Grain News


KC Southern Reports 4Q Net Income of $114 Million, Up From $93 Million in 4Q 2012

Date Posted: January 24, 2014

Kansas City, MO—Kansas City Southern (KCS) (NYSE:KSU) reported record fourth quarter 2013 revenues of $616 million.

Overall, carload volumes were 2% higher than in fourth quarter 2012.

Full KC Southern Report

Compared to 2012, fourth quarter revenue growth was led by a 30% increase in Agriculture & Minerals and an 18% increase in Intermodal.

Automotive and Industrial & Consumer Products were also strong, both with revenues growing by 9% in the fourth quarter of 2013.

Chemical & Petroleum revenue grew 2% and Energy revenue declined by 17% compared to the prior year, primarily due to a decline in utility coal shipments.

Operating income for the fourth quarter of 2013 was $196 million compared with $174 million a year ago, a 13% increase.

KCS reported a fourth quarter 2013 operating ratio of 68.1%, a 1.4 point improvement from fourth quarter 2012.

Operating expenses in the fourth quarter were $420 million compared with $395 million in the corresponding 2012 period, a 6% increase.

Reported net income in the fourth quarter of 2013 totaled $114 million, or $1.03 per diluted share, compared with $93 million, or $0.83 per diluted share, in the fourth quarter of 2012.

Excluding debt retirement costs and the impacts of foreign exchange rate fluctuations, adjusted diluted earnings per share for fourth quarter 2013 was $1.03 compared to $0.92 in 2012.

For the full year of 2013, revenue was a record $2.4 billion, up 6% over 2012. Carloads for 2013 were 2.2 million, an increase of 2% over the prior year.

Full-year operating income was $739 million.

Excluding one-time benefits from the elimination of a net deferred liability in 2012, fullyear 2013 operating income increased 10% over prior year’s adjusted operating income.

The Company’s 2013 operating ratio was 68.8% compared with the adjusted operating ratio of 69.9% in 2012, a 1.1 point improvement.

“The year 2013 proved to be another very good year for Kansas City Southern,” stated President and Chief Executive Officer David L. Starling.

“While some shifts in market conditions impacted volumes in our Agriculture & Minerals and Energy commodity groups, 2013 marks the fourth consecutive year KCS has recorded a double-digit percentage increase in its adjusted diluted earnings per share.

“KCS met its stated target of mid-single digit year-over-year revenue growth, coming in 6% higher than 2012. Also, KCS achieved a record operating ratio, improving by 1.1 points over the prior year’s adjusted operating ratio.

"For 2013, the Company reported adjusted diluted earnings per share of $3.98, a 12% improvement over prior year.

“Five years ago, KCS management established a primary corporate objective of attaining investment grade status. In 2013, after several years of delivering strong operating and financial results, the Company achieved this distinction.

"Given that long-term debt rates were near all-time lows during the year, the Company immediately capitalized on its upgraded rating and executed a major debt restructuring, which resulted in KCS extending its weighted-average maturity, reducing its weighted-average coupon and creating the lowest-cost debt portfolio in the industry.

"This restructuring benefitted us significantly in 2013 by lowering our interest expense by $20 million over 2012, and by strengthening our balance sheet. Moreover, KCS is a stronger company going forward given its expanded financial flexibility.

“We expect to maintain our excellent growth momentum in 2014 and beyond. As 2014 evolves, investors can expect to see positive developments in a wide-range of commodity groups, including intermodal, automotive, steel and chemical & petroleum products.

"Particularly exciting is that growth in these areas, as well as the increase of crude oil traffic originating in Canada and terminating at various Gulf locations, should continue to ramp up over the next five years. And, while longer term, when the positive impact of Mexican energy reform is considered, KCS appears well-positioned for growth over the next decade.”

For more information, call 816-983-1551.

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