8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 17, 2020

KANSAS CITY SOUTHERN

(Exact name of registrant as specified in its charter)

Delaware	1-4717	44-0663509
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	file number)	Identification Number)

427 West 12th Street, Kansas City, Missouri 64105

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:

(816) 983-1303

Not Applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Preferred Stock, Par Value $25 Per Share, 4%, Noncumulative	KSU	New York Stock Exchange
Common Stock, $.01 Per Share Par Value	KSU	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD.

On March 17, 2020, Kansas City Southern’s Executive Vice President and Chief Financial Officer Michael W. Upchurch gave a presentation, including commentary on the Company’s QTD revenue and volume trends, and COVID-19 management, via webcast with the Bank of America Global Industrials Conference at 10:40 a.m. central time. The presentation given by Mr. Upchurch at this conference is included in this Form 8-K as Exhibit 99.1. Interested investors may listen to the webcast on KCS’ website at www.kcsouthern.com. A link to the replay will be available for 14 days following the event.

The information in this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), nor shall it be deemed “incorporated by reference” into any filing under the Securities Act of 1933, as amended, or the 1934 Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01  Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Presentation by Executive Vice President and Chief Financial Officer Michael W. Upchurch at the 2020 Bank of America Global Industrials Conference on March 17, 2020.
104	Cover page information from Kansas City Southern’s Current Report on Form 8-K filed on March 17, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language) and included as Exhibit 101.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Kansas City Southern

Date: March 17, 2020

By:	/s/ Adam J. Godderz
Name:	Adam J. Godderz
Title:	Senior Vice President - Chief Legal Officer & Corporate Secretary

EX-99.1

Exhibit 99.1 KANSAS CITY SOUTHERN Bank of America Global Industrials Conference 2020 © KANSAS CITY SOUTHERN KCS

Safe Harbor Statement This presentation 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; public health threats or outbreaks of communicable diseases; 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 12/31/2019 (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. All reconciliations to GAAP can be found on the KCS website, kcsouthern.com/investors. © KANSAS © KANSAS CITY SOUTHERN KCS 2

Key Messages . Strong financial position – BBB Credit Rating – $600M undrawn revolving credit facility . Proactive response to COVID-19 – Safety is our #1 priority – Business continuity plans in place – No current impact to train operations . Strong start to the year – QTD volume +5% and revenue +8% – March MTD volume -5% and revenue 2%; impacted by lower Lazaro Cardenas container volume and FX – Limited P&L impact expected from commodity prices & FX – Cross-border network drives unique growth opportunities . PSR continues to improve service & cost – Cross-functional effort led by Sameh Fahmy – On track to deliver $61M of PSR savings in 2020 © KANSAS © KANSAS CITY SOUTHERN KCS Volume & Revenue performance as of March 16th, 2020. 3

Robust Credit Ratings & Metrics • From Single B in 2009 to BBB today • Only 26% of companies are BBB or above • Low 2x leverage ratio Strong Cash Flow Solid • 85% FCF CAGR since 2015 Financial Profile Ample Liquidity • $600M undrawn revolving credit facility • No debt maturities until 2023 Balanced Capital Allocation Policy • 40-50% capital projects & strategic investments • 50-60% share repurchases & dividends © KANSAS © KANSAS CITY SOUTHERN KCS Amounts and ratios as of 12/31/19 unless otherwise stated 4

COVID-19 Management . Safety of employees & communities is our #1 priority – Actively communicating with employees – Sickness protocols in place – Departmental staffing plans implemented . Business continuity plans in place – Dispatching from multiple locations – No current impact to train operations . Maintaining frequent communication with customers – No known customer facility closures . No current interruption to KCS’ materials and fuel supply chain © KANSAS © KANSAS CITY SOUTHERN KCS 5

QTD Volume and Revenue Performance QTD Volume & MTD March Volume & Revenue Performance Revenue Performance 10% 10% 8% 8% 8% Excluding Lazaro Cardenas Intermodal 6% 6% 5% and F/X impact, MTD Volumes are flat and Revenues are +5% 4% 4% 2% 2% 2% 0% 0% (2%) -2% (4%) -4% (5%) (6%) -6% Volume Revenue Volume Revenue © KANSAS © KANSAS CITY SOUTHERN KCS Volume & Revenue performance as of March 16th, 2020. 6

