(Source: Kansas City Southern press release (PDF), April 24, 2012)
KANSAS CITY, Mo. — Kansas City, MO. Kansas City Southern (KCS) (NYSE:KSU) reported record first quarter 2012 revenues of $548 million. Overall, carload volumes were 7% higher than in first quarter 2011.
First quarter 2012 results:
• All-time record quarterly revenues of $548 million, an increase of 12% over first quarter 2011 on a 7% increase in carloads.
• Operating income of $158 million, 23% higher than a year ago.
• Operating ratio of 71.2%, a 2.6 point improvement over first quarter 2011 and a 0.4 point sequential improvement over fourth quarter 2011.
• Diluted earnings per share of $0.68 compared with diluted earnings per share of $0.58 in first quarter 2011. Adjusted diluted earnings per share of $0.75 for first quarter 2012.
First quarter revenue growth compared to 2011 was led by a 26% increase in Intermodal and a 21% increase in Automotive revenues. Revenues from Industrial and Consumer Products and Agriculture and Minerals were also strong with growth of 17% and 14%, respectively, over 2011. Chemical & Petroleum revenue grew 6% in the first quarter.
Starting in the first quarter 2012, KCS has expanded the Coal business unit to better reflect the Company’s diversified opportunities in the energy sector. The expanded business unit has been renamed Energy and along with coal and petroleum coke, it includes crude oil, frac sand and other new energy markets. Energy revenue declined by 1% compared to 2011, primarily caused by a 10% decrease in utility coal. Coal and petroleum coke declined by 7% in the first quarter. Partially offsetting these declines were increases in revenue from crude oil and frac sand compared to first quarter 2011.
Operating income for the first quarter of 2012 was $158 million compared with $128 million a year ago, a 23% increase. KCS reported a first quarter 2012 operating ratio of 71.2%, a 2.6 point improvement from first quarter 2011. Operating expenses in the first quarter were $390 million compared with $361 million in the corresponding 2011 period.
Reported net income in the first quarter of 2012 totaled $75 million, or $0.68 per diluted share, compared with $64 million, or $0.58 per diluted share, in the first quarter of 2011. Excluding debt retirement costs, adjusted diluted earnings per share for first quarter 2012 was $0.75.
“We are encouraged by the overall strength of our first quarter 2012 results,” stated KCS’s president and chief executive officer David L. Starling. “The Company attained record first quarter volumes, revenues and operating ratio. The first quarter is typically the most challenging in terms of operations and volumes. For us to have an operating ratio of 71.2% in the quarter is a good start to the year.
“Already in 2012, we can point to a number of developments illustrative of our strengthening financial status. Reacting opportunistically to an attractive interest rate environment, we entered into a $275 million bank term loan arrangement, which carries a LIBOR plus 125 basis point interest rate. The Company is using the proceeds of this term loan arrangement to redeem its 8% Senior Notes, tendering $175 million of the Senior Notes during the first quarter, with the remaining $100 million expected to be called in the second quarter of 2012.
“Also during the first quarter, Standard & Poor’s upgraded its rating of KCS to BB+. This rating is only one notch below investment grade. The Company remains steadfast in its commitment to achieve investment grade status.
“Perhaps most reflective of our improved revenues, operating results and financial position is the announcement that we will pay a quarterly cash dividend on common stock beginning in the second quarter of 2012. While KCS remains, first and foremost, a company with significant long-term growth opportunities, our improved balance sheet and consistently strengthening operations and financials allow us to begin paying a dividend to our stockholders.”