Genesee & Wyoming Reports Results for the Third Quarter of 2009
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GREENWICH, Conn., Nov. 3, 2009 CT-GWR-Q3-09-earns
GREENWICH, Conn., Nov. 3, 2009 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported net income in the third quarter of 2009 of $21.7 million, compared with net income of $21.2 million in the third quarter of 2008. GWI's diluted earnings per share (EPS) in the third quarter of 2009 were $0.53 with 41.2 million weighted average shares outstanding, compared with diluted EPS of $0.58 with 36.6 million weighted average shares outstanding in the third quarter of 2008.
GWI's income from continuing operations in the third quarter of 2009 was $19.6 million, or $0.48 per diluted share, compared with income from continuing operations of $20.1 million, or $0.55 per diluted share in the third quarter of 2008.
In the third quarter of 2009, GWI completed the sale of both its Mexican operations and Bolivian investment. The sale of GWI's Mexican operations resulted in a gain of $2.2 million ($2.4 million after-tax, or $0.06 per diluted share) in discontinued operations and GWI realized total cash proceeds of $2.2 million. The sale of GWI's Bolivian investment resulted in a gain of $0.4 million ($0.4 million after-tax, or $0.01 per diluted share) from continuing operations and cash proceeds of $3.8 million.
Results from Continuing Operations
In the third quarter of 2009, GWI's total revenues decreased $23.0 million, or 14.4%, to $136.4 million, compared with $159.4 million in the third quarter of 2008. The decrease in total revenues was primarily due to a decrease in same railroad revenues of $35.9 million, or 22.5%, partially offset by revenues of $12.9 million from acquisitions. The decrease in same railroad revenues included a $2.2 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and a $6.7 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI's same railroad revenues declined $27.0 million, or 16.9%.
Freight revenues in the third quarter of 2009 decreased by $12.4 million, or 13.0%, to $83.2 million, compared with $95.6 million in the third quarter of 2008. Same railroad freight revenues decreased $23.8 million, partially offset by $11.3 million in freight revenues from acquisitions. Same railroad freight revenues were reduced by $1.0 million due to the depreciation of the Australian and Canadian dollars. Excluding currency, GWI's same railroad freight revenues decreased by $22.8 million, or 23.8%.
Average freight revenues per carload declined 10.0% in the third quarter of 2009. The impact of lower fuel surcharges, changes in commodity mix, acquisitions and the depreciation of the Canadian and Australian dollars reduced average revenues per carload by 8.7%, 1.4%, 1.2% and 1.0%, respectively. Excluding these factors, same railroad average revenues per carload increased 2.4%. In the United States and Canada, excluding currency effects, changes in commodity mix and changes in fuel surcharges, same railroad average revenues per carload increased 2.8%. Decreases in the rail cost adjustment factor (RCAF), a measure of railroad inflation published by the Association of American Railroads to which certain contract freight rates are indexed, had the impact of reducing U.S. and Canada same railroad average revenues per carload by approximately 1%.
GWI's non-freight revenues in the third quarter of 2009 decreased $10.5 million, or 16.5%, to $53.3 million compared with $63.8 million in the third quarter of 2008. Same railroad non-freight revenues decreased $12.1 million, or 19.0%, partially offset by $1.6 million in non-freight revenues from acquisitions. The decrease in same railroad non-freight revenues included a $1.2 million decrease due to the depreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar and a $6.7 million decrease due to a decline in third-party fuel sales. Excluding currency and fuel sales, GWI's same railroad non-freight revenues decreased $4.2 million, or 6.6%.
GWI's operating income in the third quarter of 2009 decreased $3.5 million, or 10.0%, to $31.1 million, compared with $34.6 million in the third quarter of 2008. The operating ratio was 77.2% in the third quarter of 2009, compared with an operating ratio of 78.3% in the third quarter of 2008. In the third quarter of 2009, operating income benefited $2.6 million ($1.7 million after-tax, or $0.04 per diluted share) due to insurance recoveries related to prior year events. In the third quarter of 2008, operating income included $1.2 million in gains on the sale of assets ($0.8 million after-tax, or $0.02 per diluted share). Excluding these items, GWI's operating ratio was 79.1% in the third quarter of 2009 and 2008. (1)
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO of GWI, commented, "Despite an extremely weak economic environment, we continue to manage our costs well and to generate strong free cash flow. In the third quarter, we maintained an operating ratio of 79% despite significant volume declines, and we are focused on ensuring that our productivity improvements remain intact when the economy improves. Meanwhile, we believe that the 5% increase in our revenues from the second quarter to the third quarter is indicative of a growing degree of economic stability."
