(Source: Kansas City Southern press release (PDF), July 17, 2015)
KANSAS CITY, Mo. — Kansas City Southern (KCS) reported second quarter 2015 revenues of $586 million, a decrease of 10% compared to second quarter 2014. Overall, carload volumes were 6% lower than in second quarter 2014. Excluding the estimated impacts of lower U.S. fuel prices and peso depreciation, revenue declined 2% compared to the second quarter of 2014.
Second Quarter 2015 Highlights:
• Revenue of $586 million, a decrease of 10% compared to second quarter 2014.
• Operating income of $187 million. Excluding lease termination costs in 2014, adjusted operating income was 13% lower than a year ago.
• Operating ratio of 68.1%, compared with 68.3% in second quarter 2014. Excluding lease termination costs in 2014, adjusted operating ratio increased 1.1 points compared to second quarter 2014.
• Diluted earnings per share of $1.01. Adjusted diluted earnings per share of $1.03 for second quarter 2015, a 15% decrease compared to second quarter 2014.
Second quarter revenue declined in all commodity groups except Chemicals & Petroleum, which grew 1%. Energy revenue declined 46% driven by lower volumes in utility coal due to lower natural gas prices and in frac sand volumes as a result of the significant decline in U.S. drilling operations.
Operating expenses in the second quarter were $399 million, 8% lower than 2014 when excluding lease termination costs in 2014. Excluding the estimated impacts of lower U.S. fuel prices and peso depreciation, operating expenses declined 1% compared to the second quarter of 2014, when excluding lease termination costs in 2014.
Operating income for the second quarter of 2015 was $187 million compared with $214 million a year ago, when excluding lease termination costs in 2014. KCS reported a second quarter 2015 adjusted operating ratio of 68.1%, a 1.1 point increase compared to second quarter 2014.
Reported net income in the second quarter of 2015 totaled $112 million, or $1.01 per diluted share, compared with $130 million, or $1.18 per diluted share, in the second quarter of 2014. Excluding the impacts of foreign exchange rate fluctuations and lease termination costs, adjusted diluted earnings per share for second quarter 2015 was $1.03 compared to $1.21 in 2014.
“KCS continued to scale its operations in both the U.S. and Mexico and has made strides in improving its network fluidity,” stated KCS’ Chief Executive Officer David L. Starling. “Our actions contributed to the Company attaining a solid second quarter operating ratio despite volume challenges, particularly in its Energy commodity group. We expect our system performance and operating metrics to continue to improve throughout the remainder of the year.
“As evidenced in the weekly industry carload data, there are still uncertainties in many of the primary markets served by rail. However, KCS’ average daily volumes increased each month throughout the second quarter and the initial results from the first few weeks of July suggest the positive trend may be continuing.”