Pittsburgh-based Portec Rail Products, Inc. Thursday reported unaudited net income of $2.02 million, or 21 cents per share, for its third quarter, down 19.5% from $2.52 million, or 26 cents per share, in the comparable period in 2008. Sales of $24.3 million for the quarter were down a similar 18% from $29.6 million in the year-ago quarter.
For the 2009’s first nine months, unaudited net income of $5.36 million, or 56 cents per share, was down 14.4% from $6.26 million, or 65 cents per share, in the comparable period in 2008. Sales of $73.0 million for the period were down a similar 14% from $84.7 million in the year-ago period.
Portec President and Chief Executive Officer Richard J. Jarosinski remains upbeat, saying, “We are pleased with our financial performance in what continues to be a very challenging economic climate for our industry. We believe that the overall diversification in our markets and product groups continue to help soften the impact on our business from the global economic downturn. Lower traffic volumes continue to be reported by the North American Class I heavy-haul railroads. These customers continue to represent a large portion of our sales, and they continue to invest in our products and services. We have also achieved sales levels from new markets for some of our products due to our efforts to continue global expansion of our products and services.”
“Our friction management product group, which has the most significant worldwide product exposure and offers multiple operational savings for both heavy-haul freight and passenger service, continues to grow despite the economic downturn,” said Jarosinski. “Sales of North American Class I gage face and top-of-rail friction control solutions were the catalyst for this growth while the remainder of our diversified friction management markets and solutions continue to expand into new markets. . . . Our wayside data management systems, provided by Salient Systems, have also had growth for the quarter and year-to-date periods. We began the year with a healthy backlog for our wayside data management systems and received a substantial number of new orders early this year, which helped to pave the way for the financial results posted thus far for Salient Systems.
“Our track component product group continues to be challenged by lower traffic volume and fewer railcar loadings in North America. We are pleased that some of our past efforts within this product group have positioned us for better financial performance, which has yielded a lower cost structure on some products. Our load securement product group has had a challenging year, as the market for new railcars being built has declined considerably in 2009. . . . Our non-core material handling business in the United Kingdom has had a difficult year with very challenging economic conditions. We are optimistic, however, that our product line and engineering talent in this product group will allow us to capitalize on new order opportunities.
“Despite the economic challenges we continue to face, we still believe that there are opportunities for our products and services in our established markets and in new markets. We have some product groups such as friction management and wayside data management systems that have demonstrated their ability to assist our customers in reducing operating expenses by extending asset life and reducing fuel costs. Our global customer base recognizes this and we believe that they will continue to invest in this technology. We will continue to focus on global expansion of our products and services by organic growth and strategic and accretive acquisitions. We are pleased with our balance sheet, favorable debt to equity ratio and operating cash flow. We believe that we are well-positioned to achieve higher levels of operating performance when favorable economic conditions return to our industry.”
Alstom SA will let go as many as 502 employees at its Hornell, N.Y., rail assembly plant, beginning in January. The move follows the release of roughly 200 employees last spring; the cuts scheduled for 2010 would reduce the plant’s staffing to between 200 and 300 workers.
Industry observers blame a reduction in rail transit orders for the work force reductions, though Alstom has said it intends to compete vigorously for new orders expected to come from Philadelphia, Miami, San Francisco, and New York City.
Wimerding, Pa.-based railroad equipment supplier Wabtec Corp. said Thursday its third-quarter earnings fell 18%, due to a fall indemand for new freightcars. But its earnings of $27.3 million, or 57 cents per share, beat Wall Street analysts estimates of 56 cents per share.
Wabtec reported earnings of $33.2 million, or 68 cents per share, in the year-ago quarter. Revenue fell to $330.5 million compared with $396 million in the third quarter of 2008.
The company also updated its 2009 guidance, with revenue expected to be about 12% lower than 2008, and earnings per diluted share expected to be between $2.40 and $2.50. Previous estimates foresaw a 10% revenue decline, with earnings per share falling between $2.35 and $2.50.
In a statement, Wabtec President and CEO Albett J. Neupaver said, “Market conditions continued to be very difficult in the third quarter for our freight rail business, while the Transit Group remained stable. Even in this environment, we still improved margins and generated strong cash flow. We will continue to manage what we can in the short term, while remaining focused on our long-term strategies and growth opportunities, such as the acquisition of Unifin International.”
