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Rail News Home Financials

10/30/2003



Rail News: Financials

New U.S. lines, 'promising' Australian operation fuel GWI's 3Q revenue growth


An acquisition, a new start, new customers and favorable business climates helped Genesee & Wyoming Inc. (GWI) post solid revenue increases during the third-quarter.

For the quarter, GWI reported net income of $7.6 million, an 8.6 percent increase compared with $7 million for the same 2002 period. North American revenue increased 16 percent — to $61.5 million — compared with third-quarter 2002's $53 million. Key reasons: The infusion of $3.4 million in revenue was from GWI's acquisition of Utah Railway and $1 million from the start-up of an Oregon short line. For the quarter, "same railroad" revenue increased $4.1 million, or 7.7 percent, despite a $1.1 million decline in metals and auto shipments in GWI's New York-Pennsylvania Region.

GWI recorded North American operating income of $9.2 million — which included a $700,000 non-cash charge for a legal settlement — a 25.7 percent increase compared with the same 2002 period. GWI's North American third-quarter operating ratio was 85, compared with 86.2 for the same 2002 period.

"Although metals and autos traffic in our New York-Pennsylvania Region has been weak for the past several months, other commodities such as coal in our Illinois Region, pulp and paper in our Oregon Region and petroleum products in our Mexico Region have shown good growth," GWI Chairman and Chief Executive Officer Mortimer Fuller III said in a prepared statement.

For the quarter, GWI's 50-percent-owned subsidiary, Australian Railroad Group (ARG), recorded revenue of $61.7 million, a 13.3 percent increase compared with the same 2002 period. ARG also secured two new customers — one for iron ore, another for ag products — that GWI projects will generate $17.2 million in revenue next year. But the railroad had operating income of $11.2 million, a 15.2 percent decline compared with the same 2002 period. (Note: The Australian dollar appreciated 21.8 percent during the past year, GWI officials said.)

Regardless, GWI officials like what they're seeing, rail-wise, in the land down under.

"First, we are pleased that the regulatory regime has been set in western Australia," Fuller said. "Second, our agreement with the Australian Tax Authority is favorable. Third, new business opportunities are good as illustrated by our two new customers. Finally, in contrast with last year's severe drought, our outlook for 2004 grain shipments is strong due to the high harvest levels projected for western and south Australia."

GWI operates short line and regional railroads in the United States, Canada, Mexico, Australia and Bolivia. The company operates more than 8,000 miles of owned and leased track, and more than 3,000 additional miles under track access arrangements.


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