Genesee & Wyoming Reports Results for the Second Quarter of 2009
GREENWICH, Conn., July 30, 2009 /PRNewswire-FirstCall/ — Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the second quarter of 2009 of $7.4 million, compared with net income of $15.4 million in the second quarter of 2008. GWI’s diluted earnings per share (EPS) in the second quarter of 2009 were $0.20 with 36.9 million weighted average shares outstanding, compared with diluted EPS of $0.42 with 36.4 million weighted average shares outstanding in the second quarter of 2008.
GWI’s income from continuing operations in the second quarter of 2009 was $8.1 million, or $0.22 per diluted share, compared with income from continuing operations of $16.2 million, or $0.44 per diluted share in the second quarter of 2008.
In June 2009, GWI announced that its subsidiary, Huron Central Railway Inc. (HCRY), intended to discontinue operations in October 2009. As a result, GWI’s results in the second quarter of 2009 included a non-cash write-down of HCRY’s non-current assets of $6.7 million as well as restructuring and related charges of $2.3 million (net after-tax impact of $5.4 million, or $0.15 per diluted share).
GWI’s results for the second quarter of 2009 included gains on the sale of assets and insurance recovery of $2.3 million ($1.5 million after-tax, or $0.04 per diluted share) and legal expenses of $1.4 million ($0.9 million after-tax or $0.02 per diluted share) associated with the resolution of the arbitration related to the Meridian & Bigbee Railroad LLC (M&B) Haulage Agreement. GWI’s results for the second quarter of 2008 included gains on the sale of assets and insurance recovery of $2.5 million ($1.6 million after-tax, or $0.04 per diluted share).
The table below summarizes the financial impact of significant operating items in the second quarter of 2009 and 2008 ($ millions, except per share amounts).
Pre- Tax After- Tax EPS
Amount Amount Impact
---------- ----------- -----------
Q2 2009:
--------
- Gains on the sale of assets
and insurance recovery $2.3 $1.5 $0.04
- M&B legal expenses ($1.4) ($0.9) ($0.02)
- HCRY, net impact ($9.0) ($5.4) ($0.15)
Q2 2008:
--------
- Gains on the sale of assets
and insurance recovery $2.5 $1.6 $0.04
GWI’s results in the second quarter of 2009 benefited $0.07 per diluted share from the positive impact of the U.S. short line tax credit, which is in effect through 2009. Primarily as a result of the short line tax credit and the HCRY-related tax benefit, GWI’s effective income tax rate on its continuing operations decreased from 39.5% in the second quarter of 2008 to 9.7% in the second quarter of 2009.
Continuing Operations
In the second quarter of 2009, GWI’s total revenues decreased $22.7 million, or 14.8%, to $130.1 million, compared with $152.7 million in the second quarter of 2008. Same railroad revenues decreased $37.7 million, or 24.7%, partially offset by revenues of $15.1 million from acquisitions. The decrease in same railroad revenues included a $6.8 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and a $7.8 million decrease due to a decline in third-party fuel sales. Excluding changes from currency and fuel sales, GWI’s same railroad revenues declined $23.1 million, or 15.1%.
Freight revenues in the second quarter of 2009 decreased by $12.1 million, or 13.3%, to $79.3 million, compared with $91.4 million in the second quarter of 2008. Same railroad freight revenues decreased $24.8 million, offset by $12.7 million in freight revenues from acquisitions. Same railroad freight revenues were reduced by $3.3 million due to the depreciation of the Australian and Canadian dollars. Excluding changes from currency, GWI’s same railroad freight revenues decreased by $21.4 million, or 23.4%.
GWI’s traffic in the second quarter of 2009 decreased 8,367 carloads, or 4.3%, compared with the second quarter of 2008. Same railroad traffic decreased by 39,272 carloads, or 20.0%. The same railroad decrease was principally due to declines of 10,156 carloads of pulp and paper traffic, 8,625 carloads of metals traffic and 7,556 carloads of coal, coke and ores traffic. All other same railroad traffic decreased by a net 12,935 carloads.
Average freight revenues per carload declined 9.4% in the second quarter of 2009. Same railroad average revenues per carload declined 8.9%. Same railroad average revenues per carload were negatively impacted by three factors: lower fuel surcharges, the depreciation of the Canadian and Australian dollars and changes in commodity mix, which reduced average revenues per carload by 6.0%, 3.5% and 1.3%, respectively. Excluding these three factors, same railroad average revenues per carload increased 1.9%. 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 3.9%.
GWI’s non-freight revenues in the second quarter of 2009 decreased $10.5 million, or 17.2%, compared with the second quarter of 2008. Same railroad non-freight revenues decreased $13.0 million, or 21.1%, partially offset by $2.4 million in non-freight revenues from acquisitions. The decrease in same railroad non-freight revenues was composed of $3.5 million due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and $7.8 million due to a decline in third-party fuel sales. Excluding changes from currency and fuel sales, GWI’s same railroad non-freight revenues decreased $1.7 million, or 2.8%.
GWI’s operating income in the second quarter of 2009 decreased $15.0 million to $14.6 million, compared with $29.7 million in the second quarter of 2008. The operating ratio was 88.7% in the second quarter of 2009, compared with an operating ratio of 80.6% in the second quarter of 2008. In the second quarter of 2009, operating income was reduced by $9.0 million due to the write-down of HCRY and related effects and $1.4 million due to legal expenses related to the M&B arbitration, partially offset by $2.3 million in gains on the sale of assets and insurance recovery. Operating income in the second quarter of 2008 included $2.5 million in gains on the sale of assets and insurance recovery. Excluding these items, GWI’s operating ratio was 82.5% in the second quarter of 2009, compared with an operating ratio of 82.2% in the second quarter of 2008. (1)
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO of GWI, commented, “Our financial results for the second quarter were consistent with the revised guidance that we provided in early June. Our revenues in the second quarter of 2009 proved to be 6% weaker than the first quarter of 2009, and we consequently implemented additional cost reductions. We now have 13% of our locomotive fleet parked and 10% of our employees furloughed. These and other cost cutting initiatives have enabled us to maintain a core operating ratio in line with last year.”
“In the second quarter, the severe contraction of North American industrial production reduced shipments of economically sensitive commodities such as steel, paper and lumber by 41%, 33% and 23%, respectively, on a same railroad basis. The pending closure of the Huron Central Railway, which principally hauls steel, resulted in a significant one-time charge in the second quarter; however, the long term financial impact is expected to be accretive to both earnings and cash flow starting in the fourth quarter of 2009.”
“Supported by the proceeds from our recent equity offering, we continue to evaluate acquisition and investment opportunities in both North America and Australia. With funds available to make opportunistic investments and our increasingly efficient core operations, we believe that we are well positioned to benefit from any improvement in economic conditions.”
Free Cash Flow from Continuing Operations (2)
($ in millions) Six Months Ended
June 30,
2009 2008
$44.1 $37.6
Net cash provided by
operating activities
Net cash used in investing
activities (26.1) (116.7)
Net cash paid for
acquisitions (a) 5.8 97.6
--- ----
Free cash flow (2) $23.8 $18.5
===== =====
(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) and 2) $1.0 million (or euro 0.8 million) in net cash paid in contingent consideration related to the Rotterdam Rail Feeding B.V. (RRF) acquisition. The 2008 period includes $71.5 million in net cash paid for the acquisition of CAGY Industries Inc. (CAGY), $22.5 million in net cash paid for the acquisition of RRF and $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 $23.8 million and $18.5 million for the six months ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009, changes in working capital reduced net cash flow from operating activities by $6.4 million. For the six months ended June 30, 2008, changes in working capital reduced net cash flow from operating activities by $14.7 million.
Net cash used in investing activities for the six months ended June 30, 2009, included $37.7 million in purchases of property and equipment, partially offset by $8.9 million in cash received from government grants, $5.6 million from sales of assets and $2.9 million from insurance proceeds. Net cash used in investing activities for the six months ended June 30, 2008, included $40.9 million in purchases of property and equipment, partially offset by $16.8 million in cash received from government grants, $4.6 million from sales of assets and $0.4 million from insurance proceeds.
