(Kansas City Southern issued the following on April 27, 2010.)
KANSAS CITY, Mo. — Kansas City Southern reported first quarter 2010 revenues of $436.3 million, a 26% increase compared to the corresponding 2009 period. Double digit revenue improvements were experienced in each of the reported commodity groups led by Automotive with 76% improvement in revenues from a year ago. The other revenue improvements were 39% for Intermodal, 28% for Agriculture & Minerals, 25% for Chemical & Petroleum, 25% for Coal, and 22% for Industrial & Consumer Products. Overall, volumes improved 15% from a year ago and 2% from fourth quarter 2009.
Highlights included:
— Adjusted Diluted Earnings Per Share, Which Excludes Debt Retirement Costs, is $0.44 for First Quarter 2010 up from a $0.05 Loss in the First Quarter 2009
–Revenues of $436.3 Million, a 26% Increase from Prior Year
–Operating Income of $108.2 Million, an Increase of 127% from a Year Ago
–Operating Ratio of 75.2%, Compared with 86.2% in First Quarter 2009, the Best Operating Ratio since the Acquisition of Kansas City Southern de Mexico, S.A. de C.V. (“KCSM”) in 2005
Operating income for the first quarter was more than double last year’s level at $108.2 million compared with $47.6 million last year, a 127% increase. The first quarter 2010 operating ratio was 75.2% compared with 86.2% a year ago. Operating expenses for the first quarter 2010 were $328.1 million.
Net income available to common shareholders in the first quarter totaled $32.6 million, or $0.34 per diluted share, compared to a loss of $8.1 million, or $(0.09) per diluted share in first quarter 2009. First quarter 2010 results include a $0.10 reduction per share from debt retirement costs and a $0.04 reduction per share in first quarter 2009. Excluding these debt retirement charges from each quarter, adjusted diluted earnings per share was $0.44 in first quarter 2010 compared to $(0.05) in first quarter 2009. (See table below for reconciliation of adjusted items to reported numbers.)
Comments from the Chairman
“In the first quarter, KCS reported increased traffic volumes in five of its six commodity groups and double digit revenue growth in all six groups. Driven by an upswing in manufacturing, KCS reported a 15% volume increase over the first quarter of last year, as well as a fourth quarter to first quarter sequential improvement in volumes of 2% which is highly unusual as historically first quarter carloadings lag the fourth quarter on our railroad.
“Organic volume strength and continued solid pricing, bolstered by the emergence of increasing cross-border business opportunities, contributed to KCS attaining a 26% increase in revenues. We also continued to experience positive pricing in many areas of our business reflecting the value of rail as an efficient transportation alternative, and specifically the high quality of KCS’s service levels. The impact of increased revenues on profitability was enhanced by continued cost controls and tightly managed rail operations in both the U.S. and Mexico. The result was a record first quarter operating ratio of 75.2%.
“KCS management has repeatedly stated that strengthening the company’s balance sheet and improving its capital structure are primary corporate goals. Indicative of this commitment, we refinanced $290 million of 9.375% KCSM debt which was due to mature in 2012 with KCSM 8.0% notes due in 2018.
“The widespread volume gains KCS achieved in the first quarter are certainly encouraging signs for the remainder of 2010. In addition, a number of key economic indicators are showing improving strength in the North American economies. That being said, we are still taking a cautious view of near-term business growth and investors can be confident that KCS will, first and foremost, focus on maximizing profitability through efficient operations and stringent cost controls.”