Genesee & Wyoming Reports Results for the First Quarter of 2015

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

First Quarter Highlights

  • Completed the acquisition of London-based Freightliner Group Limited (Freightliner) on March 25, 2015.
  • Total operating revenues increased 5.5% to $397.0 million from $376.3 million, including $15.1 million of revenues from Freightliner for the last five days in March and $21.9 million of revenues from Rapid City, Pierre & Eastern Railroad, Inc. (RCP&E) and Pinsly Arkansas.
  • Same railroad revenue, excluding the $13.4 million impact of foreign currency depreciation, declined 0.8%, primarily due to weakness in iron ore, utility coal and steel shipments.
  • Adjusted income from operations increased 15.2% to $86.7 million; Reported income from operations decreased 3.0% to $72.6 million, primarily due to $12.6 million of expense related to the Freightliner acquisition. (1)
  • Adjusted diluted earnings per common share (EPS) increased 18.6% to $0.83; Reported diluted EPS decreased 40.0% to $0.42, primarily due to $0.39 per common share of expense related to the Freightliner acquisition. (1)

Jack Hellmann, President and CEO of G&W, commented, “Our adjusted diluted earnings per common share increased 18.6% in the first quarter of 2015, or 23.9% excluding the impact of foreign currency. However, our results were weaker than our expectations for two principal reasons. First, severe winter weather, although not as challenging as last year, adversely impacted revenues and expense at several of our railroads, particularly in the Northeast United States. Second, we experienced a sharp decline in shipments of certain commodity groups in North America starting in mid-February, including coal (volume down 8% in the first quarter) and metals, primarily steel (volume down 18% in the first quarter). Meanwhile, our Australian operations performed well in a difficult business environment, as effective cost management helped mitigate revenue losses from the closure of customer iron ore mines.” (1)

“Looking ahead to the remainder of 2015, our business outlook varies by geography. In North America, overall economic activity is stable, although we expect continued weakness in utility coal, steel and scrap and certain shale-energy related shipments for the foreseeable future. In Australia, business conditions remain challenging, and, as previously disclosed, we expect our business to weaken due to the impact of customer mine closures. In the United Kingdom/Europe, we are focused on the successful integration of Freightliner and anticipate a strong financial contribution for the remainder of the year. Finally, with approximately $480 million of capacity currently available under our revolving credit facility, we continue to evaluate potential investment and acquisition opportunities worldwide.”

Financial Results

G&W reported net income in the first quarter of 2015 of $23.9 million, compared with net income of $40.0 million in the first quarter of 2014. Excluding the net impact of certain items affecting comparability between periods discussed below, G&W’s adjusted net income in the first quarter of 2015 was $47.3 million, compared with adjusted net income of $40.2 million in the first quarter of 2014. (1)

G&W’s reported diluted EPS in the first quarter of 2015 were $0.42 with 57.1 million weighted average shares outstanding, compared with reported diluted EPS in the first quarter of 2014 of $0.70 with 56.9 million weighted average shares outstanding. G&W’s adjusted diluted EPS in the first quarter of 2015 were $0.83 with 57.1 million weighted average shares outstanding, compared with adjusted diluted EPS in the first quarter of 2014 of $0.70 with 56.9 million weighted average shares outstanding. (1)

G&W’s effective income tax rate was 41.4% in the first quarter of 2015, compared with 36.4% in the first quarter of 2014. The higher effective income tax rate was driven primarily by limitations on the tax deductibility of a portion of the Freightliner acquisition costs.

Items Affecting Comparability

In the first quarter of 2015 and 2014, 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).

     
 

Income/(Loss)
Before Taxes
Impact

After-Tax Net
Income/(Loss)
Impact

Diluted
Earnings/(Loss)
Per Common
Share Impact

Three Months Ended March 31, 2015

Loss on settlement of Freightliner acquisition-related foreign currency forward purchase contracts $ (18.7 ) $ (11.6 ) $ (0.20 )
Freightliner acquisition-related costs $ (12.6 ) $ (9.5 ) $ (0.17 )
Credit facility refinancing-related costs $ (2.0 ) $ (1.3 ) $ (0.02 )
Australian severance costs $ (1.7 ) $ (1.2 ) $ (0.02 )
Net gain on sale of assets $ 0.3 $ 0.2 $
 

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
 

In the first quarter of 2015, G&W’s results included Freightliner acquisition and related financing expenses of $33.3 million, including an $18.7 million loss on the settlement of foreign currency forward purchase contracts, $12.6 million of acquisition-related costs and a non-cash write-off of deferred financing fees of $2.0 million associated with the refinancing of G&W’s credit facility. G&W’s results also included Australian severance costs of $1.7 million and net gain on sale of assets of $0.3 million. G&W’s first quarter of 2014 results included business development and related costs of $1.2 million and net gain on sale of assets of $0.8 million.

