(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | |
Class A Common Stock | GWR | New York Stock Exchange | (NYSE) |
Preliminary Unaudited Financial Results: Q3 2019 | ||||||||
($ in millions) | Q3 '19 | Q3 '18 | % change YoY | |||||
North America Same Railroad Revenue | $ | 352.4 | $ | 350.6 | 0.5 | % | ||
U.K./Europe Revenue | 159.7 | 170.9 | (6.6 | )% | ||||
Total Revenue | $ | 512.1 | $ | 521.5 | (1.8 | )% | ||
North America Net Income | $ | 65.7 | $ | 71.2 | (7.7 | )% | ||
U.K./Europe Net Loss | (2.0 | ) | (4.5 | ) | 55.5 | % | ||
Total Net Income | $ | 63.7 | $ | 66.7 | (4.5 | )% | ||
North America Same Railroad Adjusted EBITDA(a) | $ | 146.7 | $ | 145.4 | 0.9 | % | ||
U.K./Europe Adjusted EBITDA(a) | 11.6 | 17.6 | (34.4 | )% | ||||
Total Adjusted EBITDA | $ | 158.3 | $ | 163.0 | (2.9 | )% | ||
Margin - % | 30.9 | % | 31.3 | % | (0.4 | )% | ||
North America Additions to Property & Equipment | $ | 51.6 | $ | 46.1 | 11.9 | % | ||
U.K./Europe Additions to Property & Equipment | 6.3 | 6.7 | (5.5 | )% | ||||
Total Capital Expenditures | $ | 57.9 | $ | 52.8 | 9.7 | % | ||
(a) Adjusted Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP financial measure and is 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 its most directly comparable financial measure in accordance with GAAP, is included below. | ||||||||
Commentary | ||||||||
North America Revenue: Higher switching (+$3.0 million), agricultural products (+$4.5 million), minerals & stone (+$3.0 million) and chemicals & plastics (+$1.7 million), partially offset by lower metals ($6.3 million) and coal & coke ($4.7 million) | ||||||||
U.K./Europe Revenue: Unfavorable impact from foreign currency exchange ($9.1 million), lower U.K. infrastructure ($1.4 million) and Middle East ($1.6 million), partially offset by higher U.K. intermodal freight (+$1.6 million) | ||||||||
North America EBITDA: Revenue growth and operational improvements (+$6.4 million) and gain on insurance recoveries (+$1.1 million), partially offset by higher casualties and insurance ($2.6 million) and maintenance of way expense ($3.3 million) | ||||||||
U.K./Europe EBITDA: Impact of lower revenue ($2.0 million), IT initiatives and relocation of Shared Services Center ($1.8 million) and foreign currency exchange impacts ($2.6 million) |
North America Same Railroad Carloads: Q3 2019 vs Q3 2018 | |||||||
(carloads in thousands) | Q3 '19 | Q3 '18 | % Change | Commentary | |||
Agricultural Products | 56 | 50 | 12.2 | % | Midwest grain and West Coast new business | ||
Autos & Auto Parts | 10 | 8 | 16.8 | % | Timing and West Coast export demand | ||
Chemicals & Plastics | 43 | 42 | 2.2 | % | Ethanol | ||
Coal & Coke | 53 | 70 | (24.9 | )% | Unplanned outages, pending plant closures, natural gas competition and high inventories | ||
Food & Kindred Products | 14 | 15 | (4.7 | )% | |||
Intermodal | 4 | 5 | (19.1 | )% | |||
Lumber & Forest Products | 35 | 37 | (6.2 | )% | Lumber and West Coast export logs | ||
Metallic Ores | 5 | 5 | 4.7 | % | |||
