Genesee & Wyoming Reports Results for the Second Quarter of 2016

Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Second Quarter Consolidated Highlights

• Operating revenues decreased 7.5% to $501.4 million from $542.2
  million.
• Reported operating income decreased 12.3% to $87.2 million; Adjusted
  operating income decreased 5.3% to $94.4 million.⁽¹⁾
• Reported diluted earnings per common share (EPS) decreased 9.8% to
  $0.83; Adjusted diluted EPS remained constant at $0.93; Adjusted
  diluted EPS excluding the Short Line Tax Credit decreased 12.9% to
  $0.81.⁽¹⁾

Second Quarter Segment Highlights

• North America (approximately 80% of G&W's annual operating income):
  Operating revenues from G&W's North American Operations decreased 2.1%
  to $304.6 million from $311.0 million. Reported operating income from
  G&W's North American Operations increased 3.1% to $79.0 million;
  Adjusted operating income from G&W's North American Operations
  increased 4.8% to $80.8 million.⁽¹⁾
• Australia (approximately 10% of G&W's annual operating income):
  Operating revenues from G&W's Australian Operations decreased 17.3% to
  $55.3 million from $66.8 million, primarily due to declining metallic
  ores shipments. Reported operating income from G&W's Australian
  Operations decreased 38.0% to $9.4 million; Adjusted operating income
  from G&W's Australian Operations decreased 31.6% to $10.2 million.⁽¹⁾
• U.K./Europe (approximately 10% of G&W's annual operating income):
  Operating revenues from G&W's U.K./European Operations decreased 13.9%
  to $141.5 million from $164.4 million primarily due to the
  consolidation of Continental Europe intermodal routes, a decline in
  coal shipments and lower minerals and stone shipments. Reported
  operating loss from G&W's U.K./European Operations was $1.2 million,
  primarily due to the restructuring of the U.K. coal business; Adjusted
  operating income from G&W's U.K./European Operations was $3.4 million.⁽¹⁾

Jack Hellmann, President and CEO of G&W, commented, "Our financial
results for the second quarter of 2016 were well ahead of our outlook,
primarily due to good performance from our North American
Operations. Despite a 7% decline in North American carloads, favorable
revenue mix and effective management of costs led to an improvement in
our reported North American operating ratio of 1.3 percentage points to
74.1%, and a modest increase in our operating income. Meanwhile, our
Australian and U.K./Europe Operations performed generally in-line with
our expectations and we successfully completed the restructuring of our
U.K. coal business."

"While we are pleased with our second quarter results, our reported
diluted EPS declined 10% and our adjusted diluted EPS excluding the
Short Line Tax Credit declined 13% compared to last year. As a result,
we remain focused on improving the efficiency of our operations amidst
uneven business environments in each of our three segments worldwide. At
the same time, this economic uncertainty continues to provide
acquisition and investment opportunities that we are carefully
evaluating in multiple geographies within our global footprint."⁽¹⁾

Financial Results

G&W's operating revenues decreased $40.8 million, or 7.5%, to $501.4
million in the second quarter of 2016, compared with $542.2 million in
the second quarter of 2015. G&W's operating income in the second quarter
of 2016 was $87.2 million, compared with $99.5 million in the second
quarter of 2015. G&W's adjusted operating income in the second quarter
of 2016 was $94.4 million, compared with $99.8 million in the second
quarter of 2015.⁽¹⁾

G&W's reported net income in the second quarter of 2016 was $48.4
million, compared with reported net income of $52.8 million in the
second quarter of 2015. Excluding the net impact of certain items
affecting comparability between periods discussed below, G&W's adjusted
net income in the second quarter of 2016 was $54.0 million, compared
with $53.0 million in the second quarter of 2015.⁽¹⁾

G&W's reported diluted EPS in the second quarter of 2016 were $0.83 with
58.1 million weighted average shares outstanding, compared with reported
diluted EPS in the second quarter of 2015 of $0.92 with 57.1 million
weighted average shares outstanding. G&W's adjusted diluted EPS in the
second quarter of 2016 were $0.93 with 58.1 million weighted average
shares outstanding, compared with adjusted diluted EPS in the second
quarter of 2015 of $0.93 with 57.1 million weighted average shares
outstanding. G&W's adjusted diluted EPS excluding the Short Line Tax
Credit in the second quarter of 2016 were $0.81 with 58.1 million
weighted average shares outstanding, compared with adjusted diluted EPS
in the second quarter of 2015 of $0.93 with 57.1 million weighted
average shares outstanding.⁽¹⁾

Items Affecting Comparability

In the second quarter of 2016 and 2015, G&W's results included certain
items affecting comparability between the periods that are set forth in
the following table (in millions, except per share amounts):

				Income/(Loss) Before Income Taxes Impact						After-Tax Net Income/(Loss) Impact						Diluted Earnings/(Loss) Per Common Share Impact
Three Months Ended June 30, 2016
Restructuring costs				$	(5.0	)				$	(4.0	)				$	(0.07	)
Corporate development and related costs				$	(2.6	)				$	(1.8	)				$	(0.03	)
Net gain on sale of assets				$	0.3					$	0.2					$	—
Short Line Tax Credit				$	—					$	7.2					$	0.12
Three Months Ended June 30, 2015
Corporate development and related costs				$	(0.8	)				$	(0.5	)				$	(0.01	)
Net gain on sale of assets				$	0.5					$	0.3					$	0.01

In the second quarter of 2016, G&W's results included restructuring
costs of $5.0 million, primarily associated with our U.K./European
Operations, corporate development and related costs of $2.6 million and
a net gain on the sale of assets of $0.3 million. The second quarter of
2016 also included an income tax benefit of $7.2 million associated with
the U.S. Short Line Tax Credit, which was not in effect during the
second quarter of 2015. The Short Line Tax Credit was extended
retroactively in the fourth quarter of 2015 for calendar years 2015 and
2016.

