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): May 14, 2015

KANSAS CITY SOUTHERN

(Exact name of company as specified in its charter)

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

Item 7.01 Regulation FD Disclosure

On May 14, 2015, at the Bank of America Merrill Lynch Transportation Conference, Kansas City Southern (the “Company”) Executive Vice President and Chief Financial Officer, Michael W. Upchurch, will provide a business update. As noted in Mr. Upchurch’s presentation, the Company is withdrawing its 2015 revenue and volume guidance primarily due to the uncertainty around energy-related markets, foreign exchange impacts, and U.S. fuel prices. The Company is reiterating its operating ratio target of low-60s by 2017.

Additionally, the Company’s Board of Directors authorized a share repurchase program of up to $500 million, which management intends to deploy opportunistically. The repurchase program will be funded with currently available liquidity and/or future financing, and reflects the Company’s belief in the strength of the franchise and the future growth prospects.

A copy of Mr. Upchurch’s presentation is attached hereto as Exhibit 99.1. Interested investors not attending the conference may listen to the presentation via a simultaneous webcast on KCS’ website at www.kcsouthern.com. A link to the replay will be available following the event.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Presentation, dated May 14, 2015, by Michael W. Upchurch, Executive Vice President and Chief Financial Officer of Kansas City Southern, at the Bank of America Merrill Lynch 2015 Transportation Conference

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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
May 14, 2015	By:	/s/ Adam J. Godderz
	Name:	Adam J. Godderz
	Title:	Associate General Counsel & Corporate Secretary

- 3 -

Exhibit Index

Exhibit No.	Description
99.1	Presentation, dated May 14, 2015, by Michael W. Upchurch, Executive Vice President and Chief Financial Officer of Kansas City Southern, at the Bank of America Merrill Lynch 2015 Transportation Conference

- 4 -

EX-99.1

Michael W. Upchurch

Executive Vice President Finance & CFO

Kansas City Southern

Bank of America Merrill Lynch 2015 Transportation Conference

May 14

th

, 2015

Exhibit 99.1

©

2015 Kansas City Southern

2

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; interest rates; 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; credit risk of customers and counterparties and their failure to meet their

financial obligations; 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; availability of qualified personnel; labor difficulties,

including strikes and work stoppages; insufficiency of insurance to cover lost revenue, profits or other damages; acts of

terrorism or risk of terrorist activities; war or risk of war; domestic and international economic conditions; political and economic

conditions in Mexico and the level of trade between the United States and Mexico; 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, 2014

(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.

©

2015 Kansas City Southern

2015

OUTLOOK

3

©

2015 Kansas City Southern

Business Outlook

4

Withdrawing 2015 Revenue and Volume Guidance

•

Primarily due to uncertainty around energy-related markets, F/X impact and U.S. fuel price, KCS

is withdrawing its 2015 revenue and volume guidance at this time.

•

The Company will continue to provide disclosure on capital expenditure plans.

•

The Company will reevaluate providing revenue and volume guidance in early 2016.

Maintaining operating ratio goal of the low-60s by 2017

©

2015 Kansas City Southern

5

Q2 to Date Revenue and Carload Growth Well Behind Q1

Trends

* Q2 15 Revenue & Carload Growth as of  5/11/15

Impacts of

F/X

Impacts of

U.S. Fuel

Price

-4%

-

7%

-

3%

-4%

Revenue

Carloads

KCS Revenue and Carload

Growth

-11%

Utility Coal revenue down 68% due to

impacts of low natural gas prices, and

customer maintenance activity

Frac

Sand and Crude Oil negatively

impacted by lower energy prices and

spreads

Metals & Scrap down due to reduce demand

for drilling pipe, lower scrap prices, and

heavy foreign imports to North America

Service levels and tight equipment capacity

negatively impacting:

-

Grain

-

Automotive

-

Intermodal

Unfavorable

YoY

impacts of F/X and U.S. fuel

prices impacting revenue by 7%.

Impacts of recent increase in U.S. fuel price

to be seen in June/July.

©

2015 Kansas City Southern

Second Quarter Energy Segment Decline

Accelerating

6

* Q2 Revenue & Carload Growth as of  5/11/15

US Rig Count by Basin

-50%

-38%

Revenue

Carloads

KCS Energy Segment Revenue

and Carload Growth

4.00

6.00

8.00

10.00

12.00

14.00

16.00

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

110.00

Crude Price Trends

Maya -

WCS Spread

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

Henry Hub Natural Gas Spot Price

WTI Sport Price

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2015 Kansas City Southern

7

Unregulated Customer Utility Coal down 90% from "Peak"

levels

$-

$2

$4

$6

$8

$10

$-

$10

$20

$30

$40

$50

$60

$70

$80

Q1

08

Q2

08

Q3

08

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

KCS Utility Coal Revenue

Regulated Utility Coal

Non-Regulated Utility Coal

Avg. Henry Hub Natural Gas Spot Price

©

2015 Kansas City Southern

8

Service Issues are Impacting Growth

Current volume constraints

•

Service negatively impacting automotive, intermodal and grain

•

Core demand in these segments is strong

Service challenges caused by:

•

Lack of crews in Mexico due to higher than expected attrition

•

On-going maintenance and capacity enhancements by KCS and

interchange carriers in Texas on cross-border corridor and at/around

Laredo Bridge

Maintenance cycle to be completed in Q2

Multi-year capacity enhancement at Sanchez Yard continues

•

Equipment constraints due to reduced velocity

Delivery of 300 grain and 400 automotive railcars during the year

©

2015 Kansas City Southern

Key US Economic Indicators Have Deteriorated Since

Late ‘14

9

99.2

99.4

99.6

99.8

100

100.2

100.4

100.6

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

OECD

-

US

Leading

Indicator

46

48

50

52

54

56

58

60

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

PMI

104.4

104.6

104.8

105

105.2

105.4

105.6

105.8

106

106.2

106.4

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Industrial Production -

US

0

10

20

30

40

50

60

70

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

PMI -

New Orders

©

2015 Kansas City Southern

Challenging U.S. Rail Volume Environment in Q2

10

Source: AAR Carloads thru Week 18 / *excludes BNSF

-30.1%

1.1%

-11.2%

-55.3%

-18.9%

-25.1%

-20.2%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

Carrier 1

Carrier 2

Carrier 3

KCS

Carrier 5

Carrier 6

Class I Average*

Coal Carloads

-0.8%

-4.2%

-0.9%

-6.1%

-1.2%

-3.5%

-2.3%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

Carrier 1

Carrier 2

Carrier 3

KCS

Carrier 5

Carrier 6

Class I Average*

Total Traffic: Class I Volume Growth

2.3%

-4.9%

1.3%

-1.7%

2.5%

0.8%

0.9%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

Carrier 1

Carrier 2

Carrier 3

KCS

Carrier 5

Carrier 6

Class I Average*

Total Traffic ex. Coal

7.3%

-3.4%

4.3%

2.8%

3.3%

5.4%

4.2%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Carrier 1

Carrier 2

Carrier 3

KCS

Carrier 5

Carrier 6

Class I Average*

Intermodal Carloads

©

2015 Kansas City Southern

LONG-TERM

GROWTH

OPPORTUNITIES

11

©

2015 Kansas City Southern

Near-Sourcing Opportunities Resulting in

Foreign Direct Investment (FDI) in Mexico

12

•

2014 Foreign Direct

Investment (FDI) reached

$22.5 Billion

•

81% of FDI was registered

in states where KCS has

access

•

Labor cost advantages

•

Lower transportation costs

to North American markets

Source: KCS Market Research based on Secretaría de Economía de México.

Data includes all economic sectors. (2014 FDI)

KCS New Business

Opportunities

Global Partners

Est. Completion –

Q1

2017

Wylie Intermodal Facility

Sunoco Logistics

Open

Jefferson Rail Terminal

Open

Genesis Energy

Open

Hunt Refining

Open

Sasol Ethane Cracker

GM -

Expansion

Ford -

New Plant

VW -

Expansion

Toyota -

New Plant

Opens 2019

Audi -

New Plant

Opens Q2 2016

Kia –

New Plant

Opens Mid 2016

Mercedes/Infiniti-

New Plant 

Opens 2017

BMW –

New Plant

Opens 2019

©

2015 Kansas City Southern

14

APITAL

TRUCTURE

AND

APITAL

LLOCATION

RIORITIES

C

C

S

A

P

©

2015 Kansas City Southern

15

KCS is Announcing the Establishment of a Stock

Repurchase Program

$500 million program

Expires 6/30/17

To be executed opportunistically

Reflects management’s and Board of Director’s belief in the

strength of our franchise and our future growth prospects

To be funded with currently available liquidity and/or future

financing

Balances the interests of our shareholders and debt holders

–

Investment grade credit rating to be maintained

Ample capacity remains to fund growth opportunities

©

2015 Kansas City Southern

16

Balanced Approach to Investing in Business and

Returning Capital to Shareholders

•

Committed to superior growth profile

•

Original 2015 Capex –

$700 to $720 million range

•

New 2015 Capex -

$650 to $670 million range

Invest in

Business

•

Continue lease conversions

•

$3 million net operating income benefit in Q1 2015

•

Percentage of owned equipment increased from 31% at 12/31/13 to

55% at 03/31/15

•

Q1 15 asset purchases of $54 million

•

Additional

purchases

identified

to

increase

ownership

to

+/-

65%

Optimize

Capital

Structure

•

Board of Directors approved $500 million share repurchase program

•

Q1 cash dividend declared on Jan. 29, 2015; paid Apr. 8, 2015

•

Quarterly payout of $0.33 per share or $36.4 million

•

Annualized payout of $1.32 per share or $145.6 million

Shareholder

Returns

©

2015 Kansas City Southern

CONCLUSION

17

©

2015 Kansas City Southern

18

KSU Investment Highlights

Best-positioned growth story in the industry with unique

U.S.-Mexico cross-border network

Track record of strong financial and operating

performance

Well-diversified customer base and commodity mix

Excellent strategic positioning with multiple growth

drivers

Solid balance sheet with a commitment to maintaining

investment grade credit rating

©

2015 Kansas City Southern

19

Appendix

Cross-border

is defined as traffic that moves on Kansas City Southern both north and south of the U.S. / Mexico

border.  Traffic interchanged with a competing railroad at the border is not considered cross-border.