CALGARY, AB, April 29, 2026 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) $(CP)$ (CPKC) today announced its first-quarter results, including revenues of $3.7 billion, diluted earnings per share $(EPS)$ of $0.94 and core adjusted diluted EPS(1) of $1.04.
"Our talented team of world-class railroaders executed our precision scheduled railroading plan with discipline, driving meaningful improvements in network fluidity, terminal performance and other key operating metrics, while delivering solid first-quarter results," said Keith Creel, CPKC President and Chief Executive Officer. "Despite ongoing market and macroeconomic headwinds, we delivered volume growth demonstrating the resiliency and competitive advantage of our unrivalled North American network."
First-quarter 2026 results
-- Volumes, as measured in Revenue Ton-Miles, increased two percent -- Revenues decreased two percent to $3.7 billion -- Reported operating ratio $(OR)$ increased 70 basis points (bps) to 66.0 percent -- Core adjusted OR1 increased 50 bps to 63.0 percent from 62.5 percent -- Reported diluted EPS decreased three percent to $0.94 -- Core adjusted diluted EPS1 decreased two percent to $1.04 from $1.06 -- Reported and core adjusted1 results include year-over-year headwinds of approximately 4 cents from foreign-exchange and 3 cents from changes in fuel price -- Federal Railroad Administration $(FRA)$-reportable personal injury frequency decreased to 0.91 from 0.97 in Q1 20252 -- FRA-reportable train accident frequency increased to 0.93 from 0.38 in Q1 2025
"As we celebrate our third anniversary as CPKC, I want to recognize the dedication of our railroaders and their strong execution of our operation plan, as we remain focused on controlling what we can control in a dynamic economic environment," said Creel. "CPKC's long-term value proposition is strong, and we are confident in our ability to deliver on our full-year guidance, while continuing to offer unique solutions to our customers, and connecting this continent in ways only CPKC can."
(1) These measures have no standardized meanings prescribed by accounting
principles generally accepted in the United States of America ("GAAP")
and, therefore, may not be comparable to similar measures presented by
other companies. For information regarding non-GAAP measures including
reconciliations and forward-looking non-GAAP measures, see attached
supplementary schedule of Non-GAAP Measures.
(2) The first-quarter 2025 FRA-reportable personal injury frequency has been
restated to reflect new information available within specified periods
stipulated by the FRA but that exceed CPKC's financial reporting
timeline.
Conference Call Details
CPKC will discuss its results with the financial community in a conference call beginning at 4:30 p.m. ET (2:30 p.m. MT) on April 29, 2026.
Conference Call Access
Canada and U.S.: 800-579-2543
International: 785-424-1789
*Conference ID: CPKCQ126
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 CPKC's website at investor.cpkcr.com.
A replay of the first-quarter conference call will be available through May 6, 2026, at 800-839-5679 (Canada/U.S.) or 402-220-2566 (International).
Forward-looking information
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws in both the U.S. and Canada. Forward-looking statements include, but are 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 statements may contain statements with words or headings such as "financial expectations", "key assumptions", "anticipate", "believe", "expect", "plan", "will", "outlook", "guidance", "should" or similar words suggesting future outcomes. This news release contains forward-looking statements relating, but not limited, to statements concerning our ability to deliver on our financial guidance for 2026, strategic initiatives and investments, the success of our business, the realization of anticipated benefits and synergies of the CP-KCS combination, and the opportunities arising therefrom, our operations, priorities and plans, anticipated financial and operational performance, business prospects and demand for our services and growth opportunities.
The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company's experience and its perception of historical trends, and include, but are not limited to, expectations, estimates, projections and assumptions relating to: changes in business strategies, North American and global economic growth and conditions; commodity demand growth; sustainable industrial and agricultural production; commodity prices and interest rates; foreign exchange rates; core adjusted effective tax rates; performance of our assets and equipment; sufficiency of our budgeted capital expenditures in carrying out our business plan; geopolitical conditions, applicable laws, regulations and government policies, including, without limitation, those relating to regulation of rates, tariffs, import/export, trade, taxes, wages, labour and immigration; the availability and cost of labour, services and infrastructure; labour disruptions; the satisfaction by third parties of their obligations to the Company; and carbon markets, evolving sustainability strategies, and scientific or technological developments. Although the Company believes the expectations, estimates, projections and assumptions reflected in the forward-looking statements presented herein are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty.
Undue reliance should not be placed on forward-looking statements as actual results may differ materially from those expressed or implied by forward-looking statements. By their nature, forward-looking statements involve numerous inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including, but not limited to, the following factors: changes in business strategies and strategic opportunities; general Canadian, U.S., Mexican and global social, economic, political, 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, including competition from other rail carriers, trucking companies and maritime shippers in Canada, the U.S. and Mexico; North American and global economic growth and conditions; industry capacity; shifts in market demand; changes in commodity prices and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped by the Company; inflation; geopolitical instability; changes in laws, regulations and government policies, including, without limitation, those relating to regulation of rates, tariffs, import/export, trade, wages, labour and immigration; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; disruption in fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations; exchange rates; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions, including the imposition of any tariffs, or other changes to international trade arrangements; the effects of current and future multinational trade agreements on or other developments affecting the level of trade among Canada, the U.S. and Mexico; climate change and the market and regulatory responses to climate change; anticipated in-service dates; success of hedging activities; operational performance and reliability; customer, regulatory and other stakeholder approvals and support; regulatory and legislative decisions and actions; the adverse impact of any termination or revocation by the Mexican government of Kansas City Southern de México, S.A. de C.V.'s concession; public opinion; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches, volcanism and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; acts of terrorism, war or other acts of violence or crime or risk of such activities; insurance coverage limitations; material adverse changes in economic and industry conditions; the outbreak of a pandemic or contagious disease and the resulting effects on economic conditions; the demand environment for logistics requirements and energy prices, restrictions imposed by public health authorities or governments; fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply chains; the realization of anticipated benefits and synergies of the CP-KCS transaction and the timing thereof; the satisfaction of the conditions
imposed by the U.S. Surface Transportation Board in its March 15, 2023 decision; the successful integration of KCS into the Company; the focus of management time and attention on the CP-KCS integration and other disruptions arising from the CP-KCS integration; estimated future dividends; financial strength and flexibility; debt and equity market conditions, including the ability to access capital markets on favourable terms or at all; cost of debt and equity capital; improvement in data collection and measuring systems; industry-driven changes to methodologies; and the ability of the management of the Company to execute key priorities, including those in connection with the CP-KCS transaction. The foregoing list of factors is not exhaustive. These and other factors that could cause actual results to differ materially from those described in the forward-looking statements contained in this news release are detailed from time to time in reports filed by the Company with securities regulators in Canada and the United States, which can be accessed on SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov). Reference should be made to "Part I - Item 1A -- Risk Factors" and "Part II - Item 7 -- Management's Discussion and Analysis of Financial Condition and Results of Operations -- Forward-Looking Statements" in the Company's annual report on Form 10-K and "Part II -- Item 1A -- Risk Factors" and "Part I -- Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations -- Forward-Looking Statements" in the Company's interim reports on Form 10-Q.
The forward-looking statements contained in this news release are made as of the date hereof. Except as required by law, the Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, or the foregoing assumptions and risks affecting such forward-looking statements, whether as a result of new information, future events or otherwise.
About CPKC
With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf Coast to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing approximately 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For the three months
ended March 31
--------------------------
(in millions of Canadian dollars, except share and
per share data) 2026 2025
================================================== ============ ============
Revenues (Note 3)
Freight $ 3,628 $ 3,727
Non-freight 73 68
-------------------------------------------------- ------------ ------------
Total revenues 3,701 3,795
-------------------------------------------------- ------------ ------------
Operating expenses
Compensation and benefits 691 682
Fuel 458 481
Materials 127 124
Equipment rents 95 99
Depreciation and amortization 512 504
Purchased services and other 560 588
-------------------------------------------------- ------------ ------------
Total operating expenses 2,443 2,478
-------------------------------------------------- ------------ ------------
Operating income 1,258 1,317
Other expense 20 7
Other components of net periodic benefit recovery
(Note 11) (110) (107)
Net interest expense 228 216
Income before income tax expense 1,120 1,201
Current income tax expense 260 266
Deferred income tax expense 15 26
-------------------------------------------------- ------------ ------------
Income tax expense (Note 4) 275 292
-------------------------------------------------- ------------ ------------
Net income $ 845 $ 909
-------------------------------------------------- ------------ ------------
Net loss attributable to non-controlling interest (1) (1)
-------------------------------------------------- ------------ ------------
Net income attributable to controlling
shareholders $ 846 $ 910
================================================== ============ ============
Earnings per share (Note 5)
Basic earnings per share $ 0.94 $ 0.98
Diluted earnings per share $ 0.94 $ 0.97
Weighted-average number of shares (millions) (Note
5)
Basic 896.8 933.2
Diluted 897.3 934.3
Dividends declared per share $ 0.228 $ 0.190
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
For the three months
ended March 31
--------------------------
(in millions of Canadian dollars) 2026 2025
================================================== ============ ============
Net income $ 845 $ 909
Net gain (loss) in foreign currency translation
adjustments, net of hedging activities 538 (29)
Change in derivatives designated as cash flow
hedges (1) 1
Change in pension and post-retirement defined
benefit plans 1 3
Other comprehensive income from equity investees 1 --
-------------------------------------------------- ------------ ------------
Other comprehensive income (loss) before income
taxes 539 (25)
Income tax recovery (expense) 14 (3)
-------------------------------------------------- ------------ ------------
Other comprehensive income (loss) 553 (28)
-------------------------------------------------- ------------ ------------
Comprehensive income $ 1,398 $ 881
-------------------------------------------------- ------------ ------------
Comprehensive income (loss) attributable to
non-controlling interest 15 (2)
-------------------------------------------------- ------------ ------------
Comprehensive income attributable to controlling
shareholders $ 1,383 $ 883
================================================== ============ ============
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED BALANCE SHEETS AS AT
(unaudited)
March 31 December 31
(in millions of Canadian dollars) 2026 2025
========================================== ================ ================
Assets
Current assets
Cash and cash equivalents $ 409 $ 184
Accounts receivable, net (Note 7) 2,196 2,029
Materials and supplies 534 502
Other current assets 265 224
------------------------------------------ ---------------- ----------------
3,404 2,939
Investments 485 473
Properties 56,126 55,323
Goodwill 18,748 18,436
Intangible assets 2,939 2,911
Pension asset 5,229 5,129
Other assets 753 734
------------------------------------------ ---------------- ----------------
Total assets $ 87,684 $ 85,945
========================================== ================ ================
Liabilities and equity
Current liabilities
Accounts payable and accrued liabilities $ 2,632 $ 2,751
Long-term debt maturing within one year
(Note 8, 9) 2,437 3,240
------------------------------------------ ---------------- ----------------
5,069 5,991
Pension and other benefit liabilities 537 537
Other long-term liabilities 811 815
Long-term debt (Note 8, 9) 21,883 19,948
Deferred income taxes 11,968 11,829
------------------------------------------ ---------------- ----------------
Total liabilities 40,268 39,120
========================================== ================ ================
Shareholders' equity
Share capital 24,623 24,751
Additional paid-in capital 118 105
Accumulated other comprehensive income
(Note 6) 1,775 1,238
Retained earnings 19,937 19,783
------------------------------------------ ---------------- ----------------
46,453 45,877
Non-controlling interest 963 948
------------------------------------------ ---------------- ----------------
Total equity 47,416 46,825
------------------------------------------ ---------------- ----------------
Total liabilities and equity $ 87,684 $ 85,945
========================================== ================ ================
See Contingencies (Note 13).