Conference Call and Webcast Details
As previously announced, GWI’s conference call to discuss financial results for the second quarter will be held today at 10:00 a.m. (Eastern Time). The dial-in number for the teleconference is (800) 762-4758; outside U.S., call (480) 629-9035, 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 “Second Quarter 2009 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. today. The webcast audio replay will be available until GWI’s next quarterly earnings release. Telephone replay is available for 30 days beginning at 12 p.m. EDT today by dialing (800) 475-6701 (or outside U.S., dial 320-365-3844). The access code is 974250.
About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands and owns a minority interest in a railroad in Bolivia. Operations currently include 63 railroads organized in nine regions, with more than 6,800 miles of owned and leased track and approximately 3,100 additional miles under track access arrangements. GWI provides rail service at 16 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments; increased competition in relevant markets; funding needs and financing sources; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others. Words such as “anticipates,” “intends,” “plans,” “believes,” “seeks,” “expects,” “estimates,” variations of these words and similar expressions are intended to identify these forward-looking statements. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI’s Forms 10-Q and 10-K which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. GWI disclaims any intention to update the current expectations or forward looking statements contained in this press release.
(1) 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.
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 SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
OPERATING REVENUES $130,055 $152,715 $268,513 $293,396
OPERATING EXPENSES 115,415 123,040 227,773 242,415
------- ------- ------- -------
INCOME FROM OPERATIONS 14,640 29,675 40,740 50,981
INTEREST INCOME 243 571 425 1,156
INTEREST EXPENSE (7,094) (4,044) (14,274) (7,953)
OTHER INCOME, NET 1,202 561 1,244 659
----- --- ----- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 8,991 26,763 28,135 44,843
PROVISION FOR INCOME TAXES 873 10,577 6,036 17,396
--- ------ ----- ------
INCOME FROM CONTINUING
OPERATIONS 8,118 16,186 22,099 27,447
LOSS FROM DISCONTINUED
OPERATIONS, NET OF TAX (636) (735) (669) (1,574)
---- ---- ---- ------
NET INCOME 7,482 15,451 21,430 25,873
LESS: NET INCOME
ATTRIBUTABLE TO
NONCONTROLLING INTEREST (67) (60) (68) (85)
--- --- --- ---
NET INCOME ATTRIBUTABLE TO
GENESEE & WYOMING INC. $7,415 $15,391 $21,362 $25,788
====== ======= ======= =======
BASIC EARNINGS PER SHARE
ATTRIBUTABLE TO
GENESEE & WYOMING INC.
COMMON STOCKHOLDERS:
BASIC EARNINGS PER COMMON
SHARE FROM CONTINUING
OPERATIONS $0.24 $0.51 $0.65 $0.87
BASIC LOSS PER COMMON SHARE
FROM DISCONTINUED OPERATIONS (0.02) (0.02) (0.02) (0.05)
----- ----- ----- -----
BASIC EARNINGS PER COMMON
SHARE $0.22 $0.48 $0.63 $0.82
===== ===== ===== =====
WEIGHTED AVERAGE SHARES -
BASIC 34,053 31,755 33,762 31,626
====== ====== ====== ======
DILUTED EARNINGS PER SHARE
ATTRIBUTABLE TO
GENESEE & WYOMING INC.
