Revenue in the second quarter of 2020 totaled $547.9 million, down 23% from the same period in 2019 as demand slumped because of the coronavirus pandemic, the railroad said early Friday, July 17.
Second-quarter net profit was $110.3 million, or $1.16 per diluted share, compared with $129.1 million, or $1.28 per diluted share, in the second quarter of 2019.
Operating expenses were $367.5 million in the second quarter, compared with $506 million a year ago. Meanwhile, operating income was $180.4 million, compared with $208 million last year.
Kansas City Southern’s (KCS) operating ratio was 67.1% in the second quarter, compared with 70.9% for the same period in 2019. Operating ratio is a metric that can be used to gauge the financial health of a company. KCS calculates operating ratio by dividing operating expenses by revenue.
Lower revenue among all of KCS’ segments led to second-quarter revenue of $547.9 million, compared with $714 million in the second quarter of 2019.
KCS declined to provide guidance on revenue, volume, operating ratio or earnings per share given the economic uncertainty brought about by the global COVID-19 pandemic. The railroad said its capital expenditures guidance for 2020 remains at $425 million or below, while guidance for 2021 and 2022 capital expenditures remains at around 17% of revenue.
KCS expects free cash flow in 2020 to total around $500 million.
“Kansas City Southern demonstrated excellent execution during an extremely challenging quarter,” stated KCS President and CEO Pat Ottensmeyer. “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.
He continued, “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.”