EX-99.1 2 v072962_ex99-1.htm Unassociated Document

Genesee & Wyoming Reports Results for the First Quarter of 2007

GREENWICH, Conn., May 1, 2007 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported that net income in the first quarter of 2007 increased 2.2% to $14.3 million, compared with net income of $14.0 million in the first quarter of 2006. GWI's diluted earnings per share (EPS) in the first quarter of 2007 increased 3.0% to $0.34 with 41.9 million shares outstanding, compared with diluted EPS of $0.33 with 42.4 million shares outstanding in the first quarter of 2006. Operating losses from GWI's hurricane-damaged Mexico operations reduced EPS by $0.03 in the first quarter of 2007 compared with no EPS impact in the first quarter of 2006. GWI also announced today that it had repurchased 1.5 million shares during the first quarter of 2007 at an average price of $25.30 per share.

Operating Results
 
In the first quarter of 2007, GWI's revenue increased 15.8% to $130.8 million, compared with $113.0 million in the first quarter of 2006. Revenue increased by $20.1 million due to acquisitions, primarily Genesee & Wyoming Australia Pty Ltd (GWA), partially offset by a same-railroad decrease in revenue of $2.3 million, of which $1.7 million was due to a decline in revenue from GWI's Mexico operations.
 
Same-railroad revenue in the U.S. and Canada decreased $0.6 million, as a $1.3 million increase in non-freight revenue, primarily due to new industrial switching contracts and higher revenue at GWI's port railroads, was more than offset by a $1.9 million decline in freight revenue. This decline in freight revenue was the result of a 7.3% decrease in carloads, partially offset by an increase in average revenue per carload of 5.3%. The decrease in freight revenue was principally composed of a $1.2 million decline in coal, a $0.8 million decline in lumber and forest products, and a $0.8 million decline in minerals and stone, partially offset by a net increase of $0.9 million in all other commodities. The increase in average revenue per car was due to higher rates of 7.0%, partially offset by a 0.8% decrease in fuel surcharges and a 0.9% decrease due to change in commodity mix. Including GWI's Mexico operations and the effect of acquisitions, average revenue per car increased 1.1%.
 
GWI's operating income in the first quarter of 2007 was $22.1 million, unchanged from the first quarter of 2006. The operating ratio was 83.1% in the first quarter of 2007, compared with an operating ratio of 80.5% in the first quarter of 2006. The operating ratio for the first quarter of 2007 was impacted by (i) a $1.4 million operating loss from GWI's Mexico operations, (ii) a tunnel fire in Oregon, which cost $0.7 million, and (iii) the higher operating ratio of the GWA acquisition (which includes low margin third-party fuel sales).
 
Free Cash Flow (dollars in millions) (1)

 
  
Quarter Ended
  
 
  
March 31,
  
 
  
2007
  
2006
  
           
Net cash provided by operating activities
 
$
30.2
  
$
27.5
  
Net cash used in investing activities
   
(1.4
)
  
(6.3
)
Free cash flow
 
$
28.8
  
$
21.2
  

For the quarter ended March 31, 2007, GWI's operations generated net cash from operating activities of $30.2 million and free cash flow of $28.8 million. For the quarter ended March 31, 2006, GWI generated net cash from operating activities of $27.5 million and free cash flow of $21.2 million. Net cash used in investing activities in the first quarter of 2007 included $6.0 million in purchases of property and equipment, partially offset by $4.5 million in cash received from government grants and insurance proceeds for capital projects completed in 2006.
 
 
Comments from the Chief Executive Officer
 
Mortimer B. Fuller, Chairman and Chief Executive Officer of GWI, commented, "Our financial results for the first quarter of 2007 were slightly weaker than our outlook, primarily due to lower shipments of paper and forest products in our Oregon and Southern Regions. Elsewhere in the U.S. and in Canada, our business is performing well in the current economy. Meanwhile, South Australia continues to meet our expectations thanks to strength from the natural resources sector.
 