Metals | 34 | 42 | (19.9 | )% | Finished and scrap steel | ||
Minerals & Stone | 62 | 60 | 4.3 | % | Aggregates | ||
Petroleum Products | 26 | 25 | 3.0 | % | NGLs/LPGs | ||
Pulp & Paper | 41 | 44 | (8.3 | )% | Containerboard (market conditions) | ||
Waste | 16 | 16 | — | % | |||
Other | 17 | 19 | (8.5 | )% | Empty car traffic | ||
Total | 415 | 439 | (5.3 | )% | |||
Total ex. Coal | 363 | 368 | (1.5 | )% | |||
U.K./Europe Carloads: Q3 2019 vs Q3 2018 | |||||||
(carloads in thousands) | Q3 '19 | Q3 '18 | % Change | Commentary | |||
Agricultural Products | 1 | 1 | (27.8 | )% | |||
Coal & Coke | 1 | 4 | (65.6 | )% | Conclusion of services in the U.K. | ||
Intermodal | 179 | 188 | (4.7 | )% | Vessel omissions made by the shipping lines, market conditions and service cancellations (weather) | ||
Lumber & Forest Products | — | — | NM | ||||
Metallic Ores | — | — | NM | ||||
Minerals & Stone | 51 | 48 | 6.9 | % | New aggregates contracts in the U.K. | ||
Petroleum Products | 3 | — | NM | New contract in the U.K. | |||
Total | 236 | 241 | (2.4 | )% | |||
Total ex. Coal | 234 | 237 | (1.3 | )% |
($ in millions) | Q3 '19 | |||||||||||
North America | U.K./Europe | Total North America and U.K./Europe | ||||||||||
Net income/(loss) | $ | 65.7 | $ | (2.0 | ) | $ | 63.7 | |||||
Adjusted for: | ||||||||||||
Provision for income taxes | 16.9 | 0.5 | 17.3 | |||||||||
Interest expense, net | 12.6 | 0.8 | 13.4 | |||||||||
Depreciation and amortization expense | 39.2 | 10.1 | 49.2 | |||||||||
EBITDA | $ | 134.3 | $ | 9.4 | $ | 143.7 | ||||||
Adjusted for certain items: | ||||||||||||
Non-cash compensation cost | 3.8 | 0.4 | 4.3 | |||||||||
Corporate development and related costs | 7.8 | 0.2 | 7.9 | |||||||||
Restructuring and related costs | 0.3 | 3.2 | 3.6 | |||||||||
Other adjustments | 0.5 | (1.7 | ) | (1.2 | ) | |||||||
Adjusted EBITDA | $ | 146.7 | $ | 11.6 | $ | 158.3 | ||||||
Q3 '18 | ||||||||||||
North America | U.K./Europe | Total North America and U.K./Europe | ||||||||||
Net income/(loss) | $ | 71.2 | $ | (4.5 | ) | $ | 66.7 | |||||
Adjusted for: | ||||||||||||
Provision for income taxes | 22.6 | 6.0 | 28.6 | |||||||||
Interest expense, net | 10.3 | 2.9 | 13.2 | |||||||||
Depreciation and amortization expense | 41.4 | 9.1 | 50.5 | |||||||||
EBITDA | $ | 145.6 | $ | 13.5 | $ | 159.1 | ||||||
Divested operations(a) | (2.6 | ) | — | (2.6 | ) | |||||||
Same railroad EBITDA | $ | 143.0 | $ | 13.5 | $ | 156.4 | ||||||
Adjusted for certain items: | ||||||||||||
Non-cash compensation cost | 4.1 | 0.4 | 4.4 | |||||||||
Corporate development and related costs | 0.1 | 0.2 | 0.3 | |||||||||
Restructuring and related costs | — | 3.3 | 3.3 | |||||||||
Other adjustments | (1.7 | ) | 0.2 | (1.5 | ) | |||||||
Same railroad adjusted EBITDA | $ | 145.4 | $ | 17.6 | $ | 163.0 | ||||||
(a) | Represents EBITDA from two Canadian leases that expired at the end of 2018. |
Date: | October 24, 2019 | By: | /s/ Timothy J. Gallagher | |
Name: | Timothy J. Gallagher | |||
Title: | Chief Financial Officer |