Genesee & Wyoming Reports Results for the Third Quarter of 2009
GREENWICH, Conn., November 3, 2009/PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the third quarter of 2009 of $21.7 million, compared with net income of $21.2 million in the third quarter of 2008. GWI's diluted earnings per share (EPS) in the third quarter of 2009 were $0.53 with 41.2 million weighted average shares outstanding, compared with diluted EPS of $0.58 with 36.6 million weighted average shares outstanding in the third quarter of 2008.
GWI’s income from continuing operations in the third quarter of 2009 was $19.6 million, or $0.48 per diluted share, compared with income from continuing operations of $20.1 million, or $0.55 per diluted share in the third quarter of 2008.
In the third quarter of 2009, GWI completed the sale of both its Mexican operations and Bolivian investment. The sale of GWI’s Mexican operations resulted in a gain of $2.2 million ($2.4 million after-tax, or $0.06 per diluted share) in discontinued operations and GWI realized total cash proceeds of $2.2 million. The sale of GWI’s Bolivian investment resulted in a gain of $0.4 million ($0.4 million after-tax, or $0.01 per diluted share) from continuing operations and cash proceeds of $3.8 million.
Results from Continuing Operations
In the third quarter of 2009, GWI's total revenues decreased $23.0 million, or 14.4%, to $136.4 million, compared with $159.4 million in the third quarter of 2008. The decrease in total revenues was primarily due to a decrease in same railroad revenues of $35.9 million, or 22.5%, partially offset by revenues of $12.9 million from acquisitions. The decrease in same railroad revenues included a $2.2 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and a $6.7 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI’s same railroad revenues declined $27.0 million, or 16.9%.
Freight revenues in the third quarter of 2009 decreased by $12.4 million, or 13.0%, to $83.2 million, compared with $95.6 million in the third quarter of 2008. Same railroad freight revenues decreased $23.8 million, partially offset by $11.3 million in freight revenues from acquisitions. Same railroad freight revenues were reduced by $1.0 million due to the depreciation of the Australian and Canadian dollars. Excluding currency, GWI’s same railroad freight revenues decreased by $22.8 million, or 23.8%.
Average freight revenues per carload declined 10.0% in the third quarter of 2009. The impact of lower fuel surcharges, changes in commodity mix, acquisitions and the depreciation of the Canadian and Australian dollars reduced average revenues per carload by 8.7%, 1.4%, 1.2% and 1.0%, respectively. Excluding these factors, same railroad average revenues per carload increased 2.4%. In the United States and Canada, excluding currency effects, changes in commodity mix and changes in fuel surcharges, same railroad average revenues per carload increased 2.8%. Decreases in the rail cost adjustment factor (RCAF), a measure of railroad inflation published by the Association of American Railroads to which certain contract freight rates are indexed, had the impact of reducing U.S. and Canada same railroad average revenues per carload by approximately 1%.
GWI’s non-freight revenues in the third quarter of 2009 decreased $10.5 million, or 16.5%, to $53.3 million compared with $63.8 million in the third quarter of 2008. Same railroad non-freight revenues decreased $12.1 million, or 19.0%, partially offset by $1.6 million in non-freight revenues from acquisitions. The decrease in same railroad non-freight revenues included a $1.2 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and a $6.7 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI’s same railroad non-freight revenues decreased $4.2 million, or 6.6%.
GWI's operating income in the third quarter of 2009 decreased $3.5 million, or 10.0%, to $31.1 million, compared with $34.6 million in the third quarter of 2008. The operating ratio was 77.2% in the third quarter of 2009, compared with an operating ratio of 78.3% in the third quarter of 2008. In the third quarter of 2009, operating income benefited $2.6 million ($1.7 million after-tax, or $0.04 per diluted share) due to insurance recoveries related to prior year events. In the third quarter of 2008, operating income included $1.2 million in gains on the sale of assets ($0.8 million after-tax, or $0.02 per diluted share). Excluding these items, GWI’s operating ratio was 79.1% in the third quarter of 2009 and 2008. (1)
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO of GWI, commented, “Despite an extremely weak economic environment, we continue to manage our costs well and to generate strong free cash flow. In the third quarter, we maintained an operating ratio of 79% despite significant volume declines, and we are focused on ensuring that our productivity improvements remain intact when the economy improves. Meanwhile, we believe that the 5% increase in our revenues from the second quarter to the third quarter is indicative of a growing degree of economic stability.”
