Genesee & Wyoming Reports Results for the Fourth Quarter of 2008
GREENWICH, Conn., February 11, 2008/PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the fourth quarter of 2008 of $25.3 million, compared with net income of $13.9 million in the fourth quarter of 2007. GWI's diluted earnings per share (EPS) in the fourth quarter of 2008 were $0.70 with 36.4 million weighted average shares outstanding, compared with diluted EPS of $0.39 with 35.9 million weighted average shares outstanding in the fourth quarter of 2007.
GWI’s income from continuing operations in the fourth quarter of 2008 was $25.3 million, or $0.70 per diluted share, compared with income from continuing operations of $14.5 million, or $0.40 per diluted share in the fourth quarter of 2007.
In the fourth quarter of 2008, GWI’s results included a tax benefit of $6.5 million, or $0.18 per diluted share, for the retroactive impact of the extension of the U.S. short line tax credit for the first nine months of 2008. Also in the fourth quarter of 2008, GWI received a net tax benefit of $2.8 million (or $0.08 per diluted share), with $4.8 million related to the impact of acquisitions on GWI’s consolidated U.S. tax position, partially offset by deferred tax valuation allowances of $2.0 million in Australia and Canada. In the fourth quarter of 2007, GWI received a tax benefit of $0.6 million (or $0.02 per diluted share) due to a change in Canadian tax laws.
GWI’s results for the fourth quarter of 2008 included gains on the sale of assets of $3.9 million ($2.7 million after-tax, or $0.07 per diluted share) and $2.0 million of acquisition-related expenses ($1.3 million after-tax, or $0.03 per diluted share), compared with gains on the sale of assets of $0.8 million ($0.5 million after-tax, or $0.01 per diluted share) and acquisition-related expenses of $0.7 million ($0.4 million after tax, or $0.01 per diluted share) in the fourth quarter of 2007.
The table below summarizes the financial impact of the significant items in the fourth quarter of 2008 and 2007 ($ millions, except per share amounts).
After- Tax Amount | EPS Impact | |||||||
Q4 2008 - Gains on the sale of assets | $ | 2.7 | $ | 0.07 | ||||
- Acquisition-related expenses | $ | (1.3 | ) | $ | (0.03 | ) | ||
- Retroactive short line tax credit | $ | 6.5 | $ | 0.18 | ||||
- Other net tax benefits | $ | 2.8 | $ | 0.08 | ||||
Q4 2007 - Gains on the sale of assets | $ | 0.5 | $ | 0.01 | ||||
- Acquisition-related expenses | $ | (0.4 | ) | $ | (0.01 | ) | ||
- Canadian tax law change | $ | 0.6 | $ | 0.02 |
Continuing Operations
In the fourth quarter of 2008, GWI's revenues increased $14.6 million, or 10.9%, to $149.2 million, compared with $134.5 million in the fourth quarter of 2007. Of the revenue increase, $26.3 million was from acquisitions offset by a decrease of $11.7 million in same railroad revenues. The same railroad revenue decrease was composed of $7.2 million due to the depreciation of the Australian and Canadian dollars and $3.5 million due to a decline in revenues from third-party fuel sales. Excluding currency and fuel sales, GWI’s same railroad revenues declined $1.0 million.
Freight revenues in the fourth quarter of 2008 increased by $13.1 million, or 15.9%, to $95.2 million, compared with $82.1 million in the fourth quarter of 2007. Of the freight revenue increase, $19.8 million was from acquisitions offset by a decrease of $6.7 million in same railroad freight revenues. Same railroad freight revenues were reduced $3.9 million by the depreciation of the Australian and Canadian dollars. Excluding currency, GWI’s same railroad freight revenues decreased by $2.8 million.
GWI’s traffic in the fourth quarter of 2008 increased 32,949 carloads, or 17.2%, compared with the fourth quarter of 2007. Same-railroad traffic decreased by 16,814 carloads, or 8.8%. The decrease was principally due to declines of 6,286 carloads of metals traffic, 5,007 carloads of coal, coke & ores traffic, 3,903 carloads of lumber & forest products traffic and 3,712 carloads of pulp & paper traffic. The decline in fourth quarter 2008 coal, coke & ores traffic was primarily due to reduced shipments in GWI's Rocky Mountain Region where a mine closed in February 2008.
