Genesee & Wyoming Reports Results for the Fourth Quarter of 2014

DARIEN, Conn.--()--Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Fourth Quarter Highlights

  • Total operating revenues increased 6.1% to $415.6 million.
  • Adjusted income from operations (operating income) increased 18.4% to $113.4 million; Reported income from operations increased 19.7% to $113.5 million. (1)
  • Adjusted operating ratio improved 2.9 percentage points to 72.7%; Reported operating ratio of 72.7% (73.8% North American & European Operations; 67.3% Australian Operations). (1)
  • Adjusted income before income taxes (pre-tax income) increased 23.5% to $102.3 million; Reported income before income taxes increased 25.0% to $102.3 million. (1)
  • Adjusted diluted earnings per common share (EPS) of $1.12, a 19.1% increase in adjusted diluted EPS; Reported diluted EPS of $1.53. (1)

Comments on Fourth Quarter

Jack Hellmann, President and CEO of G&W, commented, “Our financial results for the fourth quarter of 2014 were solid, as our North American operations performed well thanks to a good U.S. economy, which more than offset weakness in our Australian operations. In the fourth quarter, G&W’s revenues increased 6%, our operating ratio improved 3.1 percentage points to 72.7%, and our adjusted diluted EPS increased 19.1%.” (1)

“In North America, our operating income increased 28% in the fourth quarter despite weaker than expected petroleum products shipments, and our North American operating ratio improved 3.4 percentage points to 74%. In Australia, our operating income declined 4% due to weaker shipments from both iron ore and intermodal customers, although effective cost controls resulted in an Australian operating ratio of 67%.”

Comments on Full Year 2014 and 2015

Jack Hellmann continued, “After a slow start to 2014 due to severe winter weather, G&W’s pre-tax income increased approximately 17% for the final nine months of 2014 led by the relative strength of the U.S. economy and the successful integration of the Rapid City, Pierre & Eastern Railroad (RCP&E). In addition, our cash flow was at record levels in 2014 as we generated free cash flow before business investments of $296 million.” (1)

“In 2015, we expect continued growth from our North American operations, which represents approximately 80% of our revenue, partially offset by a contraction in our Australian operations, which represents approximately 20% of our revenue, due to the closure of several iron ore mines. Overall we expect mid-teens growth in G&W’s pre-tax income in 2015, and we also continue to evaluate acquisition and investment opportunities worldwide.”

Fourth Quarter Financial Results

G&W reported net income in the fourth quarter of 2014 of $87.6 million, compared with net income of $58.1 million in the fourth quarter of 2013. Excluding the net impact of certain items affecting comparability between periods as discussed below, G&W’s adjusted net income in the fourth quarter of 2014 was $64.0 million, compared with adjusted net income of $53.0 million in the fourth quarter of 2013. (1)

G&W’s reported diluted EPS in the fourth quarter of 2014 were $1.53 with 57.1 million weighted average shares outstanding, compared with diluted EPS in the fourth quarter of 2013 of $1.03 with 56.8 million weighted average shares outstanding. Excluding the net impact of certain items affecting comparability discussed below, G&W’s adjusted diluted EPS in the fourth quarter of 2014 were $1.12 with 57.1 million weighted average shares outstanding, compared with adjusted diluted EPS in the fourth quarter of 2013 of $0.94 with 56.8 million weighted average shares outstanding. (1)

In the fourth quarter of 2014 and 2013, G&W’s results included certain items affecting comparability between the periods that are set forth in the following table (in millions, except per share amounts).

 
                  Diluted
Income/(Loss) After-Tax Net Earnings/(Loss)
Before Taxes Income/(Loss) Per Common
  Impact Impact Share Impact

Three Months Ended December 31, 2014

Business development and related costs $ (1.6 ) $ (1.0 ) $ (0.02 )
Net gain on sale of assets $ 1.7 $ 1.0 $ 0.02
2014 Short Line Tax Credit $ $ 27.0 $ 0.47

Application of full year effective tax rate to Q1 - Q3

2014 results

$ $ (3.5 ) $ (0.06 )

 

Three Months Ended December 31, 2013

Business development and related costs $ (1.2 ) $ (0.7 ) $ (0.01 )
RailAmerica integration/acquisition costs $ (1.0 ) $ (0.6 ) $ (0.01 )
Net gain on sale of assets $ 1.3 $ 0.8 $ 0.01
Valuation allowance on FTC $ $ (2.0 ) $ (0.03 )
2013 Short Line Tax Credit $ $ 7.6 $ 0.13
 

Explanation of Items Affecting Comparability

In December 2014, the U.S. Short Line Tax Credit (which had previously expired on December 31, 2013) was extended for fiscal year 2014. In the fourth quarter of 2014, G&W recorded a tax benefit of $27.0 million associated with the extension of the Short Line Tax Credit, which included $19.6 million for the first three quarters of 2014 and $7.4 million for the fourth quarter of 2014. In addition, net income and diluted EPS for the fourth quarter of 2014 were reduced by approximately $3.5 million and $0.06 per share, respectively, due to the application of the full year 2014 effective tax rate to the results of the first three quarters of 2014.