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months
ended March 31
--------------------------
(in millions of Canadian dollars) 2026 2025
================================================== ============ ============
Operating activities
Net income $ 845 $ 909
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization 512 504
Deferred income tax expense 15 26
Pension recovery and funding (Note 11) (99) (95)
Settlement of Mexican taxes -- (11)
Other operating activities, net (12) (11)
Changes in non-cash working capital balances
related to operations (285) (166)
-------------------------------------------------- ------------ ------------
Net cash provided by operating activities 976 1,156
-------------------------------------------------- ------------ ------------
Investing activities
Additions to properties (664) (711)
Additions to Meridian Speedway properties (5) (12)
Proceeds from sale of properties and other assets 8 11
Other investing activities, net (11) (3)
-------------------------------------------------- ------------ ------------
Net cash used in investing activities (672) (715)
-------------------------------------------------- ------------ ------------
Financing activities
Dividends paid (204) (177)
Issuance of Common Shares 25 8
Purchase of Common Shares (Note 10) (680) (347)
Repayment of long-term debt, excluding commercial
paper (Note 8) (345) (935)
Issuance of long-term debt, excluding commercial
paper (Note 8) 1,621 1,710
Net repayment of commercial paper (Note 8) (494) (453)
Net repayment of short-term borrowings -- (285)
Other financing activities, net (4) (5)
-------------------------------------------------- ------------ ------------
Net cash used in financing activities (81) (484)
-------------------------------------------------- ------------ ------------
Effect of foreign currency fluctuations on
foreign-denominated cash and cash equivalents 2 (1)
-------------------------------------------------- ------------ ------------
Cash position
Net increase (decrease) in cash and cash
equivalents 225 (44)
Cash and cash equivalents at beginning of period 184 739
-------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period $ 409 $ 695
================================================== ============ ============
Supplemental cash flow information
Income taxes paid $ 291 $ 237
Interest paid $ 203 $ 180
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)
For the three months ended March 31
(in millions of Common Accumulated
Canadian dollars Shares Additional other Total Non-
except per share (in Share paid-in comprehensive Retained shareholders' controlling Total
data) millions) capital capital income (loss) earnings equity interest equity
==================== ========= ======== ========== ================ ========= ============== =========== ========
Balance as at January
1, 2026 897.6 $ 24,751 $ 105 $ 1,238 $ 19,783 $ 45,877 $ 948 $ 46,825
Net Income (loss) -- -- -- -- 846 846 (1) 845
Other comprehensive
income (Note 6) -- -- -- 537 -- 537 16 553
Dividends declared
($0.228 per share) -- -- -- -- (204) (204) -- (204)
Effect of
stock-based
compensation
expense -- -- 19 -- -- 19 -- 19
Common Shares
repurchased (Note
10) (5.4) (158) -- -- (488) (646) -- (646)
Common Shares issued
under stock option
plan 0.4 6 (6) -- -- -- -- --
Cash received upon
options exercised -- 24 -- -- -- 24 -- 24
Balance as at March
31, 2026 892.6 $ 24,623 $ 118 $ 1,775 $ 19,937 $ 46,453 $ 963 $ 47,416
===================== ========= ======== ========== ================ ========= ============== =========== ========
Balance as at January
1, 2025 933.5 $ 25,689 $ 94 $ 2,680 $ 19,429 $ 47,892 $ 998 $ 48,890
Net Income (loss) -- -- -- -- 910 910 (1) 909
Contribution from
non-controlling
interest -- -- -- -- -- -- 1 1
Other comprehensive
loss (Note 6) -- -- -- (27) -- (27) (1) (28)
Dividends declared
($0.190 per share) -- -- -- -- (177) (177) -- (177)
Effect of
stock-based
compensation
expense -- -- 16 -- -- 16 -- 16
Common Shares
repurchased (Note
10) (3.3) (96) -- -- (279) (375) -- (375)
Common Shares issued
under stock option
plan 0.2 10 (3) -- -- 7 -- 7
Balance as at March
31, 2025 930.4 $ 25,603 $ 107 $ 2,653 $ 19,883 $ 48,246 $ 997 $ 49,243
--------------------- --------- -------- ---------- ---------------- --------- -------------- ----------- --------
See Notes to Interim Consolidated Financial Statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(unaudited)
1 Description of business and basis of presentation
Canadian Pacific Kansas City Limited ("CPKC" or the "Company") owns and operates a transcontinental freight railway spanning Canada, the United States ("U.S."), and Mexico. CPKC provides rail and intermodal transportation services over a network of approximately 20,000 miles, serving principal business centres across Canada, the U.S., and Mexico. The Company transports bulk commodities, merchandise freight, and intermodal traffic. CPKC's Common Shares ("Common Shares") trade on the Toronto Stock Exchange ("TSX") and New York Stock Exchange under the symbol "CP".
These unaudited interim consolidated financial statements ("Interim Consolidated Financial Statements") have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). They do not include all of the information required for a complete set of annual financial statements prepared in accordance with GAAP and should be read in conjunction with the Company's audited consolidated financial statements as at and for the year ended December 31, 2025 ("last annual consolidated financial statements"). Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and results of operations since the last annual consolidated financial statements. These Interim Consolidated Financial Statements have been prepared using the same significant accounting policies used in the last annual consolidated financial statements, except for the adoption of new accounting standards (see Note 2). Amounts are stated in Canadian dollars unless otherwise noted.
The Company's operations and income for interim periods can be affected by seasonal fluctuations such as changes in customer demand and weather conditions, and may not be indicative of annual results.
Operating segment
The Company only has one operating segment: rail transportation. The Company's measure of segment profit is reported on the Interim Consolidated Statements of Income as "Net income attributable to controlling shareholders". CPKC's significant segment expenses are consistent with the expenses presented on the Interim Consolidated Statements of Income.
2 Accounting changes
Accounting Standards Update ("ASU") 2025-05 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets
On January 1, 2026, the Company prospectively adopted ASU 2025-05, which simplifies estimating credit losses on current accounts receivable and current contract assets. Under the new guidance, CPKC elected to adopt a practical expedient allowing the Company to assume that conditions existing as of the balance sheet date will remain unchanged over the remaining life of the asset when developing reasonable and supportable forecasts for estimating expected credit losses. Adoption of ASU 2025-05 did not have a material impact on the Company's Interim Consolidated Financial Statements.
Other accounting standards that became effective during the three months ended March 31, 2026, did not have a material impact on the Company's Interim Consolidated Financial Statements. Recently issued accounting pronouncements are not expected to have a material impact on the Company's financial position or results of operations upon adoption.
3 Revenues
The following table presents disaggregated information about the Company's revenues from contracts with customers by major source:
For the three months
ended March 31
----------------------------
(in millions of Canadian dollars) 2026 2025
======================================== ============= =============
Grain $ 871 $ 788
Coal 226 257
Potash 149 156
Fertilizers and sulphur 112 114
Forest products 181 217
Energy, chemicals and plastics 700 758
Metals, minerals and consumer products 438 448
Automotive 296 315
Intermodal 655 674
---------------------------------------- ------------- -------------
Total freight revenues 3,628 3,727
Non-freight excluding leasing revenues 45 41
---------------------------------------- ------------- -------------
Revenues from contracts with customers 3,673 3,768
Leasing revenues 28 27
---------------------------------------- ------------- -------------
Total revenues $ 3,701 $ 3,795
======================================== ============= =============
4 Income taxes
The effective income tax rate including discrete items for the three months ended March 31, 2026 was 24.60%, compared to 24.32% for the same period in 2025.
For the three months ended March 31, 2026, the effective income tax rate was 24.75%, excluding the discrete items of amortization of the fair value adjustments associated with purchase accounting of $93 million and acquisition-related costs of $9 million, both related to the Kansas City Southern ("KCS") acquisition, and advisory costs related to the analysis and advocacy in connection with the U.S. Surface Transportation Board's review of the proposed merger between Union Pacific Corporation and Norfolk Southern Corporation of $13 million.
For the three months ended March 31, 2025, the effective income tax rate was 24.50%, excluding the discrete items of amortization of the fair value adjustments associated with purchase accounting of $94 million and acquisition-related costs of $20 million, both related to the KCS acquisition.
2014 Tax Assessment
Canadian Pacific Kansas City Mexico's ("CPKCM") 2014 Tax Assessment is currently in litigation (see Note 13).
