Kansas City Southern Q3 income soars nearly 99% year-over-year to US$99.8M as revenues climb 24% to US$545M; company reports carload volumes 13% higher than year-ago period, 7% higher adjusted for Hurricane Alex

KANSAS CITY, Missouri , October 21, 2011 (press release) – Kansas City Southern (KCS) (NYSE:KSU - News) reported third quarter 2011 revenues of $545 million, a 24% increase compared to the corresponding 2010 period. Adjusted for last year’s estimated revenue loss due to Hurricane Alex, revenues increased 16%. Overall, carload volumes were 13% higher than last year or 7% higher adjusted for the hurricane.

On a reported basis, Automotive revenues were up 58% compared to a year ago. Intermodal revenues also showed strength increasing 38% over the same time period. Other revenue improvements were Industrial & Consumer Products, 32%; Chemical & Petroleum, 19%; Coal, 17%; and Agriculture & Minerals, 11%.

Operating expenses for the third quarter were $363 million, 13% higher than the corresponding 2010 period, or 14% higher adjusted for hurricane-related impacts and a 2010 post-employment expense benefit. The increase was primarily due to higher volumes, fuel expense and compensation and benefits expense. The increase in fuel expense was primarily the result of higher average fuel prices in the third quarter of 2011 and reduced fuel consumption in the third quarter of 2010 resulting from the extended closure of the main KCSM rail corridor due to Hurricane Alex. The increase in compensation and benefits expense was primarily attributable to wage rate increases, higher volumes, and the decreased value of the Mexican peso compared to the U.S. dollar. Operating income for the third quarter of 2011 was $182 million, which was 57% higher than 2010, or 19% adjusted for hurricane-related impacts and the 2010 post-employment expense benefit. KCS’s third quarter 2011 operating ratio adjusted for the hurricane-related impact was 71.3%, or 66.6% on a reported basis.

KCS reported net income available to common stockholders in the third quarter 2011 of $100 million, or $0.91 per diluted share, compared to $50 million, or $0.48 per diluted share in third quarter 2010. Adjusted for the hurricane-related impacts, the 2010 post-employment expense benefit and debt retirement costs, adjusted diluted earnings per share were $0.78 and $0.59 respectively.

“Kansas City Southern reported solid third quarter 2011 results,” stated David L. Starling, president and chief executive officer. “The company posted record carloadings and revenues and experienced strong year-over-year and sequential growth.

“These achievements are all the more impressive given the operating challenges caused by prolonged flooding in the Midwest, particularly along the Missouri River. The flooding resulted in the closure of a primary rail line into Kansas City from mid-June through Labor Day, which significantly disrupted grain and coal traffic. Given the difficult conditions, our operations and marketing teams did an outstanding job of maintaining service to our customers and keeping the negative impacts to a minimum.

“During the quarter, KCS continued to strengthen its financial position by amending and restating credit facilities at both KCSR and KCSM. The facilities improve liquidity and financial flexibility as well as extend the maturity dates. Also during the third quarter, KCS settled all Hurricane Alex insurance claims.

“While there persists an understandable level of anxiety in the financial markets over the state of the economy, KCS has experienced consistent growth. With the weather challenges behind us, we remain confident that our mid-single digit volume and mid-teen revenue growth guidance for 2011 is attainable.”

 
Kansas City Southern
Consolidated Statements of Income
(In millions, except share and per share amounts)
(Unaudited)
               
      Three Months Ended       Nine Months Ended
      September 30,       September 30,
      2011       2010       2011       2010
Revenues     $ 544.5         $ 438.3         $ 1,568.0         $ 1,336.2  
Operating expenses:                              
Compensation and benefits     109.3         87.3         314.1         271.7  
Purchased services     50.6         48.0         153.5         140.9  
Fuel     86.5         61.8         258.0         191.7  
Equipment costs     41.4         37.5         125.5         117.5  
Depreciation and amortization     47.9         46.1         139.1         138.8  
Gain on insurance recoveries related to hurricane damage     (25.6 )               (25.6 )        
Materials and other     52.6         41.6         142.2         124.2  
Total operating expenses     362.7         322.3         1,106.8         984.8  
                               
Operating income     181.8         116.0         461.2         351.4  
                                       
Equity in net earnings of unconsolidated affiliates     4.7         5.2         13.6         16.2  
Interest expense     (32.2 )       (36.2 )       (97.7 )       (122.5 )
Debt retirement costs     (3.9 )       (1.9 )       (14.2 )       (49.3 )
Foreign exchange gain (loss)     (7.2 )       2.0         (6.9 )       3.2  
Other income, net     0.6         2.4         2.3         3.9  
                               
Income before income taxes     143.8         87.5         358.3         202.9  
Income tax expense     43.7         34.7         122.4         78.5  
                               
Net income     100.1         52.8         235.9         124.4  
Less: Net income (loss) attributable to noncontrolling interest     0.3         (0.1 )       1.3         (1.2 )
                               
Net income attributable to Kansas City Southern and subsidiaries     99.8         52.9         234.6         125.6  
Preferred stock dividends             2.7         1.5         8.2  
                               
Net income available to common stockholders     $ 99.8         $ 50.2         $ 233.1         $ 117.4  
Earnings per share:                              
Basic earnings per share     $ 0.91         $ 0.49         $ 2.16         $ 1.18  
Diluted earnings per share     $ 0.91         $ 0.48         $ 2.13         $ 1.17  
                               
Average shares outstanding (in thousands):                              
Basic     109,515         102,082         107,752         99,337  
Potentially dilutive common shares     347         7,428         2,052         7,485  
Diluted     109,862         109,510         109,804         106,822  
                                       
 
 

© 2017 Business Wire, Inc., All rights reserved.