Operating income was $158 million compared with $128 million a year ago, a 23% increase. The operating ratio of 71.2% was a 2.6 point improvement from first-quarter 2011. Operating expenses in the first quarter were $390 million compared with $361 million in the corresponding 2011 period. Reported net income in first-quarter 2012 totaled $75 million, or $0.68 per diluted share, compared with $64 million, or $0.58 per diluted share, in first-quarter 2011. Excluding debt retirement costs, adjusted diluted earnings per share for first-quarter 2012 were $0.75.
KCS said, “First-quarter revenue growth compared to 2011 was led by a 26% increase in Intermodal and a 21% increase in Automotive revenues. Revenues from Industrial and Consumer Products and Agriculture and Minerals were also strong, with growth of 17% and 14%, respectively, over 2011. Chemical & Petroleum revenue grew 6% in the first quarter. Starting in first-quarter 2012, KCS has expanded the Coal business unit to better reflect the Company’s diversified opportunities in the energy sector. The expanded business unit has been renamed Energy and along with coal and petroleum coke, it includes crude oil, frac sand, and other new energy markets. Energy revenue declined by 1% compared to 2011, primarily caused by a 10% decrease in utility coal. Coal and petroleum coke declined by 7% in the first quarter. Partially offsetting these declines were increases in revenue from crude oil and frac sand compared to first-quarter 2011.”
“We are encouraged by the overall strength of our first-quarter 2012 results,” stated KCS President and CEO David L. Starling (pictured). “The company attained record first-quarter volumes, revenues, and operating ratio. The first quarter is typically the most challenging in terms of operations and volumes. For us to have an operating ratio of 71.2% in the quarter is a good start to the year.”
“Already in 2012,” Starling said, “we can point to a number of developments illustrative of our strengthening financial status. Reacting opportunistically to an attractive interest rate environment, we entered into a $275 million bank term loan arrangement, which carries a LIBOR plus 125 basis point interest rate. The Company is using the proceeds of this term loan arrangement to redeem its 8% Senior Notes, tendering $175 million of the Senior Notes during the first quarter, with the remaining $100 million expected to be called in the second quarter of 2012.”