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Kansas City Southern Reports 4Q Net Income of $92 Million, Down From $96 Million in 4Q 2011; And Full Year Net Income of $377.1 Million

Date Posted: January 22, 2013

Kansas City, MO—Kansas City Southern (KCS) (NYSE:KSU) reported record fourth quarter 2012 revenues of $568 million.

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Fourth quarter carloads of 532 thousand, also a record, increased 2% over fourth quarter 2011.

Compared to 2011, fourth quarter revenue growth was led by a 33% increase in Automotive revenue and 14% increases in Chemical & Petroleum and Intermodal revenue. Industrial & Consumer Products was also strong with revenues growing by 11% in the fourth quarter of 2012.

Energy and Agriculture & Minerals revenues declined by 1% and 11%, respectively.

Operating income for the fourth quarter of 2012 was $174 million compared with $150 million a year ago, a 15% increase.

KCS reported a fourth quarter 2012 operating ratio of 69.5%, a 2.1 point improvement from fourth quarter 2011.

Operating expenses in the fourth quarter were $395 million compared with $380 million in the corresponding 2011 period, a 4% increase.

Reported net income in the fourth quarter of 2012 totaled $92 million, or $0.83 per diluted share, compared with $96 million, or $0.87 per diluted share, in the fourth quarter of 2011.

Excluding debt retirement costs and the impacts of foreign exchange rate fluctuations, adjusted diluted earnings per share for fourth quarter 2012 was $0.92 compared to $0.77 in 2011.

For the full year of 2012, revenue was a record $2.2 billion, up 7% over 2011.

Carloads for 2012 were 2.1 million, an increase of 5% over the prior year.

Full-year operating income was $716 million, a 17% increase over the prior year, and the Company’s 2012 operating ratio was 68.0% compared with 70.9% in 2011.

Excluding one-time benefits from the elimination of a net deferred liability in 2012 and insurance recoveries in 2011, full-year 2012 adjusted operating income was $673 million, an increase of 15% over prior year’s adjusted operating income.

The 2012 full-year adjusted operating ratio was 69.9%, a 2.2 point improvement over the prior year’s adjusted operating ratio.

“It is to the credit of the entire KCS team that the Company successfully navigated its way through a host of challenging economic and climatic issues to make 2012 one of the best years in its 125-year history,” stated David L. Starling, KCS president and chief executive officer.

“Despite the impact on our coal franchise of an unseasonably warm winter and low natural gas prices, the effect on our grain carloadings of one of the most severe droughts in U.S. history and finally, the dampening effect on overall economic activity late in the year due to fiscal cliff concerns, KCS achieved record carloadings and revenues in 2012.

"This success is due in large part to the balanced and diverse mix of commodities that KCS transports and the ability of employees at every level of the company to react quickly and effectively to opportunities in the transportation marketplace.

“KCS reported a fourth quarter 2012 operating ratio of 69.5% compared to 71.6% in the fourth quarter of 2011.

"For the full year, KCS’ adjusted operating ratio was 69.9%, a 2.2 point improvement to the full year 2011 adjusted operating ratio of 72.1%.

“In addition, KCS met the top-line guidance targets for full-year 2012 of mid-single digit growth in volume, revenues and pricing that were outlined in July.

"With a host of new facilities that KCS will serve coming on-line in the second half of 2013 and in 2014, coupled with expanded business opportunities throughout all commodity groups, we believe in the Company’s ability to generate strong revenue growth over both the short and longer term.

“Management remains focused on closely monitoring every aspect of KCS’ ongoing operations while also overseeing the expansion of system capacity in order to stay ahead of the sustained growth we anticipate.

"We are committed to this in order to ensure good service for our customers and to maximize returns to our shareholders.”

For more information, call 816-983-1551.

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