Exhibit 99.1
Genesee & Wyoming Reports Results for the Third Quarter of 2010
GREENWICH, Conn.--(BUSINESS WIRE)--November 2, 2010--Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the third quarter of 2010 of $24.8 million, compared with net income of $21.7 million in the third quarter of 2009. GWI's diluted earnings per share (EPS) in the third quarter of 2010 were $0.59 with 41.9 million weighted average shares outstanding, compared with diluted EPS of $0.53 with 41.2 million weighted average shares outstanding in the third quarter of 2009.
GWI’s income from continuing operations in the third quarter of 2010 was $22.1 million, or $0.53 per diluted share, compared with income from continuing operations of $19.7 million, or $0.48 per diluted share, in the third quarter of 2009.
In the third quarter of 2010, GWI recognized income from net insurance proceeds of $2.8 million ($2.8 million after-tax, or $0.07 per diluted share) in discontinued operations related to damage caused by a hurricane in our former Mexico region in 2005.
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO commented, “GWI’s financial results for the third quarter of 2010 were strong, as revenues increased 15% and we maintained an adjusted operating ratio of 76.5%. Our adjusted operating income increased 29% and we have now generated a Company-record $99 million of free cash flow over the first nine months of 2010. For the past seven months, our traffic has been generally stable, a trend that we expect to continue in our same railroad operations through year-end.” (1)(2)
“We anticipate completing the acquisition of FreightLink in November, following which our Australian business will represent approximately one-third of GWI revenues. The outlook for our Australian business remains positive, as we are expecting a good South Australian grain harvest, improving intermodal traffic and increasing shipments of ores and minerals as we enter 2011.”
Results from Continuing Operations
In the third quarter of 2010, GWI's total revenues increased $20.0 million, or 14.7%, to $156.5 million, compared with $136.4 million in the third quarter of 2009. During the third quarter of 2010, the appreciation of the Australian and Canadian dollars versus the U.S. dollar, partially offset by the depreciation of the Euro versus the U.S. dollar, increased revenues by $1.9 million. Excluding the impact from foreign currency, GWI’s revenues increased $18.1 million, or 13.3%.
Freight revenues in the third quarter of 2010 increased by $12.7 million, or 15.3%, to $95.9 million, compared with $83.2 million in the third quarter of 2009. Excluding the net impact of foreign currency appreciation, GWI’s freight revenues increased by $11.8 million, or 14.2%.
GWI's traffic in the third quarter of 2010 was 217,390 carloads, an increase of 20,303 carloads, or 10.3%, compared with the third quarter of 2009. The traffic increase in the third quarter of 2010 was principally due to increases of 10,216 carloads of farm and foods traffic, 3,088 carloads of chemicals traffic and 2,145 carloads of other commodity traffic. All other traffic increased by a net 4,854 carloads.
Average freight revenues per carload increased 4.5% in the third quarter of 2010. The appreciation of the Australian and Canadian dollars versus the U.S. dollar, higher fuel surcharges and changes in commodity mix increased average revenues per carload by 1.1%, 1.5% and 1.7%, respectively. Excluding these factors, average revenues per carload increased 0.2%. Average revenues per carload were negatively impacted by changes in the mix of customers within certain commodity groups.
GWI’s non-freight revenues in the third quarter of 2010 increased $7.3 million, or 13.8%, to $60.6 million compared with $53.3 million in the third quarter of 2009. Excluding the net impact from foreign currency, GWI’s non-freight revenues increased $6.3 million, or 11.8%, primarily due to higher switching revenues and other operating income.
GWI's operating income in the third quarter of 2010 was $38.5 million, an increase of $7.4 million compared with $31.1 million in the third quarter of 2009. The operating ratio was 75.4% in the third quarter of 2010 compared with an operating ratio of 77.2% in the third quarter of 2009. In the third quarter of 2010, operating income benefited from $2.4 million in gains on the sale of assets and the reversal of $2.3 million of restructuring charges associated with the second quarter 2009 impairment of the Huron Central Railway, partially offset by FreightLink acquisition-related expenses of $3.0 million. In the third quarter of 2009, operating income benefited by a $2.6 million gain on insurance recoveries and a $0.6 million gain on the sale of assets, partially offset by a $0.7 million impairment of assets. Excluding these items, GWI's adjusted operating ratio was 76.5% in the third quarter of 2010, compared with an adjusted operating ratio of 79.1% in the third quarter of 2009, an improvement of 2.6 percentage points. (1)
Nine Month Consolidated Results – Continuing Operations
For the nine months ended September 30, 2010, GWI reported income from continuing operations of $58.7 million, a 40.4% increase over $41.8 million for the nine months ended September 30, 2009. GWI's diluted earnings per share from continuing operations were $1.41 for the nine months ended September 30, 2010 (with 41.7 million weighted average shares outstanding), a 29.4% increase over diluted earnings per share from continuing operations of $1.09 for the nine months ended September 30, 2009 (with 38.2 million weighted average shares outstanding).