In the second quarter of 2015, G&W's results included corporate
development and related expenses of $0.8 million, primarily related to
the Freightliner integration, and a net gain on the sale of assets of
$0.5 million.

Second Quarter Results by Segment

Operating revenues from G&W's North American Operations decreased $6.4
million, or 2.1%, to $304.6 million in the second quarter of 2016,
compared with $311.0 million in the second quarter of 2015. Excluding a
$1.2 million decrease due to the impact of foreign currency
depreciation, North American Operations revenues decreased $5.2 million,
or 1.7%, primarily due to declines in coal, grain and pulp and paper
shipments.⁽²⁾

North American Operations traffic decreased 27,765 carloads, or 6.7%, to
386,123 carloads in the second quarter of 2016. The traffic decrease was
principally due to decreases of 17,208 carloads of coal and coke traffic
(primarily in the Midwest and Northeast regions), 4,360 carloads of
agricultural products traffic (primarily in the Midwest and Mountain
West regions), 4,174 carloads of pulp and paper traffic (primarily in
the Midwest, Northeast, Southern, Canada and Pacific regions) and 3,990
carloads of minerals and stone traffic (primarily in the Northeast
Region). All remaining traffic increased by a net 1,967 carloads.

G&W's North American Operations had operating income of $79.0 million in
the second quarter of 2016, compared with $76.6 million in the second
quarter of 2015. The operating ratio for North American Operations was
74.1% in the second quarter of 2016, compared with an operating ratio of
75.4% in the second quarter of 2015. Despite a 6.7% decline in North
American carloads, favorable revenue mix and effective management of
costs led to an improvement in our reported North American operating
ratio and a modest increase in our operating income. Adjusted operating
income from G&W's North American Operations in the second quarter of
2016 was $80.8 million, compared with adjusted operating income of $77.1
million in the second quarter of 2015. The adjusted operating ratio for
North American Operations was 73.5% in the second quarter of 2016,
compared with an adjusted operating ratio of 75.2% in the second quarter
of 2015.⁽¹⁾

Operating revenues from G&W's Australian Operations decreased $11.5
million, or 17.3%, to $55.3 million in the second quarter of 2016,
compared with $66.8 million in the second quarter of 2015. Excluding a
$2.7 million decrease due to the impact of foreign currency
depreciation, Australian Operations revenues decreased $8.8 million, or
13.8%, primarily due to the impact of declining metallic ores shipments.⁽²⁾

Australian Operations traffic decreased 7,853 carloads, or 15.1%, to
44,251 carloads in the second quarter of 2016. The traffic decrease was
principally due to a decrease of 5,119 carloads of metallic ores traffic
and 4,312 carloads of agricultural products traffic, partially offset by
an increase of 1,913 carloads of minerals and stone traffic. All
remaining traffic decreased by a net 335 carloads.

G&W's Australian Operations had operating income of $9.4 million in the
second quarter of 2016, compared with $15.1 million in the second
quarter of 2015. The operating ratio for Australian Operations was 83.0%
in the second quarter of 2016, compared with an operating ratio of 77.4%
in the second quarter of 2015. Adjusted operating income from G&W's
Australian Operations was $10.2 million in the second quarter of 2016,
compared with adjusted operating income of $15.0 million in the second
quarter of 2015. The adjusted operating ratio for Australian Operations
was 81.5% in the second quarter of 2016, compared with an adjusted
operating ratio of 77.6% in the second quarter of 2015.⁽¹⁾

Operating revenues from G&W's U.K./European Operations decreased $22.9
million, or 13.9%, to $141.5 million in the second quarter of 2016,
compared with $164.4 million in the second quarter of 2015. Excluding a
$7.1 million decrease due to the impact of foreign currency
depreciation, U.K./European revenues decreased $15.9 million, or 10.1%,
primarily due to the impact of the consolidation of Continental Europe
intermodal routes, declining coal shipments and lower minerals and stone
shipments.⁽²⁾

U.K./European Operations traffic decreased 5,338 carloads, or 1.9%, to
276,542 carloads in the second quarter of 2016. The traffic decrease was
principally due to a decrease of 14,130 carloads of coal and coke
(primarily in the U.K.) and 6,010 carloads of minerals and stone,
partially offset by an increase of 14,316 carloads of intermodal
traffic. All remaining traffic increased by 486 carloads.

G&W's U.K./European Operations had an operating loss of $1.2 million in
the second quarter of 2016, compared with operating income of $7.7
million in the second quarter of 2015. Adjusted operating income from
G&W's U.K./European Operations was $3.4 million in the second quarter of
2016, compared with adjusted operating income of $7.7 million in the
second quarter of 2015.⁽¹⁾

Free Cash Flow ⁽¹⁾

G&W's free cash flow for the six months ended June 30, 2016 and 2015 was
as follows (in millions):

				Six Months Ended
				June 30,
				2016						2015
Net cash provided by operating activities				$	162.0					$	184.7
Net cash used in investing activities, excluding new business investments				(74.8		)				(842.7		)
Net cash used for acquisitions (a)				1.1						776.3
Free cash flow before new business investments				88.3						118.3
New business investments, net of grants from outside parties				(3.4		)				(37.0		)
Free cash flow (1)				$	85.0					$	81.3

(a)

The 2015 period primarily consisted of net cash used for the acquisition of Freightliner and Pinsly Arkansas as well as $30.9 million in cash paid for incremental expenses related to the purchase and integration of the acquisitions.

