Canadian Pacific Railway Clocks 4% Revenue Growth In Q3; Cuts FY21 Volume Growth Outlook

Canadian Pacific Railway Ltd CP reported third-quarter revenue growth of 4.2% year-over-year to C$1.94 billion.
Adjusted EPS improved 7% to C$0.88 from C$0.82 in 3Q20.
The operating income declined slightly by 0.6% Y/Y to C$774 million, and the margin contracted by 196 bps to 39.9%.
The operating ratio increased 200 bps to 60.2%, and an adjusted operating ratio increased 120 bps to 59.4%.
Total operating expenses increased by 7.8% Y/Y to C$1.17 billion.
Adjusted net debt to Adjusted EBITDA ratio was at 2.4, compared to 2.5 a year ago.
Freight Revenue per Revenue Ton-Mile increased by 8% Y/Y to 5.36 cents; Freight Revenue per Carload increased by 3% Y/Y to C$2,851. Total RTMs declined by 4% Y/Y to 35,391.
CP generated cash from operating activities year-to-date of C$3.08 billion, compared to C$1.82 billion a year ago. Free cash flow of C$1.25 billion.
CP has updated its 2021 outlook due to diminished expectations for the 2021-2022 Canadian grain crop and ongoing supply chain challenges.
FY21 Outlook: CP now expects volumes, as measured in RTMs, to grow by low single-digits year-over-year (prior view for high single-digit RTM growth).
It continues to expect double-digit growth in Adjusted EPS based on C$3.53 in 2020.
Price Action: CP shares are trading lower by 1.91% at $72.08 during the premarket session on Wednesday.

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