EX-99 2 e17737ex99.txt PRESS RELEASE Exhibit 99 Genesee & Wyoming Reports Earnings for the First Quarter of 2004; Diluted EPS Increases 66.7% to $0.35 GREENWICH, Conn., May 3, 2004 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported today that net income in the first quarter of 2004 increased 71.1% to $9.5 million, compared to net income of $5.5 million in the first quarter of 2003. GWI's diluted earnings per share in the first quarter of 2004 increased 66.7% to $0.35 with 27.3 million shares outstanding, compared to diluted earnings per share of $0.21 with 26.6 million shares outstanding in the first quarter of 2003. In the first quarter of 2004, GWI's North American revenue increased 23.0% to $72.4 million compared to $58.9 million in the first quarter of 2003. Of this $13.5 million increase in revenue, $7.6 million was same-railroad growth and $5.9 million was from the acquisition of rail lines from Georgia-Pacific Corp. The growth in same-railroad revenue was led by an increase of $3.4 million in the Canada Region due primarily to strong shipments of winter wheat and a strengthening Canadian dollar, an increase of $1.5 million in the New York-Pennsylvania Region due to improving metals and autos shipments, and an increase of $1.2 million in the Rail Link Region due to several new customer contracts, including a contract to operate a terminal in Savannah, Georgia for CSX Corp. North American operating income was $11.6 million in the first quarter of 2004, a 44.7% increase over $8.0 million of operating income in the first quarter of 2003. GWI's North American operating ratio was 84.0% in the first quarter of 2004, a 2.4% improvement over an operating ratio of 86.4% in the first quarter of 2003. In Australia, ARG's revenue increased 54.3% to US$82.4 million in the first quarter of 2004, compared with US$53.4 million in the first quarter of 2003. This US$29.0 million increase in revenue was composed of $14.5 million in grain, US$4.9 million in other ores and minerals, US$4.0 million in iron ores and US$5.6 million in all other revenues. In Australian dollars, ARG's revenue increased 20.0% in the first quarter of 2004 compared with the first quarter of 2003. ARG's operating income in the first quarter of 2004 increased 46.3% to US$17.6 million, compared with operating income of US$12.1 million in the first quarter of 2003. ARG's operating ratio was 78.6% in the first quarter of 2004, compared with 77.4% in the first quarter of 2003. Equity income from ARG in the first quarter of 2004 was US$3.7 million, an 85.8% increase over equity income of US$2.0 in the first quarter of 2003. In comparing the first quarter of 2004 with the first quarter of 2003, the Australian dollar appreciated 28.6%. For the three months ended March 31, 2004, GWI's North American operations generated Free Cash Flow of $12.8 million (defined as Cash from Operations of $18.0 million less Cash used in Investing of $5.2 million) compared with $12.2 million of Free Cash Flow (defined as Cash from Operations of $14.0 million less Cash used in Investing of $1.9 million) in the first quarter of 2003. See the attached schedule for a description and discussion of Free Cash Flow. Mortimer B. Fuller III, Chairman and Chief Executive Officer of GWI, commented, "Despite severe winter weather that created difficult operating environments for our Canada, New York-Pennsylvania and Oregon Regions, we achieved excellent first quarter results due to a general improvement in economic conditions. Particularly noteworthy was the improvement in metals and auto shipments in our New York-Pennsylvania Region as well as the successful start-up of the Georgia-Pacific railroads, where traffic has been ahead of our expectations." Mr. Fuller continued, "Grain shipments in Australia have been moving smoothly and we expect continued strength in the coming months. With our first quarter Australian earnings increasing 86% and our first quarter North American earnings increasing 49%, we are pleased with the balanced growth in our business and remain optimistic in our 2004 outlook." As previously announced, GWI's conference call to discuss financial results for the first quarter will be held today at 11:00AM (Eastern Time). The dial-in number for the teleconference is (888) 428-4479 or the call may be accessed live over the Internet (listen only) directly at http://www.firstcallevents.com/service/ajwz405690973gf12.html or via the Investors tab of Genesee & Wyoming's website (www.gwrr.com). An audio replay of the conference call will be accessible via the Investors tab of Genesee & Wyoming's website (www.gwrr.com) starting this afternoon. GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. The Company operates over 8,100 miles of owned and leased track and more than 3,000 additional miles under track access arrangements. 