GREENWICH, Conn., August 4, 2008 CT-Genesee&Wyo-Q2-ern
GREENWICH, Conn., August 4, 2008 /PRNewswire-FirstCall/ -- Genesee &
Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the second quarter of
2008 of $15.4 million, compared with net income of $10.7 million in the second
quarter of 2007. GWI's diluted earnings per share (EPS) in the second quarter
of 2008 were $0.42 with 36.4 million weighted average shares outstanding,
compared with diluted EPS of $0.27 with 40.4 million weighted average shares
outstanding in the second quarter of 2007.
GWI's diluted earnings per share from continuing operations increased
12.8% to $0.44 in the second quarter of 2008, compared with $0.39 in the
second quarter of 2007. GWI's Mexican operations are included in results from
discontinued operations.
Continuing Operations
In the second quarter of 2008, GWI's revenues increased $27.4 million, or
21.9%, to $152.7 million, compared with $125.3 million in the second quarter
of 2007. Of this increase, revenues from acquisitions contributed $8.1
million and revenues from same railroad operations increased $19.3 million, or
15.4%. Acquisition revenues in the second quarter of 2008 included three
months from the Maryland Midland Railway, two and a half months from Rotterdam
Rail Feeding, and one month from CAGY Industries.
Same railroad freight revenues increased $8.0 million, or 10.0%, in the
second quarter of 2008 primarily due to an increase in average revenues per
carload of 13.6%. Of this pricing increase, 2.6% was due to the appreciation
of the Australian and Canadian dollars relative to the U.S. dollar. Same
railroad non-freight revenues increased $11.3 million, or 25.1%, in the second
quarter of 2008 primarily due to higher third-party fuel sales in Australia,
increased crewing and iron ore services in Australia, and higher revenues from
GWI's U.S. port railroads and industrial switching.
GWI's operating income in the second quarter of 2008 increased $8.4
million, or 39.2%, to $29.7 million, compared with $21.3 million in the second
quarter of 2007. GWI's operating ratio was 80.6% in the second quarter of
2008, compared with an operating ratio of 83.0% in the second quarter of 2007.
Operating income in the second quarter of 2008 included $2.5 million of gains
on the sale of assets, compared with $0.4 million in the second quarter of
2007.
GWI's operating income in the second quarter of 2008 was negatively
impacted by two factors. First, coal shipments to several power plants in the
Midwestern United States were delayed by severe flooding which temporarily
closed rail lines of two connecting Class I railroads. GWI expects to regain
these coal shipments in the third and fourth quarters of 2008. Second, the
25.2% increase in the average price of diesel fuel from $3.14 per gallon to
$3.93 per gallon between the first and second quarters of 2008 reduced income
due to a lag in GWI's typical fuel cost recovery mechanisms.
GWI's effective income tax rate increased from 27.0% in the second quarter
of 2007 to 39.6% in the second quarter of 2008, primarily due to the
expiration of the short line tax credit on December 31, 2007.
Comments from the Chief Executive Officer
John C. Hellmann, Chief Executive Officer of GWI, commented, "Our
operating income in the second quarter of 2008 increased 39%, as our overall
business performed well. Although we had temporary delays in coal shipments
due to flooding in the Midwest as well as a spike in the price of diesel fuel,
these negative factors were offset by effective management of our costs and
gains on the sale of surplus assets. With four new customers coming on line
in May, we continue to offset weakness in lumber and forest products shipments
in Oregon and Eastern Canada resulting from the weak U.S. housing market. Our
general outlook for the remainder of 2008 and into 2009 remains positive
despite the uncertain economic environment."
"The financial performance of GWI's three recent acquisitions, CAGY
Industries, Maryland Midland and Rotterdam Rail Feeding has been consistent
with our expectations and their outlook is good. We remain active in the
acquisition market, as our strong balance sheet and cash flow is proving to be
a significant competitive advantage."
