Kansas City Southern (KSU) delivered mixed financial results in the fourth quarter of 2014. Although the company reported higher than expected earnings in the quarter, revenues fell short of expectations.
The railroad operator reported fourth-quarter 2014 adjusted earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1.23. Moreover, adjusted earnings increased 23.3% from the year-ago figure. Increased freight volumes primarily in the automotive and energy divisions aided results in the quarter.
Total revenue stood at $643 million in the reported quarter, up 4% year over year. Revenues, however, lagged the Zacks Consensus Estimate of $658 million. The disappointing performance at the Agriculture & Minerals segment was responsible for the top-line miss. Investors were not pleased by the earnings report. Consequently, the stock declined in early trading.
The year-over-year increase can primarily be attributed to 13% growth in automotives and 9% improvement in the Chemicals & Petroleum as well as Energy divisions.
In the fourth quarter of 2014, operating income came in at $214 million, up 9% year over year. Meanwhile, operating ratio was 66.7% as against 68.1% in the year-ago quarter. For full-year 2014, adjusted operating income climbed 15% over the 2013 figure. Adjusted operating ratio for 2014 was 67.1% compared to 68.8% a year ago.
Segment-wise Quarterly Results
The Chemical & Petroleum segment contributed $115.3 million in revenues, up 9% year over year. On a year-over-year basis, volume was up 4% while revenue per unit grew 5%.
Industrial & Consumer Products generated revenues of $151.1 million, up only 1% year over year. Business volume was up 1% year over year and revenue per carload was flat year over year.
The Agriculture & Minerals segment performed disappointingly in the quarter with revenues declining 5% to $113.7 million. Business volume declined 5% year over year. Revenue per carload inched up 1% year over year.
The Energy segment generated $76.5 million in revenues, up 9% year over year. Business volume improved 8%. Revenue per carload climbed 1% year over year.
Intermodal segment revenues were $102.4 million, up 8% year over year. Business volume spiked 7% while revenue per carload climbed 6%.
The Automotive segment accounted for $60.6 million of the total revenue, up 13% year over year. Business volume rose 11% year over year. Revenue per carload spiked 2%.
Other revenues were $22.9 million, flat year over year.
The company expects an improved performance from the automotive, intermodal and chemical & petroleum products in 2015.
Upcoming Releases
Norfolk Southern Corp. (NSC), a key player in the same industry, will report results on Jan 26. Another player in the same industry, Canadian National Railway Co. (CNI), will unveil its financial numbers on Jan 27.
Zacks Rank
Kansas City Southern currently carries a Zacks Rank #3 (Hold). A better-ranked transportation stock is Covenant Transportation Group, Inc. (CVTI) with a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment