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 October 30, 2015 - 6:00 AM EDT
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Genesee & Wyoming Reports Results for the Third Quarter of 2015

Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Third Quarter Highlights

  • Operating revenues increased 26.3% to $546.3 million from $432.5 million.
  • Same railroad operating revenues, excluding the $23.6 million negative impact of foreign currency depreciation, declined 10.8%, primarily due to weakness in iron ore, coal and metals shipments.
  • Adjusted income from operations (adjusted operating income) decreased 3.5% to $118.3 million; Reported income from operations (operating income) decreased 4.5% to $117.6 million. (1)
  • Adjusted diluted earnings per common share (EPS) decreased 9.9% to $1.09; Reported diluted EPS decreased 13.4% to $1.10. Approximately half of the decrease in adjusted diluted EPS was driven by the negative impact of foreign currency depreciation. (1)

Jack Hellmann, President and CEO of G&W, commented, “Our adjusted diluted earnings per share declined 10% in the third quarter of 2015, with approximately half of the decline caused by a weak economic environment for industrial and commodity shipments and the other half due to the negative impact of foreign currency depreciation. Nevertheless, our third quarter adjusted diluted earnings per share were 17% higher than the second quarter of 2015, with stronger than expected performance from each of our three business segments.”

“In North America, our third quarter revenues declined 9% and our operating income declined 10% due to weakness in twelve out of fourteen commodity groups, however good cost management by each of our operating regions enabled us to maintain an operating ratio of 71.2%. In Australia, our third quarter operating income dropped 33%, as the impact of iron ore mine closures and the depreciation of the Australian dollar more than offset effective cost controls and the positive contribution from Freightliner Australia. Finally, in the United Kingdom/Europe (primarily composed of the newly acquired Freightliner Group), our operating income increased sequentially by more than 50% over the second quarter of 2015, as seasonal improvements in U.K. intermodal shipments and good cost management more than offset continued weakness in U.K. coal traffic.”

“Our outlook for the second half of 2015 remains unchanged from August, with third quarter results stronger than planned and fourth quarter outlook expected to be weaker than planned. As we finish the year and look ahead to 2016, our management team is concentrated on optimizing the strong free cash flow that underpins the value of our 120 railroads. In addition, we continue to evaluate potential acquisitions and investments worldwide.” (1)

Financial Results

G&W’s operating revenues increased $113.8 million, or 26.3%, to $546.3 million in the third quarter of 2015, compared with $432.5 million in the third quarter of 2014. G&W’s income from operations in the third quarter of 2015 was $117.6 million, compared with $123.1 million in the third quarter of 2014. G&W’s operating ratio in the third quarter of 2015 was 78.5%, compared with an operating ratio of 71.5% in the third quarter of 2014, including lower operating margins from Freightliner Group Limited (Freightliner). G&W's same railroad operating ratio in the third quarter of 2015 was 71.7%, compared with 71.5% in the third quarter of 2014.

G&W reported net income in the third quarter of 2015 of $63.4 million, compared with net income of $72.7 million in the third quarter of 2014. Excluding the net impact of certain items affecting comparability between periods discussed below, G&W’s adjusted net income in the third quarter of 2015 was $63.3 million, compared with adjusted net income of $69.1 million in the third quarter of 2014. (1)

G&W’s reported diluted EPS in the third quarter of 2015 were $1.10 with 57.8 million weighted average shares outstanding, compared with reported diluted EPS in the third quarter of 2014 of $1.27 with 57.0 million weighted average shares outstanding. G&W’s adjusted diluted EPS in the third quarter of 2015 were $1.09 with 57.8 million weighted average shares outstanding, compared with adjusted diluted EPS in the third quarter of 2014 of $1.21 with 57.0 million weighted average shares outstanding. (1)

G&W’s effective income tax rate was 36.8% in the third quarter of 2015, compared with 33.7% in the third quarter of 2014. G&W's effective income tax rate in the third quarter of 2014 included a $3.9 million tax benefit as a result of receiving IRS consent to change tax accounting methods retroactively for companies acquired as a result of the RailAmerica, Inc. (RailAmerica) acquisition. G&W's effective income tax rates for both periods included adjustments to reflect differences between book income tax expense and final tax returns filed in September of each year related to the previous fiscal year.