Free Cash Flow from Continuing Operations (1)
($ in millions)Six Months Ended
June 30,
2008 2007
Net cash provided by (used in)
operating activities $35.3$(42.0)
Net cash used in investing activities (116.7)(18.0)
Net cash paid for acquisitions (a) 97.6 -
Australia taxes on ARG Sale (b)- 95.6
Free cash flow (1) $16.2 $35.6
(a) 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 Rotterdam Rail Feeding (RRF) and $3.6 million for final
working capital adjustments related to the December 2007 acquisition
of Maryland Midland Railway, Inc. (MMID).
(b) Includes Australian taxes resulting from the 2006 sale of the Western
Australia operations and certain assets of the Australian Railroad
Group (ARG), previously owned by GWI and its joint venture partner
(ARG Sale), totaling $95.6 million paid in 2007, as calculated using
the U.S. Dollar/Australian Dollar exchange rate on the date of
payment.
GWI's continuing operations generated free cash flow of $16.2 million and
$35.6 million for the six months ended June 30, 2008 and 2007, respectively.
In the six months of 2008, net cash provided by operating activities was
reduced by $14.7 million as a result of cash used for working capital
purposes, primarily payments of accounts payable and accrued liabilities.
Other than the $95.6 million tax payment related to the ARG Sale, which was
excluded from free cash flow, working capital provided $1.1 million to net
cash flow from operations in the 2007 period.
Net cash used in investing activities in 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 as well as
$5.0 million from sales of assets and insurance proceeds. Net cash used in
investing activities in the six months ended June 30, 2007, included $27.5
million in purchases of property and equipment, partially offset by $8.9
million in cash received from government grants and insurance proceeds.
Discontinued Operations
For the quarter ended June 30, 2008, GWI reported a net loss related to
its discontinued Mexican business of $0.7 million (or $0.02 per diluted
share), compared with a net loss of $4.9 million (or $0.12 per diluted share)
for the quarter ended June 30, 2007. For discontinued operations, cash used
in operating activities was $1.2 million and $4.5 million for the six months
ended June 30, 2008 and 2007, respectively. There was no cash used in
investing activities of discontinued operations for the six months ended June
30, 2008, compared with $0.5 million for the same period in 2007. Free cash
flow used in discontinued operations was $1.2 million and $5.0 million for the
six months ended June 30, 2008 and 2007, respectively (1). As of June 30,
2008, there was a net liability of $1.7 million remaining on GWI's balance
sheet associated with its Mexican operations.
Conference Call and Webcast Details
As previously announced, GWI's conference call to discuss financial
results for the second quarter will be held Monday, August 4, 2008 at 11:00
a.m. (Eastern Time). The dial-in number for the teleconference is
(888) 428-4479; outside U.S., call (612) 332-0720, 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 Earnings Audio
Webcast." An audio replay of the conference call will be accessible via the
Investors tab of GWI's website starting at 1:00 p.m. Monday, August 4, 2008.
About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads and
provides railcar switching services in the United States, Canada, Australia
and the Netherlands and owns a minority interest in a railroad in Bolivia.
Operations currently include 52 railroads organized in nine regions, with more
than 6,000 miles of owned and leased track and approximately 3,000 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. Corporate headquarters is in Greenwich,
Conn.
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) 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.
Contact: Michael E. Williams
Director, Corporate Communications
Genesee & Wyoming Inc.
+1 (203) 629-3722
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30,June 30,
2008 2007 2008 2007
OPERATING REVENUES $152,715 $125,294 $293,396 $250,401
OPERATING EXPENSES 123,040 103,980 242,415 205,701
INCOME FROM OPERATIONS 29,67521,31450,98144,700
INTEREST INCOME 571 2,609 1,156 5,962
INTEREST EXPENSE (4,044) (3,519) (7,953) (7,014)
MINORITY INTEREST (60)- (85)-
OTHER INCOME, NET 561 977 659 894
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 26,70321,38144,75844,542
PROVISION FOR INCOME TAXES 10,577 5,78017,39612,858
INCOME FROM CONTINUING OPERATIONS16,12615,60127,36231,684
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX(735) (4,858) (1,574) (6,621)
NET INCOME $15,391 $10,743 $25,788 $25,063
BASIC EARNINGS PER COMMON SHARE
FROM CONTINUING OPERATIONS $0.51 $0.44 $0.87 $0.87
BASIC LOSS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS (0.02)(0.14)(0.05)(0.18)
BASIC EARNINGS PER COMMON SHARE $0.48 $0.30 $0.82 $0.69
WEIGHTED AVERAGE SHARES -
BASIC 31,75535,84731,62636,554
DILUTED EARNINGS PER COMMON SHARE
FROM CONTINUING OPERATIONS $0.44 $0.39 $0.76 $0.77
DILUTED LOSS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS (0.02)(0.12)(0.04)(0.16)
DILUTED EARNINGS PER COMMON SHARE $0.42 $0.27 $0.71 $0.61
WEIGHTED AVERAGE SHARES -
DILUTED36,37840,42536,19741,141
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2008 AND DECEMBER 31, 2007
(In thousands)
(unaudited)
June 30,December 31,
ASSETS 2008 2007
CURRENT ASSETS:
Cash and cash equivalents $40,181 $46,684
Accounts receivable, net 140,052 125,934
Materials and supplies 9,019 7,555
Prepaid expenses and other 17,95318,147
Current assets of discontinued
operations 1,351 2,213
Deferred income tax assets, net 7,462 7,495
Total current assets 216,018 208,028
PROPERTY AND EQUIPMENT, net783,683 696,990
INVESTMENT IN UNCONSOLIDATED AFFILIATES 4,805 4,696
GOODWILL59,84539,352
INTANGIBLE ASSETS, net 170,882 117,106
OTHER ASSETS, net5,53810,276
DEFERRED INCOME TAX ASSETS, net768 1,353
Total assets $1,241,539$1,077,801
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $2,393$2,247
Accounts payable 119,134 128,038
Accrued expenses35,79737,792
Current liabilities of
discontinued operations 3,049 3,919
Deferred income tax liabilities, net8466
Total current liabilities160,457 172,062
LONG-TERM DEBT, less current portion 335,235 270,519
DEFERRED INCOME TAX LIABILITIES, net 145,72193,336
DEFERRED ITEMS - grants from
governmental agencies 106,44694,651
OTHER LONG-TERM LIABILITIES 18,27115,144
MINORITY INTEREST1,193 1,108
TOTAL STOCKHOLDERS' EQUITY 474,216 430,981
Total liabilities and
stockholders' equity $1,241,539$1,077,801
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six Months Ended June 30,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $25,788$25,063
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss from discontinued operations 1,574 6,621
Depreciation and amortization 18,652 15,546
Compensation cost related to equity awards 2,598 2,754
Excess tax benefits from share-based
compensation (3,937) (815)
Deferred income taxes 8,268 3,836
Net gain on sale of assets(3,031) (463)
Minority interest 85 -
Changes in assets and liabilities which
provided (used) cash, net of effect of
acquisitions:
Accounts receivable, net(4,633) (476)
Materials and supplies(678) 1,692
Prepaid expenses and other 849 1,986
Accounts payable and accrued expenses (12,591)(4,095)
Income tax payable - Australia (2,349) (94,103)
Other assets and liabilities, net4,698451
Net cash provided by (used in)
operating activities from continuing
operations 35,293(42,003)
Net cash used in operating activities
from discontinued operations (1,166)(4,450)
Net cash provided by (used in)
operating activities 34,127(46,453)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (40,891) (27,476)
Grant proceeds from government agencies 16,786 7,233
Cash paid for acquisitions, net of cash
acquired (97,616) -
