(Source: Kansas City Southern press release (PDF), April 21, 2015)
KANSAS CITY, Mo. — Kansas City Southern (KCS) reported first quarter 2015 revenues of $603 million. Overall, carload volumes were 1% higher than in first quarter 2014.
HIGHLIGHTS:
• Revenue of $603 million, a decrease of 1% compared to first quarter 2014.
• Operating income of $178 million. Excluding lease termination costs, adjusted operating income of $188 million, 1% lower than a year ago.
• Operating ratio of 70.5%, compared with 73.7% in first quarter 2014. Excluding lease termination costs, adjusted operating ratio of 68.9%, a 0.2 point increase compared to first quarter 2014.
• Diluted earnings per share of $0.91. Adjusted diluted earnings per share of $1.03 for first quarter 2015, a 2% decrease compared to first quarter 2014.
Compared to 2014, first quarter revenue included a 9% increase in Chemicals & Petroleum and an 8% increase in Intermodal. Automotive was also strong, with revenues growing by 4% in the first quarter of 2015 despite headwinds from the weaker peso. Energy revenue declined 15% largely due to reduced utility coal shipments as a result of lower natural gas prices. Industrial & Consumer revenue declined 2% primarily due to lower metals shipments. Agriculture & Minerals revenue declined by 7% compared to the prior year, primarily due to a decline in grain shipments when compared to the strong first quarter of 2014. Also, excluding the impacts of lower U.S. fuel prices and the depreciating peso, revenue growth would have been approximately 4% compared to the first quarter of 2014.
After adjusting for lease termination costs, operating expenses in the first quarter were $415 million, 1% lower than 2014, primarily due to lower U.S. fuel prices and the depreciating peso. Adjusted operating income for the first quarter of 2015 was $188 million compared with $190 million a year ago. KCS reported a first quarter 2015 adjusted operating ratio of 68.9%, a 0.2 point increase compared to first quarter 2014.
Reported net income in the first quarter of 2015 totaled $101 million, or $0.91 per diluted share, compared with $94 million, or $0.85 per diluted share, in the first quarter of 2014. Excluding lease termination costs, debt retirement costs and the impacts of foreign exchange rate fluctuations, adjusted diluted earnings per share for first quarter 2015 was $1.03 compared to $1.05 in 2014.
“Lower-than-expected carloadings in a few commodity groups, particularly utility coal, coupled with a weak peso and the impact of low U.S. fuel prices on fuel surcharge revenues, combined to exert pressure on first quarter consolidated revenues” stated Chief Executive Officer David L. Starling. “We believe our ability to scale operating expenses and capital where necessary, provide KCS with the opportunity to improve earnings as 2015 progresses. In addition, we remain fully committed to managing our railroad in a manner designed to allow our Company and its stockholders to benefit from the abundant growth opportunities that should emerge in the years ahead.”