Kansas City Southern Thursday reported third-quarter revenue of $386.1 million, down 21.4% from the $491.5 million in the third quarter of 2008. But KCS noted that every commodity group recorded higher revenue on a sequential basis from the second quarter, reflecting a gradually improving business environment; KCS 3Q revenue was up 13% from the previous quarter, with carloadings up 12% over the same time period.
KCS net income of $25.8 million, or $0.27 per diluted share, for the third quarter was down from $48.9 million, or $0.52 per share, in the third quarter of 2008.
As business starts to return to the railroads, more freight cars and locomotives are being put back to work, though the size of the stored fleet remains too large for comfort.
Norfolk Southern's executive vice president and chief operating officer, Mark Manion, told analysts in a conference call Tuesday that while "a significant potion of our fleet remains in storage due to continued weak volume levels ... we have reduced the number of cars stored from the peak of over 35,000 cars in July to over 22,000 cars at the end of September."
Manion said the railroad has reduced the number of locomotives stored from 700 in May to about 350.
Groupe Eurotunnel SA may bid for the high speed trainline running from the Channel Tunnel to London, Chief Executive Officer Jacques Gounon said in a radio interview on France’s BFM radio station.
Groupe Eurotunnel is in discussions with possible financial partners for a bid for a long-term concession to operate the rail line, Gounon said. The cost of the concession is estimated to be $2.5 billion, and possibly 30% higher.
Paris-based Groupe Eurotunnel holds the concession to operate Channel Tunnel, as well as terminals in Folkestone in the United Kingdom and Coquelles in France, and railcars that transport cars and trucks.
Sponsors of “Joint Rail Conference-2010: High-Speed and Intercity Passenger Rail” have issued a call for papers for presentation at the event, April 27-29, 2010, at the University of Illinois at Urbana-Champaign, Urbana, Ill. Abstracts for such papers are sought by Saturday, Nov. 14.
JRC 2010 is a cooperative effort of ASME, IEEE, ASCE, AREMA and TRB. JRC 2010 Chair Chris Barkan, professor of Railway Engineering at the university, says the event will be the principal, multi-disciplinary, North American conference focused on rail transportation for the year.
Papers and presentations are being solicited on various aspects of railroad civil, mechanical, electrical, and systems engineering, as well as rail safety, planning, design, financing, operations, and management. JRC 2010 will encompass issues involving both freight and passenger rail, but the conference theme will be HSR and other forms of developing intercity passenger rail.
Though any topic can qualify for submission, the conference is encouraging papers on some specific topics, including: railroad infrastructure engineering; rail equipment engineering; HSR experience and development; shared corridors; planning, management, and operation; and safety, security, and environment.
Abstracts, due Nov. 14, should be submitted to JRC 2010 at http://ict.illinois.edu/railroad/JRC/callforpapers-jrc.asp.
Another New York Metropolitan Area transit agency has embarked on resignaling its rail rapid transit system with CBTC (communications-based train control), with Siemens as the prime supplier.
Norfolk Southern reported Tuesday third-quarter net income of $303 million, or 81 cents per diluted share, down almost 42% from $520 million, or $1.37 per diluted share, in the comparable third quarter of 2008. Revenue of $2.1 billion fell 29% from year-ago levels, which NS attributed primarily to a 20% falloff in traffic volume and fuel-related revenue. However, NS’s railway operating expenses for the quarter were $1.5 billion, a decrease of 25% over the same period of 2008. Its railway operating ratio was 72.8%, compared with 69.1% during the third quarter of 2008.
“While our third-quarter results reflect the continuing weak economy, they also show Norfolk Southern's resilience and the strength of our franchise," said Norfolk Southern CEO Wick Moorman. “By controlling costs and maintaining service levels, we are managing through this economic downturn and will emerge an even stronger company.”
NS’s results drew positive comments from some Wall Street analysts. “NS’s favorable outlook with respect to key pillars of our Attractive Industry View is likely to stabilize and support rail shares,” said Morgan Stanley & Co. Inc.'s William Greene, Adam Longson, and John Godyn. “In contrast to the relatively less favorable outlook issued by the Western rails, NS management commentary was positive on both pricing and volume trends in addition to expected productivity gains.”
In early afternoon trading Wednesday on the New York Stock Exchange, shares of Norfolk Southern were up roughly $1.00, or more than 2%.