information relating, but not limited to, the
success of our business, our operations, priorities and plans,
anticipated financial and operational performance, including our
2019 full-year guidance, expected RTM and adjusted diluted EPS
growth, business prospects, planned capital expenditures, programs
and strategies. The purpose of the 2019 adjusted diluted EPS growth
projection is to assist readers in understanding our expected and
targeted financial results, and this information may not be
appropriate for other purposes.
The forward-looking information contained in this news release
is based on current expectations, estimates, projections and
assumptions, having regarding to CP's experience and its perception
of historical trends, and includes, but is not limited to,
expectations, estimates, projections and assumptions relating to:
foreign exchange rates, effective tax rates, land sales and pension
income (including as specified in this news release); North
American and global economic growth; commodity demand growth;
sustainable industrial and agricultural production; commodity
prices and interest rates; performance of our assets and equipment;
sufficiency of our budgeted capital expenditures in carrying out
our business plan; applicable laws, regulations and government
policies; the availability and cost of labour, services and
infrastructure; and the satisfaction by third parties of their
obligations to CP. Although CP believes the expectations,
estimates, projections and assumptions reflected in the
forward-looking information presented herein are reasonable as of
the date hereof, there can be no assurance that they will prove to
be correct.
Undue reliance should not be placed on forward-looking
information as actual results may differ materially from those
expressed or implied by forward-looking information. By its nature,
CP's forward-looking information involves inherent risks and
uncertainties that could cause actual results to differ materially
from the forward looking information, including, but not limited
to, the following factors: changes in business strategies; general
North American and global economic, credit and business conditions;
risks associated with agricultural production, such as weather
conditions and insect populations; the availability and price of
energy commodities; the effects of competition and pricing
pressures; industry capacity; shifts in market demand; changes in
commodity prices; uncertainty surrounding timing and volumes of
commodities being shipped via CP; inflation; changes in laws,
regulations and government policies, including regulation of rates;
changes in taxes and tax rates; potential increases in maintenance
and operating costs; changes in fuel prices; uncertainties of
investigations, proceedings or other types of claims and
litigation; labour disputes; risks and liabilities arising from
derailments; transportation of dangerous goods; timing of
completion of capital and maintenance projects; currency and
interest rate fluctuations; effects of changes in market conditions
and discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; climate change; and various events that could
disrupt operations, including severe weather, such as droughts,
floods, avalanches and earthquakes, and cybersecurity attacks, as
well as security threats and governmental response to them, and
technological changes. The foregoing list of factors is not
exhaustive. These and other factors are detailed from time to time
in reports filed by CP with securities regulators in Canada and the
United States. Reference should be made to "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Information" in CP's
annual and interim reports on Form 10-K and 10-Q.
The forward-looking information contained in this news release
is made as of the date hereof. Except as required by law, CP
undertakes no obligation to update publicly or otherwise revise any
forward-looking information, or the foregoing assumptions and risks
affecting such forward-looking information, whether as a result of
new information, future events or otherwise.
About Canadian Pacific
Canadian Pacific is a
transcontinental railway in Canada
and the United States with direct
links to major ports on the west and east coasts. CP provides North
American customers a competitive rail service with access to key
markets in every corner of the globe. CP is growing with its
customers, offering a suite of freight transportation services,
logistics solutions and supply chain expertise. Visit cpr.ca to see
the rail advantages of CP. CP-IR
FINANCIAL INFORMATION
INTERIM CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
|
|
|
|
|
(in millions of
Canadian dollars, except share and per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
|
|
|
|
|
|
|
|
Freight
|
|
$
|
1,964
|
|
$
|
1,667
|
|
$
|
7,152
|
|
$
|
6,375
|
Non-freight
|
|
42
|
|
46
|
|
164
|
|
179
|
Total
revenues
|
|
2,006
|
|
1,713
|
|
7,316
|
|
6,554
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits (Note 2)
|
|
378
|
|
340
|
|
1,468
|
|
1,309
|
Fuel
|
|
247
|
|
197
|
|
918
|
|
677
|
Materials
|
|
46
|
|
48
|
|
201
|
|
190
|
Equipment
rents
|
|
31
|
|
34
|
|
130
|
|
142
|
Depreciation and
amortization
|
|
180
|
|
168
|
|
696
|
|
661
|
Purchased services
and other (Note 3)
|
|
250
|
|
244
|
|
1,072
|
|
1,056
|
Total operating
expenses
|
|
1,132
|
|
1,031
|
|
4,485
|
|
4,035
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
874
|
|
682
|
|
2,831
|
|
2,519
|
Less:
|
|
|
|
|
|
|
|
|
Other expense
(income) (Note 4)
|
|
118
|
|
16
|
|
174
|
|
(178)
|
Other components of
net periodic benefit recovery (Note 2)
|
|
(97)
|
|
(71)
|
|
(384)
|
|
(274)
|
Net interest
expense
|
|
114
|
|
116
|
|
453
|
|
473
|
Income before
income tax expense (recovery)
|
|
739
|
|
621
|
|
2,588
|
|
2,498
|
Income tax expense
(recovery) (Note 5)
|
|
194
|
|
(363)
|
|
637
|
|
93
|
Net
income
|
|
$
|
545
|
|
$
|
984
|
|
$
|
1,951
|
|
$
|
2,405
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
3.84
|
|
$
|
6.79
|
|
$
|
13.65
|
|
$
|
16.49
|
Diluted earnings per
share
|
|
$
|
3.83
|
|
$
|
6.77
|
|
$
|
13.61
|
|
$
|
16.44
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares (millions)
|
|
|
|
|
|
|
|
|
Basic
|
|
141.8
|
|
145.0
|
|
142.9
|
|
145.9
|
Diluted
|
|
142.3
|
|
145.4
|
|
143.3
|
|
146.3
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
$
|
0.6500
|
|
$
|
0.5625
|
|
$
|
2.5125
|
|
$
|
2.1875
|
|
Certain of the
comparative figures have been reclassified in order to be
consistent with the 2018 presentation (Note 2).
|
See Notes to Interim
Consolidated Financial Information.
|
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(unaudited)
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
|
|
$
|
545
|
|
$
|
984
|
|
$
|
1,951
|
|
$
|
2,405
|
Net (loss) gain in
foreign currency translation adjustments, net of hedging
activities
|
|
(36)
|
|
(14)
|
|
(60)
|
|
24
|
Change in derivatives
designated as cash flow hedges
|
|
2
|
|
8
|
|
38
|
|
19
|
Change in pension and
post-retirement defined benefit plans
|
|
(535)
|
|
(33)
|
|
(449)
|
|
80
|
Other comprehensive
(loss) income before income taxes
|
|
(569)
|
|
(39)
|
|
(471)
|
|
123
|
Income tax recovery
(expense) on above items
|
|
180
|
|
13
|
|
169
|
|
(65)
|
Other comprehensive
(loss) income
|
|
(389)
|
|
(26)
|
|
(302)
|
|
58
|
Comprehensive
income
|
|
$
|
156
|
|
$
|
958
|
|
$
|
1,649
|
|
$
|
2,463
|
|
See Notes to Interim
Consolidated Financial Information.
|
INTERIM CONSOLIDATED BALANCE SHEETS AS
AT
(unaudited)
|
|
December
31
|
|
December
31
|
(in millions of
Canadian dollars)
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
61
|
|
$
|
338
|
Accounts receivable,
net
|
|
815
|
|
687
|
Materials and
supplies
|
|
173
|
|
152
|
Other current
assets
|
|
68
|
|
97
|
|
|
1,117
|
|
1,274
|
Investments
|
|
203
|
|
182
|
Properties
|
|
18,418
|
|
17,016
|
Goodwill and
intangible assets
|
|
202
|
|
187
|
Pension
asset
|
|
1,243
|
|
1,407
|
Other
assets
|
|
71
|
|
69
|
Total
assets
|
|
$
|
21,254
|
|
$
|
20,135
|
Liabilities and
shareholders' equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
1,449
|
|
$
|
1,238
|
Long-term debt
maturing within one year
|
|
506
|
|
746
|
|
|
1,955
|
|
1,984
|
Pension and other
benefit liabilities
|
|
718
|
|
749
|
Other long-term
liabilities
|
|
237
|
|
231
|
Long-term
debt
|
|
8,190
|
|
7,413
|
Deferred income
taxes
|
|
3,518
|
|
3,321
|
Total
liabilities
|
|
14,618
|
|
13,698
|
Shareholders'
equity
|
|
|
|
|
Share
capital
|
|
2,002
|
|
2,032
|
Additional paid-in
capital
|
|
42
|
|
43
|
Accumulated other
comprehensive loss
|
|
(2,043)
|
|
(1,741)
|
Retained
earnings
|
|
6,635
|
|
6,103
|
|
|
6,636
|
|
6,437
|
Total liabilities
and shareholders' equity
|
|
$
|
21,254
|
|
$
|
20,135
|
|
See Notes to Interim
Consolidated Financial Information.