Mr. Hellmann continued, “We remain active in evaluating investment opportunities in both North America and Australia. Given the strength of our balance sheet, we are well positioned to execute quickly on the right transactions.”
2
Free Cash Flow from Continuing Operations (2)
($ in millions) | Nine Months Ended September 30, | |||||||
2009 | 2008 | |||||||
Net cash provided by operating activities | $ | 88.4 | $ | 93.7 | ||||
Net cash used in investing activities | (35.3 | ) | (148.5 | ) | ||||
Net cash paid/(received) for acquisitions/divestitures (a) | 2.0 | 115.7 | ||||||
Free cash flow (2) | $ | 55.1 | $ | 60.9 |
(a) The 2009 period includes: 1) $4.8 million in net cash paid for final working capital adjustments related to the acquisition of the Ohio Central Railroad System (OCR), 2) $1.0 million in net cash paid in contingent consideration related to the Rotterdam Rail Feeding B.V. (RRF) acquisition and 3) $3.8 million in cash received from the sale of Bolivia. The 2008 period includes 1) $89.5 million in net cash paid for the acquisition of CAGY Industries Inc. (CAGY), 2) $22.6 million in net cash paid for the acquisition of Rotterdam Rail Feeding (RRF) and 3) $3.6 million for final working capital adjustments related to the December 2007 acquisition of Maryland Midland Railway, Inc. (MMID).
GWI’s continuing operations generated free cash flow of $55.1 million and $60.9 million for the nine months ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009, changes in working capital increased net cash flow from operating activities by $3.8 million. For the nine months ended September 30, 2008, changes in working capital increased net cash flow from operating activities by $11.5 million.
Net cash used in investing activities for the quarter ended September 30, 2009, included $60.0 million in purchases of property and equipment, partially offset by $16.5 million in cash received from government grants and $10.2 million from sales of assets and insurance proceeds. Net cash used in investing activities in the nine months ended September 30, 2008, included $62.0 million in purchases of property and equipment, partially offset by $21.8 million in cash received from government grants and $7.4 million from sales of assets and insurance proceeds.
Discontinued Operations
For the quarter ended September 30, 2009, GWI reported income related to its discontinued Mexican business of $2.0 million after-tax (or $0.05 per diluted share), compared with income of $1.1 million after-tax (or $0.03 per diluted share) for the quarter ended September 30, 2008. Results from discontinued operations in the third quarter of 2009 included a net gain on the sale of 100% of the share capital of its Mexican subsidiary, Ferrocarriles Chiapas-Mayab, S.A. de C.V. (FCCM). Results from discontinued operations in the third quarter of 2008 included a tax benefit of $0.9 million ($0.02 per diluted share) primarily associated with the filing of GWI's 2007 U.S. income tax return.
3
Conference Call and Webcast Details
As previously announced, GWI's conference call to discuss financial results for the third quarter will be held Tuesday, November 3, 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 website (http://www.gwrr.com), by selecting "Third Quarter Earnings Audio Webcast." Management will be referring to a slide presentation that will also be available under the “Investors” tab of GWI’s website prior to the conference call. An audio replay of the conference call will be accessible via the “Investors” tab of GWI's website starting at 1:00 p.m. Tuesday, November 3, 2009. Telephone replay is available for 30 days beginning at 12 p.m. EDT on November 3, 2009, by dialing (800) 475-6701 (or outside U.S., dial (320) 365-3844). The access code is 974251.
