CP · Canadian Pacific Kansas City Ltd.

Canadian Pacific Kansas City Ltd. reported Q1 FY2026 results reflecting revenue of $3.7B, down 2.5% from $3.8B in the prior year, primarily due to lower freight revenue per RTM amid unfavorable foreign exchange impacts that offset underlying volume growth. GTMs and RTMs increased, driven by higher volumes in Grain and Intermodal, though partially offset by declines in Coal and Energy, chemicals and plastics, as noted in Management's Discussion.

Net income fell 7.0% to $846M, with diluted EPS at $0.94, down 3.1% from $0.97. The earnings reduction ties directly to the operating income decline and non-operating items including FX-related gains and losses on cash and working capital, financing costs, and other expenditures. Management highlights that key measures like operating ratio reflect effectiveness in cost control and strategy execution, supporting long-term profitability assessment.

Cash generation showed operating cash flow of $976M versus $1.16B last year, with capital expenditures at $664M—down slightly from $711M—resulting in $312M free cash flow. The capex supports network expansion and productivity, contributing to the expanded asset base driving higher depreciation. This investment posture underscores commitment to operational resilience amid volume mix shifts, such as higher export potash flows to key markets including Texas, Kamloops, and Chicago.

Overall, the quarter demonstrates resilience in core volume drivers like Grain and Intermodal, balancing commodity weaknesses, while cost discipline tempers margin pressure from fixed cost leverage and FX volatility. These factors position CP for sustained execution of its operating plan.