5 Earnings per share
For the three months
ended March 31
----------------------------
(in millions, except per share data) 2026 2025
================================================ ============= =============
Net income attributable to controlling
shareholders $ 846 $ 910
------------------------------------------------ ------------- -------------
Weighted-average basic shares outstanding 896.8 933.2
Dilutive effect of stock options 0.5 1.1
------------------------------------------------ ------------- -------------
Weighted-average diluted shares outstanding 897.3 934.3
------------------------------------------------ ------------- -------------
Basic earnings per share $ 0.94 $ 0.98
------------------------------------------------ ------------- -------------
Diluted earnings per share $ 0.94 $ 0.97
================================================ ============= =============
For the three months ended March 31, 2026, there were 1.3 million stock options excluded from the computation of diluted earnings per share because their effects were not dilutive (three months ended March 31, 2025 - 1.5 million).
6 Changes in Accumulated other comprehensive income ("AOCI") by component
Changes in AOCI attributable to controlling shareholders, net of tax, by component are as follows:
For the three months ended March 31
---------------------------------------------------------------------------------------------
Foreign currency Pension and post- Equity
(in millions of net of hedging retirement defined accounted
Canadian dollars) activities Derivatives benefit plans investments Total
================== =================== =============== ===================== =================== ===========
Opening balance,
January 1, 2026 $ 1,829 $ 9 $ (602) $ 2 $ 1,238
Other
comprehensive
income before
reclassifications 536 -- -- 1 537
Amounts
reclassified from
AOCI -- (1) 1 -- --
------------------ ------------------- --------------- --------------------- ------------------- -----------
Net other
comprehensive
income (loss) 536 (1) 1 1 537
------------------ ------------------- --------------- --------------------- ------------------- -----------
Balance as at
March 31, 2026 $ 2,365 $ 8 $ (601) $ 3 $ 1,775
================== =================== =============== ===================== =================== ===========
Opening balance,
January 1, 2025 $ 3,413 $ 10 $ (738) $ (5) $ 2,680
Other
comprehensive
loss before
reclassifications (28) -- -- -- (28)
Amounts
reclassified from
AOCI -- -- 1 -- 1 ------------------ ------------------- --------------- --------------------- ------------------- ----------- Net other comprehensive (loss) income (28) -- 1 -- (27) ------------------ ------------------- --------------- --------------------- ------------------- ----------- Balance as at March 31, 2025 $ 3,385 $ 10 $ (737) $ (5) $ 2,653 ================== =================== =============== ===================== =================== ===========
7 Accounts receivable, net
(in millions of Canadian dollars) As at March 31, 2026 As at December 31, 2025 ================ ============================= ============================= Total accounts receivable $ 2,306 $ 2,146 Allowance for credit losses (110) (117) ---------------- ----------------------------- ----------------------------- Total accounts receivable, net $ 2,196 $ 2,029 ================ ============================= =============================
8 Debt
During the three months ended March 31, 2026, the Company repaid, at maturity, U.S. $250 million ($339 million) 3.70% 10.5-year notes.
Issuance of long-term debt
During the three months ended March 31, 2026, the Company issued U.S. $600 million ($821 million) 4.00% 3-year unsecured notes due March 15, 2029 for net proceeds of U.S. $597 million ($816 million), and U.S. $600 million ($821 million) 5.50% 30-year unsecured notes due March 15, 2056 for net proceeds of U.S. $589 million ($805 million). The issued notes pay interest semi-annually and carry a negative pledge.
Credit facility
The Company's revolving credit facility agreement (the "facility") consists of a two-year U.S. $1.1 billion tranche maturing June 25, 2027, and a five-year U.S. $1.1 billion tranche maturing June 25, 2030. As at March 31, 2026, the facility was undrawn (December 31, 2025 - undrawn). The Company presents draws and repayments on the facility in the Interim Consolidated Statements of Cash Flows on a net basis.
Commercial paper program
Effective March 27, 2026, the Company increased the maximum size of its commercial paper program through the addition of a Canadian dollar commercial paper program which allows the Company to borrow Canadian dollars in the form of unsecured promissory notes. This increased the maximum amount the Company can borrow under the program from U.S. $1.5 billion to U.S. $2.2 billion, or the Canadian dollar equivalent, on a combined basis. This commercial paper program is backed by the U.S. $2.2 billion facility. As at March 31, 2026, the Company had total commercial paper borrowings outstanding of U.S. $485 million ($676 million) recognized in "Long-term debt maturing within one year" on the Company's Interim Consolidated Balance Sheets (December 31, 2025 - U.S. $850 million ($1,165 million)). The weighted-average interest rate on these borrowings as at March 31, 2026 was 4.04% (December 31, 2025 - 4.02%). The Company presents issuances and repayments of commercial paper, all of which have a maturity of less than 90 days, in the Interim Consolidated Statements of Cash Flows on a net basis.
9 Financial instruments
A. Fair values of financial instruments
The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market.
The Company's short-term financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term borrowings, including commercial paper and term loans. The carrying value of short-term financial instruments approximate their fair value.
The carrying value of the Company's debt does not approximate its fair value. The estimated fair value has been determined based on market information, where available, or by discounting future payments of principal and interest at estimated interest rates expected to be available to the Company at the balance sheet date. All measurements are classified as Level 2. The Company's long-term debt, including current maturities, with a carrying value of $23,644 million as at March 31, 2026 (December 31, 2025 - $22,023 million), had a fair value of $22,089 million (December 31, 2025 - $20,740 million).
B. Financial risk management
Foreign exchange ("FX") management
Net investment hedge
The majority of the Company's U.S. dollar-denominated long-term debt, finance lease obligations, and operating lease liabilities have been designated as a hedge of the Company's net investment in foreign subsidiaries. This designation has the effect of mitigating volatility on Net income by offsetting long-term FX gains and losses on U.S. dollar-denominated long-term debt and gains and losses on its net investment. The effect of the Company's net investment hedge for the three months ended March 31, 2026 was an unrealized FX loss of $123 million (three months ended March 31, 2025 - unrealized FX gain of $6 million) recognized in "Other comprehensive income (loss)".
10 Share repurchases
On January 28, 2026, the Company announced a normal course issuer bid ("NCIB"), commencing February 2, 2026, to purchase up to 44.9 million Common Shares in the open market for cancellation on or before February 1, 2027.
On February 27, 2025, the Company announced a NCIB, commencing March 3, 2025, to purchase up to 37.3 million Common Shares in the open market for cancellation on or before March 2, 2026. By October 29, 2025, the Company had purchased and cancelled all 37.3 million Common Shares authorized to be purchased under the NCIB.
All purchases were made in accordance with the respective NCIB at prevailing market prices plus brokerage fees, with consideration allocated to "Share capital" up to the average carrying amount of the Common Shares and any excess allocated to "Retained earnings".
In accordance with Canadian tax legislation, the Company has accrued for a 2% tax on the fair market value of Common Shares repurchased (net of qualifying issuances of equity) as a direct cost of Common Share repurchases recognized in Shareholders' equity. During the three months ended March 31, 2026, the Company has accrued a liability of $11 million (three months ended March 31, 2025 - $7 million), for the tax due on the net Common Share repurchases made, payable within the first quarter of the following year.
The following table provides activities under the share repurchase program:
For the three months ended March 31
-------------------------------------
2026 2025
======================================= ================== =================
Number of Common Shares repurchased(1) 5,735,907 3,480,658
Weighted-average price per Common
Share(2) $112.62 $107.68
Amount of repurchase (in millions of
Canadian dollars)(1)(2) $646 $375
======================================= ================== =================
(1) Includes Common Shares repurchased but not yet cancelled at end of
period.
(2) Includes brokerage fees and applicable tax on Common Share repurchases.
11 Pension and other benefits
During the three months ended March 31, 2026, the Company made contributions to its defined benefit pension plans of $3 million (three months ended March 31, 2025 - $4 million).
Net periodic benefit (recovery) cost for defined benefit pension plans and other benefits included the following components:
For the three months ended March 31
----------------------------------------------------------------------------------------
Pensions Other benefits Total
(in millions of
Canadian
dollars) 2026 2025 2026 2025 2026 2025
================ ============= ============= ============= ============= ============= =============
Current service
cost $ 19 $ 21 $ 3 $ 3 $ 22 $ 24
Other components
of net periodic
benefit
(recovery)
cost:
Interest cost
on benefit
obligation 118 117 5 5 123 122
Expected return
on plan
assets (234) (232) -- -- (234) (232)
Recognized net
actuarial
(gain) loss (1) 2 -- -- (1) 2
Amortization of
prior service
costs 2 1 -- -- 2 1
---------------- ------------- ------------- ------------- ------------- ------------- -------------
Total other
components of
net periodic
benefit
(recovery)
cost (115) (112) 5 5 (110) (107) ---------------- ------------- ------------- ------------- ------------- ------------- ------------- Net periodic benefit (recovery) cost $ (96) $ (91) $ 8 $ 8 $ (88) $ (83) ================ ============= ============= ============= ============= ============= =============
12 Stock-based compensation
As at March 31, 2026, the Company had several stock-based compensation plans including stock option plans, various cash-settled liability plans, and an employee share purchase plan. These plans resulted in an expense for the three months ended March 31, 2026 of $49 million (three months ended March 31, 2025 - expense of $34 million).
Stock options plan
In the three months ended March 31, 2026, under the Company's stock options plan, the Company issued 1,189,411 options at the weighted-average price of $104.69 per share, based on the closing price of the Company's Common Shares on the TSX at the grant date. Pursuant to the employee plan, these options may be exercised upon vesting, which is between 12 months and 48 months after the grant date, and will expire seven years from the grant date.
Under the fair value method, the fair value of the stock options at the grant date was approximately $30 million.
Performance share unit plans
During the three months ended March 31, 2026, the Company issued 629,722 Performance Share Units ("PSUs") with a grant date fair value of $66 million and 20,386 Performance Deferred Share Units ("PDSUs") with a grant date fair value, including the fair value of expected future matching units, of $3 million. PSUs and PDSUs attract dividend equivalents in the form of additional units based on dividends paid on the Company's Common Shares, and vest three to four years after the grant date, contingent on the Company's performance ("performance factor"). Vested PSUs are settled in cash. Vested PDSUs are converted into Deferred Share Units ("DSUs") pursuant to the DSU plan, are eligible for a 25% Company match if the employee has not exceeded their Common Share ownership requirements, and are settled in cash only when the holder ceases their employment with the Company.
