BNSF reports Q1 2020 financial results

Written by David C. Lester, Managing Editor
image description
The city of Burlington, Iowa, is in the beginning stages of dealing with a sinkhole underneath railroad tracks.
BNSF

BNSF released its Q1 2020 financial results this weekend.

Statement of Income (in millions)Q1 – 2020Q1 – 2019Q/Q % Change
Total revenues$ 5,417$ 5,762(6)%
Operating expenses3,5943,983(10)%
Operating income1,8231,7792%
Other (income) expense, Interest expense and Income tax expense63352620 %
Net income$ 1,190$ 1,253(5)%
Operating ratio (a)65.2%68.1%

Source: Amounts derived from the GAAP results in the Burlington Northern Santa Fe, LLC Forms 10-Q for the period ended March 31, 2020. (a) Operating ratio excludes impacts of BNSF Logistics.

Volumes and Revenues

First quarter of 2020 operating income was $1,823 million, an increase of $44 million or 2.5% compared to the same period in 2019. Total revenues for the first quarter of 2020 decreased 6% compared with the same period in 2019. The decrease in revenue is primarily due to a 5% decrease in unit volume and a 1% decrease in average revenue per car / unit driven by a one-time favorable outcome of an arbitration hearing recognized in the first quarter of 2019, in addition to lower fuel surcharges. First quarter volumes were impacted by the following:

  • Consumer Products volumes decreased 7% for the first quarter of 2020 compared with the same period in 2019 primarily due to lower international intermodal volumes as the COVID-19 pandemic contributed to lower U.S. West Coast imports. Volumes further decelerated late in the quarter in the domestic intermodal and automotive segments as the COVID-19 pandemic’s impact to U.S. consumers intensified.
  • Industrial Products volumes decreased 2% for the first quarter of 2020 compared with the same period in 2019. These changes were primarily due to lower sand volumes driven by increased competition from in- basin sand and due to lower liquefied petroleum gas volume attributable to increased pipeline takeaway capacity. These decreases were partially offset by higher demand for petroleum products.
  • Agricultural Products volumes increased 3% for the first quarter of 2020 compared with the same period in 2019, primarily due to higher domestic grain and soybean meal shipments, partially offset by lower grain exports.
  • Coal volumes decreased 8% for the first quarter of 2020 compared with the same period in 2019. These changes were primarily due to low natural gas prices, mild winter weather, and plant retirements. Listed below are details by business units – including revenues, volumes and average revenue per car/unit.
Business UnitQ1 – 2020Q1 – 2019Q/Q % Change
Revenues (in millions)
Consumer Products$ 1,765$ 2,002(12)%
Industrial Products1,4651,472—%
Agricultural Products1,1441,1133%
Coal766869(12)%
Total Freight Revenues$ 5,140$ 5,456(6)%


Other Revenues277306(9)%
Total Operating Revenues$ 5,417$ 5,762(6)%
Volumes (in thousands)
Consumer Products1,2071,301(7)%
Industrial Products460471(2)%
Agricultural Products2852763%
Coal384416(8)%
Total Volumes2,3362,464(5)%
Average Revenue per Car/Unit
Consumer Products$ 1,462$ 1,539(5)%
Industrial Products3,1853,1252%
Agricultural Products4,0144,033—%
Coal1,9952,089(4)%
Total Freight Revenues per Car/Unit$ 2,200$ 2,214(1)%

Source: Amounts derived from the GAAP results in the Burlington Northern Santa Fe, LLC Form 10-Q for the period ended March 31, 2020.

Expenses

Operating expenses for the first quarter of 2020 were $3,594 million, a decrease of $389 million or 10% compared with the same period in 2019. The decrease in expenses is primarily due to lower volume-related costs, productivity improvements, and lower costs related to improved weather conditions compared to the first quarter of 2019, including the following changes in expenses:

  • Compensation and benefits expense decreased 11% in the first quarter of 2020 compared to the same period in 2019. The decrease was primarily due to lower employee counts associated with lower volume and improved productivity.
  • Purchased services expense decreased 7% in the first quarter of 2020 compared to the same period in 2019 due to flood insurance recoveries related to the 2019 flooding.
  • Fuel expense decreased 14% in the first quarter of 2020 compared to the same period in 2019. The decrease was primarily due to improved efficiency, lower volumes, and lower average fuel prices. Locomotive fuel price per gallon decreased 4% in the first quarter of 2020 compared to the same period in 2019.
  • Materials and other expense decreased 23% in the first quarter of 2020 compared to the same period in 2019. The decrease was primarily a result of lower volume-related costs, personal injury expense, casualty-related costs, miscellaneous taxes, and cost controls.
  • There were no significant changes in depreciation and amortization, equipment rents expense and interest expense.
Operating Expenses (in millions)Q1 – 2020Q1 – 2019Q/Q % Change
Compensation and benefits$ 1,244$ 1,400(11)%
Purchased services666713(7)%
Depreciation and amortization6155914%

2

Fuel614711(14)%
Equipment rents165191(14)%
Materials and other290377(23)%
Total Operating Expenses$ 3,594$ 3,983(10)%

Source: Amounts derived from the GAAP results in the Burlington Northern Santa Fe, LLC Form 10-Q for the period ended March 31, 2020.

A BNSF press release.

For the latest railroad news, please visit rtands.com.

Categories: Class 1, Freight, Railroad News
Tags: , ,

Media