KCS broke revenue record, improved operating ratio in Q4

Led by significant gains in automotive, chemicals, petroleum, energy and intermodal business in fourth-quarter 2014, Kansas City Southern generated record revenue of $643 million, up 4 percent compared with fourth-quarter 2013's total.

Automotive revenue climbed 13 percent to $60.6 million; chemicals and petroleum revenue rose 9 percent to $115.3 million; energy revenue grew 9 percent to $76.5 million; intermodal revenue increased 8 percent to $102.4 million; and industrial and consumer products revenue ratcheted up 1 percent to $151.1 million. Agriculture and minerals revenue declined 5 percent to $113.7 million.

KCS also reported today that fourth-quarter volume rose 5 percent to 569,800 units, operating income grew 9 percent to $214 million, net income jumped 24 percent to $142 million, diluted earnings per share soared 24 percent to $1.28 and operating expenses increased only 2 percent to $429 million. In addition, the Class I's reported operating ratio improved 1.4 points to 66.7.

For the full year, KCS reported record revenue of $2.6 billion and carloads totaling 2.27 million units, up 9 percent and 5 percent, respectively, compared with 2013 figures. Net income jumped 42 percent to $504 million, diluted earnings per share leaped 43 percent to $4.55 and the adjusted operating ratio improved 1.7 points to 67.1.

KCS now has recorded a double-digit percentage increase in adjusted diluted earnings per share for five consecutive years, said President and Chief Executive Officer David Starling in a press release.

"[We] achieved record financial results with growth in all six commodity groups in 2014," he said. "KCS met its stated target of high-single digit year-over-year revenue growth."

Looking ahead, the railroad expects to maintain its growth momentum via a strengthening economy and "unique franchise opportunities," said Starling.

"We expect to see positive developments in a wide range of commodity groups, including automotive, intermodal, and chemical and petroleum products," he said. "And, while there is significant volatility in the energy markets, KCS anticipates volume growth in crude oil traffic originating in Canada and terminating at various Gulf locations."

KCS also expects capital expenditures in 2015 to range between $700 million and $720 million after totaling $703 million in 2014, or 27 percent of annual revenue.