Kansas City Southern (KSU), a leading freight rail transportation company, reported robust financial results for the second quarter of 2011. Quarterly net income was $70.7 million or 64 cents per share compared with $34.6 million or 34 cents per share in the year-ago quarter. However, quarterly adjusted EPS of 71 cents surpassed the Zacks Consensus Estimate by a penny.
Quarterly total revenue was $534.9 million, up 15.9% year over year, surpassing the Zacks Consensus Estimate of $522 million. The increase was primarily attributable to higher carloadings and pricing gains.
Quarterly operating ratio was 71.7% compared with 72.4% in the prior-year quarter. This was the best ever second-quarter operating ratio in the company’s history. Total business volume in the reported quarter was 499,800, up 7% year over year. Operating income in the reported quarter was $151.6 million, up 19.2% year over year.
Segment Wise Results
In the second quarter of 2011, Chemical & Petroleum segment accounted for $106.9 million of total revenue, up 14% year over year. Business volume was 67,000, up 4% year over year. Revenue per carload came in at $1,596, up 10% year over year.
Industrial & Consumer segment accounted for $125 million, up 14% year over year. Business volume was 80,600, up 3% year over year. Revenue per carload was $1,551, up 11% year over year.
Agriculture & Minerals segment accounted for $121.5 million, up 5% year over year. Business volume was 68,800, down 4% year over year. Revenue per carload was $1,766, up 9% year over year.
Coal segment accounted for $68 million, up 28% year over year. Business volume was 68,300, up 5% year over year. Revenue per carload was $996, up 22% year over year.
Intermodal segment accounted for $62 million, up 25% year over year. Business volume was 194,600, up 13% year over year. Revenue per carload was $319, up 10% year over year.
Automotive segment accounted for $34.4 million, up 42% year over year. Business volume was 20,500, up 17% year over year. Revenue per carload was $1,678, up 21% year over year.
Quarterly Other revenue was $17.1 million, up 8% year over year.
Recommendation
Kansas CitySouthern competes with other class one freight railroads such as Union Pacific Corp. (UNP) and CSX Corp. (CSX). We maintain our long-term Neutral recommendation on Kansas City Southern. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
