Canadian Pacific Railway (CP) Q1 2016 Earnings Call Transcript

posted in: Earnings, Notes | 0

Canadian Pacific (CP) Chief Operating Officer Keith Creel said the company performed phenomenally well in a tough economic environment

“In this current very demanding environment that we are living in today it is all about focusing on and controlling what we can. It is leveraging this operating model to succeed. The metrics you see certainly speak for themselves. Double-digit improvements, [speed], locomotive productivity, car miles per day, train length and fuel efficiency both improving by 5%. So all fruits of the hard labor and the execution day in and day out while we improved service and delivered for our shareholders.”

Feels to them as if the Canadian economy is bottoming 

“So that said the Canadian economy though on a positive note appears to be stabilizing and recessionary fears seem to be subsiding. So we do feel that the second-quarter is going to be the bottom. Q3, Q4 obviously are going to be stronger on a demand standpoint.”

Canadian Pacific marketing team is cold calling customers in order to land sales

“Becoming part of our customers’ supply chains, part of our customers’ business offering, help them grow, so that we can grow with them to a point this past quarter, we did over 3000 cold call sales.  I bet CP never did 3000 cold call sales in the last decade. So that is how hungry this marketing team is and as a result of that we have got customers that never experienced CP, we have got customers that are under their own pressures to control cost that are taking advantage of this low-cost transportation service we can provide.”

Domestic economy is good, international is less so 

“From domestic, it’s both Tom, I think the economy is good, the economy is going to help us a little bit but share gain certainly from truck most specifically.  International, it’s sort of a wild card. We had a pretty strong start to the year before the Chinese New Year but things have fallen off a bit since.  I feel much more confident about the domestic piece but we are going to do well in the marketplace.”

Canadian Pacific (CP) Chief Operating Officer Keith Creel said they decided to in-source their information technology systems

“f we don’t have good data if we don’t have good systems to make decisions with around the railway with day in and day out. If our systems crash, we can’t get our report — give us gauges on how we’re doing across the network on a day-to-day basis. It’s challenging. So, since we’ve in-sourced it, we have our own people, we’ve been able to develop our own skill-sets, our own win strength and our own level of accountability; the results have improved dramatically. And it lowered cost. So, again, it’s win-win situation for us.”