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About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands. Operations currently include 62 railroads organized in nine regions, with more than 6,000 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) The operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating ratios calculated using total operating expenses and total revenues, calculated on a basis consistent with GAAP. The information required by Regulation G under the Securities Exchange Act of 1934, including reconciliation to the operating ratios calculated using amounts determined in accordance with GAAP, 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
5
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(In thousands, except per share amounts)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
OPERATING REVENUES | $ | 136,446 | $ | 159,432 | $ | 404,959 | $ | 452,828 | ||||||||
OPERATING EXPENSES | 105,331 | 124,866 | 333,104 | 367,281 | ||||||||||||
INCOME FROM OPERATIONS | 31,115 | 34,566 | 71,855 | 85,547 | ||||||||||||
GAIN ON SALE OF INVESTMENT IN BOLIVIA | 427 | - | 427 | - | ||||||||||||
INTEREST INCOME | 252 | 597 | 677 | 1,753 | ||||||||||||
INTEREST EXPENSE | (6,376 | ) | (4,250 | ) | (20,650 | ) | (12,203 | ) | ||||||||
OTHER INCOME/(EXPENSE), NET | 665 | (99 | ) | 1,909 | 560 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 26,083 | 30,814 | 54,218 | 75,657 | ||||||||||||
PROVISION FOR INCOME TAXES | 6,361 | 10,686 | 12,397 | 28,082 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS | 19,722 | 20,128 | 41,821 | 47,575 | ||||||||||||
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 2,017 | 1,087 | 1,348 | (487 | ) | |||||||||||
NET INCOME | 21,739 | 21,215 | 43,169 | 47,088 | ||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | (78 | ) | (61 | ) | (146 | ) | (146 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. | $ | 21,661 | $ | 21,154 | $ | 43,023 | $ | 46,942 | ||||||||
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: | ||||||||||||||||
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.51 | $ | 0.63 | $ | 1.18 | $ | 1.49 | ||||||||
BASIC EARNINGS/(LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | 0.05 | 0.03 | 0.04 | (0.02 | ) | |||||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.56 | $ | 0.66 | $ | 1.22 | $ | 1.48 | ||||||||
WEIGHTED AVERAGE SHARES - BASIC | 38,388 | 32,018 | 35,328 | 31,758 | ||||||||||||
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: | ||||||||||||||||
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.48 | $ | 0.55 | $ | 1.09 | $ | 1.31 | ||||||||
DILUTED EARNINGS/(LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | 0.05 | 0.03 | 0.04 | (0.01 | ) | |||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.53 | $ | 0.58 | $ | 1.13 | $ | 1.29 | ||||||||
WEIGHTED AVERAGE SHARES - DILUTED | 41,183 | 36,592 | 38,163 | 36,334 |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(In thousands)
(unaudited)
September 30, | December 31, | |||||||
ASSETS | 2009 | 2008 | ||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 96,018 | $ | 31,693 | ||||
Accounts receivable, net | 111,918 | 120,874 | ||||||
Materials and supplies | 8,145 | 7,708 | ||||||
Prepaid expenses and other | 10,948 | 12,270 | ||||||
Current assets of discontinued operations | 738 | 1,676 | ||||||
Deferred income tax assets, net | 18,161 | 18,101 | ||||||
Total current assets | 245,928 | 192,322 | ||||||
PROPERTY AND EQUIPMENT, net | 1,004,624 | 998,995 | ||||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 1,639 | 4,986 | ||||||
GOODWILL | 161,403 | 150,958 | ||||||
INTANGIBLE ASSETS, net | 246,300 | 223,442 | ||||||
DEFERRED INCOME TAX ASSETS, net | 3,206 | - | ||||||
OTHER ASSETS, net | 16,535 | 16,578 | ||||||
Total assets | $ | 1,679,635 | $ | 1,587,281 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt | $ | 27,361 | $ | 26,034 | ||||
Accounts payable | 116,115 | 124,162 | ||||||
Accrued expenses | 41,983 | 37,903 | ||||||
Current liabilities of discontinued operations | 22 | 1,121 | ||||||
