CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) SEC Filings & Earnings Calls

Increased leverage from new debt; interest expense will rise

“CAD$1.8B in new notes with coupons 4.20%-5.40%”

Fuel price volatility

“The increase in Fuel expense in the second quarter of 2026 was primarily due to: the impact of higher fuel prices of $200 million due to higher diesel benchmark prices net of purchasing discounts.” · word for word

Foreign exchange risk

“In the first six months of 2026, the U.S. dollar weakened to an average rate of $1.38 Canadian/U.S. dollar and the Mexican peso strengthened to an average rate of Ps. 12.67 Mexican Peso/Canadian dollar, compared to $1.41 Canadian/U.S. dollar and Ps. 14.16 Mexican Peso/Canadian dollar in the first six months of 2025, resulting in a decrease in "Total revenues” · word for word

Coal volume decline

“The decrease in Coal revenue in the second quarter of 2026 was primarily due to lower volumes of Canadian coal to Vancouver, Kamloops, B.C., and Thunder Bay, Ontario due to lower production and maintenance at both the mines and the ports.” · word for word

Interest rate risk

“Net interest expense was $237 million in the second quarter of 2026, an increase of $29 million, or 14%, from $208 million in the same period of 2025.” · word for word

Operating ratio increased slightly, indicating some margin pressure from cost inflation or mix.

“Reported operating ratio increased by 90 basis points to 64.6 percent”

Litigation liability from Lac-Mégantic rail accident

“On April 28, 2025, all three plaintiffs filed applications for leave to appeal to the Supreme Court of Canada.” · word for word

Tax assessment in Mexico

“As at March 31, 2026, the 2014 Assessment, including inflation, interest, and penalties was Mexican pesos ("Ps.") 6,686 million ($518 million).” · word for word

Regulatory compliance cost from EPA Clean Air Act investigation

“In September 2020, the Company received an initial request for information from the U.S. Environmental Protection Agency ("EPA") inquiring into the Company’s compliance with the mobile source provisions of the Clean Air Act.” · word for word

Operating ratio deterioration indicates margin pressure from cost inflation or pricing weakness.

“Reported OR +70bps; core adjusted OR +50bps.”

Macroeconomic headwinds: foreign exchange and fuel price impacts.

“FX headwind ~4 cents; fuel headwind ~3 cents.”

Train accident frequency increased significantly, potential safety/regulatory risk.

“FRA-reportable train accident frequency increased to 0.93 from 0.38.” · word for word

Litigation exposure – Lac-Mégantic and other claims

“The Company has been, and may in the future be, subject to allegations or findings to the effect that it has violated, or is strictly liable under, environmental laws or regulations.” · word for word

Mexican concession revocation risk

“The Concession granted to CPKCM from the Mexican government is subject to revocation or termination in certain circumstances, which would prevent CPKCM from conducting rail operations under the Concession and would have a material adverse effect on the Company’s results of operations.” · word for word

Supply chain concentration risk

“The Company is dependent on certain key suppliers of core railway equipment and materials that could result in increased price volatility or significant shortages of materials, which could adversely affect results of operations, financial condition, and liquidity.” · word for word

Fuel supply disruption risk

“A significant fuel supply shortage arising from production decreases, increased demand in existing or emerging foreign markets, disruption of oil imports, disruption of domestic refinery production, damage to refinery or pipeline infrastructure, political unrest, war or other factors could have a material adverse effect on the Company's results of operations” · word for word

Trade policy uncertainty and macroeconomic headwinds could impact volume and revenue.

“Despite macroeconomic and trade policy headwinds in 2025...; Forward-looking statements reference risks including trade policy and global economic conditions.”

Capex reduction may signal lower growth investment or efficiency gains; could limit capacity expansion.

“Capital expenditures of $2.65 billion, a reduction of approximately 15% from 2025.” · word for word

Fuel surcharge timing mismatch

“The unfavourable impact of fuel prices on 'Operating income' was $20 million in Q3 2025 due to timing of recoveries.” · word for word

Foreign exchange exposure

“Every $0.01 weakening of CAD vs USD positively impacts revenues by ~$78M and negatively impacts operating expenses by ~$42M.”

Casualty expense increased $39M sequentially, impacting EPS by $0.03.

“Reported and core adjusted results include a $39 million sequential increase in casualty expense versus Q2 2025 which was a $0.03 impact to Q3 2025 reported and core adjusted diluted EPS”

Macroeconomic conditions remain challenging, potentially affecting demand.

“Navigating challenging macroeconomic conditions” · word for word