"We remain intensely engaged with the Mexican Government in reaching an agreement with respect to the rebuilding of the Chiapas line in Mexico. Reaching resolution is of the highest priority to GWI, and we expect to determine if we can reach a mutually acceptable agreement with the Mexican Government in the near term."
 
"Conference Call and Webcast Details"
 
As previously announced, GWI's conference call to discuss financial results for the first quarter will be held Tuesday, May 1, 2007, at 11:00 a.m. (Eastern Time). The dial-in number for the teleconference is 888-428-4480; outside U.S., call 651-291-5254, 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 "First Quarter Earnings Audio Webcast." An audio replay of the conference call will be accessible via the Investors tab of GWI's website starting at 2:30 p.m. Tuesday, May 1, 2007.

About Genesee & Wyoming Inc.
 
GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. Operations currently include 48 railroads organized in 10 regions, as well as service at 12 U.S. ports, contract coal loading and industrial switching. GWI operates more than 6,800 miles of owned and leased track and approximately 3,700 additional miles under track access arrangements.

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 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. GWI disclaims any intention to update the current expectations or forward-looking statements contained in this press release.
 
(1) Management views Free Cash Flow, as reconciled within this earnings release, 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/Provided by Investing Activities, excluding the Cost of Acquisitions/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 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 (GAAP).

Contact:
Michael Williams of GWI Corporate Communications
1-203-629-3722
mwilliams@gwrr.com
 
 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)

 
  
Three Months Ended
  
 
  
March 31,
  
 
  
2007
  
2006
  
           
OPERATING REVENUES
 
$
130,827
  
$
112,982
  
               
OPERATING EXPENSES
   
108,758
   
90,922
  
INCOME FROM OPERATIONS
   
22,069
    
22,060
  
               
EQUITY INCOME OF UNCONSOLIDATED
              
INTERNATIONAL AFFILIATES
    
-
   
2,007
  
INTEREST INCOME
    
3,363
   
100
  
INTEREST EXPENSE
   
(3,823
)
  
(5,008
)
OTHER (EXPENSE) INCOME, NET
   
(83
)
  
445
  
               
INCOME BEFORE INCOME TAXES
   
21,526
   
19,604
  
               
PROVISION FOR INCOME TAXES
   
7,206
   
5,590
  
               
NET INCOME
 
$
14,320
  
$
14,014
  
               
BASIC EARNINGS PER COMMON SHARE
 
$
0.38
  
$
0.38
  
               
WEIGHTED AVERAGE SHARES - BASIC
   
37,270
   
37,326
  
               
DILUTED EARNINGS PER COMMON SHARE
 
$
0.34
  
$
0.33
  
               
WEIGHTED AVERAGE SHARES -
              
DILUTED
   
41,861
   
42,411
  
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)

 
  
March 31,
 
December 31,
  
ASSETS
 
2007
 
2006
  
           
CURRENT ASSETS:
          
Cash and cash equivalents
 
$
235,846
  
$
240,206
  
Accounts receivable, net
   
106,181
   
117,099
  
Materials and supplies
   
11,971
   
11,302
  
Prepaid expenses and other
   
16,030
   
14,695
  
Deferred income tax assets, net
   
7,604
   
7,617
  
Total current assets
   
377,632
   
390,919
  
               
PROPERTY AND EQUIPMENT, net
   
573,784
   
573,292
  
INVESTMENT IN UNCONSOLIDATED AFFILIATES
    
4,588
   
4,644
  
GOODWILL
   
37,874
   
37,788
  
INTANGIBLE ASSETS, net
   
119,778
   
120,669
  
DEFERRED INCOME TAX ASSETS, net
   
2,387
   
2,697
  
OTHER ASSETS, net
   
10,516
   
11,055
  
Total assets
 
$
1,126,559
  
$
1,141,064
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Current portion of long-term debt
 
