Genesee & Wyoming Reports Results for the First Quarter of 2007
GREENWICH, Conn., May 1, 2007 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported that net income in the first quarter of 2007 increased 2.2% to $14.3 million, compared with net income of $14.0 million in the first quarter of 2006. GWI's diluted earnings per share (EPS) in the first quarter of 2007 increased 3.0% to $0.34 with 41.9 million shares outstanding, compared with diluted EPS of $0.33 with 42.4 million shares outstanding in the first quarter of 2006. Operating losses from GWI's hurricane-damaged Mexico operations reduced EPS by $0.03 in the first quarter of 2007 compared with no EPS impact in the first quarter of 2006. GWI also announced today that it had repurchased 1.5 million shares during the first quarter of 2007 at an average price of $25.30 per share.
Operating Results
In the first quarter of 2007, GWI's revenue increased 15.8% to $130.8 million, compared with $113.0 million in the first quarter of 2006. Revenue increased by $20.1 million due to acquisitions, primarily Genesee & Wyoming Australia Pty Ltd (GWA), partially offset by a same-railroad decrease in revenue of $2.3 million, of which $1.7 million was due to a decline in revenue from GWI's Mexico operations.
Same-railroad revenue in the U.S. and Canada decreased $0.6 million, as a $1.3 million increase in non-freight revenue, primarily due to new industrial switching contracts and higher revenue at GWI's port railroads, was more than offset by a $1.9 million decline in freight revenue. This decline in freight revenue was the result of a 7.3% decrease in carloads, partially offset by an increase in average revenue per carload of 5.3%. The decrease in freight revenue was principally composed of a $1.2 million decline in coal, a $0.8 million decline in lumber and forest products, and a $0.8 million decline in minerals and stone, partially offset by a net increase of $0.9 million in all other commodities. The increase in average revenue per car was due to higher rates of 7.0%, partially offset by a 0.8% decrease in fuel surcharges and a 0.9% decrease due to change in commodity mix. Including GWI's Mexico operations and the effect of acquisitions, average revenue per car increased 1.1%.
GWI's operating income in the first quarter of 2007 was $22.1 million, unchanged from the first quarter of 2006. The operating ratio was 83.1% in the first quarter of 2007, compared with an operating ratio of 80.5% in the first quarter of 2006. The operating ratio for the first quarter of 2007 was impacted by (i) a $1.4 million operating loss from GWI's Mexico operations, (ii) a tunnel fire in Oregon, which cost $0.7 million, and (iii) the higher operating ratio of the GWA acquisition (which includes low margin third-party fuel sales).
Free Cash Flow (dollars in millions) (1)
Quarter Ended | |||||||
March 31, | |||||||
2007 | 2006 | ||||||
Net cash provided by operating activities | $ | 30.2 | $ | 27.5 | |||
Net cash used in investing activities | (1.4 | ) | (6.3 | ) | |||
Free cash flow | $ | 28.8 | $ | 21.2 |
For the quarter ended March 31, 2007, GWI's operations generated net cash from operating activities of $30.2 million and free cash flow of $28.8 million. For the quarter ended March 31, 2006, GWI generated net cash from operating activities of $27.5 million and free cash flow of $21.2 million. Net cash used in investing activities in the first quarter of 2007 included $6.0 million in purchases of property and equipment, partially offset by $4.5 million in cash received from government grants and insurance proceeds for capital projects completed in 2006.
Comments from the Chief Executive Officer
Mortimer B. Fuller, Chairman and Chief Executive Officer of GWI, commented, "Our financial results for the first quarter of 2007 were slightly weaker than our outlook, primarily due to lower shipments of paper and forest products in our Oregon and Southern Regions. Elsewhere in the U.S. and in Canada, our business is performing well in the current economy. Meanwhile, South Australia continues to meet our expectations thanks to strength from the natural resources sector.