Mr. Hellmann continued, "We remain active in evaluating investment opportunities in both North America and Australia. Given the strength of our balance sheet, we are well positioned to execute quickly on the right transactions."
Free Cash Flow from Continuing Operations (2)
($ in millions) Nine Months Ended
September 30,
------------
2009 2008
---- ----
Net cash provided by
operating activities $88.4 $93.7
Net cash used in investing
activities (35.3) (148.5)
Net cash paid/(received) for
acquisitions/divestitures(a) 2.0 115.7
----- -----
Free cash flow (2) $55.1 $60.9
===== =====
(a) The 2009 period includes: 1) $4.8 million in net cash paid for final working capital adjustments related to the acquisition of the Ohio Central Railroad System (OCR), 2) $1.0 million in net cash paid in contingent consideration related to the Rotterdam Rail Feeding B.V. (RRF) acquisition and 3) $3.8 million in cash received from the sale of Bolivia. The 2008 period includes 1) $89.5 million in net cash paid for the acquisition of CAGY Industries Inc. (CAGY), 2) $22.6 million in net cash paid for the acquisition of Rotterdam Rail Feeding (RRF) and 3) $3.6 million for final working capital adjustments related to the December 2007 acquisition of Maryland Midland Railway, Inc. (MMID).
GWI's continuing operations generated free cash flow of $55.1 million and $60.9 million for the nine months ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009, changes in working capital increased net cash flow from operating activities by $3.8 million. For the nine months ended September 30, 2008, changes in working capital increased net cash flow from operating activities by $11.5 million.
Net cash used in investing activities for the quarter ended September 30, 2009, included $60.0 million in purchases of property and equipment, partially offset by $16.5 million in cash received from government grants and $10.2 million from sales of assets and insurance proceeds. Net cash used in investing activities in the nine months ended September 30, 2008, included $62.0 million in purchases of property and equipment, partially offset by $21.8 million in cash received from government grants and $7.4 million from sales of assets and insurance proceeds.
Discontinued Operations
For the quarter ended September 30, 2009, GWI reported income related to its discontinued Mexican business of $2.0 million after-tax (or $0.05 per diluted share), compared with income of $1.1 million after-tax (or $0.03 per diluted share) for the quarter ended September 30, 2008. Results from discontinued operations in the third quarter of 2009 included a net gain on the sale of 100% of the share capital of its Mexican subsidiary, Ferrocarriles Chiapas-Mayab, S.A. de C.V. (FCCM). Results from discontinued operations in the third quarter of 2008 included a tax benefit of $0.9 million ($0.02 per diluted share) primarily associated with the filing of GWI's 2007 U.S. income tax return.
Conference Call and Webcast Details
As previously announced, GWI's conference call to discuss financial results for the third quarter will be held Tuesday, November 3, 2009, at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is (800) 230 1092; outside U.S., call (612) 234-9960, or the call may be accessed live over the Internet (listen only) under the "Investors" tab of GWI's website (http://www.gwrr.com), by selecting "Third Quarter Earnings Audio Webcast." Management will be referring to a slide presentation that will also be available under the "Investors" tab of GWI's website prior to the conference call. An audio replay of the conference call will be accessible via the "Investors" tab of GWI's website starting at 1:00 p.m. Tuesday, November 3, 2009. Telephone replay is available for 30 days beginning at 12 p.m. EDT on November 3, 2009, by dialing (800) 475-6701 (or outside U.S., dial (320) 365-3844). The access code is 974251.
About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands. Operations currently include 62 railroads organized in nine regions, with more than 6,000 miles of owned and leased track and approximately 3,100 additional miles under track access arrangements. GWI provides rail service at 16 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that involve risks and uncertainties that could cause actual results to differ materially from its current expectations including, but not limited to, economic, political and industry conditions; customer demand, retention and contract continuation; legislative and regulatory developments; increased competition in relevant markets; funding needs and financing sources; susceptibility to various legal claims and lawsuits; strikes or work stoppages; severe weather conditions and other natural occurrences; and others. Words such as "anticipates," "intends," "plans," "believes," "seeks," "expects," "estimates," variations of these words and similar expressions are intended to identify these forward-looking statements. GWI refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as GWI's Forms 10-Q and 10-K which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. GWI disclaims any intention to update the current expectations or forward looking statements contained in this press release.
