Kansas City Southern (NYSE:KSU) Q2 2016 Earnings Conference Call - Final Transcript

Jul 19, 2016 • 08:45 am ET

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Kansas City Southern (NYSE:KSU) Q2 2016 Earnings Conference Call - Final Transcript

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Presentation
Executive
Jeffrey M. Songer

will ensure we have adequate capacity to 2018 and 2019 as these facilities come online. Other major projects that last row and Sasol and mainline citing capacity projects continue on schedule. Regarding equipment or capital for 2016 is focused on multi level auto equipment and by the end of Q3 we will have received 300 new auto rats. We are also adding new grain and intermodal equipment to support those segments.

Turning to Slide 9, I will provide a quick overview of the weather related service interruption in Rosenberg, Texas. Similar to the first quarter we were impacted again, this was a severe flooding in Texas, which resulted in the outage of a break on this track and right segment in early June. Recline was out of service for three weeks in June, and was removed from service began on July 4, to additional work required to ensure the safe operation of the bridge. To anticipate the bridge being returned to service later this week.

Our cross border and drain segments have been impacted by this outage and we will see some residual impact in Q3 due to the additional work being performed on the bridge. I would like to recognise once again the Union Pacific and BNSF for their cooperation is we can help each other to maintain fluidity through the use of reroutes and detours.

I will now turn presentation over to our Chief Marketing Officer, Brian Hancock.

Executive
Brian Hancock

Good morning, everyone. Now turn to Page 11. You can see our year-over-year revenue was down 3% for the quarter but up 2% excluding currency and fuel. Our Carloads for the quarter were unchanged last year. Our chemicals and petroleum business continued to show steady growth with an 8% volume and 6% revenue increase driven by strength ranked in the petroleum and plastics. We continue to see this as an area of growth as the plastic manufacturers in the Gulf region continued to ship automatically and globally.

Industrial and consumer growth is slowing with year-over-year decreases of 4% volume and 6% revenue respectively. But the revenue declines primarily driven by klappas, our metals and paper segments. These segments continue to experience this competition. In fact, the by currency fluctuations and low truck pricing we believe to be unsustainable in the long term. This weakness was somewhat offset by continued strength in our other Carlos segment.

During Q2 our agri & mineral business saw an increase of 9% in Carloads and 10% in revenues driven by strength and growing and food products, particularly in the cross border business. We're definitely seeing the benefits of the additional cars that just focus and we have been serving this important business unit all year with those additional cars.

Our overall, cross border business continued to show strong growth of 9% for the quarter being led by agri & mineral business as well as the growth in the chemical and petroleum business. More details on our cross border franchise our include an appendix in the