GWI’s 2009 results included a net tax benefit of $8.7 million (or $0.23 per diluted share) associated with the short line tax credit that expired December 31, 2009 and a net loss of $5.4 million (or $0.14 per diluted share) from the write-down of HCRY’s non-current assets and related charges.
Free Cash Flow from Continuing Operations (2) | |||||||||||||
($ in millions) | Nine Months Ended | ||||||||||||
September 30, | |||||||||||||
2010 | 2009 | ||||||||||||
| |||||||||||||
Net cash provided by operating activities | $ | 127.2 | $ | 88.4 | |||||||||
Net cash used in investing activities | (28.1 | ) | (35.3 | ) | |||||||||
Net cash (received)/paid for divestitures/acquisitions (a) | (0.2 | ) | 2.0 | ||||||||||
Free cash flow (2) | $ | 98.9 | $ | 55.1 | |||||||||
(a) | The 2010 period included $0.2 million in net cash received from the sale of our investment in South America. The 2009 period included: 1) $4.8 million in net cash paid for final working capital adjustments related to the acquisition of the Ohio Central Railroad System, 2) $1.0 million in net cash paid in contingent consideration related to the Rotterdam Rail Feeding B.V. acquisition and 3) $3.8 million in cash received from the sale of our investment in Bolivia. |
GWI’s continuing operations generated free cash flow of $98.9 million and $55.1 million for the nine months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010, changes in working capital increased net cash flow from operating activities by $11.9 million. For the nine months ended September 30, 2009, changes in working capital increased net cash flow from operating activities by $3.8 million.
Net cash used in investing activities for the nine months ended September 30, 2010, included $57.6 million in purchases of property and equipment, partially offset by $25.2 million in grant proceeds received from outside parties and $4.1 million from sales of assets. Net cash used in investing activities for the nine months ended September 30, 2009, included $60.0 million in purchases of property and equipment, partially offset by $16.5 million in cash received from outside parties and $10.2 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 third quarter of 2010 will be held Tuesday, November 2, 2010, at 11 a.m. EDT. The dial-in number for the teleconference is (800) 288-8968; outside U.S., call (612) 332-0226, 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 p.m. EDT on November 2, 2010, until the following quarter’s results are posted. Telephone replay is available for 30 days beginning at 1 p.m. EDT on November 2, 2010, by dialing (800) 475-6701 (or outside U.S., dial 320-365-3844). The access code is 121476.
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 3,400 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 are based on current expectations, estimates and projections about our industry, management's beliefs, and assumptions made by management. Words such as "anticipates," "intends," "plans," "believes," "seeks," "expects," "estimates," "trends," "outlook," variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions, including the following risks applicable to all of our operations: risks related to the acquisition and integration of railroads; economic, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we are subject; increased competition in relevant markets; funding needs and financing sources; unpredictability of fuel costs; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others including but not limited to, those noted in our 2009 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this press release or as of the date they were made. GWI disclaims any intention to update the current expectations or forward-looking statements contained in this press release.
(1) The operating incomes and operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating income and operating ratios calculated using operating expenses and revenues, calculated on a basis consistent with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including reconciliation to the operating income and 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 Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and 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.
