GLG News by Intermodal Railcar Experts

Toby KolstadPresidentRail Theory Forecasts

Intermodal traffic gains may be problematic: too much too fast

July 14, 2010

Analysis of:Intermodal Rail Posts Highest Year-Over-Year Monthly Gain in 20 Years | www.truckinginfo.com

Intermodal loadings are surging faster than had been expected and are rising faster than they did during the first quarter when real GDP was expected to grow over 3% in 2010. It now appears as though 2010 intermodal loads will exceed those of 2008 but fall short of the record number of shipments recorded in 2006. Much of today’s movements are for retailers stocking up for the holiday shopping season; the Christmas rush begins early in the transportation sector.

Toby KolstadPresidentRail Theory Forecasts

More troubles for railroad coal traffic

July 9, 2010

Analysis of:EPA proposes tougher air rules on power plants | af.reuters.com

The EPA has proposed rules that would force utilities in the East to significantly reduce pollutants in 2012. This will lead to the early closure of many old coal fired electric utility plants and higher utility bills for consumers in that part of the country. None of the new, more efficient and less polluting coal fired plants scheduled to start operating in the near future are in the East. For Eastern railroads, it will mean less coal traffic as utilities switch to alternate fuels in coming years.

John SchulzIndependent Analyst - Contributing EditorLogistics Management Magazine

Final Nail in YRC's Coffin? It Could Be Teamsters' Pension Payments

July 6, 2010

Analysis of:Saving Teamster Pensions | www.tdu.org

Struggling YRC Worldwide is facing unrest among its Teamsters rank and file, as well as the Teamsters international leadership, for the pension freeze won a year ago. That freeze, due to expire next January, could result in an additional costs of as much as $30 million a month for cash-strapped YRC. Teamsters President James. P. "Jim" Hoffa is vowing to hold YRC's "feet to the fire" to resume payments into the Teamsters' multi-employer plans.

Toby KolstadPresidentRail Theory Forecasts

UP profits should set records even with slow economic growth

July 5, 2010

Analysis of:Union Pacific railroad builds U.S. economy | money.cnn.com

Like many of its North American railroad cousins, the UP reacted swiftly to the precipitous fall in traffic in 2009 by cutting costs and capital spending. With the help of some small rate increases, it maintained its hard won operating ratio of 76% and waited for traffic to increase. Traffic had fallen more than the economic contraction seemed to warrant, and it was a good bet that it would increase swiftly, even if it did not return to pre-recession levels.

John SchulzIndependent Analyst - Contributing EditorLogistics Management Magazine

YRCW Turning the Corner? It Must Be The Longest Block in America

June 30, 2010

Analysis of:YRC still sees positive EBITDA, approves share plan | Reuters | www.reuters.com

YRC Worldwide, which has lost in excess of $2 billion in the last three years, says its outlook is improving despite shutdown costs associated with a $37 million sale of parts of its YRC Logistics business to Austin Ventures. That will add about $10 million of one-time shutdown costs and asset write-downs. Still, the struggling U.S. trucker, once the largest trucking company by revenue, said it expects positive earnings before interest, taxes, depreciation and amortization (EBITA) in the second quarter.

Toby KolstadPresidentRail Theory Forecasts

Kansas City Southern Railway Company is a case of permanent potential

June 24, 2010

Analysis of:Standard & Poor’s raises Kansas City Southern’s bond rating | kansascity.bizjournals.com

The recent Kansas City Southern Railway Company (KSU) swap of equity for debt was made possible not only by the company’s currently strong operating performance and recent traffic gains, but also by the perennial optimism of its shareholders. This small regional railroad has enjoyed the PE ratio of a high growth company long after it divested its highly profitable non-rail divisions several years ago. The future earnings needed to justify this PE ratio seem to be out of reach and out of sight.

John SchulzIndependent Analyst - Contributing EditorLogistics Management Magazine

Nice Quarter for FedEx, But Why Was the Stock Hammered?

June 17, 2010

Analysis of:FedEx Posts $419 Million in Profit For Quarter | query.nytimes.com

FedEx reported net profit of $419 million on $9.43 billion revenue for its quarter ended May 31, swinging back to profitability after an $876 million loss in the year-ago quarter. Its revenue jumped 20 percent in the quarter as it continued to take advantage of what the company called "a continued moderate recovery." Still, FedEx shares fell nearly 6 percent, or $4.94 a share, on the day of the announcement as investors and analysts were looking for more optimistic guidance from the company.

Toby KolstadPresidentRail Theory Forecasts

A no brainer: railroad profits to climb in the second quarter

June 15, 2010

Analysis of:Analyst says rails headed for strong 2Q earnings | finance.yahoo.com

Unlike many companies and industries, railroads report traffic levels by company and by commodity on a weekly basis to the American Association of Railroads (AAR). It is not too hard to extrapolate carloads to revenue and profits; from the data through the 22nd week of the year and halfway through the second quarter, the railroads are on pace to record a 2.3% gain over the first quarter and a 13% gain over the second quarter of 2009. Some companies like Norfolk Southern Corporation will do even better.

John SchulzIndependent Analyst - Contributing EditorLogistics Management Magazine

Asset Sales to Continue at YRCW. Is This Another Fire Sale?

June 14, 2010

Analysis of:YRC’s Zollars: Liquidity Plans a Good Problem to Have | blogs.barrons.com

YRC Worldwide CEO Bill Zollars says asset sales of his company, once the largest trucking company by revenue in the country, will continue as it seeks additional means of liquidity. This is occurring even as the rest of the trucking industry is gearing up for additional freight be added to their networks. Zollars says YRC, which has lost in excess of $2 billion the last three years, should have positive earnings before interest, depreciation and debt in this quarter.

Toby KolstadPresidentRail Theory Forecasts

Stock sale may signal something amiss at Trinity Industries

June 10, 2010

Analysis of:Trinity Industries CEO's $2.6 Million Sale | online.barrons.com

Timothy R. Wallace, CEO of Trinity Industries, made a wise move when he bought over 15,000 shares of his company in March of 2009 when it was selling for $7.18 per share. He should have bought more. He was one of many smart executives who bought shares in their companies when the stock market was crashing and pricing companies at less than their book value. He probably was also acting wisely when he sold over 100,000 shares recently at $23.65.

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