Kansas City Southern Announces Updated Full-Year 2015 Guidance
March 23 2015 - 8:00AM
Business Wire
Kansas City Southern (KCS) (NYSE: KSU) is updating its guidance
for full-year 2015. The Company now expects low single-digit
revenue growth, reduced from the mid single-digit revenue growth
provided in the previous full-year 2015 guidance issued in January
2015.
Revised Full-Year 2015 Guidance:
The reduced revenue guidance reflects slower year-to-date
carload growth primarily from the energy sector, along with a
continued deterioration in the value of the Mexican peso against
the U.S. dollar and lower fuel surcharge revenues driven by lower
WTI prices, as shown in accompanying Chart A. As shown in the
accompanying Chart B, the Company expects the impact of lower
carload volumes to result in an approximate 2% lower revenue growth
for the year as compared to prior guidance. The Company expects the
combined impact of further foreign exchange rate deterioration and
lower fuel surcharge revenues to be an additional approximate 2%
reduction in revenue growth as compared to prior guidance. The
Company expects the impacts of foreign exchange and fuel surcharges
to be largely offset with lower expenses; however, the impact of
lower carload volumes is expected to reduce operating income. The
Company is changing its guidance for linehaul revenue growth in the
Energy commodity group from double-digit growth to single-digit
growth for 2015. Linehaul revenue growth for all other commodity
groups, overall carload growth and capital expenditures are all
expected to be in line with previous guidance.
First Quarter 2015 Expected Results:
As initially discussed by the Company in early March at investor
conferences, lower crude oil and natural gas prices are
contributing to an expected approximate 10% decline in first
quarter 2015 energy revenues. Due to the continued uncertainty in
the energy markets with the recent decline in crude prices to
six-year lows, the Company believes crude oil growth for 2015 will
be lower than expected. Additionally, lower natural gas prices
continue to have a negative impact on the Company’s coal business,
resulting in an expected approximate 20% decline in coal revenues
during the first quarter of 2015. The Company is also experiencing
lower than expected frac sand and metals revenues related to a
significant decline in new drilling operations in the United
States.
As a result of the slower than expected carload growth, the
first quarter 2015 revenue is approximately flat quarter to date to
2014. Foreign exchange and fuel surcharge revenues are expected to
negatively impact first quarter 2015 revenues by approximately 4%
compared to first quarter 2014. Additionally, first quarter 2015
adjusted diluted earnings per share is expected to be flat to
slightly higher than first quarter 2014.
Headquartered in Kansas City, Mo., Kansas City Southern is a
transportation holding company that has railroad investments in the
U.S., Mexico and Panama. Its primary U.S. holding is The Kansas
City Southern Railway Company, serving the central and south
central U.S. Its international holdings include Kansas City
Southern de Mexico, S.A. de C.V., serving northeastern and central
Mexico and the port cities of Lázaro Cárdenas, Tampico and
Veracruz, and a 50 percent interest in Panama Canal Railway
Company, providing ocean-to-ocean freight and passenger service
along the Panama Canal. Kansas City Southern's North American rail
holdings and strategic alliances are primary components of a NAFTA
Railway system, linking the commercial and industrial centers of
the U.S., Mexico and Canada.
This news release contains “forward-looking statements” within
the meaning of the securities laws concerning potential future
events involving KCS and its subsidiaries, which could materially
differ from the events that actually occur. Words such as
“projects,” “estimates,” “forecasts,” “believes,” “intends,”
“expects,” “anticipates,” and similar expressions are intended to
identify many of these forward-looking statements. Such
forward-looking statements are based upon information currently
available to management and management’s perception thereof as of
the date of this news release. Differences that actually occur
could be caused by a number of external factors over which
management has little or no control, including: competition and
consolidation within the transportation industry; the business
environment in industries that produce and use items shipped by
rail; loss of the rail concession of KCS’ subsidiary, Kansas City
Southern de México, S.A. de C.V.; the termination of, or failure to
renew, agreements with customers, other railroads and third
parties; interest rates; access to capital; disruptions to KCS’
technology infrastructure, including its computer systems; natural
events such as severe weather, hurricanes and floods; market and
regulatory responses to climate change; credit risk of customers
and counterparties and their failure to meet their financial
obligations; legislative and regulatory developments and disputes;
rail accidents or other incidents or accidents on KCS’ rail network
or at KCS’ facilities or customer facilities involving the release
of hazardous materials, including toxic inhalation hazards;
fluctuation in prices or availability of key materials, in
particular diesel fuel; dependency on certain key suppliers of core
rail equipment; changes in securities and capital markets;
availability of qualified personnel; labor difficulties, including
strikes and work stoppages; insufficiency of insurance to cover
lost revenue, profits or other damages; acts of terrorism or risk
of terrorist activities; war or risk of war; domestic and
international economic conditions; political and economic
conditions in Mexico and the level of trade between the United
States and Mexico; increased demand and traffic congestion; the
outcome of claims and litigation involving KCS or its subsidiaries;
and other factors affecting the operation of the business. More
detailed information about factors that could affect future events
may be found in filings by KCS with the Securities and Exchange
Commission, including KCS’ Annual Report on Form 10-K for the year
ended December 31, 2014 (File No. 1-4717) and subsequent reports.
Forward-looking statements are not, and should not be relied upon
as, a guarantee of future performance or results, nor will they
necessarily prove to be accurate indications of the times at or by
which any such performance or results will be achieved. As a
result, actual outcomes and results may differ materially from
those expressed in forward-looking statements. KCS is not obligated
to update any forward-looking statements in this news release to
reflect future events or developments.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20150323005272/en/
Kansas City SouthernWilliam H. Galligan,
816-983-1551bgalligan@kcsouthern.com
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