Conference Call and Webcast Details

As previously announced, G&W's conference call to discuss financial
results for the second quarter of 2016 will be held on Monday, August 1,
2016, at 11 a.m. EDT. The dial-in number for the teleconference in the
U.S. is (800) 230-1074; outside the U.S. is (612) 288-0337, or the call
may be accessed live over the Internet (listen only) at www.gwrr.com/investors.
Management will be referring to a slide presentation that will also be
available at gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors
until the following quarter's earnings press release. Telephone replay
is available for 30 days beginning at 1 p.m. EDT on August 1, 2016, by
dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The
access code is 372877.

About G&W

G&W owns or leases 121 freight railroads worldwide that are organized in
10 operating regions with 7,500 employees and more than 2,800 customers.
"During the second quarter of 2016, G&W's Ohio Valley Region railroads
were consolidated into G&W's Northeast and Midwest regions. This
consolidation reduced the number of G&W operating regions from 11 to 10."

• G&W's eight North American regions serve 41 U.S. states and four
  Canadian provinces and include 114 short line and regional freight
  railroads with more than 13,000 track-miles.
• G&W's Australia Region provides rail freight services in New South
  Wales, the Northern Territory and South Australia and operates the
  1,400-mile Tarcoola-to-Darwin rail line.
• G&W's U.K./European Region is led by Freightliner, the U.K.'s largest
  rail maritime intermodal operator and second-largest rail freight
  company. Operations also include heavy-haul in Poland and Germany and
  cross-border intermodal services connecting Northern European seaports
  with key industrial regions throughout the continent.

G&W subsidiaries provide rail service at more than 40 major ports in
North America, Australia and Europe and perform contract coal loading
and railcar switching for industrial customers.

From time to time, we may use our website as a channel of distribution
of material company information. Financial and other material
information regarding G&W is routinely posted on and accessible at www.gwrr.com/investors.
In addition, you may automatically receive email alerts and other
information about us by enrolling your email address in the "Email
Alerts" section of www.gwrr.com/investors.
The information contained on or connected to our Internet website is not
deemed to be incorporated by reference in this press release or filed
with the SEC.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future
events and the future performance of Genesee & Wyoming Inc. that are
based on current expectations, estimates and projections about our
industry, management’s beliefs, and assumptions made by management.
Words such as “anticipates,” “intends,” “plans,” “believes,” “could,”
“should,” “seeks,” “expects,” “will,” “estimates,” “trends,” “outlook,”
variations of these words and similar expressions are intended to
identify these forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to forecast, including
the following: risks related to the operation of our railroads; severe
weather conditions and other natural occurrences, which could result in
shutdowns, derailments, railroad network congestion or other substantial
disruption of operations; customer demand and changes in our operations;
exposure to the credit risk of customers and counterparties; changes in
commodity prices; consummation and integration of acquisitions;
economic, political and industry conditions (including employee strikes
or work stoppages); retention and contract continuation; legislative and
regulatory developments, including changes in environmental and other
laws and regulations to which we are subject; increased competition in
relevant markets; funding needs and financing sources, including our
ability to obtain government funding for capital projects; international
complexities of operations, currency fluctuations, finance, tax and
decentralized management; challenges of managing rapid growth including
retention and development of senior leadership; unpredictability of fuel
costs; susceptibility to various legal claims and lawsuits; increase in,
or volatility associated with, expenses related to estimated claims,
self-insured retention amounts, and insurance coverage limits;
consummation of new business opportunities; decrease in revenues and/or
increase in costs and expenses; susceptibility to the risks of doing
business in foreign countries; our ability to realize the expected
synergies associated with acquisitions; and others including, but not
limited to, those noted in our 2015 Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual
results may differ materially from those expressed or forecasted in any
such forward-looking statements. Forward-looking statements speak only
as of the date of this press release or as of the date they were made.
G&W does not undertake, and expressly disclaims, any duty to publicly
update any forward-looking statement, whether as a result of new
information, future events, or otherwise, except as required by law.

1.		Adjusted operating income, adjusted operating ratio, adjusted net income, adjusted diluted earnings per common share (EPS) and free cash flow are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. The information required by 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, including a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, is included in the tables attached to this press release.
2.		Foreign exchange impact is calculated by comparing the prior period results translated from local currency to U.S. dollars using current period exchange rates to the prior period results in U.S. dollars as reported.

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(in thousands, except per share amounts)
(unaudited)
				Three Months Ended												Six Months Ended
				June 30,												June 30,
				2016						2015						2016						2015
OPERATING REVENUES				$	501,375					$	542,219					$	983,991					$	939,249
OPERATING EXPENSES				414,181						442,768						839,801						767,178
OPERATING INCOME				87,194						99,451						144,190						172,071
INTEREST INCOME				336						124						411						150
INTEREST EXPENSE				(17,741		)				(17,772		)				(35,716		)				(31,280		)
LOSS ON SETTLEMENT OF FOREIGN CURRENCY FORWARD PURCHASE CONTRACTS				—						—						—						(18,686		)
OTHER INCOME, NET				722						334						1,453						648
INCOME BEFORE INCOME TAXES				70,511						82,137						110,338						122,903
PROVISION FOR INCOME TAXES				(22,112		)				(29,300		)				(34,920		)				(46,162		)
NET INCOME				$	48,399					$	52,837					$	75,418					$	76,741
BASIC EARNINGS PER COMMON SHARE				$	0.85					$	0.94					$	1.32					$	1.37
WEIGHTED AVERAGE SHARES - BASIC				57,187						55,976						57,106						55,902
DILUTED EARNINGS PER COMMON SHARE				$	0.83					$	0.92					$	1.30					$	1.34
WEIGHTED AVERAGE SHARES - DILUTED				58,117						57,143						58,036						57,132

