KCS First Quarter 2008 Revenues, Operating Income and Operating Ratio Improve; EPS up 86% over Prior Year
First Quarter Highlights
-- Revenues of $450.6 million, nearly a 10% increase over 2007
with all commodity groups experiencing gains.
-- Operating income of $83.4 million compared with $72.4 million
in 2007, a 15% increase.
-- Operating ratio of 81.5%, nearly 1 point better than last
year.
-- Diluted EPS of $0.39 compared with $0.21 in 2007, an 86%
increase.
KANSAS CITY, Mo.--(Business Wire)--
Kansas City Southern (KCS) (NYSE:KSU) recorded first quarter 2008
revenues of $450.6 million, a 9.6% increase over first quarter 2007.
The revenue growth was attributable to a continued strong pricing
environment and carload/unit growth in some of the company's business
segments.
For the first quarter, KCS revenues were led by automotive, which
had revenue growth of 19.4%, and agriculture and minerals, which
experienced revenue increases of 16.0% quarter over quarter. In
addition, in the first quarter, revenues in chemical and petroleum
products increased 14.7%, intermodal grew 9.1%, coal revenues were up
4.2% and forest products and metals improved 1.4%.
First quarter operating expenses were $367.2 million, an increase
of 8.4% over last year. Fuel expenses increased 24.6% over the prior
year, although this was partially offset by fuel surcharge revenue.
Operating income for the first quarter of 2007 was $83.4 million
compared with $72.4 million last year, a 15.2% improvement. The first
quarter 2007 operating ratio was 81.5%, a 0.9 point improvement from
first quarter 2007.
Net income available to common shareholders in the first quarter
totaled $32.9 million, or $0.39 per diluted share, compared with $17.0
million and $0.21, respectively, in first quarter 2007.
Comments from the Chairman
"We are encouraged by the year-over-year improvement in KCS'
operating ratio especially in the face of significantly higher fuel
expenses and weather conditions which provided operating challenges
throughout much of the first quarter," stated Michael Haverty, KCS
chairman and chief executive officer. "Increased revenues and solid
improvement in key operating metrics were the drivers of our results.
"Tighter operating discipline contributed to our stronger
operating performance, which was evidenced by improved trends in train
velocity and terminal dwell time in the first quarter. Changes made in
the second half of 2007 have taken hold and moved KCS ahead in those
key measurements. In addition, the integration of approximately 180
new locomotives into our network fleet has resulted in significant
improvement in locomotive availability over the past few months. We
have thirty more locomotives which will arrive in the second quarter.
This will complete delivery of all 210 units of our three year fleet
renewal program, and will result in KCS having a significantly younger
fleet than just a few years ago.
"The combination of new business opportunities, strong pricing
environment, and continuous operating improvements positions us well
for the remainder of the year. Going forward, KCS has the momentum
needed to attain its 2008 operating and financial targets even within
what is projected to be a difficult economic environment."
Headquartered in Kansas City, Mo., KCS is a transportation holding
company that has railroad investments in the U.S., Mexico and Panama.
Its primary U.S. holding includes KCSR, serving the central and south
central U.S. Its international holdings include Kansas City Southern
de Mexico, serving northeastern and central Mexico and the port cities
of Lazaro Cardenas, Tampico and Veracruz, and a 50% interest in Panama
Canal Railway Company, providing ocean-to-ocean freight and passenger
service along the Panama Canal. KCS' North American rail holdings and
strategic alliances are primary components of a NAFTA Railway system,
linking the commercial and industrial centers of the U.S., Canada and
Mexico.
This press release includes statements concerning potential future
events involving the Company, which could materially differ from the
events that actually occur. The differences could be caused by a
number of factors including those factors identified in the "Risk
Factors" and the "Cautionary Information" sections of the Company's
Form 10-K for the year ended December 31, 2007, filed by the Company
with the Securities and Exchange Commission (SEC) (Commission file no.
1-4717). The Company will not update any forward-looking statements in
this press release to reflect future events or developments.
