Kansas City Southern (KCS) on April 17 reported record first-quarter 2019 revenues of $675 million, a 6% year-over-year increase on a 1% volume decline, based on adjusted operating income of $242 million. Its adjusted operating ratio was 64.2% compared to 65.8% the year prior. Adjusted diluted earnings per share were $1.54—18% higher than a year ago.
Revenues for the first quarter of 2019 increased in four commodity groups, led by a 21% increase in Chemicals and Petroleum due to refined product shipments to Mexico. Agriculture and Minerals grew by 8%, “driven by improved network cycle times.” Energy and Industrial and Consumer Products also grew 5% and 2%, respectively. These increases were partially offset by revenue declines in Automotive and Intermodal of 4% and 12%, respectively, due to auto plant shutdowns and “teacher protests” at the Port of Lázaro Cárdenas in Mexico.
In the first quarter of 2019, reported operating expenses were $515 million. Excluding restructuring charges related to PSR initiatives, and including a Mexican fuel excise tax credit, adjusted operating expenses were $433 million, 3% higher than 2018. Adjusted operating income was $242 million, 10% higher than a year ago. KCS reported an adjusted first-quarter operating ratio of 64.2%, a 1.6 point improvement over first-quarter 2018. Its reported OR was 76.2%.
Reported net income in the first quarter of 2019 was $103 million, or $1.02 per diluted share, compared with $145 million, or $1.40 per diluted share in the first quarter of 2018. Adjusted diluted earnings per share was $1.54, 18% higher than a year ago.
“We are pleased to announce a strong start to the year with solid revenue growth and improved operational performance,” said Kansas City Southern President and CEO Patrick J. Ottensmeyer. “Although we are still in the early stages of implementation, KCS’ transition to a precision-scheduled network is already producing improved velocity and dwell, which is driving improved customer service, labor and asset utilization as well as other efficiencies. Our PSR initiatives support volume and revenue growth, capital efficiency and an improved cost profile. They equally support improved customer service, capacity and network resiliency. We have confidence that this transition will continue to benefit all KCS stakeholders, including customers and shareholders.”