The performance period for all PSUs and all PDSUs granted in the three months ended March 31, 2026 is January 1, 2026 to December 31, 2028 and the performance factors are Free Cash Flow ("FCF") and Total Shareholder Return ("TSR"), compared to the Standard and Poor's ("S&P")/TSX 60 Index, and TSR compared to the S&P 500 Industrials Index.
The performance period for all of the 544,175 PSUs and 26,333 PDSUs granted in 2023 was January 1, 2023 to December 31, 2025, and the performance factors were FCF, Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA"), TSR compared to the S&P/TSX 60 Index, TSR compared to the S&P 500 Industrials Index, and TSR compared to Class I railways. The resulting payout was 91% of the outstanding units multiplied by the Company's average Common Share price calculated based on the last 30 trading days preceding December 31, 2025. In the first quarter of 2026, payouts were $42 million on 461,766 PSUs, including dividends reinvested. The 26,555 PDSUs that vested on December 31, 2025, with a fair value of $3 million, including dividends reinvested and matching units, will be paid out in future reporting periods pursuant to the DSU plan (as described above).
13 Contingencies
Litigation
In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damage to property. The Company maintains provisions it considers to be adequate for such actions. While the final outcome with respect to actions outstanding or pending as at March 31, 2026 cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Company's business, financial position, results of operations, or liquidity. However, an unexpected adverse resolution of one or more of these legal actions could have a material adverse effect on the Company's business, financial position, results of operations, or liquidity in a particular quarter or fiscal year.
Legal proceedings related to Lac-Mégantic rail accident
On July 6, 2013, a train carrying petroleum crude oil operated by Montréal Maine and Atlantic Railway ("MMAR") or a subsidiary, Montréal Maine & Atlantic Canada Co. ("MMAC" and collectively the "MMA Group"), derailed in Lac-Mégantic, Québec. The derailment occurred on a section of railway owned and operated by the MMA Group and while the MMA Group exclusively controlled the train.
Following the derailment, MMAC sought court protection in Canada under the Companies' Creditors Arrangement Act and MMAR filed for bankruptcy in the U.S. Plans of arrangement were approved in both Canada and the U.S. (the "Plans"), providing for the distribution of approximately $440 million amongst those claiming derailment damages.
A number of legal proceedings, set out below, were commenced in Canada and the U.S. against the Company and others:
1. Québec's Minister of Sustainable Development, Environment, Wildlife
and Parks ordered various parties, including the Company, to remediate
the derailment site (the "Cleanup Order") and served the Company with a
Notice of Claim for $95 million for those costs. The Company appealed the
Cleanup Order and contested the Notice of Claim with the Administrative
Tribunal of Québec. These proceedings are stayed pending
determination of the Attorney General of Québec ("AGQ") action
(paragraph 2 below).
2. The AGQ sued the Company in the Québec Superior Court claiming $409
million in damages, which was further amended and reduced to $231 million
(the "AGQ Action"). The AGQ Action alleges that: (i) the Company was
responsible for the petroleum crude oil from its point of origin until
its delivery to Irving Oil Ltd.; and (ii) the Company is vicariously
liable for the acts and omissions of the MMA Group.
3. A class action in the Québec Superior Court on behalf of persons and
entities residing in, owning or leasing property in, operating a business
in, or physically present in Lac-Mégantic at the time of the
derailment was certified against the Company on May 8, 2015 (the "Class
Action"). Other defendants including MMAC and Mr. Thomas Harding
("Harding") were added to the Class Action on January 25, 2017. On
November 28, 2019, the plaintiffs' motion to discontinue their action
against Harding was granted. The Class Action seeks unquantified damages,
including for wrongful death, personal injury, property damage, and
economic loss.
4. Eight subrogated insurers sued the Company in the Québec Superior
Court claiming approximately $16 million in damages, which was amended
and reduced to approximately $14 million (the "Promutuel Action"), and
two additional subrogated insurers sued the Company claiming
approximately $3 million in damages (the "Royal Action"). Both actions
contain similar allegations as the AGQ Action. The actions do not
identify the subrogated parties. As such, the extent of any overlap
between the damages claimed in these actions and under the Plans is
unclear. The Royal Action is stayed pending determination of the
consolidated proceedings described below.On December 11, 2017, the AGQ
Action, the Class Action and the Promutuel Action were consolidated. The
joint liability trial of these consolidated claims commenced on September
21, 2021 with oral arguments ending on June 15, 2022. The Québec
Superior Court issued a decision on December 14, 2022 dismissing all
claims against the Company, finding that the Company's actions were not
the direct and immediate cause of the accident and the damages suffered
by the plaintiffs. All three plaintiffs filed a declaration of appeal on
January 13, 2023. The appeal was heard October 7 to 10, 2024 by the
Québec Court of Appeal. On February 26, 2025, the Québec Court
of Appeal issued its unanimous decision upholding the trial decision and
dismissing the appeals in their entirety. On April 28, 2025, all three
plaintiffs filed applications for leave to appeal to the Supreme Court of
Canada. On May 30, 2025, the Company filed its response to the
plaintiffs' leave applications. A damages trial will follow after the
disposition of all appeals, if necessary.
5. Forty-eight plaintiffs (all individual claims joined in one action) sued
the Company, MMAC, and Harding in the Québec Superior Court claiming
approximately $5 million in damages for economic loss and pain and
suffering, and asserting similar allegations as in the Class Action and
the AGQ Action. The majority of the plaintiffs opted-out of the Class
Action and all but two are also plaintiffs in litigation against the
Company, described in paragraph 7 below. This action is stayed pending
determination of the consolidated claims described above.
6. The MMAR U.S. bankruptcy estate representative commenced an action
against the Company in November 2014 in the Maine Bankruptcy Court
claiming that the Company failed to abide by certain regulations and
seeking approximately U.S. $30 million in damages for MMAR's loss in
business value according to an expert report filed by the bankruptcy
estate. This action asserts that the Company knew or ought to have known
that the shipper misclassified the petroleum crude oil and therefore
should have refused to transport it. Summary judgement motion was argued
and taken under advisement on June 9, 2022. On May 23, 2023, the case
management judge stayed the proceedings pending the outcome of the appeal
in the Canadian consolidated claims. On April 18, 2025, the Court lifted
the stay and ordered briefing concerning the Company's request for
summary judgement based on the preclusive effect of matters decided in
other Lac-Mégantic cases. The Court would address that basis for
summary judgement first, then would address other arguments for summary
judgement, if necessary, afterwards. On October 8, 2025, the Court heard
the Company's summary judgement motion. On April 21, 2026, the Court
granted CPKC's motion for summary judgement, dismissing the bankruptcy
estate representative's claims.
7. The class and mass tort action commenced against the Company in June 2015
in Texas (on behalf of Lac-Mégantic residents and wrongful death
representatives) and the wrongful death and personal injury actions
commenced against the Company in June 2015 in Illinois and Maine, were
all transferred and consolidated in Federal District Court in Maine (the
"Maine Actions"). The Maine Actions allege that the Company negligently
misclassified and improperly packaged the petroleum crude oil. On the
Company's motion, the Maine Actions were dismissed. The plaintiffs
appealed the dismissal decision to the U.S. First Circuit Court of
Appeals, which dismissed the plaintiffs' appeal on June 2, 2021. The
plaintiffs further petitioned the U.S. First Circuit Court of Appeals for
a rehearing, which was denied on September 8, 2021. On January 24, 2022,
the plaintiffs further appealed to the U.S. Supreme Court on two
bankruptcy procedural grounds. On May 31, 2022, the U.S. Supreme Court
denied the petition, thereby rejecting the plaintiffs' appeal.
8. The trustee for the wrongful death trust commenced Carmack Amendment
claims against the Company in North Dakota Federal Court, seeking to
recover approximately U.S. $6 million for damaged rail cars and lost
crude oil and reimbursement for the settlement paid by the consignor and
the consignee under the Plans (alleged to be U.S. $110 million and U.S.
$60 million, respectively). The Court issued an Order on August 6, 2020
granting and denying in parts the parties' summary judgement motions
which has been reviewed and confirmed following motions by the parties
for clarification and reconsideration. Final briefs of dispositive
motions for summary judgement and for reconsideration on tariff
applicability were submitted on September 30, 2022. On January 20, 2023,
the Court granted in part the Company's summary judgement motion by
dismissing all claims for recovery of settlement payments but leaving for
trial the determination of the value of the lost crude oil. It also
dismissed the Company's motion for reconsideration on tariff
applicability. The remaining issues of the value of the lost crude oil
and applicability of judgement reduction provisions did not require trial,
and were fully briefed in 2024. On January 5, 2024, the Court issued its
decision finding that the Company was liable for approximately U.S. $3.9
million plus pre-judgement interest, but declined to determine whether
judgement reduction provisions were applicable, referring the parties to
a court in Maine on that issue. On January 18, 2024, the Company filed a
motion for reconsideration for the Court to apply the judgement reduction
provisions. On January 19, 2024, the trustee for the wrongful death trust
filed a Notice of Appeal for the January 5, 2024 decision, as well as
prior decisions. On February 23, 2024, the Court denied the Company's
motion for reconsideration, again referring the parties to a court in
Maine to apply the judgement reduction provision. On March 6, 2024, the
Company filed its notice of appeal of this latest ruling, as well as
prior decisions. The appeal was heard on March 18, 2025. On July 3, 2025,
the U.S. Eighth Circuit Court of Appeals unanimously allowed the
Company's appeal, reversing the district court decision and remanding the
matter back to the district court for a complete reduction of the
judgement against the Company. On July 17, 2025, the trustee for the
wrongful death trust petitioned the U.S. Eighth Circuit Court of Appeals
for a rehearing. On August 7, 2025, the U.S. Eighth Circuit Court of
Appeals denied the petition for a rehearing. The deadline for any
petition to the U.S. Supreme Court for certiorari passed in November 2025
and no petition was filed.
At this stage of the proceedings, any potential responsibility and the quantum of potential losses cannot be determined. Nevertheless, the Company denies liability and is vigorously defending these proceedings.