$
15,653
  
$
4,372
  
Accounts payable
   
97,802
   
98,186
  
Accrued expenses
   
35,057
   
38,364
  
Income tax payable - Australia
   
95,073
   
91,925
  
Deferred income tax liabilities, net
   
443
   
291
  
Total current liabilities
   
244,028
   
233,138
  
               
LONG-TERM DEBT, less current portion
   
229,866
   
241,313
  
DEFERRED INCOME TAX LIABILITIES, net
   
75,212
   
72,876
  
DEFERRED ITEMS - grants from governmental agencies
   
58,004
    
56,588
  
OTHER LONG-TERM LIABILITIES
   
17,042
   
16,962
  
               
TOTAL STOCKHOLDERS' EQUITY
   
502,407
   
520,187
  
Total liabilities and
              
stockholders' equity
 
$
1,126,559
  
$
1,141,064
  
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

 
  
Three Months Ended March 31,
  
 
  
2007
  
2006
  
           
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Net income
 
$
14,320
  
$
14,014
  
Adjustments to reconcile net income to net cash provided by operating activities:
              
Depreciation and amortization
   
7,894
   
7,311
  
Amortization of restricted stock and units
   
329
   
143
  
Compensation cost related to stock options
   
877
   
877
  
Excess tax benefits from share-based compensation
   
(420
)
  
(2,341
)
Deferred income taxes
   
2,752
   
4,547
  
Net gain on sale and impairment of assets
   
(50
)
  
(94
)
Equity income of unconsolidated international affiliates, net of tax
   
-
   
(1,415
)
Changes in assets and liabilities which provided (used) cash, net of effect of acquisitions:
              
Accounts receivable, net
   
7,781
   
1,216
  
Materials and supplies
   
(613
)
  
22
  
Prepaid expenses and other
   
(1,288
)
  
(520
)
Accounts payable and accrued expenses
   
(3,316
)
  
4,004
  
Income tax payable - Australia
   
930
   
-
  
Other assets and liabilities,net
   
957
   
(308
)
Net cash provided by operating activities
   
30,153
   
27,456
  
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Purchase of property and equipment, net of government grants
   
(2,886
)
  
(6,592
)
Insurance proceeds for the replacement of assets
   
1,422
   
-
  
Valuation adjustment of split dollar life insurance
   
37
   
12
  
Proceeds from disposition of property and equipment
   
79
   
306
  
Net cash used in investing activities
   
(1,348
)
  
(6,274
)
           
CASH FLOWS FROM FINANCING ACTIVITIES:
          
Principal payments on long-term
          
borrowings, including capital
          
leases
   
(458
)
  
(77,208
)
Proceeds from issuance of
              
long-term debt
   
-
   
53,500
  
Net proceeds from employee stock
              
purchases
   
1,552
   
2,365
  
Treasury stock purchases
   
(37,370
)
  
-
  
Excess tax benefits from
              
share-based compensation
   
420
   
2,341
  
Net cash used in financing
              
activities
   
(35,856
)
  
(19,002
)
               
EFFECT OF EXCHANGE RATE CHANGES ON
              
CASH AND CASH EQUIVALENTS
   
2,691
   
(543
)
               
(DECREASE) INCREASE IN CASH AND CASH
              
EQUIVALENTS
   
(4,360
)
  
1,637
  
CASH AND CASH EQUIVALENTS, beginning
              
of period
   
240,206
   
18,669
  
CASH AND CASH EQUIVALENTS, end of
              
period
 
$
235,846
  
$
20,306
  
 
 
 
 

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
  
Three Months Ended
  
 
  
March 31,
  
 
  
2007
 
2006
  
 
  
 
  
% of
    
% of
  
 
  
Amount
 
Revenue
 
Amount
 
Revenue
  
Revenues:
                  
Freight
 
$
88,634
    
67.7
%
$
85,514
    
75.7
%
Non-freight
   
42,193
   
32.3
%
  
27,468
   
24.3
%
                           
Total revenues
 
$
130,827
    
100.0
%
$
112,982
    
100.0
%
                           
Operating Expense Comparison:
                          