Deferred income tax liabilities, net | - | 192 | ||||||
Total current liabilities | 185,481 | 189,412 | ||||||
LONG-TERM DEBT, less current portion | 428,398 | 535,231 | ||||||
DEFERRED INCOME TAX LIABILITIES, net | 241,733 | 234,979 | ||||||
DEFERRED ITEMS - grants from outside parties | 134,503 | 113,302 | ||||||
OTHER LONG-TERM LIABILITIES | 24,334 | 34,943 | ||||||
TOTAL EQUITY | 665,186 | 479,414 | ||||||
Total liabilities and equity | $ | 1,679,635 | $ | 1,587,281 |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(In thousands)
(unaudited)
Nine Months Ended September 30, | ||||||||
2009 | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 43,169 | $ | 47,088 | ||||
Adjustments to reconcile net income to net cash provided | ||||||||
by operating activities: | ||||||||
(Income)/Loss from discontinued operations, net of tax | (1,348 | ) | 487 | |||||
Depreciation and amortization | 35,473 | 28,871 | ||||||
Compensation cost related to equity awards | 4,227 | 4,163 | ||||||
Excess tax benefits from share-based compensation | (1,173 | ) | (1,830 | ) | ||||
Deferred income taxes | 890 | 7,549 | ||||||
Net loss/(gain) on sale and impairment of assets | 4,746 | (3,817 | ) | |||||
Gain on insurance recoveries | (3,144 | ) | (399 | ) | ||||
Insurance proceeds received | 2,175 | - | ||||||
Gain on sale of investment in Bolivia | (427 | ) | - | |||||
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions: | ||||||||
Accounts receivable, net | 9,481 | (13,089 | ) | |||||
Materials and supplies | 514 | (662 | ) | |||||
Prepaid expenses and other | 1,595 | 8,968 | ||||||
Accounts payable and accrued expenses | (7,269 | ) | 12,356 | |||||
Other assets and liabilities, net | (523 | ) | 3,972 | |||||
Net cash provided by operating activities from continuing operations | 88,386 | 93,657 | ||||||
Net cash used in operating activities from discontinued operations | (275 | ) | (2,815 | ) | ||||
Net cash provided by operating activities | 88,111 | 90,842 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (59,977 | ) | (61,999 | ) | ||||
Grant proceeds from outside parties | 16,530 | 21,832 | ||||||
Cash paid for acquisitions, net | (5,780 | ) | (115,699 | ) | ||||
Insurance proceeds for the replacement of assets | 3,996 | 419 | ||||||
Proceeds from sale of investment in Bolivia | 3,771 | - | ||||||
Proceeds from disposition of property and equipment | 6,196 | 6,992 | ||||||
Net cash used in investing activities from continuing operations | (35,264 | ) | (148,455 | ) | ||||
Net cash provided by investing activities from discontinued operations | 1,774 | - | ||||||
Net cash used in investing activities | (33,490 | ) | (148,455 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments on long-term borrowings, including capital leases | (207,221 | ) | (117,905 | ) | ||||
Proceeds from issuance of long-term debt | 98,000 | 163,000 | ||||||
Net proceeds from employee stock purchases | 5,307 | 9,122 | ||||||
Treasury stock purchases | (434 | ) | (2,355 | ) | ||||
Stock issuance proceeds, net of stock issuance costs | 106,641 | - | ||||||
Excess tax benefits from share-based compensation | 1,173 | 1,830 | ||||||
Net cash provided by financing activities from continuing operations | 3,466 | 53,692 | ||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 6,130 | (2,907 | ) | |||||
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS | 108 | (348 | ) | |||||
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 64,325 | (7,176 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 31,693 | 46,684 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 96,018 | $ | 39,508 |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 83,160 | 60.9 | % | $ | 95,602 | 60.0 | % | ||||||||
Non-freight | 53,286 | 39.1 | % | 63,830 | 40.0 | % | ||||||||||
Total revenues | $ | 136,446 | 100.0 | % | $ | 159,432 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 45,722 | 33.5 | % | $ | 48,409 | 30.4 | % | ||||||||
Equipment rents | 7,447 | 5.5 | % | 9,121 | 5.7 | % | ||||||||||