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2016 AND DECEMBER 31, 2015
(in thousands)
(unaudited)
					June 30,						December 31,
					2016						2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents					$	24,971					$	35,941
Accounts receivable, net					368,704						382,458
Materials and supplies					45,873						45,790
Prepaid expenses and other					47,277						43,197
Total current assets					486,825						507,386
PROPERTY AND EQUIPMENT, net					4,208,706						4,215,063
GOODWILL					815,532						826,575
INTANGIBLE ASSETS, net					1,069,017						1,128,952
DEFERRED INCOME TAX ASSETS, net					2,591						2,270
OTHER ASSETS, net					37,350						22,836
Total assets					$	6,620,021					$	6,703,082
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt					$	130,450					$	75,966
Accounts payable					238,181						282,275
Accrued expenses					188,013						169,586
Total current liabilities					556,644						527,827
LONG-TERM DEBT, less current portion					2,035,589						2,205,785
DEFERRED INCOME TAX LIABILITIES, net					983,383						983,136
DEFERRED ITEMS - grants from outside parties					302,269						292,198
OTHER LONG-TERM LIABILITIES					150,312						174,675
TOTAL EQUITY					2,591,824						2,519,461
Total liabilities and equity					$	6,620,021					$	6,703,082

GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(in thousands)
(unaudited)
				Six Months Ended
				June 30,
				2016						2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	75,418					$	76,741
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				100,254						90,265
Stock-based compensation				9,525						6,961
Excess tax benefits from share-based compensation				—						(1,254		)
Deferred income taxes				16,336						22,672
Net loss/(gain) on sale and impairment of assets				12,517						(807		)
Loss on settlement of foreign currency forward purchase contracts				—						18,686
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net				(11,472		)				35,744
Materials and supplies				(1,071		)				(868		)
Prepaid expenses and other				(2,078		)				5,685
Accounts payable and accrued expenses				(46,236		)				(73,397		)
Other assets and liabilities, net				8,808						4,255
Net cash provided by operating activities				162,001						184,683
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment				(113,321		)				(160,226		)
Grant proceeds from outside parties				25,990						22,701
Cash paid for acquisitions, net of cash acquired				—						(726,698		)
Net payment from settlement of foreign currency forward purchase contracts related to an acquisition				—						(18,686		)
Insurance proceeds for the replacement of assets				7,741						1,421
Proceeds from disposition of property and equipment				1,458						1,734
Net cash used in investing activities				(78,132		)				(879,754		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and capital lease obligations				(311,930		)				(306,799		)
Proceeds from revolving line-of-credit and long-term borrowings				215,434						977,867
Debt amendment/issuance costs				—						(5,933		)
Proceeds from employee stock purchases				3,135						4,183
Excess tax benefits from share-based compensation				—						1,254
Treasury stock acquisitions				(2,593		)				(2,992		)
Net cash (used in)/provided by financing activities				(95,954		)				667,580
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				1,115						(1,899		)
DECREASE IN CASH AND CASH EQUIVALENTS				(10,970		)				(29,390		)
CASH AND CASH EQUIVALENTS, beginning of period				35,941						59,727
CASH AND CASH EQUIVALENTS, end of period				$	24,971					$	30,337

GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
				Three Months Ended June 30,																						Six Months Ended June 30,
				2016											2015											2016											2015
				Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue
Operating revenues:
Freight revenues				$	340,782					67.9	%				$	374,615					69.1	%				$	667,196					67.9	%				$	672,824					71.6	%
Freight-related revenues				133,688						26.7	%				137,891						25.4	%				267,146						27.1	%				216,016						23.0	%
All other revenues				26,905						5.4	%				29,713						5.5	%				49,649						5.0	%				50,409						5.4	%
Total operating revenues				$	501,375					100.0	%				$	542,219					100.0	%				$	983,991					100.0	%				$	939,249					100.0	%
Operating expenses:
Labor and benefits(a)				$	155,948					31.1	%				$	165,296					30.4	%				$	319,062					32.4	%				$	297,414					31.6	%
Equipment rents				38,426						7.7	%				43,483						8.0	%				76,856						7.8	%				65,515						6.9	%
Purchased services(b)				51,632						10.3	%				56,177						10.4	%				98,134						10.0	%				80,558						8.6	%
Depreciation and amortization				50,924						10.2	%				48,048						8.9	%				100,254						10.2	%				90,265						9.6	%
Diesel fuel used in train operations				28,251						5.5	%				37,895						7.0	%				53,717						5.4	%				67,592						7.2	%
Electricity used in train operations				3,304						0.7	%				4,977						0.9	%				6,669						0.7	%				5,366						0.6	%
Casualties and insurance				9,442						1.9	%				10,038						1.9	%				19,562						2.0	%				18,561						2.0	%
Materials				21,393						4.3	%				26,929						5.0	%				42,984						4.4	%				45,624						4.9	%
Trackage rights				21,152						4.2	%				22,172						4.1	%				41,728						4.2	%				35,505						3.8	%
Net (gain)/loss on sale and impairment of assets(c)				(308		)				(0.1	)%				(490		)				(0.1	)%				12,517						1.3	%				(807		)				(0.1	)%
Restructuring costs				4,970						1.0	%				—						—	%				6,097						0.6	%				—						—	%
Other expenses(d)				29,047						5.8	%				28,243						5.2	%				62,221						6.3	%				61,585						6.6	%
Total operating expenses				$	414,181					82.6	%				$	442,768					81.7	%				$	839,801					85.3	%				$	767,178					81.7	%