|
INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
545
|
|
$
|
984
|
|
$
|
1,951
|
|
$
|
2,405
|
Reconciliation of net
income to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
180
|
|
168
|
|
696
|
|
661
|
Deferred income taxes
(Note 5)
|
|
101
|
|
(378)
|
|
256
|
|
(210)
|
Pension recovery and
funding
|
|
(83)
|
|
(59)
|
|
(321)
|
|
(237)
|
Foreign exchange loss
(gain) on long-term debt (Note 4)
|
|
113
|
|
14
|
|
168
|
|
(186)
|
Settlement of forward
starting swaps on debt issuance
|
|
—
|
|
—
|
|
(24)
|
|
—
|
Other operating
activities, net
|
|
(56)
|
|
(25)
|
|
(79)
|
|
(113)
|
Change in non-cash
working capital balances related to operations
|
|
131
|
|
29
|
|
65
|
|
(138)
|
Cash provided by
operating activities
|
|
931
|
|
733
|
|
2,712
|
|
2,182
|
Investing
activities
|
|
|
|
|
|
|
|
|
Additions to
properties
|
|
(467)
|
|
(445)
|
|
(1,551)
|
|
(1,340)
|
Proceeds from sale of
properties and other assets (Note 3)
|
|
62
|
|
13
|
|
78
|
|
42
|
Other
|
|
16
|
|
(2)
|
|
15
|
|
3
|
Cash used in
investing activities
|
|
(389)
|
|
(434)
|
|
(1,458)
|
|
(1,295)
|
Financing
activities
|
|
|
|
|
|
|
|
|
Dividends
paid
|
|
(93)
|
|
(81)
|
|
(348)
|
|
(310)
|
Issuance of CP Common
Shares
|
|
8
|
|
6
|
|
24
|
|
45
|
Purchase of CP Common
Shares (Note 6)
|
|
(544)
|
|
(13)
|
|
(1,103)
|
|
(381)
|
Issuance of long-term
debt, excluding commercial paper
|
|
—
|
|
—
|
|
638
|
|
—
|
Repayment of
long-term debt, excluding commercial paper
|
|
(9)
|
|
(15)
|
|
(753)
|
|
(32)
|
Settlement of forward
starting swaps on de-designation
|
|
—
|
|
—
|
|
—
|
|
(22)
|
Cash used in
financing activities
|
|
(638)
|
|
(103)
|
|
(1,542)
|
|
(700)
|
Effect of foreign
currency fluctuations on U.S. dollar-
denominated cash and cash equivalents
|
|
7
|
|
—
|
|
11
|
|
(13)
|
Cash
position
|
|
|
|
|
|
|
|
|
(Decrease) increase
in cash and cash equivalents
|
|
(89)
|
|
196
|
|
(277)
|
|
174
|
Cash and cash
equivalents at beginning of period
|
|
150
|
|
142
|
|
338
|
|
164
|
Cash and cash
equivalents at end of period
|
|
$
|
61
|
|
$
|
338
|
|
$
|
61
|
|
$
|
338
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
|
88
|
|
$
|
61
|
|
$
|
318
|
|
$
|
425
|
Interest
paid
|
|
$
|
83
|
|
$
|
90
|
|
$
|
463
|
|
$
|
475
|
|
See Notes to Interim
Consolidated Information.
|
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
(unaudited)
(in millions of
Canadian dollars except per share data)
|
|
Common
shares (in
millions)
|
|
Share
capital
|
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
loss
|
|
Retained
earnings
|
|
Total
shareholders'
equity
|
Balance at January
1, 2018
|
|
144.9
|
|
$
|
2,032
|
|
$
|
43
|
|
$
|
(1,741)
|
|
$
|
6,103
|
|
$
|
6,437
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,951
|
|
1,951
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
—
|
|
(302)
|
|
—
|
|
(302)
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(358)
|
|
(358)
|
Effect of stock-based
compensation expense
|
|
—
|
|
—
|
|
11
|
|
—
|
|
—
|
|
11
|
CP Common Shares
repurchased (Note 6)
|
|
(4.6)
|
|
(66)
|
|
—
|
|
—
|
|
(1,061)
|
|
(1,127)
|
Shares issued under
stock option plan
|
|
0.2
|
|
36
|
|
(12)
|
|
—
|
|
—
|
|
24
|
Balance at
December 31, 2018
|
|
140.5
|
|
$
|
2,002
|
|
$
|
42
|
|
$
|
(2,043)
|
|
$
|
6,635
|
|
$
|
6,636
|
Balance at January 1,
2017
|
|
146.3
|
|
$
|
2,002
|
|
$
|
52
|
|
$
|
(1,799)
|
|
$
|
4,371
|
|
$
|
4,626
|
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,405
|
|
2,405
|
Other comprehensive
income
|
|
—
|
|
—
|
|
—
|
|
58
|
|
—
|
|
58
|
Dividends
declared
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(319)
|
|
(319)
|
Effect of stock-based
compensation expense
|
|
—
|
|
—
|
|
3
|
|
—
|
|
—
|
|
3
|
CP Common Shares
repurchased (Note 6)
|
|
(1.9)
|
|
(27)
|
|
—
|
|
—
|
|
(354)
|
|
(381)
|
Shares issued under
stock option plan
|
|
0.5
|
|
57
|
|
(12)
|
|
—
|
|
—
|
|
45
|
Balance at December
31, 2017
|
|
144.9
|
|
$
|
2,032
|
|
$
|
43
|
|
$
|
(1,741)
|
|
$
|
6,103
|
|
$
|
6,437
|
|
See Notes to Interim
Consolidated Financial Information.
|
NOTES TO INTERIM CONSOLIDATED FINANCIAL
INFORMATION
December 31,
2018
(unaudited)
1 Basis of presentation
This unaudited interim consolidated financial information of
Canadian Pacific Railway Limited ("CP", or "the Company"),
expressed in Canadian dollars, reflects management's estimates and
assumptions that are necessary for their fair presentation in
conformity with generally accepted accounting principles in
the United States of America
("GAAP"). It does not include all disclosures required under GAAP
for annual financial statements and should be read in conjunction
with the 2017 annual consolidated financial statements and notes
included in CP's 2017 Annual Report on Form 10-K and 2018 interim
consolidated financial information. The accounting policies used
are consistent with the accounting policies used in preparing the
2017 annual consolidated financial statements, except for the newly
adopted accounting policies discussed in Note 2.
CP's operations can be affected by seasonal fluctuations such as
changes in customer demand and weather-related issues. This
seasonality could impact quarter-over-quarter comparisons.
In management's opinion, the unaudited interim consolidated
financial information include all adjustments (consisting of normal
and recurring adjustments) necessary to present fairly such
information.
2 Accounting changes
Implemented in 2018
Revenue from Contracts with Customers
On January 1, 2018, the Company
adopted the new Accounting Standards Update ("ASU") 2014-09, issued
by the Financial Accounting Standards Board ("FASB"), and all
related amendments under FASB Accounting Standards Codification
("ASC") Topic 606, Revenue from Contracts with Customers, using the
modified retrospective method. Comparative financial information
has not been restated and continues to be reported under the
accounting standards in effect for those periods. The Company did
not recognize any adjustment to the opening balance of retained
earnings upon adoption of ASC Topic 606. There was no material
impact to the Company's net income on adoption of this new standard
in 2018.
