UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of Earliest Event Reported): May
1, 2014
Genesee
& Wyoming Inc.
(Exact name of registrant as specified in its
charter)
Delaware |
001-31456 |
06-0984624 |
||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
20 West Avenue, Darien, Connecticut |
06820 |
||
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (203) 202-8900
Not
Applicable
Former name or former address, if changed since last
report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ 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))
ITEM 2.02. Results of Operations and Financial Condition.
On May 1, 2014, Genesee & Wyoming Inc. issued a press release reporting financial results for the first quarter of 2014. A copy of the press release is attached hereto as Exhibit 99.1. The attached Exhibit 99.1 is furnished in its entirety pursuant to this Item 2.02 and is incorporated into this Item 2.02 by reference.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Exhibit | |
Exhibit 99.1 | Press release, dated May 1, 2014, announcing results for the first quarter of 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GENESEE & WYOMING INC. |
||||
|
||||
Date: |
May 1, 2014 |
By: |
/s/ Timothy J. Gallagher |
|
Name: |
Timothy J. Gallagher |
|||
Title: |
Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Exhibit |
|
Exhibit 99.1 |
Press release, dated May 1, 2014, announcing results for the first quarter of 2014. |
Exhibit 99.1
Genesee & Wyoming Reports Results for the First Quarter of 2014
DARIEN, Conn.--(BUSINESS WIRE)--May 1, 2014--Genesee & Wyoming Inc. (G&W) (NYSE:GWR)
First Quarter Highlights
Jack Hellmann, President and CEO of G&W, commented, “G&W’s financial results for the first quarter of 2014 were significantly impacted by extreme winter weather that disrupted several of our North American operations. Four G&W operating regions, Canada, Midwest, Northeast and Ohio Valley, suffered the most serious weather-related conditions, first from the direct impact of a series of winter storms on the 45 railroads in those geographies and then from congestion at connecting railroads. As a result, rail shipments were reduced and traffic was also diverted to truck. But through all of this, our employees worked tirelessly and safely under extremely harsh winter conditions. The Board of Directors and I are grateful for the efforts of these dedicated men and women over the past several months.”
“With the arrival of spring, we have seen sharp increases in our traffic levels starting in late March. In addition, we expect the Rapid City, Pierre & Eastern Railroad (RCP&E) to commence operations late in the second quarter and remain optimistic about the outlook for this business. However, we do not expect to recover the significant financial shortfall from the first quarter and congestion continues to impact the overall North American rail network. Including the impact of weather and the RCP&E, our revised outlook for growth in pre-tax income in 2014 is now approximately 15%, with expected growth in pre-tax income of more than 20% over the next nine months.”
“Meanwhile, with our integration planning well advanced on the RCP&E, we are actively evaluating new acquisition and investment opportunities worldwide.”
Financial Results
G&W reported net income in the first quarter of 2014 of $39.6 million, compared with net income of $82.7 million in the first quarter of 2013. Excluding the net impact of certain significant items discussed below, G&W’s adjusted net income in the first quarter of 2014 was $39.8 million, compared with adjusted net income of $44.9 million in the first quarter of 2013. (1)
G&W’s reported diluted EPS and adjusted diluted EPS in the first quarter of 2014 were $0.70 with 56.9 million weighted average shares outstanding, compared with diluted EPS of $1.46 and adjusted diluted EPS of $0.80 in the first quarter of 2013 with 56.5 million weighted average shares outstanding. (1) The net depreciation of foreign currencies relative to the U.S. dollar reduced first quarter 2014 diluted EPS by approximately $0.05, compared with the first quarter of 2013.
G&W’s effective income tax rate was 36.6% in the first quarter of 2014. The higher income tax rate in the first quarter of 2014, compared with the first quarter of 2013, was driven primarily by the expiration of the United States short line tax credit on December 31, 2013.
In the first quarter of 2014 and 2013, G&W’s results included certain significant items that are set forth in the following table (in millions, except per share amounts).