In the fourth quarter of 2014, G&W’s results also included business development and related costs of $1.6 million and net gain on sale of assets of $1.7 million. In the fourth quarter of 2013, G&W results included $1.2 million of business development and related costs, $1.0 million of RailAmerica integration and acquisition-related costs, net gain on asset sales of $1.3 million, a valuation allowance on foreign tax credits (FTC) generated in prior years of $2.0 million and a $7.6 million benefit associated with the Short Line Tax Credit.

Results

In the fourth quarter of 2014, G&W’s total operating revenues increased $24.0 million, or 6.1%, to $415.6 million, compared with $391.7 million in the fourth quarter of 2013. The increase included $20.7 million in revenues from the newly established RCP&E. These revenues were partially offset by a $9.2 million decrease from the net depreciation of foreign currencies relative to the U.S. dollar. Excluding the net impact from foreign currency depreciation, G&W’s same railroad operating revenues, which exclude revenues from RCP&E, increased $12.5 million, or 3.3%.

G&W’s same railroad freight revenues in the fourth quarter of 2014 were $298.1 million, compared with $297.5 million in the fourth quarter of 2013. Excluding a $6.8 million decrease from the impact of foreign currency depreciation, G&W’s same railroad freight revenues increased by $7.4 million, or 2.6%.

G&W’s same railroad non-freight revenues in the fourth quarter of 2014 were $96.8 million, compared with $94.2 million in the fourth quarter of 2013. Excluding a $2.4 million decrease from the impact of foreign currency depreciation, G&W’s same railroad non-freight revenues increased by $5.0 million, or 5.5%.

G&W’s traffic in the fourth quarter of 2014 increased 38,235 carloads, or 8.1%, to 510,141 carloads. Excluding 16,542 carloads from RCP&E, same railroad traffic in the fourth quarter of 2014 increased 21,693 carloads, or 4.6%. The same railroad traffic increase was principally due to increases of 11,303 carloads of minerals and stone traffic (across most of G&W’s regions), 10,073 carloads of coal and coke traffic (primarily in the Midwest and Ohio Valley regions) and 4,321 carloads from G&W’s other commodity group (primarily in overhead Class I shipments), partially offset by a 6,023 carload decrease in agricultural products traffic (primarily due to decreased shipments in the Australia, Ohio Valley and Midwest regions, partially offset by increased shipments in the Central Region). All remaining traffic increased by a net 2,019 carloads.

G&W’s income from operations in the fourth quarter of 2014 was $113.5 million, compared with $94.8 million in the fourth quarter of 2013. G&W’s operating ratio in the fourth quarter of 2014 was 72.7%, compared with an operating ratio of 75.8% in the fourth quarter of 2013. Income from operations in the fourth quarter of 2014 included a net gain on sale of assets of $1.7 million, partially offset by business development and related costs of $1.6 million. Income from operations in the fourth quarter of 2013 included business development and related costs of $1.2 million as well as $1.0 million of RailAmerica integration and acquisition-related costs, partially offset by net gain on sale of assets of $1.3 million. Excluding these items, G&W’s adjusted income from operations increased $17.7 million, or 18.4%, to $113.4 million. G&W’s adjusted operating ratio improved 2.9 percentage points to 72.7% in the fourth quarter of 2014, compared with 75.6% in the fourth quarter of 2013. (1)

Consolidated Annual Results

G&W reported net income for the year ended December 31, 2014 of $261.0 million ($368.1 million pre-tax), compared with net income of $272.1 million ($318.4 million pre-tax) for the year ended December 31, 2013. Excluding the impact of certain items affecting comparability listed below, G&W’s adjusted net income for the year ended December 31, 2014 was $233.5 million ($372.8 million adjusted pre-tax), compared with adjusted net income of $214.7 million ($332.9 million adjusted pre-tax) for the year ended December 31, 2013. (1)

G&W’s diluted EPS for the year ended December 31, 2014 were $4.58 with 57.0 million weighted average shares outstanding, compared with diluted EPS of $4.79 with 56.7 million weighted average shares outstanding for the year ended December 31, 2013. Excluding certain items affecting comparability listed below, G&W’s adjusted diluted EPS for the year ended December 31, 2014 were $4.10 with 57.0 million weighted average shares outstanding, compared with adjusted diluted EPS of $3.78 with 56.7 million weighted average shares outstanding for the year ended December 31, 2013. (1)

G&W’s 2014 and 2013 annual results included certain items affecting comparability between the periods that are set forth in the following table (in millions, except per share amounts).

