EX-99.1 2 gw2589991.txt Exhibit 99.1 GENESEE & Wyoming REPORTS 15.1% INCREASE IN NET INCOME FOR THE FIRST QUARTER OF 2005 GREENWICH, Conn., May 2, 2005 /PRNewswire-FirstCall/ -- Genesee & Wyoming Inc. (GWI) (NYSE: GWR) reported today that net income in the first quarter of 2005 increased 15.1% to $10.9 million, compared to net income of $9.5 million in the first quarter of 2004. GWI's diluted earnings per share in the first quarter of 2005 increased 18.2% to $0.39 with 27.7 million shares outstanding, compared to diluted earnings per share of $0.33 with 27.4 million shares outstanding in the first quarter of 2004. (Note that prior to GWI's adoption of Emerging Issues Task Force Bulletin Issue No. 03-06 under FASB Statement No. 128, GWI's diluted EPS for the first quarter of 2004 were $0.35.) Due primarily to the impact of recent U.S. tax legislation which created a track maintenance tax credit for short line railroads, GWI's book tax rate was 30.4% in the first quarter of 2005, compared to 39.0% in the first quarter of 2004. North American Results In the first quarter of 2005, North American revenue increased 16.1% to $84.1 million, compared to $72.4 million in the first quarter of 2004. Of this $11.7 million increase in revenue, $8.6 million was same-railroad growth, $2.6 million was from the Tazewell & Peoria Railroad in Illinois, and $0.5 million was from the Savannah Wharf rail line in Georgia. The 11.9% growth in same- railroad revenue was balanced across multiple commodity groups, with particular strength in paper, which increased by $2.2 million, or 22.9%; coal, which increased by $1.5 million, or 14.3%; and lumber and forest products, which increased by $1.7 million, or 29.4%. North American operating income in the first quarter of 2005 increased 23.4% to $14.3 million, compared with $11.6 million in the first quarter of 2004. The North American operating ratio improved to 83.0% in the first quarter of 2005, compared with 84.0% in the first quarter of 2004. The improvement in operating results was achieved despite a 37.9% increase in the price of diesel fuel, as the average price per gallon was $1.60 in the first quarter of 2005 compared with $1.16 in the first quarter of 2004. North American traffic in the first quarter of 2005 increased 13,578 carloads, or 9.0%, to 164,786 carloads. Same-railroad traffic in the first quarter of 2005 increased 7,253 carloads, or 4.8%. Revenue per carload in the first quarter of 2005 increased 5.8% to $383. Same-railroad revenue per carload in the first quarter of 2005 increased 7.5% due to a combination of rate increases, fuel escalation provisions, and shipments of certain higher yielding traffic. GWI's North American Free Cash Flow for the first quarter of 2005 was $15.9 million (defined as Cash from Operations of $19.7 million less Cash used in Investing of $3.8 million) compared with $12.8 million of Free Cash Flow (defined as Cash from Operations of $17.6 million less Cash used in Investing of $4.8 million) in the first quarter of 2004. See the attached schedule for a description and discussion of Free Cash Flow. Australian Results (Equity Accounting) In Australia, revenue at GWI's 50%-owned subsidiary, Australian Railroad Group (ARG), increased 2.5% to US$84.4 million in the first quarter of 2005, compared with US$82.4 million in the first quarter of 2004. This US$2.0 million increase in revenue was principally due to a US$2.6 million increase in third party fuel sales, a US$1.2 million increase in iron ore shipments and a US$1.0 million increase in alumina and bauxite shipments, partially offset by a US$4.1 million decline in grain revenue. In Australian dollars, ARG's revenue increased 0.7% in the first quarter of 2005 compared with the first quarter of 2004. ARG's operating income in the first quarter of 2005 was US$13.8 million, compared with operating income of US$17.6 million in the first quarter of 2004. The operating ratio was 83.6% in the first quarter of 2005, compared with 78.6% in the first quarter of 2004. As previously disclosed, ARG's operating results in the first quarter of 2005 were adversely impacted by two derailments by a third party operator on ARG's track in Western Australia, which cost approximately US$1.8 million and reduced the operating ratio by 2.1%. ARG's operating results were also adversely