Kansas City Southern boasts record $616 million fourth-quarter revenue

By Lisa Kerner

Charlotte, N.C., Jan. 24 - Kansas City Southern president and chief executive officer David L. Starling said he feels good about the company's fourth-quarter and full-year 2013 earnings results.

The company experienced double-digit earnings growth for the consecutive year, said Starling during Kansas City's earnings call on Friday.

Kansas City also achieved investment-grade status.

"Given that long-term debt rates were near all-time lows during the year, the company immediately capitalized on its upgraded rating and executed a major debt restructuring, which resulted in KCS extending its weighted average maturity, reducing its weighted average coupon and creating the lowest-cost debt portfolio in the industry," said Starling.

As a result, the company lowered its interest expense by $20 million over 2012.

Optimizing the balance sheet "is largely completed at this point," said executive vice president and chief financial officer Mike Upchurch on the call.

The Kansas City, Mo.-based freight transportation company will continue to take some smaller steps into 2014 to further optimize the capital structure and will continue to purchase leased assets, according to Upchurch.

During the fourth quarter, Kansas City redeemed $29 million of its 6.125% notes. Next month, the company will redeem $62 million of its remaining 8% notes, according to Upchurch.

Also, the company is in the process of amending credit facilities to support commercial paper programs.

Financial highlights

Kansas City reported record quarterly revenue of $616 million, an 8% improvement over the prior-year period. Full-year 2013 revenue was a record $2.4 billion, up 6% over 2012.

Operating income was up 13% at $196 million for the quarter. Full-year operating income was up 10% at $739 million.

Reported and adjusted diluted earnings per share for fourth quarter 2013 was $1.03, a 12% increase over fourth-quarter 2012 adjusted diluted earnings per share.

Net income for the quarter totaled $114 million, or $1.03 per diluted share, compared with $93 million, or $0.83 per diluted share, in the fourth quarter of 2012.

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