(Source: Kansas City Southern press release, January 23, 2011)
KANSAS CITY, Mo. — Kansas City Southern reported record fourth quarter 2011 revenues of $530 million. Fourth quarter carloads of 522 thousand, also a record, increased 7% over fourth quarter 2010.
Fourth quarter 2011 highlights:
• Revenue of $530 million, an increase of 11% over fourth quarter 2010.
• Operating income of $150 million, 11% higher than a year ago.
• Operating ratio of 71.6%, compared with 71.8% in fourth quarter 2010.
• Diluted earnings per share for fourth quarter 2011 was $0.87 compared with diluted earnings per share of $0.50 in fourth quarter 2010. Excluding debt retirement costs, adjusted diluted earnings per share for fourth quarter 2011 was $1.01 compared to $0.62 in 2010.
Fourth quarter revenue growth, compared to 2010 was led by a 30% increase in Automotive and a 29% increase in Intermodal revenues. Coal was also strong with revenues growing by 20% in the fourth quarter of 2011. Industrial and Consumer Products were up 8% over 2010. Agriculture and Minerals revenue grew 2%. Revenue in Chemical & Petroleum declined 1% in the fourth quarter in part due to inventory destocking, a maintenance outage at a major refinery and a customer’s contractual obligation to balance shipments between KCS and another carrier.
Operating income for the fourth quarter of 2011 was $150 million compared with $135 million a year ago, an 11% increase. KCS reported a fourth quarter 2011 operating ratio of 71.6%, an improvement from fourth quarter 2010. Operating expenses in the fourth quarter were $380 million compared with $344 million in the corresponding 2010 period. The increase was in part due to higher expenses related to fuel and incentive compensation.
Reported net income to common stockholders in the fourth quarter of 2011 totaled $96 million, or $0.87 per diluted share, compared with $52 million, or $0.50 per diluted share, in the fourth quarter of 2010. Excluding debt retirement costs, adjusted diluted earnings per share for fourth quarter 2011 was $1.01 compared to $0.62 in 2010. Both the 2011 reported and adjusted diluted earnings per share include a tax benefit of $0.23 per share, largely related to foreign exchange rate fluctuation.
For the full year 2011, revenue was a record $2.1 billion, up 16% over 2010. This is the first time that KCS generated annual revenue above $2 billion. Carloads for 2011 were 2 million, the first time annual volumes reached the 2 million threshold.
Full-year operating income was $612 million, a 26% increase over the prior year, and the Company’s 2011 operating ratio was 70.9% compared with 73.2% in 2010. Diluted earnings per share for full year 2011 were $3.00 compared to $1.67 for 2010.
“KCS’s solid fourth quarter put the final touches on a successful 2011,” stated David L. Starling, president and chief executive officer. “The Company can point to notable achievements in all areas, including marketing and sales, finance and operations.
“For the first time in our railroad’s 125 years, we attained over $2 billion in revenue and 2 million in carloads. During the fourth quarter, using available cash, KCS redeemed the entire $123.5 million aggregate principal amount of KCSR’s 13% Senior Notes. These notes were issued in December 2008 at the height of the global financial credit crisis, and to accomplish this in only three years speaks to the Company’s significantly improved financial strength. During 2011, we further levered our stronger financial position to improve liquidity, increasing revolver capacity by $175 million and extending revolver maturities.
“In addition, with the help of continually improving system-wide operating efficiency, KCS again improved its annual operating ratio. Our progress was recognized both in the credit and equity markets with upgrades to our credit ratings and a 42% increase in our stock price for the year.
“KCS continues to have abundant growth prospects and is very well-positioned to be a leading growth company in the transportation industry. We believe that in 2012, KCS will continue on a growth trend similar to that of the past year with mid-single digit increases in volumes and pricing. We are also committed to further improvements in our operating ratio for 2012.”