(Source: Genesee & Wyoming press release, November 1, 2011)
GREENWICH, Conn. — Genesee & Wyoming Inc. (GWI) reported net income in the third quarter of 2011 of $32.9 million, compared with net income of $24.8 million in the third quarter of 2010. GWI’s diluted earnings per share (EPS) in the third quarter of 2011 were $0.77 with 42.8 million weighted average shares outstanding, compared with diluted EPS of $0.59 with 41.9 million weighted average shares outstanding in the third quarter of 2010.
GWI’s income from continuing operations in the third quarter of 2011 was $33.0 million, or $0.77 per diluted share, compared with income from continuing operations of $22.1 million, or $0.53 per diluted share in the third quarter of 2010.
GWI’s effective income tax rate in the third quarter of 2011 was 27.2%, compared with 35.4% in the third quarter of 2010, primarily due to a benefit of $2.8 million from the extension of the short line tax credit in the fourth quarter of 2010.
In the third quarter of 2011 and 2010, GWI’s results included certain significant items that are set forth in the table below ($ in millions, except per share amounts).
Comments from the Chief Executive Officer
Jack Hellmann, President and CEO of GWI commented, “Our business continues to perform well, as third quarter operating revenues increased 39% to $217 million and third quarter operating income increased 46% to $56 million, both company records. Our operating ratio was 74.0% in North America and Europe, another company record, and our operating ratio in Australia was 74.7%.”
“We remain pleased with the performance of our recent acquisitions and investments. In the United States, the first month of operations of the Arizona Eastern Railway was in-line with our acquisition plan. In Canada, we are experiencing additional growth in iron ore shipments under our new contracts in the Labrador Trough. In Australia, shipments on the Alice Springs to Darwin rail line are strong and we expect that the recently completed acquisition of iron ore assets of WPG Resources by OneSteel will drive a significant increase in our iron ore traffic in South Australia starting in 2012. In addition, we remain actively engaged in several other potential acquisitions and investments particularly related to the natural resources sector in both North America and Australia.”
Results from Continuing Operations
In the third quarter of 2011, GWI’s operating revenues increased $60.7 million, or 38.8%, to $217.2 million, compared with $156.5 million in the third quarter of 2010. Excluding $41.7 million in revenues from GWA (North) Pty Ltd (GWA North), GWI’s subsidiary that acquired certain assets of FreightLink on December 1, 2010, and the Arizona Eastern Railway (AZER), which GWI acquired on September 1, 2011, same railroad operating revenues increased $26.2 million, or 16.7%. During the third quarter of 2011, the appreciation of the Australian dollar, the Canadian dollar and the Euro versus the U.S. dollar, increased same railroad operating revenues by $5.3 million. Excluding the impact from foreign currency appreciation, GWI’s same railroad operating revenues increased $20.9 million, or 13.4%.
Same railroad freight revenues in the third quarter of 2011 increased $19.9 million, or 20.7%, to $115.7 million, compared with $95.9 million in the third quarter of 2010. Excluding the $2.3 million net impact from foreign currency appreciation, GWI’s same railroad freight revenues increased by $17.5 million, or 18.3%.
GWI’s traffic in the third quarter of 2011 was 256,190 carloads, an increase of 37,867 carloads, or 17.3%, compared with the third quarter of 2010. Excluding 22,811 carloads from GWA North and AZER, same railroad traffic in the third quarter of 2011 increased 15,056 carloads, or 6.9%. The traffic increase was principally due to increases of 3,674 carloads of metals traffic, 3,664 carloads of farm and food products traffic, 3,539 carloads of coal traffic and 2,560 carloads of minerals and stone traffic. All remaining traffic increased by a net 1,619 carloads.
Same railroad average revenues per carload increased 13.0% in the third quarter of 2011. Higher fuel surcharges, the appreciation of the Australian and Canadian dollars versus the U.S. dollar and a favorable change in commodity mix increased average revenues per carload by 3.2%, 2.7% and 0.3%, respectively. Excluding these factors, same railroad average revenues per carload increased 6.8%.
GWI’s same railroad non-freight revenues in the third quarter of 2011 increased $6.4 million, or 10.5%, to $67.0 million compared with $60.6 million in the third quarter of 2010. Excluding the $3.0 million net impact from foreign currency appreciation, GWI’s same railroad non-freight revenues increased $3.4 million, or 5.6%, primarily due to higher switching revenues in the U.S., Australia and Canada.