Income/(Loss) |
After-Tax Net |
Diluted |
||||||||||||||||||
Three Months Ended March 31, 2014 |
||||||||||||||||||||
Business development and related costs | $ | (1.2 | ) | $ | (0.7 | ) | $ | (0.01 | ) | |||||||||||
Net gain on sale of assets | $ | 0.8 | $ | 0.5 | $ | 0.01 | ||||||||||||||
Three Months Ended March 31, 2013 |
||||||||||||||||||||
Retroactive 2012 short line tax credit | $ | — | $ | 41.0 | $ | 0.72 | ||||||||||||||
2013 short line tax credit | $ | — | $ | 4.0 | $ | 0.07 | ||||||||||||||
RailAmerica integration costs | $ | (12.8 | ) | $ | (8.0 | ) | $ | (0.14 | ) | |||||||||||
Refinancing and debt prepayment related expenses | $ | (0.6 | ) | $ | (0.4 | ) | $ | (0.01 | ) | |||||||||||
Net gain on sale of assets | $ | 1.7 | $ | 1.3 | $ | 0.02 | ||||||||||||||
Explanation of Significant Items
In the first quarter of 2014, G&W’s results included business development and related costs of $1.2 million, including RCP&E related integration costs, and net gain on sale of assets of $0.8 million.
On January 2, 2013, the United States short line tax credit (which had previously expired on December 31, 2011) was extended for fiscal years 2012 and 2013. In the first quarter of 2013, G&W recorded a tax benefit of $45.0 million associated with the short line tax credit. The total tax credit impact during the first quarter of 2013 included $41.0 million for the retroactive fiscal year 2012 tax benefit and $4.0 million associated with the first quarter of 2013.
Also in the first quarter of 2013, G&W incurred $12.8 million of RailAmerica integration costs and $0.6 million of debt refinancing and prepayment-related expenses. In the first quarter of 2013, net gain on sale of assets was $1.7 million.
Quarterly Results
In the first quarter of 2014, although lower than expected due to the impact of extreme winter weather, G&W’s total operating revenues increased $1.3 million, or 0.4%, to $376.3 million, compared with $375.0 million in the first quarter of 2013. Excluding a $13.0 million decrease from the net depreciation of foreign currencies relative to the U.S. dollar, G&W’s operating revenues increased $14.3 million, or 3.8%.
G&W’s freight revenues in the first quarter of 2014 were $287.7 million, compared with $281.1 million in the first quarter of 2013. Excluding a $10.1 million decrease from the impact of foreign currency depreciation, G&W’s freight revenues increased by $16.8 million, or 6.0%.
G&W’s non-freight revenues in the first quarter of 2014 were $88.5 million, compared with $93.8 million in the first quarter of 2013. Excluding a $2.9 million decrease from the net impact of foreign currency depreciation, G&W’s non-freight revenues decreased by $2.4 million, or 2.6%.
G&W’s traffic in the first quarter of 2014 increased 17,075 carloads, or 3.8%, to 467,379 carloads. The traffic increase was principally due to increases of 10,743 carloads of coal and coke traffic (primarily in the Midwest and Ohio Valley regions), 4,062 carloads of metallic ores traffic (primarily in the Australia Region) and 1,939 carloads of traffic from G&W’s Other commodity group (primarily due to overhead Class I shipments). All remaining traffic increased by a net 331 carloads.
G&W’s income from operations in the first quarter of 2014 was $74.9 million, which was lower than expected due to the impact of extreme winter weather, compared with $76.2 million in the first quarter of 2013. G&W’s operating ratio in the first quarter of 2014 was 80.1%, compared with an operating ratio of 79.7% in the first quarter of 2013. Income from operations in the first quarter of 2014 included business development and related costs of $1.2 million, partially offset by net gain on sale of assets of $0.8 million. Income from operations in the first quarter of 2013 included $12.8 million of RailAmerica integration costs, partially offset by net gain on sale of assets of $1.7 million. Excluding these items, G&W’s adjusted income from operations decreased $12.0 million, or 13.8%, to $75.2 million. G&W’s adjusted operating ratio increased 3.3 basis points to 80.0% in the first quarter of 2014, compared with 76.7% in the first quarter of 2013. (1)
Free Cash Flow (1)
G&W’s free cash flow for the three months ended March 31, 2014 and 2013 was as follows (in millions):
Three Months Ended | |||||||||||
March 31, | |||||||||||
2014 | 2013 | ||||||||||
Net cash provided by operating activities | $ | 71.7 | $ | 64.8 | |||||||
Net cash used in investing activities, excluding new business investments | (39.0 | ) | (21.1 | ) | |||||||
Net cash used for acquisitions | — | 5.5 | |||||||||
Free cash flow before new business investments | 32.6 | 49.3 | |||||||||
New business investments | (17.9 | ) | (12.0 | ) | |||||||
Free cash flow (1) | $ | 14.7 | $ | 37.3 | |||||||
The 2014 period included $27.4 million of net cash payments for 2013 capital projects. The 2013 period included $9.7 million of net cash payments for 2012 capital projects.
