(Source: Kansas City Southern press release (PDF), October 19, 2018)
KANSAS CITY, Mo. — Kansas City Southern (KCS) reported record revenues of $699 million, an increase of 6% from third quarter 2017. Overall, carload volumes increased 4% compared to prior year.
Third Quarter 2018 Results
• Record revenues of $699 million, an increase of 6% from prior year on 4% volume growth
• Reported operating income of $265 million, 14% higher than prior year. Record adjusted operating income of $256 million, excluding a gain on insurance recoveries related to hurricane damage
• Reported operating ratio of 62.0%, compared to 64.4% in third quarter 2017. Adjusted operating ratio of 63.4%
• Reported diluted earnings per share of $1.70, an increase of 38% from prior year. Adjusted diluted earnings per share of $1.57, 16% higher than a year ago
Revenues for the third quarter of 2018 increased in three commodity groups, led by a 17% increase in Chemicals and Petroleum due to refined product shipments to Mexico. Automotive and Intermodal each grew by 8%. Industrial and Consumer Products and Agriculture and Minerals were each flat compared to prior year, and Energy declined by 2%.
Excluding a gain on insurance recoveries related to damage and service interruptions from Hurricane Harvey in 2017, adjusted operating expenses in the third quarter of 2018 were $443 million, 5% higher than 2017. Adjusted operating income was $256 million, 9% higher than a year ago. KCS reported an adjusted third quarter operating ratio of 63.4%, a 1.0 point improvement over third quarter 2017.
Reported net income in the third quarter of 2018 was $174 million, or $1.70 per diluted share, compared with $129 million, or $1.23 per diluted share in the third quarter of 2017. Adjusted diluted earnings per share were $1.57, 16% higher than a year ago, excluding the impacts of foreign exchange, adjustments to 2017 provisional income tax benefit for the Tax Cuts and Jobs Act and a gain on insurance recoveries related to hurricane damage.
“Kansas City Southern faced a challenging third quarter, as network congestion in northern Mexico led to a difficult operating environment,” stated Kansas City Southern’s President and Chief Executive Officer Patrick J. Ottensmeyer. “However, we have taken steps that we are confident will restore our service levels and allow us to continue delivering strong and diversified franchise cross-border volume and revenue growth, led by increased refined product shipments to Mexico and strength in Intermodal and Automotive commodity groups.
“As we look to 2019, our cross-border network offers unique opportunities for volume growth from our robust Chemicals & Petroleum, Intermodal, Automotive and export Grain franchises. Moreover, the capital investments that we have made throughout our network, position us to deliver superior long-term growth and strong financial results to our stockholders.”