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 | ||||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
OPERATING REVENUES | $ | 156,492 | $ | 136,446 | $ | 460,524 | $ | 404,959 | ||||||||||||||||||||
OPERATING EXPENSES | 117,980 | 105,331 | 354,033 | 333,104 | ||||||||||||||||||||||||
INCOME FROM OPERATIONS | 38,512 | 31,115 | 106,491 | 71,855 | ||||||||||||||||||||||||
GAIN ON SALE OF INVESTMENT IN BOLIVIA | - | 427 | - | 427 | ||||||||||||||||||||||||
INTEREST INCOME | 703 | 252 | 1,597 | 677 | ||||||||||||||||||||||||
INTEREST EXPENSE | (5,474 | ) | (6,376 | ) | (16,247 | ) | (20,650 | ) | ||||||||||||||||||||
OTHER INCOME, NET | 418 | 665 | 693 | 1,909 | ||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 34,159 | 26,083 | 92,534 | 54,218 | ||||||||||||||||||||||||
PROVISION FOR INCOME TAXES | 12,109 | 6,361 | 33,817 | 12,397 | ||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 22,050 | 19,722 | 58,717 | 41,821 | ||||||||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | 2,745 | 2,017 | 2,673 | 1,348 | ||||||||||||||||||||||||
NET INCOME | 24,795 | 21,739 | 61,390 | 43,169 | ||||||||||||||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | - | (78 | ) | - | (146 | ) | ||||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. | $ | 24,795 | $ | 21,661 | $ | 61,390 | $ | 43,023 | ||||||||||||||||||||
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO
| ||||||||||||||||||||||||||||
BASIC EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.57 | $ | 0.51 | $ | 1.51 | $ | 1.18 | ||||||||||||||||||||
BASIC EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS | 0.07 | 0.05 | 0.07 | 0.04 | ||||||||||||||||||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.64 | $ | 0.56 | $ | 1.58 | $ | 1.22 | ||||||||||||||||||||
WEIGHTED AVERAGE SHARES - BASIC | 38,940 | 38,388 | 38,774 | 35,328 | ||||||||||||||||||||||||
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO
| ||||||||||||||||||||||||||||
DILUTED EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | 0.53 | $ | 0.48 | $ | 1.41 | $ | 1.09 | ||||||||||||||||||||
DILUTED EARNINGS PER COMMON SHARE FROM DISCONTINUED OPERATIONS | 0.07 | 0.05 | 0.06 | 0.04 | ||||||||||||||||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.59 | $ | 0.53 | $ | 1.47 | $ | 1.13 | ||||||||||||||||||||
WEIGHTED AVERAGE SHARES - DILUTED | 41,894 | 41,183 | 41,675 | 38,163 | ||||||||||||||||||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
September 30, | December 31, | |||||||||||
ASSETS | 2010 | 2009 | ||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 196,659 | $ | 105,707 | ||||||||
Accounts receivable, net | 113,646 | 109,931 | ||||||||||
Materials and supplies | 9,578 | 8,939 | ||||||||||
Prepaid expenses and other | 15,851 | 13,223 | ||||||||||
Deferred income tax assets, net | 15,447 | 15,161 | ||||||||||
Current assets of discontinued operations | 107 | 282 | ||||||||||
Total current assets | 351,288 | 253,243 | ||||||||||
PROPERTY AND EQUIPMENT, net | 1,051,973 | 1,024,297 | ||||||||||
GOODWILL | 160,626 | 161,208 | ||||||||||
INTANGIBLE ASSETS, net | 239,128 | 244,464 | ||||||||||
DEFERRED INCOME TAX ASSETS, net | 2,891 | 3,122 | ||||||||||
OTHER ASSETS, net | 12,612 | 10,698 | ||||||||||
Total assets | $ | 1,818,518 | $ | 1,697,032 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Current portion of long-term debt | $ | 28,046 | $ | 27,818 | ||||||||
Accounts payable | 116,729 | 104,813 | ||||||||||
Accrued expenses | 50,092 | 38,181 | ||||||||||
Deferred income tax liabilities, net | 986 | 971 | ||||||||||
Current liabilities of discontinued operations | 2 | 11 | ||||||||||
Total current liabilities | 195,855 | 171,794 | ||||||||||
LONG-TERM DEBT, less current portion | 401,863 | 421,616 | ||||||||||
DEFERRED INCOME TAX LIABILITIES, net | 262,969 | 244,924 | ||||||||||
DEFERRED ITEMS - grants from outside parties | 161,828 | 146,345 | ||||||||||