Insurance proceeds for the replacement of
assets419 1,715
Proceeds from disposition of property and
equipment 4,597521
Net cash used in investing activities
from continuing operations (116,705) (18,007)
Net cash used in investing activities
from discontinued operations - (481)
Net cash used in investing activities (116,705) (18,488)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings,
including capital leases (70,505) (985)
Proceeds from issuance of long-term debt 135,000 -
Net proceeds from employee stock purchases 8,057 2,431
Treasury stock purchases(2,355) (65,144)
Excess tax benefits from share-based
compensation3,937815
Net cash provided by (used in)
financing activities from continuing
operations 74,134(62,883)
Net cash used in financing activities
from discontinued operations -(13,301)
Net cash provided by (used in)
financing activities 74,134(76,184)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 1,947 6,542
CHANGE IN CASH BALANCES INCLUDED IN CURRENT
ASSETS OF DISCONTINUED OPERATIONS (6) -
DECREASE IN CASH AND CASH EQUIVALENTS (6,503) (134,583)
CASH AND CASH EQUIVALENTS, beginning of period46,684240,206
CASH AND CASH EQUIVALENTS, end of period $40,181 $105,623
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended
June 30,
20082007
% of% of
Amount RevenueAmount Revenue
Revenues:
Freight $91,41959.9%$80,12063.9%
Non-freight 61,29640.1% 45,17436.1%
Total revenues $152,715 100.0% $125,294 100.0%
Operating Expense Comparison:
Natural Classification
Labor and benefits $46,29430.3%$41,18332.9%
Equipment rents8,762 5.7% 9,535 7.6%
Purchased services12,790 8.4% 10,064 8.0%
Depreciation and amortization 9,453 6.2% 7,840 6.3%
Diesel fuel used in operations17,57811.5% 10,654 8.5%
Diesel fuel sold to third parties 10,379 6.8% 5,750 4.6%
Casualties and insurance 3,804 2.5% 3,425 2.7%
Materials 6,492 4.3% 6,252 5.0%
Net gain on sale of assets(2,481) -1.6% (432) -0.3%
Other expenses 9,969 6.5% 9,709 7.7%
Total operating expenses$123,04080.6% $103,98083.0%
Functional Classification
Transportation $52,87634.6%$40,26732.1%
Maintenance of ways and structures12,379 8.1% 12,340 9.8%
Maintenance of equipment 17,92911.8% 17,70114.1%
Diesel fuel sold to third parties 10,379 6.8% 5,750 4.6%
General and administrative22,50514.7% 20,51416.4%
Net gain on sale of assets(2,481) -1.6% (432) -0.3%
Depreciation and amortization 9,453 6.2% 7,840 6.3%
Total operating expenses$123,04080.6% $103,98083.0%
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Six Months Ended
June 30,
20082007
% of% of
Amount RevenueAmount Revenue
Revenues:
Freight$179,14761.1% $163,87465.4%
Non-freight 114,24938.9% 86,52734.6%
Total revenues $293,396 100.0% $250,401 100.0%
Operating Expense Comparison:
Natural Classification
Labor and benefits $92,41131.5%$82,14732.8%
Equipment rents 17,143 5.8% 18,976 7.6%
Purchased services23,627 8.0% 19,146 7.6%
Depreciation and amortization 18,652 6.4% 15,546 6.2%
Diesel fuel used in operations33,36311.4% 21,102 8.4%
Diesel fuel sold to third parties 18,946 6.5% 11,071 4.4%
Casualties and insurance 8,038 2.7% 7,896 3.2%
Materials 12,597 4.3% 11,434 4.6%
Net gain on sale of assets(3,031) -1.0% (463) -0.2%
Other expenses20,669 7.0% 18,846 7.5%
Total operating expenses$242,41582.6% $205,70182.1%
Functional Classification
Transportation $100,73234.3%$79,75231.8%
Maintenance of ways and structures24,531 8.4% 23,047 9.2%
Maintenance of equipment 35,87012.2% 35,19614.1%
Diesel fuel sold to third parties 18,946 6.5% 11,071 4.4%
General and administrative46,71515.8% 41,55216.6%
Net gain on sale of assets(3,031) -1.0% (463) -0.2%
Depreciation and amortization 18,652 6.4% 15,546 6.2%
Total operating expenses$242,41582.6% $205,70182.1%
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)
Three Months Ended Three Months Ended
June 30, 2008 June 30, 2007
Average Average
Freight Freight
Revenues Revenues
Freight PerFreight Per
Commodity Group Revenues Carloads Carload Revenues Carloads Carload
