Post Earnings Coverage as Kansas City Southern Reported Record Quarterly Revenues, Volumes, Operating Ratio, and EPS
Upcoming AWS Coverage on Union Pacific Post-Earnings Results
LONDON, UK / ACCESSWIRE / April 26, 2017 / Active Wall St. announces its post-earnings coverage on Kansas City Southern (NYSE: KSU) ("KCS"). The Company released its first quarter fiscal 2017 results on April 21, 2017. The railroad Company posted a 14% increase in EPS. Register with us now for your free membership at:
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One of Kansas City Southern's competitors within the Railroads space, Union Pacific Corp. (NYSE: UNP), reported on March 30, 2017, that its Q1 2017 earnings release presentation will be broadcast live over the Internet and via teleconference on Thursday, April 27, 2017, at 8:45 a.m. ET. AWS will be initiating a research report on Union Pacific in the coming days.
Today, AWS is promoting its earnings coverage on KSU; touching on UNP. Get our free coverage by signing up to:
http://www.activewallst.com/register/
Earnings Reviewed
For the quarter ended March 31, 2017, KCS reported Q1 2017 revenues of $609.5 million, an increase of 8.3% over Q1 2016 revenue of $562.7 million. The Company's overall carload volumes were 541 thousand in the reported quarter, 6% higher compared to the year earlier quarter. Excluding the estimated impact of Mexican peso depreciation, revenue increased by 11% on a y-o-y basis. KCS' revenue numbers surpassed analysts' consensus of $604.7 million.
For Q1 2017, KCS' Energy business saw revenue grow up 64% to $69.0 million, led by utility coal and frac sand, but offset by weakness in crude business. Automotive revenue was up 25% on a y-o-y basis to $51.3 million, driven by higher y-o-y volume. The Company also reported 8% growth in its Chemical & Petroleum business unit to $126.5 million with solid performance in KCS' southbound LPG business as well as lubes and oil product movements.
For Q1 2017, KCS' Industrial & Consumer segment sales declined 1% to $140.1 million as the Company continues to see competition with truck and barge for the metals business, but have noted improvement in the past few weeks. KCS also experienced temporary plant shutdowns at several of the paper facilities in the reported quarter. The Company reported solid performance in Agriculture & Minerals business with 6% y-o-y revenue growth in the reported quarter to $116.3 million, driven primarily by increased demand in food products and grain.
KCS' operating expenses in Q1 2017 were $399 million, 6% higher than 2016. Foreign exchange benefited its expenses by $11 million. Increasing fuel prices contributed to $18 million, driven by fuel price increases of more than 20% year-over-year, while the $12 million fuel excise tax credit mitigated some of those negative fuel price impacts.
Fuel consumption increased expense by an additional $6 million as the Company experienced carload growth of 6% and GTM growth of 12%. Car hire was up $5 million year-over-year, $2 million due to carload growth and another $2 million due to the mix of equipment with higher-cost automotive equipment to support the 38% carload growth. The Company reported that wage inflation drove $4 million of the increase, while benefits expense was up another $4 million, largely due to funding of its US union benefits obligations. Maintenance on the trackage rights with a partner railroad caused the Company to detour more trains, increasing expense by $4 million in the reported quarter.
KCS' operating income for Q1 2017 was $211 million, an increase of 12% on a y-o-y basis. The Company reported a first quarter operating ratio of 65.4%, a 1.2-point improvement over the year ago same period.
For Q1 2017, KCS recorded net income of $147 million, or $1.38 per diluted share, compared with $108 million, or $0.99 per diluted share, in Q1 2016. Excluding the impacts of foreign exchange rate fluctuations, the Company's adjusted diluted earnings per share for the reported quarter was $1.17, up 14% compared to $1.03 in the prior year corresponding period. KCS' earnings results match Wall Street's expectations of $1.17 per share.
Stock Performance
At the closing bell, on Tuesday, April 25, 2017, Kansas City Southern's stock rose slightly by 0.77%, ending the trading session at $90.36. A total volume of 2.29 million shares were traded at the end of the day, which was higher than the 3-month average volume of 1.45 million shares. In the last month and previous three months, shares of the Company have advanced 9.34% and 5.04%, respectively. Moreover, the stock gained 6.89% since the start of the year. The stock is trading at a PE ratio of 20.37 and has a dividend yield of 1.46%.
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