OTHER LONG-TERM LIABILITIES | 27,212 | 23,476 | ||||||||||
TOTAL EQUITY | 768,791 | 688,877 | ||||||||||
Total liabilities and equity | $ | 1,818,518 | $ | 1,697,032 | ||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 | ||||||||||||||
(in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2010 | 2009 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Net income | $ | 61,390 | $ | 43,169 | ||||||||||
Adjustments to reconcile net income to net cash provided | ||||||||||||||
by operating activities: | ||||||||||||||
Income from discontinued operations, net of tax | (2,673 | ) | (1,348 | ) | ||||||||||
Depreciation and amortization | 37,406 | 35,473 | ||||||||||||
Compensation cost related to equity awards | 5,234 | 4,227 | ||||||||||||
Excess tax benefits from share-based compensation | (1,010 | ) | (1,173 | ) | ||||||||||
Deferred income taxes | 19,277 | 890 | ||||||||||||
Net (gain)/loss on sale and impairment of assets | (4,282 | ) | 4,746 | |||||||||||
Gain on sale of investment in Bolivia | - | (427 | ) | |||||||||||
Gain on insurance recoveries | - | (3,144 | ) | |||||||||||
Insurance proceeds received | - | 2,175 | ||||||||||||
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions: | ||||||||||||||
Accounts receivable, net | (5,656 | ) | 9,481 | |||||||||||
Materials and supplies | (255 | ) | 514 | |||||||||||
Prepaid expenses and other | (2,346 | ) | 1,595 | |||||||||||
Accounts payable and accrued expenses | 20,767 | (7,269 | ) | |||||||||||
Other assets and liabilities, net | (620 | ) | (523 | ) | ||||||||||
Net cash provided by operating activities from continuing operations | 127,232 | 88,386 | ||||||||||||
Net cash provided by/(used in) operating activities from discontinued operations | 913 | (275 | ) | |||||||||||
Net cash provided by operating activities | 128,145 | 88,111 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Purchase of property and equipment | (57,642 | ) | (59,977 | ) | ||||||||||
Grant proceeds from outside parties | 25,198 | 16,530 | ||||||||||||
Cash paid for acquisitions, net of cash acquired | - | (5,780 | ) | |||||||||||
Insurance proceeds for the replacement of assets | - | 3,996 | ||||||||||||
Proceeds from the sale of investments | 208 | 3,771 | ||||||||||||
Proceeds from disposition of property and equipment | 4,090 | 6,196 | ||||||||||||
Net cash used in investing activities from continuing operations | (28,146 | ) | (35,264 | ) | ||||||||||
Net cash provided by investing activities from discontinued operations | 1,831 | 1,774 | ||||||||||||
Net cash used in investing activities | (26,315 | ) | (33,490 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Principal payments on long-term borrowings, including capital leases | (20,433 | ) | (207,221 | ) | ||||||||||
Proceeds from issuance of long-term debt | - | 98,000 | ||||||||||||
Stock issuance proceeds, net of stock issuance costs | - | 106,641 | ||||||||||||
Debt amendment costs | (1,641 | ) | - | |||||||||||
Proceeds from employee stock purchases | 7,259 | 5,307 | ||||||||||||
Treasury stock purchases | (849 | ) | (434 | ) | ||||||||||
Excess tax benefits from share-based compensation | 1,010 | 1,173 | ||||||||||||
Net cash (used in)/provided by financing activities from continuing operations | (14,654 | ) | 3,466 | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 3,680 | 6,130 | ||||||||||||
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS OF DISCONTINUED OPERATIONS | 96 | 108 | ||||||||||||
INCREASE IN CASH AND CASH EQUIVALENTS | 90,952 | 64,325 | ||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | 105,707 | 31,693 | ||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 196,659 | $ | 96,018 |
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | ||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Freight | $ | 95,857 | 61.3 | % | $ | 83,160 | 60.9 | % | ||||||||||||||||||
