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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kansas City Southern | NYSE:KSU | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 293.59 | 0 | 01:00:00 |
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
|
|
44-0663509
|
||
(State or other jurisdiction of
incorporation or organization)
|
|
|
(I.R.S. Employer
Identification No.)
|
|||
427 West 12th Street
|
|
|
|
|||
Kansas City
|
,
|
Missouri
|
|
|
64105
|
|
(Address of principal executive offices)
|
|
|
(Zip Code)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Preferred Stock, Par Value $25 Per Share, 4%, Noncumulative
|
KSU
|
New York Stock Exchange
|
Common Stock, $.01 Per Share Par Value
|
KSU
|
New York Stock Exchange
|
Class
|
|
July 10, 2020
|
Common Stock, $0.01 per share par value
|
|
94,349,268 Shares
|
|
|
Page
|
|
PART I — FINANCIAL INFORMATION
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II — OTHER INFORMATION
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
Item 1.
|
Financial Statements (unaudited)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(In millions, except share and per share amounts)
(Unaudited)
|
||||||||||||||
Revenues
|
$
|
547.9
|
|
|
$
|
714.0
|
|
|
$
|
1,279.6
|
|
|
$
|
1,388.8
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
103.8
|
|
|
128.3
|
|
|
237.2
|
|
|
257.2
|
|
||||
Purchased services
|
44.6
|
|
|
56.7
|
|
|
97.9
|
|
|
109.5
|
|
||||
Fuel
|
39.5
|
|
|
87.7
|
|
|
114.4
|
|
|
170.7
|
|
||||
Equipment costs
|
18.1
|
|
|
26.3
|
|
|
40.0
|
|
|
56.7
|
|
||||
Depreciation and amortization
|
89.3
|
|
|
87.7
|
|
|
178.7
|
|
|
176.2
|
|
||||
Materials and other
|
61.7
|
|
|
68.3
|
|
|
125.7
|
|
|
131.7
|
|
||||
Restructuring charges
|
10.5
|
|
|
51.0
|
|
|
16.5
|
|
|
118.5
|
|
||||
Total operating expenses
|
367.5
|
|
|
506.0
|
|
|
810.4
|
|
|
1,020.5
|
|
||||
Operating income
|
180.4
|
|
|
208.0
|
|
|
469.2
|
|
|
368.3
|
|
||||
Equity in net earnings (losses) of affiliates
|
0.2
|
|
|
(0.2
|
)
|
|
1.2
|
|
|
1.5
|
|
||||
Interest expense
|
(38.1
|
)
|
|
(28.0
|
)
|
|
(72.3
|
)
|
|
(56.2
|
)
|
||||
Debt retirement costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||
Foreign exchange gain (loss)
|
7.8
|
|
|
8.3
|
|
|
(51.7
|
)
|
|
12.9
|
|
||||
Other income, net
|
0.8
|
|
|
0.1
|
|
|
2.2
|
|
|
0.2
|
|
||||
Income before income taxes
|
151.1
|
|
|
188.2
|
|
|
348.6
|
|
|
326.1
|
|
||||
Income tax expense
|
40.8
|
|
|
59.1
|
|
|
86.0
|
|
|
93.8
|
|
||||
Net income
|
110.3
|
|
|
129.1
|
|
|
262.6
|
|
|
232.3
|
|
||||
Less: Net income attributable to noncontrolling interest
|
0.6
|
|
|
0.4
|
|
|
1.1
|
|
|
0.8
|
|
||||
Net income attributable to Kansas City Southern and subsidiaries
|
109.7
|
|
|
128.7
|
|
|
261.5
|
|
|
231.5
|
|
||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||
Net income available to common stockholders
|
$
|
109.7
|
|
|
$
|
128.7
|
|
|
$
|
261.4
|
|
|
$
|
231.4
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.16
|
|
|
$
|
1.29
|
|
|
$
|
2.75
|
|
|
$
|
2.31
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
2.74
|
|
|
$
|
2.30
|
|
|
|
|
|
|
|
|
|
||||||||
Average shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
94,476
|
|
|
100,028
|
|
|
95,070
|
|
|
100,264
|
|
||||
Potentially dilutive common shares
|
417
|
|
|
394
|
|
|
464
|
|
|
405
|
|
||||
Diluted
|
94,893
|
|
|
100,422
|
|
|
95,534
|
|
|
100,669
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(In millions)
(Unaudited) |
||||||||||||||
Net income
|
$
|
110.3
|
|
|
$
|
129.1
|
|
|
$
|
262.6
|
|
|
$
|
232.3
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on interest rate derivative instruments, net of tax of $1.5 million, $(2.4) million, $2.7 million and $(4.1) million, respectively
|
5.3
|
|
|
(7.6
|
)
|
|
10.1
|
|
|
(12.7
|
)
|
||||
Reclassification adjustment from cash flow hedges included in net income, net of tax of $0.2 million and $0.3 million, respectively
|
0.4
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Foreign currency translation adjustments
|
0.2
|
|
|
0.1
|
|
|
(1.5
|
)
|
|
0.3
|
|
||||
Other comprehensive income (loss)
|
5.9
|
|
|
(7.5
|
)
|
|
9.5
|
|
|
(12.4
|
)
|
||||
Comprehensive income
|
116.2
|
|
|
121.6
|
|
|
272.1
|
|
|
219.9
|
|
||||
Less: Comprehensive income attributable to noncontrolling interest
|
0.6
|
|
|
0.4
|
|
|
1.1
|
|
|
0.8
|
|
||||
Comprehensive income attributable to Kansas City Southern and subsidiaries
|
$
|
115.6
|
|
|
$
|
121.2
|
|
|
$
|
271.0
|
|
|
$
|
219.1
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
(Unaudited)
|
||||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
262.6
|
|
|
$
|
232.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
178.7
|
|
|
176.2
|
|
||
Deferred income taxes
|
34.3
|
|
|
12.2
|
|
||
Equity in net earnings of affiliates
|
(1.2
|
)
|
|
(1.5
|
)
|
||
Share-based compensation
|
13.5
|
|
|
12.0
|
|
||
Distributions from affiliates
