Genesee & Wyoming September, 2015 1
Forward-Looking Statements This presentation contains forward-looking statements regarding future events and the future performance of that involve risks and uncertainties that could cause actual results to differ materially from those expressed or forecasted, including, but not limited to, risks related to the operation of our railroads, severe weather conditions and other natural occurrences, economic and market conditions, customer demand, railroad network congestion, derailments, currency fluctuations, changes in commodity prices, increased competition in the relevant market, and others, many of which are beyond our control. The Company refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as the Company s Forms 10-Q and 10-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements discussed during this presentation. Forward-looking statements speak only as of the date of this presentation or the date they were made. does not undertake, and expressly disclaims, any duty to update any forward-looking statement contained in this presentation whether as a result of new information, future events or otherwise, except as required by law. 2
Agenda G&W Overview Business Update Outlook Reset Commodity Analysis Iron Ore Update Current Outlook and Trends August Carloads Second Half 2015 Priorities Free Cash Flow Capacity Appendices Freightliner and U.K./Europe Segment Overview 3
Overview NYSE: Listed as GWR with ~$4 billion market capitalization Railroads: 120 worldwide with ~16,000 track miles People: 7,500 worldwide Equipment: >1,300 locomotives Annual Carloads: ~3 million Track Record of Acquisitions: Added >100 railroads since 2000 4
North America Australia U.K./Europe 2015 5
G&W Safety Performance 2015 Injury Frequency Rate per 200,000 man-hours G&W through July; others through May 3.06 2.34 2.09 1.02 0.99 0.91 0.82 0.75 0.74 FRA Group 2 FRA Group 3 KCS NS Class I Avg BNSF UP CSX G&W* *Excludes Freightliner 6
G&W 2015 Pro Forma Operating Income by Geography Assumes 12-month Freightliner Contribution 7
2015 Business Update
Same Railroad North American Carloads YTD August 2015 vs. YTD August 2014 Commodity Change % Comment Agricultural Products (7,700) (6%) Midwest Corn and Wheat Autos & Auto Parts (2,200) (10%) Weaker West Coast Export Traffic and plant production issues Chemicals & Plastics 2,500 2% Coal & Coke (48,400) (20%) North American Steam Coal Food & Kindred Products 300 1% Timing Intermodal (units) (2,400) NM Customer facility closure Lumber & Forest Products (5,300) (6%) West Coast Housing Market and Export Logs, Weather & Plant Maintenance Metallic Ores 2,300 16% Copper concentrate Metals (31,000) (25%) North America Steel Minerals & Stone (800) (1%) Lower Sand & Proppants, Higher Construction Aggregates Petroleum Products (2,700) (4%) Lower CBR, Higher LPGs/NGLs Pulp * Includes & Papercarloads and intermodal 1,700 units 2% Liner Board, Packaging **Includes 2013 classification adjustments Waste (800) (3%) Other (14,400) (24%) Class I Overhead Traffic Total Carloads (108,900) (9%) 9
North American Coal & Coke G&W carloads are approximately 97% steam coal for electricity generation June 2015 YTD Revenue of $49 million (~ 8% of North America Total Revenue) Same Railroad August YTD Carloads 2015 2014 Change % Description Illinois Basin 38,000 46,000 (8,000) (17%) Powder River Basin 108,000 129,000 (21,000) (16%) Northern Appalachia 34,000 46,000 (12,000) (26%) Origin, destination and overhead traffic in Indiana Destination coal for Illinois, Missouri and Oklahoma utilities On-line coal moves in Ohio and Pennsylvania All Other 10,000 17,000 (7,000) (41%) Declining Utah coal shipments Total 190,000 238,000 (48,000) (20%) Weakness due to competition from low-priced natural gas Flat outlook with future volumes weather and natural gas price dependent for remainder of 2015 10
North American Metals June 2015 YTD Revenue of $53 million (~8% of North America Total Revenue) Same Railroad August YTD Carloads 2015 2014 Change % Description Pipe 5,000 8,000 (3,000) (38%) Oil and gas drilling and transmission related Scrap Steel 33,000 44,000 (11,000) (25%) Origin and destination customers. Input to steel making Pig Iron 6,000 7,000 (1,000) (14%) Input to steel making Slab 16,000 22,000 (6,000) (27%) Coil 14,000 24,000 (10,000) (42%) All Other 18,000 18,000-0% Origin customers. End markets include auto and appliances Origin customers. End markets include auto, energy and appliances Total 92,000 123,000 (31,000) (25%) Weakness across all metals categories primarily due to competition from lower priced imported steel and reduced oil & gas drilling Cyclical commodity with ongoing weakness due to strong US$, weaker demand (energyrelated) and global oversupply 11
