CPKC reports third-quarter results driven by solid execution; poised for strong finish to 2024
CALGARY, AB, Oct. 23, 2024 /PRNewswire/ - Canadian Pacific Kansas City (TSX:CP) (NYSE:CP) (CPKC) today announced its third-quarter results, including revenues of $3.5 billion, diluted earnings per share (EPS) of $0.90 and core adjusted combined diluted EPS1 of $0.99.
"During the third quarter, we delivered strong performance across the operations of our unrivaled North American network, despite dealing with a number of temporary headwinds," said Keith Creel, CPKC President and Chief Executive Officer. "We continue to see strong revenue growth, uniquely enabled by this new network. With our commitment to operational excellence, safety and customer service, we are doing what we said we would do and generating value for all stakeholders."
Third-quarter 2024 results
Revenues increased by six percent to $3.5 billion from $3.3 billion in Q3 2023
Reported operating ratio (OR) increased by 120 basis points to 66.1 percent from 64.9 percent in Q3 2023
Core adjusted combined OR1 increased by 120 basis points to 62.9 percent from 61.7 percent in Q3 2023
Reported diluted EPS increased to $0.90 from $0.84 in Q3 2023
Core adjusted combined diluted EPS1 increased eight percent to $0.99 from $0.92 in Q3 2023
Volumes, as measured in Revenue Ton-Miles (RTMs), increased four percent
Federal Railroad Administration (FRA)-reportable personal injury frequency decreased to 0.85 from 1.02 in Q3 20232
FRA-reportable train accident frequency decreased to 1.27 from 1.38 in Q3 20232
"I am proud of this team of railroaders for overcoming challenges to still deliver on our guidance; as we look to close 2024 with growing momentum, we've never been more excited about the opportunities ahead," Creel added. "Our strategic initiatives and investments position us well for more growth and success for the remainder of this year, in 2025 and beyond. Fueled by the strength of our dedicated team of railroaders, we are confident in our ability to continue producing results for our customers and long-term value for shareholders."
2024 GuidanceCPKC now expects RTMs3 to increase mid-single digits vs 2023 on a combined basis. CPKC continues to expect 2024 core adjusted combined diluted EPS1 to grow double digits versus 2023 core adjusted combined diluted EPS1 of $3.84.
1
These measures have no standardized meanings prescribed by accounting principles generally accepted in the United States of America ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. For information regarding non-GAAP measures including reconciliations, see attached supplementary schedule of Non-GAAP Measures.
2
The third-quarter 2023 FRA-reportable train accident frequency and FRA-reportable personal injury frequency have been restated to reflect new information available within specified periods stipulated by the FRA but that exceed the Company's financial reporting timeline.
3
The 2023 comparison for RTMs represents combined operating information to illustrate the estimated effects of the acquisition as if the acquisition closed on January 1, 2022.
Conference Call DetailsCPKC will discuss its results with the financial community in a conference call beginning at 4:30 p.m. ET (2:30 p.m. MT) on Oct. 23, 2024.
Conference Call AccessCanada and U.S.: 800-225-9448International: 203-518-9708*Conference ID: CPKCQ324Callers should dial in 10 minutes prior to the call.
WebcastWe encourage you to access the webcast and presentation material in the Investors section of CPKC's website at investor.cpkcr.com.
A replay of the third-quarter conference call will be available by phone through Oct. 30, 2024, at 800-839-4014 (Canada/U.S.) or 402-220-2983 (International).
Forward looking informationThis news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws in both the U.S. and Canada. Forward-looking information 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", "guidance", "should" or similar words suggesting future outcomes. This news release contains forward-looking information relating, but not limited, to statements concerning our ability to deliver on our financial guidance for 2024, strategic initiatives and investments, the success of our business, the realization of anticipated benefits and synergies of the CP-KCS combination, and the opportunities arising therefrom, our operations, priorities and plans, business prospects and demand for our services and growth opportunities.
