Kansas City Southern (KSU) Tops Q3 EPS by 6c, Revenues Miss; Expects Adj. EPS to be 'Slightly Higher on YoY Basis'

Kansas City Southern (NYSE: KSU) reported Q3 EPS of $1.96, $0.06 better than the analyst estimate of $1.90. Revenue for the quarter came in at $659.6 million versus the consensus estimate of $662.69 million.

As KCS' outlook improves, the Company has updated and improved elements of its 2020 guidance. The Company now expects adjusted diluted earnings per share to be slightly higher on a year over year basis, and full-year 2020 adjusted operating ratio to be on the low end of the 60% to 61% range. Additionally, previously provided 2020 capital expenditure guidance remains $425.0 million or below. Guidance for 2021 and 2022 capital expenditures remains at ~17% of revenue. Finally, the Company expects free cash flow to be approximately $550 million in 2020. See the following pages for a reconciliation of historical free cash flow.

The Company intends to enter into accelerated share repurchase agreements on or around October 16, 2020 for the repurchase of approximately $500 million of its outstanding shares of common stock. This will be executed under the Company’s $2 billion share repurchase program announced on November 12, 2019.

“Kansas City Southern’s strong third quarter results demonstrate the Company’s resiliency and the tremendous discipline and focus of our workforce,” stated President and Chief Executive Officer, Patrick J. Ottensmeyer. “Our service was tested this quarter with an unprecedented volume recovery and two hurricanes that struck the heart of our network. KCS responded by steadfastly executing the lessons learned in its Precision Scheduled Railroading (PSR) implementation, which included aligning resources with rapidly increasing demand while maintaining a keen focus on preserving efficiencies created from PSR principles.

"Our performance this year has been remarkable given the challenges we have faced. This strong and sustainable operational performance has given us confidence to reintroduce elements of our guidance. Our outlook has improved for adjusted operating ratio, free cash flow and adjusted diluted earnings per share, and the Company is positioned to deliver superior growth and customer service.

“It is from this position of solid financial performance, confidence in the sustainability of our operations, outlook for our business and our outstanding liquidity and financial position that we announce our intent to enter into a new $500 million accelerated share repurchase."

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

You May Also Be Interested In

• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• A.O. Smith (AOS) Tops Q1 EPS by 1c ; Offers Guidance
• Bread Financial Holdings, Inc. (BFH) Provides Performance Update for March 2024