Kansas City Southern
) reported fourth quarter 2013 adjusted earnings of $1.03 per
share, missing the Zacks Consensus Estimate of $1.10. However,
adjusted earnings increased 12% from 92 cents in the year-ago
quarter on higher revenues.
Total revenue was $616 million in the fourth quarter, up 8%
year over year but below the Zacks Consensus Estimate of $622
million. The year-over-year increase was primarily attributable
to solid revenue growth in the Intermodal segment and Agriculture
For the full year, the company reported adjusted earnings per
share of $3.98, up from $3.43 in 2012. Revenues increased 6% year
over year to $2,369.3 million.
In the fourth quarter, operating income was $196 million, up
13% year over year. Operating ratio was 68.1%, reflecting an
improvement of 140 basis points year over year. In 2013, adjusted
operating income rose 10% year over year to $738.6 million. For
2013, operating ratio was 68.8%, representing an improvement of
110 basis points year over year.
Segment Quarterly Results
Chemical & Petroleum
segment contributed $105.8 million in revenues, up 2% year over
year. Volume was down 4% year over year. Revenue per unit grew 6%
year over year.
Industrial & Consumer Products
generated revenues of $149.5 million, up 9% year over year.
Business volume grew 1% year over year. Revenue per carload was
up 7% year over year.
Agriculture & Minerals
segment revenues were $119.1 million, up 30% year over year.
Business volume grew 23% year over year. Revenue per carload also
rose 5% year over year.
segment generated $70.4 million in revenues, down 17% year over
year. Business volume dipped 10% year over year. Revenue per
carload was also down 7% year over year.
segment revenues were $94.4 million, up 18% year over year.
Business volume rose 3% year over year. Revenue per carload grew
14% year over year.
segment accounted for $53.5 million of the total revenue, up 9%
year over year. Business volume grew 3% year over year. Revenue
per carload rose 6% year over year.
revenues were $22.9 million, up 7% year over year.
The company exited the year with cash and cash equivalents of
$429.5 million compared with $72.6 million in 2012. Long-term
debt increased to $1,856.9 million from $1,547.6 million in 2012.
The company had free cash flows of $105.6 million at the end of
2013 compared with $58.1 million in 2012.
Capital expenditures for 2013 amounted to $594.8 million
compared with $517.1 million for 2012.
We believe Kansas City Southern remains well positioned to
reap benefits from the ongoing strong pricing trend. The
company's productivity initiatives and efficient cost control
measures are expected to drive operating performance over the
long term. Further, strategic investments in infrastructural
development will ensure the achievement of growth goals.
However, we remain cautious on the stock due to competitive
pressure, a unionized workforce, heavy investments and increased
railroad regulation. Additionally, the ongoing uncertainties in
Coal and a competition from other carriers like
Canadian National Railway
Norfolk Southern Corp.
Canadian Pacific Railway
) may also pose significant headwinds to the company's
Kansas City Southern retains a Zacks Rank #3 (Hold).
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KANSAS CITY SOU (KSU): Free Stock Analysis
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