Kansas City Southern Reports Record First Quarter Results

Kansas City Southern (KCS) (NYSE:KSU) reported record first quarter 2018 revenues of $639 million, an increase of 5% from first quarter 2017. Overall, carload volumes increased 1% compared to the prior year.

First quarter 2018 revenues increased in four commodity groups, led by a 17% increase in Automotive, a 10% increase in Chemicals and Petroleum and a 9% increase in Intermodal. Revenue from Industrial and Consumer was also positive with an increase of 4% compared to the first quarter of 2017. These increases were partially offset by declines in Energy and Agriculture and Minerals of 11% and 2%, respectively, compared to the first quarter of 2017.

Operating expenses in the first quarter were $420 million, 5% higher than 2017. Operating income was a first quarter record at $219 million, an increase of 4% from the first quarter 2017. KCS reported a first quarter operating ratio of 65.8%, a 0.4 point deterioration over first quarter 2017.

Reported net income in the first quarter of 2018 was $145 million, or $1.40 per diluted share, compared with $147 million, or $1.38 per diluted share, in the first quarter of 2017. Excluding the impacts of foreign exchange, adjusted diluted earnings per share was a first quarter record of $1.30, compared to $1.17 in first quarter 2017.

“Despite congestion across the North American rail network, KCS grew volumes in all commodity groups except Energy and Agriculture and Minerals during the first quarter 2018,” stated Kansas City Southern’s President and Chief Executive Officer Patrick J. Ottensmeyer. “Furthermore, we maintain our outlook for mid-single digit volume growth for full year 2018.”

Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS' North American rail holdings and strategic alliances are primary components of a railway network, linking the commercial and industrial centers of the U.S., Mexico and Canada. More information about KCS can be found at www.kcsouthern.com.

This news release contains “forward-looking statements” within the meaning of the securities laws concerning potential future events involving KCS and its subsidiaries, which could materially differ from the events that actually occur. Words such as “projects,” “estimates,” “forecasts,” “believes,” “intends,” “expects,” “anticipates,” and similar expressions are intended to identify many of these forward-looking statements. Such forward-looking statements are based upon information currently available to management and management’s perception thereof as of the date hereof. Differences that actually occur could be caused by a number of external factors over which management has little or no control, including: competition and consolidation within the transportation industry; the business environment in industries that produce and use items shipped by rail; loss of the rail concession of KCS’ subsidiary, Kansas City Southern de México, S.A. de C.V.; the termination of, or failure to renew, agreements with customers, other railroads and third parties; access to capital; disruptions to KCS’ technology infrastructure, including its computer systems; natural events such as severe weather, hurricanes and floods; market and regulatory responses to climate change; legislative and regulatory developments and disputes; rail accidents or other incidents or accidents on KCS’ rail network or at KCS’ facilities or customer facilities involving the release of hazardous materials, including toxic inhalation hazards; fluctuation in prices or availability of key materials, in particular diesel fuel; dependency on certain key suppliers of core rail equipment; changes in securities and capital markets; unavailability of qualified personnel; labor difficulties, including strikes and work stoppages; acts of terrorism or risk of terrorist activities; war or risk of war; domestic and international economic, political and social conditions; the level of trade between the United States and Asia or Mexico; fluctuations in the peso-dollar exchange rate; increased demand and traffic congestion; the outcome of claims and litigation involving KCS or its subsidiaries; and other factors affecting the operation of the business. More detailed information about factors that could affect future events may be found in filings by KCS with the Securities and Exchange Commission, including KCS’ Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 1-4717) and subsequent reports. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. KCS is not obligated to update any forward-looking statements to reflect future events or developments.

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