EX-99.1 2 c26013exv99w1.htm PRESS RELEASE exv99w1
 

(LETTERHEAD)
         
Date:
  April 24, 2008    
 
        
Media Contact:
  William H. Galligan   Phone: 816/983-1551
 
  bgalligan@kcsouthern.com    
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. 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 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 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.

 

 

Kansas City Southern
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  
 
            

 

 

Kansas City Southern
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 %
  24,781       28,174       (12.0 %)  
Military/Other 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 %
                   
 
                    
                       
 
                        
  452,273       456,796       (1.0 %)  
TOTAL FOR BUSINESS 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 %