Items Affecting Comparability

In the third quarter of 2015 and 2014, G&W’s results included certain items affecting comparability between the periods that are set forth in the following table (in millions, except per share amounts):

   

Income/(Loss)
Before Income
Taxes Impact

 

After-Tax Net
Income/(Loss)
Impact

 

Diluted
Earnings/(Loss)
Per Common
Share Impact

Three Months Ended September 30, 2015  
Business development and related costs $ (2.0 ) $ (1.3 ) $ (0.02 )
Net gain on sale of assets $ 1.2 $ 0.9 $ 0.02
Adjustment for tax returns from previous fiscal year $ $ 0.4 $ 0.01
 
Three Months Ended September 30, 2014
Business development and related costs $ (0.7 ) $ (0.5 ) $ (0.01 )
Net gain on sale of assets $ 1.2 $ 0.9 $ 0.02
Adjustment for tax returns from previous fiscal year $ $ (0.7 ) $ (0.01 )
RailAmerica-related tax benefit $ $ 3.9 $ 0.07
 

In the third quarter of 2015, G&W’s results included business development and related costs of $2.0 million primarily related to the integration of Freightliner and a net gain on the sale of assets of $1.2 million. The third quarter of 2015 also included a tax benefit of $0.4 million related to differences between book income tax expense and the final tax returns filed in September of 2015 related to the previous fiscal year.

G&W’s third quarter of 2014 results included business development and related costs of $0.7 million and a net gain on the sale of assets of $1.2 million. The third quarter of 2014 also included an income tax expense of $0.7 million related to differences between book income tax expense and the final tax returns filed in September of 2014 related to the previous fiscal year and an income tax benefit of $3.9 million associated with the companies acquired as a result of the RailAmerica acquisition.

Third Quarter Results by Segment

Operating revenues from G&W's North American Operations decreased $30.5 million, or 8.8%, to $314.6 million in the third quarter of 2015, compared with $345.1 million in the third quarter of 2014. Excluding $4.0 million of revenues from new operations and a $5.0 million decrease due to the impact of foreign currency depreciation, North American Operations same railroad revenues decreased by $29.5 million, or 8.7%, primarily due to declines in coal and metals shipments.

North American Operations traffic decreased 42,771 carloads, or 9.3%, to 419,571 carloads in the third quarter of 2015. Excluding 8,683 carloads from new operations, same railroad traffic decreased 51,454 carloads, or 11.1%, in the third quarter of 2015 compared with the third quarter of 2014. The same railroad traffic decrease was principally due to decreases of 15,814 carloads of coal and coke (Ohio Valley, Midwest, Central and Mountain West regions), 15,233 carloads of metals traffic (primarily in the Southern, Ohio Valley and Northeast regions), 8,403 carloads of Other traffic (primarily overhead Class I shipments), 3,680 carloads of minerals and stone traffic (primarily in the Midwest and Northeast regions), 2,375 carloads of lumber and forest products traffic (primarily in the Pacific Region) and 2,336 carloads of auto and auto parts traffic (primarily in the Pacific Region). All remaining traffic decreased by a net 3,613 carloads.

Income from operations from G&W's North American Operations in the third quarter of 2015 was $90.6 million, compared with $100.9 million in the third quarter of 2014. The operating ratio for North American Operations was 71.2% in the third quarter of 2015, compared with an operating ratio of 70.7% in the third quarter of 2014.

Operating revenues from G&W's Australian Operations decreased $20.5 million, or 25.1%, to $61.0 million in the third quarter of 2015, compared with $81.5 million in the third quarter of 2014. Excluding $11.9 million of revenues from the newly acquired operations of Freightliner Australia and a $17.6 million decrease due to the impact of foreign currency depreciation, Australian Operations same railroad revenues decreased by $14.8 million, or 23.1%, primarily due to a decrease in freight revenues resulting from a decline in iron ore shipments.

Australian Operations traffic decreased 9,026 carloads, or 15.7%, to 48,532 carloads in the third quarter of 2015. The traffic decrease was principally due to a decrease of 8,623 carloads of metallic ores traffic. All remaining traffic decreased by a net 403 carloads.

Income from operations from G&W's Australian Operations in the third quarter of 2015 was $15.0 million, compared with $22.4 million in the third quarter of 2014. The operating ratio for Australian Operations was 75.5% in the third quarter of 2015, compared with an operating ratio of 72.6% in the third quarter of 2014.

Operating revenues from G&W's U.K./European Operations increased $164.8 million to $170.7 million in the third quarter of 2015, compared with $6.0 million in the third quarter of 2014. Excluding $165.5 million of revenues from the newly acquired Freightliner U.K./European operations and a $1.0 million decrease due to the impact of foreign currency depreciation, U.K./European Operations same railroad revenues increased by $0.2 million, or 4.3%. U.K./European Operations traffic consisted of 307,453 carloads in the third quarter of 2015, primarily related to traffic from G&W’s newly acquired Freightliner U.K./European operations.

Income from operations from U.K./European Operations in the third quarter of 2015 was $12.0 million with an operating ratio of 93.0%. The prior year is not comparable because over 95% of the revenue and income from operations was generated from the recently acquired Freightliner business. As a reminder, our U.K./European Operations require substantially lower capital expenditures and generate a higher operating ratio than our other segments.

