1 Genesee & Wyoming Inc.
Managing Change at G&W Jack Hellmann, President & CEO
Midwest Association of Rail Shippers July 12, 2016
2 Genesee & Wyoming Inc.
Agenda
1.G&W Overview
2.Managing Change
3.Current Trends
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Overview
• NYSE: Listed as GWR with ~$3.5 billion market capitalization
• Railroads: 121 worldwide with ~16,000 track miles
• People: 7,500 worldwide
• Equipment: >1,300 locomotives
• Annual Carloads: ~3.0 million
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Diversified by Geography
North
America
~80%
Australia
~10%
U.K./
Europe
~10%
G&W Operating Income by Segment
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Diversified by Commodity
Agricultural Products
10% Autos & Auto Parts
1%
Chemicals & Plastics
10%
Coal & Coke 8%
Food & Kindred Products
3%
Intermodal 21% Lumber & Forest
Products 6%
Metallic Ores 5%
Metals 7%
Minerals & Stone 13%
Petroleum Products
5%
Pulp & Paper 8%
Waste 1%
Other 2%
2015 Freight Revenue* by Commodity
*Freight revenue is 70% of total revenues
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Customer Focus of a Short Line on a Global Scale
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Managing Change
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Changes by Year: 1899-2016
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Geographic Footprint
21 U.S. States 41 5 Countries 10
1,000 Customers 2,800 9,300 Track Miles 16,000 430 Locomotives 1,300
2006 vs. 2016
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G&W Railroads: 2006
41 logos
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G&W Railroads: 2016
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Carloads Interchanged in North America
405,000
310,000
170,000
90,000
300,000
405,000
48,900
2006: 940,000 2015: 1,700,000
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
G&W Revenue Growth
($ millions)
$2,000
$451
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2006: China-led Commodity Boom
2008: Global Financial Crisis
2012: Shale Oil & Gas Revolution
2015: U.S. Coal Collapse; Australian Iron Ore Collapse; Strong US$
Significant Changes Over Past Decade:
External Shocks and Transformational Growth
2010: Freightlink Acquisition in Australia ($320M)
2013: RailAmerica Acquisition in North America ($2B)
2015: Freightliner Acquisition in U.K./Europe ($740M)
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1. Short Lines Excel at Playing
the Hand They are Dealt
– Operations can always be more efficient
– Opportunistic investments in downturns
External Shocks:
Key Lessons
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2. Boom Never as Good as You
Think; Bust Never as Bad
– Linear extrapolation of trends
is always wrong eventually
External Shocks:
Key Lessons
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U.S. Steam Coal Power Generation EIA Annual Energy Outlook Forecast Coal Use (mm tons)
0
200
400
600
800
1,000
1,200
2011 2012 2013 2014 2015 2016
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3. Railroad Shipments Follow
the Evolution of the Economy
External Shocks:
Key Lessons
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4. Politics Trump Economics
External Shocks:
Key Lessons
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1. Rigorous Upfront Analysis
– Railroads & Customers
Transformational Growth:
Key Lessons
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2. Outstanding People
to Execute Integration
Transformational Growth:
Key Lessons
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3. Cultural Emphasis
on Continuous Improvement
Transformational Growth:
Key Lessons
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4. Remain True to Core Values
of the Organization
Transformational Growth:
Key Lessons
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What Remains Constant Amidst Change?
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To be the
safest and
most respected
rail service
provider
in the world.