The forward-looking information that may be in this news release is based on current expectations, estimates, projections and assumptions, having regard to CPKC's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: changes in business strategies, North American and global economic growth and conditions; commodity demand growth; sustainable industrial and agricultural production; commodity prices and interest rates; performance of our assets and equipment; sufficiency of our budgeted capital expenditures in carrying out our business plan; geopolitical conditions, applicable laws, regulations and government policies; the availability and cost of labour, services and infrastructure; labour disruptions; the satisfaction by third parties of their obligations to CPKC; and carbon markets, evolving sustainability strategies, and scientific or technological developments. Although CPKC believes the expectations, estimates, projections and assumptions reflected in the forward-looking information presented herein are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from those expressed or implied by forward-looking information. By its nature, CPKC's forward-looking information involves 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 and strategic opportunities; general Canadian, U.S., Mexican and global social, economic, political, credit and business conditions; risks associated with agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures, including competition from other rail carriers, trucking companies and maritime shippers in Canada, the U.S. and Mexico; North American and global economic growth and conditions; industry capacity; shifts in market demand; changes in commodity prices and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped via CPKC; inflation; geopolitical instability; changes in laws, regulations and government policies, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; disruption in fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations; exchange rates; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions or other changes to international trade arrangements; the effects of current and future multinational trade agreements on the level of trade among Canada, the U.S. and Mexico; climate change and the market and regulatory responses to climate change; anticipated in-service dates; success of hedging activities; operational performance and reliability; customer, regulatory and other stakeholder approvals and support; regulatory and legislative decisions and actions; the adverse impact of any termination or revocation by the Mexican government of Kansas City Southern de México, S.A. de C.V.'s Concession; public opinion; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; acts of terrorism, war or other acts of violence or crime or risk of such activities; insurance coverage limitations; material adverse changes in economic and industry conditions, including the availability of short and long-term financing; the demand environment for logistics requirements and energy prices, restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions, and disruptions to global supply chains; the realization of anticipated benefits and synergies of the CP-KCS transaction and the timing thereof; the satisfaction of the conditions imposed by the U.S. Surface Transportation Board in its March 15, 2023 final decision; the success of integration plans for KCS; other disruptions arising from the CP-KCS integration; estimated future dividends; financial strength and flexibility; debt and equity market conditions, including the ability to access capital markets on favourable terms or at all; cost of debt and equity capital; improvement in data collection and measuring systems; industry-driven changes to methodologies; and the ability of the management of CPKC to execute key priorities, including those in connection with the CP-KCS transaction. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CPKC with securities regulators in Canada and the United States. Reference should be made to "Item 1A, Risk Factors" and "Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Forward-Looking Statements" in CPKC's annual and interim reports on Form 10-K and 10-Q.
Any forward-looking information contained in this news release is made as of the date hereof. Except as required by law, CPKC undertakes no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.
Forward-Looking Non-GAAP MeasuresAlthough CPKC has provided forward-looking non-GAAP measures (core adjusted combined diluted EPS) management is unable to reconcile, without unreasonable efforts, the forward-looking core adjusted combined diluted EPS to the most comparable GAAP measure, due to unknown variables and uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value. In recent years, the Company has recognized acquisition-related costs, the merger termination payment received, KCS's gain on unwinding of interest rate hedges (net of Canadian Pacific's (CP) associated purchase accounting basis differences and tax), loss on derecognition of CPKC's previously held equity method investment in KCS, discrete tax items, changes in the outside basis tax difference between the carrying amount of the Company's equity investment in KCS and its tax basis of the investment, adjustments to provisions and settlements of Mexican taxes, changes in income tax rates, and changes to an uncertain tax item. Acquisition-related costs include legal, consulting, financing fees, integration costs including third-party services and system migration, debt exchange transaction costs, community investments, fair value gain or loss on FX forward contracts and interest rate hedges, FX gain on U.S. dollar-denominated cash on hand from the issuances of long-term debt to fund the KCS acquisition, restructuring, employee retention and synergy incentive costs, and transaction and integration costs incurred by KCS which were recognized within Equity earnings of Kansas City Southern in the Company's Consolidated Statements of Income. KCS has also recognized FX gains and losses. These items may not be non-recurring and may include items that are settled in cash. Specifically, due to the magnitude of the acquisition, its significant impact to the Company's business and complexity of integrating the acquired business and operations, the Company expects to incur the acquisition-related costs beyond the year of acquisition. These or other similar, large unforeseen transactions affect diluted EPS but may be excluded from CPKC's core adjusted combined diluted EPS. Additionally, the Canadian-to-U.S. dollar and Mexican peso-to-U.S. dollar exchange rates are unpredictable and can have a significant impact on CPKC's reported results but may be excluded from CPKC's core adjusted combined diluted EPS. For further information regarding non-GAAP measures, see below.