First Quarter Results

In the first quarter of 2015, G&W’s total operating revenues increased $20.8 million, or 5.5%, to $397.0 million, compared with $376.3 million in the first quarter of 2014. The increase included $37.0 million in revenues from new operations, including Freightliner, RCP&E and Pinsly Arkansas. These revenue increases were partially offset by a $13.4 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 new operations, decreased $2.8 million, or 0.8%.

G&W’s same railroad freight revenues in the first quarter of 2015 were $270.4 million, compared with $287.7 million in the first quarter of 2014. Excluding a $9.5 million decrease from the net impact of foreign currency depreciation, G&W’s same railroad freight revenues decreased by $7.9 million, or 2.8%, primarily due to declines in iron ore, utility coal and steel shipments.

G&W’s same railroad non-freight revenues in the first quarter of 2015 were $89.7 million, compared with $88.5 million in the first quarter of 2014. Excluding a $3.9 million decrease from the net impact of foreign currency depreciation, G&W’s same railroad non-freight revenues increased by $5.1 million, or 6.0%, primarily due to an increase in railcar switching revenues.

G&W’s traffic in the first quarter of 2015 increased 9,358 carloads, or 2.0%, to 476,737 carloads. Excluding 24,569 carloads from new operations, same railroad traffic in the first quarter of 2015 decreased 15,211 carloads, or 3.3%. The same railroad traffic decrease was principally due to decreases of 7,324 carloads of metals traffic (primarily in the Southern and Northeast regions), 6,691 carloads of coal and coke (primarily in the Central Region), 2,180 carloads of waste traffic (primarily in the Ohio Valley and Pacific regions), 1,874 carloads of agricultural products traffic (primarily in the Australia Region), partially offset by a 4,414 carload increase in minerals and stone traffic. All remaining traffic decreased by a net 1,556 carloads.

G&W’s income from operations in the first quarter of 2015 was $72.6 million, compared with $74.9 million in the first quarter of 2014. G&W’s operating ratio in the first quarter of 2015 was 81.7%, compared with an operating ratio of 80.1% in the first quarter of 2014. Income from operations in the first quarter of 2015 included Freightliner acquisition-related costs of $12.6 million and Australian severance costs of $1.7 million, partially offset by net gain on sale of assets of $0.3 million. 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. Excluding these items, G&W’s adjusted income from operations increased $11.4 million, or 15.2%, to $86.7 million in the first quarter of 2015, and G&W’s adjusted operating ratio improved 1.8 percentage points to 78.2% in the first quarter of 2015, compared with 80.0% in the first quarter of 2014. (1)

Free Cash Flow (1)

G&W’s free cash flow for the three months ended March 31, 2015 and 2014 was as follows (in millions):

  Three Months Ended
March 31,
2015   2014
Net cash provided by operating activities $ 84.0 $ 71.7
Net cash used in investing activities, excluding new business investments (777.3 ) (39.0 )
Add back: net cash used for acquisitions (a) 742.6    
Free cash flow before new business investments 49.3 32.6
New business investments (12.7 ) (17.9 )
Free cash flow (1) $ 36.6   $ 14.7  

(a) The 2015 period consisted of net cash used for the acquisition of Freightliner and Pinsly Arkansas.

Overview of Freightliner

Headquartered in London, England, Freightliner is an international freight rail operator with operations in the United Kingdom (U.K.), Poland, Germany, the Netherlands and Australia. Freightliner's principal business is located in the U.K. where it is the second largest freight rail operator, providing intermodal and heavy haul service throughout England, Scotland and Wales. Freightliner operates in open access rail freight markets and therefore has limited ownership of track assets. Its fleet of primarily leased equipment includes approximately 250 standard gauge locomotives (mostly diesel-electric) as well as 5,500 wagons. Freightliner employs over 2,500 people worldwide.