|
2.5
|
|
|
3.0
|
|
||
Settlement of foreign currency derivative instruments
|
(29.0
|
)
|
|
4.8
|
|
||
(Gain) loss on foreign currency derivative instruments
|
27.3
|
|
|
(10.9
|
)
|
||
Foreign exchange (gain) loss
|
24.4
|
|
|
(2.0
|
)
|
||
Restructuring charges
|
16.5
|
|
|
118.5
|
|
||
Cash payments for restructuring charges
|
(3.2
|
)
|
|
(1.4
|
)
|
||
Changes in working capital items:
|
|
|
|
||||
Accounts receivable
|
44.1
|
|
|
16.0
|
|
||
Materials and supplies
|
19.3
|
|
|
4.5
|
|
||
Other current assets
|
(47.1
|
)
|
|
(15.0
|
)
|
||
Accounts payable and accrued liabilities
|
(16.2
|
)
|
|
(6.4
|
)
|
||
Other, net
|
(1.0
|
)
|
|
(1.1
|
)
|
||
Net cash provided by operating activities
|
525.5
|
|
|
541.2
|
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(194.7
|
)
|
|
(350.4
|
)
|
||
Purchase or replacement of assets under operating leases
|
(78.2
|
)
|
|
(0.9
|
)
|
||
Property investments in MSLLC
|
(20.0
|
)
|
|
(22.3
|
)
|
||
Investments in and advances to affiliates
|
(4.9
|
)
|
|
(15.3
|
)
|
||
Proceeds from disposal of property
|
8.0
|
|
|
12.3
|
|
||
Other, net
|
(9.4
|
)
|
|
2.5
|
|
||
Net cash used for investing activities
|
(299.2
|
)
|
|
(374.1
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
545.6
|
|
|
—
|
|
||
Repayment of long-term debt
|
(4.8
|
)
|
|
(5.5
|
)
|
||
Dividends paid
|
(76.9
|
)
|
|
(72.6
|
)
|
||
Shares repurchased
|
(211.7
|
)
|
|
(142.7
|
)
|
||
Debt issuance costs paid
|
(6.6
|
)
|
|
(2.5
|
)
|
||
Proceeds from employee stock plans
|
4.5
|
|
|
3.3
|
|
||
Net cash provided by (used for) financing activities
|
250.1
|
|
|
(220.0
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
(5.1
|
)
|
|
—
|
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Net increase (decrease) during each period
|
471.3
|
|
|
(52.9
|
)
|
||
At beginning of year
|
148.8
|
|
|
100.5
|
|
||
At end of period
|
$
|
620.1
|
|
|
$
|
47.6
|
|
|
|
$25 Par
Preferred
Stock
|
|
$.01 Par
Common
Stock
|
|
Additional Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Non-
controlling
Interest
|
|
Total
|
||||||||||||||
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2018
|
$
|
5.7
|
|
|
$
|
1.0
|
|
|
$
|
946.6
|
|
|
$
|
3,870.6
|
|
|
$
|
(10.9
|
)
|
|
$
|
319.7
|
|
|
$
|
5,132.7
|
|
Net income
|
|
|
|
|
|
|
102.8
|
|
|
|
|
0.4
|
|
|
103.2
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(4.9
|
)
|
|
|
|
(4.9
|
)
|
||||||||||||
Contribution from noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
|
1.8
|
|
||||||||||||
Dividends on common stock ($0.36/share)
|
|
|
|
|
—
|
|
|
(36.3
|
)
|
|
|
|
|
|
(36.3
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
(0.1
|
)
|
||||||||||||
Share repurchases
|
—
|
|
|
—
|
|
|
(4.4
|
)
|
|
(45.9
|
)
|
|
|
|
|
|
(50.3
|
)
|
|||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
(2.1
|
)
|
|
|
|
|
|
|
|
(2.1
|
)
|
|||||||||||
Share-based compensation
|
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
6.0
|
|
||||||||||||
Balance at March 31, 2019
|
5.7
|
|
|
1.0
|
|
|
946.1
|
|
|
3,891.1
|
|
|
(15.8
|
)
|
|
321.9
|
|
|
5,150.0
|
|
|||||||
Net income
|
|
|
|
|
|
|
128.7
|
|
|
|
|
0.4
|
|
|
129.1
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(7.5
|
)
|
|
|
|
(7.5
|
)
|
||||||||||||
Dividends on common stock ($0.36/share)
|
|
|
|
|
—
|
|
|
(36.0
|
)
|
|
|
|
|
|
(36.0
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||||
Share repurchases
|
(0.1
|
)
|
|
—
|
|
|
(7.3
|
)
|
|
(85.0
|
)
|
|
|
|
|
|
(92.4
|
)
|
|||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
2.3
|
|
|
|
|
|
|
|
|
2.3
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
6.0
|
|
||||||||||||
Balance at June 30, 2019
|
5.6
|
|
|
1.0
|
|
|
947.1
|
|
|
3,898.8
|
|
|
(23.3
|
)
|
|
322.3
|
|
|
5,151.5
|
|
|||||||
Net income
|
|
|
|
|
|
|
180.2
|
|
|
|
|
0.4
|
|
|
180.6
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(7.3
|
)
|
|
|
|
(7.3
|
)
|
||||||||||||
Dividends on common stock ($0.36/share)
|
|
|
|
|
—
|
|
|
(35.6
|
)
|
|
|
|
|
|
(35.6
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
(0.1
|
)
|
||||||||||||
Share repurchases
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
(92.1
|
)
|
|
|
|
|
|
(99.8
|
)
|
|||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
2.7
|
|
|
|
|
|
|
|
|
2.7
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
5.2
|
|
|
|
|
|
|
|
|
5.2
|
|
||||||||||||
Balance at September 30, 2019
|
5.6
|
|
|
1.0
|
|
|
947.3
|
|
|
3,951.2
|
|
|
(30.6
|
)
|
|
322.7
|
|
|
5,197.2
|
|
|||||||
Net income
|
|
|
|
|
|
|
127.2
|
|
|
|
|
0.7
|
|
|
127.9
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
1.5
|
|
|
|
|
1.5
|
|
||||||||||||
Dividends on common stock ($0.40/share)
|
|
|
|
|
—
|
|
|
(38.6
|
)
|
|
|
|
|
|
(38.6
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||||
Share repurchases
|
—
|
|
|
—
|
|
|
(29.0
|
)
|
|
(438.5
|
)
|
|
|
|
|
|
(467.5
|
)
|
|||||||||
Forward contract for accelerated share repurchases