Compensation - Retirement Benefits
On January 1, 2018, the Company
adopted the changes required under ASU 2017-07, Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Post-retirement Benefit Cost under FASB ASC Topic 715, Retirement
Benefits as issued by the FASB in March
2017. In accordance with the ASU, beginning on January 1, 2018, the Company reports the current
service cost component of net periodic benefit cost in Compensation
and benefits on the Company's Consolidated Statements of Income,
and reports the Other components of net periodic benefit recovery
as a separate item outside of Operating income on the Company's
Consolidated Statements of Income. The Company has applied these
changes in presentation retrospectively, which resulted in a
decrease in Operating income of $71
million and $274 million for
the three months and year ended December 31,
2017, respectively.
These changes in presentation do not result in any changes to
net income or earnings per share.
The ASU also prospectively restricts capitalization of net
periodic benefit costs to the current service cost component when
applicable. This restriction has no impact on the Company's
operating income or amounts capitalized because the Company has and
continues to only capitalize an appropriate portion of current
service cost for self-constructed properties.
Derivatives and Hedging
In August 2017, the FASB issued
ASU 2017-12, Targeted Improvements to Accounting for Hedging
Activities, under FASB ASC Topic 815, Derivatives and Hedging. This
improves the financial reporting of hedging relationships to better
portray the economic results of an entity's risk management
activities in its financial statements. These amendments also make
targeted improvements to simplify the application of the hedge
accounting guidance in GAAP. The amendments require the entire
change in the fair value of the hedging instrument to be recorded
in Other comprehensive income for effective cash flow hedges.
Consequently, any ineffective portion of the change in fair value
will no longer be recorded to the Consolidated Statement of Income
as it arises. While the amendments are effective for public
entities beginning on January 1,
2019, early adoption is permitted and the Company early
adopted this ASU effective January 1,
2018. Entities are required to apply the amendments in this
update to hedging relationships existing on the date of adoption,
reflected as a cumulative-effect adjustment as of the beginning of
the fiscal year of adoption. Other amendments to presentation and
disclosure are applied prospectively. No significant
cumulative-effect adjustment was required.
Accumulated Other Comprehensive Income -
Reclassification
In February 2018, the FASB issued
ASU 2018-02, Reclassification of Certain Tax Effects from
Accumulated Other Comprehensive Income under FASB ASC Topic 220,
Income Statement - Reporting Comprehensive Income. The current
standard ASC Topic 740, Income Taxes, requires deferred tax
liabilities and assets to be adjusted for the effect of a change in
tax laws or rates with the effect included in income from
continuing operations in the reporting period that includes the
enactment date. This includes the tax effects of items in
Accumulated other comprehensive income ("AOCI") that were
originally recognized in Other comprehensive income, subsequently
creating stranded tax effects. This ASU allows a reclassification
from AOCI to Retained earnings for stranded tax effects
specifically resulting from the U.S. federal government's recently
enacted tax bill, the Tax Cuts and Jobs Act. The amendments are
effective for public entities beginning on January 1, 2019 and early adoption is permitted.
Entities are required to apply these amendments either in the
period of adoption or retrospectively to each period in which the
effect of the change in tax rate from the Tax Cuts and Jobs Act was
recognized. The Company early adopted this ASU effective
January 1, 2018, electing not to
change AOCI, Retained earnings or disclosure in the Company's
Interim Consolidated Financial Statements.
3 Dispositions of properties
During the fourth quarter of 2018, the Company completed the
sale of the Bass Lake Spur for gross proceeds of $37 million (U.S. $27
million). The company recorded a gain on sale of
$35 million ($26 million after tax) within "Purchased services
and other" in the interim consolidated statement of income.
4 Other expense (income)
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Foreign exchange loss
(gain) on long-term debt
|
|
$
|
113
|
|
$
|
14
|
|
$
|
168
|
|
$
|
(186)
|
Other foreign
exchange losses (gains)
|
|
1
|
|
(2)
|
|
3
|
|
(7)
|
Insurance recovery of
legal settlement
|
|
—
|
|
—
|
|
—
|
|
(10)
|
Charge on hedge roll
and de-designation
|
|
—
|
|
—
|
|
—
|
|
13
|
Other
|
|
4
|
|
4
|
|
3
|
|
12
|
Other expense
(income)
|
|
$
|
118
|
|
$
|
16
|
|
$
|
174
|
|
$
|
(178)
|
"Other expense (income)" was previously presented as "Other
income and charges" in the Company's Consolidated Statements of
Income. This change in presentation has no impact on the components
within this line item.
5 Income taxes
During the fourth quarter of 2018, there were no changes in
federal, provincial or state corporate income tax rates that
required a revaluation of deferred income tax balances. For the
year ended December 31, 2018,
revaluations of deferred tax balances associated with decreases in
the Iowa and Missouri state corporate income tax rates in
the second quarter totaled a net recovery of $21 million.
On December 22, 2017, the United States ("U.S.") enacted the "Tax
Cuts and Jobs Act" which has been commonly referred to as U.S. tax
reform. A significant change under this reform was the reduction of
the U.S. federal statutory corporate income tax rate from 35% to
21% beginning in 2018. As a result of this and other corporate
income tax rate increases in the provinces of British Columbia and Saskatchewan, the Company revalued its
deferred income tax balances accordingly. The revaluation of
deferred tax associated with these tax rate changes total a net
recovery of $527 million in the
fourth quarter of 2017 reducing income tax expense of the period.
For the full year in 2017, revaluations of deferred tax balances
associated with changes in rates total a net recovery of
$541 million.
6 Shareholders' equity
On October 19, 2018, the Company
announced a new normal course issuer bid ("NCIB"), commencing
October 24, 2018, to purchase up to
5.68 million Common Shares for cancellation before October 23,
2019.
All purchases were made in accordance with the NCIB at prevalent
market prices plus brokerage fees, or such other prices that were
permitted by the Toronto Stock Exchange, with consideration
allocated to share capital up to the average carrying amount of the
shares, and any excess allocated to retained earnings.
The following table describes activities under the share
repurchase program:
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Number of Common
Shares repurchased(1)
|
|
2,187,200
|
|
59,800
|
|
4,683,162
|
|
1,888,100
|
Weighted-average
price per share(2)
|
|
$
|
259.74
|
|
$
|
215.90
|
|
$
|
240.68
|
|
$
|
201.53
|
Amount of repurchase
(in millions)(2)
|
|
$
|
568
|
|
$
|
13
|
|
$
|
1,127
|
|
$
|
381
|
|
(1)
Includes shares repurchased but not yet cancelled at quarter
end.
|
(2)
Includes brokerage fees.