Q120 Revenue Trend QTD YoY Revenue Business Unit Key Drivers Performance Strength in Refined Product exports from the United Chemical & Petroleum States to Mexico; strong Plastics exports to Mexico Positive Franchise cross-border volumes up 14% MTD; Intermodal Lazaro Cardenas volumes down (52%) MTD Positive Industrial & Consumer Strong Metals and Pulp/Paper shipments Positive Expect strong end to the quarter from Grain & Food Agriculture & Minerals Product shipments Positive Lower Automotive production & shipments to U.S. & Automotive Canada from KCS-served OEM’s Neutral Low natural gas prices pressuring Utility Coal volumes; Energy Crude Oil represents just 2% of total revenues Negative © KANSAS © KANSAS CITY SOUTHERN KCS QTD Revenue performance as of March 16th, 2020. 7

Foreign Exchange Exposure to Depreciating Peso Peso has depreciated ~16% vs. USD in March Business Area Exposure Impact Peso denominated revenue and Revenues/Expenses Neutral expense generally offset in O.I. Income Taxes and Foreign currency derivative instruments Foreign Exchange Neutral hedge cash tax exposure Hedges Lazaro Intra-Mexico KCS bills customers in USD; Negative Intermodal Trucking competition bills in pesos Cross-border intermodal generally not Cross-Border Intermodal Neutral at risk due to longer length of haul Generally not at risk of loss due to All Other Mexico Traffic Neutral fluctuations in FX © KANSAS © KANSAS CITY SOUTHERN KCS 8

KCS Refined Products Business Benefiting from Growth in Non-Pemex Imports into Mexico . QTD Mexico Energy Reform volumes are up 50% vs. 2019 . Pemex production continues to decline . Non-Pemex imports to Mexico grew 54% in the 2nd half of 2019 . Non-Pemex sales are growing as a % of total sales © KANSAS © KANSAS CITY SOUTHERN KCS QTD volume performance as of March 16th, 2020. 9

PSR: Cross-Functional Success Mechanical Financial Planning & Analysis Walczak Vander Ark Yield Transportation Management Truitt, Eaton Austin Fuel Engineering Conservation Jones Roberts Sameh Fahmy EVP of PSR Service Car Utilization Design Tippins Daily © KANSAS © KANSAS CITY SOUTHERN KCS 10

On Track to Deliver 2020 PSR Savings ($ in millions) Total PSR Program Annualized OpEx Savings of $125M FY 2019 FY 2020 OpEx Category Primary Drivers Actual OpEx Incremental Savings OpEx Savings Compensation & Reduced headcount & crew $8 $15 Benefits costs Disposal of certain locomotives Depreciation and rail cars $5 $4 Train consolidation and Fuel efficiency/technology $19 $21 Equipment Lease returns & car cycle times $13 $17 Purchased Restructured contracts, and $13† Services and reduced repair expenses $4 Materials & Other Total $58 $61 © KANSAS © KANSAS CITY SOUTHERN KCS †Includes a $5.1M benefit from a one-time settlement 11

Solid Investment Thesis Best-positioned growth story in the industry with unique U.S.-Mexico cross-border network and the most profitable rail franchise in Mexico Well-diversified customer base and commodity mix Excellent strategic positioning with multiple growth drivers Track record of strong financial and operating performance, with continued improvement driven by precision scheduled railroading Solid balance sheet with improving cash flow and return profile © KANSAS © KANSAS CITY SOUTHERN KCS 12

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Entity Registrant Name	KANSAS CITY SOUTHERN
Entity Incorporation, State or Country Code	DE
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Entity Tax Identification Number	44-0663509
Entity Address, Address Line One	427 West 12th Street
Entity Address, City or Town	Kansas City
Entity Address, State or Province	MO
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City Area Code	816
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$25 Par Preferred Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock, Par Value $25 Per Share, 4%, Noncumulative
Trading Symbol	KSU
Security Exchange Name	NYSE
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $.01 Per Share Par Value
Trading Symbol	KSU
Security Exchange Name	NYSE