Genesee & Wyoming Reports Results for the Fourth Quarter of 2009
GREENWICH, Conn., February 8, 2010/PRNewswire-FirstCall/ — Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the fourth quarter of 2009 of $18.3 million, compared with net income of $25.3 million in the fourth quarter of 2008. GWI's diluted earnings per share (EPS) in the fourth quarter of 2009 were $0.44 with 41.3 million weighted average shares outstanding, compared with diluted EPS of $0.70 with 36.4 million weighted average shares outstanding in the fourth quarter of 2008.
GWI’s results for the fourth quarter of 2009 included gains on the sale of assets of $0.8 million ($0.5 million after-tax, or $0.01 per diluted share). Fourth quarter results also included a tax benefit of approximately $1.0 million, or $0.03 per diluted share, as a result of applying GWI’s full year effective income tax rate to results for the first nine months of 2009. 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), $2.0 million of acquisition-related expenses ($1.3 million after-tax, or $0.03 per diluted share) and certain net tax benefits of $9.3 million, or $0.26 per diluted share, primarily related to the extension of the short line tax credit.
The table below summarizes the financial impact of the significant items in the fourth quarter of 2009 and 2008 ($ millions, except per share amounts).
Pre- Tax Amount | After- Tax Amount (a) | EPS Impact | ||||||||||
Q4 2009 - Gains on the sale of assets | $ | 0.8 | $ | 0.5 | $ | 0.01 | ||||||
- Net tax benefits | $ | — | $ | 1.0 | $ | 0.03 | ||||||
Q4 2008 - Gains on the sale of assets | $ | 3.9 | $ | 2.7 | $ | 0.07 | ||||||
- Acquisition-related expense | $ | (2.0 | ) | $ | (1.3 | ) | $ | (0.03 | ) | |||
- Certain net tax benefits (b) | $ | — | $ | 9.3 | $ | 0.26 |
(a) | Other than tax credits and deferred tax valuation allowances, all after-tax amounts presented are calculated using the marginal effective income tax rate for the appropriate jurisdictions where the transactions occurred. |
(b) | Includes a net tax benefit of $6.5 million related to the impact of the retroactive extension of the U.S. short line tax credit for the first nine months of 2008 and a net tax benefit of $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. |
Results from Continuing Operations
In the fourth quarter of 2009, GWI's total revenues decreased $9.2 million, or 6.2%, to $139.9 million, compared with $149.2 million in the fourth quarter of 2008. During the fourth quarter of 2009, the appreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar increased revenues by $7.6 million, partially offset by a $1.3 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI’s revenues declined $15.5 million, or 10.4%.
Freight revenues in the fourth quarter of 2009 decreased by $13.1 million, or 13.8%, to $82.1 million, compared with $95.2 million in the fourth quarter of 2008. Freight revenues were increased by $3.2 million due to the appreciation of the Australian and Canadian dollars. Excluding currency, GWI’s freight revenues decreased by $16.3 million, or 17.2%.
Average freight revenues per carload increased 3.5% in the fourth quarter of 2009. During the fourth quarter of 2009, average revenues per carload were negatively impacted by lower fuel surcharges, which reduced average revenues per carload by 5.3%, and positively impacted by the appreciation of the Canadian and Australian dollars and changes in commodity mix that increased average revenue per carload by 3.5% and 0.6%, respectively. Excluding these factors, average revenues per carload increased 4.7%.
In the United States and Canada, excluding currency effects, changes in commodity mix and changes in fuel surcharges, average revenues per carload increased 4.4% in the fourth quarter of 2009 compared with the fourth quarter of 2008. 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 average revenues per carload by approximately 1%.
GWI’s non-freight revenues in the fourth quarter of 2009 increased $3.9 million, or 7.1%, to $57.8 million compared with $54.0 million in the fourth quarter of 2008. The increase in non-freight revenues included a $4.4 million increase due to the appreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar, partially offset by a $1.3 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI’s non-freight revenues increased $0.8 million, or 1.5%.