Court decision related to Remington Development Corporation legal claim
On October 20, 2022, the Court of King's Bench of Alberta issued a decision in a claim brought by Remington Development Corporation ("Remington") against the Company and the Province of Alberta ("Alberta") with respect to an alleged breach of contract by the Company in relation to the sale of certain properties in Calgary. In its decision, the Court found the Company had breached its contract with Remington and Alberta had induced the contract breach. The Court found the Company and Alberta liable for damages of approximately $164 million plus interest and costs, and subject to an adjustment to the acquisition value of the property. In a further decision on August 30, 2023, the Court determined that adjustment and set the total damages at $165 million plus interest and costs. On October 20, 2023, the Court determined the costs payable to Remington, however, the Court had not provided any indication of how the damages, which were estimated to total approximately $232 million as at June 30, 2025, should be apportioned between the Company and Alberta. On November 17, 2022, the Company filed an appeal of the Court's decision. On April 11, 2024, the Court of Appeal of Alberta ("ABCA") stayed the judgement pending the outcome of the appeal. On September 10, 2024, the ABCA heard the Company's appeal and reserved its decision. On July 2, 2025, the ABCA unanimously allowed the Company's appeal and set aside the trial judgement and costs order. A majority of the ABCA ordered a new trial in the Court of King's Bench. On September 26, 2025, Remington sought leave to appeal the ABCA's decision to the Supreme Court of Canada.
2014 tax assessment
On April 13, 2022, the Servicio de Administracion Tributaria ("SAT") delivered an audit assessment of CPKCM's 2014 tax returns (the "2014 Assessment"). As at March 31, 2026, the 2014 Assessment, including inflation, interest, and penalties was Mexican pesos ("Ps.") 6,686 million ($518 million).
On July 7, 2022, CPKCM filed an administrative appeal (the "Administrative Appeal") before the SAT, seeking to revoke the 2014 Assessment on the basis that the SAT's notification of the 2014 Assessment through the tax mailbox was not legal, because it was in violation of a tax mailbox injunction previously granted to CPKCM on March 19, 2015. On September 26, 2022, the SAT dismissed the Administrative Appeal, on the basis that it was not a timely submission (the "Administrative Appeal Resolution").
On October 10, 2022, CPKCM submitted an annulment lawsuit (the "Annulment Lawsuit") before the Federal Administrative Court (the "Administrative Court"), challenging the 2014 Assessment, its notification, and the Administrative Appeal Resolution. On April 24, 2024, the Administrative Court resolved the Annulment Lawsuit, confirming the Administrative Appeal Resolution and the 2014 Assessment (the "Administrative Court Resolution").
On June 21, 2024, CPKCM challenged the Administrative Court Resolution by submitting an Amparo appeal (Demanda de Amparo) before the Collegiate Circuit Courts (Tribunales Colegiados de Circuito). On June 4, 2025, the Twenty Third Collegiate Court of the First Circuit (the "Circuit Court") unanimously granted CPKCM's Amparo petition, vacating the prior decision and sending the matter back to the Administrative Court with an order to issue a new resolution addressing CPKCM's arguments that were presented in the Annulment Lawsuit. On June 25, 2025, the Administrative Court resolved the Annulment Lawsuit unfavourably to CPKCM (the "2025 Administrative Court Resolution"). On August 19, 2025, CPKCM submitted a new Amparo appeal challenging the 2025 Administrative Court Resolution. On September 8, 2025, the Circuit Court admitted the Amparo appeal submitted by CPKCM. CPKCM expects to prevail based on the technical merits of its case.
On August 20, 2025, derived from the submission of the Amparo appeal, the Administrative Court issued a resolution granting an injunction against the enforcement and collection of the 2014 Assessment, as long as the 2014 Assessment is duly guaranteed.
Environmental liabilities
Environmental remediation accruals, recognized on an undiscounted basis unless a reliable, determinable estimate as to an amount and timing of costs can be established, cover site-specific remediation programs.
The accruals for environmental remediation represent the Company's best estimate of its probable future obligation and include both asserted and unasserted claims, without reduction for anticipated recoveries from third parties. Although the recognized accruals include the Company's best estimate of all probable costs, the Company's total environmental remediation costs cannot be predicted with certainty. Accruals for environmental remediation may change from time to time as new information about previously untested sites becomes known, and as environmental laws and regulations evolve and advances are made in environmental remediation technology. The accruals may also vary as the courts decide legal proceedings against outside parties responsible for contamination. These potential charges, which cannot be quantified at this time, may materially affect income in the particular period in which a charge is recognized. Costs related to existing, but as yet unknown, or future contamination will be accrued in the period in which they become probable and reasonably estimable.
The expense recognized in "Purchased services and other" in the Company's Interim Consolidated Statements of Income for the three months ended March 31, 2026 was $nil (three months ended March 31, 2025 - $2 million). Provisions for environmental remediation costs are recognized in the Company's Interim Consolidated Balance Sheets in "Other long-term liabilities", except for the current portion, which is recognized in "Accounts payable and accrued liabilities". The total amount provided as at March 31, 2026 was $243 million (December 31, 2025 - $241 million). Payments are expected to be made over 10 years through 2035.
Summary of Rail Data
First Quarter
Financial (in millions, except per Total %
share data) 2026 2025 Change Change
-------------------------------------- -------- -------- --------- -------
Revenues
--------------------------------------
Freight $ 3,628 $ 3,727 $ (99) (3)
Non-freight 73 68 5 7
-------- -------- ---------
Total revenues 3,701 3,795 (94) (2)
-------- -------- ---------
Operating expenses
--------------------------------------
Compensation and benefits 691 682 9 1
Fuel 458 481 (23) (5)
Materials 127 124 3 2
Equipment rents 95 99 (4) (4)
Depreciation and amortization 512 504 8 2
Purchased services and other 560 588 (28) (5)
-------- -------- ---------
Total operating expenses 2,443 2,478 (35) (1)
-------- -------- ---------
Operating income 1,258 1,317 (59) (4)
Other expense 20 7 13 186
Other components of net periodic
benefit recovery (110) (107) (3) 3
Net interest expense 228 216 12 6
Income before income tax expense 1,120 1,201 (81) (7)
Current income tax expense 260 266 (6) (2)
Deferred income tax expense 15 26 (11) (42)
-------- -------- ---------
Income tax expense 275 292 (17) (6)
-------- -------- ---------
Net income $ 845 $ 909 $ (64) (7)
-------- -------- ---------
Net loss attributable to
non-controlling interest (1) (1) -- --
-------- -------- ---------
Net income attributable to controlling
shareholders $ 846 $ 910 $ (64) (7)
-------- -------- ---------
Operating ratio (%) 66.0 65.3 0.7 70 bps
Basic earnings per share $ 0.94 $ 0.98 $ (0.04) (4)
-------- -------- ---------
Diluted earnings per share $ 0.94 $ 0.97 $ (0.03) (3)
-------- -------- ---------
Shares Outstanding
--------------------------------------
Weighted average number of basic
shares outstanding (millions) 896.8 933.2 (36.4) (4)
Weighted average number of diluted
shares outstanding (millions) 897.3 934.3 (37.0) (4)
Foreign Exchange
--------------------------------------
Average foreign exchange rate
(U.S.$/Canadian$) 0.73 0.70 0.03 4
Average foreign exchange rate
(Canadian$/U.S.$) 1.37 1.44 (0.07) (5)
Average foreign exchange rate
(Mexican peso/Canadian$) 12.79 14.23 (1.44) (10)
Average foreign exchange rate
(Canadian$/Mexican peso) 0.0782 0.0703 0.0079 11
Summary of Rail Data (Continued)
First Quarter
------------------------------------------------
FX
Adjusted
Total % %
Commodity Data 2026 2025 Change Change Change(1)
---------------------------- ------- ------- --------- ------- ----------
Freight Revenues (millions)
- Grain $ 871 $ 788 $ 83 11 14
- Coal 226 257 (31) (12) (11)
- Potash 149 156 (7) (4) (2)
- Fertilizers and sulphur 112 114 (2) (2) 2
- Forest products 181 217 (36) (17) (14)
- Energy, chemicals and
plastics 700 758 (58) (8) (5)
- Metals, minerals and
consumer products 438 448 (10) (2) (1)
- Automotive 296 315 (19) (6) (6)
- Intermodal 655 674 (19) (3) (1)
Total Freight Revenues $ 3,628 $ 3,727 $ (99) (3) --
------- ------- ---------
Freight Revenue per Revenue
Ton-Mile ("RTM") (cents)
- Grain 5.19 5.27 (0.08) (2) 1
- Coal 4.36 4.44 (0.08) (2) (1)
- Potash 3.30 3.53 (0.23) (7) (4)
- Fertilizers and sulphur 8.06 7.99 0.07 1 5
- Forest products 8.59 9.26 (0.67) (7) (4)
- Energy, chemicals and
plastics 7.63 7.81 (0.18) (2) 1
- Metals, minerals and
consumer products 9.12 9.57 (0.45) (5) (3)
- Automotive 23.47 25.55 (2.08) (8) (8)
- Intermodal 6.89 7.33 (0.44) (6) (4)
Total Freight Revenue per
RTM 6.63 6.94 (0.31) (4) (2)
------- ------- ---------
Freight Revenue per Carload
- Grain $ 5,842 $ 5,894 $ (52) (1) 2
- Coal 2,064 2,171 (107) (5) (4)
- Potash 3,548 3,920 (372) (9) (7)
- Fertilizers and sulphur 6,328 6,404 (76) (1) 2
- Forest products 5,934 6,236 (302) (5) (2)
- Energy, chemicals and
plastics 5,185 5,319 (134) (3) 1
- Metals, minerals and
consumer products 3,747 3,601 146 4 5
- Automotive 5,725 5,450 275 5 5
- Intermodal 1,519 1,548 (29) (2) --
Total Freight Revenue per
Carload $ 3,348 $ 3,374 $ (26) (1) 1
------- ------- ---------
(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)
First Quarter
----------------------------------
Total %
Commodity Data 2026 2025 Change Change
------------------------------------------ ------- ------- ------- -------
Millions of RTM
- Grain 16,785 14,942 1,843 12
- Coal 5,184 5,783 (599) (10)
- Potash 4,511 4,419 92 2
- Fertilizers and sulphur 1,389 1,427 (38) (3)
- Forest products 2,106 2,343 (237) (10)
- Energy, chemicals and plastics 9,177 9,701 (524) (5)
- Metals, minerals and consumer products 4,803 4,681 122 3
- Automotive 1,261 1,233 28 2
- Intermodal 9,509 9,195 314 3
Total RTMs 54,725 53,724 1,001 2
------- ------- -------
Carloads (thousands)
- Grain 149.1 133.7 15.4 12
- Coal 109.5 118.4 (8.9) (8)
- Potash 42.0 39.8 2.2 6
- Fertilizers and sulphur 17.7 17.8 (0.1) (1)
- Forest products 30.5 34.8 (4.3) (12)
- Energy, chemicals and plastics 135.0 142.5 (7.5) (5)
- Metals, minerals and consumer products 116.9 124.4 (7.5) (6)
- Automotive 51.7 57.8 (6.1) (11)
- Intermodal 431.1 435.4 (4.3) (1)
Total Carloads 1,083.5 1,104.6 (21.1) (2)
------- ------- -------
First Quarter
------------------------------------------------
FX
Adjusted
Total % %
2026 2025 Change Change Change(1)
------- ------- --------- ------- ----------
Operating Expenses
(millions)
Compensation and benefits $ 691 $ 682 $ 9 1 2
Fuel 458 481 (23) (5) (4)
Materials 127 124 3 2 3
Equipment rents 95 99 (4) (4) --
Depreciation and
amortization 512 504 8 2 4
Purchased services and
other 560 588 (28) (5) (3)
Total Operating Expenses $ 2,443 $ 2,478 $ (35) (1) --
------- ------- ---------
(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)
First Quarter
Total %
2026 2025 Change Change
------- ------ ------- -------
Operations Performance
-------------------------------------------
Gross ton-miles ("GTMs") (millions) 100,625 98,412 2,213 2
Train miles (thousands) 11,523 11,804 (281) (2)
Average train weight - excluding local
traffic (tons) 9,378 9,034 344 4
Average train length - excluding local
traffic (feet) 7,858 7,628 230 3
Average terminal dwell (hours) 9.5 10.3 (0.8) (8)
Average train speed (miles per hour, or
"mph")(1) 19.9 19.1 0.8 4
Locomotive productivity (GTMs / operating
horsepower)(2) 171 163 8 5
Fuel efficiency(3) 1.043 1.064 (0.021) (2)
U.S. gallons of locomotive fuel consumed
(millions)(4) 105.0 104.7 0.3 --
Average fuel price (U.S. dollars per U.S.