RCP&E Financing
G&W expects to amend and expand the size of its senior secured syndicated credit facility from approximately US$2.0 billion to US$2.4 billion in conjunction with financing the $210 million RCP&E cash purchase price for the western end of Canadian Pacific’s Dakota, Minnesota and Eastern rail line. G&W anticipates that the amended credit facility will be comprised of a US$1,520 million dollar term loan, an A$220 million term loan and a US$625 million revolving credit facility, of which approximately US$600 million would be undrawn at closing. In addition, G&W plans to extend the maturity of the amended credit facility from October 1, 2017 to May 31, 2019. As of March 31, 2014, pro forma for the debt financing associated with the $210 million cash purchase price for the expected RCP&E transaction, G&W’s total debt to capitalization would be approximately 45%.
Conference Call and Webcast Details
As previously announced, G&W’s conference call to discuss financial results for the first quarter of 2014 will be held on Thursday, May 1, 2014, at 11:00 am EDT. The dial-in number for the teleconference in the U.S. is (800) 553-5260; outside the U.S. is (612) 288-0340, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors, by selecting “First Quarter Earnings Conference Call Webcast.” 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 1:00 p.m. EDT on May 1, 2014 by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 309988.
About G&W
G&W owns and operates short line and regional freight railroads in the United States, Australia, Canada, the Netherlands and Belgium. In addition, G&W operates the 1,400-mile Tarcoola to Darwin rail line, which links the Port of Darwin with the Australian interstate rail network in South Australia. Operations currently include 111 railroads organized in 11 regions, with nearly 15,000 miles of owned and leased track, 4,600 employees and over 2,000 customers. We provide rail service at 37 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,” “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 or other substantial disruption of operations; consummation and integration of acquisitions; economic, political and industry conditions (including employee strikes or work stoppages); customer demand and changes in our operations, 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; exposure to the credit risk of customers and counterparties; 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 2013 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 net income, adjusted diluted earnings per common share, adjusted income from operations, adjusted operating ratio 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 MONTHS ENDED MARCH 31, 2014 AND 2013 | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
OPERATING REVENUES | $ | 376,279 | $ | 374,950 | |||||||||
OPERATING EXPENSES | 301,404 | 298,750 | |||||||||||
INCOME FROM OPERATIONS | 74,875 | 76,200 | |||||||||||
INTEREST INCOME | 1,034 | 1,043 | |||||||||||
INTEREST EXPENSE | (13,641 | ) | (20,120 | ) | |||||||||
OTHER INCOME, NET | 266 | 673 | |||||||||||
INCOME BEFORE INCOME TAXES | 62,534 | 57,796 | |||||||||||
(PROVISION FOR)/BENEFIT FROM INCOME TAXES | (22,900 | ) | 24,932 | ||||||||||
NET INCOME | 39,634 | 82,728 | |||||||||||
LESS:NET (LOSS)/INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | (370 | ) | 165 | ||||||||||
LESS:SERIES A-1 PREFERRED STOCK DIVIDEND | — | 2,139 | |||||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 40,004 | $ | 80,424 | |||||||||
BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS | $ | 0.73 | $ | 1.57 | |||||||||
WEIGHTED AVERAGE SHARES - BASIC | 54,841 | 51,332 | |||||||||||
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS | $ | 0.70 | $ | 1.46 | |||||||||
WEIGHTED AVERAGE SHARES - DILUTED | 56,905 | 56,496 | |||||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
AS OF MARCH 31, 2014 AND DECEMBER 31, 2013 | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