(a)		Includes $0.1 million corporate development and related costs for the three months ended June 30, 2016. Includes $1.7 million of severance costs for the six months ended June 30, 2015.
(b)		Includes $0.1 million and $0.2 million corporate development and related costs for the three and six months ended June 30, 2016, respectively.
(c)		Includes an impairment charge of $13.0 million associated with an Australia iron ore customer entering into voluntary administration for the six months ended June 30, 2016.
(d)		Includes the write-off of accounts receivable of $8.1 million associated with an Australia iron ore customer entering into voluntary administration for the six months ended June 30, 2016. Includes $2.4 million and $2.9 million corporate development and related costs for the three and six months ended June 30, 2016, respectively. Includes $0.9 million corporate development and related costs for the three and six months ended June 30, 2015. Includes $12.6 million in Freightliner acquisition costs for the six months ended June 30, 2015.

GENESEE & WYOMING INC. AND SUBSIDIARIES
NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
				Three Months Ended June 30,																						Six Months Ended June 30,
				2016											2015											2016											2015
				Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue
Operating revenues:
Freight revenues				$	227,082					74.6	%				$	238,153					76.6	%				$	448,907					74.2	%				$	481,183					76.5	%
Freight-related revenues				60,978						20.0	%				55,589						17.9	%				122,503						20.3	%				113,650						18.1	%
All other revenues				16,515						5.4	%				17,238						5.5	%				32,943						5.5	%				33,771						5.4	%
Total operating revenues				$	304,575					100.0	%				$	310,980					100.0	%				$	604,353					100.0	%				$	628,604					100.0	%
Operating expenses:
Labor and benefits(a)				$	95,587					31.4	%				$	100,297					32.3	%				$	198,177					32.8	%				$	209,748					33.3	%
Equipment rents				14,218						4.7	%				16,485						5.3	%				29,274						4.9	%				34,271						5.4	%
Purchased services(b)				16,263						5.3	%				15,220						4.9	%				31,964						5.3	%				29,349						4.7	%
Depreciation and amortization				37,124						12.2	%				34,936						11.2	%				73,313						12.1	%				70,241						11.2	%
Diesel fuel used in train operations				13,837						4.5	%				19,757						6.4	%				27,361						4.5	%				43,782						7.0	%
Casualties and insurance				7,013						2.3	%				6,659						2.1	%				14,253						2.4	%				13,114						2.1	%
Materials				12,946						4.4	%				15,675						5.0	%				25,946						4.3	%				31,685						5.0	%
Trackage rights				8,885						2.9	%				6,249						2.0	%				17,752						2.9	%				12,793						2.0	%
Net gain on sale and impairment of assets				(236		)				(0.1	)%				(402		)				(0.1	)%				(395		)				(0.1	)%				(699		)				(0.1	)%
Restructuring costs				335						0.1	%				—						—	%				694						0.1	%				—						—	%
Other expenses(c)				19,580						6.4	%				19,483						6.3	%				37,013						6.1	%				50,618						8.1	%
Total operating expenses				$	225,552					74.1	%				$	234,359					75.4	%				$	455,352					75.3	%				$	494,902					78.7	%
Operating income				$	79,023										$	76,621										$	149,001										$	133,702
Expenditures for additions to property & equipment, net of grants from outside parties				$	39,523										$	73,440										$	64,939										$	118,710

(a)		Includes $0.2 million corporate development and related costs for the three and six months ended June 30, 2016, respectively.
(b)		Includes $0.1 million and $0.2 million corporate development and related costs for the three and six months ended June 30, 2016, respectively.
(c)		Includes $1.5 million and $0.9 million corporate development and related costs for the three months ended June 30, 2016 and 2015, respectively. Includes $1.8 million and $0.9 million corporate development and related costs for the six months ended June 30, 2016 and 2015, respectively. Includes $12.6 million of Freightliner acquisition costs for the six months ended June 30, 2015.

GENESEE & WYOMING INC. AND SUBSIDIARIES
AUSTRALIAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
				Three Months Ended June 30,																						Six Months Ended June 30,
				2016											2015											2016											2015
				Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue
Operating revenues:
Freight revenues				$	26,394					47.7	%				$	39,464					59.1	%				$	51,171					47.8	%				$	85,822					67.7	%
Freight-related revenues				27,129						49.1	%				25,173						37.7	%				52,619						49.1	%				36,037						28.4	%
All other revenues				1,760						3.2	%				2,171						3.2	%				3,291						3.1	%				4,891						3.9	%
Total operating revenues				$	55,283					100.0	%				$	66,808					100.0	%				$	107,081					100.0	%				$	126,750					100.0	%
Operating expenses:
Labor and benefits(a)				$	16,800					30.4	%				$	18,750					28.0	%				$	32,568					30.4	%				$	36,134					28.5	%
Equipment rents				1,630						2.9	%				4,020						6.0	%				3,325						3.1	%				6,206						4.9	%
Purchased services				6,098						11.0	%				5,718						8.6	%				11,349						10.6	%				10,758						8.5	%
Depreciation and amortization				7,233						13.1	%				7,394						11.1	%				13,889						13.0	%				13,620						10.7	%
Diesel fuel used in train operations				4,538						8.2	%				6,218						9.3	%				8,575						8.0	%				9,899						7.8	%
Casualties and insurance				1,553						2.8	%				1,886						2.8	%				3,088						2.9	%				3,767						3.0	%
Materials				2,870						5.2	%				2,709						4.1	%				5,289						4.9	%				4,934						3.9	%
Trackage rights				2,028						3.7	%				3,424						5.1	%				4,317						4.0	%				8,420						6.6	%
Net (gain)/loss on sale and impairment of assets(b)				—						—	%				(32		)				—	%				12,982						12.1	%				(38		)				—	%
Restructuring costs				23						—	%				—						—	%				716						0.7	%				—						—	%
Other expenses(c)				3,129						5.7	%				1,590						2.4	%				13,353						12.5	%				3,683						2.9	%
Total operating expenses				$	45,902					83.0	%				$	51,677					77.4	%				$	109,451					102.2	%				$	97,383					76.8	%
Operating income/(loss)				$	9,381										$	15,131										$	(2,370	)									$	29,367
Expenditures for additions to property & equipment, net of grants from outside parties				$	4,787										$	9,159										$	5,654										$	13,774