gallon) 3.18 3.20 (0.02) (1)
Total Employees and Workforce
-------------------------------------------
Total employees (average)(5) 19,539 19,749 (210) (1)
Total employees (end of period)(5) 19,658 19,992 (334) (2)
Workforce (end of period)(6) 19,671 20,114 (443) (2)
Safety Indicators(7)
-------------------------------------------
FRA personal injuries per 200,000
employee-hours 0.91 0.97 (0.06) (6)
FRA train accidents per million train-miles 0.93 0.38 0.55 145
(1) Average train speed is defined as a measure of the line-haul movement
from origin to destination including terminal dwell hours. It is
calculated by dividing the total train miles travelled by the total train
hours operated. This calculation does not include delay time related to
customers or foreign railroads and excludes the time and distance
travelled by: i) trains used in or around CPKC's yards; ii) passenger
trains; and iii) trains used for repairing track. An increase in average
train speed indicates improved on-time performance resulting in improved
asset utilization.
(2) Locomotive productivity is defined as the daily average GTMs divided by
daily average operating horsepower. Operating horsepower excludes units
offline, tied up or in storage, or in use on other railways, and includes
foreign units.
(3) Fuel efficiency is defined as United States ("U.S.") gallons of
locomotive fuel consumed per 1,000 GTMs.
(4) Fuel consumed includes gallons 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,
part-time, or seasonal employment with CPKC. CPKC monitors employment
levels in order to efficiently meet service and strategic requirements.
The number of employees is a key driver to total compensation and
benefits costs.
(6) Workforce is defined as employees plus contractors and consultants.
(7) Federal Railroad Administration ("FRA") personal injuries per 200,000
employee-hours for the three months ended March 31, 2025 have been
restated to reflect new information available within specified periods
stipulated by the FRA but that exceed the Company's financial reporting
timeline.
Non-GAAP Measures
The Company presents Non-GAAP measures to provide a basis for evaluating underlying earnings and liquidity trends in the Company's current period's financial results that can be compared with the results of operations in prior periods. Management believes these Non-GAAP measures facilitate a multi-period assessment of long-term profitability.
These Non-GAAP measures have no standardized meanings and are not defined by accounting principles generally accepted in the United States of America ("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 and Liquidity Measures
The Company uses Core adjusted operating income, Core adjusted operating ratio, Core adjusted income, and Core adjusted diluted earnings per share ("EPS") to evaluate the Company's operating performance and for planning and forecasting future business operations and future profitability. In addition to the Non-GAAP performance measures noted above, other Non-GAAP liquidity measures include Adjusted free cash and Adjusted net debt to adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") ratio.
Management believes these Non-GAAP measures provide meaningful supplemental information about our financial results and improved comparability to past performance because they exclude certain significant items that are not considered indicative of future or past financial trends either by nature or amount. As a result, these items are excluded for management's 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 or equity investments, acquisition-related costs, certain adjustments to provisions and settlements of Mexican taxes, advisory costs related to rail consolidation matters, discrete tax items, changes in income tax rates, changes to uncertain tax items, and certain items that are not typical of normal business activities or are outside the control of management. Acquisition-related costs include legal, consulting,
integration costs including third-party services and system migration, restructuring and special termination benefit costs, employee retention and synergy incentive costs. These items may not be non-recurring and may include items that are settled in cash. Specifically, due to the magnitude of the Kansas City Southern ("KCS") acquisition, its significant impact to the Company's business and complexity of integrating the acquired business and operations, the Company continues to expect to incur acquisition-related costs beyond the year of acquisition. Management believes excluding these significant items from GAAP results provides an additional viewpoint which may give users a consistent understanding of the Company's financial performance when performing a multi-period assessment including assessing the likelihood of future results. Accordingly, these Non-GAAP financial measures may provide additional insight to investors and other external users of the Company's financial information.
In addition, these Non-GAAP measures exclude KCS purchase accounting. KCS purchase accounting represents the amortization of basis differences being the incremental depreciation or amortization in relation to fair value adjustments to properties and intangible assets, fair value adjustments to KCS's investments, the change in fair value of debt of KCS assumed on April 14, 2023 (the "Control Date"), and fair value adjustments that are attributable to the non-controlling interest, as recognized within "Depreciation and amortization", "Other expense", "Net interest expense", and "Net loss attributable to non-controlling interest", respectively, in the Company's Interim Consolidated Statements of Income. All assets subject to KCS purchase accounting contribute to income generation and will continue to amortize over their estimated useful lives. Excluding KCS purchase accounting from GAAP results provides financial statement users with additional transparency by isolating the impact of KCS purchase accounting.
Significant items recognized in "Net income attributable to controlling shareholders" as reported on a GAAP basis for the first three months of 2026, the year ended December 31, 2025, and the last nine months of 2024 were as follows:
2026:
-- during the first quarter, acquisition-related costs of $9 million in
connection with the KCS acquisition ($7 million after current income tax
recovery of $2 million) including $4 million recognized in "Compensation
and benefits" primarily related to synergy related incentive compensation
and restructuring costs, and $5 million recognized in "Purchased services
and other" primarily related to system migration, legal fees, and other
third party purchased services, that unfavourably impacted Diluted EPS by
1 cent; and
-- during the first quarter, advisory costs related to the analysis and
advocacy in connection with the U.S. Surface Transportation Board's
review of the proposed merger between Union Pacific Corporation and
Norfolk Southern Corporation of $13 million ($10 million after current
income tax recovery of $3 million) recognized in "Purchased services and
other", that unfavourably impacted Diluted EPS by 1 cent.
2025:
-- during the course of the year, a gain on sale of an equity investment of
$333 million ($256 million after current income tax expense of $102
million net of deferred income tax recovery of $25 million) recognized in
"Gain on sale of equity investment", that favourably impacted Diluted EPS
by 27 cents as follows:
-- in the fourth quarter, a current tax expense of $26 million
recognized in "Current income tax expense" due to the finalization
of the related tax provision, that unfavourably impacted Diluted
EPS by 3 cents;
-- in the second quarter, a gain on sale of an equity investment of
$333 million ($282 million after current income tax expense of $76
million net of deferred income tax recovery of $25 million)
recognized in "Gain on sale of equity investment", that favourably
impacted Diluted EPS by 30 cents; and
-- during the course of the year, acquisition-related costs of $72 million
in connection with the KCS acquisition ($56 million after current income
tax recovery of $16 million), including $11 million recognized in
"Compensation and benefits" primarily related to synergy related
incentive compensation and restructuring costs, $1 million recognized in
"Materials", $51 million recognized in "Purchased services and other"
primarily related to system migration, legal fees, and other third party
purchased services, and $9 million recognized in "Other components of net
period benefit recovery" related to special termination benefit costs,
that unfavourably impacted Diluted EPS by 6 cents as follows:
-- in the fourth quarter, acquisition-related costs of $20 million
($17 million after current income tax recovery of $3 million)
including a recovery of $5 million recognized in "Compensation and
benefits", an expense of $16 million recognized in "Purchased
services and other", and an expense of $9 million recognized in
"Other components of net period benefit recovery", that
unfavourably impacted Diluted EPS by 2 cents;
-- in the third quarter, acquisition-related costs of $13 million
($10 million after current income tax recovery of $3 million)
including $4 million recognized in "Compensation and benefits",
and $9 million recognized in "Purchased services and other", that
unfavourably impacted Diluted EPS by 1 cent;
-- in the second quarter, acquisition-related costs of $19 million
($14 million after current income tax recovery of $5 million)
including $7 million recognized in "Compensation and benefits",
and $12 million recognized in "Purchased services and other", that
unfavourably impacted Diluted EPS by 2 cents; and
-- in the first quarter, acquisition-related costs of $20 million
($15 million after current income tax recovery of $5 million)
including $5 million recognized in "Compensation and benefits", $1
million recognized in "Materials", and $14 million recognized in
"Purchased services and other", that unfavourably impacted Diluted
EPS by 2 cents.
