Kansas City Southern Q2 Results Top Estimates

(RTTNews) - Transportation holding company Kansas City Southern (KSU) reported Friday a profit for the second quarter that soared from last year, which was weighed down hefty debt retirement costs. The results reflected double-digit revenue growth amid improved grain and automotive shipments. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.

"During the second quarter of 2014, KCS experienced strong revenue growth from the shipment of grain and automotive. KCS' core carload franchise continues to show strength in line with the general economy, while the energy commodity group declined due to reduced shipments of utility coal," President and CEO David Starling said in a statement.

The Kansas City, Missouri-based company reported net income of $129.8 million or $1.18 per share for the second quarter, sharply higher than $15.4 million or $0.14 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $133.7 million or $1.21 per share, compared to $106.3 million or $0.96 per share in the year-ago quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $1.17 per share for the quarter. Analysts' estimate typically excludes special items.

Revenues for the quarter grew 12 percent to a record of $649.7 million from $579.3 million in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $645.05 million.

The company attributed the revenue growth primarily to a 33 percent growth in agriculture & minerals revenue, a 25 percent rise in automotive revenues, and a 14 percent increase in intermodal revenue.

Industrial & consumer products revenues improved 10 percent, and chemical & petroleum revenue grew 6 percent. Meanwhile, energy revenue decreased 5 percent, primarily due to a decline in utility coal shipments.

Carload volumes for the quarter increased 7 percent to 573.6 thousand, and revenue per carload grew 5 percent to $1,091 from the year-ago quarter.

Operating ratio for the quarter improved 0.7 points to 68.3 percent, and adjusted operating ratio, excluding lease termination costs, was 67.0 percent, up 2.0 points from last year.

"We are optimistic about our business in the second half of the year, but we again remind investors that grain growth rates will decline from the first half of 2014, reflecting the improved grain shipments in the second half of 2013. Therefore, we maintain our 2014 goals outlined to investors in January," Starling added.

KSU closed Wednesday's regular trading session at $114.11, up $0.85 or 0.75% on a volume of 0.19 million shares.