North American Shale Energy June 2015 YTD Revenue of $35 million (~6% of North America Total Revenue) Same Railroad August YTD Carloads 2015 2014 Change % Description Pipe 5,000 8,000 (3,000) (38%) LPGs/NGLs 37,000 28,000 9,000 32% Crude Oil 8,000 22,000 (14,000) (64%) Sand & Proppants 22,000 26,000 (4,000) (15%) Oil and gas drilling and transmission related Origin traffic from Utica and Marcellus shale fractionation plants. Destination LPG traffic for consumer and industrial use Bakken and Canadian heavy crude destination traffic Multiple regions, both origin and destination traffic Total 72,000 84,000 (12,000) (14%) Significant decrease in crude traffic, frac sand and pipe largely offset by higher LPG/NGL volumes from new NGL fractionation plants in Utica and Marcellus 12
Australia Commodity Trends Same Railroad August YTD Carloads 2015 2014 Change % Description Agricultural Products 37,800 41,800 (4,000) (10%) Export grain Intermodal 40,900 41,400 (500) (1%) Metallic Ores 21,900 37,500 (15,600) (42%) Minerals & Stone 39,100 34,600 4,500 13% Domestic intermodal to Northern Territory Iron Ore, Manganese and Copper Concentrate. Gypsum for domestic construction market All Other 200 200-0% Total 139,900 155,500 (15,600) (10%) Lower iron ore traffic primarily due to customer mine closures 13
Update on G&W Iron Ore Business Global iron ore price declined from US$120s in 2014 to current levels of US$50s per ton Australian Iron Ore Impact of 3 mine closures reflected in 2015 financial outlook (Australia) Remaining iron ore exposure ~US$51 million Canadian Iron Ore Impact of 1 mine closure reflected in 2015 financial outlook (North America) Remaining iron ore exposure ~US$9 million Comments High proportion of fixed payments on remaining revenues under contract in Australia and Canada No expectation for mines reopening at current iron ore price of US$53/ton, even with significant depreciation of A$ and C$ 14
2015 Current Outlook
Outlook Overview for Second Half 2015 North America - Traffic modestly improving - Seasonal improvements in agricultural products, construction aggregates and cement - Expense reduction plans implemented U.K./Europe - Intermodal sequentially improves in peak season - Coal expected to seasonally strengthen in Q4 2015 and Q1 2016 Australia - Expect seasonally weaker agricultural products traffic heading into new harvest in Q4 2015 - Ongoing commodity weakness - Weaker Australian dollar 16
Same Railroad North American Carloads August 2015 vs. August 2014 Commodity Change % Comment Agricultural Products (400) (2%) Autos & Auto Parts (500) (17%) Weaker West Coast Export Traffic Chemicals & Plastics 300 2% Coal & Coke (6,000) (19%) North American Steam Coal Food & Kindred Products (100) (1%) Intermodal (units) (400) NM Customer facility closure Lumber & Forest Products (1,400) (12%) West Coast Housing Market and Export Logs Metallic Ores 400 22% Copper concentrate Metals (5,100) (31%) North America Steel Minerals & Stone (900) (5%) Rock Salt and Sand & Proppants Petroleum Products 400 5% Higher LPGs/NGLs, Lower CBR Pulp * Includes & Paper carloads and intermodal (400) units (3%) **Includes 2013 classification adjustments Waste 200 7% Other (6,300) (51%) Class I Overhead Traffic Total Carloads (20,200) (13%) 17
Key Priorities for Second Half 2015 1. Safety 2. Cost Reductions in North America and Australia 3. Successful Freightliner Integration in U.K./Europe/Australia 4. Short Line Tax Credit Extension 5. Acquisitions and Investments Evaluating opportunities in North America and abroad Near term investments will take into consideration higher than expected leverage (flat at 3.5x Debt/Adj. EBITDA* at year end 2015) * Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is a non-gaap financial measure. Reconciliations of non-gaap financial measures accompany this presentation. 18
Annual Free Cash Flow Capacity (1) ($ in millions) Free Cash Flow Free Cash Flow* February 2015 Guidance $329 Changes Less: Reduced North American operating cash flow Plus: Freightliner pro forma annual Plus: Annual Grant Match & Project Capital (Discretionary) ~($80) ~$20 $0 - $50 Free Cash Flow Current Run Rate $269 - $319 (1) Before New Business Investments * Free cash flow is a non-gaap financial measure. Non-GAAP financial measure reconciliations accompany this presentation. 19
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Appendices 21
Freightliner Overview
Freightliner U.K. Intermodal Operations Largest rail participant in the UK intermodal market Most traffic runs from ports of Felixstowe, Southampton, London Gateway and Tilbury to the Midlands/Northeast/Northwest Key Container Origination and Destination Points Strong intermodal franchise: Excellent service quality (98% on time) Terminals at ports and key inland cities High-quality product due to wide network, dock-to-door service and scale of train operations (e.g., 100 trains and 3,000 containers per day) 23
