First Quarter 2018
Results
- Record first quarter revenues of $639
million, an increase of 5% from prior year on 1% volume growth
- Record first quarter operating income
of $219 million, 4% higher than a year ago
- Operating ratio of 65.8%, compared with
65.4% in first quarter 2017
- Record first quarter diluted earnings
per share of $1.40, an increase of 1% over first quarter 2017;
record first quarter adjusted diluted earnings per share of $1.30,
an increase of 11% over first quarter 2017
Kansas City Southern (KCS) (NYSE:KSU) reported record first
quarter 2018 revenues of $639 million, an increase of 5% from first
quarter 2017. Overall, carload volumes increased 1% compared to the
prior year.
First quarter 2018 revenues increased in four commodity groups,
led by a 17% increase in Automotive, a 10% increase in Chemicals
and Petroleum and a 9% increase in Intermodal. Revenue from
Industrial and Consumer was also positive with an increase of 4%
compared to the first quarter of 2017. These increases were
partially offset by declines in Energy and Agriculture and Minerals
of 11% and 2%, respectively, compared to the first quarter of
2017.
Operating expenses in the first quarter were $420 million, 5%
higher than 2017. Operating income was a first quarter record at
$219 million, an increase of 4% from the first quarter 2017. KCS
reported a first quarter operating ratio of 65.8%, a 0.4 point
deterioration over first quarter 2017.
Reported net income in the first quarter of 2018 was $145
million, or $1.40 per diluted share, compared with $147 million, or
$1.38 per diluted share, in the first quarter of 2017. Excluding
the impacts of foreign exchange, adjusted diluted earnings per
share was a first quarter record of $1.30, compared to $1.17 in
first quarter 2017.
“Despite congestion across the North American rail network, KCS
grew volumes in all commodity groups except Energy and Agriculture
and Minerals during the first quarter 2018,” stated Kansas City
Southern’s President and Chief Executive Officer Patrick J.
Ottensmeyer. “Furthermore, we maintain our outlook for mid-single
digit volume growth for full year 2018.”
GAAP Reconciliations
($ in millions, except per share
amounts)
Reconciliation of Diluted Earnings per Share to
Adjusted Diluted Earnings per
Share Three Months Ended March 31, 2018
Income BeforeIncome Taxes
Income TaxExpense
Net Income
Diluted Earningsper Share
As reported $ 221.7 $ 76.8 $ 144.9 $ 1.40 Adjustments for: Foreign
exchange gain (27.8 ) (8.3 ) (19.5 ) (0.19 ) Foreign exchange
component of income taxes — (8.9 ) 8.9 0.09
Adjusted $ 193.9 $ 59.6 134.3
Less: Noncontrolling interest and
preferred stock dividends
(0.5 )
Adjusted net income available to common
stockholders - see (a) below
$ 133.8 $ 1.30
Three Months Ended March 31,
2017
Income BeforeIncome Taxes
Income TaxExpense
Net Income
Diluted Earningsper Share
As reported $ 237.9 $ 91.0 $ 146.9 $ 1.38 Adjustments for: Foreign
exchange gain (46.8 ) (14.1 ) (32.7 ) (0.31 ) Foreign exchange
component of income taxes — (10.3 ) 10.3 0.10
Adjusted $ 191.1 $ 66.6 124.5
Less: Noncontrolling interest and
preferred stock dividends
(0.4 )
Adjusted net income available to common
stockholders - see (a) below
$ 124.1 $ 1.17 (a) The Company believes
adjusted diluted earnings per share is meaningful as it allows
investors to evaluate the Company’s performance for different
periods on a more comparable basis by excluding the impact of
changes in foreign currency exchange rates. The income tax expense
impacts related to these adjustments are calculated at the
applicable statutory tax rate.
Headquartered in Kansas City, Mo., Kansas City Southern (KCS)
(NYSE: KSU) is a transportation holding company that has railroad
investments in the U.S., Mexico and Panama. Its primary U.S.
holding is The Kansas City Southern Railway Company, serving the
central and south central U.S. Its international holdings include
Kansas City Southern de Mexico, S.A. de C.V., serving northeastern
and central Mexico and the port cities of Lázaro Cárdenas, Tampico
and Veracruz, and a 50 percent interest in Panama Canal Railway
Company, providing ocean-to-ocean freight and passenger service
along the Panama Canal. KCS' North American rail holdings and
strategic alliances are primary components of a railway network,
linking the commercial and industrial centers of the U.S., Mexico
and Canada. More information about KCS can be found at
www.kcsouthern.com.
This news release contains “forward-looking statements” within
the meaning of the securities laws concerning potential future
events involving KCS and its subsidiaries, which could materially
differ from the events that actually occur. Words such as
“projects,” “estimates,” “forecasts,” “believes,” “intends,”
“expects,” “anticipates,” and similar expressions are intended to
identify many of these forward-looking statements. Such
forward-looking statements are based upon information currently
available to management and management’s perception thereof as of
the date hereof. Differences that actually occur could be caused by
a number of external factors over which management has little or no
control, including: competition and consolidation within the
transportation industry; the business environment in industries
that produce and use items shipped by rail; loss of the rail
concession of KCS’ subsidiary, Kansas City Southern de México, S.A.
