Kansas City Southern (NYSE:KSU) Q2 2020 Earnings Conference Call - Final Transcript

Jul 17, 2020 • 08:45 am ET

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Kansas City Southern (NYSE:KSU) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Kansas City Southern Second Quarter 2020 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce you to Ashley Thorne, Vice President, Investor Relations for Kansas City Southern.

Executive
Ashley Thorne

Thank you, Andrew. Good morning and thank you for joining Kansas City Southern's second quarter 2020 earnings call.

Before we begin, I want to remind you that this presentation contains forward-looking statements within the meaning of the Securities Exchange Act as amended. Readers can usually identify these forward-looking statements by the use of such words as may, will, should, likely, plans, projects, expects, anticipates, believes or similar words. Actual results could materially differ from those anticipated by such forward-looking statements as a number of factors or combination of factors, including but not limited to, the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2019, and in other reports filed by us with the SEC, including our quarterly report for the quarter ended June 30, 2020. Forward-looking statements reflect the information only as of the date on which they are made. KCS does not undertake any obligation to update any forward-looking statements to reflect future events, developments or other information.

In addition to disclosing financial results in according with US GAAP, the accompanying earnings release and presentation contains non-GAAP financial measures. These non-GAAP measures should be viewed as a supplement to and not a substitute for our US GAAP measures of performance and liquidity and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated. All reconciliations to the most directly comparable financial measures calculated and presented in accordance with US GAAP can be found on our website.

And with that, it is now my pleasure to introduce Kansas City Southern's President and CEO, Pat Ottensmeyer.

Executive
Patrick J. Ottensmeyer

Okay. Thank you, Ashley, and good morning, everyone.

I will make some brief comments here before I turn it over to my colleagues. On slide 4, the folks that we have on the call today are, for the most part, the usual crowd that you have come to see over the last several quarters, with the exception of Oscar Del Cueto. And Oscar -- we're introducing Oscar this quarter ahead of the transition of Jose Zozaya. I'll talk more about that at the end of the prepared comments. But Oscar has been working side-by-side with Jose for the last year and a half, and we feel that we are in a position for a very smooth transition in the leadership of our Mexico business. So happy to introduce Oscar, and again, I'll say a little bit more about that at the end.

Moving on to slide 5. Second quarter overview. We had a tough quarter. Revenue decreased 23%. 21% drop in volumes. Operating ratio -- really look at the adjusted operating ratio of 65.2%, 150 basis point worse than last year. Second quarter diluted earnings per share, again, adjusted, of $1.15 which is a 30%