COMMON STOCKHOLDERS:
DILUTED EARNINGS PER COMMON
SHARE FROM CONTINUING
OPERATIONS $0.22 $0.44 $0.60 $0.76
DILUTED LOSS PER COMMON
SHARE FROM DISCONTINUED
OPERATIONS (0.02) (0.02) (0.02) (0.04)
----- ----- ----- -----
DILUTED EARNINGS PER COMMON
SHARE $0.20 $0.42 $0.58 $0.71
===== ===== ===== =====
WEIGHTED AVERAGE SHARES -
DILUTED 36,907 36,378 36,641 36,197
====== ====== ====== ======
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
(In thousands)
(unaudited)
June 30, December 31,
ASSETS 2009 2008
---- ----
CURRENT ASSETS:
Cash and cash equivalents $62,417 $31,693
Accounts receivable, net 105,974 120,874
Materials and supplies 7,949 7,708
Prepaid expenses and other 10,582 12,270
Current assets of discontinued operations 1,249 1,676
Deferred income tax assets, net 18,106 18,101
------ ------
Total current assets 206,277 192,322
------- -------
PROPERTY AND EQUIPMENT, net 994,339 998,995
INVESTMENT IN UNCONSOLIDATED AFFILIATES 5,104 4,986
GOODWILL 161,347 150,958
INTANGIBLE ASSETS, net 228,118 223,442
DEFERRED INCOME TAX ASSETS, net 3,118 -
OTHER ASSETS, net 16,286 16,578
------ ------
Total assets $1,614,589 $1,587,281
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $27,154 $26,034
Accounts payable 101,137 124,162
Accrued expenses 36,084 37,903
Current liabilities of discontinued
operations 1,021 1,121
Deferred income tax liabilities, net - 192
- ---
Total current liabilities 165,396 189,412
------- -------
LONG-TERM DEBT, less current portion 433,057 535,231
DEFERRED INCOME TAX LIABILITIES, net 238,450 234,979
DEFERRED ITEMS - grants from outside parties 122,354 113,302
OTHER LONG-TERM LIABILITIES 22,497 34,943
TOTAL EQUITY 632,835 479,414
------- -------
Total liabilities and equity $1,614,589 $1,587,281
========== ==========
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(In thousands)
(unaudited)
Six Months Ended
June 30,
----------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $21,430 $25,873
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss from discontinued operations, net of tax 669 1,574
Depreciation and amortization 23,423 18,652
Compensation cost related to equity awards 2,826 2,598
Excess tax benefits from share-based
compensation (1,114) (1,598)
Deferred income taxes (872) 8,268
Net loss/(gain) on sale and impairment of
assets 4,650 (2,632)
Gain on insurance recovery (500) (399)
Changes in assets and liabilities which
provided (used) cash, net of effect
of acquisitions:
Accounts receivable, net 10,178 (10,276)
Materials and supplies 231 (678)
Prepaid expenses and other 1,807 849
Accounts payable and accrued expenses (18,232) (9,297)
Other assets and liabilities, net (391) 4,698
---- -----
Net cash provided by operating
activities from continuing operations 44,105 37,632
Net cash used in operating activities
from discontinued operations (28) (1,166)
--- ------
Net cash provided by operating
activities 44,077 36,466
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (37,670) (40,891)
Grant proceeds from outside parties 8,895 16,786
Cash paid for acquisitions, net (5,780) (97,616)
Insurance proceeds for the replacement of assets 2,900 419
Proceeds from disposition of property and
equipment 5,551 4,597
----- -----
Net cash used in investing activities
from continuing operations (26,104) (116,705)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings,
including capital leases (200,450) (70,505)
Proceeds from issuance of long-term debt 98,000 135,000
Net proceeds from employee stock purchases 4,437 8,057
Treasury stock purchases (434) (2,355)
Stock issuance proceeds, net of stock issuance
costs 107,027 -
Excess tax benefits from share-based
compensation 1,114 1,598
----- -----
Net cash provided by financing activities
from continuing operations 9,694 71,795
----- ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 3,360 1,947
----- -----
CHANGE IN CASH BALANCES INCLUDED IN CURRENT ASSETS
OF DISCONTINUED OPERATIONS (303) (6)
---- --
DECREASE IN CASH AND CASH EQUIVALENTS 30,724 (6,503)
CASH AND CASH EQUIVALENTS, beginning of period 31,693 46,684
------ ------
CASH AND CASH EQUIVALENTS, end of period $62,417 $40,181
======= =======