Average freight revenues per carload declined 1.1% in the fourth quarter of 2008. The impact of acquisitions and the depreciation of the Canadian and Australian dollars reduced average freight revenues per carload by 2.9% and 4.1%, respectively. Excluding currency, same railroad average revenues per carload increased 5.9% in the fourth quarter of 2008.
GWI’s non-freight revenues in the fourth quarter of 2008 increased $1.6 million, or 3.0%, compared with the fourth quarter of 2007. Of the non-freight revenue increase, $6.5 million was from acquisitions offset by a decrease of $4.9 million in same railroad non-freight revenues. The same railroad non-freight revenues decrease was composed of $3.2 million due to the depreciation of the Australian and Canadian dollars and $3.5 million due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI’s same railroad non-freight revenues increased $1.8 million.
GWI's operating income in the fourth quarter of 2008 increased 35.2% to $30.4 million, compared with $22.5 million in the fourth quarter of 2007. The operating ratio was 79.6% in the fourth quarter of 2008, compared with an operating ratio of 83.3% in the fourth quarter of 2007. Operating income for the fourth quarter of 2008 included $3.9 million of net gains on the sale of assets and $2.0 million in acquisition-related expenses, compared with $0.8 million of net gains on the sale of assets and $0.7 million in acquisition-related expenses in the fourth quarter of 2007. Excluding net gains on asset sales and acquisition-related expenses, GWI’s operating ratio improved to 80.9% in the fourth quarter of 2008, while operating income increased by 27.2% (1).
Comments from the Chief Executive Officer
John C. Hellmann, Chief Executive Officer of GWI commented, “Despite our strong reported earnings, the fourth quarter of 2008 was a difficult one. On the positive side, our less economically sensitive commodities such as utility coal, grain, waste and salt performed well and our five recent acquisitions collectively met our financial expectations. On the negative side, the severe deterioration of the industrial economy negatively impacted our results, especially in December. Areas of particular traffic weakness were in paper and forest products as well as steel shipments.”
“As we enter 2009, we have made appropriate reductions to our cost structure and capital expenditures and we expect to generate strong free cash flow in a weak demand environment. For GWI, we expect that the accretive impact of our recent acquisitions will largely offset the weakness in our same railroad business. GWI also maintains capacity to make opportunistic acquisitions in an environment of significantly reduced bidding competition.”
A presentation including additional information related to Q4 results is posted at http://www.gwrr.com/investors under “Recent Presentations.” Information included on our Web site is not incorporated by reference into this press release.
Annual Consolidated Results – Continuing Operations
For the year ended December 31, 2008, GWI reported income from continuing operations of $72.7 million, a 5.1% increase over $69.2 million for the year ended December 31, 2007. GWI's diluted earnings per share from continuing operations were $2.00 in 2008 (with 36.3 million weighted average shares outstanding), a 13.0% increase over $1.77 in 2007 (with 39.1 million weighted average shares outstanding).
GWI’s 2007 results included a net tax benefit of $3.7 million (or $0.09 per share) associated with the sale of GWI’s 50% interest in the Western Australia operations and certain other assets of the Australian Railroad Group (ARG) (ARG Sale) in 2006.