|
|
|
|
|
(82.5
|
)
|
|
|
|
|
|
|
|
(82.5
|
)
|
||||||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
1.2
|
|
|
|
|
|
|
|
|
1.2
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
6.7
|
|
|
|
|
|
|
|
|
6.7
|
|
||||||||||||
Balance at December 31, 2019
|
5.6
|
|
|
1.0
|
|
|
843.7
|
|
|
3,601.3
|
|
|
(29.1
|
)
|
|
323.4
|
|
|
4,745.9
|
|
|||||||
Net income
|
|
|
|
|
|
|
151.8
|
|
|
|
|
0.5
|
|
|
152.3
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
3.6
|
|
|
|
|
3.6
|
|
||||||||||||
Dividends on common stock ($0.40/share)
|
|
|
|
|
—
|
|
|
(38.2
|
)
|
|
|
|
|
|
(38.2
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
(0.1
|
)
|
||||||||||||
Share repurchases
|
|
|
—
|
|
|
(11.4
|
)
|
|
(182.8
|
)
|
|
|
|
|
|
(194.2
|
)
|
||||||||||
Settlement of forward contract for accelerated share repurchases
|
|
|
|
|
82.5
|
|
|
|
|
|
|
|
|
82.5
|
|
||||||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
(0.1
|
)
|
|||||||||||
Share-based compensation
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
|
10.3
|
|
||||||||||||
Balance at March 31, 2020
|
$
|
5.6
|
|
|
$
|
1.0
|
|
|
$
|
925.0
|
|
|
$
|
3,532.0
|
|
|
$
|
(25.5
|
)
|
|
$
|
323.9
|
|
|
$
|
4,762.0
|
|
Net income
|
|
|
|
|
|
|
109.7
|
|
|
|
|
0.6
|
|
|
110.3
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
5.9
|
|
|
|
|
5.9
|
|
||||||||||||
Dividends on common stock ($0.40/share)
|
|
|
|
|
—
|
|
|
(37.8
|
)
|
|
|
|
|
|
(37.8
|
)
|
|||||||||||
Dividends on $25 par preferred stock ($0.25/share)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||||
Share repurchases
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|
(93.2
|
)
|
|
|
|
|
|
(100.0
|
)
|
|||||||||
Options exercised and stock subscribed, net of shares withheld for employee taxes
|
|
|
—
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
(0.3
|
)
|
|||||||||||
Share-based compensation
|
|
|
|
|
4.9
|
|
|
|
|
|
|
|
|
4.9
|
|
||||||||||||
Balance at June 30, 2020
|
$
|
5.6
|
|
|
$
|
1.0
|
|
|
$
|
922.8
|
|
|
$
|
3,510.7
|
|
|
$
|
(19.6
|
)
|
|
$
|
324.5
|
|
|
$
|
4,745.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Chemical & Petroleum
|
|
|
|
|
|
|
|
||||||||
Chemicals
|
$
|
52.2
|
|
|
$
|
61.6
|
|
|
$
|
114.7
|
|
|
$
|
122.1
|
|
Petroleum
|
70.6
|
|
|
90.0
|
|
|
166.4
|
|
|
164.3
|
|
||||
Plastics
|
35.7
|
|
|
36.7
|
|
|
76.0
|
|
|
70.5
|
|
||||
Total
|
158.5
|
|
|
188.3
|
|
|
357.1
|
|
|
356.9
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Industrial & Consumer Products
|
|
|
|
|
|
|
|
||||||||
Forest Products
|
57.8
|
|
|
63.2
|
|
|
126.7
|
|
|
129.6
|
|
||||
Metals & Scrap
|
40.4
|
|
|
59.9
|
|
|
102.7
|
|
|
116.9
|
|
||||
Other
|
22.4
|
|
|
27.2
|
|
|
50.2
|
|
|
53.6
|
|
||||
Total
|
120.6
|
|
|
150.3
|
|
|
279.6
|
|
|
300.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Agriculture & Minerals
|
|
|
|
|
|
|
|
||||||||
Grain
|
64.1
|
|
|
73.2
|
|
|
141.9
|
|
|
145.9
|
|
||||
Food Products
|
39.0
|
|
|
34.7
|
|
|
81.7
|
|
|
70.4
|
|
||||
Ores & Minerals
|
5.3
|
|
|
5.8
|
|
|
11.1
|
|
|
12.3
|
|
||||
Stone, Clay & Glass
|
6.0
|
|
|
8.7
|
|
|
14.2
|
|
|
16.7
|
|
||||
Total
|
114.4
|
|
|
122.4
|
|
|
248.9
|
|
|
245.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Energy
|
|
|
|
|
|
|
|
||||||||
Utility Coal
|
23.2
|
|
|
27.5
|
|
|
46.8
|
|
|
60.0
|
|
||||
Coal & Petroleum Coke
|
9.5
|
|
|
10.1
|
|
|
21.1
|
|
|
20.6
|
|
||||
Frac Sand
|
1.7
|
|
|
6.7
|
|
|
5.5
|
|
|
14.7
|
|
||||
Crude Oil
|
4.9
|
|
|
9.6
|
|
|
22.2
|
|
|
23.2
|
|
||||
Total
|
39.3
|
|
|
53.9
|
|
|
95.6
|
|
|
118.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Intermodal
|
63.5
|
|
|
92.6
|
|
|
152.2
|
|
|
172.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Automotive
|
15.6
|
|
|
70.9
|
|
|
69.5
|
|
|
128.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Freight Revenues
|
511.9
|
|
|
678.4
|
|
|
1,202.9
|
|
|
1,321.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Revenue
|
36.0
|
|
|
35.6
|
|
|
76.7
|
|
|
67.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Revenues
|
$
|
547.9
|
|
|
$
|
714.0
|
|
|
$
|
1,279.6
|
|
|
$
|
1,388.8
|
|
Contract liabilities
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Beginning balance
|
|
$
|
21.1
|
|
|
$
|
22.3
|
|
|
$
|
30.5
|
|
|
$
|
32.4
|
|
Revenue recognized that was included in the contract liability balance at the beginning of the period
|
|
(7.8
|
)
|
|
(10.1
|
)
|
|
(17.9
|
)
|
|
(24.2
|
)
|
||||
Increases due to consideration received, excluding amounts recognized as revenue during the period
|
|
2.8
|
|
|
6.8
|
|
|
3.5
|
|
|
10.8
|
|
||||
Ending balance
|
|
$
|
16.1
|
|
|
$
|
19.0
|
|
|
$
|
16.1
|
|
|
$
|
19.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income available to common stockholders for purposes of computing basic and diluted earnings per share
|
$
|
109.7
|
|
|
$
|
128.7
|
|
|
$
|
261.4
|
|
|
$
|
231.4
|
|
Weighted-average number of shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic shares