Pulp & Paper $18,798 30,994$607$17,03230,900$551
Coal, Coke &
Ores 15,488 41,474 373 12,88942,453 304
Minerals & Stone 11,743 37,041 317 8,07432,399 249
Metals 10,675 21,154 505 9,81221,376 459
Farm & Food
Products 10,157 18,436 551 7,74214,461 535
Lumber & Forest
Products 8,667 19,503 444 9,84823,103 426
Chemicals-
Plastics 8,049 12,147 663 6,67911,027 606
Petroleum
Products 4,2416,336 669 3,752 6,242 601
Autos & Auto
Parts 2,1483,433 626 2,083 4,052 514
Intermodal145 362 401279 563 496
Other 1,3085,676 230 1,930 9,501 203
Totals$91,419 196,556 465$80,120 196,077 409
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE FREIGHT REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)
Six Months Ended Six Months Ended
June 30, 2008June 30, 2007
Average Average
Freight Freight
Revenues Revenues
Freight Per Freight Per
Commodity Group Revenues Carloads Carload Revenues Carloads Carload
Pulp & Paper $36,811 60,920$604$34,50562,892$549
Coal, Coke &
Ores 32,234 86,954 371 28,75291,543 314
Farm & Food
Products 21,044 36,368 579 17,49436,129 484
Minerals & Stone 20,957 68,694 305 14,84359,679 249
Metals 20,194 40,281 501 18,73541,061 456
Lumber & Forest
Products 16,638 37,640 442 18,55343,835 423
Chemicals-
Plastics 15,471 23,524 658 13,15122,281 590
Petroleum
Products 9,248 13,787 671 8,29313,671 607
Autos & Auto
Parts 3,9036,778 576 3,765 7,562 498
Intermodal269 621 433560 1,100 509
Other 2,378 10,416 228 5,22324,797 211
Totals $179,147 385,983 464 $163,874 404,550 405
Reconciliation of non-GAAP Financial Measure
This earnings release contains free cash flow, which is a "non-GAAP
financial measure" as this term is defined in Regulation G of the Securities
Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled
this non-GAAP financial measure to its most directly comparable U.S. GAAP
measures.
Free Cash Flow Description and Discussion
Management views Free Cash Flow as an important financial measure of how
well GWI is managing its assets. Subject to the limitations discussed below,
Free Cash Flow is a useful indicator of cash flow that may be available for
discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided
by/Used in Operating Activities from Continuing Operations less Net Cash Used
in Investing Activities from Continuing Operations, excluding the Cost of
Acquisitions. Free Cash Flow from Discontinued Operations is defined as Net
Cash Used in Operating Activities from Discontinued Operations less Net Cash
Used in Investing Activities from Discontinued Operations. Key limitations of
the Free Cash Flow measure include the assumptions that GWI will be able to
refinance its existing debt when it matures and meet other cash flow
obligations from financing activities, such as principal payments on debt.
Free Cash Flow is not intended to represent, and should not be considered more
meaningful than, or as an alternative to, measures of cash flow determined in
accordance with GAAP.
The following table sets forth a reconciliation of GWI's Net Cash Provided
by/Used in Operating Activities from Continuing Operations to GWI's Free Cash
Flow ($ in millions):
Six Months Ended
June 30,
2008 2007
Net cash provided by (used in) operating
activities from continuing operations $35.3$(42.0)
Net cash used in investing activities
from continuing operations(116.7)(18.0)
Cash paid for acquisitions, net of cash
acquired97.6 -
Australia taxes on ARG Sale - 95.6
Free cash flow $16.2 $35.6
The following table sets forth a reconciliation of GWI's Net Cash Used In
Operating Activities from Discontinued Operations to GWI's Free Cash Flow from
Discontinued Operations ($ in millions):
Six Months Ended
June 30,
20082007
Net cash used in operating activities from
discontinued operations$(1.2) $(4.5)
Net cash used in investing activities from
discontinued operations-(0.5)
Free cash flow from discontinued operations $(1.2) $(5.0)
SOURCE Genesee & Wyoming Inc.