(a)		Includes $1.7 million of severance costs for the six months ended June 30, 2015.
(b)		Includes an impairment charge of $13.0 million associated with an iron ore customer entering into voluntary administration for the six months ended June 30, 2016.
(c)		Includes $0.8 million and $1.0 million corporate development and related costs for the three months and six months ended June 30, 2016, respectively. Includes the write-off of accounts receivable of $8.1 million associated with an iron ore customer entering into voluntary administration for the six months ended June 30, 2016.

GENESEE & WYOMING INC. AND SUBSIDIARIES
U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
				Three Months Ended June 30,																						Six Months Ended June 30,
				2016											2015											2016											2015
				Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue					Amount						% of Revenue
Operating revenues:
Freight revenues				$	87,306					61.7	%				$	96,998					59.0	%				$	167,118					61.3	%				$	105,819					57.5	%
Freight-related revenues				45,581						32.2	%				57,129						34.7	%				92,024						33.8	%				66,329						36.1	%
All other revenues				8,630						6.1	%				10,304						6.3	%				13,415						4.9	%				11,747						6.4	%
Total operating revenues				$	141,517					100.0	%				$	164,431					100.0	%				$	272,557					100.0	%				$	183,895					100.0	%
Operating expenses:
Labor and benefits				$	43,561					30.8	%				$	46,249					28.1	%				$	88,317					32.4	%				$	51,532					27.9	%
Equipment rents				22,578						16.0	%				22,978						14.0	%				44,257						16.2	%				25,038						13.6	%
Purchased services				29,271						20.7	%				35,239						21.4	%				54,821						20.1	%				40,451						22.0	%
Depreciation and amortization				6,567						4.6	%				5,718						3.5	%				13,052						4.9	%				6,404						3.5	%
Diesel fuel used in train operations				9,876						7.0	%				11,920						7.2	%				17,781						6.5	%				13,911						7.6	%
Electricity used in train operations				3,304						2.3	%				4,977						3.0	%				6,669						2.4	%				5,366						2.9	%
Casualties and insurance				876						0.6	%				1,493						0.9	%				2,221						0.8	%				1,680						0.9	%
Materials				5,577						3.9	%				8,545						5.2	%				11,749						4.3	%				9,005						4.9	%
Trackage rights				10,239						7.3	%				12,499						7.6	%				19,659						7.2	%				14,292						7.8	%
Net gain on sale and impairment of assets				(72		)				(0.1	)%				(56		)				—	%				(70		)				—	%				(70		)				—	%
Restructuring costs				4,612						3.3	%				—						—	%				4,687						1.7	%				—						—	%
Other expenses				6,338						4.5	%				7,170						4.4	%				11,855						4.4	%				7,284						4.0	%
Total operating expenses				$	142,727					100.9	%				$	156,732					95.3	%				$	274,998					100.9	%				$	174,893					95.1	%
Operating (loss)/income				$	(1,210	)									$	7,699										$	(2,441	)									$	9,002
Expenditures for additions to property & equipment, net of grants from outside parties				$	11,338										$	5,028										$	16,738										$	5,041

GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Three Months Ended June 30, 2016				North American Operations																	Australian Operations																	U.K./European Operations																	Total Operations
Commodity Group				Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload
Agricultural Products				$	27,178					49,330					$	551					$	4,411					10,504					$	420					$	393					448					$	877					$	31,982					60,282					$	531
Autos & Auto Parts				4,980						8,146					611						—						—					—						—						—					—						4,980						8,146					611
Chemicals & Plastics				35,743						44,875					797						—						—					—						—						—					—						35,743						44,875					797
Coal & Coke				15,051						46,237					326						—						—					—						3,408						9,250					368						18,459						55,487					333
Food & Kindred Products				7,973						14,448					552						—						—					—						—						—					—						7,973						14,448					552
Intermodal				1						12					83						17,044						15,320					1,113						68,919						228,543					302						85,964						243,875					352
Lumber & Forest Products				20,842						34,561					603						—						—					—						59						135					437						20,901						34,696					602
Metallic Ores				4,615						6,122					754						2,867						2,018					1,421						40						93					430						7,522						8,233					914
Metals				27,157						35,881					757						—						—					—						—						—					—						27,157						35,881					757
Minerals & Stone				29,502						51,882					569						1,901						16,337					116						14,487						38,073					381						45,890						106,292					432
Petroleum Products				17,180						25,462					675						171						72					2,375						—						—					—						17,351						25,534					680
Pulp & Paper				26,062						41,128					634						—						—					—						—						—					—						26,062						41,128					634
Waste				5,551						11,520					482						—						—					—						—						—					—						5,551						11,520					482
Other				5,247						16,519					318						—						—					—						—						—					—						5,247						16,519					318
Totals				$	227,082					386,123					$	588					$	26,394					44,251					$	596					$	87,306					276,542					$	316					$	340,782					706,916					$	482

