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Kansas City Southern Reports Record Second Quarter 2017 Revenues and Earnings per Share, and All-Time Record Quarterly Operating Income

KANSAS CITY, Mo.--(BUSINESS WIRE)--Kansas City Southern (KCS) (NYSE:KSU) reported record second quarter 2017 revenues of $656 million, an increase of 15% from second quarter 2016. Overall, carload volumes increased 6% compared to second quarter 2016.

Operating expenses in the second quarter were $417 million, 20% higher than 2016. In the second quarter of 2016, KCS determined it could utilize a Mexican fuel excise tax credit, and recognized a year-to-date benefit, including $17 million for the first quarter of 2016.

Operating income for the second quarter of 2017 was $239 million, an increase of 9% from the second quarter 2016 and an all-time quarterly record. KCS reported a second quarter operating ratio of 63.5%, a 2.2 point increase from second quarter 2016. Reported net income in the second quarter of 2017 totaled $135 million, or $1.27 per diluted share, compared with 1 million, or $1.11 per diluted share, in the second quarter of 2016. Excluding the impacts of foreign exchange rate fluctuations, adjusted diluted earnings per share for second quarter 2017 was $1.33, compared to $1.22 in second quarter 2016.

“We are pleased to report record second quarter revenues and earnings per share, as well as an all-time record quarterly operating income,” stated Kansas City Southern’s President and Chief Executive Officer Patrick J. Ottensmeyer. “All three milestones highlight the overall strength of our second quarter 2017 results.

“Carloads were up in four out of six commodity groups, driving strong second quarter revenue growth of 15%. Our revenue performance featured strength in Energy, Automotive and Chemicals & Petroleum, as higher commodity prices, Mexican automotive production and the emergence of Mexican energy reform supported growth.

“Looking forward, the investments that we have made in our network and our ability to improve operational performance in a strong demand environment position our Company for continued growth.”

GAAP Reconciliations

($ in millions, except per share amounts)

Reconciliation of Diluted Earnings per Share to
Adjusted Diluted Earnings per Share Three Months Ended June 30, 2017

Income Before
Income Taxes

Income Tax
Expense

Net Income

Diluted
Earnings
per Share

As reported $ 231.3 $ 96.6 $ 134.7 $ 1.27
Adjustments for:
Foreign exchange gain (14.2 ) (4.3 ) (9.9 ) (0.09 )
Foreign exchange component of income taxes (16.6 ) 16.6 0.15
Adjusted $ 217.1 $ 75.7 141.4
Less: Noncontrolling interest (0.3 )

Adjusted net income available to common stockholders - see (a) below

$ 141.1 $ 1.33
Three Months Ended June 30, 2016

Income Before
Income Taxes

Income Tax
Expense

Net Income

Diluted
Earnings
per Share

As reported $ 173.8 $ 53.3 $ 120.5 $ 1.11
Adjustments for:
Foreign exchange loss 24.0 7.2 16.8 0.16
Foreign exchange component of income taxes 5.3 (5.3 ) (0.05 )
Adjusted $ 197.8 $ 65.8 132.0
Less: Noncontrolling interest (0.4 )

Adjusted net income available to common stockholders - see (a) below

$ 131.6 $ 1.22

Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent 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 railway network, linking the commercial and industrial centers of the U.S., Mexico and Canada. More information about KCS can be found at www.kcsouthern.com.

This news release contains “forward-looking statements” within the meaning of the securities laws concerning potential future events involving KCS and...


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