impacted by a 28.3% increase in the price of diesel fuel used in operations. Equity income from ARG in the first quarter of 2005 was US$2.3 million, including the US$0.6 million after-tax negative impact of the third party derailments, compared with US$3.7 million of equity income in the first quarter of 2004. In comparing the first quarter of 2005 with the first quarter of 2004, the Australian dollar strengthened 1.1%. Mortimer B. Fuller III, Chairman and Chief Executive Officer of GWI, commented, "In North America, the strength of our regional businesses continued to exceed our expectations and to more than offset the high price of diesel fuel. In Australia, a lower grain harvest, higher fuel prices, and derailments by third parties were partially mitigated by increasing iron ore and alumina related shipments. In this context, we are pleased with our first quarter results." As previously announced, GWI's conference call to discuss financial results for the first quarter will be held today at 11:00AM (Eastern Daylight Time). The dial-in number for the teleconference is 877-209-0397 or the call may be accessed live over the Internet (listen only) directly at http://phx.corporate-ir.net/phoenix.zhtml?c=64426&p=irol-irhome or via the Investors tab of Genesee & Wyoming's website (http://www.gwrr.com). An audio replay of the conference call will be accessible via the Investors tab of Genesee & Wyoming's website 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 8,200 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, ----------------------------- 2005 2004 ------------ ------------ REVENUES $ 84,081 $ 72,403 OPERATING EXPENSES 69,821 60,843 INCOME FROM OPERATIONS 14,260 11,560 INTEREST EXPENSE (2,119) (2,435) OTHER INCOME, NET 97 192 INCOME BEFORE INCOME TAXES AND EQUITY EARNINGS 12,238 9,317 PROVISION FOR INCOME TAXES 3,716 3,633 INCOME BEFORE EQUITY EARNINGS 8,522 5,684 EQUITY IN NET INCOME OF INTERNATIONAL AFFILIATES: AUSTRALIAN RAILROAD GROUP 2,291 3,742 SOUTH AMERICA 87 40 NET INCOME 10,900 9,466 IMPACT OF PREFERRED STOCK OUTSTANDING - 301 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 10,900 $ 9,165 BASIC EARNINGS PER SHARE: NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 0.45 $ 0.38 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,418 23,888 DILUTED EARNINGS PER SHARE: NET INCOME $ 0.39 $ 0.33 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 27,659 27,378 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31, December 31, 2005 2004 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 24,208 $ 14,451 Accounts receivable, net 67,914 64,537 Materials and supplies 4,796 5,263 Prepaid expenses and other 7,977 7,784 Deferred income tax assets, net 3,191 3,190 Total current assets 108,086 95,225 PROPERTY AND EQUIPMENT, net 336,106 337,024 INVESTMENT IN UNCONSOLIDATED AFFILIATES 135,073 132,528 GOODWILL 24,664 24,682 INTANGIBLE ASSETS, net 77,381 77,778 OTHER ASSETS, net 9,716 10,014 Total assets $ 691,026 $ 677,251 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 4,486 $ 6,356 Accounts payable 67,799 63,794 Accrued expenses 23,910 21,598 Total current liabilities 96,195 91,748 LONG-TERM DEBT, less current portion 121,155 125,881 DEFERRED INCOME TAX LIABILITIES, net 52,212 50,517 DEFERRED ITEMS - grants from governmental agencies 46,677 46,229 DEFERRED GAIN - sale/leaseback 3,424 3,495 OTHER LONG-TERM LIABILITIES 14,743 14,122 MINORITY INTEREST 3,440 3,559 TOTAL STOCKHOLDERS' EQUITY 353,180 341,700 Total liabilities and stockholders' equity $ 691,026 $ 677,251 GENESEE & WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended ----------------------------- March 31, March 31, 2005 2004 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 10,900 $ 9,466 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 4,990 4,730 Amortization of restricted stock 94 - Deferred income taxes 1,616 1,760 Net gain on sale and impairment of assets (67) (93) Equity earnings of unconsolidated international affiliates (2,378) (3,782) Minority interest expense 8 26 Tax benefit realized upon exercise of stock options 111 372 Changes in assets and liabilities, net of effect of acquisitions - Accounts receivable (3,452) 2,953 Materials and supplies 458 (237) Prepaid expenses and other (184) (575) Accounts payable and accrued expenses 6,396 3,806 Other assets and