Purchased services | 10,999 | 8.1 | % | 11,975 | 7.5 | % | ||||||||||
Depreciation and amortization | 12,050 | 8.8 | % | 10,219 | 6.4 | % | ||||||||||
Diesel fuel used in operations | 7,921 | 5.8 | % | 15,948 | 10.0 | % | ||||||||||
Diesel fuel sold to third parties | 3,603 | 2.6 | % | 9,947 | 6.2 | % | ||||||||||
Casualties and insurance | 4,243 | 3.1 | % | 3,803 | 2.4 | % | ||||||||||
Materials | 5,201 | 3.8 | % | 6,211 | 3.9 | % | ||||||||||
Net loss (gain) on sale and impairment of assets | 96 | 0.1 | % | (1,185 | ) | (0.7 | %) | |||||||||
Gain on insurance recoveries | (2,644 | ) | (1.9 | %) | - | 0.0 | % | |||||||||
Other expenses | 10,693 | 7.8 | % | 10,418 | 6.5 | % | ||||||||||
Total operating expenses | $ | 105,331 | 77.2 | % | $ | 124,866 | 78.3 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | 41,430 | 30.3 | % | $ | 51,897 | 32.6 | % | |||||||||
Maintenance of ways and structures | 12,811 | 9.4 | % | 12,535 | 7.9 | % | ||||||||||
Maintenance of equipment | 16,201 | 11.9 | % | 18,084 | 11.3 | % | ||||||||||
Diesel fuel sold to third parties | 3,603 | 2.6 | % | 9,947 | 6.2 | % | ||||||||||
General and administrative | 21,784 | 16.0 | % | 23,369 | 14.6 | % | ||||||||||
Net loss (gain) on sale and impairment of assets | 96 | 0.1 | % | (1,185 | ) | (0.7 | %) | |||||||||
Gain on insurance recoveries | (2,644 | ) | (1.9 | %) | - | 0.0 | % | |||||||||
Depreciation and amortization | 12,050 | 8.8 | % | 10,219 | 6.4 | % | ||||||||||
Total operating expenses | $ | 105,331 | 77.2 | % | $ | 124,866 | 78.3 | % |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 251,622 | 62.1 | % | $ | 274,749 | 60.7 | % | ||||||||
Non-freight | 153,337 | 37.9 | % | 178,079 | 39.3 | % | ||||||||||
Total revenues | $ | 404,959 | 100.0 | % | $ | 452,828 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 143,654 | 35.5 | % | $ | 140,820 | 31.1 | % | ||||||||
Equipment rents | 22,240 | 5.5 | % | 26,262 | 5.8 | % | ||||||||||
Purchased services | 30,316 | 7.5 | % | 35,602 | 7.9 | % | ||||||||||
Depreciation and amortization | 35,473 | 8.7 | % | 28,871 | 6.4 | % | ||||||||||
Diesel fuel used in operations | 24,265 | 6.0 | % | 49,311 | 10.9 | % | ||||||||||
Diesel fuel sold to third parties | 10,096 | 2.5 | % | 28,893 | 6.4 | % | ||||||||||
Casualties and insurance | 10,707 | 2.6 | % | 11,841 | 2.6 | % | ||||||||||
Materials | 16,552 | 4.1 | % | 18,808 | 4.1 | % | ||||||||||
Net loss (gain) on sale and impairment of assets | 4,746 | 1.2 | % | (3,817 | ) | (0.8 | %) | |||||||||
Gain on insurance recoveries | (3,144 | ) | (0.8 | %) | (399 | ) | (0.1 | %) | ||||||||
Restructuring charges | 2,288 | 0.6 | % | - | 0.0 | % | ||||||||||
Other expenses | 35,911 | 8.9 | % | 31,089 | 6.8 | % | ||||||||||
Total operating expenses | $ | 333,104 | 82.3 | % | $ | 367,281 | 81.1 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | $ | 124,501 | 30.7 | % | $ | 152,629 | 33.7 | % | ||||||||
Maintenance of ways and structures | 39,580 | 9.8 | % | 38,698 | 8.5 | % | ||||||||||
Maintenance of equipment | 49,704 | 12.3 | % | 53,954 | 11.9 | % | ||||||||||
Diesel fuel sold to third parties | 10,096 | 2.5 | % | 28,893 | 6.4 | % | ||||||||||
General and administrative | 69,860 | 17.3 | % | 68,452 | 15.1 | % | ||||||||||
Net loss (gain) on sale and impairment of assets | 4,746 | 1.2 | % | (3,817 | ) | (0.8 | %) | |||||||||
Gain on insurance recoveries | (3,144 | ) | (0.8 | %) | (399 | ) | (0.1 | %) | ||||||||
Restructuring charges | 2,288 | 0.6 | % | - | 0.0 | % | ||||||||||
Depreciation and amortization | 35,473 | 8.7 | % | 28,871 | 6.4 | % | ||||||||||
Total operating expenses | $ | 333,104 | 82.3 | % | $ | 367,281 | 81.1 | % |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, 2009 | September 30, 2008 | |||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Coal, Coke & Ores | $ | 17,116 | 49,720 | $ | 344 | $ | 17,223 | 48,259 | $ | 357 | ||||||||||||||
Pulp & Paper | 12,794 | 22,385 | 572 | 19,180 | 30,705 | 625 | ||||||||||||||||||
Minerals & Stone | 10,867 | 36,459 | 298 | 12,952 | 37,797 | 343 | ||||||||||||||||||