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended
June 30,
--------
2009 2008
---- ----
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues:
---------
Freight $79,296 61.0% $91,419 59.9%
Non-freight 50,759 39.0% 61,296 40.1%
------ ---- ------ ----
Total revenues $130,055 100.0% $152,715 100.0%
======== ===== ======== =====
Operating Expense Comparison:
-----------------------------
Natural Classification
----------------------
Labor and benefits $47,968 36.9% $46,294 30.3%
Equipment rents 6,903 5.3% 8,760 5.7%
Purchased services 10,006 7.7% 12,790 8.4%
Depreciation and
amortization 11,917 9.2% 9,453 6.2%
Diesel fuel used in
operations 7,351 5.6% 17,578 11.5%
Diesel fuel sold to third
parties 3,104 2.4% 10,379 6.8%
Casualties and insurance 2,880 2.2% 3,804 2.5%
Materials 5,748 4.4% 6,492 4.3%
Net loss (gain) on sale and
impairment of assets 4,889 3.8% (2,082) (1.4%)
Gain on insurance recovery (500) (0.4%) (399) (0.2%)
Restructuring charges 2,288 1.8% - 0.0%
Other expenses 12,861 9.8% 9,971 6.5%
------ --- ----- ---
Total operating expenses $115,415 88.7% $123,040 80.6%
======== ==== ======== ====
Functional Classification
-------------------------
Transportation 39,942 30.7% $52,876 34.6%
Maintenance of ways and
structures 13,336 10.2% 13,195 8.6%
Maintenance of equipment 16,395 12.6% 17,929 11.8%
Diesel fuel sold to third
parties 3,104 2.4% 10,379 6.8%
General and administrative 24,044 18.4% 21,689 14.2%
Net loss (gain) on sale and
impairment of assets 4,889 3.8% (2,082) (1.4%)
Gain on insurance recovery (500) (0.4%) (399) (0.2%)
Restructuring charges 2,288 1.8% - 0.0%
Depreciation and
amortization 11,917 9.2% 9,453 6.2%
------ --- ----- ---
Total operating expenses $115,415 88.7% $123,040 80.6%
======== ==== ======== ====
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Six Months Ended
June 30,
--------
2009 2008
---- ----
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues:
---------
Freight $168,462 62.7% $179,147 61.1%
Non-freight 100,051 37.3% 114,249 38.9%
------- ---- ------- ----
Total revenues $268,513 100.0% $293,396 100.0%
======== ===== ======== =====
Operating Expense Comparison:
-----------------------------
Natural Classification
----------------------
Labor and benefits $97,932 36.5% $92,411 31.5%
Equipment rents 14,793 5.5% 17,143 5.8%
Purchased services 19,317 7.2% 23,627 8.0%
Depreciation and
amortization 23,423 8.7% 18,652 6.4%
Diesel fuel used in
operations 16,344 6.1% 33,363 11.4%
Diesel fuel sold to third
parties 6,493 2.4% 18,946 6.5%
Casualties and insurance 6,464 2.4% 8,038 2.7%
Materials 11,351 4.2% 12,597 4.3%
Net loss (gain) on sale
and impairment of assets 4,650 1.7% (2,632) (0.9%)
Gain on insurance recovery (500) (0.2%) (399) (0.1%)
Restructuring charges 2,288 0.9% - 0.0%
Other expenses 25,218 9.4% 20,669 7.0%
------ --- ------ ---
Total operating expenses $227,773 84.8% $242,415 82.6%
======== ==== ======== ====
Functional Classification
-------------------------
Transportation $83,071 30.9% $100,732 34.3%
Maintenance of ways and
structures 26,769 10.0% 26,163 8.9%
Maintenance of equipment 33,503 12.5% 35,870 12.2%
Diesel fuel sold to third
parties 6,493 2.4% 18,946 6.5%
General and administrative 48,076 17.9% 45,083 15.3%
Net loss (gain) on sale
and impairment of assets 4,650 1.7% (2,632) (0.9%)
Gain on insurance recovery (500) (0.2%) (399) (0.1%)
Restructuring charges 2,288 0.9% - 0.0%
Depreciation and
amortization 23,423 8.7% 18,652 6.4%
------ --- ------ ---
Total operating expenses $227,773 84.8% $242,415 82.6%
======== ==== ======== ====
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
June 30, 2009 June 30, 2008
------------- -------------
Average Average
Revenues Revenues
Freight Per Freight Per
Commodity Group Revenues Carloads Carload Revenues Carloads Carload
-------- -------- ------- -------- -------- -------
Coal, Coke & Ores $15,729 42,606 $369 $15,488 41,474 $373
Pulp & Paper 12,147 21,877 555 18,798 30,994 607
Minerals & Stone 10,172 35,321 288 11,743 37,041 317
Farm & Food
Products 9,224 22,316 413 10,157 18,436 551
Chemicals-Plastics 7,879 12,230 644 8,049 12,147 663
Metals 7,745 15,500 500 10,675 21,154 505