GWI's operating income in the fourth quarter of 2009 decreased $2.9 million, or 9.6%, to $27.5 million, compared with $30.4 million in the fourth quarter of 2008. The operating ratio was 80.4% in the fourth quarter of 2009, compared with an operating ratio of 79.6% in the fourth quarter of 2008. Operating income in the fourth quarter of 2009 included $0.8 million of net gains on the sale of assets, compared with $3.9 million of net gains on the sale of assets and $2.0 million of acquisition-related expenses in the fourth quarter of 2008. Excluding net gains on asset sales and acquisition-related expenses, GWI's operating ratio was 80.9% in the fourth quarter of 2009 and 2008. (1)
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO of GWI, commented, “Our revenues in the fourth quarter decreased 6% compared to the fourth quarter of 2008, but were stable compared to the third quarter of 2009. Despite the revenue decline from last year, we continued to manage our costs well and maintained an operating ratio of 81%. We also experienced a few areas of unexpected revenue strength in the fourth quarter of 2009, including grain shipments on the Gulf Coast and steel pipe in the Southeastern United States.”
Mr. Hellmann continued, “In 2009, we generated $75 million of free cash flow, which was the second best performance in Company history. In the context of the recession, we think this is an important accomplishment. With $106 million of cash on our balance sheet and an undrawn revolving credit facility, we continue to actively evaluate acquisition and investment opportunities in both North America and Australia.”
Free Cash Flow from Continuing Operations (2)
($ in millions) | Year Ended | |||||||
December 31, | ||||||||
2009 | 2008 | |||||||
Net cash provided by operating activities | $ | 126.9 | $ | 128.7 | ||||
Net cash used in investing activities | (58.3 | ) | (413.8 | ) | ||||
Net cash paid/(received) for acquisitions/divestitures (a) | 6.4 | 345.5 | ||||||
Contingent consideration held in escrow (b) | — | 7.5 | ||||||
Free cash flow (2) | $ | 75.0 | $ | 67.9 |
(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, 3) $4.4 million in cash paid to purchase the remaining 12.6% interest in Maryland Midland Railway, Inc. (Maryland Midland) and 4) $3.8 million in cash received from the sale of Bolivia. The 2008 period includes 1) $212.6 million in net cash paid for the acquisition of the 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 RRF and 5) $3.7 million for final working capital adjustments related to the December 2007 acquisition of Maryland Midland. |
(b) | Includes $7.5 million of contingent consideration placed into escrow by GWI that was paid to the seller of OCR in 2009 upon satisfaction of certain conditions. |
GWI’s continuing operations generated free cash flow of $75.0 million and $67.9 million for the years ended December 31, 2009 and 2008, respectively. For the year ended December 31, 2009, changes in working capital increased net cash flow from operating activities by $3.8 million. For the year ended December 31, 2008, changes in working capital increased net cash flow from operating activities by $7.3 million.
Net cash used in investing activities for the year ended December 31, 2009, included $88.9 million in purchases of property and equipment, partially offset by $24.6 million in grant proceeds received from outside parties for the funding of capital projects and $12.3 million from sales of assets and insurance proceeds. Net cash used in investing activities in the year 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.
Conference Call and Webcast Details
As previously announced, GWI's conference call to discuss financial results for the fourth quarter will be held Monday, February 8, 2010, at 11 a.m. EST. The dial-in number for the teleconference is (800) 288-8960; outside U.S., call (612) 332-0107, 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 "Q4 2009 Earnings Announcement 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 p.m. EST on February 8, 2010, until the following quarter's results are posted. Telephone replay is available for 30 days beginning at 1 p.m. EST on February 8, 2010, by dialing (800) 475-6701 (or outside U.S., dial 320-365-3844). The access code is 121468.