Free Cash Flow (1)

G&W’s free cash flow for the nine months ended September 30, 2015 and 2014 was as follows (in millions):

    Nine Months Ended
September 30,
2015   2014
Net cash provided by operating activities $ 344.3 $ 369.0
Net cash used in investing activities, excluding new business investments (927.4 ) (368.5 )
Add back: net cash used for acquisitions (a) 786.3   220.5  
Free cash flow before new business investments 203.1 221.0
New business investments (58.6 ) (71.5 )
Free cash flow (1) $ 144.5   $ 149.5  
 

(a) The 2015 period primarily consisted of net cash used for the acquisition of Freightliner and Pinsly Arkansas as well as $32.0 million in cash paid for incremental expenses related to the purchase and integration of the Freightliner acquisition. The 2014 period primarily consisted of net cash used for the Rapid City, Pierre & Eastern Railroad, Inc. (RCP&E) acquisition.

Conference Call and Webcast Details

As previously announced, G&W’s conference call to discuss financial results for the third quarter of 2015 will be held on Friday, October 30, 2015, at 11 a.m. EDT. The dial-in number for the teleconference in the U.S. is (800) 230-1096; outside the U.S. is (612) 332-0802, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors. Management will be referring to a slide presentation that will also be available at gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors until the following quarter’s earnings press release. Telephone replay is available for 30 days beginning at 1 p.m. EDT on October 30, 2015, by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 345266.

About G&W

G&W owns or leases 120 freight railroads worldwide that are organized in 11 operating regions with 7,500 employees and more than 2,500 customers.

  • G&W’s nine North American regions serve 41 U.S. states and four Canadian provinces and include 113 short line and regional freight railroads with more than 13,000 track-miles.
  • G&W’s Australia Region provides rail freight services in New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line.
  • G&W’s U.K./European Region is led by Freightliner, the U.K.’s largest rail maritime intermodal operator and second-largest rail freight company. Operations also include heavy-haul in Poland and Germany and cross-border intermodal services connecting Northern European seaports with key industrial regions throughout the continent.

G&W subsidiaries provide rail service at more than 40 major ports in North America, Australia and Europe and perform 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,” “could,” “should,” “seeks,” “expects,” “will,” “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 that are difficult to forecast, including the following: risks related to the operation of our railroads; severe weather conditions and other natural occurrences, which could result in shutdowns, derailments, railroad network congestion or other substantial disruption of operations; customer demand and changes in our operations; exposure to the credit risk of customers and counterparties; changes in commodity prices; consummation and integration of acquisitions; economic, political and industry conditions (including employee strikes or work stoppages); 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, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to various legal claims and lawsuits; increase in, or volatility associated with, expenses related to estimated claims, self-insured retention amounts, and insurance coverage limits; consummation of new business opportunities; decrease in revenues and/or increase in costs and expenses; susceptibility to the risks of doing business in foreign countries; our ability to realize the expected synergies associated with acquisitions; and others including, but not limited to, those noted in our 2014 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. G&W does not undertake, and expressly disclaims, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

1. Adjusted income from operations (adjusting operating income), adjusted net income, adjusted diluted earnings per common share (EPS) and free cash flow are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance 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 a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, 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, 2015 AND 2014
(in thousands, except per share amounts)
(unaudited)
           
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
OPERATING REVENUES $ 546,299 $ 432,543 $ 1,485,548 $ 1,223,385
OPERATING EXPENSES 428,740   309,427   1,195,918   915,285  
INCOME FROM OPERATIONS 117,559 123,116 289,630 308,100
INTEREST INCOME 225 82 375 1,357
INTEREST EXPENSE (17,464 ) (12,654 ) (48,744 ) (44,109 )

LOSS ON SETTLEMENT OF FOREIGN CURRENCY
FORWARD PURCHASE CONTRACTS

(18,686 )
OTHER (LOSS)/INCOME, NET (103 ) (949 ) 545   446  
INCOME BEFORE INCOME TAXES 100,217 109,595 223,120 265,794
PROVISION FOR INCOME TAXES (36,855 ) (36,945 ) (83,017 ) (92,412 )
NET INCOME $ 63,362   $ 72,650   $ 140,103   $ 173,382  
BASIC EARNINGS PER COMMON SHARE $ 1.12   $ 1.31   $ 2.47   $ 3.14  
WEIGHTED AVERAGE SHARES - BASIC 56,819   55,600   56,673   55,167  
DILUTED EARNINGS PER COMMON SHARE $ 1.10   $ 1.27   $ 2.42   $ 3.05  
WEIGHTED AVERAGE SHARES - DILUTED 57,846   57,014   57,833   56,943  
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)
     