 
                  Diluted
Income/(Loss) After-Tax Net Earnings/(Loss)
Before Taxes Income/(Loss) Per Common
  Impact Impact Share Impact

Twelve Months Ended December 31, 2014

Business development and related costs $ (5.2 ) $ (3.2 ) $ (0.06 )
Credit facility refinancing-related costs $ (4.7 ) $ (2.9 ) $ (0.05 )
Net gain on sale of assets $ 5.1 $ 3.5 $ 0.06
2014 Short Line Tax Credit $ $ 27.0 $ 0.47
RailAmerica-related tax benefit $ $ 3.9 $ 0.07
Adjustments for tax returns from previous fiscal year $ $ (0.7 ) $ (0.01 )
 

Twelve Months Ended December 31, 2013

Business development and related costs $ (2.2 ) $ (1.4 ) $ (0.03 )
RailAmerica integration/acquisition costs $ (17.0 ) $ (10.7 ) $ (0.19 )
Net gain on sale of assets $ 4.7 $ 3.2 $ 0.06
Retroactive Short Line Tax Credit for 2012 $ $ 41.0 $ 0.72
2013 Short Line Tax Credit $ $ 25.9 $ 0.46
Valuation allowance on FTC $ $ (2.0 ) $ (0.03 )
Adjustment for tax returns from previous fiscal year $ $ 1.4 $ 0.02
 
 

Free Cash Flow (1)

 

G&W’s free cash flow for the twelve months ended December 31, 2014 and 2013 was as follows (in millions):

 
          Twelve Months Ended
2014     2013
Net cash provided by operating activities $ 491.5 $ 413.5

Net cash used in investing activities, excluding new business

investments

(417.0 ) (174.5 )

Net cash used for acquisitions (a)

221.5   12.9  
Free cash flow before new business investments 295.9 251.8
New business investments (92.9 ) (34.2 )
Free cash flow (1) $ 203.1   $ 217.6  
 
(a)   The 2014 period primarily consisted of cash paid for the RCP&E acquisition. The 2013 period consisted of cash paid for expenses related to the integration of RailAmerica.

Conference Call and Webcast Details

As previously announced, G&W’s conference call to discuss financial results for the fourth quarter of 2014 will be held on Tuesday, February 10, 2015, at 11 a.m. ET. The dial-in number for the teleconference in the U.S. is (800) 230-1096; outside the U.S. is (612) 332-0802, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors, by selecting “Q4 2014 Genesee & Wyoming 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 p.m. ET on February 10, 2015 by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 345263.

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 116 railroads organized in 11 regions, with more than 15,000 miles of owned and leased track, 5,200 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,” “will,” “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, railroad network congestion or other substantial disruption of operations; customer demand and changes in our operations; exposure to the credit risk of customers and counterparties; changes in commodity prices; consummation and integration of acquisitions; economic, political and industry conditions (including employee strikes or work stoppages); 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; 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 income from operations, adjusted operating ratio, adjusted income before income taxes, adjusted net income, adjusted diluted earnings per common share 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 AND TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013
(in thousands, except per share amounts)
(unaudited)
 
          Three Months Ended     Twelve Months Ended
December 31, December 31,
2014     2013 2014     2013
OPERATING REVENUES $ 415,627 $ 391,668 $ 1,639,012 $ 1,568,643
OPERATING EXPENSES 302,156   296,838   1,217,441   1,188,455  
INCOME FROM OPERATIONS 113,471 94,830 421,571 380,188
INTEREST INCOME 88 986 1,445 3,971
INTEREST EXPENSE (12,053 ) (14,542 ) (56,162 ) (67,894 )
OTHER INCOME, NET 820   592   1,259   2,122  
INCOME BEFORE INCOME TAXES 102,326 81,866 368,113 318,387
PROVISION FOR INCOME TAXES (14,695 ) (23,778 ) (107,107 ) (46,296 )
NET INCOME 87,631 58,088 261,006 272,091
LESS: NET INCOME/(LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTEREST 258 (189 ) 251 795

LESS: SERIES A-1 PREFERRED STOCK DIVIDEND

      2,139  

NET INCOME AVAILABLE TO COMMON

STOCKHOLDERS

$ 87,373   $ 58,277   $ 260,755   $ 269,157  

BASIC EARNINGS PER COMMON SHARE

ATTRIBUTABLE TO GENESEE & WYOMING INC.

COMMON STOCKHOLDERS

$ 1.57   $ 1.07   $ 4.71   $ 5.00  
WEIGHTED AVERAGE SHARES - BASIC 55,715   54,727   55,305   53,788  

DILUTED EARNINGS PER COMMON SHARE

ATTRIBUTABLE TO GENESEE & WYOMING INC.