|
Summary of Rail Data
|
|
Fourth
Quarter
|
|
Year
|
Financial
(millions, except per share data)
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight
|
|
$
|
1,964
|
|
$
|
1,667
|
|
$
|
297
|
|
18
|
|
$
|
7,152
|
|
$
|
6,375
|
|
$
|
777
|
|
12
|
Non-freight
|
|
42
|
|
46
|
|
(4)
|
|
(9)
|
|
164
|
|
179
|
|
(15)
|
|
(8)
|
Total
revenues
|
|
2,006
|
|
1,713
|
|
293
|
|
17
|
|
7,316
|
|
6,554
|
|
762
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits(1)
|
|
378
|
|
340
|
|
38
|
|
11
|
|
1,468
|
|
1,309
|
|
159
|
|
12
|
Fuel
|
|
247
|
|
197
|
|
50
|
|
25
|
|
918
|
|
677
|
|
241
|
|
36
|
Materials
|
|
46
|
|
48
|
|
(2)
|
|
(4)
|
|
201
|
|
190
|
|
11
|
|
6
|
Equipment
rents
|
|
31
|
|
34
|
|
(3)
|
|
(9)
|
|
130
|
|
142
|
|
(12)
|
|
(8)
|
Depreciation and
amortization
|
|
180
|
|
168
|
|
12
|
|
7
|
|
696
|
|
661
|
|
35
|
|
5
|
Purchased services
and other
|
|
250
|
|
244
|
|
6
|
|
2
|
|
1,072
|
|
1,056
|
|
16
|
|
2
|
Total operating
expenses(1)
|
|
1,132
|
|
1,031
|
|
101
|
|
10
|
|
4,485
|
|
4,035
|
|
450
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income(1)
|
|
874
|
|
682
|
|
192
|
|
28
|
|
2,831
|
|
2,519
|
|
312
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
(income)
|
|
118
|
|
16
|
|
102
|
|
638
|
|
174
|
|
(178)
|
|
352
|
|
(198)
|
Other components of
net periodic benefit recovery(1)
|
|
(97)
|
|
(71)
|
|
(26)
|
|
37
|
|
(384)
|
|
(274)
|
|
(110)
|
|
40
|
Net interest
expense
|
|
114
|
|
116
|
|
(2)
|
|
(2)
|
|
453
|
|
473
|
|
(20)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax expense (recovery)
|
|
739
|
|
621
|
|
118
|
|
19
|
|
2,588
|
|
2,498
|
|
90
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
194
|
|
(363)
|
|
557
|
|
(153)
|
|
637
|
|
93
|
|
544
|
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
545
|
|
$
|
984
|
|
$
|
(439)
|
|
(45)
|
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
(454)
|
|
(19)
|
Operating ratio
(%)(1)
|
|
56.5
|
|
60.2
|
|
(3.7)
|
|
(370)
bps
|
|
61.3
|
|
61.6
|
|
(0.3)
|
|
(30)
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
3.84
|
|
$
|
6.79
|
|
$
|
(2.95)
|
|
(43)
|
|
$
|
13.65
|
|
$
|
16.49
|
|
$
|
(2.84)
|
|
(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
|
3.83
|
|
$
|
6.77
|
|
$
|
(2.94)
|
|
(43)
|
|
$
|
13.61
|
|
$
|
16.44
|
|
$
|
(2.83)
|
|
(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding (millions)
|
|
141.8
|
|
145.0
|
|
(3.2)
|
|
(2)
|
|
142.9
|
|
145.9
|
|
(3.0)
|
|
(2)
|
Weighted average
number of diluted shares outstanding
(millions)
|
|
142.3
|
|
145.4
|
|
(3.1)
|
|
(2)
|
|
143.3
|
|
146.3
|
|
(3.0)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average foreign
exchange rate (US$/Canadian$)
|
|
0.76
|
|
0.79
|
|
(0.03)
|
|
(4)
|
|
0.77
|
|
0.77
|
|
—
|
|
—
|
Average foreign
exchange rate (Canadian$/US$)
|
|
1.32
|
|
1.27
|
|
0.05
|
|
4
|
|
1.30
|
|
1.30
|
|
—
|
|
—
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
Accounting Standards Update ("ASU") ASU 2017-07, discussed further
in Note 2 Accounting changes in CP's Interim Consolidated Financial
Information for the period ended December 31, 2018.
|
Summary of Rail Data (Continued)
|
|
Fourth
Quarter
|
|
Year
|
Commodity
Data
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
FX
Adjusted
%
Change(1)
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
FX
Adjusted
%
Change(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenues
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Grain
|
|
$
|
453
|
|
$
|
425
|
|
$
|
28
|
|
7
|
|
5
|
|
$
|
1,566
|
|
$
|
1,532
|
|
$
|
34
|
|
2
|
|
2
|
- Coal
|
|
187
|
|
153
|
|
34
|
|
22
|
|
21
|
|
673
|
|
631
|
|
42
|
|
7
|
|
7
|
- Potash
|
|
128
|
|
101
|
|
27
|
|
27
|
|
24
|
|
486
|
|
411
|
|
75
|
|
18
|
|
19
|
- Fertilizers and
sulphur
|
|
72
|
|
60
|
|
12
|
|
20
|
|
18
|
|
243
|
|
241
|
|
2
|
|
1
|
|
1
|
- Forest
products
|
|
73
|
|
63
|
|
10
|
|
16
|
|
12
|
|
284
|
|
265
|
|
19
|
|
7
|
|
8
|
- Energy, chemicals
and plastics
|
|
369
|
|
247
|
|
122
|
|
49
|
|
46
|
|
1,243
|
|
898
|
|
345
|
|
38
|
|
39
|
- Metals, minerals,
and consumer products
|
|
202
|
|
187
|
|
15
|
|
8
|
|
5
|
|
797
|
|
739
|
|
58
|
|
8
|
|
8
|
-
Automotive
|
|
75
|
|
70
|
|
5
|
|
7
|
|
4
|
|
322
|
|
293
|
|
29
|
|
10
|
|
11
|
-
Intermodal
|
|
405
|
|
361
|
|
44
|
|
12
|
|
11
|
|
1,538
|
|
1,365
|
|
173
|
|
13
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight
Revenues
|
|
$
|
1,964
|
|
$
|
1,667
|
|
$
|
297
|
|
18
|
|
16
|
|
$
|
7,152
|
|
$
|
6,375
|
|
$
|
777
|
|
12
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue
per Revenue Ton-Mile
(RTM) (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Grain
|
|
4.46
|
|
4.21
|
|
0.25
|
|
6
|
|
4
|
|
4.25
|
|
4.10
|
|
0.15
|
|
4
|
|
4
|
- Coal
|
|
3.23
|
|
2.82
|
|
0.41
|
|
15
|
|
14
|
|
3.00
|
|
2.78
|
|
0.22
|
|
8
|
|
8
|
- Potash
|
|
2.77
|
|
2.62
|
|
0.15
|
|
6
|
|
3
|
|
2.65
|
|
2.61
|
|
0.04
|
|
2
|
|
2
|
- Fertilizers and
sulphur
|
|
6.27
|
|
5.91
|
|
0.36
|
|
6
|
|
3
|
|
6.00
|
|
6.27
|
|
(0.27)
|
|
(4)
|
|
(4)
|
- Forest
products
|
|
6.24
|
|
5.79
|
|
0.45
|
|
8
|
|
5
|
|
5.96
|
|
5.92
|
|
0.04
|
|
1
|
|
1
|
- Energy, chemicals
and plastics
|
|
4.74
|
|
4.10
|
|
0.64
|
|
16
|
|
13
|
|
4.47
|
|
4.21
|
|
0.26
|
|
6
|
|
6
|
- Metals, minerals,
and consumer products
|
|
7.24
|
|
6.32
|
|
0.92
|
|
15
|
|
11
|
|
6.72
|
|
6.44
|
|
0.28
|
|
4
|
|
4
|
-
Automotive
|
|
25.18
|
|
22.91
|
|
2.27
|
|
10
|
|
6
|
|
23.92
|
|
22.15
|
|
1.77
|
|
8
|
|
8
|
-
Intermodal
|
|
5.90
|
|
5.65
|
|
0.25
|
|
4
|
|
3
|
|
5.76
|
|
5.62
|
|
0.14
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight Revenue
per RTM
|
|
4.84
|
|
4.49
|
|
0.35
|
|
8
|
|
6
|
|
4.64
|
|
4.47
|
|
0.17
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue
per Carload
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Grain
|
|
$
|
3,945
|
|
$
|
3,690
|
|
$
|
255
|
|
7
|
|
5
|
|
$
|
3,645
|
|
$
|
3,477
|
|
$
|
168
|
|
5
|
|
5
|
- Coal
|
|
2,404
|
|
2,106
|
|
298
|
|
14
|
|
14
|
|
2,211
|
|
2,061
|
|
150
|
|
7
|
|
7
|
- Potash
|
|
3,126
|
|
2,916
|
|
210
|
|
7
|
|
5
|
|
3,071
|
|
2,988
|
|
83
|
|
3
|
|
3
|
- Fertilizers and
sulphur
|
|
4,450
|
|
4,118
|
|
332
|
|
8
|
|
5
|
|
4,186
|
|
4,178
|
|
8
|
|
—
|
|
1
|
- Forest
products
|
|
4,235
|
|
3,974
|
|
261
|
|
7
|
|
4
|
|
4,139
|
|
4,036
|
|
103
|
|
3
|
|
3
|
- Energy, chemicals
and plastics
|
|
4,004
|
|
3,271
|
|
733
|
|
22
|
|
20
|
|
3,715
|
|
3,333
|
|
382
|
|
11
|
|
12
|
- Metals, minerals,
and consumer products
|
|
3,226
|
|
2,911
|
|
315
|
|
11
|
|
8
|
|
3,161
|
|
2,894
|
|
267
|
|
9
|
|
9
|
-
Automotive
|
|
2,991
|
|
2,776
|
|
215
|
|
8
|
|
4
|
|
2,975
|
|
2,785
|
|
190
|
|
7
|
|
7
|
-
Intermodal
|
|
1,541
|
|
1,384
|
|
157
|
|
11
|
|
10
|
|
1,499
|
|
1,370
|
|
129
|
|
9
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight Revenue
per Carload
|
|
$
|
2,767
|
|
$
|
2,455
|
|
$
|
312
|
|
13
|
|
11
|
|
$
|
2,611
|
|
$
|
2,420
|
|
$
|
191
|
|
8
|
|
8
|
|
|
(1)
|
This earnings measure
has no standardized meaning prescribed by GAAP and, therefore, is
unlikely to be comparable to similar measures presented by other
companies. This measure is defined and reconciled in Non-GAAP
Measures of this Earnings Release.