September 30, December 31,
2015 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,973 $ 59,727
Accounts receivable, net 359,116 357,278
Materials and supplies 43,817 30,251
Prepaid expenses and other 40,367 24,176
Deferred income tax assets, net 44,708   76,994
Total current assets 526,981   548,426
PROPERTY AND EQUIPMENT, net 4,086,213 3,788,482
GOODWILL 949,489 628,815
INTANGIBLE ASSETS, net 1,108,629 587,663
DEFERRED INCOME TAX ASSETS, net 1,971 2,500
OTHER ASSETS, net 43,263   39,867
Total assets $ 6,716,546   $ 5,595,753
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 48,784 $ 67,398
Accounts payable 293,944 290,746
Accrued expenses 139,552   106,094
Total current liabilities 482,280   464,238
LONG-TERM DEBT, less current portion 2,250,997 1,548,051
DEFERRED INCOME TAX LIABILITIES, net 1,086,027 908,852
DEFERRED ITEMS - grants from outside parties 288,266 279,286
OTHER LONG-TERM LIABILITIES 178,079 37,346
TOTAL EQUITY 2,430,897   2,357,980
Total liabilities and equity $ 6,716,546   $ 5,595,753
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands)
(unaudited)
    Nine Months Ended
September 30,
2015   2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 140,103 $ 173,382
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 138,568 116,130
Stock-based compensation 10,341 9,063
Excess tax benefits from share-based compensation (1,393 ) (5,483 )
Deferred income taxes 46,795 62,612
Net gain on sale of assets (1,981 ) (3,444 )
Loss on settlement of foreign currency forward purchase contracts 18,686
Insurance proceeds received 103 5,527
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net 52,847 (32,222 )
Materials and supplies (2,325 ) (1,070 )
Prepaid expenses and other 14,929 5,568
Accounts payable and accrued expenses (71,446 ) 34,990
Other assets and liabilities, net (970 ) 3,950  
Net cash provided by operating activities 344,257   369,003  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (276,150 ) (271,696 )
Grant proceeds from outside parties 31,456 43,518
Cash paid for acquisitions, net of cash acquired (735,556 ) (220,542 )
Net payment from settlement of foreign currency forward purchase contracts related to an acquisition (18,686 )
Insurance proceeds for the replacement of assets 9,658 4,112
Proceeds from disposition of property and equipment 3,223   4,562  
Net cash used in investing activities (986,055 ) (440,046 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases (502,839 ) (378,763 )
Proceeds from issuance of long-term debt 1,139,511 398,761
Debt amendment/issuance costs (9,622 ) (3,880 )
Proceeds from employee stock purchases 5,478 9,574
Excess tax benefits from share-based compensation 1,393 5,483
Treasury stock acquisitions (3,245 ) (4,062 )
Net cash provided by financing activities 630,676   27,113  
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (9,632 ) (154 )
DECREASE IN CASH AND CASH EQUIVALENTS (20,754 ) (44,084 )
CASH AND CASH EQUIVALENTS, beginning of period 59,727   62,876  
CASH AND CASH EQUIVALENTS, end of period $ 38,973   $ 18,792  
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
         
Three Months Ended September 30,
2015 2014
Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 379,789 69.5% $ 331,042 76.5%
Freight-related revenues 144,277 26.4% 74,022 17.1%
All other revenues 22,233   4.1% 27,479   6.4%
Total operating revenues $ 546,299   100.0% $ 432,543   100.0%

 

Operating expenses:

Labor and benefits $ 158,675 29.1% $ 121,152 28.0%
Equipment rents 44,630 8.2% 22,934 5.3%
Purchased services 55,291 10.1% 24,861 5.7%
Depreciation and amortization 48,303 8.8% 40,277 9.3%
Diesel fuel used in train operations 34,264 6.3% 36,089 8.3%
Electricity used in train operations 5,164 0.9% 437 0.1%
Casualties and insurance 11,466 2.1% 8,702 2.0%
Materials 25,140 4.6% 21,195 4.9%
Trackage rights 21,765 4.0% 14,174 3.3%
Net gain on sale of assets (1,174 ) (0.2)% (1,237 ) (0.3)%
Other expenses 25,216   4.6% 20,843   4.9%
Total operating expenses $ 428,740   78.5% $ 309,427   71.5%
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
               

Three Months Ended September 30,
2015

North American
Operations

Australian
Operations

U.K./European
Operations

Total
Operations

Amount    

% of
Revenue

Amount    

% of
Revenue

Amount    

% of
Revenue

Amount    

% of
Revenue

Operating revenues:

Freight revenues $ 241,410 76.7 % $ 32,780 53.7 % $ 105,599 61.9 % $ 379,789 69.5 %
Freight-related revenues 56,795 18.1 % 26,156 42.9 % 61,326 35.9 % 144,277 26.4 %
All other revenues 16,358   5.2 % 2,077   3.4 % 3,798   2.2 % 22,233   4.1 %
Total operating revenues $ 314,563   100.0 % $ 61,013   100.0 % $ 170,723   100.0 % $ 546,299   100.0 %

Operating expenses:

Labor and benefits $ 93,887 29.8 % $ 16,078 26.4 % $ 48,710 28.6 % $ 158,675 29.1 %
Equipment rents 16,669 5.3 % 3,083 5.1 % 24,878 14.6 % 44,630 8.2 %
Purchased services 17,263 5.5 % 5,080 8.3 % 32,948 19.3 % 55,291 10.1 %
Depreciation and amortization 35,158 11.2 % 7,151 11.7 % 5,994 3.5 % 48,303 8.8 %
Diesel fuel used in train operations 16,444 5.2 % 6,004 9.8 % 11,816 6.9 % 34,264 6.3 %
Electricity used in train operations % % 5,164 3.0 % 5,164 0.9 %
Casualties and insurance 7,547 2.4 % 1,696 2.8 % 2,223 1.3 % 11,466 2.1 %
Materials 13,704 4.4 % 2,964 4.9 % 8,472 5.0 % 25,140 4.6 %
Trackage rights 6,023 1.9 % 2,457 4.0 % 13,285 7.8 % 21,765 4.0 %
Net gain on sale of assets (1,025 ) (0.3 )% (7 ) % (142 ) (0.1 )% (1,174 ) (0.2 )%
Other expenses 18,329   5.8 % 1,541   2.5 % 5,346   3.1 % 25,216   4.6 %
Total operating expenses $ 223,999   71.2 % $ 46,047   75.5 % $ 158,694   93.0 % $ 428,740   78.5 %
Income from operations $ 90,564   $ 14,966   $ 12,029   $ 117,559  

Net expenditures for additions to
property & equipment

$ 86,620 $ 6,354 $ 14,195 $ 107,169
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
               

Three Months Ended September 30,
2014

North American
Operations

Australian
Operations

U.K./European
Operations

Total
Operations

Amount    

% of
Revenue

Amount    

% of
Revenue

Amount    

% of
Revenue

Amount    

% of
Revenue

Operating revenues:

Freight revenues $ 267,584 77.5 % $ 63,458 77.8 % $ % $ 331,042 76.5 %
Freight-related revenues 53,420 15.5 % 14,629 18.0 % 5,973 100.0 % 74,022 17.1 %
All other revenues 24,088   7.0 % 3,391   4.2 %   % 27,479   6.4 %
Total operating revenues $ 345,092   100.0 % $ 81,478   100.0 % $ 5,973   100.0 % $ 432,543   100.0 %

Operating expenses:

Labor and benefits $ 99,579 28.9 % $ 19,683 24.2 % $ 1,890 31.6 % $ 121,152 28.0 %
Equipment rents 19,693 5.7 % 2,521 3.1 % 720 12.1 % 22,934 5.3 %
Purchased services 16,442 4.8 % 7,591 9.3 % 828 13.9 % 24,861 5.7 %

Depreciation and
amortization

32,809 9.5 % 7,072 8.7 % 396 6.6 % 40,277 9.3 %

Diesel fuel used in train
operations

29,039 8.4 % 6,475 7.9 % 575 9.6 % 36,089 8.3 %

Electricity used in train
operations

% % 437 7.3 % 437 0.1 %
Casualties and insurance 4,214 1.2 % 4,474 5.5 % 14 0.2 % 8,702 2.0 %
Materials 18,095 5.2 % 2,881 3.5 % 219 3.7 % 21,195 4.9 %
Trackage rights 7,327 2.1 % 5,953 7.3 % 894 15.0 % 14,174 3.3 %
Net gain on sale of assets (1,132 ) (0.3 )% (75 ) (0.1 )% (30 ) (0.5 )% (1,237 ) (0.3 )%
Other expenses 18,078   5.2 % 2,548   3.2 % 217   3.6 % 20,843   4.9 %
Total operating expenses $ 244,144   70.7 % $ 59,123   72.6 % $ 6,160   103.1 % $ 309,427   71.5 %
Income/(loss) from operations $ 100,948   $ 22,355   $ (187 ) $ 123,116  

Net expenditures for additions to
property & equipment

$ 73,159 $ 7,661 $ 81 $ 80,901
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
                         