2024:
-- during the last nine months, a deferred income tax recovery of $81
million on account of changes in tax rates, that favourably impacted
Diluted EPS by 9 cents as follows:
-- in the fourth quarter, a deferred income tax recovery of $78
million due to a decrease in the Louisiana state corporate income
tax rate, that favourably impacted Diluted EPS by 9 cents; and
-- in the second quarter, a deferred income tax recovery of $3
million due to a decrease in the Arkansas state corporate income
tax rate, that had minimal impact on Diluted EPS;
-- during the last nine months, adjustments to provisions and settlements of
Mexican taxes of $14 million recovery ($12 million after deferred income
tax expense of $2 million) recognized in "Compensation and benefits",
that favourably impacted Diluted EPS by 1 cent as follows:
-- in the fourth quarter, adjustments to provisions and settlements
of Mexican taxes of $7 million recovery ($6 million after deferred
income tax expense of $1 million) recognized in "Compensation and
benefits", that had minimal impact on Diluted EPS;
-- in the third quarter, adjustments to provisions and settlements of
Mexican taxes of $7 million recovery ($6 million after deferred
income tax expense of $1 million) recognized in "Compensation and
benefits", that favourably impacted Diluted EPS by 1 cent; and
-- during the last nine months, acquisition-related costs of $86 million in
connection with the KCS acquisition ($62 million after current income tax
recovery of $24 million), including $14 million recognized in
"Compensation and benefits" primarily related to retention and synergy
related incentive compensation costs; $4 million recognized in
"Materials"; and $68 million recognized in "Purchased services and other"
primarily related to system migration, relocation expenses, legal and
consulting fees, that unfavourably impacted Diluted EPS by 7 cents as
follows:
-- in the fourth quarter, acquisition-related costs of $22 million
($17 million after current income tax recovery of $5 million)
including $1 million recognized in "Compensation and benefits", $1
million recognized in "Materials", and $20 million recognized in
"Purchased services and other", that unfavourably impacted Diluted
EPS by 2 cents;
-- in the third quarter, acquisition-related costs of $36 million
($26 million after current income tax recovery of $10 million)
including $11 million recognized in "Compensation and benefits",
$1 million recognized in "Materials", and $24 million recognized
in "Purchased services and other", that unfavourably impacted
Diluted EPS by 3 cents; and
-- in the second quarter, acquisition-related costs of $28 million
($19 million after current income tax recovery of $9 million)
including $2 million recognized in "Compensation and benefits", $2
million recognized in "Materials", and $24 million recognized in
"Purchased services and other", that unfavourably impacted Diluted
EPS by 2 cents.
KCS purchase accounting recognized in "Net income attributable to controlling shareholders" as reported on a GAAP basis for the first three months of 2026, the year ended December 31, 2025, and the last nine months of 2024 was as follows:
2026:
-- during the first quarter, KCS purchase accounting of $91 million ($66
million after deferred income tax recovery of $25 million), including
costs of $87 million recognized in "Depreciation and amortization", $1
million recognized in "Purchased services and other" related to the
amortization of equity investments, $5 million recognized in "Net
interest expense", and a recovery of $2 million recognized in "Net loss
attributable to non-controlling interest", that unfavourably impacted
Diluted EPS by 8 cents.
2025:
-- during the course of the year, KCS purchase accounting of $391 million
($285 million after deferred income tax recovery of $106 million),
including costs of $373 million recognized in "Depreciation and
amortization", $3 million recognized in "Purchased services and other"
related to the amortization of equity investments, $21 million recognized
in "Net interest expense", $1 million recognized in "Other expense", and
a recovery of $7 million recognized in "Net loss attributable to
non-controlling interest", that unfavourably impacted Diluted EPS by 31
cents as follows:
-- in the fourth quarter, KCS purchase accounting of $109 million
($79 million after deferred income tax recovery of $30 million),
including costs of $105 million recognized in "Depreciation and
amortization", $1 million recognized in "Purchased services and
other", $5 million recognized in "Net interest expense", and a
recovery of $2 million recognized in "Net loss attributable to
non-controlling interest", that unfavourably impacted Diluted EPS
by 8 cents;
-- in the third quarter, KCS purchase accounting of $95 million ($69
million after deferred income tax recovery of $26 million),
including costs of $90 million recognized in "Depreciation and
amortization", $1 million recognized in "Purchased services and
other", $6 million recognized in "Net interest expense", and a
recovery of $2 million recognized in "Net loss attributable to
non-controlling interest", that unfavourably impacted Diluted EPS
by 8 cents;
-- in the second quarter, KCS purchase accounting of $95 million ($70
million after deferred income tax recovery of $25 million),
including costs of $91 million recognized in "Depreciation and
amortization", $5 million recognized in "Net interest expense",
and a recovery of $1 million recognized in "Net loss attributable
to non-controlling interest", that unfavourably impacted Diluted
EPS by 7 cents; and
-- in the first quarter, KCS purchase accounting of $92 million ($67
million after deferred income tax recovery of $25 million),
including costs of $87 million recognized in "Depreciation and
amortization", $1 million recognized in "Purchased services and
other", $5 million recognized in "Net interest expense", $1
million recognized in "Other expense", and a recovery of $2
million recognized in "Net loss attributable to non-controlling
interest", that unfavourably impacted Diluted EPS by 7 cents.
2024:
-- during the last nine months, KCS purchase accounting of $268 million
($195 million after deferred income tax recovery of $73 million),
including $254 million recognized in "Depreciation and amortization", $2
million recognized in "Purchased services and other" related to the
amortization of equity investments, $15 million recognized in "Net
interest expense", $2 million recognized in "Other expense", and a
recovery of $5 million recognized in "Net loss attributable to
non-controlling interest", that unfavourably impacted Diluted EPS by 21
cents as follows:
-- in the fourth quarter, KCS purchase accounting of $93 million ($68
million after deferred income tax recovery of $25 million),
including costs of $87 million recognized in "Depreciation and
amortization", $1 million recognized in "Purchased services and
other" related to the amortization of equity investments, $6
million recognized in "Net interest expense", $1 million
recognized in "Other expense", and a recovery of $2 million
recognized in "Net loss attributable to non-controlling interest",
that unfavourably impacted Diluted EPS by 8 cents;
-- in the third quarter, KCS purchase accounting of $89 million ($65
million after deferred income tax recovery of $24 million),
including costs of $85 million recognized in "Depreciation and
amortization", $4 million recognized in "Net interest expense", $1
million recognized in "Other expense", and a recovery of $1
million recognized in "Net loss attributable to non-controlling
interest", that unfavourably impacted Diluted EPS by 7 cents; and
-- in the second quarter, KCS purchase accounting of $86 million ($62
million after deferred income tax recovery of $24 million),
including costs of $82 million recognized in "Depreciation and
amortization", $1 million recognized in "Purchased services and
other" related to the amortization of equity investments, $5
million recognized in "Net interest expense", and a recovery of $2
million recognized in "Net loss attributable to non-controlling
interest", that unfavourably impacted Diluted EPS by 6 cents.
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:
Core Adjusted Income and Core Adjusted Diluted EPS
Core adjusted income is calculated as Net income attributable to controlling shareholders reported on a GAAP basis adjusted for significant items less KCS purchase accounting.
For the three months
ended March 31
----------------------------
(in millions of Canadian dollars) 2026 2025
================================================ ============= =============
Net income attributable to controlling
shareholders as reported $ 846 $ 910
Less:
Significant items (pre-tax):
Acquisition-related costs (9) (20)
Advisory costs related to rail consolidation
matters (13) --
KCS purchase accounting (91) (92)
Add:
Tax effect of adjustments(1) (30) (30)
Core adjusted income $ 929 $ 992
------------------------------------------------ ------------- -------------
(1) The tax effect of adjustments was calculated as the pre-tax effect of the
significant items and KCS purchase accounting listed above multiplied by
the applicable tax rate for the above items of 26.56% for the three
months ended March 31, 2026 and 26.76% for the three months ended March
31, 2025. The applicable tax rates reflect the taxable jurisdictions and
nature, being on account of capital or income, of the adjustments.
Core adjusted diluted EPS is calculated using Diluted EPS reported on a GAAP basis adjusted for significant items less KCS purchase accounting.
For the three months For the year ended
ended March 31 December 31
---------------------------- ----------------------
2026 2025 2025
======================== ============= ============= ======================
Diluted EPS as reported $ 0.94 $ 0.97 $ 4.51
Less:
Significant items
(pre-tax):
Gain on sale of equity
investment -- -- 0.36
Acquisition-related
costs (0.01) (0.02) (0.08)
Advisory costs related
to rail consolidation
matters (0.02) -- --
KCS purchase accounting (0.10) (0.10) (0.43)
Add:
Tax effect of
adjustments(1) (0.03) (0.03) (0.05)
Core adjusted diluted
EPS $ 1.04 $ 1.06 $ 4.61
======================== ============= ============= ======================
(1) The tax effect of adjustments was calculated as the pre-tax effect of the
significant items and KCS purchase accounting listed above multiplied by
the applicable tax rate for the above items of 26.56% for the three
months ended March 31, 2026, 26.76% for the three months ended March 31,
2025, and 34.76% for the year ended December 31, 2025. The applicable tax
rates reflect the taxable jurisdictions and nature, being on account of
capital or income, of the adjustments.
Core Adjusted Operating Income and Core Adjusted Operating Ratio
Core adjusted operating income and Core adjusted operating ratio are calculated from reported GAAP revenue and operating expenses adjusted for, where applicable, (1) significant items (acquisition-related costs and advisory costs related to rail consolidation matters) that are reported within Operating income, and (2) KCS purchase accounting recognized in "Depreciation and amortization" and "Purchased services and other".