Farm & Food Products | 8,575 | 16,963 | 506 | 8,247 | 15,161 | 544 | ||||||||||||||||||
Metals | 8,432 | 18,148 | 465 | 12,529 | 25,330 | 495 | ||||||||||||||||||
Chemicals-Plastics | 8,251 | 11,891 | 694 | 8,650 | 12,649 | 684 | ||||||||||||||||||
Lumber & Forest Products | 7,485 | 16,813 | 445 | 9,319 | 20,539 | 454 | ||||||||||||||||||
Petroleum Products | 4,357 | 6,522 | 668 | 4,382 | 6,434 | 681 | ||||||||||||||||||
Autos & Auto Parts | 1,191 | 1,921 | 620 | 1,719 | 2,422 | 710 | ||||||||||||||||||
Other | 4,092 | 16,265 | 252 | 1,401 | 4,757 | 295 | ||||||||||||||||||
Totals | $ | 83,160 | 197,087 | $ | 422 | $ | 95,602 | 204,053 | $ | 469 |
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GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 2009 | September 30, 2008 | |||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Coal, Coke & Ores | $ | 53,962 | 150,272 | $ | 359 | $ | 49,457 | 135,213 | $ | 366 | ||||||||||||||
Pulp & Paper | 38,340 | 68,348 | 561 | 55,991 | 91,625 | 611 | ||||||||||||||||||
Minerals & Stone | 29,546 | 103,030 | 287 | 33,909 | 106,491 | 318 | ||||||||||||||||||
Farm & Food Products | 28,603 | 65,671 | 436 | 29,291 | 51,529 | 568 | ||||||||||||||||||
Metals | 25,644 | 52,986 | 484 | 32,723 | 65,611 | 499 | ||||||||||||||||||
Chemicals-Plastics | 24,487 | 36,929 | 663 | 24,121 | 36,173 | 667 | ||||||||||||||||||
Lumber & Forest Products | 21,011 | 46,727 | 450 | 25,958 | 58,179 | 446 | ||||||||||||||||||
Petroleum Products | 14,645 | 21,320 | 687 | 13,630 | 20,221 | 674 | ||||||||||||||||||
Autos & Auto Parts | 3,483 | 5,684 | 613 | 5,622 | 9,200 | 611 | ||||||||||||||||||
Other | 11,900 | 48,748 | 244 | 4,047 | 15,794 | 256 | ||||||||||||||||||
Totals | $ | 251,621 | 599,715 | $ | 420 | $ | 274,749 | 590,036 | $ | 466 |
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Reconciliation of non-GAAP Financial Measures
This earnings release contains adjusted operating ratios and free cash flow, which are "non-GAAP financial measures" 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 Ratios 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 this is useful for investors in assessing GWI’s financial results compared with the same period in the prior year, the Adjusted Operating Ratio for the three months ended September 30, 2009, is presented excluding net (loss) gain on sale and impairment of assets and gain on insurance recoveries and for the three months ended September 30, 2008, is presented excluding net gain on the sale of assets. 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 Ratios calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratios described above for the three months ended September 30, 2009 and 2008 ($ in millions):
2009 | Total Revenues | Total Operating Expenses | Operating Income | Operating Ratio | ||||||||||||
As Reported | $ | 136.4 | $ | 105.3 | $ | 31.1 | 77.2 | % | ||||||||
Gain on insurance recoveries | - | 2.6 | (2.6 | ) | ||||||||||||
Net (loss) gain on sale and impairment of assets | - | (0.1 | ) | 0.1 | ||||||||||||
Adjusted | $ | 136.4 | $ | 107.9 | $ | 28.5 | 79.1 | % |
2008 | Total Revenues | Total Operating Expenses | Operating Income | Operating Ratio | ||||||||||||
As Reported | $ | 159.4 | $ | 124.9 | $ | 34.6 | 78.3 | % | ||||||||
Net gain on sale of assets | - | 1.2 | (1.2 | ) | ||||||||||||
Adjusted | $ | 159.4 | $ | 126.1 | $ | 33.4 | 79.1 | % |
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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 and 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 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):
Nine Months Ended September 30, | ||||||||
($ in millions) | 2009 | 2008 | ||||||
Net cash provided by operation activities from continuing operations | $ | 88.4 | $ | 93.7 | ||||
Net cash used in investing activities from continuing operations | (35.3 | ) | (148.5 | ) | ||||
Net cash paid/(received) for acquisitions/divestitures | 2.0 | 115.7 | ||||||
Free cash flow | $ | 55.1 | $ | 60.9 |
14