(1) The operating ratios that exclude the items described above are non-GAAP financial measures and are not intended to replace the operating ratios calculated using total operating expenses and total revenues, calculated on a basis consistent with GAAP. The information required by Regulation G under the Securities Exchange Act of 1934, including reconciliation to the operating ratios calculated using amounts determined in accordance with GAAP, is included in the tables attached to this press release.
(2) Free Cash Flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, its most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net cash provided by operating activities is included in the tables attached to this press release.
SOURCE: Genesee & Wyoming Inc.
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
OPERATING REVENUES $136,446 $159,432 $404,959 $452,828
OPERATING EXPENSES 105,331 124,866 333,104 367,281
------- ------- ------- -------
INCOME FROM OPERATIONS 31,115 34,566 71,855 85,547
GAIN ON SALE OF INVESTMENT IN
BOLIVIA 427 - 427 -
INTEREST INCOME 252 597 677 1,753
INTEREST EXPENSE (6,376) (4,250) (20,650) (12,203)
OTHER INCOME/(EXPENSE), NET 665 (99) 1,909 560
--- --- ----- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 26,083 30,814 54,218 75,657
PROVISION FOR INCOME TAXES 6,361 10,686 12,397 28,082
----- ------ ------ ------
INCOME FROM CONTINUING
OPERATIONS 19,722 20,128 41,821 47,575
INCOME/(LOSS) FROM
DISCONTINUED OPERATIONS, NET
OF TAX 2,017 1,087 1,348 (487)
----- ----- ----- ----
NET INCOME 21,739 21,215 43,169 47,088
LESS: NET INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST (78) (61) (146) (146)
--- --- ---- ----
NET INCOME ATTRIBUTABLE TO
GENESEE & WYOMING INC. $21,661 $21,154 $43,023 $46,942
======= ======= ======= =======
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO
GENESEE & WYOMING INC. COMMON STOCKHOLDERS:
BASIC EARNINGS PER COMMON
SHARE FROM CONTINUING
OPERATIONS $0.51 $0.63 $1.18 $1.49
BASIC EARNINGS/(LOSS) PER
COMMON SHARE FROM
DISCONTINUED OPERATIONS 0.05 0.03 0.04 (0.02)
---- ---- ---- -----
BASIC EARNINGS PER COMMON
SHARE $0.56 $0.66 $1.22 $1.48
===== ===== ===== =====
WEIGHTED AVERAGE SHARES -
BASIC 38,388 32,018 35,328 31,758
====== ====== ====== ======
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO
GENESEE & WYOMING INC. COMMON STOCKHOLDERS:
DILUTED EARNINGS PER COMMON
SHARE FROM CONTINUING
OPERATIONS $0.48 $0.55 $1.09 $1.31
DILUTED EARNINGS/(LOSS) PER
COMMON SHARE FROM
DISCONTINUED OPERATIONS 0.05 0.03 0.04 (0.01)
---- ---- ---- -----
DILUTED EARNINGS PER COMMON
SHARE $0.53 $0.58 $1.13 $1.29
===== ===== ===== =====
WEIGHTED AVERAGE SHARES -
DILUTED 41,183 36,592 38,163 36,334
====== ====== ====== ======
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(In thousands)
(unaudited)
September 30, December 31,
ASSETS 2009 2008
---- ----
CURRENT ASSETS:
Cash and cash equivalents $96,018 $31,693
Accounts receivable, net 111,918 120,874
Materials and supplies 8,145 7,708
Prepaid expenses and other 10,948 12,270
Current assets of discontinued operations 738 1,676
Deferred income tax assets, net 18,161 18,101
------ ------
Total current assets 245,928 192,322
------- -------
PROPERTY AND EQUIPMENT, net 1,004,624 998,995
INVESTMENT IN UNCONSOLIDATED AFFILIATES 1,639 4,986
GOODWILL 161,403 150,958
INTANGIBLE ASSETS, net 246,300 223,442
DEFERRED INCOME TAX ASSETS, net 3,206 -
OTHER ASSETS, net 16,535 16,578
------ ------
Total assets $1,679,635 $1,587,281
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $27,361 $26,034
Accounts payable 116,115 124,162
Accrued expenses 41,983 37,903
Current liabilities of discontinued
operations 22 1,121
Deferred income tax liabilities, net - 192
------ ------
Total current liabilities 185,481 189,412
------- -------
LONG-TERM DEBT, less current portion 428,398 535,231
DEFERRED INCOME TAX LIABILITIES, net 241,733 234,979