March 31, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 32,187 | $ | 62,876 | ||||||||
Accounts receivable, net | 326,160 | 325,453 | ||||||||||
Materials and supplies | 31,788 | 31,295 | ||||||||||
Prepaid expenses and other | 48,896 | 52,584 | ||||||||||
Deferred income tax assets, net | 75,610 | 76,122 | ||||||||||
Total current assets | 514,641 | 548,330 | ||||||||||
PROPERTY AND EQUIPMENT, net | 3,462,074 | 3,440,744 | ||||||||||
GOODWILL | 629,545 | 630,462 | ||||||||||
INTANGIBLE ASSETS, net | 606,615 | 613,933 | ||||||||||
DEFERRED INCOME TAX ASSETS, net | 3,117 | 2,405 | ||||||||||
OTHER ASSETS, net | 70,620 | 83,947 | ||||||||||
Total assets | $ | 5,286,612 | $ | 5,319,821 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Current portion of long-term debt | $ | 94,837 | $ | 84,366 | ||||||||
Accounts payable | 205,603 | 242,010 | ||||||||||
Accrued expenses | 125,502 | 130,132 | ||||||||||
Total current liabilities | 425,942 | 456,508 | ||||||||||
LONG-TERM DEBT, less current portion | 1,484,722 | 1,540,346 | ||||||||||
DEFERRED INCOME TAX LIABILITIES, net | 872,706 | 863,051 | ||||||||||
DEFERRED ITEMS - grants from outside parties | 266,590 | 267,098 | ||||||||||
OTHER LONG-TERM LIABILITIES | 42,921 | 43,748 | ||||||||||
TOTAL EQUITY | 2,193,731 | 2,149,070 | ||||||||||
Total liabilities and equity | $ | 5,286,612 | $ | 5,319,821 | ||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013 | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net income | $ | 39,634 | $ | 82,728 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 37,641 | 34,223 | |||||||||||
Compensation cost related to equity awards | 3,314 | 7,525 | |||||||||||
Excess tax benefits from share-based compensation | (3,580 | ) | (4,314 | ) | |||||||||
Deferred income taxes | 16,118 | (33,866 | ) | ||||||||||
Net gain on sale of assets | (838 | ) | (1,707 | ) | |||||||||
Insurance proceeds received | — | 9,315 | |||||||||||
Changes in assets and liabilities which (used) provided cash, net of effect of acquisitions: | |||||||||||||
Accounts receivable, net | (8,559 | ) | (8,766 | ) | |||||||||
Materials and supplies | 131 | (3,404 | ) | ||||||||||
Prepaid expenses and other | 2,181 | (2,215 | ) | ||||||||||
Accounts payable and accrued expenses | (15,582 | ) | (15,328 | ) | |||||||||
Other assets and liabilities, net | 1,200 | 628 | |||||||||||
Net cash provided by operating activities | 71,660 | 64,819 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Purchase of property and equipment | (71,618 | ) | (37,908 | ) | |||||||||
Grant proceeds from outside parties | 12,800 | 2,848 | |||||||||||
Insurance proceeds for the replacement of assets | 300 | — | |||||||||||
Proceeds from disposition of property and equipment | 1,555 | 2,011 | |||||||||||
Net cash used in investing activities | (56,963 | ) | (33,049 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Principal payments on long-term borrowings, including capital leases | (96,287 | ) | (139,475 | ) | |||||||||
Proceeds from issuance of long-term debt | 46,546 | 73,362 | |||||||||||
Debt amendment costs | — | (1,543 | ) | ||||||||||
Dividends paid on Series A-1 Preferred Stock | — | (2,139 | ) | ||||||||||
Proceeds from employee stock purchases | 4,647 | 5,903 | |||||||||||
Excess tax benefits from share-based compensation | 3,580 | 4,314 | |||||||||||
Treasury stock acquisitions | (3,374 | ) | (7,237 | ) | |||||||||
Net cash used in financing activities | (44,888 | ) | (66,815 | ) | |||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (498 | ) | (391 | ) | |||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (30,689 | ) | (35,436 | ) | |||||||||
CASH AND CASH EQUIVALENTS, beginning of period | 62,876 | 64,772 | |||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 32,187 | $ | 29,336 | |||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | |||||||||||||||||||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||
