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Rail News: Financials

Genesee & Wyoming's second-quarter financial performance not in peak form

Today, Genesee & Wyoming Inc. (GWI) reported second-quarter net income of $11.4 million, a 4.9 percent increase compared with second-quarter 2004. The short-line holding company’s diluted earnings per share rose 5.1 percent to 41 cents.

In North America, GWI increased quarterly revenue 25.2 percent to $92.7 million and boosted operating income 18 percent to $16 million compared with second-quarter 2004.

However, the company’s North American operating ratio worsened 1 point to 82.7 and quarterly operating expenses rose 20 percent to $146.5 million. During the quarter, GWI incurred legal expenses totaling $600,000 and fuel costs increased 35.7 percent compared with second-quarter 2004.

In Australia, the company’s half-owned subsidiary Australian Railroad Group (ARG) increased quarterly revenue 5.3 percent to $86 million (in U.S. dollars) compared with the same 2004 period. In Australian dollars, revenue declined 2.1 percent.

ARG’s quarterly operating income of $13.6 million dropped about 20 percent and operating ratio of 84.2 worsened 4.3 points compared with second-quarter 2004.

“While results for the second quarter have suffered from higher fuel prices, lower grain shipments, and delays in new iron ore and alumina traffic, ARG’s outlook has never been brighter,” said GWI Chairman and Chief Executive Officer Mortimer Fuller III in a prepared statement. “Grain shipments have recently improved to provide storage capacity for this year’s harvest, which begins in the fourth quarter, [and] a significant new intermodal contract from Melbourne to Adelaide has begun.”

Meanwhile, GWI also announced it recently completed a private placement of $100 million 10-year senior notes and $25 million floating rate seven-year senior notes. The company will use proceeds to repay $125 million in 10-year floating rate notes issued in connection with GWI’s acquisition of Rail Management Corp.’s short lines in May.

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More News from 8/2/2005