Conference Call and Webcast Details

As previously announced, G&W’s conference call to discuss financial results for the first quarter of 2015 will be held on Friday, May 1, 2015, at 11 a.m. EDT. 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. 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. EDT on May 1, 2015, by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 345264.

About G&W

Inclusive of Freightliner, G&W owns or leases 120 freight railroads worldwide that are organized in 11 operating regions with 7,700 employees and more than 2,500 customers.

  • G&W’s nine North American regions serve 41 U.S. states and four Canadian provinces and include 113 short line and regional freight railroads with more than 13,000 track-miles.
  • G&W’s Australia Region provides rail freight services in New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line.
  • G&W’s U.K./Europe Region is led by Freightliner, the U.K.’s largest rail maritime intermodal operator and second-largest rail freight company. Operations also include heavy-haul in Poland and Germany and cross-border intermodal services connecting Northern European seaports with key industrial regions throughout the continent.

G&W subsidiaries provide rail service at more than 40 major 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 2014 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 net income, adjusted diluted earnings per common share (EPS) 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, 2015 AND 2014
(in thousands, except per share amounts)
(unaudited)
   
Three Months Ended
March 31,
2015 2014
OPERATING REVENUES $ 397,030 $ 376,279
OPERATING EXPENSES 324,410   301,404  
INCOME FROM OPERATIONS 72,620 74,875
INTEREST INCOME 26 1,034
INTEREST EXPENSE (13,508 ) (13,641 )
LOSS ON SETTLEMENT OF FOREIGN CURRENCY FORWARD PURCHASE CONTRACTS (18,686 )

OTHER INCOME, NET

314   636  
INCOME BEFORE INCOME TAXES 40,766 62,904
PROVISION FOR INCOME TAXES (16,862 ) (22,900 )
NET INCOME $ 23,904   $ 40,004  
BASIC EARNINGS PER COMMON SHARE $ 0.43   $ 0.73  
WEIGHTED AVERAGE SHARES - BASIC 55,826   54,841  
DILUTED EARNINGS PER COMMON SHARE $ 0.42   $ 0.70  
WEIGHTED AVERAGE SHARES - DILUTED 57,121   56,905  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)
   
March 31, December 31,
2015 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 112,420 $ 59,727
Accounts receivable, net 394,132 357,278
Materials and supplies 43,183 30,251
Prepaid expenses and other 51,294 24,176
Deferred income tax assets, net 76,721   76,994
Total current assets 677,750   548,426
PROPERTY AND EQUIPMENT, net 4,014,856 3,788,482
GOODWILL 907,440 628,815
INTANGIBLE ASSETS, net 1,112,740 587,663
DEFERRED INCOME TAX ASSETS, net 2,205 2,500
OTHER ASSETS, net 42,634   39,867
Total assets $ 6,757,625   $ 5,595,753
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 35,963 $ 67,398
Accounts payable 318,219 290,746
Accrued expenses 153,762   106,094
Total current liabilities 507,944   464,238
LONG-TERM DEBT, less current portion 2,410,340 1,548,051
DEFERRED INCOME TAX LIABILITIES, net 1,096,457 908,852
DEFERRED ITEMS - grants from outside parties 276,950 279,286
OTHER LONG-TERM LIABILITIES 132,414 37,346
TOTAL EQUITY 2,333,520   2,357,980
Total liabilities and equity $ 6,757,625   $ 5,595,753
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(in thousands)
(unaudited)
  Three Months Ended
March 31,
2015   2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,904 $ 39,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 41,813 37,641
Stock-based compensation 3,881 3,314
Excess tax benefits from share-based compensation (834 ) (3,580 )
Deferred income taxes 10,236 16,118
Net gain on sale of assets (317 ) (838 )

Loss on settlement of foreign currency forward purchase contracts

18,686
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net 20,547 (8,559 )
Materials and supplies 543 131
Prepaid expenses and other (3,410 ) 2,181
Accounts payable and accrued expenses (32,133 ) (15,582 )
Other assets and liabilities, net 1,078   1,200  
Net cash provided by operating activities 83,994   71,660  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (66,267 ) (71,618 )
Grant proceeds from outside parties 16,369 12,800
Cash paid for acquisitions, net of cash acquired (723,944 )

Net payment from settlement of foreign currency forward purchase contracts related to an acquisition

