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Kansas City Southern (KSU) Q1 Earnings Beat, Increase Y/Y
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Kansas City Southern’s first-quarter 2020 earnings (excluding 38 cents from non-recurring items) of $1.96 beat the Zacks Consensus Estimate by 26 cents. Moreover, the bottom line improved 27.3% on a year-over-year basis on the back of better operational efficiency.
This Kansas City, MO-based railroad operator also reported better-than-expected revenues. Quarterly revenues of $731.7 million surpassed the Zacks Consensus Estimate of $714.5 million. Moreover, the top line improved 8.4% year over year, mainly owing to strong performances at the Chemicals and Petroleum and the Intermodal units.
The company’s strong earnings outperformance pleased investors. Evidently, the stock gained in early trading. Overall, carload volumes increased 4% year over year, mainly onthe double-digit volume expansion in the Chemicals and Petroleum segment.
In the reported quarter, operating income (on a reported basis) soared 80.8% to $288.8 million. Moreover, operating income (on an adjusted basis) rose 29.4% to $294.8 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) improved to 59.7% from 66.2% a year ago. Lower the value of the metric the better.
Kansas City Southern Price, Consensus and EPS Surprise
The Chemical & Petroleum segment generated revenues worth $198.6 million, up 18% year over year. Volumes expanded 14% year over year. Revenues per carload also climbed 3% from the prior-year quarter.
The Industrial & Consumer Products segment’srevenues logged $159 million, up 6% year over year. Business volumes and revenues per carload were up 4% and 2%, respectively, on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues increased 9% to $134.5 million. Business volumes were up 2% and revenues per carload improved 8% on a year-over-year basis.
The Energy segment’s revenues of $56.3 million were down 13% year over year. Revenues were hurt by weakness in the Utility Coal (down 27%) and Frac Sand (down 53%) sub-groups. While business volumes decreased 5% year over year, revenues per carload dropped 8%.
Intermodal revenues were $88.7 million, up 11% year over year. While business volumes increased 6%, revenues per carload climbed 5% year over year.
Revenues in the Automotive segment dwindled 6% year over year to $53.9 million. While business volumes fell 12%, revenues per carload ascended 6% on a year-over-year basis.
Other revenues totaled $40.7 million, up 30% year over year.
Outlook
Due to the uncertainty emanating from the coronavirus pandemic, this Zacks Rank #3 (Hold) company withdrew its previously announced 2020 projections for revenues, volumes, operating ratio and earnings per share. The company aims to generate free cash flow of $500 million or more in 2020. Capital expenditures are still anticipated to be roughly 17% of revenues in the 2021-2022 period.
Investors interested in the broader Transportation sector are keenly awaiting first-quarter 2020 earnings reports from key players, namely Delta Air Lines (DAL - Free Report) , Canadian Pacific Railway (CP - Free Report) and Union Pacific Corp. (UNP - Free Report) . While Delta will report first-quarter earnings on Apr 22, Canadian Pacific and Union Pacific will announce the same on Apr 21 and Apr 23, respectively.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Kansas City Southern (KSU) Q1 Earnings Beat, Increase Y/Y
Kansas City Southern’s first-quarter 2020 earnings (excluding 38 cents from non-recurring items) of $1.96 beat the Zacks Consensus Estimate by 26 cents. Moreover, the bottom line improved 27.3% on a year-over-year basis on the back of better operational efficiency.
This Kansas City, MO-based railroad operator also reported better-than-expected revenues. Quarterly revenues of $731.7 million surpassed the Zacks Consensus Estimate of $714.5 million. Moreover, the top line improved 8.4% year over year, mainly owing to strong performances at the Chemicals and Petroleum and the Intermodal units.
The company’s strong earnings outperformance pleased investors. Evidently, the stock gained in early trading. Overall, carload volumes increased 4% year over year, mainly onthe double-digit volume expansion in the Chemicals and Petroleum segment.
In the reported quarter, operating income (on a reported basis) soared 80.8% to $288.8 million. Moreover, operating income (on an adjusted basis) rose 29.4% to $294.8 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) improved to 59.7% from 66.2% a year ago. Lower the value of the metric the better.
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 $198.6 million, up 18% year over year. Volumes expanded 14% year over year. Revenues per carload also climbed 3% from the prior-year quarter.
The Industrial & Consumer Products segment’srevenues logged $159 million, up 6% year over year. Business volumes and revenues per carload were up 4% and 2%, respectively, on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues increased 9% to $134.5 million. Business volumes were up 2% and revenues per carload improved 8% on a year-over-year basis.
The Energy segment’s revenues of $56.3 million were down 13% year over year. Revenues were hurt by weakness in the Utility Coal (down 27%) and Frac Sand (down 53%) sub-groups. While business volumes decreased 5% year over year, revenues per carload dropped 8%.
Intermodal revenues were $88.7 million, up 11% year over year. While business volumes increased 6%, revenues per carload climbed 5% year over year.
Revenues in the Automotive segment dwindled 6% year over year to $53.9 million. While business volumes fell 12%, revenues per carload ascended 6% on a year-over-year basis.
Other revenues totaled $40.7 million, up 30% year over year.
Outlook
Due to the uncertainty emanating from the coronavirus pandemic, this Zacks Rank #3 (Hold) company withdrew its previously announced 2020 projections for revenues, volumes, operating ratio and earnings per share. The company aims to generate free cash flow of $500 million or more in 2020. Capital expenditures are still anticipated to be roughly 17% of revenues in the 2021-2022 period.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Investors interested in the broader Transportation sector are keenly awaiting first-quarter 2020 earnings reports from key players, namely Delta Air Lines (DAL - Free Report) , Canadian Pacific Railway (CP - Free Report) and Union Pacific Corp. (UNP - Free Report) . While Delta will report first-quarter earnings on Apr 22, Canadian Pacific and Union Pacific will announce the same on Apr 21 and Apr 23, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>