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Thursday, February 14, 2013    

Genesee & Wyoming posts progress with RailAmerica integration


On Tuesday, Genesee & Wyoming Inc. (GWI) President and Chief Executive Officer Jack Hellmann provided an update on the RailAmerica integration during the company's fourth-quarter earnings conference. GWI assumed control of RailAmerica on Dec. 28, 2012.

"From an operating standpoint, our planned new regional structure was rolled out to the railroads with our nine North American regions now run by a nice balance of six GWI senior vice presidents and three former RailAmerica senior vice presidents," said Hellmann during his opening remarks. "Given that our top priority is to impart [our] safety culture, business culture and decision-making frameworks, what might seem to be a daunting task, with 45 new railroads, is actually quite manageable thanks to the accountability of our regional leadership."

GWI has begun a reorganization at RailAmerica's corporate headquarters in Jacksonville, Fla., he said, adding that the company expects to close the offices in the second quarter.

"We have thus far reduced annual labor costs by around $20 million," said Hellmann. "Given the expected timing of this reorganization, we expect at least $27 million of savings in 2013, with the synergies fully visible in the third quarter."

GWI has made some "important new additions" to its organization that will create significant long-term value, he said. The commercial organization now includes a larger industrial development team and an in-house real estate group; a newly expanded customer service department is being led by former GWI regional senior vice president, who has been tasked with creating a world-class service organization; the company is centralizing the oversight of track investment and equipment management via a new chief engineer and new chief mechanical officer; and purchasing has been centralized to leverage greater purchasing power.

"While our No. 1 priority as we enter 2013 is to complete the integration of RailAmerica … we also remain active with business development and potential acquisitions," said Hellmann. "We continue to pursue multiple targets and we currently have approximately $400 million of availability under our revolving credit facility."

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