liabilities, net 1,232 (818) Net cash provided by operating activities 19,724 17,608 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of proceeds from government grants (4,047) (5,301) Proceeds from disposition of property and equipment, including sale/leasebacks 85 137 Valuation adjustment of split dollar life insurance 114 394 Net cash used in financing activities (3,848) (4,770) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term borrowings, including capital leases (54,235) (44,160) Proceeds from issuance of long-term debt 48,000 32,500 Proceeds from employee stock purchases 437 864 Purchase of treasury stock (270) - Dividend on Redeemable Convertible Preferred Stock - (250) Net cash used in investing activities (6,068) (11,046) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (51) (93) INCREASE IN CASH AND CASH EQUIVALENTS 9,757 1,699 CASH AND CASH EQUIVALENTS, beginning of period 14,451 11,118 CASH AND CASH EQUIVALENTS, end of period $ 24,208 $ 12,817 GENESEE & WYOMING INC. AND SUBSIDIARIES Selected Consolidated Financial Information (dollars in thousands) (Unaudited)
Three Months Ended March 31, ---------------------------------------------------- 2005 2004 ------------------------ ------------------------ % of % of Amount Revenue Amount Revenue ---------- ---------- ---------- ---------- Revenues: Freight $ 63,133 75.1% $ 54,810 75.7% Non-freight 20,948 24.9% 17,593 24.3% Total revenues $ 84,081 100.0% $ 72,403 100.0% Operating Expense Comparison: Natural Classification Labor and benefits $ 28,884 34.4% $ 26,396 36.5% Equipment rents 7,890 9.4% 6,882 9.5% Purchased services 5,130 6.1% 4,281 5.9% Depreciation and amortization 4,990 5.9% 4,730 6.5% Diesel fuel 7,937 9.4% 5,645 7.8% Casualties and insurance 3,632 4.3% 3,707 5.1% Materials 4,208 5.0% 3,708 5.1% Net gain on sale and impairment of assets (67) -0.1% (93) -0.1% Other expenses 7,217 8.6% 5,587 7.7% Total operating expenses $ 69,821 83.0% $ 60,843 84.0% Functional Classification Transportation $ 28,886 34.4% $ 24,666 34.1% Maintenance of ways and structures 7,892 9.4% 6,887 9.5% Maintenance of equipment 13,105 15.6% 11,682 16.1% General and administrative 15,015 17.8% 12,971 17.9% Net gain on sale and impairment of assets (67) -0.1% (93) -0.1% Depreciation and amortization 4,990 5.9% 4,730 6.5% Total operating expenses $ 69,821 83.0% $ 60,843 84.0%
GENESEE & WYOMING INC. AND SUBSIDIARIES North America Railroad Freight Revenues, 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, 2005 March 31, 2004 ------------------------------------ ------------------------------------ Average Average Revenue Revenue Freight Per Freight Per Revenues Carloads Carload Revenues Carloads Carload ---------- ---------- ---------- ---------- ---------- ---------- Commodity Group Coal, Coke & Ores $ 12,269 45,858 $ 268 $ 10,737 44,042 $ 244 Paper 11,700 25,409 460 9,520 22,984 414 Lumber & Forest Products 7,552 20,951 360 5,838 18,034 324 Petroleum Products 6,871 8,783 782 6,314 8,310 760 Metals 6,354 18,165 350 5,655 17,838 317 Minerals & Stone 5,601 14,065 398 5,136 12,665 406 Farm & Food Products 4,759 13,372 356 4,792 11,452 418 Chemicals-Plastics 4,673 9,305 502 3,872 7,468 518 Autos & Auto Parts 1,830 3,954 463 1,742 4,197 415 Intermodal 501 1,143 438 552 1,364 405 Other 1,023 3,781 271 652 2,854 228 Totals $ 63,133 164,786 383 $ 54,810 151,208 362
AUSTRALIAN RAILROAD GROUP PTY. LTD. CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands) (Unaudited - U.S. GAAP) Three Months Ended March 31, ----------------------------- 2005 2004 ------------ ------------ REVENUES $ 84,379 $ 82,353 OPERATING EXPENSES 70,577 64,713 INCOME FROM OPERATIONS 13,802 17,640 INTEREST EXPENSE (7,412) (7,348) OTHER INCOME, NET 179 403 INCOME BEFORE TAX 6,569 10,695 PROVISION FOR INCOME TAX 1,983 3,212 NET INCOME $ 4,586 $ 7,483 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, December 31, 2005 2004 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 12,553 $ 21,217 Accounts receivable, net 48,732 49,085 Materials and supplies 11,280 11,580 Prepaid expenses and other 903 3,055 Total current assets 73,468 84,937 PROPERTY AND EQUIPMENT, net 541,941 541,470 DEFERRED INCOME TAX ASSETS, net 73,284 77,325 OTHER ASSETS, net 8,350 8,522 Total assets $ 697,043 $ 712,254 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 13,908 19,832 