|
Summary of Rail Data (Continued)
|
|
Fourth
Quarter
|
|
Year
|
Commodity Data
(Continued)
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of
RTM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Grain
|
|
10,158
|
|
10,103
|
|
55
|
|
1
|
|
36,856
|
|
37,377
|
|
(521)
|
|
(1)
|
- Coal
|
|
5,786
|
|
5,430
|
|
356
|
|
7
|
|
22,443
|
|
22,660
|
|
(217)
|
|
(1)
|
- Potash
|
|
4,621
|
|
3,832
|
|
789
|
|
21
|
|
18,371
|
|
15,751
|
|
2,620
|
|
17
|
- Fertilizers and
sulphur
|
|
1,149
|
|
1,012
|
|
137
|
|
14
|
|
4,051
|
|
3,849
|
|
202
|
|
5
|
- Forest
products
|
|
1,167
|
|
1,094
|
|
73
|
|
7
|
|
4,763
|
|
4,484
|
|
279
|
|
6
|
- Energy, chemicals
and plastics
|
|
7,783
|
|
6,025
|
|
1,758
|
|
29
|
|
27,830
|
|
21,327
|
|
6,503
|
|
30
|
- Metals, minerals,
and consumer products
|
|
2,791
|
|
2,956
|
|
(165)
|
|
(6)
|
|
11,858
|
|
11,468
|
|
390
|
|
3
|
-
Automotive
|
|
300
|
|
305
|
|
(5)
|
|
(2)
|
|
1,347
|
|
1,321
|
|
26
|
|
2
|
-
Intermodal
|
|
6,868
|
|
6,402
|
|
466
|
|
7
|
|
26,688
|
|
24,303
|
|
2,385
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RTMs
|
|
40,623
|
|
37,159
|
|
3,464
|
|
9
|
|
154,207
|
|
142,540
|
|
11,667
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carloads
(thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Grain
|
|
114.9
|
|
115.1
|
|
(0.2)
|
|
—
|
|
429.4
|
|
440.7
|
|
(11.3)
|
|
(3)
|
- Coal
|
|
77.6
|
|
72.7
|
|
4.9
|
|
7
|
|
304.3
|
|
306.0
|
|
(1.7)
|
|
(1)
|
- Potash
|
|
41.0
|
|
34.5
|
|
6.5
|
|
19
|
|
158.4
|
|
137.4
|
|
21.0
|
|
15
|
- Fertilizers and
sulphur
|
|
16.2
|
|
14.5
|
|
1.7
|
|
12
|
|
58.1
|
|
57.7
|
|
0.4
|
|
1
|
- Forest
products
|
|
17.1
|
|
16.0
|
|
1.1
|
|
7
|
|
68.6
|
|
65.8
|
|
2.8
|
|
4
|
- Energy, chemicals
and plastics
|
|
92.2
|
|
75.5
|
|
16.7
|
|
22
|
|
334.6
|
|
269.5
|
|
65.1
|
|
24
|
- Metals, minerals,
and consumer products
|
|
62.6
|
|
64.2
|
|
(1.6)
|
|
(2)
|
|
252.2
|
|
255.3
|
|
(3.1)
|
|
(1)
|
-
Automotive
|
|
25.3
|
|
25.2
|
|
0.1
|
|
—
|
|
108.3
|
|
105.1
|
|
3.2
|
|
3
|
-
Intermodal
|
|
263.0
|
|
261.3
|
|
1.7
|
|
1
|
|
1,025.9
|
|
996.7
|
|
29.2
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Carloads
|
|
709.9
|
|
679.0
|
|
30.9
|
|
5
|
|
2,739.8
|
|
2,634.2
|
|
105.6
|
|
4
|
|
|
Fourth
Quarter
|
|
Year
|
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
FX
Adjusted %
Change(1)
|
|
2018
|
|
2017
|
|
Total
Change
|
|
%
Change
|
|
FX
Adjusted %
Change(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits(2)
|
|
$
|
378
|
|
$
|
340
|
|
$
|
38
|
|
11
|
|
10
|
|
$
|
1,468
|
|
$
|
1,309
|
|
$
|
159
|
|
12
|
|
12
|
Fuel
|
|
247
|
|
197
|
|
50
|
|
25
|
|
22
|
|
918
|
|
677
|
|
241
|
|
36
|
|
36
|
Materials
|
|
46
|
|
48
|
|
(2)
|
|
(4)
|
|
(6)
|
|
201
|
|
190
|
|
11
|
|
6
|
|
6
|
Equipment
rents
|
|
31
|
|
34
|
|
(3)
|
|
(9)
|
|
(11)
|
|
130
|
|
142
|
|
(12)
|
|
(8)
|
|
(8)
|
Depreciation and
amortization
|
|
180
|
|
168
|
|
12
|
|
7
|
|
6
|
|
696
|
|
661
|
|
35
|
|
5
|
|
5
|
Purchased services
and other
|
|
250
|
|
244
|
|
6
|
|
2
|
|
1
|
|
1,072
|
|
1,056
|
|
16
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses(2)
|
|
$
|
1,132
|
|
$
|
1,031
|
|
$
|
101
|
|
10
|
|
8
|
|
$
|
4,485
|
|
$
|
4,035
|
|
$
|
450
|
|
11
|
|
11
|
|
|
(1)
|
This earnings measure
has no standardized meaning prescribed by GAAP and, therefore, is
unlikely to be comparable to similar measures presented by other
companies. This measure is defined and reconciled in Non-GAAP
Measures of this Earnings Release.