Non-freight | 60,635 | 38.7 | % | 53,286 | 39.1 | % | ||||||||||||||||||||
Total revenues | $ | 156,492 | 100.0 | % | $ | 136,446 | 100.0 | % | ||||||||||||||||||
Operating Expense Comparison: | ||||||||||||||||||||||||||
Natural Classification | ||||||||||||||||||||||||||
Labor and benefits | $ | 50,840 | 32.5 | % | $ | 45,958 | 33.6 | % | ||||||||||||||||||
Equipment rents | 8,201 | 5.2 | % | 7,447 | 5.5 | % | ||||||||||||||||||||
Purchased services | 13,965 | 8.9 | % | 10,999 | 8.1 | % | ||||||||||||||||||||
Depreciation and amortization | 12,506 | 8.0 | % | 12,050 | 8.8 | % | ||||||||||||||||||||
Diesel fuel used in operations | 10,037 | 6.4 | % | 7,921 | 5.8 | % | ||||||||||||||||||||
Diesel fuel sold to third parties | 4,840 | 3.1 | % | 3,603 | 2.6 | % | ||||||||||||||||||||
Casualties and insurance | 3,104 | 2.0 | % | 4,243 | 3.1 | % | ||||||||||||||||||||
Materials | 5,349 | 3.4 | % | 5,201 | 3.8 | % | ||||||||||||||||||||
Net (gain)/loss on sale and impairment of assets | ( 2,434 | ) | (1.5 | %) | 96 | 0.1 | % | |||||||||||||||||||
Gain on insurance recoveries | - | 0.0 | % | (2,644 | ) | (1.9 | %) | |||||||||||||||||||
Restructuring charges | (2,349 | ) | (1.5 | %) | - | 0.0 | % | |||||||||||||||||||
Other expenses | 13,921 | 8.9 | % | 10,457 | 7.7 | % | ||||||||||||||||||||
Total operating expenses | $ | 117,980 | 75.4 | % | $ | 105,331 | 77.2 | % | ||||||||||||||||||
Functional Classification | ||||||||||||||||||||||||||
Transportation | $ | 46,019 | 29.4 | % | $ | 41,430 | 30.3 | % | ||||||||||||||||||
Maintenance of ways and structures | 13,902 | 8.9 | % | 12,811 | 9.4 | % | ||||||||||||||||||||
Maintenance of equipment | 18,350 | 11.7 | % | 16,201 | 11.9 | % | ||||||||||||||||||||
Diesel fuel sold to third parties | 4,840 | 3.1 | % | 3,603 | 2.6 | % | ||||||||||||||||||||
General and administrative | 27,146 | 17.3 | % | 21,784 | 16.0 | % | ||||||||||||||||||||
Net (gain)/loss on sale and impairment of assets | ( 2,434 | ) | (1.5 | %) | 96 | 0.1 | % | |||||||||||||||||||
Gain on insurance recoveries | - | 0.0 | % | (2,644 | ) | (1.9 | %) | |||||||||||||||||||
Restructuring charges | (2,349 | ) | (1.5 | %) | - | 0.0 | % | |||||||||||||||||||
Depreciation and amortization | 12,506 | 8.0 | % | 12,050 | 8.8 | % | ||||||||||||||||||||
Total operating expenses | $ | 117,980 | 75.4 | % | $ | 105,331 | 77.2 | % | ||||||||||||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | ||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||||
Amount | Revenue | Amount | Revenue | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Freight | $ | 285,617 | 62.0 | % | $ | 251,622 | 62.1 | % | ||||||||||||||||||
Non-freight | 174,907 | 38.0 | % | 153,337 | 37.9 | % | ||||||||||||||||||||
Total revenues | $ | 460,524 | 100.0 | % | $ | 404,959 | 100.0 | % | ||||||||||||||||||
Operating Expense Comparison: | ||||||||||||||||||||||||||
Natural Classification | ||||||||||||||||||||||||||
Labor and benefits | $ | 152,357 | 33.1 | % | $ | 144,112 | 35.6 | % | ||||||||||||||||||
Equipment rents | 24,116 | 5.2 | % | 22,240 | 5.5 | % | ||||||||||||||||||||
Purchased services | 37,257 | 8.1 | % | 30,316 | 7.5 | % | ||||||||||||||||||||
Depreciation and amortization | 37,406 | 8.1 | % | 35,473 | 8.7 | % | ||||||||||||||||||||
Diesel fuel used in operations | 31,679 | 6.9 | % | 24,265 | 6.0 | % | ||||||||||||||||||||
Diesel fuel sold to third parties | 12,543 | 2.7 | % | 10,096 | 2.5 | % | ||||||||||||||||||||
Casualties and insurance | 10,131 | 2.2 | % | 10,707 | 2.6 | % | ||||||||||||||||||||
Materials | 16,830 | 3.7 | % | 16,552 | 4.1 | % | ||||||||||||||||||||
Net (gain)/loss on sale and impairment of assets | (4,282 | ) | (0.9 | %) | 4,746 | 1.2 | % | |||||||||||||||||||
Gain on insurance recoveries | - | 0.0 | % | (3,144 | ) | (0.8 | %) | |||||||||||||||||||
Restructuring charges | (2,349 | ) | (0.5 | %) | 2,288 | 0.6 | % | |||||||||||||||||||