DEFERRED ITEMS - grants from outside parties 134,503 113,302
OTHER LONG-TERM LIABILITIES 24,334 34,943
TOTAL EQUITY 665,186 479,414
------- -------
Total liabilities and equity $1,679,635 $1,587,281
========== ==========
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(In thousands)
(unaudited)
Nine Months Ended
September 30,
-----------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $43,169 $47,088
Adjustments to reconcile net income to net cash
provided by operating activities:
(Income)/Loss from discontinued operations, net
of tax (1,348) 487
Depreciation and amortization 35,473 28,871
Compensation cost related to equity
awards 4,227 4,163
Excess tax benefits from share-based
compensation (1,173) (1,830)
Deferred income taxes 890 7,549
Net loss/(gain) on sale and impairment of
assets 4,746 (3,817)
Gain on insurance recoveries (3,144) (399)
Insurance proceeds received 2,175 -
Gain on sale of investment in
Bolivia (427) -
Changes in assets and liabilities which
provided (used) cash, net of
effect of acquisitions:
Accounts receivable, net 9,481 (13,089)
Materials and supplies 514 (662)
Prepaid expenses and other 1,595 8,968
Accounts payable and accrued expenses (7,269) 12,356
Other assets and liabilities, net (523) 3,972
---- -----
Net cash provided by operating activities
from continuing operations 88,386 93,657
Net cash used in operating activities
from discontinued operations (275) (2,815)
---- ------
Net cash provided by operating
activities 88,111 90,842
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (59,977) (61,999)
Grant proceeds from outside parties 16,530 21,832
Cash paid for acquisitions, net (5,780) (115,699)
Insurance proceeds for the replacement of
assets 3,996 419
Proceeds from sale of investment in
Bolivia 3,771 -
Proceeds from disposition of property and
equipment 6,196 6,992
----- -----
Net cash used in investing activities from
continuing operations (35,264) (148,455)
------- --------
Net cash provided by investing activities
from discontinued operations 1,774 -
----- -----
Net cash used in investing activities (33,490) (148,455)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings,
including capital leases (207,221) (117,905)
Proceeds from issuance of long-term
debt 98,000 163,000
Net proceeds from employee stock
purchases 5,307 9,122
Treasury stock purchases (434) (2,355)
Stock issuance proceeds, net of stock issuance
costs 106,641 -
Excess tax benefits from share-based
compensation 1,173 1,830
----- -----
Net cash provided by financing activities
from continuing operations 3,466 53,692
----- ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 6,130 (2,907)
----- ------
CHANGE IN CASH BALANCES INCLUDED IN CURRENT
ASSETS OF DISCONTINUED OPERATIONS 108 (348)
--- ----
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 64,325 (7,176)
CASH AND CASH EQUIVALENTS, beginning of period 31,693 46,684
------ ------
CASH AND CASH EQUIVALENTS, end of period $96,018 $39,508
======= =======
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended
September 30,
-------------
2009 2008
---- ----
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues:
---------
Freight $83,160 60.9% $95,602 60.0%
Non-freight 53,286 39.1% 63,830 40.0%
------ ---- ------ ----
Total revenues $136,446 100.0% $159,432 100.0%
======== ===== ======== =====
Operating Expense Comparison:
-----------------------------
Natural Classification
----------------------
Labor and benefits $45,722 33.5% $48,409 30.4%
Equipment rents 7,447 5.5% 9,121 5.7%
Purchased services 10,999 8.1% 11,975 7.5%
Depreciation and
amortization 12,050 8.8% 10,219 6.4%
Diesel fuel used in
operations 7,921 5.8% 15,948 10.0%
Diesel fuel sold to third
parties 3,603 2.6% 9,947 6.2%
Casualties and insurance 4,243 3.1% 3,803 2.4%
Materials 5,201 3.8% 6,211 3.9%
Net loss (gain) on sale
and impairment of assets 96 0.1% (1,185) (0.7%)
Gain on insurance recoveries (2,644) (1.9%) - 0.0%