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 approximately 6,000 miles of owned and leased track and approximately 3,400 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
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(In thousands, except per share amounts)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
OPERATING REVENUES | $ | 139,907 | $ | 149,156 | $ | 544,866 | $ | 601,984 | ||||||||
OPERATING EXPENSES | 112,440 | 118,772 | 445,544 | 486,053 | ||||||||||||
INCOME FROM OPERATIONS | 27,467 | 30,384 | 99,322 | 115,931 | ||||||||||||
GAIN ON SALE OF INVESTMENT IN BOLIVIA | (36 | ) | — | 391 | — | |||||||||||
INTEREST INCOME | 388 | 340 | 1,065 | 2,093 | ||||||||||||
INTEREST EXPENSE | (6,252 | ) | (8,406 | ) | (26,902 | ) | (20,610 | ) | ||||||||
OTHER INCOME/(EXPENSE), NET | 206 | (90 | ) | 2,115 | 470 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 21,773 | 22,228 | 75,991 | 97,884 | ||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 3,519 | (3,172 | ) | 15,916 | 24,909 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 18,254 | 25,400 | 60,075 | 72,975 | ||||||||||||
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 50 | (14 | ) | 1,398 | (501 | ) | ||||||||||
NET INCOME | 18,304 | 25,386 | 61,473 | 72,474 | ||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | — | (97 | ) | (146 | ) | (243 | ) | |||||||||
NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. | $ | 18,304 | $ | 25,289 | $ | 61,327 | $ | 72,231 | ||||||||
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: | ||||||||||||||||
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.47 | $ | 0.78 | $ | 1.66 | $ | 2.28 | ||||||||
BASIC EARNINGS/(LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | — | — | 0.04 | (0.02 | ) | |||||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.48 | $ | 0.78 | $ | 1.70 | $ | 2.26 | ||||||||
WEIGHTED AVERAGE SHARES - BASIC | 38,444 | 32,404 | 36,146 | 31,922 | ||||||||||||
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: | ||||||||||||||||
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.44 | $ | 0.70 | $ | 1.54 | $ | 2.00 | ||||||||
DILUTED EARNINGS/(LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | — | — | 0.04 | (0.01 | ) | |||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.44 | $ | 0.70 | $ | 1.57 | $ | 1.99 | ||||||||
WEIGHTED AVERAGE SHARES - DILUTED | 41,338 | 36,371 | 38,974 | 36,348 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
(In thousands)
(unaudited)
December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 105,707 | $ | 31,693 | ||||
Accounts receivable, net | 109,931 | 120,874 | ||||||
Materials and supplies | 8,939 | 7,708 | ||||||
Prepaid expenses and other | 13,223 | 12,270 | ||||||
Deferred income tax assets, net | 15,161 | 18,101 | ||||||
Current assets of discontinued operations | 282 | 1,676 | ||||||
Total current assets | 253,243 | 192,322 | ||||||
PROPERTY AND EQUIPMENT, net | 1,024,297 | 998,995 | ||||||
GOODWILL | 161,208 | 150,958 | ||||||
INTANGIBLE ASSETS, net | 244,464 | 223,442 | ||||||
DEFERRED INCOME TAX ASSETS, net | 3,122 | — | ||||||
OTHER ASSETS, net | 10,698 | 21,564 | ||||||
Total assets | $ | 1,697,032 | $ | 1,587,281 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt | $ | 27,818 | $ | 26,034 | ||||
Accounts payable | 104,813 | 124,162 | ||||||
Accrued expenses | 38,181 | 37,903 | ||||||
Deferred income tax liabilities, net | 971 | 192 | ||||||
Current liabilities of discontinued operations | 11 | 1,121 | ||||||
Total current liabilities | 171,794 | 189,412 | ||||||
LONG-TERM DEBT, less current portion | 421,616 | 535,231 | ||||||
DEFERRED INCOME TAX LIABILITIES, net | 244,924 | 234,979 | ||||||
DEFERRED ITEMS - grants from outside parties | 146,345 | 113,302 | ||||||
OTHER LONG-TERM LIABILITIES | 23,476 | 34,943 | ||||||