"We remain intensely engaged with the Mexican Government in reaching an agreement with respect to the rebuilding of the Chiapas line in Mexico. Reaching resolution is of the highest priority to GWI, and we expect to determine if we can reach a mutually acceptable agreement with the Mexican Government in the near term."
"Conference Call and Webcast Details"
As previously announced, GWI's conference call to discuss financial results for the first quarter will be held Tuesday, May 1, 2007, at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is 888-428-4480; outside U.S., call 651-291-5254, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's website (http://www.gwrr.com), by selecting "First Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's website starting at 2:30 p.m. Tuesday, May 1, 2007.
About Genesee & Wyoming Inc.
GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. Operations currently include 48 railroads organized in 10 regions, as well as service at 12 U.S. ports, contract coal loading and industrial switching. GWI operates more than 6,800 miles of owned and leased track and approximately 3,700 additional miles under track access arrangements.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic conditions, customer demand, increased competition in relevant markets, and others. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI's Forms 10-Q and 10-K which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. GWI disclaims any intention to update the current expectations or forward-looking statements contained in this press release.
(1) Management views Free Cash Flow, as reconciled within this earnings release, as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities less Net Cash Used in/Provided by Investing Activities, excluding the Cost of Acquisitions/Proceeds from Divestitures. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as required dividend payments and principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with Generally Accepted Accounting Principles (GAAP).
Contact:
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended | |||||||
March 31, | |||||||
2007 | 2006 | ||||||
OPERATING REVENUES | $ | 130,827 | $ | 112,982 | |||
OPERATING EXPENSES | 108,758 | 90,922 | |||||
INCOME FROM OPERATIONS | 22,069 | 22,060 | |||||
EQUITY INCOME OF UNCONSOLIDATED | |||||||
INTERNATIONAL AFFILIATES | - | 2,007 | |||||
INTEREST INCOME | 3,363 | 100 | |||||
INTEREST EXPENSE | (3,823 | ) | (5,008 | ) | |||
OTHER (EXPENSE) INCOME, NET | (83 | ) | 445 | ||||
INCOME BEFORE INCOME TAXES | 21,526 | 19,604 | |||||
PROVISION FOR INCOME TAXES | 7,206 | 5,590 | |||||
NET INCOME | $ | 14,320 | $ | 14,014 | |||
BASIC EARNINGS PER COMMON SHARE | $ | 0.38 | $ | 0.38 | |||
WEIGHTED AVERAGE SHARES - BASIC | 37,270 | 37,326 | |||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.34 | $ | 0.33 | |||
WEIGHTED AVERAGE SHARES - | |||||||
DILUTED | 41,861 | 42,411 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
March 31, | December 31, | ||||||
ASSETS | 2007 | 2006 | |||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 235,846 | $ | 240,206 | |||
Accounts receivable, net | 106,181 | 117,099 | |||||
Materials and supplies | 11,971 | 11,302 | |||||
Prepaid expenses and other | 16,030 | 14,695 | |||||
Deferred income tax assets, net | 7,604 | 7,617 | |||||
Total current assets | 377,632 | 390,919 | |||||
PROPERTY AND EQUIPMENT, net | 573,784 | 573,292 | |||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 4,588 | 4,644 | |||||