Free Cash Flow from Continuing Operations (2)
Twelve Months Ended | ||||||||
($ in millions) | December 31, | |||||||
2008 | 2007 | |||||||
Net cash provided by operating activities | $ | 128.7 | $ | 34.5 | ||||
Net cash used in investing activities | (413.8 | ) | (70.0 | ) | ||||
Net cash paid for acquisitions (a) | 345.5 | 19.4 | ||||||
Contingent consideration held in escrow (b) | 7.5 | - | ||||||
Australia taxes on ARG Sale (c) | - | 95.6 | ||||||
Free cash flow (1) | $ | 67.9 | $ | 79.5 |
(a) | The 2008 period includes: 1) $212.6 million in net cash paid for the acquisition of the Ohio Central Railroad System (OCR), 2) $16.7 million in net cash paid for the acquisition of Georgia Southwestern Railroad, Inc. (Georgia Southwestern), 3) $89.9 million in net cash paid for the acquisition of CAGY Industries Inc. (CAGY), 4) $22.6 million in net cash paid for the acquisition of Rotterdam Rail Feeding (RRF) and 5) $3.7 million for final working capital adjustments related to the December 2007 acquisition of Maryland Midland Railway, Inc. (Maryland Midland). The 2007 period includes $19.4 million in net cash paid for the acquisition of Maryland Midland. |
(b) | Includes $7.5 million of contingent consideration placed into escrow by GWI that will be paid to the seller of OCR upon satisfaction of certain conditions. |
(c) | Includes Australian taxes resulting from the 2006 ARG Sale totaling $95.6 million paid in 2007, as calculated using the U.S. Dollar/Australian Dollar exchange rate on the date of payment. |
GWI’s continuing operations generated free cash flow of $67.9 million and $79.5 million for the twelve months ended December 31, 2008 and 2007, respectively. In the twelve months of 2008, working capital activities provided $12.7 million to net cash flow from operating activities. Other than the $95.6 million tax payment related to the ARG Sale, working capital activities provided $23.6 million to net cash flow from operations in the 2007 period.
Net cash used in investing activities in the twelve months ended December 31, 2008, included $97.9 million in purchases of property and equipment, partially offset by $28.6 million in cash received from government grants and $8.5 million from sales of assets and insurance proceeds. Net cash used in investing activities in the twelve months ended December 31, 2007, included $96.1 million in purchases of property and equipment, partially offset by $34.3 million in cash received from government grants and $11.2 million from sales of assets and insurance proceeds.
Discontinued Operations
As previously reported, GWI commenced the liquidation of its hurricane damaged operations in Mexico on June 25, 2007, and had no remaining employees as of September 30, 2007. Results from GWI’s Mexican operations for the three and twelve months ended December 31, 2008 and 2007, are included in results from discontinued operations.
For the year ended December 31, 2008, GWI reported a net loss from discontinued operations of $0.5 million (or $0.01 per diluted share), compared with a net loss of $14.1 million (or $0.36 per diluted share) for the year ended December 31, 2007. For discontinued operations, cash used in operating activates was $3.5 million and $14.0 million for the years ended December 31, 2008 and 2007, respectively. Cash provided by investing activities of discontinued operations was $0.5 million for the year ended December 31, 2008, compared with $0.5 million of cash used in investing activities of discontinued operations for the year ended December 31, 2007. Free cash flow used in discontinued operations was $3.0 million and $14.5 million for the years ended December 31, 2008 and 2007, respectively (2). As of December 31, 2008, there was a net asset of $0.6 million remaining on GWI’s balance sheet associated with its Mexican operations.
Conference Call and Webcast Details
As previously announced, GWI's conference call to discuss financial results for the fourth quarter will be held Wednesday, February 11, 2009 at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is (800) 230-1092; outside U.S., call (612) 234-9960, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's Web site (http://www.gwrr.com), by selecting "Fourth Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's Web site starting at 1:00 p.m. Wednesday, February 11, 2009.
From time to time GWI may use its Web site as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at http://www.gwrr.com/investors. In addition, you may automatically receive email alerts and other information about GWI by enrolling your email by visiting the “Email Alert” section at http://www.gwrr.com/investors.
About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands and owns a minority interest in a railroad in Bolivia. Operations currently include 63 railroads organized in nine regions, with more than 6,800 miles of owned and leased track and approximately 3,100 additional miles under track access arrangements. GWI provides rail service at 16 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers.