TOTAL EQUITY | 688,877 | 479,414 | ||||||
Total liabilities and equity | $ | 1,697,032 | $ | 1,587,281 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(In thousands)
(unaudited)
Twelve Months Ended December 31, | ||||||||
2009 | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 61,473 | $ | 72,474 | ||||
Adjustments to reconcile net income to net cash provided | ||||||||
by operating activities: | ||||||||
(Income)/loss from discontinued operations, net of tax | (1,398 | ) | 501 | |||||
Depreciation and amortization | 48,110 | 40,507 | ||||||
Compensation cost related to equity awards | 6,031 | 5,734 | ||||||
Excess tax benefits from share-based compensation | (1,234 | ) | (1,829 | ) | ||||
Deferred income taxes | 7,558 | 12,205 | ||||||
Net loss/(gain) on sale and impairment of assets | 3,953 | (7,708 | ) | |||||
Gain on insurance recoveries | (3,143 | ) | (399 | ) | ||||
Insurance proceeds received | 2,175 | — | ||||||
Gain on sale of investment in Bolivia | (391 | ) | — | |||||
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions: | ||||||||
Accounts receivable, net | 16,082 | 11,541 | ||||||
Materials and supplies | (170 | ) | (812 | ) | ||||
Prepaid expenses and other | (622 | ) | 6,597 | |||||
Accounts payable and accrued expenses | (10,940 | ) | (18,089 | ) | ||||
Other assets and liabilities, net | (550 | ) | 8,024 | |||||
Net cash provided by operating activities from continuing operations | 126,934 | 128,746 | ||||||
Net cash used in operating activities from discontinued operations | (746 | ) | (3,484 | ) | ||||
Net cash provided by operating activities | 126,188 | 125,262 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (88,865 | ) | (97,853 | ) | ||||
Grant proceeds from outside parties | 24,575 | 28,551 | ||||||
Cash paid for acquisitions, net | (10,141 | ) | (345,477 | ) | ||||
Contingent consideration held in escrow | — | (7,500 | ) | |||||
Insurance proceeds for the replacement of assets | 3,996 | 419 | ||||||
Proceeds from sale of investment in Bolivia | 3,778 | — | ||||||
Proceeds from disposition of property and equipment | 8,313 | 8,081 | ||||||
Net cash used in investing activities from continuing operations | (58,344 | ) | (413,779 | ) | ||||
Net cash provided by investing activities from discontinued operations | 1,774 | 450 | ||||||
Net cash used in investing activities | (56,570 | ) | (413,329 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments on long-term borrowings, including capital leases | (214,153 | ) | (193,051 | ) | ||||
Proceeds from issuance of long-term debt | 98,000 | 468,076 | ||||||
Debt issuance costs | — | (4,340 | ) | |||||
Net proceeds from employee stock purchases | 5,765 | 9,314 | ||||||
Treasury stock purchases | (434 | ) | (2,355 | ) | ||||
Stock issuance proceeds, net of stock issuance costs | 106,614 | — | ||||||
Excess tax benefits from share-based compensation | 1,234 | 1,829 | ||||||
Net cash (used in)/provided by financing activities from continuing operations | (2,974 | ) | 279,473 | |||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 6,832 | (5,973 | ) | |||||
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS | 538 | (424 | ) | |||||
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 74,014 | (14,991 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 31,693 | 46,684 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 105,707 | $ | 31,693 |
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 82,089 | 58.7 | % | $ | 95,188 | 63.8 | % | ||||||||
Non-freight | 57,818 | 41.3 | % | 53,968 | 36.2 | % | ||||||||||
Total revenues | $ | 139,907 | 100.0 | % | $ | 149,156 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 47,366 | 33.9 | % | $ | 50,288 | 33.7 | % | ||||||||
Equipment rents | 7,032 | 5.0 | % | 8,908 | 6.0 | % | ||||||||||