|
(2)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
Summary of Rail Data (Continued)
|
|
Fourth
Quarter
|
|
Year
|
|
|
2018
|
|
2017 (1)
|
|
Total
Change
|
|
%
Change
|
|
2018
|
|
2017 (1)
|
|
Total
Change
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross ton-miles
("GTMs") (millions)
|
|
72,786
|
|
65,296
|
|
7,490
|
|
11
|
|
275,362
|
|
252,195
|
|
23,167
|
|
9
|
Train miles
(thousands)
|
|
8,504
|
|
7,845
|
|
659
|
|
8
|
|
32,312
|
|
30,632
|
|
1,680
|
|
5
|
Average train
weight - excluding local traffic (tons)
|
|
9,152
|
|
8,897
|
|
255
|
|
3
|
|
9,100
|
|
8,806
|
|
294
|
|
3
|
Average train
length - excluding local traffic (feet)
|
|
7,360
|
|
7,276
|
|
84
|
|
1
|
|
7,313
|
|
7,214
|
|
99
|
|
1
|
Average terminal
dwell (hours)
|
|
6.5
|
|
6.9
|
|
(0.4)
|
|
(6)
|
|
6.8
|
|
6.6
|
|
0.2
|
|
3
|
Average train speed
(mph)(2)
|
|
22.6
|
|
21.9
|
|
0.7
|
|
3
|
|
21.5
|
|
22.6
|
|
(1.1)
|
|
(5)
|
Fuel
efficiency(3)
|
|
0.956
|
|
0.984
|
|
(0.028)
|
|
(3)
|
|
0.953
|
|
0.980
|
|
(0.027)
|
|
(3)
|
U.S. gallons of
locomotive fuel consumed (millions)(4)
|
|
69.6
|
|
63.9
|
|
5.7
|
|
9
|
|
262.5
|
|
245.3
|
|
17.2
|
|
7
|
Average fuel price
(U.S. dollars per U.S. gallon)
|
|
2.71
|
|
2.43
|
|
0.28
|
|
12
|
|
2.72
|
|
2.16
|
|
0.56
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Employees
and Workforce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total employees
(average)(5)
|
|
12,912
|
|
12,165
|
|
747
|
|
6
|
|
12,695
|
|
12,034
|
|
661
|
|
5
|
Total employees (end
of period)(5)
|
|
12,770
|
|
12,163
|
|
607
|
|
5
|
|
12,770
|
|
12,163
|
|
607
|
|
5
|
Workforce (end of
period)(6)
|
|
12,793
|
|
12,242
|
|
551
|
|
5
|
|
12,793
|
|
12,242
|
|
551
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety
Indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FRA personal injuries
per 200,000 employee-hours
|
|
1.42
|
|
1.66
|
|
(0.24)
|
|
(14)
|
|
1.47
|
|
1.65
|
|
(0.18)
|
|
(11)
|
FRA train accidents
per million train miles
|
|
0.64
|
|
0.93
|
|
(0.29)
|
|
(31)
|
|
1.10
|
|
0.99
|
|
0.11
|
|
11
|
|
|
(1)
|
Certain figures have
been revised to conform with current presentation or have been
updated to reflect new information as certain operating statistics
are estimated and can continue to be updated as actuals
settle.
|
(2)
|
Average train speed
is defined as a measure of the line-haul movement from origin to
destination including terminal dwell hours. It excludes delay time
related to customer or foreign railways, and also excludes the time
and distance travelled by: i) trains used in or around CP's yards;
ii) passenger trains; and iii) trains used for repairing
track.
|
(3)
|
Fuel efficiency is
defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs
– freight and yard.
|
(4)
|
Includes gallons of
fuel consumed from freight, yard and commuter service but excludes
fuel used in capital projects and other non-freight
activities.
|
(5)
|
An employee is
defined as an individual currently engaged in full-time or
part-time employment with CP.
|
(6)
|
Workforce is defined
as total employees plus contractors and consultants.
|
Non-GAAP Measures
The Company presents non-GAAP measures including Free cash to
provide a basis for evaluating underlying earnings and liquidity
trends in the Company's business that can be compared with the
results of operations in prior periods. In addition, these non-GAAP
measures facilitate a multi-period assessment of long-term
profitability allowing management and other external users of the
Company's consolidated financial information to compare
profitability on a long-term basis, including assessing future
profitability, with that of the Company's peers.
These non-GAAP measures have no standardized meaning and are not
defined by GAAP and, therefore, may not be comparable to similar
measures presented by other companies. The presentation of these
non-GAAP measures is not intended to be considered in isolation
from, as a substitute for, or as superior to, the financial
information presented in accordance with GAAP.
Non-GAAP Performance Measures
The Company uses Adjusted income, Adjusted diluted earnings per
share, Adjusted operating income and Adjusted operating ratio to
evaluate the Company's operating performance and for planning and
forecasting future business operations and future profitability.
These non-GAAP measures provide meaningful supplemental information
regarding operating results because they exclude certain
significant items that are not considered indicative of future
financial trends either by nature or amount. As a result, these
items are excluded for management assessment of operational
performance, allocation of resources and preparation of annual
budgets. These significant items may include, but are not limited
to, restructuring and asset impairment charges, individually
significant gains and losses from sales of assets, the foreign
exchange ("FX") impact of translating the Company's U.S. dollar
denominated long-term debt, and certain items outside the control
of management. These items may not be non-recurring. However,
excluding these significant items from GAAP results allows for a
consistent understanding of the Company's consolidated financial
performance when performing a multi-period assessment including
assessing the likelihood of future results. Accordingly, these
non-GAAP financial measures may provide insight to investors and
other external users of the Company's consolidated financial
information.
Significant items that impact reported earnings for 2018 and
2017 include:
2018:
- in the second quarter, a deferred tax recovery of $21 million due to reductions in the Missouri and Iowa state tax rates that favourably impacted
Diluted EPS by 15 cents; and
- during the course of the year, a net non-cash loss of
$168 million ($150 million after deferred tax) due to FX
translation of the Company's U.S dollar-denominated debt as
follows:
-
- in the fourth quarter, a $113
million loss ($103 million
after deferred tax) that unfavourably impacted Diluted EPS by
72 cents;
- in the third quarter, a $38
million gain ($33 million
after deferred tax) that favourably impacted Diluted EPS by
23 cents;
- in the second quarter, a $44
million loss ($38 million
after deferred tax) that unfavourably impacted Diluted EPS by
27 cents; and
- in the first quarter, a $49
million loss ($42 million
after deferred tax) that unfavourably impacted Diluted EPS by
29 cents.
2017:
- in the second quarter, a charge on hedge roll and
de-designation of $13 million
($10 million after deferred tax) that
unfavourably impacted Diluted EPS by 7
cents;
- in the second quarter, an insurance recovery of a legal
settlement of $10 million
($7 million after current tax) that
favourably impacted Diluted EPS by 5
cents;
- in the first quarter, a management transition recovery of
$51 million related to the retirement
of Mr. E. Hunter Harrison as CEO of
CP ($39 million after deferred tax)
that favourably impacted Diluted EPS by 27
cents;
- during the course of the year, a net deferred tax recovery of
$541 million as a result of changes
in income tax rates as follows:
-
- in the fourth quarter, a deferred tax recovery of $527 million, primarily due to the U.S. tax
reform, that favourably impacted Diluted EPS by $3.63;
- in the third quarter, a deferred tax expense of $3 million as a result of the change in the
Illinois state corporate income
tax rate that unfavourably impacted Diluted EPS by 2 cents;
- in the second quarter, a deferred tax recovery of $17 million as a result of the change in the
Saskatchewan provincial corporate
income tax rate that favourably impacted Diluted EPS by
12 cents; and
- during the course of the year, a net non-cash gain of
$186 million ($162 million after deferred tax) due to FX
translation of the Company's U.S. dollar-denominated debt as
follows:
-
- in the fourth quarter, a $14
million loss ($12 million
after deferred tax) that unfavourably impacted Diluted EPS by
8 cents;
- in the third quarter, a $105
million gain ($91 million
after deferred tax) that favourably impacted Diluted EPS by
62 cents;
- in the second quarter, a $67
million gain ($59 million
after deferred tax) that favourably impacted Diluted EPS by
40 cents; and
- in the first quarter, a $28
million gain ($24 million
after deferred tax) that favourably impacted Diluted EPS by
16 cents.
2019 Outlook
As a result of a 2019 plan built on sustainable, profitable,
growth along with further productivity improvement, CP expects
mid-single digit revenue ton mile ("RTM") growth and double-digit
adjusted diluted EPS growth. CP expectations for adjusted diluted
EPS growth in 2019 are based on adjusted diluted EPS of
$14.51 in 2018. As CP continues to
enhance the service, productivity and safety of the network, the
company plans to invest approximately $1.6
billion in capital programs. CP's outlook assumes a
U.S.-to-Canadian dollar exchange rate of approximately $1.30, an effective tax rate of 25.5 to 26
percent, and no material land sales. CP estimates other components
of net periodic benefit recovery to increase by approximately
$11 million versus 2018.
Adjusted diluted EPS is defined and discussed further
below. Although CP has provided a forward-looking non-GAAP
measure, it is not practicable to provide a reconciliation to a
forward-looking reported Diluted EPS, the most comparable GAAP
measure, due to unknown variables and uncertainty related to future
results. These unknown variables may include unpredictable
transactions of significant value. In past years, CP has recognized
significant asset impairment charges and management transition
costs related to senior executives. These or other similar,
large unforeseen transactions affect Diluted EPS but may be
excluded from CP's Adjusted diluted EPS. Additionally, the
Canadian-to-U.S. dollar exchange rate is unpredictable and can have
a significant impact on CP's reported results but may be excluded
from CP's Adjusted diluted EPS. In particular, CP excludes the
FX impact of translating the Company's U.S. dollar denominated
long-term debt from Adjusted diluted EPS. Please see
forward-looking Information in this Earnings Release for further
discussion.