Three Months Ended
September 30, 2015

North American
Operations

Australian
Operations

U.K./European
Operations

Total
Operations

Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 29,643 51,010 $ 581 $ 4,796 11,442 $ 419 $ 131 169 $ 775 $ 34,570 62,621 $ 552
Autos & Auto Parts 4,302 6,997 615 4,302 6,997 615
Chemicals & Plastics 34,942 43,829 797 34,942 43,829 797
Coal & Coke 24,609 71,197 346 6,616 17,678 374 31,225 88,875 351
Food & Kindred Products 8,712 15,261 571 8,712 15,261 571
Intermodal 6 66 91 18,133 16,045 1,130 79,337 243,161 326 97,476 259,272 376
Lumber & Forest Products 20,154 34,770 580 20,154 34,770 580
Metallic Ores 4,897 6,291 778 7,686 5,724 1,343 12,583 12,015 1,047
Metals 26,522 34,507 769 26,522 34,507 769
Minerals & Stone 31,411 56,977 551 1,771 15,224 116 18,119 43,539 416 51,301 115,740 443
Petroleum Products 16,365 25,242 648 394 97 4,062 16,759 25,339 661
Pulp & Paper 29,348 45,270 648 29,348 45,270 648
Waste 5,386 11,453 470 5,386 11,453 470
Other 5,113   16,701   306     1,396   2,906   480 6,509   19,607   332
Totals $ 241,410   419,571   $ 575 $ 32,780   48,532   $ 675 $ 105,599   307,453   $ 343 $ 379,789   775,556   $ 490

Three Months Ended
September 30, 2014

    North American Operations   Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 32,153 52,337 $ 614 $ 7,178 12,219 $ 587 $ $ $ 39,331 64,556 $ 609
Autos & Auto Parts 6,389 9,333 685 6,389 9,333 685
Chemicals & Plastics 34,889 43,292 806 34,889 43,292 806
Coal & Coke 31,771 87,011 365 31,771 87,011 365
Food & Kindred Products 9,109 15,494 588 9,109 15,494 588
Intermodal 138 1,216 113 24,063 16,235 1,482 24,201 17,451 1,387
Lumber & Forest Products 21,445 35,376 606 21,445 35,376 606
Metallic Ores 4,585 5,638 813 29,261 14,347 2,040 33,846 19,985 1,694
Metals 35,390 49,329 717 35,390 49,329 717
Minerals & Stone 34,089 56,280 606 2,562 14,681 175 36,651 70,961 516
Petroleum Products 15,710 25,735 610 394 76 5,184 16,104 25,811 624
Pulp & Paper 30,639 45,368 675 30,639 45,368 675
Waste 5,254 10,839 485 5,254 10,839 485
Other 6,023   25,094   240         6,023   25,094   240
Totals $ 267,584   462,342   $ 579 $ 63,458   57,558   $ 1,103 $     $ $ 331,042   519,900   $ 637

* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
         
Nine Months Ended September 30,
2015 2014
Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

 

Freight revenues $ 1,053,664 70.9% $ 935,526 76.5%
Freight-related revenues 358,325 24.1% 211,987 17.3%
All other revenues 73,559   5.0% 75,872   6.2%
Total operating revenues $ 1,485,548   100.0% $ 1,223,385   100.0%

 

Operating expenses:

Labor and benefits $ 456,089 30.7% $ 353,179 28.9%
Equipment rents 110,145 7.4% 61,866 5.1%
Purchased services 135,849 9.1% 77,257 6.3%
Depreciation and amortization 138,568 9.3% 116,130 9.5%
Diesel fuel used in train operations 101,856 6.9% 115,403 9.4%
Electricity used in train operations 10,530 0.7% 909 0.1%
Casualties and insurance 30,027 2.0% 31,071 2.5%
Materials 70,764 4.8% 56,710 4.6%
Trackage rights 57,270 3.9% 40,461 3.3%
Net gain on sale of assets (1,981 ) (0.1)% (3,444 ) (0.3)%
Other expenses 86,801   5.8% 65,743   5.4%
Total operating expenses $ 1,195,918   80.5% $ 915,285   74.8%
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
         

Nine Months Ended September 30,
2015

North American
Operations

Australian
Operations

U.K./European
Operations

Total
Operations

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Operating revenues:

Freight revenues $ 722,593 76.6 % $ 118,602 63.2 % $ 212,469 59.9 % $ 1,053,664 70.9 %
Freight-related revenues 169,906 18.0 % 62,094 33.0 % 126,325 35.6 % 358,325 24.1 %
All other revenues 50,668   5.4 % 7,067   3.8 % 15,824   4.5 % 73,559   5.0 %
Total operating revenues $ 943,167   100.0 % $ 187,763   100.0 % $ 354,618   100.0 % $ 1,485,548   100.0 %

Operating expenses:

Labor and benefits $ 303,635 32.2 % $ 52,212 27.8 % $ 100,242 28.2 % $ 456,089 30.7 %
Equipment rents 50,940 5.4 % 9,289 4.9 % 49,916 14.1 % 110,145 7.4 %
Purchased services 46,612 4.9 % 15,838 8.4 % 73,399 20.7 % 135,849 9.1 %
Depreciation and amortization 105,399 11.2 % 20,771 11.1 % 12,398 3.5 % 138,568 9.3 %
Diesel fuel used in train operations 60,226 6.4 % 15,903 8.5 % 25,727 7.3 % 101,856 6.9 %
Electricity used in train operations % % 10,530 3.0 % 10,530 0.7 %
Casualties and insurance 20,661 2.2 % 5,463 2.9 % 3,903 1.1 % 30,027 2.0 %
Materials 45,389 4.8 % 7,898 4.2 % 17,477 4.9 % 70,764 4.8 %
Trackage rights 18,816 2.0 % 10,877 5.8 % 27,577 7.8 % 57,270 3.9 %
Net gain on sale of assets (1,724 ) (0.2 )% (45 ) % (212 ) (0.1 )% (1,981 ) (0.1 )%
Other expenses 68,947   7.3 % 5,224   2.8 % 12,630   3.6 % 86,801   5.8 %
Total operating expenses $ 718,901   76.2 % $ 143,430   76.4 % $ 333,587   94.1 % $ 1,195,918   80.5 %
Income from operations $ 224,266   $ 44,333   $ 21,031   $ 289,630  

Net expenditures for additions
to property & equipment

$ 205,330 $ 20,128 $ 19,236 $ 244,694
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
         

Nine Months Ended September 30,
2014

North American
Operations

Australian
Operations

U.K./European
Operations

Total
Operations

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Operating revenues:

 
Freight revenues $ 748,891 77.5 % $ 186,635 77.5 % $ % $ 935,526 76.5 %
Freight-related revenues 152,863 15.8 % 43,104 17.9 % 16,020 100.0 % 211,987 17.3 %
All other revenues 64,722   6.7 % 11,150   4.6 %   % 75,872   6.2 %
Total operating revenues $ 966,476   100.0 % $ 240,889   100.0 % $ 16,020   100.0 % $ 1,223,385   100.0 %

Operating expenses:

Labor and benefits $ 292,726 30.3 % $ 54,700 22.7 % $ 5,753 35.9 % $ 353,179 28.9 %
Equipment rents 52,392 5.4 % 7,542 3.2 % 1,932 12.1 % 61,866 5.1 %
Purchased services 46,988 4.9 % 27,742 11.5 % 2,527 15.8 % 77,257 6.3 %
Depreciation and amortization 93,633 9.7 % 21,306 8.8 % 1,191 7.4 % 116,130 9.5 %
Diesel fuel used in train operations 92,684 9.6 % 21,199 8.8 % 1,520 9.5 % 115,403 9.4 %
Electricity used in train operations % % 909 5.7 % 909 0.1 %
Casualties and insurance 21,691 2.2 % 9,215 3.8 % 165 1.0 % 31,071 2.5 %
Materials 51,014 5.3 % 5,001 2.1 % 695 4.3 % 56,710 4.6 %
Trackage rights 21,462 2.2 % 16,911 7.0 % 2,088 13.0 % 40,461 3.3 %
Net gain on sale of assets (3,146 ) (0.3 )% (237 ) (0.1 )% (61 ) (0.4 )% (3,444 ) (0.3 )%
Other expenses 54,105   5.6 % 10,889   4.5 % 749   4.7 % 65,743   5.4 %
Total operating expenses $ 723,549   74.9 % $ 174,268   72.3 % $ 17,468   109.0 % $ 915,285   74.8 %
Income/(loss) from operations $ 242,927   $ 66,621   $ (1,448 ) $ 308,100  

Net expenditures for additions
to property & equipment

$ 212,058 $ 15,541 $ 579 $ 228,178
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
                         

Nine Months Ended September 30,
2015

North American Operations Australian Operations U.K./European Operations Total Operations
Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 94,762 163,037 $ 581 $ 18,222 40,854 $ 446 $ 272 376 $ 723 $ 113,256 204,267 $ 554
Autos & Auto Parts 13,675 21,670 631 13,675 21,670 631
Chemicals & Plastics 106,181 135,509 784 106,181 135,509 784
Coal & Coke 73,713 214,254 344 16,468 43,162 382 90,181 257,416 350
Food & Kindred Products 26,235 45,875 572 26,235 45,875 572
Intermodal 7 78 90 54,293 46,051 1,179 155,633 476,660 327 209,933 522,789 402
Lumber & Forest Products 60,147 102,325 588 60,147 102,325 588
Metallic Ores 15,018 18,770 800 39,666 23,607 1,680 54,684 42,377 1,290
Metals 79,935 104,232 767 79,935 104,232 767
Minerals & Stone 89,541 160,233 559 5,436 43,918 124 37,123 91,585 405 132,100 295,736 447
Petroleum Products 49,417 76,154 649 985 230 4,283 50,402 76,384 660
Pulp & Paper 85,722 133,337 643 85,722 133,337 643
Waste 13,390 28,970 462 13,390 28,970 462
Other 14,850   51,728   287     2,973   6,192   480 17,823   57,920   308
Totals $ 722,593   1,256,172   $ 575 $ 118,602   154,660   $ 767 $ 212,469   617,975   $ 344 $ 1,053,664   2,028,807   $ 519
 