Freight | $ | 287,734 | 76.5 | % | $ | 281,104 | 75.0 | % | |||||||||||||||||
Non-freight | 88,545 | 23.5 | % | 93,846 | 25.0 | % | |||||||||||||||||||
Total revenues | $ | 376,279 | 100.0 | % | $ | 374,950 | 100.0 | % | |||||||||||||||||
Operating Expense Comparison: |
|||||||||||||||||||||||||
Natural Classification |
|||||||||||||||||||||||||
Labor and benefits | $ | 116,751 | 30.9 | % | $ | 109,306 | 29.2 | % | |||||||||||||||||
Equipment rents | 19,060 | 5.1 | % | 18,708 | 5.0 | % | |||||||||||||||||||
Purchased services | 27,907 | 7.4 | % | 28,996 | 7.7 | % | |||||||||||||||||||
Depreciation and amortization | 37,641 | 10.0 | % | 34,223 | 9.1 | % | |||||||||||||||||||
Diesel fuel used in operations | 41,935 | 11.1 | % | 39,185 | 10.5 | % | |||||||||||||||||||
Casualties and insurance | 9,633 | 2.6 | % | 7,951 | 2.1 | % | |||||||||||||||||||
Materials | 16,119 | 4.3 | % | 19,329 | 5.2 | % | |||||||||||||||||||
Trackage rights | 12,266 | 3.3 | % | 10,857 | 2.9 | % | |||||||||||||||||||
Net gain on sale of assets | (838 | ) | (0.2 | )% | (1,707 | ) | (0.5 | )% | |||||||||||||||||
Other expenses | 20,930 | 5.6 | % | 19,135 | 5.1 | % | |||||||||||||||||||
RailAmerica integration costs | — | — | % | 12,767 | 3.4 | % | |||||||||||||||||||
Total operating expenses | $ | 301,404 | 80.1 | % | $ | 298,750 | 79.7 | % | |||||||||||||||||
Functional Classification |
|||||||||||||||||||||||||
Transportation | $ | 119,035 | 31.6 | % | $ | 110,326 | 29.4 | % | |||||||||||||||||
Maintenance of ways and structures | 41,408 | 11.0 | % | 38,316 | 10.2 | % | |||||||||||||||||||
Maintenance of equipment | 43,422 | 11.5 | % | 40,263 | 10.8 | % | |||||||||||||||||||
General and administrative | 56,468 | 15.1 | % | 56,760 | 15.2 | % | |||||||||||||||||||
Construction costs | 4,268 | 1.1 | % | 7,802 | 2.1 | % | |||||||||||||||||||
RailAmerica integration costs | — | — | % | 12,767 | 3.4 | % | |||||||||||||||||||
Net gain on sale of assets | (838 | ) | (0.2 | )% | (1,707 | ) | (0.5 | )% | |||||||||||||||||
Depreciation and amortization | 37,641 | 10.0 | % | 34,223 | 9.1 | % | |||||||||||||||||||
Total operating expenses | $ | 301,404 | 80.1 | % | $ | 298,750 | 79.7 | % | |||||||||||||||||
GENESEE & WYOMING INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||
SELECTED CONSOLIDATED FINANCIAL INFORMATION | |||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2014 |
North American & European |
Australian Operations | Total Operations | ||||||||||||||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||||||||||||||||
Freight | $ | 228,987 | 76.3 | % | $ | 58,747 | 77.0 | % | $ | 287,734 | 76.5 | % | |||||||||||||||||||||||||||
Non-freight | 71,000 | 23.7 | % | 17,545 | 23.0 | % | 88,545 | 23.5 | % | ||||||||||||||||||||||||||||||
Total revenues | 299,987 | 100.0 | % | 76,292 | 100.0 | % | 376,279 | 100.0 | % | ||||||||||||||||||||||||||||||
Operating expenses: |
|||||||||||||||||||||||||||||||||||||||
Labor and benefits | 100,542 | 33.5 | % | 16,209 | 21.3 | % | 116,751 | 30.9 | % | ||||||||||||||||||||||||||||||
Equipment rents | 16,772 | 5.6 | % | 2,288 | 3.0 | % | 19,060 | 5.1 | % | ||||||||||||||||||||||||||||||
Purchased services | 15,725 | 5.1 | % | 12,182 | 16.0 | % | 27,907 | 7.4 | % | ||||||||||||||||||||||||||||||
Depreciation and amortization | 30,579 | 10.2 | % | 7,062 | 9.3 | % | 37,641 | 10.0 | % | ||||||||||||||||||||||||||||||
Diesel fuel used in operations | 34,734 | 11.6 | % | 7,201 | 9.4 | % | 41,935 | 11.1 | % | ||||||||||||||||||||||||||||||
Casualties and insurance | 7,132 | 2.4 | % | 2,501 | 3.3 | % | 9,633 | 2.6 | % | ||||||||||||||||||||||||||||||
Materials | 15,511 | 5.1 | % | 608 | 0.8 | % | 16,119 | 4.3 | % | ||||||||||||||||||||||||||||||
Trackage rights | 6,757 | 2.3 | % | 5,509 | 7.2 | % | 12,266 | 3.3 | % | ||||||||||||||||||||||||||||||
Net gain on sale of assets | (720 | ) | (0.2 | )% | (118 | ) | (0.2 | )% | (838 | ) | (0.2 | )% | |||||||||||||||||||||||||||