Reconciliation of GAAP Performance Measures to Non-GAAP
Performance Measures
The following tables reconcile the most directly comparable
measures presented in accordance with GAAP to the non-GAAP measures
for the three months and year ended December
31, 2018 and 2017:
Adjusted income is calculated as Net income reported on a GAAP
basis less significant items.
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in
millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income as
reported
|
|
$
|
545
|
|
$
|
984
|
|
$
|
1,951
|
|
$
|
2,405
|
Less significant
items (pretax):
|
|
|
|
|
|
|
|
|
Insurance recovery of
legal settlement
|
|
—
|
|
—
|
|
—
|
|
10
|
Charge on hedge roll
and de-designation
|
|
—
|
|
—
|
|
—
|
|
(13)
|
Management transition
recovery
|
|
—
|
|
—
|
|
—
|
|
51
|
Impact of FX
translation on U.S. dollar-denominated debt
|
|
(113)
|
|
(14)
|
|
(168)
|
|
186
|
Add:
|
|
|
|
|
|
|
|
|
Tax effect of
adjustments(1)
|
|
(10)
|
|
(2)
|
|
(18)
|
|
36
|
Income tax rate
changes
|
|
—
|
|
(527)
|
|
(21)
|
|
(541)
|
Adjusted
income
|
|
$
|
648
|
|
$
|
469
|
|
$
|
2,080
|
|
$
|
1,666
|
|
(1)
|
The tax effect of
adjustments was calculated as the pretax effect of the adjustments
multiplied by the applicable tax rate for the above items of 9.28%
and 10.64% for the three months and year ended December 31, 2018,
and 13.28% and 15.27% for the three months and year ended
December 31, 2017, respectively. The applicable tax rates reflect
the taxable jurisdictions and nature, being on account of capital
or income, of the significant items.
|
Adjusted diluted earnings per share is calculated using Adjusted
income, as defined above, divided by the weighted-average diluted
shares outstanding during the period as determined in accordance
with GAAP.
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Diluted earnings
per share as reported
|
|
$
|
3.83
|
|
$
|
6.77
|
|
$
|
13.61
|
|
$
|
16.44
|
Less significant
items (pretax):
|
|
|
|
|
|
|
|
|
Insurance recovery of
legal settlement
|
|
—
|
|
—
|
|
—
|
|
0.07
|
Charge on hedge roll
and de-designation
|
|
—
|
|
—
|
|
—
|
|
(0.09)
|
Management transition
recovery
|
|
—
|
|
—
|
|
—
|
|
0.35
|
Impact of FX
translation on U.S. dollar-denominated debt
|
|
(0.79)
|
|
(0.09)
|
|
(1.17)
|
|
1.27
|
Add:
|
|
|
|
|
|
|
|
|
Tax effect of
adjustments(1)
|
|
(0.07)
|
|
(0.01)
|
|
(0.12)
|
|
0.25
|
Income tax rate
changes
|
|
—
|
|
(3.63)
|
|
(0.15)
|
|
(3.70)
|
Adjusted diluted
earnings per share
|
|
$
|
4.55
|
|
$
|
3.22
|
|
$
|
14.51
|
|
$
|
11.39
|
|
(1)
|
The tax effect of
adjustments was calculated as the pretax effect of the adjustments
multiplied by the applicable tax rate for the above items of 9.28%
and 10.64% for the three months and year ended December 31, 2018,
and 13.28% and 15.27% for the three months and year ended December
31, 2017, respectively. The applicable tax rates reflect the
taxable jurisdictions and nature, being on account of capital or
income, of the significant items.
|
Adjusted operating income is calculated as Operating income
reported on a GAAP basis less significant items.
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in
millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Operating income
as reported(1)
|
|
$
|
874
|
|
$
|
682
|
|
$
|
2,831
|
|
$
|
2,519
|
Less significant
item:
|
|
|
|
|
|
|
|
|
Management transition
recovery
|
|
—
|
|
—
|
|
—
|
|
51
|
Adjusted operating
income(1)
|
|
$
|
874
|
|
$
|
682
|
|
$
|
2,831
|
|
$
|
2,468
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
Adjusted operating ratio excludes those significant items that
are reported within Operating income.
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Operating ratio as
reported(1)
|
|
56.5%
|
|
60.2%
|
|
61.3%
|
|
61.6%
|
Less significant
item:
|
|
|
|
|
|
|
|
|
Management transition
recovery
|
|
—
|
|
—
|
|
—
|
|
(0.8)
|
Adjusted operating
ratio(1)
|
|
56.5%
|
|
60.2%
|
|
61.3%
|
|
62.4%
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
ROIC and Adjusted ROIC
ROIC is calculated as Operating income less Other expense
(income) and Other components of net periodic benefit recovery, tax
effected at the Company's annualized effective tax rate, divided by
the sum of total Shareholders' equity, Long-term debt, Long-term
debt maturing within one year and Short-term borrowing, as
presented in the Company's Consolidated Financial Statements,
averaged between the beginning and ending balance over a rolling
twelve-month period. Adjusted ROIC excludes Other components of net
periodic benefit recovery, and significant items reported in
Operating income and Other expense (income) in the Company's
Consolidated Financial Statements, as these significant items are
not considered indicative of future financial trends either by
nature or amount. Total Shareholders' equity, Long-term debt,
Long-term debt maturing within one year and Short-term borrowing is
similarly adjusted for the impact of periodic significant items,
net of tax, on closing balances as part of this average. ROIC and
Adjusted ROIC are all-encompassing performance measures that
measure how productively the Company uses its long-term capital
investments, representing critical indicators of good operating and
investment decisions made by management and are important
performance criteria in determining certain elements of the
Company's long-term incentive plan.
Calculation of ROIC and Adjusted ROIC
|
|
For the year
ended
December 31
|
(in millions, except
for percentages)
|
|
2018
|
|
2017
|
Operating
income(1)
|
|
$
|
2,831
|
|
$
|
2,519
|
Less:
|
|
|
|
|
Other expense
(income)
|
|
174
|
|
(178)
|
Other components of
net periodic benefit recovery(1)
|
|
(384)
|
|
(274)
|
Tax(2)
|
|
749
|
|
111
|
|
|
$
|
2,292
|
|
$
|
2,860
|
Average of total
shareholders' equity, long-term debt, long-term debt maturing
within one year and
short-term borrowing
|
|
$
|
14,964
|
|
$
|
13,961
|
ROIC
|
|
15.3%
|
|
20.5%
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
(2)
|
Tax was calculated at
the annualized effective tax rate of 24.64% and 3.74% for each of
the above items for the years presented, respectively.
|
|
|
For the year
ended
December 31
|
(in millions, except
for percentages)
|
|
2018
|
|
2017
|
Adjusted operating
income(1)
|
|
$
|
2,831
|
|
$
|
2,468
|
Less:
|
|
|
|
|
Other expense
(income)
|
|
174
|
|
(178)
|
Other components of
net periodic benefit recovery(1)
|
|
(384)
|
|
(274)
|
Add significant items
(pretax):
|
|
|
|
|
Insurance recovery of
legal settlement
|
|
—
|
|
(10)
|
Charge on hedge roll
and de-designation
|
|
—
|
|
13
|
Impact of FX
translation on U.S. dollar-denominated debt
|
|
168
|
|
(186)
|
Less:
|
|
|
|
|
Tax(2)
|
|
788
|
|
724
|
|
|
$
|
2,421
|
|
$
|
2,013
|
Average of total
shareholders' equity, long-term debt, long-term debt maturing
within one year and
short-term borrowing
|
|
$
|
14,964
|
|
$
|
13,961
|
Add:
|
|
|
|
|
Impact of periodic
significant items net of tax on the above average
|
|
(11)
|
|
(289)
|
Adjusted average for
the twelve months of total shareholders' equity, long-term debt,
long-term debt
maturing within one year and short-term borrowing
|
|
$
|
14,953
|
|
$
|
13,672
|
Adjusted
ROIC
|
|
16.2%
|
|
14.7%
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
(2)
|
Tax was calculated at
the adjusted annualized effective tax rate of 24.55% and 26.42% for
each of the above items for the years presented,
respectively.
|
Free Cash
Free cash is calculated as Cash provided by operating
activities, less Cash used in investing activities, adjusted for
changes in cash and cash equivalents balances resulting from FX
fluctuations, and the cash settlement of hedges settled upon
issuance of debt. Free cash is a measure that management considers
to be an indicator of liquidity. Free cash is useful to investors
and other external users of the consolidated financial statements
as it assists with the evaluation of the Company's ability to
generate cash from its operations without incurring additional
external financing. The cash settlement of forward starting swaps
that occurred in the second quarter of 2018 in conjunction with the
issuance of long-term debt is not an indicator of CP's ongoing cash
generating ability and therefore has been excluded from free cash.