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 conditions, customer demand, increased competition in relevant markets, and others. 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. GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2004 2003 REVENUES $72,403 $58,862 OPERATING EXPENSES 60,843 50,875 INCOME FROM OPERATIONS 11,560 7,987 INTEREST EXPENSE (2,435) (2,342) OTHER INCOME, NET 192 326 INCOME BEFORE INCOME TAXES AND EQUITY EARNINGS 9,317 5,971 PROVISION FOR INCOME TAXES 3,633 2,174 INCOME BEFORE EQUITY EARNINGS 5,684 3,797 EQUITY IN NET INCOME OF INTERNATIONAL AFFILIATES: AUSTRALIAN RAILROAD GROUP 3,742 2,014 SOUTH AMERICA 40 (277) NET INCOME 9,466 5,534 IMPACT OF PREFERRED STOCK OUTSTANDING 301 293 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $9,165 $5,241 BASIC EARNINGS PER SHARE: NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $0.40 $0.23 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 22,928 22,529 DILUTED EARNINGS PER SHARE: NET INCOME $0.35 $0.21 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 27,325 26,594 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, December 31, ASSETS 2004 2003 CURRENT ASSETS: Cash and cash equivalents $12,817 $11,118 Accounts receivable, net 51,627 54,656 Materials and supplies 5,430 5,204 Prepaid expenses and other 6,762 6,204 Deferred income tax assets, net 3,370 3,010 Total current assets 80,006 80,192 PROPERTY AND EQUIPMENT, net 315,375 315,345 INVESTMENT IN UNCONSOLIDATED AFFILIATES 122,940 117,664 GOODWILL 24,500 24,522 INTANGIBLE ASSETS, net 78,958 79,357 OTHER ASSETS, net 10,328 10,093 Total assets $632,107 $627,173 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $6,503 $6,589 Accounts payable 60,475 57,472 Accrued expenses 14,873 13,902 Total current liabilities 81,851 77,963 LONG-TERM DEBT, less current portion 139,510 151,433 DEFERRED INCOME TAX LIABILITIES, net 43,778 41,840 DEFERRED ITEMS - grants from governmental agencies 42,132 42,667 DEFERRED GAIN - sale/leaseback 3,713 3,982 OTHER LONG-TERM LIABILITIES 15,477 14,843 MINORITY INTEREST 3,391 3,365 REDEEMABLE CONVERTIBLE PREFERRED STOCK 24,045 23,994 TOTAL STOCKHOLDERS' EQUITY 278,210 267,086 Total liabilities and stockholders' equity $632,107 $627,173 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2004 March 31, 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $9,466 $5,534 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 4,730 3,724 Deferred income taxes 1,760 1,236 Net (gain) loss on sale and impairment of assets (93) 1 Equity earnings of unconsolidated international affiliates (3,782) (1,737) Minority interest expense 26 34 Tax benefit realized upon exercise of stock options 372 276 Changes in assets and liabilities, net of effect of acquisitions - Accounts receivable 2,953 6,994 Materials and supplies (237) (235) Prepaid expenses and other (575) 195 Accounts payable and accrued expenses 3,806 (2,294) Other assets and liabilities, net (424) 300 Net cash provided by operating activities 18,002 14,028 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of proceeds from government grants (5,301) (1,988) Locomotive upgrade project (52) Cash received from unconsolidated international affiliates 132 Proceeds from disposition of property and equipment, including sale/leasebacks 137 33 Net cash used in investing activities (5,164) (1,875) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term borrowings, including capital leases (44,160) (38,614) Proceeds from issuance of long-term debt 32,500 23,500 Proceeds from employee stock purchases 913 1,146 Purchase of treasury stock (49) (178) Dividend on Redeemable Convertible Preferred Stock (250) (250) Net cash used in financing