About CPKCWith its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of México to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR
FINANCIAL STATEMENTS
INTERIM CONSOLIDATED STATEMENTS OF INCOME(unaudited)
For the three months ended September 30
For the nine months ended September 30
(in millions of Canadian dollars, except share and per share data)
2024
2023
2024
2023
Revenues (Note 3)
Freight
$ 3,461
$ 3,266
$ 10,422
$ 8,584
Non-freight
88
73
250
195
Total revenues
3,549
3,339
10,672
8,779
Operating expenses
Compensation and benefits (Note 8)
644
598
1,946
1,695
Fuel
419
430
1,343
1,153
Materials (Note 8)
99
90
290
260
Equipment rents
89
91
253
201
Depreciation and amortization (Note 8)
472
451
1,412
1,086
Purchased services and other (Note 8)
623
506
1,809
1,438
Total operating expenses
2,346
2,166
7,053
5,833
Operating income
1,203
1,173
3,619
2,946
Less:
Equity earnings of Kansas City Southern (Note 8, 9)
—
—
—
(230)
Other expense (income) (Note 8, 10)
1
13
(41)
36
Other components of net periodic benefit recovery (Note 12)
(89)
(85)
(265)
(254)
Net interest expense (Note 8)
192
207
598
565
Remeasurement loss of Kansas City Southern (Note 8)
—
—
—
7,175
Income (loss) before income tax expense (recovery)
1,099
1,038
3,327
(4,346)
Less:
Current income tax expense (Note 4)
257
255
773
674
Deferred income tax expense (recovery) (Note 4, 8)
5
3
40
(7,925)
Income tax expense (recovery) (Note 4)
262
258
813
(7,251)
Net income
$ 837
$ 780
$ 2,514
$ 2,905
Less: Net (loss) income attributable to non-controlling interest (Note 8)
—
—
(3)
1
Net income attributable to controlling shareholders
$ 837
$ 780
$ 2,517
$ 2,904
Earnings per share (Note 5)
Basic earnings per share
$ 0.90
$ 0.84
$ 2.70
$ 3.12
Diluted earnings per share
$ 0.90
$ 0.84
$ 2.69
$ 3.11
Weighted-average number of shares (millions) (Note 5)
Basic
933.2
931.5
932.8
931.1
Diluted
935.3
933.9
934.8
933.7
Dividends declared per share
$ 0.19
$ 0.19
$ 0.57
$ 0.57
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(unaudited)
For the three months ended September 30
For the nine months ended September 30
(in millions of Canadian dollars)
2024
2023
2024
2023
Net income
$ 837
$ 780
$ 2,514
$ 2,905
Net (loss) gain in foreign currency translation adjustments, net of hedging activities
(423)
605
577
(33)
Change in derivatives designated as cash flow hedges
1
2
5
5
Change in pension and post-retirement defined benefit plans
12
8
35
13
Other comprehensive (loss) income from equity investees
(5)
—
(7)
7
Other comprehensive (loss) income before income taxes
(415)
615
610
(8)
Income tax (expense) recovery
(7)
15
(1)
(5)
Other comprehensive (loss) income (Note 6)
(422)
630
609
(13)
Comprehensive income
$ 415
$ 1,410
$ 3,123
$ 2,892
Comprehensive (loss) income attributable to non-controlling interest (Note 6)
(15)
20
16
13
Comprehensive income attributable to controlling shareholders
$ 430
$ 1,390
$ 3,107
$ 2,879
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED BALANCE SHEETS AS AT(unaudited)
September 30
December 31
(in millions of Canadian dollars)
2024
2023
Assets
Current assets
Cash and cash equivalents
$ 463
$ 464
Accounts receivable, net (Note 7)
1,941
1,887
Materials and supplies
407
400
Other current assets
261
251
3,072
3,002
Investments
555
533
Properties
53,242
51,744
Goodwill (Note 8)
18,160
17,729
Intangible assets
2,972
2,974
Pension asset
3,604
3,338
Other assets
620
582
Total assets
$ 82,225
$ 79,902
Liabilities and equity
Current liabilities
Accounts payable and accrued liabilities
$ 2,594
$ 2,567
Long-term debt maturing within one year (Note 10, 11)
3,204
3,143
5,798
5,710
Pension and other benefit liabilities
580
581
Other long-term liabilities
817
797
Long-term debt (Note 10, 11)
18,710
19,351
Deferred income taxes
11,240
11,052
Total liabilities
37,145
37,491
Shareholders' equity
Share capital
25,672
25,602
Additional paid-in capital
94
88
Accumulated other comprehensive loss (Note 6)
(28)
(618)
Retained earnings
18,405
16,420
44,143
41,492
Non-controlling interest
937
919
Total equity
45,080
42,411
Total liabilities and equity
$ 82,225
$ 79,902
See Contingencies (Note 14).
