(Genesee & Wyoming issued the following on April 29, 2010.)
GREENWICH, Conn. — Genesee & Wyoming Inc. (GWI) reported net income in the first quarter of 2010 of $16.0 million, compared with net income of $13.9 million in the first quarter of 2009. GWI’s diluted earnings per share (EPS) in the first quarter of 2010 were $0.39 with 41.4 million weighted average shares outstanding, compared with diluted EPS of $0.38 with 36.4 million weighted average shares outstanding in the first quarter of 2009.
GWI’s effective income tax rate in the first quarter of 2010 was 37.6%, compared with 27.0% in the first quarter of 2009, primarily due to the expiration of the short line tax credit on December 31, 2009.
Results from Continuing Operations
In the first quarter of 2010, GWI’s total revenues increased $7.1 million, or 5.1%, to $145.6 million, compared with $138.5 million in the first quarter of 2009. During the first quarter of 2010, the appreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar increased revenues by $8.4 million. Excluding foreign currency appreciation, GWI’s revenues declined $1.3 million, or 0.9%.
Freight revenues in the first quarter of 2010 increased by $0.4 million, or 0.4%, to $89.6 million, compared with $89.2 million in the first quarter of 2009. Freight revenues increased by $4.3 million due to the appreciation of the Australian and Canadian dollars versus the U.S. dollar. Excluding foreign currency appreciation, GWI’s freight revenues decreased by $3.9 million, or 4.4%.
Of particular importance in reviewing the first quarter of 2010 was the timing of carloadings, which increased significantly in the month of March. In March 2010, GWI’s traffic increased 5.0% compared with March 2009 and 17.8% compared with February 2010. GWI’s total traffic in the first quarter was 202,368 carloads, a decrease of 12,071 carloads, or 5.6%, compared with the first quarter of 2009.
Average freight revenues per carload increased 6.5% in the first quarter of 2010. The appreciation of the Australian and Canadian dollars versus the U.S. dollar increased average revenues per carload by 4.9%, and higher fuel surcharges increased average revenues per carload by 0.1%. Excluding these factors, average revenues per carload increased 1.4%.
GWI’s non-freight revenues in the first quarter of 2010 increased $6.7 million, or 13.6%, to $56.0 million, compared with $49.3 million in the first quarter of 2009. The increase in non-freight revenues included a $4.1 million increase due to the appreciation of the Australian and Canadian dollars and the Euro versus the U.S. dollar. Excluding foreign currency appreciation, GWI’s non-freight revenues increased $2.6 million, or 5.3%.
GWI’s operating income in the first quarter of 2010 was $30.1 million, an increase of $4.0 million, or 15.3%, compared with $26.1 million in the first quarter of 2009. GWI’s operating ratio was 79.3% in the first quarter of 2010, a 1.8 percentage point improvement over the 81.1% operating ratio in the first quarter of 2009.
Comments from the Chief Executive Officer
John C. Hellmann, President and CEO of GWI, commented, “Our first quarter financial results were a good start to 2010. In late February, our traffic began to strengthen in several commodity groups including steel and grain, and we continued to control our costs. The result was an operating ratio of 79.3%, which is a first quarter record in the history of GWI. We are focused on sustaining this level of operating efficiency for the remainder of the year, regardless of the pace of improvement in the economy.”
Mr. Hellmann continued, “We generated $30 million of free cash flow in the first quarter of 2010, further strengthening our balance sheet for acquisitions and investments. While not our exclusive focus, we continue to actively evaluate opportunities that relate to the natural resources sector, similar to the recent contract that we signed to provide rail haulage services for export iron ore in Labrador, Canada.”
GWI’s continuing operations generated free cash flow of $30.2 million and $12.2 million for the quarters ended March 31, 2010 and 2009, respectively. For the quarter ended March 31, 2010, changes in working capital decreased net cash flow from operating activities by $0.1 million. For the quarter ended March 31, 2009, changes in working capital decreased net cash flow from operating activities by $3.5 million.
Net cash used in investing activities for the quarter ended March 31, 2010 included $14.3 million relating to the purchase of property and equipment, partially offset by $10.1 million relating to grant proceeds received from outside parties and $0.8 million from the sale of assets. Net cash used in investing activities in the quarter ended March 31, 2009 included $20.7 million relating to the purchase of property and equipment, partially offset by $3.8 million relating to grant proceeds received from outside parties and $3.6 million from the sale of assets.
Conference Call and Webcast Details
As previously announced, GWI’s conference call to discuss financial results for the first quarter will be held Thursday, April 29, 2010, at 11:00 a.m. EDT. The dial-in number for the teleconference is (800) 288-8960; outside U.S., call (612) 332-0107, 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.” Management will be referring to a slide presentation that will also be available under the “Investors” tab of GWI’s website prior to the conference call. An audio replay of the conference call will be accessible via the “Investors” tab of GWI’s website starting at 1:00 p.m. on April 29, 2010, until the following quarter’s results are posted. Telephone replay is available for 30 days beginning at 12 p.m. EDT on April 29, 2010, by dialing (800) 475-6701 (or outside U.S., dial (320) 365-3844). The access code is 121474.
About Genesee & Wyoming Inc.
GWI owns and operates short line and regional freight railroads in the United States, Canada, Australia and the Netherlands. Operations currently include 62 railroads organized in nine regions, with more than 6,000 miles of owned and leased track and approximately 3,400 additional miles under track access arrangements. GWI provides rail service at 16 ports in North America and Europe and performs contract coal loading and railcar switching for industrial customers.