) reported third quarter 2012 adjusted earnings per share of 82
cents, missing the Zacks Consensus Estimate of 84 cents. However,
the earnings figure grew 5.1% year over year from 78 cents,
driven by strong growth in Intermodal and Automotive
Quarterly total revenue was $577 million, up 6% year over
year, but came below the Zacks Consensus Estimate of $578
million. The year-over-year increase was primarily attributable
to strong revenue growth in Automotive and Intermodal
In the third quarter, adjusted operating income was $181
million, up 16.0% year over year on a 260 basis point (bps)
improvement in adjusted operating ratio (defined as operating
expenses as a percentage of revenue) to 68.7%.
In the third-quarter, Chemical & Petroleum accounted for
$106.4 million of total revenue, up 4% year over year while
volumes declined 3% year over year. Revenue per unit was $1,694,
up 6% year over year.
Industrial & Consumer
products accounted for $138.0 million, up 1% year over year.
Business volume was 83,500, down 1% year over year. Revenue per
carload was $1,614, up 2% year over year.
Agriculture & Minerals
accounted for $90.7 million, down 10% year over year. Business
volume was 5,020, down 12% year over year. Revenue per carload
was $1,807, up 3% year over year.
accounted for $89.3 million, up 8% year over year. Business
volume was 82,500 up 3% year over year. Revenue per carload was
$1,082, up 5% year over year.
accounted for $82.4 million, up 25% year over year. Business
volume was 243,300, up 17% year over year. Revenue per carload
was $337, up 7% year over year.
accounted for $48.2 million, up 31% year over year. Business
volume was 28,100, up 31% year over year. Revenue per carload
remained unchanged year over year at $1,715.
revenue was $22.8 million, up 19% year over year.
The company exited the third quarter of 2012 with cash and
cash equivalents of $187.0 million, compared to $217.1 million in
third quarter of 2011. Long-term debt was $1.56 billion compared
with $1.60 billion in 2011.
Despite the economic volatilities, we believe Kansas City
Southern remains poised to gain from its key growth drivers like
automotive, cross-border intermodal, freight business at Lázaro
Cárdenas, crude oil and frac sand that collectively marked 18% of
the company's freight business in the third quarter.
Additionally, the company's productivity initiatives and
efficient cost control are expected to drive operating
performances over the long term.
On the other side, there are several headwinds that challenge
the carrier's growth, such as stiff competition from other class
one freight railroads such as
Union Pacific Corp.
), in addition to capital intensive nature of business, unionized
workforce and stringent railroad regulations.
We maintain our long-term Neutral recommendation on Kansas
City Southern. Currently, it holds a short-term (1-3 months)
Zacks #3 Rank (Hold).
CSX CORP (CSX): Free Stock Analysis Report
KANSAS CITY SOU (KSU): Free Stock Analysis
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