Purchased services | 12,119 | 8.7 | % | 10,567 | 7.1 | % | ||||||||||
Depreciation and amortization | 12,637 | 9.0 | % | 11,636 | 7.8 | % | ||||||||||
Diesel fuel used in operations | 9,273 | 6.6 | % | 11,702 | 7.8 | % | ||||||||||
Diesel fuel sold to third parties | 4,304 | 3.1 | % | 5,731 | 3.8 | % | ||||||||||
Casualties and insurance | 4,135 | 3.0 | % | 3,295 | 2.2 | % | ||||||||||
Materials | 5,283 | 3.8 | % | 7,330 | 4.9 | % | ||||||||||
Net (gain)/loss on sale and impairment of assets | ( 793 | ) | (0.6 | )% | (3,891 | ) | (2.6 | )% | ||||||||
Gain on insurance recoveries | 1 | 0.0 | % | — | 0.0 | % | ||||||||||
Other expenses | 11,083 | 7.9 | % | 13,206 | 8.9 | % | ||||||||||
Total operating expenses | $ | 112,440 | 80.4 | % | $ | 118,772 | 79.6 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | $ | 42,912 | 30.7 | % | $ | 47,073 | 31.6 | % | ||||||||
Maintenance of ways and structures | 12,133 | 8.7 | % | 14,831 | 9.9 | % | ||||||||||
Maintenance of equipment | 16,951 | 12.1 | % | 18,232 | 12.2 | % | ||||||||||
Diesel fuel sold to third parties | 4,304 | 3.1 | % | 5,731 | 3.8 | % | ||||||||||
General and administrative | 24,295 | 17.4 | % | 25,160 | 16.9 | % | ||||||||||
Net (gain)/loss on sale and impairment of assets | ( 793 | ) | (0.6 | )% | (3,891 | ) | (2.6 | )% | ||||||||
Gain on insurance recoveries | 1 | 0.0 | % | — | 0.0 | % | ||||||||||
Depreciation and amortization | 12,637 | 9.0 | % | 11,636 | 7.8 | % | ||||||||||
Total operating expenses | $ | 112,440 | 80.4 | % | $ | 118,772 | 79.6 | % |
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Twelve Months Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||
Revenues: | ||||||||||||||||
Freight | $ | 333,711 | 61.2 | % | $ | 369,937 | 61.5 | % | ||||||||
Non-freight | 211,155 | 38.8 | % | 232,047 | 38.5 | % | ||||||||||
Total revenues | $ | 544,866 | 100.0 | % | $ | 601,984 | 100.0 | % | ||||||||
Operating Expense Comparison: | ||||||||||||||||
Natural Classification | ||||||||||||||||
Labor and benefits | $ | 191,479 | 35.1 | % | $ | 191,108 | 31.7 | % | ||||||||
Equipment rents | 29,272 | 5.4 | % | 35,170 | 5.8 | % | ||||||||||
Purchased services | 42,435 | 7.8 | % | 46,169 | 7.7 | % | ||||||||||
Depreciation and amortization | 48,110 | 8.8 | % | 40,507 | 6.7 | % | ||||||||||
Diesel fuel used in operations | 33,538 | 6.2 | % | 61,013 | 10.1 | % | ||||||||||
Diesel fuel sold to third parties | 14,400 | 2.7 | % | 34,624 | 5.8 | % | ||||||||||
Casualties and insurance | 14,842 | 2.7 | % | 15,136 | 2.5 | % | ||||||||||
Materials | 21,835 | 4.0 | % | 26,138 | 4.3 | % | ||||||||||
Net (gain)/loss on sale and impairment of assets | 3,953 | 0.7 | % | (7,708 | ) | (1.2 | )% | |||||||||
Gain on insurance recoveries | (3,143 | ) | (0.6 | )% | (399 | ) | (0.1 | )% | ||||||||
Restructuring charges | 2,288 | 0.4 | % | — | 0.0 | % | ||||||||||
Other expenses | 46,535 | 8.6 | % | 44,295 | 7.4 | % | ||||||||||
Total operating expenses | $ | 445,544 | 81.8 | % | $ | 486,053 | 80.7 | % | ||||||||
Functional Classification | ||||||||||||||||
Transportation | $ | 167,413 | 30.8 | % | $ | 199,702 | 33.1 | % | ||||||||
Maintenance of ways and structures | 51,713 | 9.5 | % | 53,529 | 8.9 | % | ||||||||||
Maintenance of equipment | 66,655 | 12.2 | % | 72,186 | 12.0 | % | ||||||||||
Diesel fuel sold to third parties | 14,400 | 2.7 | % | 34,624 | 5.8 | % | ||||||||||
General and administrative | 94,155 | 17.3 | % | 93,612 | 15.5 | % | ||||||||||
Net (gain)/loss on sale and impairment of assets | 3,953 | 0.7 | % | (7,708 | ) | (1.2 | )% | |||||||||
Gain on insurance recoveries | (3,143 | ) | (0.6 | )% | (399 | ) | (0.1 | )% | ||||||||
Restructuring charges | 2,288 | 0.4 | % | — | 0.0 | % | ||||||||||
Depreciation and amortization | 48,110 | 8.8 | % | 40,507 | 6.7 | % | ||||||||||