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, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments; increased competition in relevant markets; funding needs and financing sources; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others. Words such as "anticipates," "intends," "plans," "believes," "seeks," "expects," "estimates," variations of these words and similar expressions are intended to identify these forward-looking statements. 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) Adjusted Operating Ratio is a non-GAAP financial measure and is not intended to replace operating ratio, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to our operating ratio is included in the tables attached to this press release.
(2) Free Cash Flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net cash provided by operating activities is included in the tables attached to this press release.
SOURCE Genesee & Wyoming Inc.
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com
GENESEE & WYOMING INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS |
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007 |
(In thousands, except per share amounts) |
(unaudited) |
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
OPERATING REVENUES | $ | 149,156 | $ | 134,542 | $ | 601,984 | $ | 516,167 | ||||||||
OPERATING EXPENSES | 118,772 | 112,075 | 486,053 | 419,339 | ||||||||||||
INCOME FROM OPERATIONS | 30,384 | 22,467 | 115,931 | 96,828 | ||||||||||||
INTEREST INCOME | 340 | 744 | 2,093 | 7,813 | ||||||||||||
INTEREST EXPENSE | (8,406 | ) | (4,109 | ) | (20,610 | ) | (14,735 | ) | ||||||||
MINORITY INTEREST | (97 | ) | - | (243 | ) | - | ||||||||||
OTHER (EXPENSE) INCOME, NET | (90 | ) | 43 | 470 | 889 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 22,131 | 19,145 | 97,641 | 90,795 | ||||||||||||
(BENEFIT) PROVISION FOR INCOME TAXES | (3,172 | ) | 4,621 | 24,909 | 21,548 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 25,303 | 14,524 | 72,732 | 69,247 | ||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | (14 | ) | (578 | ) | (501 | ) | (14,072 | ) | ||||||||
NET INCOME | $ | 25,289 | $ | 13,946 | $ | 72,231 | $ | 55,175 | ||||||||
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.78 | $ | 0.46 | $ | 2.28 | $ | 2.00 | ||||||||
BASIC LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS | - | (0.02 | ) | (0.02 | ) | (0.41 | ) | |||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.78 | $ | 0.44 | $ | 2.26 | $ | 1.59 | ||||||||
WEIGHTED AVERAGE SHARES - BASIC | 32,404 | 31,429 | 31,922 | 34,625 | ||||||||||||
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.70 | $ | 0.40 | $ | 2.00 | $ | 1.77 | ||||||||
DILUTED LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS | - | (0.02 | ) | (0.01 | ) | (0.36 | ) | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.70 | $ | 0.39 | $ | 1.99 | $ | 1.41 | ||||||||
WEIGHTED AVERAGE SHARES - DILUTED | 36,371 | 35,919 | 36,348 | 39,148 |
GENESEE & WYOMING INC. AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
AS OF DECEMBER 31, 2008 AND 2007 | |||||
(In thousands) | |||||
(unaudited) |
December 31, | December 31, | |||||||
ASSETS | 2008 | 2007 | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 31,693 | $ | 46,684 | ||||
Accounts receivable, net | 120,874 | 125,934 | ||||||
Materials and supplies | 7,708 | 7,555 | ||||||
Prepaid expenses and other | 12,270 | 18,147 | ||||||
Current assets of discontinued operations | 1,676 | 2,213 | ||||||
Deferred income tax assets, net | 18,095 | 7,495 | ||||||
Total current assets | 192,316 | 208,028 | ||||||
PROPERTY AND EQUIPMENT, net | 997,486 | 696,990 | ||||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 4,986 | 4,696 | ||||||
