Kansas City Southern (NYSE:KSU) Q1 2018 Earnings Conference Call Transcript
Apr 20, 2018 • 08:45 am ET
Thank you. (Operator Instructions). Our first question today is from Ken Hoexter with Merrill Lynch.
Good Morning, Ken.
Great good morning Mike, my condolences obviously over to Pat and his family. But it just -- maybe you can step back and quantify, you talked a lot about the impact of UPs, I'm sorry other rail network congestion and the impact on results you mentioned a couple million dollars but I'm interested in your comment that things seem to be improving maybe you can kind of address that and kind of walk us through you talked a little bit about that the specific cost categories but how quickly can they get back to normal, what needs to happen and kind of the all rank to KSU you as you move forward?
Yes, Ken, I'll take that firstly we did not say UP, we said overall congestion in the region, the way I look at this where as we've spelled on I think the energy is doing a much better job today understanding that we are a system of very interconnected system. So for us the impacts were slowdown really from between Belmont and getting things back and forth across the border to Texas.
Impacts to us as I outlined higher re-crew rates. We probably could have had some crews furloughed if not or for the just extra effort and extra resources that during these types of issues similar as what we saw with the hurricanes, we just have to load up the resources a bit more to ensure we keep fluidity for the traffic and for the customers. I think Mike outlined the financial impact of that from a net income perspective.
Yes, $2.5 million of operating income impact.
So that's a rough guess on the elevated expense net of any potential revenue loss opportunity. Where we're at today things are feeling little better and how I measure that just the fluidity, I mentioned the auto ground counts for me that was a big item here we had over substantial amount of ground counts here during Q1. Those will relatively quickly clean themselves up, we're still not where we want to be but you've seen a lot of movement in the auto here early into Q2, we're seeing that on the volume side, you're seeing that just from the ground counts that are winding down.
So that equipment is flowing better. We are gaining more reroutes around some of the congested area I think during Q1, you had a lot of Texas, a lot of the routes in Texas we're really seeing some congestion in this harder route any carriers traffic in and through, in and through the areas. So I think we're feeling better on that now. We are receiving some reroutes and some detour routes for various commodities.
So again I don't think we're out of this quite yet. I think we understand and I think our resources are at good level. And as I mentioned that the need