Other expenses | 17,265 | 5.8 | % | 3,665 | 4.8 | % | 20,930 | 5.6 | % | ||||||||||||||||||||||||||||||
RailAmerica integration costs | — | — | % | — | — | % | — | — |
% |
||||||||||||||||||||||||||||||
Total operating expenses | 244,297 | 81.4 | % | 57,107 | 74.9 | % | 301,404 | 80.1 | % | ||||||||||||||||||||||||||||||
Income from operations | $ | 55,690 | $ | 19,185 | $ | 74,875 | |||||||||||||||||||||||||||||||||
Carloads | 409,537 | 57,842 | 467,379 | ||||||||||||||||||||||||||||||||||||
Net expenditures for additions to property & equipment | $ | 53,985 | $ | 4,833 | $ | 58,818 | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2013 |
North American & European |
Australian Operations | Total Operations | ||||||||||||||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||||||||||||||||
Freight | $ | 220,846 | 73.8 | % | $ | 60,258 | 79.4 | % | $ | 281,104 | 75.0 | % | |||||||||||||||||||||||||||
Non-freight | 78,249 | 26.2 | % | 15,597 | 20.6 | % | 93,846 | 25.0 | % | ||||||||||||||||||||||||||||||
Total revenues | 299,095 | 100.0 | % | 75,855 | 100.0 | % | 374,950 | 100.0 | % | ||||||||||||||||||||||||||||||
Operating expenses: |
|||||||||||||||||||||||||||||||||||||||
Labor and benefits | 92,697 | 30.9 | % | 16,609 | 21.9 | % | 109,306 | 29.2 | % | ||||||||||||||||||||||||||||||
Equipment rents | 16,093 | 5.4 | % | 2,615 | 3.4 | % | 18,708 | 5.0 | % | ||||||||||||||||||||||||||||||
Purchased services | 16,706 | 5.6 | % | 12,290 | 16.3 | % | 28,996 | 7.7 | % | ||||||||||||||||||||||||||||||
Depreciation and amortization | 27,411 | 9.2 | % | 6,812 | 9.0 | % | 34,223 | 9.1 | % | ||||||||||||||||||||||||||||||
Diesel fuel used in operations | 31,608 | 10.6 | % | 7,577 | 10.0 | % | 39,185 | 10.5 | % | ||||||||||||||||||||||||||||||
Casualties and insurance | 5,801 | 1.9 | % | 2,150 | 2.8 | % | 7,951 | 2.1 | % | ||||||||||||||||||||||||||||||
Materials | 18,769 | 6.3 | % | 560 | 0.7 | % | 19,329 | 5.2 | % | ||||||||||||||||||||||||||||||
Trackage rights | 6,718 | 2.2 | % | 4,139 | 5.5 | % | 10,857 | 2.9 | % | ||||||||||||||||||||||||||||||
Net gain on sale of assets | (1,707 | ) | (0.6 | )% | — | — | % | (1,707 | ) | (0.5 | )% | ||||||||||||||||||||||||||||
Other expenses | 17,438 | 5.9 | % | 1,697 | 2.2 | % | 19,135 | 5.1 | % | ||||||||||||||||||||||||||||||
RailAmerica integration costs | 12,767 | 4.3 | % | — | — | % | 12,767 | 3.4 | % | ||||||||||||||||||||||||||||||
Total operating expenses | 244,301 | 81.7 | % | 54,449 | 71.8 | % | 298,750 | 79.7 | % | ||||||||||||||||||||||||||||||
Income from operations | $ | 54,794 | $ | 21,406 | $ | 76,200 | |||||||||||||||||||||||||||||||||
Carloads | 394,971 | 55,333 | 450,304 | ||||||||||||||||||||||||||||||||||||
Net expenditures for additions to property & equipment | $ | 16,218 | $ | 18,842 | $ | 35,060 | |||||||||||||||||||||||||||||||||
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 March 31, 2014 | North American & European Operations | Australian Operations | Total Operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commodity Group |
Freight |
Carloads |
Average |
Freight |
Carloads |
Average |
Freight |
Carloads |
Average |
|||||||||||||||||||||||||||||||||||||||||||||||||
Agricultural Products | $ | 25,902 | 48,055 | $ | 539 | $ | 9,765 | 16,979 | $ | 575 | $ | 35,667 | 65,034 | $ | 548 | |||||||||||||||||||||||||||||||||||||||||||
Chemicals & Plastics | 32,749 | 40,272 | 813 | — | — | — | 32,749 | 40,272 | 813 | |||||||||||||||||||||||||||||||||||||||||||||||||
Coal & Coke | 31,250 | 86,303 | 362 | — | — | — | 31,250 | 86,303 | 362 | |||||||||||||||||||||||||||||||||||||||||||||||||
Metallic Ores * | 4,494 | 5,579 | 806 | 25,179 | 13,295 | 1,894 | 29,673 | 18,874 | 1,572 | |||||||||||||||||||||||||||||||||||||||||||||||||
Metals | 29,582 | 41,329 | 716 | — | — | — | 29,582 | 41,329 | 716 | |||||||||||||||||||||||||||||||||||||||||||||||||
Pulp & Paper | 27,662 | 42,211 | 655 | — | — | — | 27,662 | 42,211 | 655 | |||||||||||||||||||||||||||||||||||||||||||||||||