Three Months Ended June 30, 2015				North American Operations																	Australian Operations																	U.K./European Operations																	Total Operations
Commodity Group				Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload
Agricultural Products				$	30,742					53,690					$	573					$	6,658					14,816					$	449					$	129					190					$	679					$	37,529					68,696					$	546
Autos & Auto Parts				4,749						7,450					637						—						—					—						—						—					—						4,749						7,450				637
Chemicals & Plastics				35,354						45,637					775						—						—					—						—						—					—						35,354						45,637				775
Coal & Coke				22,136						63,445					349						—						—					—						9,039						23,380					387						31,175						86,825				359
Food & Kindred Products				8,280						14,726					562						—						—					—						—						—					—						8,280						14,726				562
Intermodal				1						12					83						18,917						15,657					1,208						70,395						214,227					329						89,313						229,896				388
Lumber & Forest Products				20,496						34,966					586						—						—					—						—						—					—						20,496						34,966				586
Metallic Ores				4,910						6,114					803						11,865						7,137					1,662						—						—					—						16,775						13,251				1,266
Metals				27,015						35,136					769						—						—					—						—						—					—						27,015						35,136				769
Minerals & Stone				30,653						55,872					549						1,716						14,424					119						17,435						44,083					396						49,804						114,379				435
Petroleum Products				15,194						23,855					637						308						70					4,400						—						—					—						15,502						23,925				648
Pulp & Paper				28,952						45,302					639						—						—					—						—						—					—						28,952						45,302				639
Waste				4,709						10,224					461						—						—					—						—						—					—						4,709						10,224				461
Other				4,962						17,459					284						—						—					—						—						—					—						4,962						17,459				284
Totals				$	238,153					413,888					$	575					$	39,464					52,104					$	757					$	96,998					281,880					$	344					$	374,615					747,872					$	501

* Represents physical railcars and the estimated railcar equivalents of
commodities transported by metric ton or other measure, as well as
intermodal units.

GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
Six Months Ended June 30, 2016				North American Operations																	Australian Operations																	U.K./European Operations																	Total Operations
Commodity Group				Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload
Agricultural Products				$	55,234					105,345					$	524					$	9,410					24,077					$	391					$	736					842					$	874					$	65,380					130,264					$	502
Autos & Auto Parts				9,015						14,952					603						—						—					—						—						—					—						9,015						14,952					603
Chemicals & Plastics				69,491						89,234					779						—						—					—						—						—					—						69,491						89,234					779
Coal & Coke				31,877						94,915					336						—						—					—						7,752						17,313					448						39,629						112,228					353
Food & Kindred Products				16,407						29,412					558						—						—					—						—						—					—						16,407						29,412					558
Intermodal				2						24					83						31,617						28,943					1,092						133,448						440,638					303						165,067						469,605					352
Lumber & Forest Products				41,712						69,393					601						—						—					—						126						315					400						41,838						69,708					600
Metallic Ores				9,677						12,347					784						5,974						4,336					1,378						40						93					430						15,691						16,776					935
Metals				54,200						71,786					755						—						—					—						—						—					—						54,200						71,786					755
Minerals & Stone				54,296						95,563					568						3,780						32,985					115						25,016						69,310					361						83,092						197,858					420
Petroleum Products				35,453						51,451					689						390						133					2,932						—						—					—						35,843						51,584					695
Pulp & Paper				52,190						82,296					634						—						—					—						—						—					—						52,190						82,296					634
Waste				9,339						19,806					472						—						—					—						—						—					—						9,339						19,806					472
Other				10,014						32,791					305						—						—					—						—						—					—						10,014						32,791					305
Totals				$	448,907					769,315					$	584					$	51,171					90,474					$	566					$	167,118					528,511					$	316					$	667,196					1,388,300					$	481

Six Months Ended June 30, 2015				North American Operations																	Australian Operations																	U.K./European Operations																	Total Operations
Commodity Group				Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload						Freight Revenues						Carloads*					Average Revenues Per Carload
Agricultural Products				$	65,119					112,027					$	581					$	13,426					29,412					$	456					$	141					207					$	681					$	78,686					141,646					$	556
Autos & Auto Parts				9,373						14,673					639						—						—					—						—						—					—						9,373						14,673					639
Chemicals & Plastics				71,239						91,680					777						—						—					—						—						—					—						71,239						91,680					777
Coal & Coke				49,104						143,057					343						—						—					—						9,982						25,755					388						59,086						168,812					350
Food & Kindred Products				17,523						30,614					572						—						—					—						—						—					—						17,523						30,614					572
Intermodal				1						12					83						36,160						30,006					1,205						76,692						233,499					328						112,853						263,517					428
Lumber & Forest Products				39,993						67,555					592						—						—					—						—						—					—						39,993						67,555					592
Metallic Ores				10,121						12,479					811						31,980						17,883					1,788						—						—					—						42,101						30,362					1,387
Metals				53,413						69,725					766						—						—					—						—						—					—						53,413						69,725					766
Minerals & Stone				58,130						103,256					563						3,665						28,694					128						19,004						48,046					396						80,799						179,996					449
Petroleum Products				33,052						50,912					649						591						133					4,444						—						—					—						33,643						51,045					659
Pulp & Paper				56,374						88,067					640						—						—					—						—						—					—						56,374						88,067					640
Waste				8,004						17,517					457						—						—					—						—						—					—						8,004						17,517					457
Other				9,737						35,027					278						—						—					—						—						—					—						9,737						35,027					278
Totals				$	481,183					836,601					$	575					$	85,822					106,128					$	809					$	105,819					307,507					$	344					$	672,824					1,250,236					$	538

* Represents physical railcars and the estimated railcar equivalents of
commodities transported by metric ton or other measure, as well as
intermodal units.