Freightliner U.K. Bulk Operations Key Commodities Hauled Aggregates and Cement Coal Equipment and materials to maintain passenger and freight rail network for Network Rail (U.K. track owner) Waste & Other 24
Freightliner Continental Europe Poland Based in Warsaw, Freightliner has less than 3% of the Polish rail market (2nd largest rail market in Europe) The business is diversified with more than 70 customers, primarily aggregates and coal Operations also extend into Eastern and Northern Germany 25
Freightliner Continental Europe ERS (Intermodal) Originally set up as in-house rail operator by Maersk in 1994, connecting seaports of Rotterdam, Hamburg and Bremerhaven with cities in Germany, Italy, Poland and beyond Based in Rotterdam and acquired in 2013, with restructuring underway 26
Freightliner Australia Operations based near Sydney, NSW Key Commodities Hauled Coal Cotton Agricultural Products Underpinned by long-term contracts with customers Owned 15% by local management GWA-Owned Track GWA-Operated Track Other Railroads (largely open access) GWA Headquarters Freightliner Operations Cotton Growing Regions Hunter Valley Coal Region NSW 27
Introduction to U.K./Europe Segment
Updated Revenue Presentation Non-freight revenues is now divided into two categories: Freight-Related and All other Segment North America U.K./Europe Australia Freight revenues Traditional carload business (includes fuel surcharges) Bulk commodities and Intermodal (includes fuel surcharges) Bulk commodities and Intermodal (includes fuel surcharges) Freight-Related revenues Switching, car hire, ancillary freight charges, trackage rights, contracted services Switching, traction service/hook and pull (locomotive + drivers), infrastructure services Switching, contracted services, trackage rights, crewing All other revenues Easements, real estate, 3 rd party car and locomotive repair, passenger related revenues Real estate, 3 rd party car and locomotive repair Real estate, 3 rd party car and locomotive repair 29
Introduction to the U.K./Europe Segment ($ in millions) Operating revenues: Q2 2015 Actual % of Revenue Freight revenues $ 98.0 59.6% Intermodal 70%; Minerals & Stone 18%; Coal 9% Notes Freight-related revenues 61.0 37.1% Switching; Traction service; Infrastructure All other revenues 5.4 3.3% Total operating revenues 164.4 100.0% Operating expenses: Labor and benefits $ 46.2 28.1% Equipment rents 23.0 14.0% Leased locomotives and freight cars Purchased services 35.2 21.4% Depreciation and amortization 5.7 3.5% Diesel fuel used in train operations 11.9 7.2% Contract drivers/traction in Europe; Port/terminal handling & trucking in U.K. Electricity used in train operations 5.0 3.0% New category for U.K. and Continental Europe Casualties and insurance 1.5 0.9% Materials 8.5 5.2% Trackage rights 12.5 7.6% Track access fees Net gain on the sale of assets - 0.0% Other expenses 7.2 4.4% Total operating expenses $ 156.7 95.3% Income from Operations $ 7.7 4.7% 30
Reconciliation of Non-GAAP Financial Measures 31
Non-GAAP Financial Measure This presentation contains references to Free Cash Flow which is a non-gaap financial measure as this term is defined in Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934. In accordance with these rules, G&W has reconciled this non-gaap financial measure to its most directly comparable U.S. GAAP measures. Management views Free Cash Flow and Free Cash Flow Before New Business Investments, an important financial measure of how well G&W is managing its assets and a useful indicator of cash flow that may be available for discretionary use by G&W. Management also views this non-gaap financial measure as a way to assess comparability between periods. Key limitations of the Free Cash Flow and Free Cash Flow Before New Business Investments measures include the assumptions that G&W will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. Non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. Non-GAAP financial measures may be different from similarly-titled non-gaap financial measures used by other companies. The following table set forth reconciliations of Free Cash Flow and Free Cash Flow Before New Business Investments to their most directly comparable GAAP measure (in millions). 32
Free Cash Flow Twelve Months Ended December 31, 2015 - Outlook Original (February 2015) Net cash provided by operating activities $ 569 Net cash used in investing activities (277) Net cash used for acquisitions - Free cash flow $ 292 New business investments 37 Free cash flow before new business investments $ 329 33
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