Other expenses | 38,345 | 8.3 | % | 35,453 | 8.8 | % | ||||||||||||||||||||
Total operating expenses | $ | 354,033 | 76.9 | % | $ | 333,104 | 82.3 | % | ||||||||||||||||||
Functional Classification | ||||||||||||||||||||||||||
Transportation | $ | 136,418 | 29.6 | % | $ | 124,501 | 30.7 | % | ||||||||||||||||||
Maintenance of ways and structures | 40,788 | 8.9 | % | 39,580 | 9.8 | % | ||||||||||||||||||||
Maintenance of equipment | 54,151 | 11.8 | % | 49,704 | 12.3 | % | ||||||||||||||||||||
Diesel fuel sold to third parties | 12,543 | 2.7 | % | 10,096 | 2.5 | % | ||||||||||||||||||||
General and administrative | 79,358 | 17.2 | % | 69,860 | 17.3 | % | ||||||||||||||||||||
Net (gain)/loss on sale and impairment of assets | (4,282 | ) | (0.9 | %) | 4,746 | 1.2 | % | |||||||||||||||||||
Gain on insurance recoveries | - | 0.0 | % | (3,144 | ) | (0.8 | %) | |||||||||||||||||||
Restructuring charges | (2,349 | ) | (0.5 | %) | 2,288 | 0.6 | % | |||||||||||||||||||
Depreciation and amortization | 37,406 | 8.1 | % | 35,473 | 8.7 | % | ||||||||||||||||||||
Total operating expenses | $ | 354,033 | 76.9 | % | $ | 333,104 | 82.3 | % | ||||||||||||||||||
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, 2010 | September 30, 2009 | ||||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | ||||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | |||||||||||||||||||
Coal, Coke & Ores | $ | 17,328 | 50,071 | $ | 346 | $ | 17,116 | 49,720 | $ | 344 | |||||||||||||||
Pulp & Paper | 14,381 | 23,823 | 604 | 12,794 | 22,385 | 572 | |||||||||||||||||||
Farm & Food Products | 13,944 | 27,179 | 513 | 8,575 | 16,963 | 506 | |||||||||||||||||||
Minerals & Stone | 12,020 | 37,291 | 322 | 10,867 | 36,459 | 298 | |||||||||||||||||||
Chemicals-Plastics | 10,337 | 14,979 | 690 | 8,251 | 11,891 | 694 | |||||||||||||||||||
Metals | 9,236 | 19,576 | 472 | 8,432 | 18,148 | 465 | |||||||||||||||||||
Lumber & Forest Products | 7,688 | 16,912 | 455 | 7,485 | 16,813 | 445 | |||||||||||||||||||
Petroleum Products | 4,718 | 7,030 | 671 | 4,357 | 6,522 | 668 | |||||||||||||||||||
Autos & Auto Parts | 1,400 | 2,119 | 661 | 1,191 | 1,921 | 620 | |||||||||||||||||||
Other | 4,805 | 18,410 | 261 | 4,092 | 16,265 | 252 | |||||||||||||||||||
Totals | $ | 95,857 | 217,390 | $ | 441 | $ | 83,160 | 197,087 | $ | 422 | |||||||||||||||
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, 2010 | September 30, 2009 | |||||||||||||||||||||||||||||
Freight | Average Revenues | Freight | Average Revenues | |||||||||||||||||||||||||||
Commodity Group | Revenues | Carloads | Per Carload | Revenues | Carloads | Per Carload | ||||||||||||||||||||||||
Coal, Coke & Ores | $ 54,666 | 146,269 | $ 374 | $ 53,962 | 150,272 | $ 359 | ||||||||||||||||||||||||
Farm & Food Products | 41,406 | 81,704 | 507 | 28,603 | 65,671 | 436 | ||||||||||||||||||||||||
Pulp & Paper | 39,791 | 65,699 | 606 | 38,341 | 68,348 | 561 | ||||||||||||||||||||||||
Metals | 31,462 | 63,707 | 494 | 25,644 | 52,986 | 484 | ||||||||||||||||||||||||
Minerals & Stone | 32,796 | 102,330 | 320 | 29,546 | 103,030 | 287 | ||||||||||||||||||||||||
Chemicals-Plastics | 28,929 | 41,872 | 691 | 24,487 | 36,929 | 663 | ||||||||||||||||||||||||
Lumber & Forest Products | 21,817 | 48,336 | 451 | 21,011 | 46,727 | 450 | ||||||||||||||||||||||||
Petroleum Products | 15,008 | 21,332 | 704 | 14,645 | 21,320 | 687 | ||||||||||||||||||||||||
Autos & Auto Parts | 5,423 | 7,811 | 694 | 3,483 | 5,684 | 613 | ||||||||||||||||||||||||
Other | 14,319 | 57,727 | 248 | 11,900 | 48,748 | 244 | ||||||||||||||||||||||||
Totals | $ 285,617 | 636,787 | $ 449 | $ 251,622 | 599,715 | $ 420 |
Reconciliation of non-GAAP Financial Measures
This earnings release contains references to adjusted operating income, 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 each of these non-GAAP financial measures to its most directly comparable U.S. GAAP measure.