GOODWILL | 37,874 | 37,788 | |||||
INTANGIBLE ASSETS, net | 119,778 | 120,669 | |||||
DEFERRED INCOME TAX ASSETS, net | 2,387 | 2,697 | |||||
OTHER ASSETS, net | 10,516 | 11,055 | |||||
Total assets | $ | 1,126,559 | $ | 1,141,064 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Current portion of long-term debt | $ | 15,653 | $ | 4,372 | |||
Accounts payable | 97,802 | 98,186 | |||||
Accrued expenses | 35,057 | 38,364 | |||||
Income tax payable - Australia | 95,073 | 91,925 | |||||
Deferred income tax liabilities, net | 443 | 291 | |||||
Total current liabilities | 244,028 | 233,138 | |||||
LONG-TERM DEBT, less current portion | 229,866 | 241,313 | |||||
DEFERRED INCOME TAX LIABILITIES, net | 75,212 | 72,876 | |||||
DEFERRED ITEMS - grants from governmental agencies | 58,004 | 56,588 | |||||
OTHER LONG-TERM LIABILITIES | 17,042 | 16,962 | |||||
TOTAL STOCKHOLDERS' EQUITY | 502,407 | 520,187 | |||||
Total liabilities and | |||||||
stockholders' equity | $ | 1,126,559 | $ | 1,141,064 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended March 31, | |||||||
2007 | 2006 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 14,320 | $ | 14,014 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,894 | 7,311 | |||||
Amortization of restricted stock and units | 329 | 143 | |||||
Compensation cost related to stock options | 877 | 877 | |||||
Excess tax benefits from share-based compensation | (420 | ) | (2,341 | ) | |||
Deferred income taxes | 2,752 | 4,547 | |||||
Net gain on sale and impairment of assets | (50 | ) | (94 | ) | |||
Equity income of unconsolidated international affiliates, net of tax | - | (1,415 | ) | ||||
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions: | |||||||
Accounts receivable, net | 7,781 | 1,216 | |||||
Materials and supplies | (613 | ) | 22 | ||||
Prepaid expenses and other | (1,288 | ) | (520 | ) | |||
Accounts payable and accrued expenses | (3,316 | ) | 4,004 | ||||
Income tax payable - Australia | 930 | - | |||||
Other assets and liabilities,net | 957 | (308 | ) | ||||
Net cash provided by operating activities | 30,153 | 27,456 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property and equipment, net of government grants | (2,886 | ) | (6,592 | ) | |||
Insurance proceeds for the replacement of assets | 1,422 | - | |||||
Valuation adjustment of split dollar life insurance | 37 | 12 | |||||
Proceeds from disposition of property and equipment | 79 | 306 | |||||
Net cash used in investing activities | (1,348 | ) | (6,274 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Principal payments on long-term | |||||||
borrowings, including capital | |||||||
leases | (458 | ) | (77,208 | ) | |||
Proceeds from issuance of | |||||||
long-term debt | - | 53,500 | |||||
Net proceeds from employee stock | |||||||
purchases | 1,552 | 2,365 | |||||
Treasury stock purchases | (37,370 | ) | - | ||||
Excess tax benefits from | |||||||
share-based compensation | 420 | 2,341 | |||||
Net cash used in financing | |||||||
activities | (35,856 | ) | (19,002 | ) | |||
EFFECT OF EXCHANGE RATE CHANGES ON | |||||||
CASH AND CASH EQUIVALENTS | 2,691 | (543 | ) | ||||
(DECREASE) INCREASE IN CASH AND CASH | |||||||
EQUIVALENTS | (4,360 | ) | 1,637 | ||||
CASH AND CASH EQUIVALENTS, beginning | |||||||
of period | 240,206 | 18,669 | |||||
CASH AND CASH EQUIVALENTS, end of | |||||||