|
94,476
|
|
|
100,028
|
|
|
95,070
|
|
|
100,264
|
|
||||
Effect of dilution
|
417
|
|
|
394
|
|
|
464
|
|
|
405
|
|
||||
Diluted shares
|
94,893
|
|
|
100,422
|
|
|
95,534
|
|
|
100,669
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.16
|
|
|
$
|
1.29
|
|
|
$
|
2.75
|
|
|
$
|
2.31
|
|
Diluted earnings per share
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
2.74
|
|
|
$
|
2.30
|
|
Stock options excluded as their inclusion would be anti-dilutive
|
72
|
|
|
134
|
|
|
72
|
|
|
212
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
Land
|
$
|
225.6
|
|
|
$
|
224.9
|
|
Concession land rights
|
141.1
|
|
|
141.1
|
|
||
Road property
|
7,997.6
|
|
|
7,962.1
|
|
||
Equipment
|
2,757.5
|
|
|
2,652.6
|
|
||
Technology and other
|
352.2
|
|
|
345.1
|
|
||
Construction in progress
|
228.5
|
|
|
170.2
|
|
||
Total property
|
11,702.5
|
|
|
11,496.0
|
|
||
Accumulated depreciation and amortization
|
2,755.1
|
|
|
2,689.7
|
|
||
Property and equipment (including concession assets), net
|
$
|
8,947.4
|
|
|
$
|
8,806.3
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
|
Level 2
|
|
Level 2
|
||||
Assets
|
|
|
|
|
||||
Foreign currency derivative instruments
|
|
$
|
4.2
|
|
|
$
|
2.5
|
|
Treasury lock agreements
|
|
12.8
|
|
|
—
|
|
||
Liabilities
|
|
|
|
|
||||
Debt instruments
|
|
4,356.7
|
|
|
3,535.7
|
|
|
Derivative Assets
|
||||||||
|
Balance Sheet Location
|
|
June 30,
2020 |
|
December 31, 2019
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Treasury lock agreements
|
Other assets
|
|
$
|
12.8
|
|
|
$
|
—
|
|
Total derivatives designated as hedging instruments
|
|
|
12.8
|
|
|
—
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
4.2
|
|
|
2.5
|
|
||
Total derivatives not designated as hedging instruments
|
|
|
4.2
|
|
|
2.5
|
|
||
Total derivative assets
|
|
|
$
|
17.0
|
|
|
$
|
2.5
|
|
|
Offsetting of Derivative Assets
|
|
|
|
|
|
|
||||||
As of June 30, 2020
|
|
Gross Assets
|
|
Gross Liabilities
|
|
Net Amounts Presented in the Consolidated Balance Sheets
|
||||||
Derivatives subject to a master netting arrangement or similar agreement
|
|
$
|
5.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
4.2
|
|
As of December 31, 2019
|
|
|
|
|
|
|
||||||
Derivatives subject to a master netting arrangement or similar agreement
|
|
$
|
2.5
|
|
|
$
|
—
|
|
|
$
|
2.5
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of Gain/(Loss) Recognized in OCI on Derivative
|
|
Location of Gain/(Loss) Reclassified from AOCI into Income
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Income
|
||||||||||||
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Treasury lock agreements
|
|
$
|
6.8
|
|
|
$
|
(10.0
|
)
|
|
Interest expense
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
Total
|
|
$
|
6.8
|
|
|
$
|
(10.0
|
)
|
|
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain/(Loss) Recognized in Income on Derivative
|
|
Amount of Gain/(Loss) Recognized in Income on Derivative
|
||||||
|
|
|
|
2020
|
|
2019
|
||||
Foreign currency forward contracts
|
|
Foreign exchange gain (loss)
|
$
|
6.4
|
|
|
$
|
7.3
|
|
|
Total
|
|
|
|
$
|
6.4
|
|
|
$
|
7.3
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of Gain/(Loss) Recognized in OCI on Derivative
|
|
Location of Gain/(Loss) Reclassified from AOCI into Income
|
|
Amount of Gain/(Loss) Reclassified from AOCI into Income
|
||||||||||||
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
||||||||
Treasury lock agreements
|
|
$
|
12.8
|
|
|
$
|
(16.8
|
)
|
|
Interest expense
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
Total
|
|
$
|
12.8
|
|
|
$
|
(16.8
|
)
|
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain/(Loss) Recognized in Income on Derivative
|
|
Amount of Gain/(Loss) Recognized in Income on Derivative
|
||||||
|
|
|
|
2020
|
|
2019
|
||||
Foreign currency forward contracts
|
|
Foreign exchange gain (loss)
|
$
|
(27.3
|
)
|
|
$
|
10.9
|
|
|
Total
|
|
|
|
$
|
(27.3
|
)
|
|
$
|
10.9
|
|
Third Party Institution
|
|
Agreement Date
|
|
Settlement Date
|
|
Total Amount of Agreement (in millions)
|
|
Initial Shares Delivered
|
|
Fair Market Value of Initial Shares
(in millions)
|
|
Additional Shares Delivered
|
|
Fair Market Value of Additional Shares
(in millions)
|
|
Total Shares Delivered
|
|
Weighted-Average Price Per Share
|
|||||||||||
ASR Agreement #1
|
|
November 2019
|
|
March 2020
|
|
$
|
275.0
|
|
|
1,511,380
|
|
$
|
233.75
|
|
|
224,244
|
|
|
$
|
41.25
|
|
|
1,735,624
|
|
$
|
158.44
|
|
||
ASR Agreement #2
|
|
November 2019
|
|
March 2020
|
|
$
|
275.0
|
|
|
1,511,380
|
|
$
|
233.75
|
|
|
221,692
|
|
|
$
|
41.25
|
|
|
1,733,072
|
|
$
|
158.68
|
|
||
Total
|
|
|
|
|
|
$
|
550.0
|
|
|
3,022,760
|
|
|
$
|
467.5
|
|
|
445,936
|
|
|
$
|
82.5
|
|
|
3,468,696
|
|
|
$
|
158.56
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
Revenues
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
U.S.
