Kansas City Southern
) reported third quarter 2013 adjusted earnings of $1.10 per
share, missing the Zacks Consensus Estimate by a penny. However,
adjusted earnings increased 16% from 95 cents in the year-ago
quarter buoyed by higher freight volumes and operational
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Total revenue was $621.6 million in the third quarter, up 7.7%
year over year and ahead of the Zacks Consensus Estimate of $617
million. The year-over-year increase was primarily attributable
to 3% growth in carloads and solid revenue growth in the
In the third quarter, operating income was $200.3 million, up
10.8% year over year. Operating ratio was 67.8%, up 90 basis
points year over year.
Segment Quarterly Results
Chemical & Petroleum
segment contributed $109.5 million in revenues, up 3% year over
year. Volume was down 1% year over year. Revenue per unit grew 4%
year over year.
Industrial & Consumer Products
generated revenues of $148.0 million, up 7% year over year.
Business volume remained almost flat year over year. Revenue per
carload was up 7% year over year.
Agriculture & Minerals
segment revenues were $97.1 million, up 7% year over year.
Business volume grew 6% year over year. Revenue per carload also
inched up 1% year over year.
segment generated $94.6 million in revenues, up 6% year over
year. Business volume rose 2% year over year. Revenue per carload
was also up 4% year over year.
segment revenues were $95.8 million, up 17% year over year.
Business volume rose 6% year over year. Revenue per carload grew
11% year over year.
segment accounted for $51.4 million of the total revenue, up 7%
year over year. Business volume was flat year over year. Revenue
per carload rose 7% year over year.
revenues were $25.2 million, up 11% year over year.
The company exited the third quarter with cash and cash
equivalents of $95.9 million compared with $72.6 million in 2012.
Long-term debt increased to $1,728.6 million from $1,547.6
million in 2012. The company had free cash flows of $116.2
million in the quarter ended Sep 30, compared with $167.6 million
in the corresponding quarter a year ago.
Capital expenditures for the nine months ended Sep 30, 2013
amounted to $381.8 million compared with $296.3 million for the
same period a year ago.
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 competitive market may also pose significant headwinds
to the company's growth.
Kansas City Southern, which operates with other railway companies
Canadian National Railway Co.
Norfolk Southern Corp.
Canadian Pacific Railway
) retains a Zacks Rank #3 (Hold).