Minerals & Stone | 19,520 | 36,240 | 539 | 2,140 | 12,797 | 167 | 21,660 | 49,037 |
442 |
|||||||||||||||||||||||||||||||||||||||||||||||||
Intermodal ** | 102 | 879 | 116 | 21,371 | 14,712 | 1,453 | 21,473 | 15,591 | 1,377 | |||||||||||||||||||||||||||||||||||||||||||||||||
Lumber & Forest Products | 19,179 | 32,547 | 589 | — | — | — | 19,179 | 32,547 | 589 | |||||||||||||||||||||||||||||||||||||||||||||||||
Petroleum Products | 16,294 | 27,776 | 587 | 292 | 59 | 4,949 | 16,586 | 27,835 | 596 | |||||||||||||||||||||||||||||||||||||||||||||||||
Food or Kindred Products | 8,061 | 13,847 | 582 | — | — | — | 8,061 | 13,847 | 582 | |||||||||||||||||||||||||||||||||||||||||||||||||
Autos & Auto Parts | 5,458 | 7,736 | 706 | — | — | — | 5,458 | 7,736 | 706 | |||||||||||||||||||||||||||||||||||||||||||||||||
Waste | 4,333 | 9,446 | 459 | — | — | — | 4,333 | 9,446 | 459 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other | 4,401 | 17,317 | 254 | — | — | — | 4,401 | 17,317 | 254 | |||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | 228,987 | 409,537 | $ | 559 | $ | 58,747 | 57,842 | $ | 1,016 | $ | 287,734 | 467,379 | $ | 616 | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2013 | North American & European Operations | Australian Operations | Total Operations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commodity Group |
Freight |
Carloads |
Average |
Freight |
Carloads |
Average |
Freight |
Carloads |
Average |
|||||||||||||||||||||||||||||||||||||||||||||||||
Agricultural Products | $ | 23,856 | 47,769 | $ | 499 | $ | 11,170 | 15,672 | $ | 713 | $ | 35,026 | 63,441 | $ | 552 | |||||||||||||||||||||||||||||||||||||||||||
Chemicals & Plastics | 32,080 | 40,908 | 784 | — | — | — | 32,080 | 40,908 | 784 | |||||||||||||||||||||||||||||||||||||||||||||||||
Coal & Coke | 26,492 | 75,560 | 351 | — | — | — | 26,492 | 75,560 | 351 | |||||||||||||||||||||||||||||||||||||||||||||||||
Metallic Ores * | 4,038 | 5,074 | 796 | 23,241 | 9,738 | 2,387 | 27,279 | 14,812 | 1,842 | |||||||||||||||||||||||||||||||||||||||||||||||||
Metals | 29,246 | 41,623 | 703 | — | — | — | 29,246 | 41,623 | 703 | |||||||||||||||||||||||||||||||||||||||||||||||||
Pulp & Paper | 26,461 | 40,778 | 649 | — | — | — | 26,461 | 40,778 | 649 | |||||||||||||||||||||||||||||||||||||||||||||||||
Minerals & Stone | 19,228 | 34,739 | 553 | 3,091 | 15,486 | 200 | 22,319 | 50,225 | 444 | |||||||||||||||||||||||||||||||||||||||||||||||||
Intermodal ** | 192 | 1,801 | 107 | 22,253 | 14,375 | 1,548 | 22,445 | 16,176 | 1,388 | |||||||||||||||||||||||||||||||||||||||||||||||||
Lumber & Forest Products | 19,746 | 33,625 | 587 | — | — | — | 19,746 | 33,625 | 587 | |||||||||||||||||||||||||||||||||||||||||||||||||
Petroleum Products | 16,661 | 27,151 | 614 | 503 | 62 | 8,113 | 17,164 | 27,213 | 631 | |||||||||||||||||||||||||||||||||||||||||||||||||
Food or Kindred Products | 7,825 | 13,594 | 576 | — | — | — | 7,825 | 13,594 | 576 | |||||||||||||||||||||||||||||||||||||||||||||||||
Autos & Auto Parts | 5,854 | 7,956 | 736 | — | — | — | 5,854 | 7,956 | 736 | |||||||||||||||||||||||||||||||||||||||||||||||||
Waste | 5,015 | 9,015 | 556 | — | — | — | 5,015 | 9,015 | 556 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other | 4,152 | 15,378 | 270 | — | — | — | 4,152 | 15,378 | 270 | |||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | 220,846 | 394,971 | $ | 559 | $ | 60,258 | 55,333 | $ | 1,089 | $ | 281,104 | 450,304 | $ | 624 | |||||||||||||||||||||||||||||||||||||||||||
* | Includes carload and intermodal units | |
** | Represents intermodal units |
Non-GAAP Financial Measures
This earnings release contains references to adjusted net income, adjusted diluted earnings per common share, adjusted income from operations, adjusted operating ratio 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. 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 percentages and per share amounts).
