Kansas City Southern Thursday reported it lost $7.5 million, or 8 cents per share, in its first quarter, hurt by declining volume, declining fuel surcharge revenue, and $11 million in nonrecurring charges. The loss contrasted with earnings of $32.9 million, or 39 cents per share, in the first quarter of 2008.
Revenue dropped 23% to $346 million from $450.6 million in the comparable 2008 quarter. Results included a charge of $5.9 million, or 4 cents per share, related to debt retirement costs, and a charge of $5.1 million, or 4 cents per share, related to a foreign exchange loss associated with the weakened Mexican peso.
Analyst estimates expected KCS to notch revenue of $377.4 million and post a profit of 6 cents per share. Despite the shortfall, KCS shares rose in morning trading on the New York Stock Exchange, and were up 2% in early afternoon trade.
Noted Dahlman Rose & Co. Director Equity Research (and Railway Age Contributing Editor) Jason Seidl: “With the rail industry trying to cope with the most drastic volume
declines in recent history, we believe management will continue to
focus its efforts on cutting costs and reducing capital expenditures. Indeed, KSU expects 2009 capital expenditures to be roughly 50% below
2008 levels at nearly $300 million (KSU had $100 million in capital
spending in the first quarter). This should enable the company to
generate free cash flow in 2009. Despite the significant spending
reduction, the company does plan to complete its Victoria-Rosenberg
line in the second quarter. While many may question the need for
expansionary capital in a recessionary environment, this line should
help reduce costs and improve service for the railroad’s burgeoning
cross border intermodal business."
Also, "First quarter results were also negatively impacted by the company accidently booking two preferred dividend payments. Tthis is purely a timing issue, as 2Q will not have a payment now. The operating ratio deteriorated 450 basis points year-over-year to 86%, in line with our estimate."
Joe Szabo won Senate confirmation Wednesday to become head of the Federal Railroad Administration.
His longtime friend Senate Assistant Majority Leader Dick Durbin (D-Ill.) took the floor to give Szabo a warm endorsement, saying that the fifth-generation railroader and former United Transportation Union officer understands better than most the demanding and sometimes dangerous conditions under which railroad employees work.
Durbin also said Szabo will bring his enthusiasm for Amtrak to his new job, which in addition to its primary goal of ensuring that railroads are safe will also involve the administration of President Obama's high speed passenger rail initiative.
Szabo will be informally sworn into office May 5 so that he can take over his new duties without delay, with a more formal ceremony to be announced later.
Armed with $7.4 million in federal stimulus package funding to implement a Bus Rapid Transit line this year, Reno, Nev., is also looking to supplement, and eventually replace, BRT with streetcar operations.
Reno Economic Development Director John Hester justifies the plan by noting rail systems foster private investment. “I think it would be a major transformation of that whole corridor,” Hester said. “Sometimes putting in rail really makes investment happen.”
The City Council wants Virginia Street to accommodate buses, street cars, eventually trains, and other motor vehicles, he said. "The council also wants a new Virginia Street bridge strong enough for rail cars. Eventually, a light railline would run from the University of Nevada campus to the Reno-Sparks Convention Center,” Hester said.
Hester cites the success of Portland, Ore.’s growing streetcar network as a model for his city.
California’s Assembly has passed a bill directing the Golden State’s Department of Transportation to pursue Amtrak service to San Francisco. The state seeks to route such trains though Altamont Pass, currently used by Altamont Commuter Express trains and by owner Union Pacific, which has expressed strong reservations about the proposal. The bill also directs the state to negotiate with BNSF.
Amtrak current serves San Francisco by connecting busservice to and from Oakland and Emeryville, Calif., on the east side of San Francisco Bay. Those cities are served by Amtrak’s Capitol Corridor and San Joaquin services, as well as the long-distance Coast Starlight; Emeryville also hosts Amtrak’s California Zephyr.