Other expenses 10,693 7.8% 10,418 6.5%
------ --- ------ ---
Total operating expenses $105,331 77.2% $124,866 78.3%
======== ==== ======== ====
Functional Classification
-------------------------
Transportation 41,430 30.3% $51,897 32.6%
Maintenance of ways and
structures 12,811 9.4% 12,535 7.9%
Maintenance of equipment 16,201 11.9% 18,084 11.3%
Diesel fuel sold to third
parties 3,603 2.6% 9,947 6.2%
General and administrative 21,784 16.0% 23,369 14.6%
Net loss (gain) on sale
and impairment of assets 96 0.1% (1,185) (0.7%)
Gain on insurance recoveries (2,644) (1.9%) - 0.0%
Depreciation and
amortization 12,050 8.8% 10,219 6.4%
------ --- ------ ---
Total operating expenses $105,331 77.2% $124,866 78.3%
======== ==== ======== ====
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
Nine Months Ended
September 30,
-------------
2009 2008
---- ----
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues:
---------
Freight $251,622 62.1% $274,749 60.7%
Non-freight 153,337 37.9% 178,079 39.3%
------- ---- ------- ----
Total revenues $404,959 100.0% $452,828 100.0%
======== ===== ======== =====
Operating Expense Comparison:
-----------------------------
Natural Classification
----------------------
Labor and benefits $143,654 35.5% $140,820 31.1%
Equipment rents 22,240 5.5% 26,262 5.8%
Purchased services 30,316 7.5% 35,602 7.9%
Depreciation and
amortization 35,473 8.7% 28,871 6.4%
Diesel fuel used in
operations 24,265 6.0% 49,311 10.9%
Diesel fuel sold to third
parties 10,096 2.5% 28,893 6.4%
Casualties and insurance 10,707 2.6% 11,841 2.6%
Materials 16,552 4.1% 18,808 4.1%
Net loss (gain) on sale
and impairment of assets 4,746 1.2% (3,817) (0.8%)
Gain on insurance recoveries (3,144) (0.8%) (399) (0.1%)
Restructuring charges 2,288 0.6% - 0.0%
Other expenses 35,911 8.9% 31,089 6.8%
------ --- ------ ---
Total operating expenses $333,104 82.3% $367,281 81.1%
======== ==== ======== ====
Functional Classification
-------------------------
Transportation $124,501 30.7% $152,629 33.7%
Maintenance of ways and
structures 39,580 9.8% 38,698 8.5%
Maintenance of equipment 49,704 12.3% 53,954 11.9%
Diesel fuel sold to third
parties 10,096 2.5% 28,893 6.4%
General and administrative 69,860 17.3% 68,452 15.1%
Net loss (gain) on sale
and impairment of assets 4,746 1.2% (3,817) (0.8%)
Gain on insurance recoveries (3,144) (0.8%) (399) (0.1%)
Restructuring charges 2,288 0.6% - 0.0%
Depreciation and
amortization 35,473 8.7% 28,871 6.4%
------ --- ------ ---
Total operating expenses $333,104 82.3% $367,281 81.1%
======== ==== ======== ====
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER
CARLOAD COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
------------------ ------------------
Average Average
Revenues Revenues
Freight Per Freight Per
Revenues Carloads Carload Revenues Carloads Carload
-------- -------- ------- -------- -------- -------
Coal, Coke & Ores $17,116 49,720 $344 $17,223 48,259 $357
Pulp & Paper 12,794 22,385 572 19,180 30,705 625
Minerals & Stone 10,867 36,459 298 12,952 37,797 343
Farm & Food Products 8,575 16,963 506 8,247 15,161 544
Metals 8,432 18,148 465 12,529 25,330 495
Chemicals-Plastics 8,251 11,891 694 8,650 12,649 684
Lumber & Forest
Products 7,485 16,813 445 9,319 20,539 454
Petroleum Products 4,357 6,522 668 4,382 6,434 681
Autos & Auto Parts 1,191 1,921 620 1,719 2,422 710
Other 4,092 16,265 252 1,401 4,757 295
------- ------- ------- -------
Totals $83,160 197,087 $422 $95,602 204,053 $469
======= ======= ======= =======
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER
CARLOAD COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
------------------ ------------------
Average Average
Revenues Revenues
Freight Per Freight Per
Revenues Carloads Carload Revenues Carloads Carload
-------- -------- ------- -------- -------- -------
Coal, Coke & Ores $53,962 150,272 $359 $49,457 135,213 $366