de C.V.; the termination of, or failure to renew, agreements with
customers, other railroads and third parties; access to capital;
disruptions to KCS’ technology infrastructure, including its
computer systems; natural events such as severe weather, hurricanes
and floods; market and regulatory responses to climate change;
legislative and regulatory developments and disputes; rail
accidents or other incidents or accidents on KCS’ rail network or
at KCS’ facilities or customer facilities involving the release of
hazardous materials, including toxic inhalation hazards;
fluctuation in prices or availability of key materials, in
particular diesel fuel; dependency on certain key suppliers of core
rail equipment; changes in securities and capital markets;
unavailability of qualified personnel; labor difficulties,
including strikes and work stoppages; acts of terrorism or risk of
terrorist activities; war or risk of war; domestic and
international economic, political and social conditions; the level
of trade between the United States and Asia or Mexico; fluctuations
in the peso-dollar exchange rate; increased demand and traffic
congestion; the outcome of claims and litigation involving KCS or
its subsidiaries; and other factors affecting the operation of the
business. More detailed information about factors that could affect
future events may be found in filings by KCS with the Securities
and Exchange Commission, including KCS’ Annual Report on Form 10-K
for the year ended December 31, 2017 (File No. 1-4717) and
subsequent reports. Forward-looking statements are not, and should
not be relied upon as, a guarantee of future performance or
results, nor will they necessarily prove to be accurate indications
of the times at or by which any such performance or results will be
achieved. As a result, actual outcomes and results may differ
materially from those expressed in forward-looking statements. KCS
is not obligated to update any forward-looking statements to
reflect future events or developments.
Kansas City Southern and Subsidiaries Consolidated
Statements of Income (In millions, except share and per share
amounts) (Unaudited)
Three Months
Ended March 31, 2018 2017
Revenues $ 638.6 $ 609.5 Operating expenses:
Compensation and benefits 121.6 117.4 Purchased services 47.1 48.8
Fuel 81.3 75.4 Mexican fuel excise tax credit (9.2 ) (11.7 )
Equipment costs 32.2 31.2 Depreciation and amortization 83.3 79.3
Materials and other 63.6 58.4 Total operating
expenses 419.9 398.8 Operating income 218.7 210.7
Equity in net earnings of affiliates 1.0 4.0 Interest expense (25.5
) (24.7 ) Foreign exchange gain 27.8 46.8 Other income (expense),
net (0.3 ) 1.1 Income before income taxes 221.7 237.9 Income
tax expense 76.8 91.0 Net income 144.9 146.9 Less:
Net income attributable to noncontrolling interest 0.4 0.3
Net income attributable to Kansas City Southern and
subsidiaries 144.5 146.6 Preferred stock dividends 0.1 0.1
Net income available to common stockholders $ 144.4 $
146.5 Earnings per share: Basic earnings per share $
1.41 $ 1.38 Diluted earnings per share $ 1.40
$ 1.38 Average shares outstanding (in thousands):
Basic 102,574 106,111 Potentially dilutive common shares 402
215 Diluted 102,976 106,326
Kansas City Southern and Subsidiaries Revenue &
Carload/Units by Commodity - First Quarter 2018 and 2017
Revenues Carloads and Units Revenue per (in
millions) (in thousands)
Carload/Unit Year to Date % Year to
Date % Year to Date % 2018 2017 Change 2018 2017 Change 2018 2017
Change Chemical & Petroleum Chemicals $ 57.7 $ 54.6 6 %
26.7 27.5 (3 %) $ 2,161 $ 1,985 9 % Petroleum 49.0 38.8 26 % 24.0
21.0 14 % 2,042 1,848 10 % Plastics 33.0 33.1 —
17.4 18.2 (4 %) 1,897 1,819 4 %
Total 139.7 126.5 10 % 68.1 66.7 2 %
2,051 1,897 8 % Industrial & Consumer
Products Forest Products 65.3 63.5 3 % 29.6 29.6 — 2,206 2,145 3 %
Metals & Scrap 53.8 54.3 (1 %) 29.7 30.4 (2 %) 1,811 1,786 1 %
Other 27.2 22.3 22 % 22.7 20.8 9 %
1,198 1,072 12 % Total 146.3 140.1 4 %
82.0 80.8 1 % 1,784 1,734 3 %
Agriculture & Minerals Grain 65.2 66.2 (2 %) 33.5 35.7 (6 %)
1,946 1,854 5 % Food Products 36.2 38.3 (5 %) 14.9 16.3 (9 %) 2,430
2,350 3 % Ores & Minerals 4.9 4.3 14 % 5.3 4.8 10 % 925 896 3 %
Stone, Clay & Glass 7.1 7.5 (5 %) 3.2 3.3
(3 %) 2,219 2,273 (2 %) Total 113.4
116.3 (2 %) 56.9 60.1 (5 %) 1,993 1,935
3 % Energy Utility Coal 29.3 42.8 (32 %) 30.0 44.5
(33 %) 977 962 2 % Coal & Petroleum Coke 10.2 11.0 (7 %) 13.4
16.3 (18 %) 761 675 13 % Frac Sand 11.1 10.7 4 % 7.1 7.2 (1 %)
1,563 1,486 5 % Crude Oil 10.7 4.5 138 % 7.0
3.7 89 % 1,529 1,216 26 % Total 61.3
69.0 (11 %) 57.5 71.7 (20 %) 1,066 962
11 % Intermodal 90.9 83.5 9 % 243.0
224.0 8 % 374 373 —
Automotive 59.8 51.3 17 % 39.8 37.6 6 %
1,503 1,364 10 %
TOTAL FOR COMMODITY
GROUPS 611.4 586.7 4 % 547.3 540.9 1 % $ 1,117
$ 1,085 3 % Other Revenue 27.2 22.8
19 %
TOTAL $ 638.6 $ 609.5 5 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180420005103/en/
Kansas City SouthernAshley Thorne,
816-983-1530athorne@kcsouthern.com
Kansas City Southern (NYSE:KSU)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kansas City Southern (NYSE:KSU)
Historical Stock Chart
From Jul 2023 to Jul 2024