GOODWILL | 150,401 | 39,352 | ||||||
INTANGIBLE ASSETS, net | 225,508 | 117,106 | ||||||
DEFERRED INCOME TAX ASSETS, net | - | 1,353 | ||||||
OTHER ASSETS, net | 16,578 | 10,276 | ||||||
Total assets | $ | 1,587,275 | $ | 1,077,801 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt | $ | 26,034 | $ | 2,247 | ||||
Accounts payable | 124,162 | 128,038 | ||||||
Accrued expenses | 37,903 | 37,792 | ||||||
Current liabilities of discontinued operations | 1,121 | 3,919 | ||||||
Deferred income tax liabilities, net | 192 | 66 | ||||||
Total current liabilities | 189,412 | 172,062 | ||||||
LONG-TERM DEBT, less current portion | 535,231 | 270,519 | ||||||
DEFERRED INCOME TAX LIABILITIES, net | 234,973 | 93,336 | ||||||
DEFERRED ITEMS - grants from governmental agencies | 113,302 | 94,651 | ||||||
OTHER LONG-TERM LIABILITIES | 34,943 | 15,144 | ||||||
MINORITY INTEREST | 1,351 | 1,108 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 478,063 | 430,981 | ||||||
Total liabilities and stockholders' equity | $ | 1,587,275 | $ | 1,077,801 |
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(In thousands) | ||||
(unaudited) |
Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 72,231 | $ | 55,175 | ||||
Adjustments to reconcile net income to net cash provided | ||||||||
by operating activities: | ||||||||
Loss from discontinued operations | 501 | 14,072 | ||||||
Depreciation and amortization | 40,507 | 31,773 | ||||||
Compensation cost related to equity awards | 5,734 | 5,412 | ||||||
Excess tax benefits from share-based compensation | (1,829 | ) | (1,159 | ) | ||||
Deferred income taxes | 6,805 | 7,994 | ||||||
Net gain on sale of assets | (8,107 | ) | (6,742 | ) | ||||
Minority interest | 243 | - | ||||||
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions: | ||||||||
Accounts receivable, net | 11,541 | (5,412 | ) | |||||
Materials and supplies | (812 | ) | 2,400 | |||||
Prepaid expenses and other | 6,597 | (6,159 | ) | |||||
Accounts payable and accrued expenses | (8,972 | ) | 29,160 | |||||
Income tax payable - Australia | (3,717 | ) | (92,982 | ) | ||||
Other assets and liabilities, net | 8,024 | 989 | ||||||
Net cash provided by operating activities from continuing operations | 128,746 | 34,521 | ||||||
Net cash used in operating activities from discontinued operations | (3,484 | ) | (14,000 | ) | ||||
Net cash provided by operating activities | 125,262 | 20,521 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (97,853 | ) | (96,081 | ) | ||||
Grant proceeds from government agencies | 28,551 | 34,307 | ||||||
Cash paid for acquisitions, net of cash received | (345,477 | ) | (19,424 | ) | ||||
Contingent consideration held in escrow | (7,500 | ) | - | |||||
Insurance proceeds for the replacement of assets | 419 | 1,747 | ||||||
Proceeds from disposition of property and equipment | 8,081 | 9,404 | ||||||
Net cash used in investing activities from continuing operations | (413,779 | ) | (70,047 | ) | ||||
Net cash provided by (used in) investing activities from discontinued operations | 450 | (517 | ) | |||||
Net cash used in investing activities | (413,329 | ) | (70,564 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments on long-term borrowings, including capital leases | (193,051 | ) | (21,448 | ) | ||||
Proceeds from issuance of long-term debt | 468,076 | 55,000 | ||||||
Debt issuance costs | (4,340 | ) | - | |||||
Net proceeds from employee stock purchases | 9,314 | 3,384 | ||||||
Treasury stock purchases | (2,355 | ) | (175,637 | ) | ||||
Excess tax benefits from share-based compensation | 1,829 | 1,159 | ||||||
Net cash provided by (used in) financing activities from continuing operations | 279,473 | (137,542 | ) | |||||
