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Kansas City Southern's (KSU) Q2 Earnings Beat, Fall Y/Y
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Kansas City Southern’s second-quarter 2020 earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. However, the bottom line declined approximately 30% year over year due to decline in demand as a result of coronavirus.
Meanwhile, quarterly revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million. Moreover, the top line fell 23% year over year due to weak volumes. Overall carload volumes plunged 21% year over year with declines across all segments.
In the reported quarter, operating income (on a reported basis) declined 13.3% to $180.4 million. Moreover, operating income (on an adjusted basis) fell 26.3% to $190.9 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated to 65.2% from 63.7% a year ago. The lower the value of the metric the better. Operating expenses (adjusted) in the quarter declined 21.5% year over year.
Kansas City Southern Price, Consensus and EPS Surprise
The Chemical & Petroleum segment generated revenues worth $158.5 million, down 16% year over year. Volumes declined 13% year over year. Revenues per carload also dipped 3% from the prior-year quarter.
The Industrial & Consumer Products segment’s revenues logged $120.6 million, down 20% year over year. Business volumes and revenues per carload decreased 14% and 7% respectively, on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues decreased 7% to $114.4 million. Business volumes slipped 7% while revenues per carload were flat on a year-over-year basis.
The Energy segment’s revenues of $39.3 million were down 27% year over year. While business volumes decreased 19% year over year, revenues per carload dropped 10%.
Intermodal revenues were $63.5 million, down 31% year over year. While business volumes dropped 22%, revenues per carload declined 12% year over year.
Revenues in the Automotive segment plunged 78% year over year to $15.6 million. While business volumes fell 73%, revenues per carload declined 19% on a year-over-year basis.
Other revenues totaled $36 million, up 1% year over year.
Outlook
This Zacks Rank #3 (Hold) company anticipates capital expenditures of $425 million or less in 2020. For the period 2021-2022, capital expenditures are still expected to be roughly 17% of revenues. The company is committed to generate free cash flow of $500 million or more in 2020.
Investors interested in the railroad space are keenly awaiting second-quarter 2020 earnings reports from key players, namely Norfolk Southern Corporation (NSC - Free Report) , CSX Corporation (CSX - Free Report) and Union Pacific Corporation (UNP - Free Report) . While CSX and Union Pacific will release earnings numbers on Jul 22 and Jul 23 respectively, Norfolk Southern will announce the same on Jul 29.
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Kansas City Southern's (KSU) Q2 Earnings Beat, Fall Y/Y
Kansas City Southern’s second-quarter 2020 earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. However, the bottom line declined approximately 30% year over year due to decline in demand as a result of coronavirus.
Meanwhile, quarterly revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million. Moreover, the top line fell 23% year over year due to weak volumes. Overall carload volumes plunged 21% year over year with declines across all segments.
In the reported quarter, operating income (on a reported basis) declined 13.3% to $180.4 million. Moreover, operating income (on an adjusted basis) fell 26.3% to $190.9 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated to 65.2% from 63.7% a year ago. The lower the value of the metric the better. Operating expenses (adjusted) in the quarter declined 21.5% year over year.
Kansas City Southern Price, Consensus and EPS Surprise
Kansas City Southern price-consensus-eps-surprise-chart | Kansas City Southern Quote
Segmental Details
The Chemical & Petroleum segment generated revenues worth $158.5 million, down 16% year over year. Volumes declined 13% year over year. Revenues per carload also dipped 3% from the prior-year quarter.
The Industrial & Consumer Products segment’s revenues logged $120.6 million, down 20% year over year. Business volumes and revenues per carload decreased 14% and 7% respectively, on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues decreased 7% to $114.4 million. Business volumes slipped 7% while revenues per carload were flat on a year-over-year basis.
The Energy segment’s revenues of $39.3 million were down 27% year over year. While business volumes decreased 19% year over year, revenues per carload dropped 10%.
Intermodal revenues were $63.5 million, down 31% year over year. While business volumes dropped 22%, revenues per carload declined 12% year over year.
Revenues in the Automotive segment plunged 78% year over year to $15.6 million. While business volumes fell 73%, revenues per carload declined 19% on a year-over-year basis.
Other revenues totaled $36 million, up 1% year over year.
Outlook
This Zacks Rank #3 (Hold) company anticipates capital expenditures of $425 million or less in 2020. For the period 2021-2022, capital expenditures are still expected to be roughly 17% of revenues. The company is committed to generate free cash flow of $500 million or more in 2020.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Investors interested in the railroad space are keenly awaiting second-quarter 2020 earnings reports from key players, namely Norfolk Southern Corporation (NSC - Free Report) , CSX Corporation (CSX - Free Report) and Union Pacific Corporation (UNP - Free Report) . While CSX and Union Pacific will release earnings numbers on Jul 22 and Jul 23 respectively, Norfolk Southern will announce the same on Jul 29.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>