Canadian Pacific Kansas City Ltd.

CPKC reported revenue growth of 13% and volume growth of 4% in the quarter. Diluted EPS was $1.15, while core adjusted diluted EPS was $1.20, up 13% year over year. Reported operating ratio was 54.6% and core adjusted operating ratio was 61.6%, up 90 basis points from last year. On the cost side, core adjusted comp and benefits expense was $702 million and core adjusted PSNO expense was $585 million. Year to date, operating cash flow was up 8%, capital expenditures were $1.4 billion, adjusted free cash flow was $1.3 billion, and management still expects full-year CapEx of $2.65 billion, down 15% year over year. For the full year, Nadeem said the core adjusted effective tax rate is expected to be approximately 24.75%. Looking ahead, management expects continued sequential improvement in cents per RTM, significantly faster volume growth in the second half, and continued yield strength supported by fuel and FX; John reaffirmed confidence in mid-single-digit volume growth in 2026.

Keith Creel framed the quarter as proof that CPKC’s single-line Canada-U.S.-Mexico network is working as intended, with stronger service, better asset utilization, and expanding commercial opportunities. He emphasized that the company is still in the early chapters of its growth story and said CPKC is well positioned to deliver another year of double-digit earnings growth in 2026. His tone was confident and combative on industry consolidation, arguing the network’s advantage is unique and that customers want more options, not fewer.

Nadeem Velani highlighted reported OR of 54.6%, core adjusted OR of 61.6%, and core adjusted EPS of $1.20, up 13% year over year. He said higher casualty costs and stock-based compensation were about a $0.04 EPS impact and a 120 basis point OR headwind, while fuel price inflation added another 130 basis points of OR pressure. He also noted core adjusted comp and benefits expense of $702 million, PSNO expense of $585 million, year-to-date operating cash flow up 8%, CapEx of $1.4 billion year to date, and a full-year CapEx target of $2.65 billion. Capital returns totaled $2.4 billion in the first half through buybacks and dividends, and he said the full-year core adjusted tax rate should be about 24.75%.

Analysts focused on the CN/UP transaction implications, coal weakness, yield trends, second-half capacity, and whether operating leverage can accelerate. Management repeatedly said the CN/UP concessions do not change CPKC’s math, while Keith argued the deal still reduces customer options and increases long-term competitive and regulatory risk. On growth, John said the synergies pipeline remains strong, with land-bridge business seen rising from $600 million by year-end toward $1 billion over future years, and he pointed to grain, intermodal, automotive, and Mexico flows as key drivers. On costs and OR, Nadeem said second-half OR should improve sequentially as volumes accelerate and casualty costs ease, and he suggested a sub-60% operating ratio is a fair framework if certain headwinds are absent.