COMMON STOCKHOLDERS

$ 1.53   $ 1.03   $ 4.58   $ 4.79  
WEIGHTED AVERAGE SHARES - DILUTED 57,062   56,808   56,972   56,679  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2014 AND DECEMBER 31, 2013
(in thousands)
(unaudited)
               
December 31, December 31,
2014 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 59,727 $ 62,876
Accounts receivable, net 357,278 336,271
Materials and supplies 30,251 31,295
Prepaid expenses and other 24,176 41,766
Deferred income tax assets, net 76,994   76,122
Total current assets 548,426   548,330
PROPERTY AND EQUIPMENT, net 3,788,482 3,440,744
GOODWILL 628,815 630,462
INTANGIBLE ASSETS, net 587,663 613,933
DEFERRED INCOME TAX ASSETS, net 2,500 2,405
OTHER ASSETS, net 39,867   83,947
Total assets $ 5,595,753   $ 5,319,821
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 67,398 $ 84,366
Accounts payable 290,746 242,010
Accrued expenses 106,094   130,132
Total current liabilities 464,238   456,508
LONG-TERM DEBT, less current portion 1,548,051 1,540,346
DEFERRED INCOME TAX LIABILITIES, net 908,852 863,051
DEFERRED ITEMS - grants from outside parties 279,286 267,098
OTHER LONG-TERM LIABILITIES 37,346 43,748
TOTAL EQUITY 2,357,980   2,149,070
Total liabilities and equity $ 5,595,753   $ 5,319,821
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013
(in thousands)
(unaudited)
          Twelve Months Ended
December 31,
2014       2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 261,006 $ 272,091
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 157,081 141,644
Stock-based compensation 12,858 16,951
Excess tax benefits from share-based compensation (6,221 ) (6,861 )
Deferred income taxes 70,131 10,229
Net gain on sale of assets (5,100 ) (4,677 )
Insurance proceeds received 5,527 11,053

Changes in assets and liabilities which (used) provided cash, net of effect of

acquisitions:

Accounts receivable, net (39,107 ) (47,780 )
Materials and supplies 2,600 (1,839 )
Prepaid expenses and other 17,451 3,304
Accounts payable and accrued expenses 14,703 16,383
Other assets and liabilities, net 535   3,006  
Net cash provided by operating activities 491,464   413,504  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (331,499 ) (249,318 )
Grant proceeds from outside parties 27,980 33,913
Cash paid for acquisitions, net of cash acquired (221,451 )
Insurance proceeds for the replacement of assets 8,029
Proceeds from disposition of property and equipment 7,096   6,687  
Net cash used in investing activities (509,845 ) (208,718 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases (538,035 ) (471,957 )
Proceeds from issuance of long-term debt 543,300 262,651
Debt amendment costs (3,880 ) (2,773 )
Dividends paid on Series A-1 Preferred Stock (2,139 )
Proceeds from employee stock purchases 11,819 12,510
Excess tax benefits from share-based compensation 6,221 6,861
Treasury stock acquisitions (4,186 ) (11,095 )
Net cash provided by/(used in) financing activities 15,239   (205,942 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (7 ) (740 )
DECREASE IN CASH AND CASH EQUIVALENTS (3,149 ) (1,896 )
CASH AND CASH EQUIVALENTS, beginning of period 62,876   64,772  
CASH AND CASH EQUIVALENTS, end of period $ 59,727   $ 62,876  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
          Three Months Ended December 31,
2014     2013
Amount     % of Revenue Amount     % of Revenue

Revenues:

Freight $ 316,415 76.1 % $ 297,500 76.0 %
Non-freight 99,212   23.9 % 94,168   24.0 %
Total revenues $ 415,627   100.0 % $ 391,668   100.0 %
 

Operating Expense Comparison:

Natural Classification

Labor and benefits $ 116,826 28.1 % $ 111,622 28.5 %
Equipment rents 20,864 5.0 % 19,609 5.0 %
Purchased services 22,530 5.4 % 29,428 7.5 %
Depreciation and amortization 40,951 9.9 % 35,926 9.2 %
Diesel fuel used in operations 33,644 8.1 % 37,633 9.6 %
Casualties and insurance 10,481 2.5 % 11,596 3.0 %
Materials 21,629 5.2 % 15,728 4.0 %
Trackage rights 13,322 3.2 % 13,854 3.5 %
Net gain on sale of assets (1,656 ) (0.4 )% (1,258 ) (0.3 )%
Other expenses 23,565   5.7 % 22,700   5.8 %
Total operating expenses $ 302,156   72.7 % $ 296,838   75.8 %
 

Functional Classification

Transportation $ 110,426 26.5 % $ 116,126 29.6 %
Maintenance of ways and structures 43,555 10.5 % 41,114 10.5 %
Maintenance of equipment 41,728 10.0 % 40,762 10.4 %
General and administrative 59,258 14.3 % 56,496 14.4 %
Construction costs 7,894 1.9 % 7,672 2.0 %
Net gain on sale of assets (1,656 ) (0.4 )% (1,258 ) (0.3 )%
Depreciation and amortization 40,951   9.9 % 35,926   9.2 %
Total operating expenses $ 302,156   72.7 % $ 296,838   75.8 %
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
Three Months Ended December 31, 2014          

North American & European

Operations

    Australian Operations     Total Operations
Amount     % of Revenue Amount     % of Revenue Amount     % of Revenue

Revenues:

Freight $ 259,345 75.5 % $ 57,070 78.9 % $ 316,415 76.1 %
Non-freight 83,989   24.5 % 15,223   21.1 % 99,212   23.9 %
Total revenues 343,334   100.0 % 72,293   100.0 % 415,627   100.0 %

Operating expenses:

Labor and benefits 100,310 29.1 % 16,516 22.8 % 116,826 28.1 %
Equipment rents 18,433 5.4 % 2,431 3.4 % 20,864 5.0 %
Purchased services 16,264 4.7 % 6,266 8.7 % 22,530 5.4 %
Depreciation and amortization 34,162 10.0 % 6,789 9.4 % 40,951 9.9 %
Diesel fuel used in operations 28,497 8.3 % 5,147 7.1 % 33,644 8.1 %
Casualties and insurance 8,797 2.6 % 1,684 2.3 % 10,481 2.5 %
Materials 18,974 5.5 % 2,655 3.7 % 21,629 5.2 %
Trackage rights 8,138 2.4 % 5,184 7.2 % 13,322 3.2 %
Net gain on sale of assets (1,461 ) (0.4 )% (195 ) (0.3 )% (1,656 ) (0.4 )%
Other expenses 21,385   6.2 % 2,180   3.0 % 23,565   5.7 %
Total operating expenses 253,499   73.8 % 48,657   67.3 % 302,156   72.7 %
Income from operations $ 89,835   $ 23,636   $ 113,471  
Carloads 455,785 54,356 510,141

Net expenditures for additions to property &

equipment

$ 68,020 $ 9,523 $ 77,543
 
Three Months Ended December 31, 2013          

North American & European

Operations

    Australian Operations     Total Operations
Amount     % of Revenue Amount     % of Revenue Amount     % of Revenue

Revenues:

Freight $ 230,844 74.8 % $ 66,656 80.1 % $ 297,500 76.0 %
Non-freight 77,613   25.2 % 16,555   19.9 % 94,168   24.0 %
Total revenues 308,457   100.0 % 83,211   100.0 % 391,668   100.0 %

Operating expenses:

Labor and benefits 95,840 31.1 % 15,782 18.9 % 111,622 28.5 %
Equipment rents 17,122 5.5 % 2,487 3.0 % 19,609 5.0 %
Purchased services 16,131 5.2 % 13,297 16.0 % 29,428 7.5 %
Depreciation and amortization 29,039 9.4 % 6,887 8.3 % 35,926 9.2 %
Diesel fuel used in operations 29,923 9.7 % 7,710 9.3 % 37,633 9.6 %
Casualties and insurance 7,939 2.6 % 3,657 4.4 % 11,596 3.0 %
Materials 14,897 4.8 % 831 1.0 % 15,728 4.0 %
Trackage rights 8,216 2.7 % 5,638 6.8 % 13,854 3.5 %
Net gain on sale of assets (1,462 ) (0.5 )% 204 0.2 % (1,258 ) (0.3 )%
Other expenses 20,630   6.7 % 2,070   2.5 % 22,700   5.8 %
Total operating expenses 238,275   77.2 % 58,563   70.4 % 296,838   75.8 %
Income from operations $ 70,182   $ 24,648   $ 94,830  
Carloads 415,067 56,839 471,906

Net expenditures for additions to property &

equipment

$ 58,342 $ 10,506 $ 68,848

 
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 December 31, 2014   North American & European Operations   Australian Operations   Total Operations
Commodity Group Freight Revenues   Carloads  

Average

Revenues Per Carload

Freight Revenues   Carloads  

Average

Revenues Per Carload

Freight Revenues   Carloads  

Average

Revenues Per Carload

Agricultural Products $ 34,511 56,612 $ 610 $ 5,657 9,312 $ 607 $ 40,168 65,924 $ 609
Chemicals & Plastics 34,461 43,153 799 34,461 43,153 799
Metals 31,744 45,122 704 31,744 45,122 704
Metallic Ores* 4,414 5,619 786 26,581 14,347 1,853 30,995 19,966 1,552
Coal & Coke 31,469 93,047 338 31,469 93,047 338
Minerals & Stone 31,273 51,231 610 2,141 14,047 152 33,414 65,278 512
Pulp & Paper 29,854 44,447 672 29,854 44,447 672
Intermodal** 57 542 105 22,323 16,575 1,347 22,380 17,117 1,307
Lumber & Forest Products 20,334 33,549 606 20,334 33,549 606
Petroleum Products 15,694 26,249 598 368 75 4,907 16,062 26,324 610
Food or Kindred Products 9,383 15,937 589 9,383 15,937 589
Autos & Auto Parts 5,883 9,432 624 5,883 9,432 624
Waste 4,793 10,076 476 4,793 10,076 476
Other 5,475   20,769   264     5,475   20,769   264
Totals $ 259,345   455,785   $ 569 $ 57,070   54,356   $ 1,050 $ 316,415   510,141   $ 620
 
Three Months Ended December 31, 2013   North American & European Operations   Australian Operations   Total Operations
Commodity Group Freight Revenues   Carloads   Average Revenues Per Carload Freight Revenues   Carloads  