Nine Months Ended September 30,
2014

   

North American Operations

  Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 86,754 153,704 $ 564 $ 26,346 44,872 $ 587 $ $ $ 113,100 198,576 $ 570
Autos & Auto Parts 17,736 25,038 708 17,736 25,038 708
Chemicals & Plastics 102,031 126,007 810 102,031 126,007 810
Coal & Coke 94,908 262,715 361 94,908 262,715 361
Food & Kindred Products 26,151 44,804 584 26,151 44,804 584
Intermodal 333 2,900 115 69,572 46,900 1,483 69,905 49,800 1,404
Lumber & Forest Products 61,937 103,219 600 61,937 103,219 600
Metallic Ores 13,381 16,504 811 82,858 42,195 1,964 96,239 58,699 1,640
Metals 99,417 139,142 715 99,417 139,142 715
Minerals & Stone 81,726 143,104 571 6,780 39,360 172 88,506 182,464 485
Petroleum Products 47,357 78,423 604 1,079 211 5,114 48,436 78,634 616
Pulp & Paper 87,445 130,495 670 87,445 130,495 670
Waste 13,656 29,918 456 13,656 29,918 456
Other 16,059   67,399   238         16,059   67,399   238
Totals $ 748,891   1,323,372   $ 566 $ 186,635   173,538   $ 1,075 $     $ $ 935,526   1,496,910   $ 625

* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.

Non-GAAP Financial Measures

This earnings release contains references to adjusted income from operations (adjusted operating income), adjusted net income, adjusted diluted earnings per common share (EPS) and free cash flow, which are “non-GAAP financial measures” as this term is defined in 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. In accordance with these rules, G&W has reconciled these non-GAAP financial measures to their most directly comparable U.S. GAAP measures.

Management views these non-GAAP financial measures as important measures of G&W’s operating performance or, in the case of free cash flow, an important financial measure of how well G&W is managing its assets and a useful indicator of cash flow that may be available for discretionary use by G&W. Management also views these non-GAAP financial measures as a way to assess comparability between periods. Key limitations of the free cash flow measure include the assumptions that G&W 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.

These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies.

The following tables set forth reconciliations of each of these non-GAAP financial measures to their most directly comparable GAAP measure (in millions, except per share amounts).

Reconciliations of Non-GAAP Financial Measures

 

Adjusted Income from Operations

    Three Months Ended
September 30,
2015   2014
Operating revenues $ 546.3 $ 432.5
Operating expenses 428.7   309.4  
Income from operations (a) $ 117.6   $ 123.1  
 
Operating expenses $ 428.7 $ 309.4
Business development and related costs (2.0 ) (0.7 )
Net gain on sale of assets 1.2   1.2  
Adjusted operating expenses $ 428.0   $ 309.9  
 
Adjusted income from operations $ 118.3   $ 122.6  
 
(a)   Income from operations is calculated as operating revenues less operating expenses.
 

Adjusted Net Income and Adjusted Diluted Earnings Per Common Share

   
Three Months Ended September 30, 2015 Net Income

Diluted
Earnings/
(Loss) Per
Common
Share

As reported $ 63.4 $ 1.10
Add back certain items, net of tax:
Business development and related costs 1.3 0.02
Net gain on sale of assets (0.9 ) (0.02 )
Adjustment for tax returns from previous fiscal year (0.4 ) (0.01 )
As adjusted $ 63.3   $ 1.09  
 
 
Three Months Ended September 30, 2014 Net Income

Diluted
Earnings/
(Loss) Per
Common
Share

As reported $ 72.7 $ 1.27
Add back certain items, net of tax:
Business development and related costs 0.5 0.01
Net gain on sale of assets (0.9 ) (0.02 )
Adjustment for tax returns from previous fiscal year 0.7 0.01
RailAmerica-related tax benefit (3.9 ) (0.07 )
As adjusted $ 69.1   $ 1.21  
 
 
Three Months Ended June 30, 2015 Net Income

Diluted
Earnings/
(Loss) Per
Common
Share

As reported $ 52.8 $ 0.92
Add back certain items, net of tax:
Business development and related costs 0.5 0.01
Net gain on sale of assets

(0.3

)

(0.01 )
As adjusted $ 53.0   $ 0.93  
 
 

Free Cash Flow

 
Nine Months Ended
September 30,
2015 2014
Net cash provided by operating activities $ 344.3 $ 369.0
Net cash used in investing activities (986.1 ) (440.0 )

Add back: net cash used for acquisitions

786.3   220.5  
Free cash flow $ 144.5 $ 149.5
New business investments 58.6   71.5  
Free cash flow before new business investments $ 203.1   $ 221.0  

G&W Corporate Communications
Michael Williams, 1-203-202-8900
mwilliams@gwrr.com


Source: Business Wire (October 30, 2015 - 6:00 AM EDT)

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