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*T
Kansas City Southern
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Income Statement
----------------------------------------------------------------------
(In millions, except share and per share amounts)
(Unaudited)
Three Months
Ended March 31,
---------------------
2008 2007
---------- ----------
Revenues $450.6 $411.3
Operating expenses:
Compensation and benefits 106.1 99.9
Purchased services 44.9 46.7
Fuel 77.9 62.5
Equipment costs 45.8 44.9
Depreciation and amortization 40.7 38.1
Casualties and insurance 19.0 19.4
Materials and other costs 32.8 27.4
---------- ----------
Total operating expenses 367.2 338.9
---------- ----------
Operating income 83.4 72.4
Equity in net earnings of unconsolidated
affiliates 4.1 1.1
Interest expense (39.5) (39.4)
Foreign exchange gain (loss) 2.5 (3.1)
Other income 3.0 0.6
---------- ----------
Income before income taxes and minority
interest 53.5 31.6
Income tax expense 15.7 9.3
---------- ----------
Income before minority interest 37.8 22.3
Minority interest 0.1 0.1
---------- ----------
Net income 37.7 22.2
Preferred stock dividends 4.8 5.2
---------- ----------
Net income available to common shareholders $32.9 $17.0
========== ==========
Earnings per share:
Basic earnings per share $0.43 $0.22
========== ==========
Diluted earnings per share $0.39 $0.21
========== ==========
Average shares outstanding (in thousands):
Basic 76,253 75,611
Potential dilutive common shares 21,231 14,724
---------- ----------
Diluted 97,484 90,335
========== ==========
*T
-0-
*T
Kansas City Southern
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Revenue & Carloadings By Commodity - First Quarter 2008
----------------------------------------------------------------------
(Dollars in Millions)
Carloadings Revenue
First Quarter % First Quarter %
----------------- ----------------
2008 2007 Change 2008 2007 Change
-------- -------- ------- -------- ------- -------
Coal
59,120 62,299 (5.1%) Unit Coal $37.0 $35.6 3.9%
13,651 12,844 6.3% Other Coal 10.0 9.5 5.3%
-------- -------- -------- -------
72,771 75,143 (3.2%) Total 47.0 45.1 4.2%
-------- -------- -------- -------
Forest Products &
Metals
27,743 30,272 (8.4%) Pulp/Paper 41.2 40.1 2.7%
4,781 2,881 65.9% Scrap Paper 5.8 3.7 56.8%
5,528 5,043 9.6% Pulpwood/Logs/Chips 5.2 4.2 23.8%
4,661 6,454 (27.8%) Lumber/Plywood 7.5 8.9 (15.7%)
27,284 29,231 (6.7%) Metal/Scrap 39.7 36.7 8.2%
Military/Other
24,781 28,174 (12.0%) Carloads 24.5 28.6 (14.3%)
-------- -------- -------- -------
94,778 102,055 (7.1%) Total 123.9 122.2 1.4%
-------- -------- -------- -------
Chemical &
Petroleum Products
4,021 3,430 17.2% Agri Chemicals 5.4 4.2 28.6%
26,273 22,771 15.4% Other Chemicals 36.9 29.8 23.8%
16,489 17,904 (7.9%) Petroleum 24.1 23.3 3.4%
14,862 10,479 41.8% Plastics 20.3 18.3 10.9%
-------- -------- -------- -------
61,645 54,584 12.9% Total 86.7 75.6 14.7%
-------- -------- -------- -------
Agriculture and
Minerals
40,379 39,156 3.1% Grain 66.3 52.0 27.5%
14,546 16,031 (9.3%) Food Products 23.4 25.0 (6.4%)
12,523 14,208 (11.9%) Ores and Minerals 12.7 11.8 7.6%
4,352 3,475 25.2% Stone, Clay & Glass 6.4 5.0 28.0%
-------- -------- -------- -------
71,800 72,870 (1.5%) Total 108.8 93.8 16.0%
-------- -------- -------- -------
Intermodal &
Automotive
124,067 129,305 (4.1%) Intermodal 35.8 32.8 9.1%
27,212 22,839 19.1% Automotive 28.3 23.7 19.4%
-------- -------- -------- -------
151,279 152,144 (0.6%) Total 64.1 56.5 13.5%
-------- -------- -------- -------
TOTAL FOR BUSINESS
452,273 456,796 (1.0%) UNITS 430.5 393.2 9.5%
Other Revenue 20.1 18.1 11.0%
-------- -------- -------- -------
452,273 456,796 (1.0%) TOTAL $450.6 $411.3 9.6%
======== ======== ======== =======
*T
Kansas City Southern
William H. Galligan, 816-983-1551
bgalligan@kcsouthern.com
Copyright Business Wire 2008