Average

Revenues Per Carload

Freight Revenues   Carloads  

Average

Revenues Per Carload

Agricultural Products $ 24,075 48,361 $ 498 $ 8,652 13,466 $ 643 $ 32,727 61,827 $ 529
Chemicals & Plastics 30,668 39,088 785 30,668 39,088 785
Metals 31,517 42,636 739 31,517 42,636 739
Metallic Ores* 4,669 5,333 875 29,817 15,430 1,932 34,486 20,763 1,661
Coal & Coke 28,880 82,960 348 28,880 82,960 348
Minerals & Stone 21,122 39,463 535 1,819 10,624 171 22,941 50,087 458
Pulp & Paper 29,066 42,928 677 29,066 42,928 677
Intermodal** 218 2,404 91 25,980 17,243 1,507 26,198 19,647 1,333
Lumber & Forest Products 19,200 32,375 593 19,200 32,375 593
Petroleum Products 16,069 27,677 581 388 76 5,105 16,457 27,753 593
Food or Kindred Products 8,607 14,916 577 8,607 14,916 577
Autos & Auto Parts 6,748 9,512 709 6,748 9,512 709
Waste 5,546 10,999 504 5,546 10,999 504
Other 4,459   16,415   272     4,459   16,415   272
Totals $ 230,844   415,067   $ 556 $ 66,656   56,839   $ 1,173 $ 297,500   471,906   $ 630

* Includes carload and intermodal units

** Represents intermodal units

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
         
Twelve Months Ended December 31,
2014     2013
Amount     % of Revenue Amount     % of Revenue

Revenues:

Freight $ 1,251,941 76.4 % $ 1,177,364 75.1 %
Non-freight 387,071   23.6 % 391,279   24.9 %
Total revenues $ 1,639,012   100.0 % $ 1,568,643   100.0 %
 

Operating Expense Comparison:

Natural Classification

Labor and benefits $ 471,713 28.8 % $ 441,312 28.1 %
Equipment rents 82,730 5.0 % 77,595 4.9 %
Purchased services 98,704 6.0 % 122,584 7.8 %
Depreciation and amortization 157,081 9.6 % 141,644 9.0 %
Diesel fuel used in operations 149,047 9.1 % 147,172 9.4 %
Casualties and insurance 41,568 2.5 % 38,564 2.5 %
Materials 78,624 4.8 % 76,454 4.9 %
Trackage rights 53,783 3.3 % 50,911 3.2 %
Net gain on sale of assets (5,100 ) (0.3 )% (4,677 ) (0.3 )%
Other expenses 89,291   5.5 % 96,896   6.3 %
Total operating expenses $ 1,217,441   74.3 % $ 1,188,455   75.8 %
 

Functional Classification

Transportation $ 462,272 28.2 % $ 443,552 28.3 %
Maintenance of ways and structures 174,716 10.7 % 164,641 10.5 %
Maintenance of equipment 173,212 10.6 % 164,349 10.5 %
General and administrative 231,725 14.1 % 239,927 15.3 %
Construction costs 23,535 1.4 % 39,019 2.5 %
Net gain on sale of assets (5,100 ) (0.3 )% (4,677 ) (0.3 )%
Depreciation and amortization 157,081   9.6 % 141,644   9.0 %
Total operating expenses $ 1,217,441   74.3 % $ 1,188,455   75.8 %
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
Twelve Months Ended December 31, 2014          

North American & European

Operations

    Australian Operations     Total Operations
Amount     % of Revenue Amount     % of Revenue Amount     % of Revenue

Revenues:

Freight $ 1,008,236 76.0 % $ 243,705 77.8 % $ 1,251,941 76.4 %
Non-freight 317,594   24.0 % 69,477   22.2 % 387,071   23.6 %
Total revenues 1,325,830   100.0 % 313,182   100.0 % 1,639,012   100.0 %

Operating expenses:

Labor and benefits 400,497 30.2 % 71,216 22.7 % 471,713 28.8 %
Equipment rents 72,757 5.5 % 9,973 3.2 % 82,730 5.0 %
Purchased services 64,696 4.9 % 34,008 10.9 % 98,704 6.0 %
Depreciation and amortization 128,986 9.7 % 28,095 8.9 % 157,081 9.6 %
Diesel fuel used in operations 122,701 9.3 % 26,346 8.4 % 149,047 9.1 %
Casualties and insurance 30,669 2.3 % 10,899 3.5 % 41,568 2.5 %
Materials 70,968 5.4 % 7,656 2.4 % 78,624 4.8 %
Trackage rights 31,688 2.4 % 22,095 7.1 % 53,783 3.3 %
Net gain on sale of assets (4,668 ) (0.4 )% (432 ) (0.1 )% (5,100 ) (0.3 )%
Other expenses 76,976   5.8 % 12,315   3.9 % 89,291   5.5 %
Total operating expenses 995,270   75.1 % 222,171   70.9 % 1,217,441   74.3 %
Income from operations $ 330,560   $ 91,011   $ 421,571  
Carloads 1,779,157 227,894 2,007,051