Adjusted Operating Income and Adjusted Operating Ratios Description and Discussion
Management views its Operating Income, calculated as Operating Revenues less Operating Expenses, and its Operating Ratio, calculated as Operating Expenses divided by Operating Revenues, as important measures of GWI’s operating performance. Because management believes this information is useful for investors in assessing GWI’s financial results compared with the same period in the prior year, the Operating Income and Operating Ratio for the three months ended September 30, 2010, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding net gain on sale of assets, the reversal of restructuring charges associated with the second quarter 2009 impairment of Huron Central Railway and FreightLink acquisition-related expenses. The Operating Income and Operating Ratio for the three months ended September 30, 2009, used to calculate Adjusted Operating Income and Adjusted Operating Ratio, are presented excluding gain on insurance recoveries and net loss on sale and impairment of assets. The Adjusted Operating Income and 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 Income and Operating Ratios calculated using amounts in accordance with GAAP. Adjusted Operating Income and Adjusted Operating Ratio may be different from similarly-titled non-GAAP financial measures used by other companies.
The following table sets forth a reconciliation of GWI’s Operating Income and Operating Ratios calculated using amounts determined in accordance with GAAP to the Adjusted Operating Income and Adjusted Operating Ratios described above ($ in millions):
Operating | Operating | Operating | Operating | |||||||||||||||||||||||
Three months ended September 30, 2010 | Revenues | Expenses | Income | Ratio | ||||||||||||||||||||||
As reported | $ | 156.5 | $ | 118.0 | $ | 38.5 | 75.4 | % | ||||||||||||||||||
Net gain on sale of assets | - | 2.4 | (2.4 | ) | ||||||||||||||||||||||
Reversal of restructuring charges | - | 2.3 | (2.3 | ) | ||||||||||||||||||||||
FreightLink acquisition-related expenses | - | (3.0 | ) | 3.0 | ||||||||||||||||||||||
Adjusted | $ | 156.5 | $ | 119.7 | $ | 36.7 | 76.5 | % | ||||||||||||||||||
Operating | Operating | Operating | Operating | |||||||||||||||||||||||
Three months ended September 30, 2009 | Revenues | Expenses | Income | Ratio | ||||||||||||||||||||||
As reported | $ | 136.4 | $ | 105.3 | $ | 31.1 | 77.2 | % | ||||||||||||||||||
Gain on insurance recoveries | - | 2.6 | (2.6 | ) | ||||||||||||||||||||||
Net loss on sale and impairment of assets | - | (0.1 | ) | 0.1 | ||||||||||||||||||||||
Adjusted | $ | 136.4 | $ | 107.9 | $ | 28.6 | 79.1 | % | ||||||||||||||||||
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 proceeds received from divestitures and the cost of acquisitions. 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. Free Cash Flow may be different from similarly-titled non-GAAP financial measures used by other companies.
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, | ||||||||||||||
2010 | 2009 | |||||||||||||
Net cash provided by operating activities from | ||||||||||||||
continuing operations | $ | 127.2 | $ | 88.4 | ||||||||||
Net cash used in investing activities from continuing operations | (28.1 | ) | (35.3 | ) | ||||||||||
Net cash (received)/paid for divestitures/acquisitions | (0.2 | ) | 2.0 | |||||||||||
Free cash flow | $ | 98.9 | $ | 55.1 | ||||||||||
CONTACT:
GWI Corporate Communications
Michael Williams, 1-203-629-3722
mwilliams@gwrr.com