|
$
|
304.4
|
|
|
$
|
363.8
|
|
|
$
|
684.3
|
|
|
$
|
729.4
|
|
Mexico
|
243.5
|
|
|
350.2
|
|
|
595.3
|
|
|
659.4
|
|
||||
Total revenues
|
$
|
547.9
|
|
|
$
|
714.0
|
|
|
$
|
1,279.6
|
|
|
$
|
1,388.8
|
|
|
|
|
|
|
|
|
|
||||||||
Property and equipment (including concession assets), net
|
|
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||||||
U.S.
|
|
|
|
|
$
|
5,575.0
|
|
|
$
|
5,435.9
|
|
||||
Mexico
|
|
|
|
|
3,372.4
|
|
|
3,370.4
|
|
||||||
Total property and equipment (including concession assets), net
|
|
|
|
|
$
|
8,947.4
|
|
|
$
|
8,806.3
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Customer service — improve and sustain consistency and reliability of service and create a more resilient and dependable network;
|
•
|
Facilitating growth — additional capacity for new opportunities;
|
•
|
Improving asset utilization — meet growing or changing demand with the same or fewer assets; and,
|
•
|
Improving the cost profile of the Company — increased profitability driven by volume and revenue growth and improved productivity and asset utilization.
|
|
|
Three Months Ended
|
|
Improvement/ (Deterioration)
|
|
Six Months Ended
|
|
Improvement/ (Deterioration)
|
|
FY 2020
Goal
|
||||
|
|
June 30,
|
|
June 30,
|
|
|||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|||||
Gross velocity (mph) (i)
|
|
17.1
|
|
12.5
|
|
37%
|
|
16.4
|
|
12.5
|
|
31%
|
|
17.0
|
Terminal dwell (hours) (ii)
|
|
20.3
|
|
21.2
|
|
4%
|
|
20.0
|
|
21.5
|
|
7%
|
|
18.0
|
Train length (feet) (iii)
|
|
6,921
|
|
5,999
|
|
15%
|
|
6,349
|
|
5,879
|
|
8%
|
|
6,350
|
Car miles per day (iv)
|
|
118.6
|
|
104.6
|
|
13%
|
|
119.8
|
|
102.8
|
|
17%
|
|
135.0
|
Fuel efficiency (gallons per 1,000 GTM's) (v)
|
|
1.21
|
|
1.31
|
|
8%
|
|
1.24
|
|
1.33
|
|
7%
|
|
1.24
|
(i) Gross velocity is the average train speed between origin and destination in miles per hour calculated as the sum of the miles traveled divided by the sum of total transit hours. Transit hours are measured as the difference between a train’s origin departure and destination arrival date and times broken down by segment across the train route (includes all time spent including crew changes, terminal dwell, delays, and incidents).
|
|||||
|
|
|
|
|
|
(ii) Terminal dwell is the average amount of time in hours between car arrival to and departure from the yard (excludes cars that move through a terminal on a run-through train, stored, bad ordered, and maintenance-of-way cars). Calculated by dividing the total number of hours cars spent in terminals by the total count of car dwell events.
|
|||||
|
|
|
|
|
|
(iii) Train length is the average length of a train across its reporting stations, including the origin and intermediate stations. Length of a train is the sum of car and locomotive lengths measured in feet.
|
|||||
|
|
|
|
|
|
(iv) Car miles per day is the miles a car travels divided by total transit days. Transit days are measured from opening event to closing event (includes all time spent in terminals and on trains).
|
|||||
|
|
|
|
|
|
(v) Fuel efficiency is calculated by taking locomotive fuel consumed in gallons divided by thousand gross ton miles (“GTM’s”) net of detours with no associated fuel gallons. GTM’s are the movement of one ton of train weight over one mile calculated by multiplying total train weight by distance the train moved. GTM’s exclude locomotive gross ton miles.
|
|
Three Months Ended
|
|
Change
|
||||||||
|
June 30,
|
|
|||||||||
|
2020
|
|
2019
|
|
|||||||
Revenues
|
$
|
547.9
|
|
|
$
|
714.0
|
|
|
$
|
(166.1
|
)
|
Operating expenses
|
367.5
|
|
|
506.0
|
|
|
(138.5
|
)
|
|||
Operating income
|
180.4
|
|
|
208.0
|
|
|
(27.6
|
)
|
|||
Equity in net earnings (losses) of affiliates
|
0.2
|
|
|
(0.2
|
)
|
|
0.4
|
|
|||
Interest expense
|
(38.1
|
)
|
|
(28.0
|
)
|
|
(10.1
|
)
|
|||
Foreign exchange gain
|
7.8
|
|
|
8.3
|
|
|
(0.5
|
)
|
|||
Other income, net
|
0.8
|
|
|
0.1
|
|
|
0.7
|
|
|||
Income before income taxes
|
151.1
|
|
|
188.2
|
|
|
(37.1
|
)
|
|||
Income tax expense
|
40.8
|
|
|
59.1
|
|
|
(18.3
|
)
|
|||
Net income
|
110.3
|
|
|
129.1
|
|
|
(18.8
|
)
|
|||
Less: Net income attributable to noncontrolling interest
|
0.6
|
|
|
0.4
|
|
|
0.2
|
|
|||
Net income attributable to Kansas City Southern and subsidiaries
|
$
|
109.7
|
|
|
$
|
128.7
|
|
|
$
|
(19.0
|
)
|
|
Six Months Ended
|
|
Change
|
||||||||
|
June 30,
|
|
|||||||||
|
2020
|
|
2019
|
|
|||||||
Revenues
|
$
|
1,279.6
|
|
|
$
|
1,388.8
