July 17, 2020
Freight

It’s earnings report season, and Kansas City Southern kicks it off

Written by David C. Lester, Editor-in-Chief

KCS’s second bridge span will speed movement of freight between the U.S. and Mexico.

File photo

Kansas City Southern reported today that Q2 2020 revenues were $547.9 million, representing a 23% drop in revenues compared to Q2 2019. In addition, carload volumes were down 21% compared to the prior year. KCS says that the drop in revenue is because of the impact of COVID-19 on the economy.

The railroad announced that because of the uncertainty surrounding COVID-19, it is not going to provide any guidance for the rest of the year. The press release said “Due to the general economic uncertainty created by the global COVID-19 pandemic, KCS is not providing guidance on revenue, volume, operating ratio or earnings per share.”

In addition, the railroad said that the capex guidance remains the same: “Previously provided 2020 capital expenditure guidance remains $425.0 million or below. Guidance for 2021 and 2022 capital expenditures remains at ~17% of revenue. The Company is on track to deliver $500.0 million or more of free cash flow in 2020.”

Kansas City Southern President and Chief Executive Officer, Patrick J. Ottensmeyer, said that “Kansas City Southern demonstrated excellent execution during an extremely challenging quarter. Our network experienced a rapid decline in volumes followed by an unprecedented rebound, forcing us to quickly adjust our service model to match customer demand while optimizing our cost structure.

“I would like to thank the men and women of Kansas City Southern who work tirelessly under challenging circumstances to deliver essential freight transportation and keep the U.S. and Mexican economies running. Their efforts have allowed KCS to continue providing consistent and reliable service to our customers.

“Precision Scheduled Railroading is producing sustainable improvements to customer service and operations, and has been a key contributor to the Company’s strong cost performance this quarter. Although visibility into the second half volumes and revenue remains limited, the Company is focused on retaining the efficiences gained during the second quarter, and reiterates its outlook to deliver at least $500 million free cash flow in 2020. We are confident in our operational execution, and believe KCS will emerge from these challenging times even better positioned to deliver superior growth and shareholder returns.”

Below is KCS’s Consolidated Statement of Income for Q2 2020 and for the sixth months ending June 30, 2020.