period | $ | 235,846 | $ | 20,306 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2007 | 2006 | ||||||||||||
% of | % of | ||||||||||||
Amount | Revenue | Amount | Revenue | ||||||||||
Revenues: | |||||||||||||
Freight | $ | 88,634 | 67.7 | % | $ | 85,514 | 75.7 | % | |||||
Non-freight | 42,193 | 32.3 | % | 27,468 | 24.3 | % | |||||||
Total revenues | $ | 130,827 | 100.0 | % | $ | 112,982 | 100.0 | % | |||||
Operating Expense Comparison: | |||||||||||||
Natural Classification | |||||||||||||
Labor and benefits | $ | 43,207 | 33.0 | % | $ | 37,191 | 32.9 | % | |||||
Equipment rents | 9,902 | 7.6 | % | 9,906 | 8.8 | % | |||||||
Purchased services | 10,249 | 7.8 | % | 7,351 | 6.5 | % | |||||||
Depreciation and amortization | 7,894 | 6.0 | % | 7,311 | 6.5 | % | |||||||
Diesel fuel used in operations | 11,500 | 8.8 | % | 11,276 | 10.0 | % | |||||||
Diesel fuel sold to third parties | 4,942 | 3.8 | % | - | 0.0 | % | |||||||
Casualties and insurance | 5,219 | 4.0 | % | 2,783 | 2.5 | % | |||||||
Materials | 6,484 | 5.0 | % | 5,795 | 5.1 | % | |||||||
Net gain on sale and impairment of | |||||||||||||
assets | (50 | ) | 0.0 | % | (94 | ) | -0.1 | % | |||||
Other expenses | 9,411 | 7.1 | % | 9,403 | 8.3 | % | |||||||
Total operating expenses | $ | 108,758 | 83.1 | % | $ | 90,922 | 80.5 | % | |||||
Functional Classification | |||||||||||||
Transportation | $ | 42,362 | 32.4 | % | $ | 38,400 | 34.0 | % | |||||
Maintenance of ways and structures | 11,907 | 9.1 | % | 9,926 | 8.8 | % | |||||||
Maintenance of equipment | 19,087 | 14.6 | % | 16,432 | 14.5 | % | |||||||
Diesel fuel sold to third parties | 4,942 | 3.8 | % | - | 0.0 | % | |||||||
General and administrative | 22,616 | 17.2 | % | 18,947 | 16.8 | % | |||||||
Net gain on sale and impairment of | |||||||||||||
assets | (50 | ) | 0.0 | % | (94 | ) | -0.1 | % | |||||
Depreciation and amortization | 7,894 | 6.0 | % | 7,311 | 6.5 | % | |||||||
Total operating expenses | $ | 108,758 | 83.1 | % | $ | 90,922 | 80.5 | % |
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUE, CARLOADS AND AVERAGE REVENUE PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)
Three Months Ended March 31, 2007 | Three Months Ended March 31, 2006 | ||||||||||||||||||
Commodity Group | Freight Revenues | Carloads | Average Revenue Per Carload | Freight Revenues | Carloads | Average Revenue Per Carload | |||||||||||||
Pulp & Paper | $ | 17,528 | 32,057 | $ | 547 | $ | 17,399 | 35,362 | $ | 492 | |||||||||
Coal, Coke & Ores | 15,877 | 49,116 | 323 | 17,024 | 51,695 | 329 | |||||||||||||
Farm & Food Products | 10,584 | 23,502 | 450 | 6,135 | 16,210 | 378 | |||||||||||||
Metals | 9,157 | 20,018 | 457 | 9,401 | 22,392 | 420 | |||||||||||||
Lumber & Forest Products | 8,758 | 20,942 | 418 | 9,529 | 25,432 | 375 | |||||||||||||
Minerals & Stone | 8,752 | 29,992 | 292 | 8,199 | 20,039 | 409 | |||||||||||||
Chemicals-Plastics | 6,253 | 10,568 | 592 | 6,239 | 10,999 | 567 | |||||||||||||
Petroleum Products | 6,189 | 8,227 | 752 | 6,451 | 8,562 | 753 | |||||||||||||
Autos & Auto Parts | 1,837 | 3,605 | 509 | 1,666 | 3,434 | 485 | |||||||||||||
Intermodal | 282 | 537 | 525 | 451 | 1,035 | 436 | |||||||||||||
Other | 3,417 | 15,469 | 221 | 3,020 | 13,614 | 222 | |||||||||||||
Totals | $ | 88,634 | 214,033 | 414 | $ | 85,514 | 208,774 | 410 |
SOURCE Genesee & Wyoming Inc. | ||
-0- | 05/01/2007 | |
/CONTACT: Michael Williams of GWI Corporate Communications, | ||
+1-203-629-3722, mwilliams@gwrr.com/ | ||
/Web site: http://www.gwrr.com/ | ||
(GWR) |