This summary is based on the second quarter fiscal 2008 earnings call conducted by Burlington Northern Santa Fe Corp. (BNI) on July 24, 2008.
Management:
Chairman, CEO and President: Matthew K. Rose
CFO and EVP: Thomas N. Hund
COO and EVP: Carl R. Ice
CMO and EVP: John P. Lanigan Jr.
Key Investor Issues:
- Q2 freight revenues were $4.35 billion versus $3.74 billion in the year ago quarter.
- Quarterly net income decreased to $350 million versus $433 million.
- The company repurchased $269 million worth of shares versus $360 million in the last year quarter
Second-Quarter Financial Highlights:
The second quarter revenues increased 16% to $4.35 billion.
- This is in comparison with $3.74 billion in the same quarter last year.
- The increase in revenue included an increase in fuel surcharges of approximately $400 million driven by higher fuel prices.
- The
Agricultural Products revenues increased $218 million or 36% to $828 million.
- The increase was due to strong unit volumes in ethanol, corn, soya-beans and wheat combined with improved yields.
-
Coal revenues of $902 million rose $126 million or 16% helped by improved yields and contractual inflation escalators, partially offset by lower unit volumes due to weather-related challenges.
- The
Industrial Products revenues increased by $96 million or 10% to $1.05 billion.
- The strong demand for construction and petroleum products was offset by a decline in building products due to weakness in the housing market.
- The
Consumer Product revenues of $1.57 billion rose $173 million or 12% as strong domestic inter-modal unit volumes and improved yields were offset by lower international inter-modal unit volumes.
- The management reported that each of the business units also benefited from increased fuel surcharges driven by higher fuel prices.
The quarterly earnings of $1 per share included 31 cents per share charge related to environmental matters in Montana.
- The earnings also included 3 cents per share effect from additional personal injury accruals.
- The management reported that Q2 of 2007 earnings were $1.20.
[The operating expenses for the second quarter were $3.76 billion versus $3 billion for the same quarter last year.
- The $762 million increase in operating expenses was largely driven by a $474 million increase in fuel expense due to higher fuel prices.
- It also includes a $175 million charge related to environmental matters in Montana and $15 million for additional personal injury accruals.
The operating income was $714 million compared with the Q2 of 2007 operating income of $841 million.
- The decrease in operating income reflects a $474 million increase in fuel expense.
- The decrease is also due to a $175 million charge related to environmental matters in Montana and $15 million for additional personal injury accruals.
The company announced that planned capital commitments for 2008 will be about $2.85 billion.
