Canadian Pacific Railway is planning to buy more than 4.8 million company shares in a share buy-back program valued at nearly $1.6 billion.
Officials from Canada’s second largest rail company announced Dec. 17 that the Toronto Stock Exchange had accepted the company’s notice to purchase, for cancellation, up to 4,800,862 common shares.
The buy-back program started Dec. 20 and is due to end Dec. 19, 2020.
The program will account for the purchase and cancellation of approximately 3.5 percent of CP’s outstanding common shares as of Dec. 9, 2019, the company said.
CP shares on the TSX were trading in the range of $333 shortly after the buyback program was announced.
Company shares on the New York Stock Exchange were trading at around US$25.
“This new share buyback program reinforces our confidence in the continued growth prospects of the company,” said CP president Keith Creel.
“CP’s strong cash flow generation enables us to return cash to shareholders in a disciplined, opportunistic manner.”
Purchases of CP common shares under the program may be made through the TSX, the NYSE or alternative trading systems by means of open market transactions.
The purchase price for any common shares acquired will be the market price at the time of purchase or such other price as may be permitted by the TSX.
Meanwhile, CP’s board of directors announced a quarterly shareholder dividend of 83 cents per share on Dec. 16, payable on all outstanding common shares.
The dividend is payable on Jan. 27, 2020, to shareholders of record at the close of business on Dec. 27, 2019.
CP has been moving Canadian grain at a record pace over the past few months.
According to a Dec. 2 news release, the company moved more Canadian grain and grain products in November 2019 than in any month in the company’s history.
CP transported 2.74 million tonnes of Canadian grain and grain products in November, beating the previous all-time record of 2.66 million tonnes set in October 2019.
The company also reported record third-quarter revenues of $1.98 billion from all sources and a record-low quarterly operating ratio of 56.1 percent.
“After a record second quarter that included strong operating metrics including train speed and terminal dwell, we continue to see those performance measures be improved upon,” Creel said in an October news release.
“Our disciplined approach to precision-scheduled railroading and the commitment of our 13,000-strong CP family puts us in a position to control what we can as we navigate softer volumes, macroeconomic challenges and geopolitical tensions into the fourth quarter.”
Based on 2018 figures, CP generated 41 percent of its annual freight revenues through the movement of bulk commodities, including grain, potash, coal, fertilizer and sulfur.
Intermodal business accounted for another 21 percent, while merchandise — including energy, chemicals, plastic, metals, minerals, consumer products, automotive goods and forest products — accounted for the remaining 37 percent.
In 2018, the company generated revenues of $1.566 billion moving North American grain, including $1.065 billion from Canadian grain and $500 million from American product.
Of the $1.065 billion generated from Canadian grain, approximately $736 million was earned on federally regulated grain routes that are subject to maximum revenue entitlements, also known as railway revenue caps.