|
|
|
$
|
(109.2
|
)
|
Operating expenses
|
810.4
|
|
|
1,020.5
|
|
|
(210.1
|
)
|
|||
Operating income
|
469.2
|
|
|
368.3
|
|
|
100.9
|
|
|||
Equity in net earnings of affiliates
|
1.2
|
|
|
1.5
|
|
|
(0.3
|
)
|
|||
Interest expense
|
(72.3
|
)
|
|
(56.2
|
)
|
|
(16.1
|
)
|
|||
Debt retirement costs
|
—
|
|
|
(0.6
|
)
|
|
0.6
|
|
|||
Foreign exchange gain (loss)
|
(51.7
|
)
|
|
12.9
|
|
|
(64.6
|
)
|
|||
Other income, net
|
2.2
|
|
|
0.2
|
|
|
2.0
|
|
|||
Income before income taxes
|
348.6
|
|
|
326.1
|
|
|
22.5
|
|
|||
Income tax expense
|
86.0
|
|
|
93.8
|
|
|
(7.8
|
)
|
|||
Net income
|
262.6
|
|
|
232.3
|
|
|
30.3
|
|
|||
Less: Net income attributable to noncontrolling interest
|
1.1
|
|
|
0.8
|
|
|
0.3
|
|
|||
Net income attributable to Kansas City Southern and subsidiaries
|
$
|
261.5
|
|
|
$
|
231.5
|
|
|
$
|
30.0
|
|
|
Revenues
|
|
Carloads and Units
|
|
Revenue per Carload/Unit
|
|||||||||||||||||||||||||
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|||||||||||||||||||
|
June 30,
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|||||||||||||
Chemical and petroleum
|
$
|
158.5
|
|
|
$
|
188.3
|
|
|
(16
|
%)
|
|
75.6
|
|
|
86.9
|
|
|
(13
|
%)
|
|
$
|
2,097
|
|
|
$
|
2,167
|
|
|
(3
|
%)
|
Industrial and consumer products
|
120.6
|
|
|
150.3
|
|
|
(20
|
%)
|
|
68.0
|
|
|
79.2
|
|
|
(14
|
%)
|
|
1,774
|
|
|
1,898
|
|
|
(7
|
%)
|
||||
Agriculture and minerals
|
114.4
|
|
|
122.4
|
|
|
(7
|
%)
|
|
57.7
|
|
|
61.8
|
|
|
(7
|
%)
|
|
1,983
|
|
|
1,981
|
|
|
—
|
|
||||
Energy
|
39.3
|
|
|
53.9
|
|
|
(27
|
%)
|
|
44.1
|
|
|
54.7
|
|
|
(19
|
%)
|
|
891
|
|
|
985
|
|
|
(10
|
%)
|
||||
Intermodal
|
63.5
|
|
|
92.6
|
|
|
(31
|
%)
|
|
191.0
|
|
|
244.6
|
|
|
(22
|
%)
|
|
332
|
|
|
379
|
|
|
(12
|
%)
|
||||
Automotive
|
15.6
|
|
|
70.9
|
|
|
(78
|
%)
|
|
11.6
|
|
|
42.7
|
|
|
(73
|
%)
|
|
1,345
|
|
|
1,660
|
|
|
(19
|
%)
|
||||
Carload revenues, carloads and units
|
511.9
|
|
|
678.4
|
|
|
(25
|
%)
|
|
448.0
|
|
|
569.9
|
|
|
(21
|
%)
|
|
$
|
1,143
|
|
|
$
|
1,190
|
|
|
(4
|
%)
|
||
Other revenue
|
36.0
|
|
|
35.6
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues (i)
|
$
|
547.9
|
|
|
$
|
714.0
|
|
|
(23
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(i) Included in revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fuel surcharge
|
$
|
37.6
|
|
|
$
|
74.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
Carloads and Units
|
|
Revenue per Carload/Unit
|
|||||||||||||||||||||||||
|
Six Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
Six Months Ended
|
|
|
|||||||||||||||||||
|
June 30,
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|||||||||||||
Chemical and petroleum
|
$
|
357.1
|
|
|
$
|
356.9
|
|
|
—
|
|
|
166.5
|
|
|
166.3
|
|
|
—
|
|
|
$
|
2,145
|
|
|
$
|
2,146
|
|
|
—
|
|
Industrial and consumer products
|
279.6
|
|
|
300.1
|
|
|
(7
|
%)
|
|
151.4
|
|
|
159.1
|
|
|
(5
|
%)
|
|
1,847
|
|
|
1,886
|
|
|
(2
|
%)
|
||||
Agriculture and minerals
|
248.9
|
|
|
245.3
|
|
|
1
|
%
|
|
120.8
|
|
|
123.8
|
|
|
(2
|
%)
|
|
2,060
|
|
|
1,981
|
|
|
4
|
%
|
||||
Energy
|
95.6
|
|
|
118.5
|
|
|
(19
|
%)
|
|
101.7
|
|
|
115.5
|
|
|
(12
|
%)
|
|
940
|
|
|
1,026
|
|
|
(8
|
%)
|
||||
Intermodal
|
152.2
|
|
|
172.5
|
|
|
(12
|
%)
|
|
424.6
|
|
|
465.5
|
|
|
(9
|
%)
|
|
358
|
|
|
371
|
|
|
(4
|
%)
|
||||
Automotive
|
69.5
|
|
|
128.5
|
|
|
(46
|
%)
|
|
43.8
|
|
|
79.3
|
|
|
(45
|
%)
|
|
1,587
|
|
|
1,620
|
|
|
(2
|
%)
|
||||
Carload revenues, carloads and units
|
1,202.9
|
|
|
1,321.8
|
|
|
(9
|
%)
|
|
1,008.8
|
|
|
1,109.5
|
|
|
(9
|
%)
|
|
$
|
1,192
|
|
|
$
|
1,191
|
|
|
—
|
|
||
Other revenue
|
76.7
|
|
|
67.0
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues (i)
|
$
|
1,279.6
|
|
|
$
|
1,388.8
|
|
|
(8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(i) Included in revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fuel surcharge
|
$
|
115.2
|
|
|
$
|
137.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by commodity group
for the three months ended June 30, 2020 |
Chemical and petroleum. Revenues decreased $29.8 million for the three months ended June 30, 2020, compared to the same period in 2019, due to a 13% decrease in carload/unit volumes caused by lower market demand as a result of COVID-19 and a 3% decrease in revenue per carload/unit due to shorter than average length of haul, the weakening of the Mexican peso against the U.S. dollar, and lower fuel surcharge, partially offset by positive pricing impacts and mix.