Net cash used in financing activities from discontinued operations | - | (13,301 | ) | |||||
Net cash provided by (used in) financing activities | 279,473 | (150,843 | ) | |||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (5,973 | ) | 7,581 | |||||
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS | (424 | ) | (217 | ) | ||||
DECREASE IN CASH AND CASH EQUIVALENTS | (14,991 | ) | (193,522 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 46,684 | 240,206 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 31,693 | $ | 46,684 |
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | ||||||||
(dollars in thousands) | ||||||||
(unaudited) |
Three Months Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 95,188 | 63.8 | % | $ | 82,137 | 61.0 | % | ||||||||
Non-freight | 53,968 | 36.2 | % | 52,405 | 39.0 | % | ||||||||||
Total revenues | $ | 149,156 | 100.0 | % | $ | 134,542 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 50,288 | 33.7 | % | $ | 43,348 | 32.2 | % | ||||||||
Equipment rents | 8,906 | 6.0 | % | 9,460 | 7.0 | % | ||||||||||
Purchased services | 10,567 | 7.1 | % | 9,631 | 7.2 | % | ||||||||||
Depreciation and amortization | 11,636 | 7.8 | % | 8,258 | 6.1 | % | ||||||||||
Diesel fuel used in operations | 11,702 | 7.8 | % | 13,801 | 10.3 | % | ||||||||||
Diesel fuel sold to third parties | 5,731 | 3.8 | % | 8,933 | 6.6 | % | ||||||||||
Casualties and insurance | 3,295 | 2.2 | % | 3,694 | 2.8 | % | ||||||||||
Materials | 7,330 | 4.9 | % | 5,798 | 4.3 | % | ||||||||||
Net gain on sale of assets | (3,891 | ) | -2.6 | % | (828 | ) | -0.6 | % | ||||||||
Other expenses | 13,208 | 8.9 | % | 9,980 | 7.4 | % | ||||||||||
Total operating expenses | $ | 118,772 | 79.6 | % | $ | 112,075 | 83.3 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | $ | 47,073 | 31.6 | % | $ | 44,132 | 32.8 | % | ||||||||
Maintenance of ways and structures | 14,831 | 9.9 | % | 11,349 | 8.4 | % | ||||||||||
Maintenance of equipment | 18,232 | 12.2 | % | 17,708 | 13.2 | % | ||||||||||
Diesel fuel sold to third parties | 5,731 | 3.8 | % | 8,933 | 6.6 | % | ||||||||||
General and administrative | 25,160 | 16.9 | % | 22,523 | 16.8 | % | ||||||||||
Net gain on sale of assets | (3,891 | ) | -2.6 | % | (828 | ) | -0.6 | % | ||||||||
Depreciation and amortization | 11,636 | 7.8 | % | 8,258 | 6.1 | % | ||||||||||
Total operating expenses | $ | 118,772 | 79.6 | % | $ | 112,075 | 83.3 | % |
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | ||||||||
(dollars in thousands) | ||||||||
(unaudited) |
Twelve Months Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 369,937 | 61.5 | % | $ | 329,184 | 63.8 | % | ||||||||
Non-freight | 232,047 | 38.5 | % | 186,983 | 36.2 | % | ||||||||||
Total revenues | $ | 601,984 | 100.0 | % | $ | 516,167 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 191,108 | 31.7 | % | $ | 167,066 | 32.4 | % | ||||||||
Equipment rents | 35,170 | 5.8 | % | 37,308 | 7.2 | % | ||||||||||
Purchased services | 46,169 | 7.7 | % | 38,990 | 7.6 | % | ||||||||||
Depreciation and amortization | 40,507 | 6.7 | % | 31,773 | 6.1 | % | ||||||||||
Diesel fuel used in operations | 61,013 | 10.1 | % | 45,718 | 8.8 | % | ||||||||||
Diesel fuel sold to third parties | 34,624 | 5.8 | % | 26,975 | 5.2 | % | ||||||||||
Casualties and insurance | 15,136 | 2.5 | % | 16,179 | 3.1 | % | ||||||||||
Materials | 26,138 | 4.3 | % | 23,504 | 4.6 | % | ||||||||||
Net gain on sale of assets | (8,107 | ) | -1.3 | % | (6,742 | ) | -1.3 | % | ||||||||
Other expenses | 44,295 | 7.4 | % | 38,568 | 7.5 | % | ||||||||||
Total operating expenses | $ | 486,053 | 80.7 | % | $ | 419,339 | 81.2 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | $ | 199,702 | 33.1 | % | $ | 166,146 | 32.2 | % | ||||||||