Net expenditures for additions to property &

equipment

$ 280,657 $ 25,064 $ 305,721
Twelve Months Ended December 31, 2013

North American & European

Operations

Australian Operations Total Operations
Amount % of Revenue Amount % of Revenue Amount % of Revenue

Revenues:

Freight $ 917,971 73.8 % $ 259,393 79.9 % $ 1,177,364 75.1 %
Non-freight 325,876   26.2 % 65,403   20.1 % 391,279   24.9 %
Total revenues 1,243,847   100.0 % 324,796   100.0 % 1,568,643   100.0 %

Operating expenses:

Labor and benefits 374,935 30.1 % 66,377 20.4 % 441,312 28.1 %
Equipment rents 67,296 5.4 % 10,299 3.2 % 77,595 4.9 %
Purchased services 70,339 5.7 % 52,245 16.1 % 122,584 7.8 %
Depreciation and amortization 114,542 9.2 % 27,102 8.4 % 141,644 9.0 %
Diesel fuel used in operations 116,204 9.3 % 30,968 9.5 % 147,172 9.4 %
Casualties and insurance 28,185 2.3 % 10,379 3.2 % 38,564 2.5 %
Materials 73,724 5.9 % 2,730 0.8 % 76,454 4.9 %
Trackage rights 29,595 2.4 % 21,316 6.6 % 50,911 3.2 %
Net gain on sale of assets (4,491 ) (0.4 )% (186 ) (0.1 )% (4,677 ) (0.3 )%
Other expenses 89,396   7.3 % 7,500   2.3 % 96,896   6.3 %
Total operating expenses 959,725   77.2 % 228,730   70.4 % 1,188,455   75.8 %
Income from operations $ 284,122   $ 96,066   $ 380,188  
Carloads 1,649,914 236,098 1,886,012

Net expenditures for additions to property &

equipment

$ 163,545 $ 51,860 $ 215,405
 

 
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)
 
 
Twelve Months Ended December 31, 2014   North American & European Operations   Australian Operations   Total Operations
Commodity Group Freight Revenues   Carloads   Average Revenues Per Carload Freight Revenues   Carloads   Average Revenues Per Carload Freight Revenues   Carloads   Average Revenues Per Carload
Agricultural Products $ 121,265 210,316 $ 577 $ 32,003 54,184 $ 591 $ 153,268 264,500 $ 579
Chemicals & Plastics 136,492 169,160 807 136,492 169,160 807
Metals 131,161 184,264 712 131,161 184,264 712
Metallic Ores* 17,795 22,123 804 109,439 56,542 1,936 127,234 78,665 1,617
Coal & Coke 126,377 355,762 355 126,377 355,762 355
Minerals & Stone 112,999 194,335 581 8,921 53,407 167 121,920 247,742 492
Pulp & Paper 117,299 174,942 671 117,299 174,942 671
Intermodal** 390 3,442 113 91,895 63,475 1,448 92,285 66,917 1,379
Lumber & Forest Products 82,271 136,768 602 82,271 136,768 602
Petroleum Products 63,051 104,672 602 1,447 286 5,059 64,498 104,958 615
Food or Kindred Products 35,534 60,741 585 35,534 60,741 585
Autos & Auto Parts 23,619 34,470 685 23,619 34,470 685
Waste 18,449 39,994 461 18,449 39,994 461
Other 21,534   88,168   244     21,534   88,168   244
Totals $ 1,008,236   1,779,157   $ 567 $ 243,705   227,894   $ 1,069 $ 1,251,941   2,007,051   $ 624
 
Twelve Months Ended December 31, 2013   North American & European Operations   Australian Operations   Total Operations
Commodity Group Freight Revenues   Carloads   Average Revenues Per Carload Freight Revenues   Carloads   Average Revenues Per Carload Freight Revenues   Carloads   Average Revenues Per Carload
Agricultural Products $ 90,272 179,083 $ 504 $ 40,305 61,757 $ 653 $ 130,577 240,840 $ 542
Chemicals & Plastics 128,935 163,123 790 128,935 163,123 790
Metals 127,769 175,636 727 127,769 175,636 727
Metallic Ores* 16,602 20,231 821 109,326 52,135 2,097 125,928 72,366 1,740
Coal & Coke 110,836 323,500 343 110,836 323,500 343
Minerals & Stone 86,627 162,401 533 10,144 56,762 179 96,771 219,163 442
Pulp & Paper 112,663 169,708 664 112,663 169,708 664
Intermodal** 871 8,518 102 97,888 65,148 1,503 98,759 73,666 1,341
Lumber & Forest Products 79,035 133,649 591 79,035 133,649 591
Petroleum Products 63,493 108,605 585 1,730 296 5,845 65,223 108,901 599
Food or Kindred Products 31,982 55,084 581 31,982 55,084 581
Autos & Auto Parts 26,415 36,510 724 26,415 36,510 724
Waste 22,750 43,166 527 22,750 43,166 527
Other 19,721   70,700   279     19,721   70,700   279
Totals $ 917,971   1,649,914   $ 556 $ 259,393   236,098   $ 1,099 $ 1,177,364   1,886,012   $ 624

