Kansas City Southern (KSU) Tops Q1 EPS by 18c, Revenues Beat; Withdraws Guidance

Kansas City Southern (NYSE: KSU) reported Q1 EPS of $1.96, $0.18 better than the analyst estimate of $1.78. Revenue for the quarter came in at $731.7 million versus the consensus estimate of $717.61 million.

“KCS posted a record first quarter, driven by 8% revenue growth and judicious expense management,” stated President and Chief Executive Officer, Patrick J. Ottensmeyer. “This outstanding performance resulted in a record adjusted operating ratio of 59.7%, which reflects the positive impact of PSR-related efficiencies and cost controls.

“As pleased as we are with this exceptional performance, we have now turned our full attention to the rapidly changing operating and economic environment. The COVID-19 pandemic presents KCS and companies across the globe with unprecedented challenges and uncertainty. We are responding by prioritizing the safety of our employees and ensuring business continuity. At the same time, we are focusing intently on rightsizing our resources in the face of declining volumes, while remaining prepared for a return to volume growth.

“KCS is well-prepared to handle this period of challenge and uncertainty. Our employees are dedicated, vigilant and focused. Moreover, our financial profile has never been stronger with ample liquidity and a favorable debt maturity schedule. I am confident that the actions we are taking to accelerate our already successful PSR implementation during this downturn will further strengthen the Company and leave us well-positioned to handle future volume growth.”

Outlook

Due to the general economic uncertainty created by the global COVID-19 pandemic, KCS is withdrawing previously provided revenue, volume, operating ratio and earnings per share guidance. Previously provided capital expenditure guidance is revised from ~17% of revenue to ~$450.0 million. Guidance for 2021 and 2022 capital expenditures remains at ~17% of revenue. The Company is targeting $500.0 million or more of free cash flow in 2020. See the following pages for a reconciliation of historical free cash flow.

For earnings history and earnings-related data on Kansas City Southern (KSU) click here.

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