(18,686 )
Insurance proceeds for the replacement of assets 1,421 300
Proceeds from disposition of property and equipment 1,082   1,555  
Net cash used in investing activities (790,025 ) (56,963 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings, including capital leases (125,307 ) (96,287 )
Proceeds from issuance of long-term debt 892,805 46,546
Debt amendment/issuance costs (5,933 )
Proceeds from employee stock purchases 2,727 4,647
Excess tax benefits from share-based compensation 834 3,580
Treasury stock acquisitions (2,847 ) (3,374 )
Net cash provided by/(used in) financing activities 762,279   (44,888 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (3,555 ) (498 )
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 52,693 (30,689 )
CASH AND CASH EQUIVALENTS, beginning of period 59,727   62,876  
CASH AND CASH EQUIVALENTS, end of period $ 112,420   $ 32,187  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
       
Three Months Ended March 31,
2015 2014
Amount % of Revenue Amount % of Revenue

Revenues:

Freight $ 289,388 72.9 % $ 287,734 76.5 %
Non-freight 92,507 23.3 % 88,545 23.5 %
Freightliner revenues (5 days) 15,135   3.8 %   %
Total revenues $ 397,030   100.0 % $ 376,279   100.0 %
 

Operating expenses:

Labor and benefits $ 128,550 32.4 % $ 116,676 30.9 %
Equipment rents 20,317 5.1 % 19,075 5.1 %
Purchased services 19,731 5.0 % 27,816 7.4 %
Depreciation and amortization 41,813 10.5 % 37,641 10.0 %
Diesel fuel used in operations 28,051 7.1 % 41,935 11.1 %
Casualties and insurance 8,369 2.1 % 9,633 2.6 %
Materials 18,463 4.7 % 16,168 4.3 %
Trackage rights 12,082 3.0 % 12,266 3.3 %
Net gain on sale of assets (317 ) (0.1 )% (838 ) (0.2 )%
Other expenses 33,352 8.4 % 21,032 5.6 %
Freightliner operating expenses (5 days) 13,999   3.5 %   %
Total operating expenses $ 324,410   81.7 % $ 301,404   80.1 %
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
               
Three Months Ended March 31, 2015

North American &
European Operations

Australian Operations Freightliner Total Operations
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Revenues:

Freight $ 243,030 75.3 % $ 46,358 78.4 % $ % $ 289,388 72.9 %
Non-freight 79,714 24.7 % 12,793 21.6 % % 92,507 23.3 %
Freightliner revenues (5 days)   %   % 15,135   100.0 % 15,135   3.8 %
Total revenues 322,744   100.0 % 59,151   100.0 % 15,135   100.0 % 397,030   100.0 %

Operating expenses:

Labor and benefits 111,452 34.5 % 17,098 28.9 % % 128,550 32.4 %
Equipment rents 18,383 5.8 % 1,934 3.2 % % 20,317 5.1 %
Purchased services 14,732 4.6 % 4,999 8.4 % % 19,731 5.0 %
Depreciation and amortization 35,651 11.0 % 6,162 10.4 % % 41,813 10.5 %
Diesel fuel used in operations 24,468 7.6 % 3,583 6.1 % % 28,051 7.1 %
Casualties and insurance 6,528 2.0 % 1,841 3.1 % % 8,369 2.1 %
Materials 16,241 5.0 % 2,222 3.8 % % 18,463 4.7 %
Trackage rights 7,202 2.2 % 4,880 8.3 % % 12,082 3.0 %
Net gain on sale of assets (311 ) (0.1 )% (6 ) % % (317 ) (0.1 )%
Other expenses 31,502 9.8 % 1,850 3.1 % % 33,352 8.4 %
Freightliner operating expenses (5 days)   %   % 13,999   92.5 % 13,999   3.5 %
Total operating expenses 265,848   82.4 % 44,563   75.3 % 13,999   92.5 % 324,410   81.7 %
Income from operations $ 56,896   $ 14,588   $ 1,136   $ 72,620  
Carloads 422,713 54,024 476,737
Net expenditures for additions to property & equipment $ 45,283 $ 4,615 $ $ 49,898

     
Three Months Ended March 31, 2014

North American &
European Operations

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 100,541 33.5 % 16,135 21.2 % 116,676 30.9 %
Equipment rents 16,772 5.6 % 2,303 3.0 % 19,075 5.1 %
Purchased services 15,624 5.1 % 12,192 16.0 % 27,816 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 % 657 0.9 % 16,168 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 17,367   5.8 % 3,665   4.8 % 21,032   5.6 %
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
 