Reconciliations of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Diluted Earnings Per Common Share | |||||||||||||||||||
Three Months Ended March 31, 2014 | Net Income | Diluted Shares |
Diluted |
||||||||||||||||
As reported | $ | 39.6 | 56.9 | $ | 0.70 | ||||||||||||||
Add back certain items, net of tax: | |||||||||||||||||||
Business development and related costs | 0.7 | 0.01 | |||||||||||||||||
Net gain on sale of assets | (0.5 | ) | (0.01 | ) | |||||||||||||||
As adjusted | $ | 39.8 | 56.9 | $ | 0.70 | ||||||||||||||
Three Months Ended March 31, 2013 | Net Income | Diluted Shares |
Diluted |
||||||||||||||||
As reported | $ | 82.7 | 56.5 | $ | 1.46 | ||||||||||||||
Add back certain items, net of tax: | |||||||||||||||||||
Retroactive 2012 short line tax credit | (41.0 | ) | (0.72 | ) | |||||||||||||||
2013 short line tax credit | (4.0 | ) | (0.07 | ) | |||||||||||||||
RailAmerica integration costs | 8.0 | 0.14 | |||||||||||||||||
Refinancing and debt prepayment related expenses | 0.4 | 0.01 | |||||||||||||||||
Net gain on sale of assets | (1.3 | ) | (0.02 | ) | |||||||||||||||
As adjusted | $ | 44.9 | 56.5 | $ | 0.80 | ||||||||||||||
Adjusted Income from Operations and Adjusted Operating Ratio |
|||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Operating revenues | $ | 376.3 | $ | 375.0 | |||||||||
Operating expenses | 301.4 | 298.8 | |||||||||||
Income from operations (a) | $ | 74.9 | $ | 76.2 | |||||||||
Operating ratio (b) | 80.1 | % | 79.7 | % | |||||||||
Operating expenses | $ | 301.4 | $ | 298.8 | |||||||||
Business development and related costs | (1.2 | ) | — | ||||||||||
RailAmerica integration costs | — | (12.8 | ) | ||||||||||
Net gain on sale of assets | 0.8 | 1.7 | |||||||||||
Adjusted operating expenses | $ | 301.1 | $ | 287.7 | |||||||||
Adjusted income from operations | $ | 75.2 | $ | 87.3 | |||||||||
Adjusted operating ratio | 80.0 | % | 76.7 | % | |||||||||
(a) | Income from operations is calculated as operating revenues less operating expenses. | |
(b) | Operating ratio is calculated as operating expenses divided by operating revenues. |
Free Cash Flow |
|||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Net cash provided by operating activities | $ | 71.7 | $ | 64.8 | |||||||||
Net cash used in investing activities | (57.0 | ) | (33.0 | ) | |||||||||
Net cash used for acquisitions (a) | — | 5.5 | |||||||||||
Free cash flow | $ | 14.7 | $ | 37.3 | |||||||||
(a) | The 2013 period included $5.5 million in cash paid for incremental expenses related to the integration of RailAmerica. |
CONTACT:
G&W Corporate Communications
Michael
Williams, 1-203-202-8900
mwilliams@gwrr.com