Non-GAAP Financial Measures

This earnings release contains references to adjusted operating income,
adjusted operating ratio, adjusted net income, adjusted diluted earnings
per common share (EPS) and free cash flow, which are "non-GAAP financial
measures" 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 these non-GAAP financial measures
to their most directly comparable U.S. GAAP measures.

Management views these non-GAAP financial measures as important measures
of G&W's operating performance or, in the case of free cash flow, 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 these non-GAAP financial measures as a
way to assess comparability between periods. Key limitations of the free
cash flow measure 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.

These 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. These non-GAAP financial
measures may be different from similarly-titled non-GAAP financial
measures used by other companies.

The following tables set forth reconciliations of each of these non-GAAP
financial measures to their most directly comparable GAAP measure ($ in
millions, except per share amounts).

Reconciliations of Non-GAAP Financial Measures

Adjusted Operating Income and Adjusted Operating Ratio
				Three Months Ended
				June 30, 2016
				North American Operations						Australian Operations						U.K./European Operations						Total Operations
Operating revenues				$	304.6					$	55.3					$	141.5					$	501.4
Operating expenses				225.6						45.9						142.7						414.2
Operating income/(loss)(a)				$	79.0					$	9.4					$	(1.2	)				$	87.2
Operating ratio (b)				74.1		%				83.0		%				100.9		%				82.6		%
Operating expenses				$	225.6					$	45.9					$	142.7					$	414.2
Corporate development and related costs				(1.7		)				(0.8		)				—						(2.6		)
Restructuring costs				(0.3		)				—						(4.6		)				(5.0		)
Net gain on sale of assets				0.2						—						0.1						0.3
Adjusted operating expenses				$	223.7					$	45.1					$	138.2					$	406.9
Adjusted operating income				$	80.8					$	10.2					$	3.4					$	94.4
Adjusted operating ratio				73.5		%				81.5		%				97.6		%				81.2		%

				Three Months Ended
				June 30, 2015
				North American Operations						Australian Operations						U.K./European Operations						Total Operations
Operating revenues				$	311.0					$	66.8					$	164.4					$	542.2
Operating expenses				234.4						51.7						156.7						442.8
Operating income (a)				$	76.6					$	15.1					$	7.7					$	99.5
Operating ratio (b)				75.4		%				77.4		%				95.3		%				81.7		%
Operating expenses				$	234.4					$	51.7					$	156.7					$	442.8
Corporate development and related costs				(0.9		)				0.1						—						(0.8		)
Net gain on sale of assets				0.4						—						0.1						0.5
Adjusted operating expenses				$	233.8					$	51.9					$	156.8					$	442.5
Adjusted operating income				$	77.1					$	15.0					$	7.7					$	99.8
Adjusted operating ratio				75.2		%				77.6		%				95.3		%				81.6		%

(a)		Operating income is calculated as operating revenues less operating expenses.
(b)		Operating ratio is calculated as operating expenses divided by operating revenues.

Adjusted Net Income and Adjusted Diluted Earnings Per Common Share
Three Months Ended June 30, 2016				Income Before Income Taxes						Provision for Income Taxes						Net Income						Diluted Earnings Per Common Share
As reported				$	70.5					$	(22.1	)				$	48.4					$	0.83
Add back certain items:
Corporate development and related costs				2.6						(0.8		)				1.8						0.03
Restructuring costs				5.0						(0.9		)				4.0						0.07
Net gain on sale of assets				(0.3		)				0.1						(0.2		)				—
Adjusted				$	77.8					$	(23.7	)				$	54.0					$	0.93
Short Line Tax Credit				—						(7.2		)				(7.2		)				(0.12		)
Adjusted (excluding Short Line Tax Credit)				$	77.8					$	(30.9	)				$	46.8					$	0.81

Three Months Ended June 30, 2015				Income Before Income Taxes						Provision for Income Taxes						Net Income						Diluted Earnings Per Common Share
As reported				$	82.1					$	(29.3	)				$	52.8					$	0.92
Add back certain items:
Corporate development and related costs				0.8						(0.3		)				0.5						0.01
Net gain on sale of assets				(0.5		)				0.2						(0.3		)				(0.01		)
As adjusted				$	82.4					$	(29.5	)				$	53.0					$	0.93
Foreign exchange impact (a)				(0.7		)				0.2						(0.4		)				(0.01		)
As adjusted (excluding foreign exchange)				$	81.8					$	(29.3	)				$	52.5					$	0.92

(a)		Foreign exchange impact is calculated by comparing the prior period results translated from local currency to U.S. dollars using current period exchange rates to the prior period results in U.S. dollars as reported.

Free Cash Flow
				Six Months Ended
				June 30,
				2016						2015
Net cash provided by operating activities				$	162.0					$	184.7
Net cash used in investing activities				(78.1		)				(879.8		)
Net cash used for acquisitions				1.1						776.3
Free cash flow				$	85.0					$	81.3
New business investments, net of grants from outside parties				3.4						37.0
Free cash flow before new business investments				$	88.3					$	118.3

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