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)
For the three months ended September 30
For the nine months ended September 30
(in millions of Canadian dollars)
2024
2023
2024
2023
Operating activities
Net income
$ 837
$ 780
$ 2,514
$ 2,905
Reconciliation of net income to cash provided by operating activities:
Depreciation and amortization
472
451
1,412
1,086
Deferred income tax expense (recovery) (Note 4)
5
3
40
(7,925)
Pension recovery and funding (Note 12)
(79)
(76)
(230)
(231)
Equity earnings of Kansas City Southern (Note 8, 9)
—
—
—
(230)
Remeasurement loss of Kansas City Southern (Note 8)
—
—
—
7,175
Dividend from Kansas City Southern (Note 9)
—
—
—
300
Settlement of Mexican taxes (Note 4)
(2)
(75)
(2)
(75)
Settlement of foreign currency forward contract (Note 11)
—
—
(65)
—
Other operating activities, net
59
11
(9)
(8)
Changes in non-cash working capital balances related to operations
(20)
(67)
(95)
(196)
Net cash provided by operating activities
1,272
1,027
3,565
2,801
Investing activities
Additions to properties
(748)
(733)
(2,083)
(1,767)
Additions to Meridian Speedway properties
(9)
(19)
(29)
(27)
Proceeds from sale of properties and other assets
9
12
19
28
Cash acquired on control of Kansas City Southern (Note 8)
—
—
—
298
Investment in government securities
—
—
—
(267)
Other investing activities, net
(12)
(2)
9
(26)
Net cash used in investing activities
(760)
(742)
(2,084)
(1,761)
Financing activities
Dividends paid
(177)
(177)
(532)
(530)
Issuance of Common Shares
13
13
55
50
Repayment of long-term debt, excluding commercial paper (Note 10)
(89)
(12)
(309)
(1,108)
Net (repayment) issuance of commercial paper (Note 10)
(343)
(147)
(705)
403
Acquisition-related financing fees
—
(2)
—
(17)
Other financing activities, net
—
1
—
—
Net cash used in financing activities
(596)
(324)
(1,491)
(1,202)
Effect of foreign currency fluctuations on foreign-denominated cash and cash equivalents
(10)
8
9
5
Cash position
Net decrease in cash and cash equivalents
(94)
(31)
(1)
(157)
Cash and cash equivalents at beginning of period
557
325
464
451
Cash and cash equivalents at end of period
$ 463
$ 294
$ 463
$ 294
Supplemental cash flow information
Income taxes paid
$ 173
$ 205
$ 724
$ 648
Interest paid
$ 157
$ 152
$ 563
$ 570
See Notes to Interim Consolidated Financial Statements.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)
For the three months ended September 30
(in millions of Canadian dollars except per share data)
Common shares (in millions)
Share
capital
Additional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total
shareholders'
equity
Non-controlling interest
Total
equity
Balance as at July 1, 2024
933.1
$ 25,655
$ 93
$ 379
$ 17,745
$ 43,872
$ 951
$ 44,823
Net income
—
—
—
—
837
837
—
837
Contribution from non-controlling interest
—
—
—
—
—
—
1
1
Other comprehensive loss (Note 6)
—
—
—
(407)
—
(407)
(15)
(422)
Dividends declared ($0.19 per share)
—
—
—
—
(177)
(177)
(177)
Effect of stock-based compensation expense
—
—
4
—
—
4
—
4
Shares issued under stock option plan
0.2
17
(3)
—
—
14
—
14
Balance as at September 30, 2024
933.3
$ 25,672
$ 94
$ (28)
$ 18,405
$ 44,143
$ 937
