GWI reports 1Q results, two deals

Greenwich, Conn.-based Genesee & Wyoming Inc. Thursday reported its first-quarter net income was $22.1 million up 38% from net income of $16.0 million in the first quarter of 2010. GWI’s diluted earnings per share of 52 cents rose 33% compared with 39 cents in the year-ago quarter.

GWI’s operating revenue increased $46.3 million, or 31.8%, to $191.9 million, compared with $145.6 million in the first quarter of 2010. Excluding $30.0 million in revenue from GWA (North) Pty Ltd., GWI’s subsidiary that acquired certain assets of FreightLink, same railroad operating revenue increased $22.8 million, or 15.6%, the company said.

GWI said its effective income tax rate in the first quarter of 2011 was 27.7%, compared with 37.6% in the first quarter of 2010, primarily due to the extension of the short line tax credit in the fourth quarter of 2010.

Said President and CEO Jack Hellmann, "In the first quarter of 2011, GWI’s revenue increased 32% as we successfully integrated the FreightLink acquisition in Australia and our same railroad traffic continued to improve, particularly in the month of March.”

Revenue was negatively affected by several factors, including track washouts suffered by GWI’ Australian operations, severe winter weather in Canada, and “a sharp increase in the price of diesel fuel [that] was not fully mitigated by fuel surcharges given the average four-month lag in our fuel surcharge programs."

The setbacks in Australia and Canada haven’t stopped the company from pursuing more business there. GWI on Thursday also announced subsidiary Genesee & Wyoming Australia has signed a rail haulage agreement with a subsidiary of WPG Resources Ltd to transport 3.3 million tons per year of hematite iron ore from WPG’s Peculiar Knob mine in South Australia. The haulage service is expected to start in the second quarter of 2012 and continue for a minimum of five years.

GWI on Thursday also affirmed that subsidiary Western Labrador Rail Services (WLRS), had officially entered into a long-term rail services agreement with Labrador Iron Mines Ltd. , a subsidiary of Labrador Iron Mines Holdings Ltd. WLRS will operate LIM’s newly constructed 6-kilometer (3.7-mile) railway, which connects LIM’s Silver Yards processing facility in western Labrador to Tshiuetin Rail Transportation Inc.’s privately owned rail line that runs from Schefferville, Quebec, to Emeril Junction, Quebec.