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2/13/2013


Rail News: Financials
RailAmerica acquisition skewed Genesee & Wyoming's 4Q financial results



Yesterday, Genesee & Wyoming Inc. (GWI) reported diluted fourth-quarter earnings per share (EPS) of 18 cents compared with 77 cents in fourth-quarter 2011. Reported net income totaled $13.4 million versus $33.3 million in the year-ago period.

The primary reason for the significant declines: GWI's $2 billion acquisition of RailAmerica Inc. last year. GWI assumed control of RailAmerica on Dec. 28, 2012, and as a result, the company's reported 4Q earnings include after-tax charges of $30.7 million, or 61 cents per diluted common share, associated with the transaction, financing and integration-related expenses.

Excluding the acquisition's impact, GWI's adjusted net income in the quarter was $44.2 million compared with adjusted net income of $29.1 million in fourth-quarter 2011, company officials said in a prepared statement. GWI incurred $28.8 million in business development costs, primarily associated with the acquisition and related financing transactions, and an additional $11.4 million in integration costs, primarily associated with severance benefits paid to certain RailAmerica senior executives at 2012's end.

"The integration of RailAmerica is well under way, with new regional management teams largely established, overlapping functions being rationalized and best practices being established in each department," said GWI President and Chief Executive Officer Jack Hellmann. "We are optimistic that we will complete the vast majority of the integration work by the end of the second quarter."

GWI also reported that in 4Q, total operating revenue climbed 8 percent to $227.3 million; same-railroad freight revenue rose 9.6 percent to $163.1 million; operating income dropped 26 percent to $33.7 million; traffic declined 6.9 percent to 229,818 carloads; operating expenses jumped 17 percent to $193.7 million; and the operating ratio increased 7.8 points to 85.2. GWI's adjusted operating ratio improved 4 points to 74.6.

In addition, GWI reported RailAmerica's 4Q results since the company didn't gain control until Dec. 28. In the quarter, RailAmerica's revenue increased 2.6 percent to $151.1 million, operating income fell 30 percent to $26.1 million, traffic inched up 1.1 percent to 214,272 carloads and operating ratio climbed 8 points to 82.7 compared with fourth-quarter 2011 results.

GWI now owns 111 regionals and short lines in the United States, Australia, Canada, Netherlands and Belgium.

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