Maintenance of ways and structures | 53,529 | 8.9 | % | 48,621 | 9.4 | % | ||||||||||
Maintenance of equipment | 72,186 | 12.0 | % | 70,330 | 13.6 | % | ||||||||||
Diesel fuel sold to third parties | 34,624 | 5.8 | % | 26,975 | 5.2 | % | ||||||||||
General and administrative | 93,612 | 15.5 | % | 82,236 | 15.9 | % | ||||||||||
Net gain on sale of assets | (8,107 | ) | -1.3 | % | (6,742 | ) | -1.3 | % | ||||||||
Depreciation and amortization | 40,507 | 6.7 | % | 31,773 | 6.2 | % | ||||||||||
Total operating expenses | $ | 486,053 | 80.7 | % | $ | 419,339 | 81.2 | % |
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD | ||||||||||||
COMPARISON BY COMMODITY GROUP | ||||||||||||
(dollars in thousands, except average revenue per carload) | ||||||||||||
(unaudited) |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Average Freight | Average Freight | |||||||||||||||||||||||
Freight | Revenues | Freight | Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Coal, Coke & Ores | $ | 22,171 | 58,490 | $ | 379 | $ | 15,861 | 51,543 | $ | 308 | ||||||||||||||
Pulp & Paper | 16,362 | 27,988 | 585 | 17,849 | 30,102 | 593 | ||||||||||||||||||
Minerals & Stone | 11,217 | 37,500 | 299 | 7,663 | 29,833 | 257 | ||||||||||||||||||
Farm & Food Products | 9,720 | 21,903 | 444 | 8,535 | 15,288 | 558 | ||||||||||||||||||
Metals | 9,353 | 19,206 | 487 | 9,113 | 18,334 | 497 | ||||||||||||||||||
Chemicals-Plastics | 8,417 | 12,328 | 683 | 7,002 | 10,714 | 654 | ||||||||||||||||||
Lumber & Forest Products | 7,257 | 16,486 | 440 | 8,263 | 19,955 | 414 | ||||||||||||||||||
Petroleum Products | 4,873 | 7,123 | 684 | 4,748 | 7,595 | 625 | ||||||||||||||||||
Autos & Auto Parts | 1,109 | 1,912 | 580 | 1,779 | 3,301 | 539 | ||||||||||||||||||
Intermodal | 114 | 277 | 412 | 204 | 428 | 477 | ||||||||||||||||||
Other | 4,595 | 21,595 | 213 | 1,120 | 4,766 | 235 | ||||||||||||||||||
Totals | $ | 95,188 | 224,808 | 423 | $ | 82,137 | 191,859 | 428 |
GENESEE & WYOMING INC. AND SUBSIDIARIES |
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD |
COMPARISON BY COMMODITY GROUP |
(dollars in thousands, except average revenue per carload) |
(unaudited) |
Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Average Freight | Average Freight | |||||||||||||||||||||||
Freight | Revenues | Freight | Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Pulp & Paper | $ | 72,353 | 119,613 | $ | 605 | $ | 69,598 | 122,706 | $ | 567 | ||||||||||||||
Coal, Coke & Ores | 71,628 | 193,703 | 370 | 60,164 | 195,393 | 308 | ||||||||||||||||||
Minerals & Stone | 45,126 | 143,991 | 313 | 30,932 | 122,006 | 254 | ||||||||||||||||||
Metals | 42,076 | 84,817 | 496 | 36,569 | 78,191 | 468 | ||||||||||||||||||
Farm & Food Products | 39,011 | 73,432 | 531 | 34,833 | 68,909 | 505 | ||||||||||||||||||
Lumber & Forest Products | 33,215 | 74,665 | 445 | 35,967 | 85,309 | 422 | ||||||||||||||||||
Chemicals-Plastics | 32,538 | 48,501 | 671 | 27,120 | 44,164 | 614 | ||||||||||||||||||
Petroleum Products | 18,503 | 27,344 | 677 | 16,941 | 27,700 | 612 | ||||||||||||||||||
Autos & Auto Parts | 6,731 | 11,112 | 606 | 7,096 | 13,853 | 512 | ||||||||||||||||||
Intermodal | 505 | 1,213 | 416 | 1,060 | 2,108 | 503 | ||||||||||||||||||
Other | 8,251 | 36,453 | 226 | 8,904 | 40,930 | 218 | ||||||||||||||||||
Totals | $ | 369,937 | 814,844 | 454 | $ | 329,184 | 801,269 | 411 |
Reconciliation of non-GAAP Financial Measure
This earnings release contains adjusted operating ratio and free cash flow, which are "non-GAAP financial measure" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to its most directly comparable U.S. GAAP measure.