activities (11,046) (14,396) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (93) 80 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,699 (2,163) CASH AND CASH EQUIVALENTS, beginning of period 11,118 11,028 CASH AND CASH EQUIVALENTS, end of period $12,817 $8,865 GENESEE & WYOMING INC. AND SUBSIDIARIES Selected Consolidated Financial Information (dollars in thousands) (Unaudited) Three Months Ended March 31, 2004 2003 % of % of Amount Revenue Amount Revenue Revenues: Freight $54,810 75.7% $44,526 75.6% Non-freight 17,593 24.3% 14,336 24.4% Total revenues $72,403 100.0% $58,862 100.0% Operating Expense Comparison: Natural Classification Labor and benefits $26,396 36.5% $21,867 37.1% Equipment rents 6,882 9.5% 5,001 8.5% Purchased services 4,281 5.9% 3,538 6.0% Depreciation and amortization 4,730 6.5% 3,724 6.3% Diesel fuel 5,645 7.8% 5,171 8.8% Casualties and insurance 3,707 5.1% 2,971 5.0% Materials 3,708 5.1% 3,696 6.3% Net (gain) loss on sale and impairment of assets (93) -0.1% 1 0.0% Other expenses 5,587 7.7% 4,906 8.4% Total operating expenses $60,843 84.0% $50,875 86.4% Functional Classification Transportation $24,666 34.1% $20,848 35.4% Maintenance of ways and structures 6,887 9.5% 6,138 10.4% Maintenance of equipment 11,682 16.1% 8,997 15.3% General and administrative 12,971 17.9% 11,167 19.0% Net (gain) loss on sale and impairment of assets (93) -0.1% 1 0.0% Depreciation and amortization 4,730 6.5% 3,724 6.3% Total operating expenses $60,843 84.0% $50,875 86.4% GENESEE & WYOMING INC. AND SUBSIDIARIES North America Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload) Three Months Ended Three Months Ended March 31, 2004 March 31, 2003 Freight Average Freight Average Commodity Group Revenues Carloads Revenue Revenues Carloads Revenue Per Per Carload Carload Coal, Coke & Ores $10,737 44,042 $244 $9,843 41,979 $234 Paper 9,520 22,984 414 7,326 17,874 410 Petroleum Products 6,314 8,310 760 6,488 8,690 747 Minerals & Stone 5,136 12,665 406 4,909 12,636 388 Lumber & Forest Products 5,838 18,034 324 3,863 12,079 320 Metals 5,655 17,838 317 4,274 15,217 281 Farm & Food Products 4,792 11,452 418 2,892 8,271 350 Chemicals-Plastics 3,872 7,468 518 2,578 5,675 454 Autos & Auto Parts 1,742 4,197 415 1,529 3,757 407 Intermodal 552 1,364 405 357 1,296 275 Other 652 2,854 228 467 2,456 190 Totals $54,810 151,208 362 $44,526 129,930 343 AUSTRALIAN RAILROAD GROUP PTY. LTD. CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands) (Unaudited - U.S. GAAP) Three Months Ended March 31, 2004 March 31, 2003 REVENUES $82,353 $53,360 OPERATING EXPENSES 64,713 41,032 RESTRUCTURING COSTS - 267 TOTAL OPERATING EXPENSES 64,713 41,299 INCOME FROM OPERATIONS 17,640 12,061 INTEREST EXPENSE (7,348) (7,064) OTHER INCOME, NET 403 759 INCOME BEFORE TAX 10,695 5,756 PROVISION FOR INCOME TAX 3,212 1,727 NET INCOME $7,483 $4,029 Australian Railroad Group Pty. Ltd. is 50% owned by Genesee & Wyoming Inc. AUSTRALIAN RAILROAD GROUP PTY. LTD. CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) (Unaudited - U.S. GAAP) March 31, 2004 December 31, 2003 ASSETS CURRENT ASSETS: Cash and cash equivalents $34,504 $26,618 Accounts receivable, net 48,705 47,764 Materials and supplies 9,902 10,033 Prepaid expenses and other 1,015 3,069 Total current assets 94,126 87,484 PROPERTY AND EQUIPMENT, net 492,284 478,808 DEFERRED INCOME TAX ASSETS, net 80,405 80,193 OTHER ASSETS, net 8,153 5,476 Total assets $674,968 $651,961 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $- $- Accounts payable 2,851 7,199 Accrued expenses 41,032 35,111 Current income tax liabilities 173 - Total current liabilities 44,056 42,310 LONG-TERM DEBT 375,193 367,892 DEFERRED INCOME TAX LIABILITIES, net 15,537 14,271 OTHER LONG-TERM LIABILITIES 2,082 2,031 FAIR VALUE OF INTEREST RATE SWAPS 11,574 9,133 SUBORDINATED NOTES TO STOCKHOLDERS 11,792 11,562 Total non-current liabilities 416,178 404,889 REDEEMABLE PREFERRED STOCK OF STOCKHOLDERS 16,534 16,212 TOTAL STOCKHOLDERS' EQUITY 198,200 188,550 Total liabilities and stockholders' equity $674,968 $651,961 Australian Railroad Group Pty. Ltd. is 50% owned by Genesee & Wyoming Inc. AUSTRALIAN RAILROAD GROUP PTY. LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) (Unaudited - U.S. GAAP) Three Months Ended March 31, 