* Includes carload and intermodal units

** Represents intermodal units

 

Non-GAAP Financial Measures

This earnings release contains references to adjusted income from operations, adjusted operating ratio, adjusted income before income taxes, adjusted net income, adjusted diluted earnings per common share, 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. Management also views these non-GAAP financial measures as a way to assess comparability between periods. 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 Income from Operations and Adjusted Operating Ratios

 
          Three Months Ended
December 31,
2014     2013
Operating revenues $ 415.6 $ 391.7
Operating expenses 302.2   296.8  
Income from operations (a) $ 113.5   $ 94.8  
Operating ratio (b) 72.7 % 75.8 %
 
Operating expenses $ 302.2 $ 296.8
Business development and related costs (1.6 ) (1.2 )
RailAmerica integration/acquisition costs (1.0 )
Net gain on sale of assets 1.7   1.3  
Adjusted operating expenses $ 302.2   $ 295.9  
 
Adjusted income from operations $ 113.4   $ 95.7  
Adjusted operating ratio 72.7 % 75.6 %
 
(a) Income from operations is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by operating revenues.
 

 

Adjusted Income Before Income Taxes, Adjusted Net Income and Adjusted Diluted Earnings Per

Common Share

 
Three Months Ended December 31, 2014      

Income Before

Income Taxes

    Net Income    

Diluted

Earnings Per

Common Share

As reported     $ 102.3 $ 87.6 $ 1.53

Add back certain items:

Business development and related costs 1.6 1.0 0.02
Net gain on sale of assets (1.7 ) (1.0 ) (0.02 )
2014 Short Line Tax Credit (27.0 ) (0.47 )

Application of full year effective tax rate to Q1 - Q3

2014 results

  3.5   0.06  
As adjusted $ 102.3   $ 64.0   $ 1.12  
 
Three Months Ended December 31, 2013    

Income Before

Income Taxes

Net Income

Diluted

Earnings Per

Common Share

As reported $ 81.9 $ 58.1 $ 1.03

Add back certain items:

Business development and related costs 1.2 0.7 0.01
RailAmerica integration/acquisition costs 1.0 0.6 0.01
Net gain on sale of assets (1.3 ) (0.8 ) (0.01 )
Valuation allowance on FTC 2.0 0.03
2013 Short Line Tax Credit   (7.6 ) (0.13 )
As adjusted $ 82.8   $ 53.0   $ 0.94  
 
Twelve Months Ended December 31, 2014    

Income Before

Income Taxes

Net Income

Diluted

Earnings Per

Common Share

 
As reported $ 368.1 $ 261.0 $ 4.58

Add back certain items:

Business development and related costs 5.2 3.2 0.06
Credit facility refinancing-related costs 4.7 2.9 0.05
Net gain on sale of assets (5.1 ) (3.5 ) (0.06 )
2014 Short Line Tax Credit (27.0 ) (0.47 )
RailAmerica-related tax benefit (3.9 ) (0.07 )
Adjustments for tax returns from previous fiscal year   0.7   0.01  
As adjusted $ 372.8   $ 233.5   $ 4.10  
 

 
Twelve Months Ended December 31, 2013      

Income Before

Income Taxes

  Net Income  

Diluted

Earnings/(Loss)

Per Common

Share

As reported $ 318.4 $ 272.1 $ 4.79

Add back certain items:

Business development and related costs 2.2 1.4 0.03
RailAmerica integration/acquisition costs 17.0 10.7 0.19
Net gain on sale of assets (4.7 )

(3.2

) (0.06 )
Retroactive Short Line Tax Credit for 2012

(41.0

) (0.72 )
2013 Short Line Tax Credit

(25.9

) (0.46 )
Valuation allowance on FTC

2.0

0.03
Adjustment for tax returns from previous fiscal year  

(1.4

) (0.02 )
As adjusted $ 332.9   $ 214.7   $ 3.78  
 

Free Cash Flow

 

Twelve Months Ended December 31,

2014 2013
Net cash provided by operating activities

$

491.5

$

413.5
Net cash used in investing activities (a) (509.8 ) (208.7 )
Net cash used for acquisitions   221.5     12.9  
Free cash flow

$

203.1  

 

$

217.6  
 
(a) The twelve months ended December 31, 2014 and 2013 includes $92.9 million and $34.2 million, respectively, of new business investments.

Contacts

G&W Corporate Communications
Michael Williams, 1-203-202-8900
mwilliams@gwrr.com

Release Summary

Genesee & Wyoming Reports Results for the Fourth Quarter of 2014

Contacts

G&W Corporate Communications
Michael Williams, 1-203-202-8900
mwilliams@gwrr.com