Pulp & Paper 38,340 68,348 561 55,991 91,625 611
Minerals & Stone 29,546 103,030 287 33,909 106,491 318
Farm & Food Products 28,603 65,671 436 29,291 51,529 568
Metals 25,644 52,986 484 32,723 65,611 499
Chemicals-Plastics 24,487 36,929 663 24,121 36,173 667
Lumber & Forest
Products 21,011 46,727 450 25,958 58,179 446
Petroleum Products 14,645 21,320 687 13,630 20,221 674
Autos & Auto Parts 3,483 5,684 613 5,622 9,200 611
Other 11,900 48,748 244 4,047 15,794 256
-------- ------- -------- -------
Totals $251,621 599,715 $420 $274,749 590,036 $466
======== ======= ======== =======
Reconciliation of non-GAAP Financial Measures
This earnings release contains adjusted operating ratios and free cash flow, which are "non-GAAP financial measures" as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, GWI has reconciled these non-GAAP financial measures to its most directly comparable U.S. GAAP measure.
Adjusted Operating Ratios Description and Discussion
Management views its Operating Ratio, calculated as total Operating Expenses divided by total Revenues, as an important measure of GWI's operating performance. Because management believes this is useful for investors in assessing GWI's financial results compared with the same period in the prior year, the Adjusted Operating Ratio for the three months ended September 30, 2009, is presented excluding net (loss) gain on sale and impairment of assets and gain on insurance recoveries and for the three months ended September 30, 2008, is presented excluding net gain on the sale of assets. The Adjusted Operating Ratios presented excluding these effects are not intended to represent, and should not be considered more meaningful than, or as an alternative to, the Operating Ratios calculated using amounts in accordance with GAAP.
The following table sets forth a reconciliation of GWI's Operating Ratios calculated using amounts determined in accordance with GAAP to the Adjusted Operating Ratios described above for the three months ended September 30, 2009 and 2008 ($ in millions):
2009 Total Total Operating Operating
Revenues Operating Income Ratio
Expenses
----------- ----------- --------- ---------
As Reported $136.4 $105.3 $31.1 77.2%
Gain on
insurance
recoveries - 2.6 (2.6)
Net (loss) gain on
sale and impairment
of Assets - (0.1) 0.1
------ --- ---
Adjusted $136.4 $107.9 $28.5 79.1%
====== ====== =====
2008 Total Total Operating Operating
Revenues Operating Income Ratio
Expenses
----------- ----------- --------- ---------
As Reported $159.4 $124.9 $34.6 78.3%
Net gain on
sale of assets - 1.2 (1.2)
--- --- ---
Adjusted $159.4 $126.1 $33.4 79.1%
====== ====== =====
Free Cash Flow Description and Discussion
Management views Free Cash Flow as an important financial measure of how well GWI is managing its assets. Subject to the limitations discussed below, Free Cash Flow is a useful indicator of cash flow that may be available for discretionary use by GWI. Free Cash Flow is defined as Net Cash Provided by Operating Activities from Continuing Operations less Net Cash Used in Investing Activities from Continuing Operations, excluding the cost of acquisitions and proceeds from divestitures. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Free Cash Flow is not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of cash flow determined in accordance with GAAP.
The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities from Continuing Operations to GWI's Free Cash Flow ($ in millions):
Nine Months Ended
September 30,
($in millions) 2009 2008
---- ----
Net cash provided by operating activities from
continuing operations $88.4 $93.7
Net cash used in investing activities from continuing
operations (35.3) (148.5)
Net cash paid/(received) for acquisitions/divestitures 2.0 115.7
--- -----
Free cash flow $55.1 $60.9
===== =====
SOURCE Genesee & Wyoming Inc.
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