All fields are required.
— by Tony Hatch
In the beginning of 2012, rails faced what appeared to be the crisis of a lifetime, a nightmare scenario of a still-uncertain economy and what some have dubbed "the end of the coal age." Yes — the end for coal, King Coal, the bedrock commodity that sustained rails through the dark, pre-Staggers days.
So, how did rails perform in the first quarter? Well, their earnings per share collectively increased fully 33 percent, perhaps five times more than the overall market and a third more than the befuddled Wall Street consensus numbers.
How did they do it? Railroads had compensating growth in other areas — much of it shale related (the hand that taketh also giveth), as well as chemicals (itself an industry given new life by cheap natural gas), autos, steel and intermodal. And they proved they can continue to increase productivity (in this case, the warm weather that giveth the utilities stockpiles also taketh cost out of railroading — as well as systemic improvements). The rails also began what will be an all-time record capex year ($13 billion!) while increasing both dividends and share buybacks. Some crisis!
And now, a summary of the factors that helped shape Q1 financial results:
The first quarter sets the stage for the rest of the year: coal concerns, yet solid earnings growth as the recovery continues and share is regained.
For rails, the future looks greener — and brighter — than ever.
Tony Hatch is an independent transportation analyst and consultant, and a program consultant for Progressive Railroading's RailTrends® conference. Email him at email@example.com.