Natural Classification
                          
Labor and benefits
 
$
43,207
    
33.0
%
$
37,191
    
32.9
%
Equipment rents
   
9,902
   
7.6
%
  
9,906
   
8.8
%
Purchased services
   
10,249
   
7.8
%
  
7,351
   
6.5
%
Depreciation and amortization
   
7,894
   
6.0
%
  
7,311
   
6.5
%
Diesel fuel used in operations
   
11,500
   
8.8
%
  
11,276
   
10.0
%
Diesel fuel sold to third parties
   
4,942
    
3.8
%
  
-
   
0.0
%
Casualties and insurance
   
5,219
   
4.0
%
  
2,783
   
2.5
%
Materials
   
6,484
   
5.0
%
  
5,795
   
5.1
%
Net gain on sale and impairment of
                          
assets
   
(50
)
  
0.0
%
  
(94
)
  
-0.1
%
Other expenses
   
9,411
   
7.1
%
  
9,403
   
8.3
%
                           
Total operating expenses
 
$
108,758
    
83.1
%
$
90,922
    
80.5
%
                           
Functional Classification
                          
Transportation
 
$
42,362
    
32.4
%
$
38,400
    
34.0
%
Maintenance of ways and structures
   
11,907
   
9.1
%
  
9,926
   
8.8
%
Maintenance of equipment
   
19,087
   
14.6
%
  
16,432
   
14.5
%
Diesel fuel sold to third parties
   
4,942
   
3.8
%
  
-
   
0.0
%
General and administrative
   
22,616
   
17.2
%
  
18,947
   
16.8
%
Net gain on sale and impairment of
                          
assets
   
(50
)
  
0.0
%
  
(94
)
  
-0.1
%
Depreciation and amortization
   
7,894
   
6.0
%
  
7,311
   
6.5
%
                           
Total operating expenses
 
$
108,758
    
83.1
%
$
90,922
    
80.5
%
 
 
GENESEE & WYOMING INC. AND SUBSIDIARIES
RAILROAD FREIGHT REVENUE, CARLOADS AND AVERAGE REVENUE PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenue per carload)
(unaudited)

   
Three Months Ended
March 31, 2007
    
Three Months Ended
March 31, 2006
  
                           
Commodity Group
    
Freight Revenues
   
 Carloads
    
Average Revenue Per Carload
    
Freight Revenues
    
Carloads
    
Average Revenue Per Carload
  
                                     
Pulp & Paper
 
$
17,528
    
32,057
 
$
547
  
$
17,399
    
35,362
 
$
492
  
Coal, Coke & Ores
   
15,877
   
49,116
   
323
   
17,024
   
51,695
   
329
  
Farm & Food Products
   
10,584
   
23,502
   
450
   
6,135
   
16,210
   
378
  
Metals
   
9,157
   
20,018
   
457
   
9,401
   
22,392
   
420
  
Lumber & Forest Products
   
8,758
   
20,942
   
418
   
9,529
   
25,432
   
375
  
Minerals & Stone
   
8,752
   
29,992
   
292
   
8,199
   
20,039
   
409
  
Chemicals-Plastics
   
6,253
   
10,568
   
592
   
6,239
   
10,999
   
567
  
Petroleum Products
   
6,189
   
8,227
   
752
   
6,451
   
8,562
   
753
  
Autos & Auto Parts
   
1,837
   
3,605
   
509
   
1,666
   
3,434
    
485
  
Intermodal
   
282
   
537
   
525
   
451
   
1,035
   
436
  
Other
   
3,417
   
15,469
   
221
   
3,020
   
13,614
   
222
  
                                       
Totals
 
$
88,634
    
214,033
   
414
 
$
85,514
    
208,774
   
410
  
 
 
SOURCE Genesee & Wyoming Inc.
-0-   05/01/2007
/CONTACT: Michael Williams of GWI Corporate Communications,
+1-203-629-3722, mwilliams@gwrr.com/
/Web site: http://www.gwrr.com/
(GWR)