Lumber & Forest
Products 6,910 15,199 455 8,667 19,503 444
Petroleum Products 4,599 6,911 665 4,241 6,336 669
Autos & Auto Parts 1,188 2,055 578 2,148 3,433 626
Other 3,703 14,174 261 1,453 6,038 241
----- ------ ----- -----
Totals $79,296 188,189 421 $91,419 196,556 465
======= ======= ======= =======
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)
Six Months Ended Six Months Ended
June 30, 2009 June 30, 2008
------------- -------------
Average Average
Revenues Revenues
Freight Per Freight Per
Commodity Group Revenues Carloads Carload Revenues Carloads Carload
-------- -------- ------- -------- -------- -------
Coal, Coke & Ores $36,846 100,552 $366 $32,234 86,954 $371
Pulp & Paper 25,547 45,963 556 36,811 60,920 604
Farm & Food
Products 20,028 48,708 411 21,044 36,368 579
Minerals & Stone 18,679 66,571 281 20,957 68,694 305
Metals 17,213 34,838 494 20,194 40,281 501
Chemicals-Plastics 16,236 25,038 648 15,471 23,524 658
Lumber & Forest
Products 13,526 29,914 452 16,638 37,640 442
Petroleum Products 10,288 14,798 695 9,248 13,787 671
Autos & Auto Parts 2,292 3,763 609 3,903 6,778 576
Other 7,808 32,483 240 2,647 11,037 240
----- ------ ----- ------
Totals $168,463 402,628 418 $179,147 385,983 464
======== ======= ======== =======
Reconciliation of non-GAAP Financial Measures
This earnings release contains adjusted operating ratios and free cash flow, which are “non-GAAP financial measures” as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to its most directly comparable U.S. GAAP measure.
Adjusted Operating Ratios Description and Discussion
Management views its Operating Ratio, calculated as total Operating Expenses divided by total Revenues, as an important measure of GWI’s operating performance. Because management believes this is useful for investors in assessing GWI’s financial results compared with the same period in the prior year, the Adjusted Operating Ratios for the three months ended June 30, 2009 and 2008, are presented excluding the Huron Central Railway Inc. (HCRY) impairment and restructuring and related charges, legal expenses associated with the resolution of the arbitration associated with the Meridian & Bigbee Railroad LLC (M&B) Haulage Agreement and net gain on sale of assets and insurance recovery. The Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Ratios calculated using amounts in accordance with GAAP.
The following table sets forth a reconciliation of GWI’s Operating Ratios calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratios described above for the three months ended June 30, 2009 and 2008 ($ in millions):
2009 Total
Total Operating Operating Operating
Revenues Expenses Income Ratio
-------- -------- ------ -----
As Reported $130.1 $115.4 $14.6 88.7%
HCRY impairment and
restructuring and
related charges - (9.0) 9.0
M&B legal expenses - (1.4) 1.4
Net gain on sale of assets - 1.8 (1.8)
Gain on insurance recovery - 0.5 (0.5)
Adjusted $130.1 $107.3 $22.7 82.5%
2008 Total
Total Operating Operating Operating
Revenues Expenses Income Ratio
-------- -------- ------ -----
As Reported $152.7 $123.0 $29.7 80.6%
Net gain on sale of assets - 2.1 (2.1)
Gain on insurance recovery - 0.4 (0.4)
Adjusted $152.7 $125.5 $27.2 82.2%
Free Cash Flow Description and Discussion
Management views Free Cash Flow as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities from Continuing Operations less Net Cash Used in Investing Activities from Continuing Operations, excluding the cost of acquisitions. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with GAAP.
The following table sets forth a reconciliation of GWI’s Net Cash Provided by Operating Activities from Continuing Operations to GWI’s Free Cash Flow ($ in millions):
Six Months Ended
June 30,
--------
2009 2008
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Net cash provided by operating activities
from continuing operations $44.1 $37.6
Net cash used in investing activities
from continuing operations (26.1) (116.7)
Cash paid for acquisitions, net of cash
acquired 5.8 97.6
--- ----
Free cash flow $23.8 $18.5
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SOURCE Genesee & Wyoming Inc.