Kansas City Southern Third-Quarter Profit Climbs 3%

Record revenues helped Kansas City Southern KSU generate a 3% increase in third-quarter profit compared with the same period in 2018.

Reported net income for the third quarter was $180.6 million, or $1.81/diluted share, compared with $174 million, or $1.70/diluted share in the third quarter of 2018. 

Adjusted diluted earnings per share were $1.94, 24% higher than the same period in 2018. 

The company said investors should consider the adjusted earnings because they take into account factors such as foreign exchange currency rates, the impact of adjustments to the 2017

provisional income tax benefit for the Tax Cuts and Jobs Act and other items that are not directly related to ongoing operations. 

Meanwhile, operating ratio (OR) in the third quarter was 62.3%, while the adjusted OR was 60.7%. In the third quarter of 2018, the OR was 62%, while the adjusted OR was 63.4%. Investors sometimes use OR as an indicator or profitability, with a lower OR implying greater profitability. Kansas City Southern defines OR as dividing operating expenses by revenues.

Third-quarter revenue rose 7% to $747.7 million even though carloads were flat year-over-year. Among the notable gains, increased refined fuel products and liquid petroleum gas shipments to Mexico helped fuel a 21% revenue increase in KSU's chemicals and petroleum segment, while improved cycle times helped the minerals segment's third-quarter increase by 15%.

Reported operating expenses were $465.7 million in the third quarter of 2019, compared with $433.6 million in the third quarter of 2018. But KSU said investors should consider adjusted operating expenses of $453.7 million.

"We are very pleased with our progress towards implementing PSR [precision scheduled railroading] principles. Notwithstanding this exceptional performance, we expect to continue optimizing our cost profile while delivering superior customer service and shareholder value," said KSU Chief Executive Officer Patrick J. Ottensmeyer.

Image Sourced from Pixabay