Accrued expenses 26,930 31,989 Current income tax liabilities 336 364 Total current liabilities 41,174 52,185 LONG-TERM DEBT 378,966 383,425 DEFERRED INCOME TAX LIABILITIES, net 21,213 21,207 OTHER LONG-TERM LIABILITIES 2,179 2,177 FAIR VALUE OF INTEREST RATE SWAPS 5,052 9,788 Total non-current liabilities 407,410 416,597 REDEEMABLE PREFERRED STOCK OF STOCKHOLDERS 16,700 16,897 TOTAL STOCKHOLDERS' EQUITY 231,759 226,575 Total liabilities and stockholders' equity $ 697,043 $ 712,254 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, March 31, 2005 2004 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,586 $ 7,483 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 7,602 6,714 Deferred income taxes 3,392 2,361 Net (gain) loss on sale and impairment of assets (327) 484 Changes in assets and liabilities (9,629) 1,479 Net cash provided by operating activities 5,624 18,521 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (14,664) (11,665) Proceeds from disposition of property and equipment 661 484 Net cash used in investing activities (14,003) (11,181) EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH AND CASH EQUIVALENTS (285) 546 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (8,664) 7,886 CASH AND CASH EQUIVALENTS, beginning of period 21,217 26,618 CASH AND CASH EQUIVALENTS, end of period $ 12,553 $ 34,504 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, ---------------------------------------------------- 2005 2004 ------------------------ ------------------------ % of % of Amount Revenue Amount Revenue ---------- ---------- ---------- ---------- Revenues: Freight $ 69,339 82.2% $ 70,940 86.1% Non-freight 15,040 17.8% 11,413 13.9% Total railroad revenues $ 84,379 100.0% $ 82,353 100.0% Operating Expenses: Natural Classification Labor and benefits $ 17,104 20.3% $ 14,256 17.3% Equipment rents 883 1.0% 710 0.9% Purchased services 17,370 20.6% 19,062 23.2% Depreciation and amortization 7,602 9.0% 6,714 8.1% Diesel fuel used in operations 7,219 8.6% 6,155 7.5% Diesel fuel for sales to third parties 5,710 6.8% 3,498 4.2% Casualties and insurance 4,629 5.5% 3,459 4.2% Materials 3,651 4.3% 3,303 4.0% Net (gain) loss on sale and impairment of assets (327) -0.4% 484 0.6% Other expenses 6,736 7.9% 7,072 8.6% Total operating expenses $ 70,577 83.6% $ 64,713 78.6% Functional Classification Transportation $ 32,569 38.6% $ 29,638 36.0% Maintenance of ways and structures 9,427 11.2% 9,707 11.8% Maintenance of equipment 8,006 9.5% 7,957 9.7% General and administrative 13,300 15.7% 10,213 12.4% Net (gain) loss on sale and impairment of assets (327) -0.4% 484 0.6% Depreciation and amortization 7,602 9.0% 6,714 8.1% Total operating expenses $ 70,577 83.6% $ 64,713 78.6%
Australian Railroad Group Pty. Ltd. is 50%-owned by Genesee & Wyoming Inc. AUSTRALIAN RAILROAD GROUP PTY. LTD. Australian Railroad Freight Revenues, Carloads and Average Revenue Per Carload Comparison by Commodity Group (U.S. dollars in thousands, except average revenue per carload) (Unaudited)
Three Months Ended Three Months Ended March 31, 2005 March 31, 2004 ------------------------------------ ------------------------------------ Average Average Revenue Revenue Freight Per Freight Per Revenues Carloads Carload Revenues Carloads Carload ---------- ---------- ---------- ---------- ---------- ---------- Commodity Group Grain $ 22,115 54,620 $ 405 $ 26,261 66,563 $ 395 Other Ores and Minerals 15,576 26,680 584 15,078 28,158 535 Iron Ore 12,633 52,989 238 11,462 50,479 227 Alumina 5,560 40,061 139 5,019 39,416 127 Bauxite 3,662 33,970 108 3,212 30,217 106 Hook and Pull (Haulage) 338 685 493 464 2,776 167 Gypsum 988 11,156 89 1,008 12,793 79 Other 8,467 17,808 475 8,436 17,193 491 Total $ 69,339 237,969 291 $ 70,940 247,595 287
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 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: Quarters Ended March 31, ----------------------------- 2005 2004 ------------ ------------ Net cash provided by operating activities $ 19,724 $ 17,608 Net cash used in investing activities (3,848) (4,770) Free cash flow $ 15,876 $ 12,838 SOURCE Genesee & Wyoming Inc. -0- 05/02/2005 /CONTACT: John C. Hellmann, Chief Financial Officer, Genesee & Wyoming Inc., +1-203-629-3722/ /Web site: http://www.gwrr.com http://phx.corporate-ir.net/phoenix.zhtml?c=64426&p=irol-irhome / _