Positive Free cash indicates the amount of cash available for
reinvestment in the business, or cash that can be returned to
investors through dividends, stock repurchase programs, debt
retirements or a combination of these. Conversely, negative Free
cash indicates the amount of cash that must be raised from
investors through new debt or equity issues, reduction in available
cash balances or a combination of these. Free cash should be
considered in addition to, rather than as a substitute for, Cash
provided by operating activities.
Reconciliation of Cash Provided by Operating Activities to
Free Cash
|
|
For the three
months
ended December 31
|
|
For the year
ended
December 31
|
(in
millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash provided by
operating activities
|
|
$
|
931
|
|
$
|
733
|
|
$
|
2,712
|
|
$
|
2,182
|
Cash used in
investing activities
|
|
(389)
|
|
(434)
|
|
(1,458)
|
|
(1,295)
|
Effect of foreign
currency fluctuations on U.S. dollar-denominated cash and
cash equivalents
|
|
7
|
|
—
|
|
11
|
|
(13)
|
Settlement of forward
starting swaps upon debt issuance
|
|
—
|
|
—
|
|
24
|
|
—
|
Free
cash
|
|
$
|
549
|
|
$
|
299
|
|
$
|
1,289
|
|
$
|
874
|
FX Adjusted Variance
FX adjusted variance allows certain financial results to be
viewed without the impact of fluctuations in foreign currency
exchange rates, thereby facilitating period-to-period comparisons
in the analysis of trends in business performance. Financial result
variances at constant currency are obtained by translating the
comparable period of the prior year results denominated in U.S.
dollars at the foreign exchange rates of the current period.
|
|
For the three
months ended December 31
|
(in
millions)
|
|
Reported
2018
|
|
Reported
2017
|
|
Variance
due to FX
|
|
FX Adjusted
2017
|
|
FX Adjusted
% Change
|
Freight revenues by
line of business
|
|
|
|
|
|
|
|
|
|
|
Grain
|
|
$
|
453
|
|
$
|
425
|
|
$
|
8
|
|
$
|
433
|
|
5
|
Coal
|
|
187
|
|
153
|
|
1
|
|
154
|
|
21
|
Potash
|
|
128
|
|
101
|
|
2
|
|
103
|
|
24
|
Fertilizers
& sulphur
|
|
72
|
|
60
|
|
1
|
|
61
|
|
18
|
Forest
products
|
|
73
|
|
63
|
|
2
|
|
65
|
|
12
|
Energy,
chemicals & plastics
|
|
369
|
|
247
|
|
6
|
|
253
|
|
46
|
Metals,
minerals & consumer products
|
|
202
|
|
187
|
|
5
|
|
192
|
|
5
|
Automotive
|
|
75
|
|
70
|
|
2
|
|
72
|
|
4
|
Intermodal
|
|
405
|
|
361
|
|
4
|
|
365
|
|
11
|
Total freight
revenues
|
|
1,964
|
|
1,667
|
|
31
|
|
1,698
|
|
16
|
Non-freight
revenues
|
|
42
|
|
46
|
|
—
|
|
46
|
|
(9)
|
Total
revenues
|
|
2,006
|
|
1,713
|
|
31
|
|
1,744
|
|
15
|
Compensation and
benefits(1)
|
|
378
|
|
340
|
|
4
|
|
344
|
|
10
|
Fuel
|
|
247
|
|
197
|
|
6
|
|
203
|
|
22
|
Materials
|
|
46
|
|
48
|
|
1
|
|
49
|
|
(6)
|
Equipment
rents
|
|
31
|
|
34
|
|
1
|
|
35
|
|
(11)
|
Depreciation and
amortization
|
|
180
|
|
168
|
|
2
|
|
170
|
|
6
|
Purchased services
and other
|
|
250
|
|
244
|
|
4
|
|
248
|
|
1
|
Total operating
expenses(1)
|
|
1,132
|
|
1,031
|
|
18
|
|
1,049
|
|
8
|
Operating
income(1)
|
|
$
|
874
|
|
$
|
682
|
|
$
|
13
|
|
$
|
695
|
|
26
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
|
|
For the year ended
December 31
|
(in
millions)
|
|
Reported
2018
|
|
Reported
2017
|
|
Variance
due to FX
|
|
FX Adjusted
2017
|
|
FX Adjusted
% Change
|
Freight revenues by
line of business
|
|
|
|
|
|
|
|
|
|
|
Grain
|
|
$
|
1,566
|
|
$
|
1,532
|
|
$
|
—
|
|
$
|
1,532
|
|
2
|
Coal
|
|
673
|
|
631
|
|
—
|
|
631
|
|
7
|
Potash
|
|
486
|
|
411
|
|
(1)
|
|
410
|
|
19
|
Fertilizers
& sulphur
|
|
243
|
|
241
|
|
(1)
|
|
240
|
|
1
|
Forest
products
|
|
284
|
|
265
|
|
(1)
|
|
264
|
|
8
|
Energy,
chemicals & plastics
|
|
1,243
|
|
898
|
|
(1)
|
|
897
|
|
39
|
Metals,
minerals & consumer products
|
|
797
|
|
739
|
|
(1)
|
|
738
|
|
8
|
Automotive
|
|
322
|
|
293
|
|
(2)
|
|
291
|
|
11
|
Intermodal
|
|
1,538
|
|
1,365
|
|
(1)
|
|
1,364
|
|
13
|
Total freight
revenues
|
|
7,152
|
|
6,375
|
|
(8)
|
|
6,367
|
|
12
|
Non-freight
revenues
|
|
164
|
|
179
|
|
—
|
|
179
|
|
(8)
|
Total
revenues
|
|
7,316
|
|
6,554
|
|
(8)
|
|
6,546
|
|
12
|
Compensation and
benefits(1)
|
|
1,468
|
|
1,309
|
|
(1)
|
|
1,308
|
|
12
|
Fuel
|
|
918
|
|
677
|
|
—
|
|
677
|
|
36
|
Materials
|
|
201
|
|
190
|
|
—
|
|
190
|
|
6
|
Equipment
rents
|
|
130
|
|
142
|
|
—
|
|
142
|
|
(8)
|
Depreciation and
amortization
|
|
696
|
|
661
|
|
—
|
|
661
|
|
5
|
Purchased services
and other
|
|
1,072
|
|
1,056
|
|
(3)
|
|
1,053
|
|
2
|
Total operating
expenses(1)
|
|
4,485
|
|
4,035
|
|
(4)
|
|
4,031
|
|
11
|
Operating
income(1)
|
|
$
|
2,831
|
|
$
|
2,519
|
|
$
|
(4)
|
|
$
|
2,515
|
|
13
|
|
|
(1)
|
2017 comparative
period figures have been restated for the retrospective adoption of
ASU 2017-07, discussed further in Note 2 Accounting changes in CP's
Interim Consolidated Financial Information for the period ended
December 31, 2018.
|
View original
content:http://www.prnewswire.com/news-releases/cp-reports-record-fourth-quarter-sustainable-profitable-growth-continues-into-2019-300783171.html
SOURCE Canadian Pacific