(Source: Kansas City Southern press release, July 21, 2011)
KANSAS CITY, Mo. — Kansas City Southern reported second quarter 2011 revenues of $535 million, a 16% increase compared to the corresponding 2010 period. Overall, carload volumes were 7% higher than in second quarter 2010.
Highlights:
— Revenues of $535 million, a 16% increase from prior year on a 7% increase in carloadings;
— Operating income of $152 million, an increase of 19% from a year ago;
— Operating ratio of 71.7%, a 0.7 point improvement over second quarter 2010;
–Adjusted diluted earnings per share of $0.71 for second quarter 2011 up from $0.55 in the second quarter 2010. Diluted earnings per share were $0.64 and $0.34 respectively.
All commodity groups contributed to the improvement in revenues. The Automotive group experienced a 42% increase in revenues in second quarter compared to the same period a year ago. Intermodal revenues also showed strength increasing 25% over the same time period. Other revenue improvements were 28% for Coal; 14% for Industrial and Consumer Products; 14% for Chemical and Petroleum; and 5% for Agriculture and Minerals.
Operating expenses for the second quarter of $383 million were $49 million, or 15%, higher than the corresponding 2010 period, primarily due to a 33% increase in fuel. Exclusive of fuel, operating expenses increased 10%. Operating income for the second quarter of 2011 was $152 million, which was 19% higher than 2010. KCS’s record second quarter operating ratio of 71.7% improved compared with the 72.4% operating ratio reported for the corresponding 2010 period, despite higher fuel prices.
Net income available to common stockholders in the second quarter totaled $71 million, or $0.64 per diluted share, compared to $35 million, or $0.34 per diluted share in second quarter 2010. Adjusting for debt retirement costs of $10.3 million in the second quarter of 2011 and $32.5 million in second quarter 2010, adjusted diluted earnings per share were $0.71 and $0.55 respectively, an increase of 29%.
“Kansas City Southern achieved year-over-year and sequential improvement in most of its key financial and operational metrics, including carloads, revenues, operating income and operating ratio,” stated David L. Starling, KCS president and chief executive officer. “These results illustrate the continued expansion of KCS’s markets and its success in maintaining a high level of operating performance while handling record levels of traffic. As we look out to the remainder of the year, KCS’s full year revenue growth is expected to be higher than the first half growth of 14%; an improvement over the low double-digit guidance we provided previously.
“KCS did experience some disruption of its grain and coal traffic late in the second quarter caused by flood conditions in the upper Midwest. While KCS’s rail system was not directly impacted, our interchange partners have been forced to divert trains away from flood-ravaged areas. This situation is expected to persist through the first half of the third quarter.
“Despite the traffic disruptions, KCS established new records in the second quarter for carloads; and freight, line haul and total revenues, while also attaining the highest average revenue per unit in the company’s history. The strength and diversity of the markets we serve in both the U.S. and Mexico provide us with confidence that KCS can continue to achieve strong business growth over the long term.
“In July, KCS completed the refinancing of the Kansas City Southern Railway credit facility extending maturities and improving financial flexibility. Also in July, KCS entered into a final settlement on the Hurricane Alex property and casualty claim. It is expected that the final cumulative earnings per share impact of Hurricane Alex will be a loss of approximately $0.05, which is consistent with guidance provided since the third quarter 2010 earnings conference call.”