Revenues and volumes remained flat for the six months ended June 30, 2020, compared to the same period in 2019 as volume increases from refined fuel products and liquid petroleum gas shipments to Mexico in the first quarter were offset by lower market demand as a result of COVID-19 in the second quarter. Revenue per carload/unit remained flat as positive pricing impacts, mix, and higher fuel surcharge, were offset by shorter average length of haul and the weakening of the Mexican peso against the U.S. dollar.
|
|
Industrial and consumer products. Revenues decreased $29.7 million for the three months ended June 30, 2020, compared to the same period in 2019, due to a 14% decrease in carload/unit volumes and a 7% decrease in revenue per carload/unit. For the six months ended June 30, 2020, revenues decreased $20.5 million, compared to the same period in 2019, due to a 5% decrease in carload/unit volumes and a 2% decrease in revenue per carload/unit. Volumes decreased primarily due to lower market demand as a result of COVID-19. Revenue per carload/unit decreased due to the weakening of the Mexican peso against the U.S. dollar and mix, partially offset by positive pricing impacts.
|
|
|
Revenues by commodity group
for the three months ended June 30, 2020 |
Agriculture and minerals. Revenues decreased $8.0 million for the three months ended June 30, 2020, compared to the same period in 2019, due to a 7% decrease in carload/unit volumes, driven by the acceleration of shipments into the first quarter and impacts from non-essential business shutdowns as a result of COVID-19.
Revenues increased $3.6 million for the six months ended June 30, 2020, compared to the same period in 2019, due to a 4% increase in revenue per carload/unit primarily driven by mix, longer average length of haul, and positive pricing impacts. This increase was partially offset by a 2% decrease in carload/unit volumes driven by the shutdown of non-essential business due to COVID-19.
|
|
Energy. Revenues decreased $14.6 million for the three months ended June 30, 2020, compared to the same period in 2019, due to a 19% decrease in carload/unit volumes and a 10% decrease in revenue per carload/unit. Revenues decreased $22.9 million for the six months ended June 30, 2020, compared to the same period in 2019, due to a 12% decrease in carload/unit volumes and an 8% decrease in revenue per carload/unit. Frac sand and crude oil volumes decreased due to the declines in oil prices. Utility coal volumes decreased as a result of low natural gas prices and warm weather. Revenue per carload/unit decreased due to mix, lower fuel surcharge, and the weakening of the Mexican peso against the U.S. dollar, partially offset by positive pricing impacts.
|
|
|
Three Months Ended
|
|
|
|||||||||||
|
June 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Dollars
|
|
Percent
|
|||||||
Compensation and benefits
|
$
|
103.8
|
|
|
$
|
128.3
|
|
|
$
|
(24.5
|
)
|
|
(19
|
%)
|
Purchased services
|
44.6
|
|
|
56.7
|
|
|
(12.1
|
)
|
|
(21
|
%)
|
|||
Fuel
|
39.5
|
|
|
87.7
|
|
|
(48.2
|
)
|
|
(55
|
%)
|
|||
Equipment costs
|
18.1
|
|
|
26.3
|
|
|
(8.2
|
)
|
|
(31
|
%)
|
|||
Depreciation and amortization
|
89.3
|
|
|
87.7
|
|
|
1.6
|
|
|
2
|
%
|
|||
Materials and other
|
61.7
|
|
|
68.3
|
|
|
(6.6
|
)
|
|
(10
|
%)
|
|||
Restructuring charges
|
10.5
|
|
|
51.0
|
|
|
(40.5
|
)
|
|
(79
|
%)
|
|||
Total operating expenses
|
$
|
367.5
|
|
|
$
|
506.0
|
|
|
$
|
(138.5
|
)
|
|
(27
|
%)
|
|
Six Months Ended
|
|
|
|||||||||||
|
June 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Dollars
|
|
Percent
|
|||||||
Compensation and benefits
|
$
|
237.2
|
|
|
$
|
257.2
|
|
|
$
|
(20.0
|
)
|
|
(8
|
%)
|
Purchased services
|
97.9
|
|
|
109.5
|
|
|
(11.6
|
)
|
|
(11
|
%)
|
|||
Fuel
|
114.4
|
|
|
170.7
|
|
|
(56.3
|
)
|
|
(33
|
%)
|
|||
Equipment costs
|
40.0
|
|
|
56.7
|
|
|
(16.7
|
)
|
|
(29
|
%)
|
|||
Depreciation and amortization
|
178.7
|
|
|
176.2
|
|
|
2.5
|
|
|
1
|
%
|
|||
Materials and other
|
125.7
|
|
|
131.7
|
|
|
(6.0
|
)
|
|
(5
|
%)
|
|||
Restructuring charges
|
16.5
|
|
|
118.5
|
|
|
(102.0
|
)
|
|
(86
|
%)
|
|||
Total operating expenses
|
$
|
810.4
|
|
|
$
|
1,020.5
|
|
|
$
|
(210.1
|
)
|
|
(21
|
%)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Statutory rate in effect
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
Tax effect of:
|
|
|
|
|
|
|
|
||||
Difference between U.S. and foreign tax rate
|
4.9
|
%
|
|
6.2
|
%
|
|
5.3
|
%
|
|
6.0
|
%
|
Global intangible low-taxed income (“GILTI”) tax, net
|
1.3
|
%
|
|
0.1
|
%
|
|
1.2
|
%
|
|
0.5
|
%
|
Mexican fuel excise tax credit, net (i)
|
—
|
|
|
1.0
|
%
|
|
—
|
|
|
(1.5
|
%)
|
State and local income tax provision, net
|
1.5
|
%
|
|
0.9
|
%
|
|
1.4
|
%
|
|
1.0
|
%
|
Foreign exchange (ii)
|
(1.8
|
%)
|
|
2.2
|
%
|
|
(3.5
|
%)
|
|
1.8
|
%
|
Other, net
|
0.1
|
%
|
|
—
|
|
|
(0.7
|
%)
|
|
—
|
|
Effective tax rate
|
27.0
|
%
|
|
31.4
|
%
|
|
24.7
|
%
|
|
28.8
|
%
|
(i)
|
See discussion of the inclusion of the Mexican fuel excise tax credit, net within the effective tax rate in the Mexico Tax Reform section below.