$ 45,080
Balance as at July 1, 2023
931.4
$ 25,563
$ 88
$ (544)
$ 14,972
$ 40,079
$ 925
$ 41,004
Net income
—
—
—
—
780
780
—
780
Other comprehensive income (Note 6)
—
—
—
610
—
610
20
630
Dividends declared ($0.19 per share)
—
—
—
—
(177)
(177)
—
(177)
Effect of stock-based compensation expense
—
—
5
—
—
5
—
5
Shares issued under stock option plan
0.3
16
(3)
—
—
13
—
13
Balance as at September 30, 2023
931.7
$ 25,579
$ 90
$ 66
$ 15,575
$ 41,310
$ 945
$ 42,255
For the nine months ended September 30
(in millions of Canadian dollars except per share data)
Common shares (in millions)
Share
capital
Additional
paid-in
capital
Accumulated other comprehensive
income (loss)
Retained
earnings
Total
shareholders'
equity
Non-controlling interest
Total
equity
Balance at January 1, 2024
932.1
$ 25,602
$ 88
$ (618)
$ 16,420
$ 41,492
$ 919
$ 42,411
Net income (loss)
—
—
—
—
2,517
2,517
(3)
2,514
Contribution from non-controlling interest
—
—
—
—
—
—
2
2
Other comprehensive income (Note 6)
—
—
—
590
—
590
19
609
Dividends declared ($0.57 per share)
—
—
—
(532)
(532)
—
(532)
Effect of stock-based compensation expense
—
—
20
—
—
20
—
20
Shares issued under stock option plan
1.2
70
(14)
—
—
56
—
56
Balance as at September 30, 2024
933.3
$ 25,672
$ 94
$ (28)
$ 18,405
$ 44,143
$ 937
$ 45,080
Balance as at January 1, 2023
930.5
$ 25,516
$ 78
$ 91
$ 13,201
$ 38,886
$ ,
$ 38,886
Net income
—
—
—
—
2,904
2,904
1
2,905
Other comprehensive (loss) income (Note 6)
—
—
—
(25)
—
(25)
12
(13)
Dividends declared ($0.57 per share)
—
—
—
—
(530)
(530)
—
(530)
Effect of stock-based compensation expense
—
—
24
—
—
24
—
24
Shares issued under stock option plan
1.2
63
(12)
—
—
51
—
51
Non-controlling interest in connection with business acquisition
—
—
—
—
—
—
932
932
Balance as at September 30, 2023
931.7
$ 25,579
$ 90
$ 66
$ 15,575
$ 41,310
$ 945
$ 42,255
See Notes to Interim Consolidated Financial Statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2024 (unaudited)
1 Description of business and basis of presentation
Canadian Pacific Kansas City Limited ("CPKC" or the "Company") owns and operates a transcontinental freight railway spanning Canada, the United States ("U.S."), and Mexico. CPKC provides rail and intermodal transportation services over a network of approximately 20,000 miles, serving principal business centres across Canada, the U.S., and Mexico. The Company transports bulk commodities, merchandise, and intermodal freight. CPKC's Common Shares trade on the Toronto Stock Exchange and New York Stock Exchange under the symbol "CP".
On April 14, 2023, Canadian Pacific Railway Limited ("CPRL") assumed control of Kansas City Southern ("KCS") and changed its name to Canadian Pacific Kansas City Limited. These unaudited interim consolidated financial statements as at and for the three and nine months ended September 30, 2024 ("Interim Consolidated Financial Statements") include KCS as a consolidated subsidiary from April 14, 2023. For the period beginning on January 1, 2023 and ending on April 13, 2023, the Company's 100% interest in KCS was accounted for and reported as an equity-method investment (see Notes 8 and 9).
These Interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). They do not include all of the information required for a complete set of annual financial statements prepared in accordance with GAAP and should be read in conjunction with the Company's audited consolidated financial statements as at and for the year ended December 31, 2023 ("last annual financial statements"). Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and results of operations since the last annual financial statements. These Interim Consolidated Financial Statements have been prepared using the same significant accounting policies used in the last annual financial statements, except for the adoption of new standards, where applicable (see Note 2). Amounts are stated in Canadian dollars unless otherwise noted.
The Company's operations and income for interim periods can be affected by seasonal fluctuations such as changes in customer demand and weather conditions, and may not be indicative of annual results.
2 Accounting changes
Recently adopted accounting standards
The accounting standards that have become effective during the three and nine months ended September 30, 2024 did not have a material impact on the Interim Consolidated Financial Statements.
Accounting standards not yet adopted
Recently issued accounting pronouncements are not expected to have a material impact on the Company's financial position or results of operations when they are adopted.
3 Revenues
The following table presents disaggregated information about the Company's revenues from contracts with customers by major source:
For the three months ended September 30
For the nine months ended September 30
(in millions of Canadian dollars)
2024
2023
2024
2023
Grain
$ 668
$ 600
$ 2,063
$ 1,652
Coal
248
229
693
603
Potash
144
133
461
409
Fertilizers and sulphur
91
91
298
276
Forest products
198
199
603
489
Energy, chemicals and plastics
712
643
2,109
1,584
Metals, minerals and consumer products
443
455
1,347
1,128
Automotive
333
266
956
648
Intermodal
624
650
1,892
1,795
Total freight revenues
3,461
3,266
10,422
8,584
Non-freight excluding leasing revenues
42
39
148
105
Revenues from contracts with customers
3,503
3,305
10,570
8,689
Leasing revenues
46
34
102
90
Total revenues
$ 3,549
$ 3,339
$ 10,672
$ 8,779
4 Income taxes
During the nine months ended September 30, 2024, legislation was enacted to decrease the Arkansas state corporate income tax rate. As a result of this change, the Company recorded a deferred income tax recovery of $3 million related to the revaluation of deferred income tax balances.
During the three and nine months ended September 30, 2023, legislation was enacted to decrease the Iowa and Arkansas state corporate income tax rates. As a result of these changes, the Company recorded a deferred income tax recovery of $14 million related to the revaluation of deferred income tax balances.
The effective tax rates including discrete items for the three and nine months ended September 30, 2024 were 23.88% and 24.44%, respectively, compared to 24.88% and 166.83%, respectively, for the same periods of 2023.
For the three months ended September 30, 2024, the effective tax rate was 24.24%, excluding the discrete items of amortization of business acquisition fair value adjustments of $90 million, acquisition-related costs incurred by CPKC of $36 million, and adjustments to provisions and settlements of Mexican taxes of $7 million recovery recognized in "Compensation and benefits".
For the three months ended September 30, 2023, the effective tax rate was 24.96%, excluding the discrete items of amortization of business acquisition fair value adjustments of $87 million, acquisition-related costs incurred by CPKC of $24 million, a tax settlement with the Servicio de Administración Tributaria ("SAT") (Mexican tax authority) in relation to taxation years for which audits have closed and an estimated reserve for potential future audit settlements totaling $15 million, and a deferred income tax recovery of $14 million on state corporate income tax rate changes as mentioned above.
For the nine months ended September 30, 2024, the effective tax rate was 24.75%, excluding the discrete items of amortization of business acquisition fair value adjustments of $264 million, acquisition-related costs incurred by CPKC of $90 million, adjustments to provisions and settlements of Mexican taxes of $3 million expense recognized in "Compensation and benefits", and a deferred income tax recovery of $3 million on the Arkansas state corporate income tax rate change.
For the nine months ended September 30, 2023, the effective tax rate was 24.91%, excluding the discrete items of the reversal of the deferred income tax liability on the outside basis difference of the investment in KCS of $7,832 million upon acquiring control of KCS, remeasurement loss of KCS of $7,175 million, the equity earnings of KCS of $230 million, amortization of business acquisition fair value adjustments of $162 million, acquisition-related costs incurred by CPKC of $158 million, revaluation of deferred income tax balances on unitary state ...
