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Genesee & Wyoming Reports Results For The Third Quarter Of 2012

Stocks in this article: GWR

“Although we did not own RailAmerica in the third quarter of 2012, its operating results were consistent with our expectations. RailAmerica’s revenues increased 11% to $155 million and its adjusted operating income increased 25% to $37 million (3). Starting in the fourth quarter, we will account for the earnings of RailAmerica using the equity method of accounting while the shares are held in a voting trust.”

Financial Results

GWI reported a net loss in the third quarter of 2012 of $19.6 million, compared with net income of $32.9 million in the third quarter of 2011. The net loss was primarily due to a previously disclosed, one-time, non-cash charge whereby GWI marked-to-market $350 million of Series A-1 Mandatorily Convertible Preferred Stock issued to Carlyle (Carlyle Convertible) pursuant to an Investment Agreement to partially fund the RailAmerica acquisition. As discussed below, the non-cash charge of $50.1 million for marking-to-market the Carlyle Convertible is a result of the significant increase in GWI’s share price between the execution of the RailAmerica Acquisition Agreement and the Investment Agreement on July 23, 2012 and the end of the third quarter of 2012. Excluding the impact of marking-to-market the Carlyle Convertible and certain other significant items discussed below, GWI's adjusted net income in the third quarter of 2012 was $32.0 million, compared with adjusted net income of $30.8 million in the third quarter of 2011 (1).

GWI's reported diluted loss per share in the third quarter of 2012 was $0.47 with 41.7 million weighted average shares outstanding, compared with diluted earnings per share (EPS) of $0.77 with 42.8 million weighted average shares outstanding in the third quarter of 2011. Excluding the largely RailAmerica acquisition-related significant items discussed below, GWI's adjusted diluted EPS in the third quarter of 2012 were $0.74 with 43.3 million weighted average shares outstanding, compared with adjusted diluted EPS of $0.72 with 42.8 million weighted average shares outstanding in the third quarter of 2011 (1).

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