|
(ii)
|
Mexican income taxes are paid in Mexican pesos, and as a result, the effective income tax rate reflects fluctuations in the value of the Mexican peso against the U.S. dollar measured by the forward exchange rate. The foreign exchange impact on income taxes includes the gain or loss from the revaluation of net U.S. dollar-denominated monetary liabilities into Mexican pesos which is included in Mexican taxable income under Mexican tax law. As a result, a strengthening of the Mexican peso against the U.S. dollar for the reporting period will generally increase the Mexican cash tax obligation and the effective income tax rate, and a weakening of the Mexican peso against the U.S. dollar for the reporting period will generally decrease the Mexican cash tax obligation and the effective tax rate. To hedge its exposure to this cash tax risk, the Company enters into foreign currency derivative contracts, which are measured at fair value each period and any change in fair value is recognized in foreign exchange gain (loss) within the consolidated statements of income as described above. Refer to Note 7, Derivative Instruments for more information.
|
•
|
Approximately 50-60% to share repurchases and dividends.
|
•
|
An increase in the quarterly dividend on KCS’s common stock from $0.36 to $0.40 per share; and
|
•
|
A new $2.0 billion share repurchase program (“2019 Program”), expiring December 31, 2022.
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows provided by (used for):
|
|
|
|
||||
Operating activities
|
$
|
525.5
|
|
|
$
|
541.2
|
|
Investing activities
|
(299.2
|
)
|
|
(374.1
|
)
|
||
Financing activities
|
250.1
|
|
|
(220.0
|
)
|
||
Effect of exchange rate changes on cash
|
(5.1
|
)
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
471.3
|
|
|
(52.9
|
)
|
||
Cash and cash equivalents beginning of year
|
148.8
|
|
|
100.5
|
|
||
Cash and cash equivalents end of period
|
$
|
620.1
|
|
|
$
|
47.6
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Roadway capital program
|
$
|
116.2
|
|
|
$
|
122.5
|
|
Locomotives and freight cars
|
20.7
|
|
|
165.0
|
|
||
Capacity
|
20.1
|
|
|
39.9
|
|
||
Information technology
|
21.0
|
|
|
15.1
|
|
||
Positive train control
|
6.7
|
|
|
7.9
|
|
||
Other
|
1.8
|
|
|
4.5
|
|
||
Total capital expenditures (accrual basis)
|
186.5
|
|
|
354.9
|
|
||
Change in capital accruals
|
8.2
|
|
|
(4.5
|
)
|
||
Total cash capital expenditures
|
$
|
194.7
|
|
|
$
|
350.4
|
|
|
|
|
|
||||
|
|
|
|
||||
Purchase or replacement of assets under operating leases (accrual basis)
|
$
|
78.2
|
|
|
$
|
0.9
|
|
Change in capital accruals
|
—
|
|
|
—
|
|
||
Total cash purchase or replacement of assets under operating leases
|
$
|
78.2
|
|
|
$
|
0.9
|
|
Income Statements
|
KCS and Guarantor Subsidiaries
|
||||||
|
Six Months Ended
|
|
Twelve Months Ended
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Revenues
|
$
|
673.6
|
|
|
$
|
1,472.0
|
|
Operating expenses
|
423.8
|
|
|
1,068.5
|
|
||
Operating income
|
249.8
|
|
|
403.5
|
|
||
Income before income taxes
|
180.6
|
|
|
291.7
|
|
||
Net income
|
156.7
|
|
|
235.0
|
|
Balance Sheets
|
KCS and Guarantor Subsidiaries
|
||||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Assets:
|
|
|
|
||||
Current assets
|
$
|
764.9
|
|
|
$
|
332.9
|
|
Property and equipment (including concession assets), net
|
4,725.3
|
|
|
4,596.3
|
|
||
Other non-current assets
|
88.5
|
|
|
156.9
|
|
||
|
|
|
|
||||
Liabilities and equity:
|
|
|
|
||||
Current liabilities
|
$
|
300.8
|
|
|
$
|
313.5
|
|
Non-current liabilities
|
4,800.6
|
|
|
4,267.7
|
|
||
Noncontrolling interest
|
324.5
|
|
|
323.4
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
(a) Total
Number
of Shares
(or Units)
Purchased (1)
|
|
(b) Average
Price Paid
per Share (or Unit)
|
|
(c) Total
Number of
Shares
(or Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs (2)
|
|
(d) Maximum
Number (or
Approximate
Dollar Value)
of Shares (or Units)
that may yet be
purchased under
the Plans
or Programs (2)
|
|
||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
April 1-30, 2020
|
|
120,959
|
|
|
|
$
|
132.27
|
|
|
|
120,959
|
|
|
|
$
|
1,322,281,412
|
|
|
|
May 1-31, 2020
|
|
383,834
|
|
|
|
$
|
140.02
|
|
|
|
383,834
|
|
|
|
$
|
1,268,536,165
|
|
|
|
June 1-30, 2020
|
|
194,330
|
|
|
|
$
|
155.74
|
|
|
|
194,330
|
|
|
|
$
|
1,238,270,469
|
|
|
|
Total
|
|
699,123
|
|
|
|
|
|
|
|
699,123
|
|
|
|
|
|
|
|
||
$25 Par preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
April 1-30, 2020
|
|
10
|
|
|
|
$
|
27.75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
May 1-31, 2020
|
|
285
|
|
|
|
$
|
27.00
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
June 1-30, 2020
|
|
200
|
|
|
|
$
|
28.46
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Total
|
|
495
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(1
|
)
|
All $25 par preferred stock repurchases were made other than through a publicly disclosed plan or program. Repurchases of $25 par preferred stock were made through open market purchases and/or privately negotiated transactions.
|
(2
|
)
|
On November 12, 2019, the Company announced that the Board of Directors approved a share repurchase program, pursuant to which up to $2.0 billion in shares of common stock could be repurchased through December 31, 2022. Share repurchases may be made in the open market, through privately negotiated transactions, or through accelerated share repurchase (“ASR”) transactions.
|
Item 3.
|
Defaults upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Kansas City Southern
|
|
/s/ MICHAEL W. UPCHURCH
|
Michael W. Upchurch
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
/s/ SUZANNE M. GRAFTON
|
Suzanne M. Grafton
|
Vice President and Chief Accounting Officer
|
(Principal Accounting Officer)
|
1 Year Kansas City Southern Chart |
1 Month Kansas City Southern Chart |
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