For the three months
ended March 31
--------------------------
(in millions of Canadian dollars) 2026 2025
================================================== ============ ============
Operating income as reported $ 1,258 $ 1,317
Less:
Acquisition-related costs (9) (20)
Advisory costs related to rail consolidation
matters (13) --
KCS purchase accounting in Operating expenses (88) (88)
-------------------------------------------------- ------------ ------------
Core adjusted operating income $ 1,368 $ 1,425
================================================== ============ ============
For the three months
ended March 31
2026 2025
====================================================== ========== ==========
Operating ratio as reported 66.0 % 65.3 %
Less:
Acquisition-related costs 0.2 % 0.5 %
Advisory costs related to rail consolidation matters 0.4 % -- %
KCS purchase accounting in Operating expenses 2.4 % 2.3 %
------------------------------------------------------ ---------- ----------
Core adjusted operating ratio 63.0 % 62.5 %
====================================================== ========== ==========
FX Adjusted % Change
FX adjusted % change allows certain financial results to be viewed without the impact of fluctuations in FX 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's results denominated in U.S. dollars and Mexican pesos at the FX rates of the current period.
FX adjusted % changes in revenues are also used in calculating FX adjusted % change in Freight revenue per carload and per RTM. FX adjusted % changes in revenues are as follows:
For the three months ended March 31
(in millions of
Canadian Reported Reported Variance FX Adjusted FX Adjusted
dollars) 2026 2025 due to FX 2025 % Change
================ ========== ========== =========== ============ ===========
Freight revenues
by line of
business
Grain $ 871 $ 788 $ (22) $ 766 14
Coal 226 257 (3) 254 (11)
Potash 149 156 (4) 152 (2)
Fertilizers and
sulphur 112 114 (4) 110 2
Forest products 181 217 (7) 210 (14)
Energy,
chemicals and
plastics 700 758 (24) 734 (5)
Metals,
minerals and
consumer
products 438 448 (6) 442 (1)
Automotive 296 315 -- 315 (6)
Intermodal 655 674 (11) 663 (1)
---------------- ---------- ---------- ----------- ------------ -----------
Freight revenues 3,628 3,727 (81) 3,646 --
Non-freight
revenues 73 68 (1) 67 9
---------------- ---------- ---------- ----------- ------------ -----------
Total revenues $ 3,701 $ 3,795 $ (82) $ 3,713 --
================ ========== ========== =========== ============ ===========
FX adjusted % changes in Operating expenses are as follows:
For the three months ended March 31
(in millions of
Canadian Reported Reported Variance FX Adjusted FX Adjusted
dollars) 2026 2025 due to FX 2025 % Change
================ ========== ========== ============ ============ ===========
Compensation and
benefits $ 691 $ 682 $ (4) $ 678 2
Fuel 458 481 (4) 477 (4)
Materials 127 124 (1) 123 3
Equipment rents 95 99 (4) 95 --
Depreciation and
amortization 512 504 (14) 490 4
Purchased
services and
other 560 588 (8) 580 (3)
---------------- ---------- ---------- ------------ ------------ -----------
Total operating
expenses $ 2,443 $ 2,478 $ (35) $ 2,443 --
================ ========== ========== ============ ============ ===========
FX adjusted % change in Operating income is as follows:
For the three months ended March 31
(in millions of
Canadian Reported Reported Variance FX Adjusted FX Adjusted
dollars) 2026 2025 due to FX 2025 % Change
================ ========== ========== =========== ============ ===========
Total revenues $ 3,701 $ 3,795 $ (82) $ 3,713 --
Total operating
expenses 2,443 2,478 (35) 2,443 --
---------------- ---------- ---------- ----------- ------------ -----------
Operating income $ 1,258 $ 1,317 $ (47) $ 1,270 (1)
================ ========== ========== =========== ============ ===========
Reconciliation of GAAP Liquidity Measures to Non-GAAP Liquidity Measures
Adjusted Free Cash
Adjusted free cash is calculated as Net cash provided by operating activities, less Net cash used in investing activities, adjusted for changes in Cash and cash equivalents balances resulting from FX rate fluctuations, the cash flow impacts of acquisition-related costs associated with the KCS acquisition, certain settlements of Mexican taxes, and advisory costs related to rail consolidation matters which are not indicative of operating trends. Adjusted free cash is useful to investors and other external users of the Company's Interim Consolidated Financial Statements as it assists with the evaluation of the Company's ability to generate cash to satisfy debt obligations and other activities such as dividends, share repurchase programs, and other strategic opportunities, and is an important performance criterion in determining certain elements of the Company's long-term incentive plan. Adjusted free cash should be considered in addition to, rather than as a substitute for, Net cash provided by operating activities.
Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash
For the three months
ended March 31
---------------------------
(in millions of Canadian dollars) 2026 2025
================================================= ============= ============
Net cash provided by operating activities as
reported $ 976 $ 1,156
Net cash used in investing activities (672) (715)
Effect of foreign currency fluctuations on
foreign currency-denominated cash and cash
equivalents 2 (1)
Less:
Settlements of Mexican taxes -- (11)
Acquisition-related costs (21) (15)
Advisory costs related to rail consolidation
matters (11) --
------------------------------------------------- ------------- ------------
Adjusted free cash $ 338 $ 466
================================================= ============= ============
Adjusted Net Debt to Adjusted EBITDA Ratio
Adjusted net debt to adjusted EBITDA ratio is calculated as Adjusted net debt divided by Adjusted EBITDA. The Adjusted net debt to adjusted EBITDA ratio is a key credit measure used to assess the Company's financial capacity. The ratio provides information on the Company's ability to service its debt and other long-term obligations from operations, excluding significant items. The Adjusted net debt to adjusted EBITDA ratio which is reconciled below from the Long-term debt to Net income attributable to controlling shareholders ratio, the most comparable measure calculated in accordance with GAAP.
Calculation of Long-term Debt to Net Income Attributable to Controlling Shareholders Ratio
The Long-term debt to Net income attributable to controlling shareholders ratio is calculated as Long-term debt, including Long-term debt maturing within one year, divided by Net income attributable to controlling shareholders.
(in millions of Canadian dollars, except for ratios) 2026 2025 =================================== ==================== =================== Long-term debt including long-term debt maturing within one year as at March 31 $ 24,320 $ 22,652 Net income attributable to controlling shareholders for the twelve months ended March 31 4,077 3,853 ----------------------------------- -------------------- ------------------- Long-term debt to Net income attributable to controlling shareholders ratio 6.0 5.9 =================================== ==================== ===================
Reconciliation of Long-term Debt to Adjusted Net Debt
Adjusted net debt is defined as Long-term debt and Long-term debt maturing within one year, as reported on the Company's Interim Consolidated Balance Sheets adjusted for pension plans' deficit, operating lease liabilities, Cash and cash equivalents, and the fair value adjustment to KCS debt on the Control Date which is recognized under Long-term debt on the Company's Interim Consolidated Balance Sheets. Adjusted net debt is used as a measure of debt and long-term obligations as part of the calculation of Adjusted net debt to Adjusted EBITDA.
(in millions of Canadian dollars) 2026 2025
================================== ==================== ====================
Long-term debt including long-term
debt maturing within one year as
at March 31 $ 24,320 $ 22,652
Add:
Pension plans deficit(1) 155 161
Operating lease liabilities 389 392
Fair value adjustment to KCS debt
upon Control(2) 460 495
Less:
Cash and cash equivalents 409 695
---------------------------------- -------------------- --------------------
Adjusted net debt $ 24,915 $ 23,005
================================== ==================== ====================
(1) Pension plans deficit is the total funded status of the Pension plans in
deficit only.
(2) The fair value adjustment to KCS debt upon control represents the fair
value adjustment based on the purchase price allocation at fair value,
net of amortization of fair value adjustments from April 14, 2023 and the
foreign currency translation impact on the fair value adjustment.
Reconciliation of Net Income Attributable to Controlling Shareholders to Adjusted EBITDA
Adjusted EBITDA is calculated as Net income attributable to controlling shareholders before Net interest expense, Income tax expense, Depreciation and amortization, and Operating lease expense recognized on the Company's Interim Consolidated Statement of Income, excluding significant items reported in "Net income" less "Other components of net periodic benefit recovery" recognized on the Company's Interim Consolidated Statement of Income. Adjusted EBITDA is used as a performance measure derived from operating results, excluding significant items, as part of the calculation of Adjusted net debt to adjusted EBITDA. Detailed quarterly information on significant items that occurred within the 12 months ended March 31, 2026 and 2025 can be found under the earlier section Core Adjusted Income and Core Adjusted Diluted EPS.
For the twelve months ended
March 31
------------------------------------------
(in millions of Canadian dollars) 2026 2025
================================== ==================== ====================
Net income attributable to
controlling shareholders as
reported $ 4,077 $ 3,853
Add:
Net interest expense 888 811
Income tax expense 1,328 1,092
Depreciation and amortization 2,027 1,937
Operating lease expense 115 114
Less:
Significant items (pre-tax):
Adjustments to provisions and
settlements of Mexican taxes -- 14
Acquisition-related costs (61) (106)
Advisory costs related to rail
consolidation matters (13) --
Gain on sale of equity investment 333 --
Other components of net periodic
benefit recovery 418 371
---------------------------------- -------------------- --------------------
Adjusted EBITDA $ 7,758 $ 7,528
---------------------------------- -------------------- --------------------
Calculation of Adjusted Net Debt to Adjusted EBITDA Ratio
(in millions of Canadian dollars, except for ratios) 2026 2025 ---------------------------------- -------------------- -------------------- Adjusted net debt as at March 31 $ 24,915 $ 23,005 Adjusted EBITDA for the twelve months ended March 31 7,758 7,528 ---------------------------------- -------------------- -------------------- Adjusted net debt to adjusted EBITDA ratio 3.2 3.1 ---------------------------------- -------------------- --------------------
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SOURCE CPKC
(END) Dow Jones Newswires
April 29, 2026 16:05 ET (20:05 GMT)
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