Adjusted Operating Ratio Description and Discussion
Management views its Operating Ratio, calculated as total Operating Expenses divided by total Revenues, as an important measure of GWI’s operating performance. Because management believes that this is useful for investors in assessing GWI’s financial results compared to the same period in the prior year, the Adjusted Operating Ratio for the three months ended December 31, 2008 and 2007, are presented excluding the impact of Net Gain on Sale of Assets and Acquisition Expenses. The Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Ratios calculated using amounts in accordance with GAAP.
The following table sets forth a reconciliation of GWI’s Operating Ratio calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratio described above for the three months ended December 31, 2008 and 2007 ($ in millions):
2008 | Total Revenues | Total Operating Expenses | Operating Income | Operating Ratio | ||||||||||||
As Reported | $ | 149.2 | $ | 118.8 | $ | 30.4 | 79.6 | % | ||||||||
Net Gain on Sale of Assets | - | 3.9 | 3.9 | |||||||||||||
Acquisition Expenses | - | (2.0 | ) | (2.0 | ) | |||||||||||
Adjusted | $ | 149.2 | $ | 120.7 | $ | 28.5 | 80.9 | % |
2007 | Total Revenues | Total Operating Expenses | Operating Income | Operating Ratio | ||||||||||||
As Reported | $ | 134.5 | $ | 112.1 | $ | 22.5 | 83.3 | % | ||||||||
Net Gain on Sale of Assets | - | 0.8 | 0.8 | |||||||||||||
Acquisition Expenses | - | (0.7 | ) | (0.7 | ) | |||||||||||
Adjusted | $ | 134.5 | $ | 112.2 | $ | 22.4 | 83.4 | % |
Free Cash Flow Description and Discussion
Management views Free Cash Flow 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 from Continuing Operations less Net Cash Used in Investing Activities from Continuing Operations, excluding the cost of acquisitions, contingent consideration held in escrow and tax effects of divestitures. Free Cash Flow from Discontinued Operations is defined as Net Cash Used In Operating Activities from Discontinued Operations less Net Cash Provided by (Used in) Investing Activities from Discontinued Operations. 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 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 GAAP.
The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities from Continuing Operations to GWI's Free Cash Flow ($ in millions):
Year Ended | ||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
Net cash provided by operating activities from continuing operations | $ | 128.7 | $ | 34.5 | ||||
Net cash used in investing activities from continuing operations | (413.8 | ) | (70.0 | ) | ||||
Cash paid for acquisitions, net of cash acquired | 345.5 | 19.4 | ||||||
Contingent consideration held in escrow | 7.5 | - | ||||||
Australia taxes on ARG Sale | - | 95.6 | ||||||
Free cash flow | $ | 67.9 | $ | 79.5 |
The following table sets forth a reconciliation of GWI's Net Cash Used In Operating Activities from Discontinued Operations to GWI's Free Cash Flow from Discontinued Operations ($ in millions):
Year Ended | ||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
Net cash used in operating activities from discontinued operations | $ | (3.5 | ) | $ | (14.0 | ) | ||
Net cash provided by (used in) investing activities from discontinued operations | 0.5 | (0.5 | ) | |||||
Free cash flow from discontinued operations | $ | (3.0 | ) | $ | (14.5 | ) |