2004 March 31, 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $7,483 $4,029 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 6,714 5,157 Deferred income taxes 2,361 715 Net loss (gain) on sale and impairment of assets 484 (425) Changes in assets and liabilities 1,479 2,950 Net cash provided by operating activities 18,521 12,426 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (11,665) (3,578) Proceeds from disposition of property and equipment 484 1,050 Transfer to restricted funds on deposit - (531) Net cash used in investing activities (11,181) (3,059) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on borrowings - - Proceeds from borrowings - - Net cash provided by financing activities - - EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH AND CASH EQUIVALENTS 546 576 INCREASE IN CASH AND CASH EQUIVALENTS 7,886 9,943 CASH AND CASH EQUIVALENTS, beginning of period 26,618 5,882 CASH AND CASH EQUIVALENTS, end of period $34,504 $15,825 Australian Railroad Group Pty. Ltd. is 50% owned by Genesee & Wyoming Inc. AUSTRALIAN RAILROAD GROUP PTY. LTD. Selected Consolidated Financial Information (U.S. dollars in thousands) (Unaudited - U.S. GAAP) Three Months Ended March 31, 2004 2003 % of % of Amount Revenue Amount Revenue Revenues: Freight $70,940 86.1% $43,356 81.3% Non-freight 11,413 13.9% 10,004 18.7% Total railroad revenues $82,353 100.0% $53,360 100.0% Operating Expenses: Natural Classification Labor and benefits $14,256 17.3% $9,634 18.1% Equipment rents 710 0.9% 354 0.7% Purchased services 19,062 23.2% 12,660 23.7% Depreciation and amortization 6,714 8.1% 5,157 9.7% Diesel fuel 9,653 11.7% 4,940 9.3% Casualties and insurance 3,459 4.2% 1,850 3.5% Materials 3,303 4.0% 2,844 5.3% Net loss (gain) on sale and impairment of assets 484 0.6% (425) -0.8% Other expenses 7,072 8.6% 4,285 7.9% Total operating expenses $64,713 78.6% $41,299 77.4% Functional Classification Transportation $29,638 36.0% $16,005 30.0% Maintenance of ways and structures 9,707 11.8% 7,061 13.2% Maintenance of equipment 7,957 9.7% 6,369 11.9% General and administrative 10,213 12.4% 7,132 13.4% Net loss (gain) on sale and impairment of assets 484 0.6% (425) -0.8% Depreciation and amortization 6,714 8.1% 5,157 9.7% Total operating expenses $64,713 78.6% $41,299 77.4% Australian Railroad Group Pty. Ltd. is 50% owned by Genesee & Wyoming Inc. AUSTRALIAN RAILROAD GROUP PTY. LTD. Australian Railroad Freight Revenue, Carloads and Average Revenue Per Carload Comparison by Commodity Group (U.S. dollars in thousands) (Unaudited) Three Months Ended Three Months Ended March 31, 2004 March 31, 2003 Freight Average Freight Average Commodity Group Revenues Carloads Revenue Revenues Carloads Revenue Per Per Carload Carload Grain $26,261 66,563 $395 $11,749 27,812 $422 Other Ores and Minerals 15,078 28,158 535 10,189 24,795 411 Iron Ore 11,462 50,479 227 7,486 43,007 174 Alumina 5,019 39,416 127 3,771 37,436 101 Bauxite 3,212 30,217 106 2,754 31,899 86 Hook and Pull (Haulage) 464 2,776 167 797 1,301 613 Gypsum 1,008 12,793 79 655 10,629 62 Other 8,436 17,193 491 5,955 16,014 372 Total $70,940 247,595 287 $43,356 192,893 225 Australian Railroad Group Pty. Ltd. is 50% owned by Genesee & Wyoming Inc. 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 less Net Cash Used in Investing Activities, excluding the Cost of Acquisitions. Key limitations of the Free Cash Flow measure include the assumptions that GWI will be able to refinance its existing debt when it matures with new debt, and meet other cash flow obligations from financing activities, such as required dividend payments and 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 Generally Accepted Accounting Principles. The following table sets forth a reconciliation of GWI's Net Cash Provided by Operating Activities to GWI's Free Cash Flow: Three Months Ended 2004 2003 Net cash provided by operating activities $18,002 $14,028 Net cash used in investing activities (5,164) (1,875) Cash used for acquisitions -- -- Free cash flow $12,838 $12,153 SOURCE Genesee & Wyoming Inc. -0- 05/03/2004 /CONTACT: John C. Hellmann, Chief Financial Officer, Genesee & Wyoming Inc., +1-203-629-3722 / /Web site: http://www.gwrr.com / (GWR) CO: Genesee & Wyoming Inc. ST: Connecticut IN: TRN SU: ERN CCA