KCS reports flat first quarter

Overall revenues were $603.1 million, compared to first-quarter 2014’s $607.4 million. Revenues were a mixed bag, with healthy increases in three categories mostly offsetting declines in others.

On the plus side, KCS saw a 9% increase in chemicals and petroleum, an 8% increase in intermodal, and a 4% increase in automotive in first-quarter 2015.

KCS saw revenue decreases in most other categories, including a 15% decrease in energy largely due to reduced utility coal shipments as a result of lower natural gas prices; a 2% decrease in industrial and consumer revenue due to lower metals shipments; and a 7% decrease in agriculture and minerals revenue due to a decline in grain shipments. KCS said that “excluding the impacts of lower U.S. fuel prices and the depreciating peso, revenue growth would have been approximately 4% compared to the first-quarter 2014.”

KCS’s first-quarter 2015 operating income was $178 million. Excluding lease termination costs, the company’s adjusted operating income was $188 million, compared to $190 million in 2014, a 1% decrease. After adjusting for lease termination costs, operating expenses in first-quarter 2015 were $415 million, 1% lower than 2014.

KCS’s first-quarter operating ratio was 70.5%, compared with 73.7% in first-quarter 2014. Excluding lease termination costs, the first-quarter 2015 adjusted operating ratio was 68.9%.

KCS net income in first-quarter 2015 totaled $101 million, or $0.91 per diluted share, compared with $94 million, or $0.85 per diluted share, in first-quarter 2014. Excluding lease termination and debt requirement costs and the impacts of foreign exchange rate fluctuations, adjusted first-quarter 2015 diluted EPS were $1.03, compared to $1.05 in 2014.

“Lower-than-expected carloadings in a few commodity groups, particularly utility coal, coupled with a weak peso and the impact of low U.S. fuel prices on fuel surcharge revenues, combined to exert pressure on first quarter consolidated revenues,” stated KCS Chief Executive Officer David L. Starling. “We believe our ability to scale operating expenses and capital where necessary provides KCS with the opportunity to improve earnings as 2015 progresses. In addition, we remain fully committed to managing our railroad in a manner designed to allow our company and its stockholders to benefit from the abundant growth opportunities that should emerge in the years ahead.”