Canadian Pacific unveils vision for future aimed at improving service, increasing efficiency, lowering costs and growing the business, including eliminating 4,500 employee, contractor jobs by 2016
December 5, 2012
– Canadian Pacific (CP.TO)(CP) President and CEO E. Hunter Harrison today outlined CP's go-forward plan for change that will greatly improve service, increase the railway's efficiency, lower cost and grow the business.
"Momentum is building at Canadian Pacific and the organization is driving to a culture of intense focus on operations. Service will be what drives this organization, by providing a premium, reliable product offering through a lower cost operation," Harrison said. "We have initiated a rapid change agenda and have made tremendous progress in my first 160 days, and we are only getting started."
Progress Already Underway
Harrison provided various examples of steps taken over the past five months highlighting CP's evolution to a more competitive railway, including the following:
The Plan for Change Going Forward
"We now have a leadership team that understands the urgency of making change and improving the culture of this organization" Harrison said. "CP has many talented railroaders who want to win. Together we are squarely focused on improved service and becoming the low cost carrier. This will allow us to continue to grow with our customers."
Moving forward, Harrison outlined various plans CP will execute to continue to improve service reliability, increase the railway's efficiency, and grow the business. Key highlights include:
Financial expectations on CP's journey to 2016 include:
As previously noted on December 3, 2012, CP anticipates taking a fourth quarter estimated pre-tax non-cash charge of approximately $180 million ($107 million after tax) on its option to build into the Powder River Basin. CP also anticipates taking a charge related to labour and other restructuring activities, the amount of which is under review.
*To access a HD video webcast of the presentations on December 4 and 5 go to: www.cpr.ca under "Invest In CP" tab.
**To access the conference by the phone on December 4 and 5, please call 888-821-9349 or 201-604-5056 password 637402.
***Investor Day full-disclosure PowerPoint presentations by Mr. Harrison and his Executive Team can be viewed at www.cpr.ca after 0830 December 5, 2012.
Note on Forward-Looking Information
This news release contains certain forward-looking information within the meaning of applicable securities laws relating, but not limited, to our operations, priorities and plans, anticipated financial performance, business prospects, planned capital expenditures, programs and strategies. This forward-looking information also includes, but is 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 information may contain statements with words or headings such as "financial expectations", "key assumptions", "anticipate", "believe", "expect", "plan", "will", "outlook", "should" or similar words suggesting future outcomes. To the extent that CP has provided guidance that is a non-GAAP financial measure, the Company may not be able to provide a reconciliation to a GAAP measure, due to unknown variables and uncertainty related to future results.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CP's forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CP; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. The foregoing list of factors is not exhaustive.
These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CP's annual and interim reports, Annual Information Form and Form 40-F. Readers are cautioned not to place undue reliance on forward-looking information. Forward-looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.
We present non-GAAP measures and cash flow information to provide a basis for evaluating underlying earnings and liquidity trends in our business that can be compared with the results of our operations in prior periods. These non-GAAP measures have no standardized meaning and are not defined by GAAP and, therefore, are unlikely to be comparable to similar measures presented by other companies.
Free cash and cash flow before dividends are non-GAAP measures that management considers to be indicators of liquidity. These measures are used by management to provide information with respect to the relationship between cash provided by operating activities and investment decisions and provides a comparable measure for period to period changes. Free cash is calculated as cash provided by operating activities, less cash used in investing activities and dividends paid, adjusted for changes in cash and cash equivalent balances resulting from FX fluctuations. For the purposes of this press release cash flow before dividends has been calculated as cash provided by operating activities less cash used in investing activities. Dividends have been excluded as, at this time, the board of directors of the Company has not approved dividends for 2016 and therefore it is not appropriate to provide forward looking estimates of what amount such dividends could be. In addition, it is assumed that the Canadian dollar will be at parity with the US dollar, thereby eliminating any foreign exchange FX fluctuations on cash balances. For further information regarding non-GAAP measures see our Management's Discussion and Analysis for the third quarter of 2012 or the document Non-GAAP Measures on our web site at www.cpr.ca.
About Canadian Pacific
Canadian Pacific (CP.TO)(CP) is a transcontinental railway in Canada and the United States with direct links to eight major ports, including Vancouver and Montreal, providing North American customers a competitive rail service with access to key markets in every corner of the globe. CP is a low-cost provider that is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpr.ca to see the rail advantages of Canadian Pacific.