Total operating expenses | $ | 445,544 | 81.8 | % | $ | 486,053 | 80.7 | % |
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 | |||||||||||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Coal, Coke & Ores | $ | 16,982 | 46,892 | $ | 362 | $ | 22,171 | 58,490 | $ | 379 | ||||||||||||||
Pulp & Paper | 12,542 | 20,869 | 601 | 16,362 | 27,988 | 585 | ||||||||||||||||||
Minerals & Stone | 10,484 | 31,969 | 328 | 11,217 | 37,500 | 299 | ||||||||||||||||||
Farm & Food Products | 8,886 | 17,628 | 504 | 9,720 | 21,903 | 444 | ||||||||||||||||||
Chemicals-Plastics | 8,469 | 12,079 | 701 | 8,417 | 12,328 | 683 | ||||||||||||||||||
Metals | 7,493 | 15,424 | 486 | 9,353 | 19,206 | 487 | ||||||||||||||||||
Lumber & Forest Products | 6,171 | 14,518 | 425 | 7,257 | 16,486 | 440 | ||||||||||||||||||
Petroleum Products | 5,158 | 7,233 | 713 | 4,873 | 7,123 | 684 | ||||||||||||||||||
Autos & Auto Parts | 1,484 | 2,352 | 631 | 1,109 | 1,912 | 580 | ||||||||||||||||||
Other | 4,420 | 18,507 | 239 | 4,709 | 21,872 | 215 | ||||||||||||||||||
Totals | $ | 82,089 | 187,471 | $ | 438 | $ | 95,188 | 224,808 | $ | 423 |
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)
Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | |||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||
Coal, Coke & Ores | $ | 70,944 | 197,164 | $ | 360 | $ | 71,628 | 193,703 | $ | 370 | ||||||||||||||
Pulp & Paper | 50,882 | 89,217 | 570 | 72,353 | 119,613 | 605 | ||||||||||||||||||
Minerals & Stone | 40,031 | 134,999 | 297 | 45,126 | 143,991 | 313 | ||||||||||||||||||
Farm & Food Products | 37,489 | 83,299 | 450 | 39,011 | 73,432 | 531 | ||||||||||||||||||
Metals | 33,137 | 68,410 | 484 | 42,076 | 84,817 | 496 | ||||||||||||||||||
Chemicals-Plastics | 32,956 | 49,008 | 672 | 32,538 | 48,501 | 671 | ||||||||||||||||||
Lumber & Forest Products | 27,181 | 61,245 | 444 | 33,215 | 74,665 | 445 | ||||||||||||||||||
Petroleum Products | 19,804 | 28,553 | 694 | 18,503 | 27,344 | 677 | ||||||||||||||||||
Autos & Auto Parts | 4,967 | 8,036 | 618 | 6,731 | 11,112 | 606 | ||||||||||||||||||
Other | 16,320 | 67,255 | 243 | 8,756 | 37,666 | 232 | ||||||||||||||||||
Totals | $ | 333,711 | 787,186 | $ | 424 | $ | 369,937 | 814,844 | $ | 454 |
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 December 31, 2009, is presented excluding net gain on sale of assets and for the three months ended December 31, 2008, is presented excluding net gain on the sale of assets and acquisition-related expense. 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 December 31, 2009 and 2008 ($ in millions):
2009 | Total Revenues | Total Operating Expenses | Operating Income | Operating Ratio | ||||||||||||
As Reported | $ | 139.9 | $ | 112.4 | $ | 27.5 | 80.4 | % | ||||||||
Net gain on sale of assets | — | 0.8 | (0.8 | ) | ||||||||||||
Adjusted | $ | 139.9 | $ | 113.2 | $ | 26.7 | 80.9 | % |
Total | ||||||||||||||||
Operating | Operating | Operating | ||||||||||||||
2008 | Total Revenues | Expenses | Income | Ratio | ||||||||||||
As Reported | $ | 149.2 | $ | 118.8 | $ | 30.4 | 79.6 | % | ||||||||
Net gain on sale of assets | — | 3.9 | (3.9 | ) | ||||||||||||
Acquisition-related expense | — | (2.0 | ) | 2.0 | ||||||||||||
Adjusted | $ | 149.2 | $ | 120.6 | $ | 28.5 | 80.9 | % |
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 and contingent consideration held in escrow. 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, | ||||||||
2009 | 2008 | |||||||
Net cash provided by operating activities from continuing operations | $ | 126.9 | $ | 128.7 | ||||
Net cash used in investing activities from continuing operations | (58.3 | ) | (413.8 | ) | ||||
Net cash paid/(received) for acquisitions/divestitures | 6.4 | 345.5 | ||||||
Contingent consideration held in escrow | — | 7.5 | ||||||
Free cash flow | $ | 75.0 | $ | 67.9 |