G&W: Last Look At The Books

With the Brookfield Asset Partners $8.4 Billion Takeover Imminent, GWI Issues 10-Q for 2019 Second Quarter; Possibly the Last Public Disclosure of Financial and Operational Information for its Many Short Lines.

Editor’s Note: All comparisons herein reflect results of the three months ended June 30, 2019 (2Q19) against the three months ended June 30, 2018 (2Q18): 

07 August, Darien CT – G&W reported a global 8.7% operating income decline $8.9M/8.6% to $94.2 million in 2Q19, thanks to declines in its Australian and European operations. Net income rose by 16%, and net profit grew by the same percentage to $51.4 million. OR improved to 83.5% from 82.7%.

“Total traffic from our North American Operations decreased 23,458 carloads, or 5.5%, to 406,895 carloads. Excluding traffic from the two railroad leases in Canada that expired at the end of 2018, existing operations traffic decreased 14,779 carloads, or 3.5%. 

“Average freight revenues per carload on North American Operations increased 5.8% to $637. Average freight revenues per carload from existing operations, excluding the impact of foreign currency, increased 5.1%. A change in the mix of commodities increased average freight revenues per carload by 0.7%; higher fuel surcharges, which increased average freight revenues per carload by 0.6%. Excluding these factors, average freight revenues per carload increased 3.8%.” {G&W 10-Q, reporting 2Q19}

A breakdown of ongoing first half G&W traffic in all commodity groups by revenue and carloads. {G&W 10-Q, reporting 2Q19}

Increased traffic

  • Agricultural products traffic increased 5,418 carloads, or 10.7%, which increased revenues by $3.2 million, and average freight revenues per carload increased 1.6%, which increased revenues by $0.4 million. The increase in carloads was primarily due to increased farm products shipments in the western United States and grain shipments in the midwestern United States.
  • Chemicals and plastics traffic increased 1,015 carloads, or 2.3%, which increased revenues by $0.9 million, and average freight revenues per carload increased 2.0%, which increased revenues by $0.8 million. The increase in carloads was primarily due to an increase in industrial chemical shipments in the western United States.
  • Minerals and stone traffic increased 704 carloads, or 1.0%, which increased revenues $0.4 million, and average freight per carload increased 1.0%, which increased revenues by $0.4 million. The increase in average freight per carload and traffic was primarily due to new business and strong demand for rock salt and frac sand in the northeastern United States, partially offset by a decrease in bentonite and clay shipments due to flooding in the midwestern and southern United States.

Petroleum products average freight revenues per carload increased 9.6%, which increased revenues by $1.5 million, and traffic increased 233 carloads, or 1.0%, which increased revenues by $0.2 million. The increase in average freight revenues per carload was primarily due to stronger pricing and a change in the mix of business. {ibid.}

Decreased traffic

  • Coal and coke traffic decreased 11,206 carloads, or 18.9%, which decreased revenues by $4.3 million, while average freight revenues per carload increased 20.2%, which increased revenues by $3.8 million. The decrease in carloads was primarily due to decreased demand in the southern United States primarily associated with low natural gas prices, high inventory levels and mild temperatures as well as decreased coal shipments in the midwestern United States due to flooding, partially offset by increased demand in the northeastern United States primarily associated with new business. The increase in average freight revenues per carload was primarily due to stronger pricing and a change in the mix of business.
  • Metals traffic decreased 4,221 carloads, or 10.8%, which decreased revenues by $3.5 million, while average freight revenues per carload increased 2.2%, which increased revenues by $0.7 million. The decrease in carloads was primarily due to decreased scrap and finished steel shipments across the United States, decreased pipe shipments in the northeastern and midwestern United States and decreased pig iron shipments in the southern and midwestern United States.
  • Pulp and paper traffic decreased 3,734 carloads, or 9.0%, which decreased revenues by $2.8 million, while average freight revenues per carload increased 4.8%, which increased revenues by $1.5 million. The decrease in carloads was primarily due to decreased containerboard shipments across North America. {}

Freight revenues from all remaining commodities combined increased by $0.3 million.” { ibid.}