Core Purpose
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Safety Culture: 2006 - 2016
0
1
2
3
4
5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Injury Frequency Rate per 200,000 Hours
Class I
Short Lines
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2.0
0.5
1.8
0.5
2.1
0
1
2
3 Safety Culture
Injuries per 200,000 hours
2006 2012 2012 2014 2015 2016YTD
0.7
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Respected by Customers:
Customer Satisfaction Rating
5
6
7
8
9
10
2007 2009 2011 2013 2015
Trucking
Other Railroads
8.0 = Our Goal
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Gary Long SVP, Midwest Region
Respected by Customers:
Regions Designed for Customers
Customers
Finance Operations Engineering Sales &
Marketing Mechanical
Human Resources
Safety &
Compliance
Strategic Planning
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Respected by Customers:
Corporate Capabilities Support Local Focus
1. Outstanding Customer Service Intimate knowledge of our operations and customers’ needs
2. Industrial Development Driving new business to our 41-state footprint; 300+ meetings with local EDCs in last two years
3. Transload Enabling non-rail-served customers to tap freight-rail economics
4. National Accounts Relationships with customers served by multiple G&W railroads
5. Operating Excellence In-House Engineering, Mechanical, Purchasing
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Respected by Customers:
Strong Local Management
10 Regional Senior Vice Presidents
Promoted Internally ‒Succession Planning
Hired Externally
‒Class I Railroad Chief Operating Officer ‒Short Line Railroad President ‒Mining Railroad President
Joined via Acquisitions
‒RailAmerica Regional Senior Vice President ‒Freightliner Managing Director
4
4
2
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Respected by Customers:
Disciplined Allocation of Capital
$64 $96 $98 $89
$120
$179
$232 $249
$331
$372
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
($ millions)
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Current Trends
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North American Carloads YTD May 2016 vs. YTD May 2015
Commodity Change % CommentAgricultural Products (6,300) (7%) Weak Commodity Prices, High Levels of StorageAutos & Auto Parts (400) (3%)Chemicals & Plastics (2,300) (3%)Coal & Coke (45,800) (37%) Steam CoalFood & Kindred Products (900) (4%)Lumber & Forest Products 2,200 4% Wood Pellets and Wood ChipsMetallic Ores - 0%Metals 3,500 6% Steel inputs (scrap and pig iron) and pipeMinerals & Stone (6,400) (8%) Lower Frac Sand and Salt, Higher Aggregates and Cement Petroleum Products (300) (1%) Lower Crude By Rail, Higher LPGs/NGLsPulp & Paper (4,500) (6%) Containerboard (Truck Competition)Waste 1,700 12%Other (1,700) (6%)Total Carloads (61,200) (9%)
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Segment 1: North America
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North America Update
Expect Overall North American Volumes Down 5% in 2016
• Coal continues to be weak given low natural gas prices and represents 80% of overall carload decline
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North America Update Other Key Commodities
• Lumber and Forest Products: Stronger housing market (up 4%) • Metals: Less import competition (up 2%) • Minerals and Stone: Strong construction aggregates offset by
lower salt and frac sand (down 6%) • Agricultural Products: Two competing forces: large crops and
high levels of storage vs. strong dollar and weak prices (+/-)
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North America Update
Cost Reduction Focus
• Reducing corporate and regional overhead expense • Example: Internal benchmarking of operating regions
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Segment 2:
Australia
Above and Below Rail Operations
Above Rail Operations
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Australia Update
Global Commodity Weakness Largest Impact
• Three mines closed in 2015 (iron ore, manganese)
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Australia Update
Cost Reduction Focus
• Right-sizing operational and administrative overhead to new business landscape
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Segment 3: U.K./Europe
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U.K./Europe Update
U.K. Intermodal & Infrastructure Services Performing Well
• Expect same railroad intermodal volumes up 5% - 10%
U.K. Coal Restructuring
• Expected fade to 2022 has been faster • New business wins reducing overall
rolling stock surplus
Continental Europe Intermodal Rationalization Continues
• Exiting unprofitable routes
Cost Reduction Focus in Both U.K. and Europe
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G&W Priorities for 2016
1. Safety - Freightliner integration to G&W safety culture
2. Expense-reduction efforts in all three segments
3. New commercial development (U.S., Canada, U.K., Australia, Europe)
4. U.S. Short Line Tax Credit extension
5. Active acquisitions and investment pipeline
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