 
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, 2015 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 $ 34,377 58,337 $ 589 $ 6,768 14,596 $ 464 $ 41,145 72,933 $ 564
Autos & Auto Parts 4,624 7,223 640 4,624 7,223 640
Chemicals & Plastics 35,885 46,043 779 35,885 46,043 779
Coal & Coke 26,968 79,612 339 26,968 79,612 339
Food & Kindred Products 9,243 15,888 582 9,243 15,888 582
Intermodal * 17,243 14,349 1,202 17,243 14,349 1,202
Lumber & Forest Products 19,497 32,589 598 19,497 32,589 598
Metallic Ores ** 5,211 6,365 819 20,115 10,746 1,872 25,326 17,111 1,480
Metals 26,398 34,589 763 26,398 34,589 763
Minerals & Stone 27,477 47,384 580 1,949 14,270 137 29,426 61,654 477
Petroleum Products 17,858 27,057 660 283 63 4,492 18,141 27,120 669
Pulp & Paper 27,422 42,765 641 27,422 42,765 641
Waste 3,295 7,293 452 3,295 7,293 452
Other 4,775   17,568   272     4,775   17,568   272
Totals $ 243,030   422,713   $ 575 $ 46,358   54,024   $ 858 $ 289,388   476,737   $ 607

     
Three Months Ended March 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 $ 25,902 48,055 $ 539 $ 9,765 16,979 $ 575 $ 35,667 65,034 $ 548
Autos & Auto Parts 5,458 7,736 706 5,458 7,736 706
Chemicals & Plastics 32,749 40,272 813 32,749 40,272 813
Coal & Coke 31,250 86,303 362 31,250 86,303 362
Food & Kindred Products 8,061 13,847 582 8,061 13,847 582
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
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
Minerals & Stone 19,520 36,240 539 2,140 12,797 167 21,660 49,037 442
Petroleum Products 16,294 27,776 587 292 59 4,949 16,586 27,835 596
Pulp & Paper 27,662 42,211 655 27,662 42,211 655
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

* Represents intermodal units

** Includes carload and intermodal units

Non-GAAP Financial Measures

This earnings release contains references to adjusted income from operations, adjusted operating ratio, adjusted net income, adjusted diluted earnings per common share (EPS) 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 Ratio

  Three Months Ended
March 31,
2015   2014
Operating revenues $ 397.0 $ 376.3
Operating expenses 324.4   301.4  
Income from operations (a) $ 72.6   $ 74.9  
Operating ratio (b) 81.7 % 80.1 %
 
Operating expenses $ 324.4 $ 301.4
Freightliner acquisition-related costs (12.6 )
Business development and related costs (1.2 )

Australian severance costs

(1.7 )
Net gain on sale of assets 0.3   0.8  
Adjusted operating expenses $ 310.4   $ 301.1  
 
Adjusted income from operations $ 86.7   $ 75.2  
Adjusted operating ratio 78.2 % 80.0 %

(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 Net Income and Adjusted Diluted Earnings Per Common Share

Three Months Ended March 31, 2015   Net Income  

Diluted
Earnings/(Loss)
Per
Common
Share

As reported $ 23.9 $ 0.42
Add back certain items, net of tax:
Loss on settlement of Freightliner acquisition-related foreign currency forward purchase contracts 11.6 0.20
Freightliner acquisition-related costs 9.5 0.17
Credit facility refinancing-related costs 1.3 0.02
Australian severance costs 1.2 0.02
Net gain on sale of assets (0.2 )
As adjusted $ 47.3   $ 0.83

   
Three Months Ended March 31, 2014 Net Income

Diluted
Earnings/(Loss)
Per
Common
Share

As reported $ 40.0 $ 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 $ 40.2   $ 0.70

Foreign exchange

(0.03 )

As adjusted excluding foreign exchange

$ 0.67  
 

Free Cash Flow

  Three Months Ended
March 31,
2015   2014
Net cash provided by operating activities $ 84.0 $ 71.7
Net cash used in investing activities (790.0 ) (57.0 )
Net cash used for acquisitions 742.6    
Free cash flow $ 36.6 $ 14.7
New business investments 12.7   17.9  
Free cash flow before new business investments $ 49.3   $ 32.6  
 

Contacts

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

Release Summary

Genesee & Wyoming Reports Results for the First Quarter of 2015

Contacts

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