Blanchard Railroad Week in Review, First Quarter 2002

The Railroad Week in Review:
First Quarter 2002

Current Issues

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Week ending March 30, 2002
Rail stocks ended the quarter generally ahead of the DJIA with NS and FEC the big gainers. Providence & Worcester income declines by 50% due to no asset sales. Canadian National shortline working group notes are up at www.cn.ca. GATX is among the Top Ten holdings of a hot "value" fund. Annual reports make good bedtime reading -- excerpts from NS, BNSF, CP. Look for continuing emphasis on strengthening shortline-Class I interchange process to include not only cars but event data.
Week ending March 23, 2002
Trinity Industries short sales up on railcar futures while rail stocks go up on better operating efficiencies. Is EBITDA a good measure of a company's performance? RailAmerica income for 4Q01 and the full year up sharply, results restated to conform to class 1 reporting format. The
switchman's dilemma. Matt Rose becomes BNSF Chairman on Rob Krebs' retirement.
Week ending March 16, 2002
Shares of the Big Six Class I rails sold off this week, with only BNSF finishing unchanged at $30. NS was hardest hit, shedding 6% from its Tuesday high. GNWR's three-for-two stock split hit Thursday for owners of record Feb 28. Canadian National holds annual shortline meeting, endorses
elimination of some RIA paper barriers, commits to quick action on a number of pressing matters. Class I carloadings slide again in week 9; possible impact on Class II and II operators. Is there much room left for share price increases or is all the growth already baked in? GNWR management team additions. Forest products remain a mixed bag for rails.
Week ending March 9, 2002
Rail stocks sold off sharply at the open on Friday after posting some nice gains intraweek. Carloadings for Week 8 (2/23/2002) were up 2.7% yoy and the second week in a row. NS completes $9.8 mm in Enola improvements. CN buys 60 Dash-9s from GE. Further STB commentary on the BNSF Texas build-in from a UP trackage rights line. KCS initiates Hazmat shippers award. Shortlines get short shrift in AAR-class 1 security push.
Week ending March 2, 2002
Rail stocks surge with NS and UP in the lead. NIT League President Ed Emmitt offers rail service observations and a new Coalition to unify shippers. STB Chairman Linda Morgan encouraged by shortline performance and "creative thought process." BNSF President Matt Rose rolls out carload network redesign. UP/CSXT Express Lane increased revenues 20% last year, looks to repeat in 2002.
Week ending February 23, 2002
DM&E to acquire IMRL, get direct access to MSP, Chicago, KC. Florida East Coast Industries takes earnings hits for the quarter, year on fiber-optics venture; FEC rail doing well, thank you. Merchandise carload business off in Week Six. CSXT program brings back moribund industry tracks from the dead. A few remarks on what goes into calculating an operating ratio, given the present accounting uproar.
Week ending February 16, 2002
RailAmerica revises earnings estimates down yet net margins will improve. Genesee & Wyoming reports nice gains for the quarter and year. Estimates at CSX and CP trimmed on traffic forecasts. CP to use Norfolk Southern TYES in ops management. PennDot awards another $6 mm for track rehab. Forest products producers outperform.
Week ending February 9, 2002
A veritable mixed bag this week. Tony Hatch comments on Earnings Week. What to expect in 2002 and some thoughts on making money in a static market for rail services. How value-added services and better fleet management affect car builders. Tom Schlosser to head up RailAmerica's Pacific Corridor. Library Company of Phila to exhibit William Rau photos of the PRR in the 1890s. CSXT announces a fresh paint scheme.
Week ending February 2, 2002
KCS joined the club this week as they announced a much improved railroad in 2001, never mind what "everybody says" about the economy. Both the DM&E and BNSF received approval from the STB for new rail lines, though the latter was a challenge to find on a map. It took a 1955 Official Guide and Yahoo.com maps to see how everything fits. Also, we made some changes in last week's metrics matrix and added KCS.
Week ending January 26, 2002
Earnings week (BNSF, CP, CN, CSX, NS, UP) happened all at once and the results were generally encouraging. Commentary is necessarily sparse, trying to get all six reports in one issue. However, it is highly recommended you spend a little time with the presentation slides available at the investors' section of each railroad's website.
Week ending January 19, 2002
Our focus this week is on commercial opportunities for shortlines in 2002. Genesee & Wyoming is now half overseas business; RailAmerica is less than a quarter overseas. How will this affect their 2002 results? We also look at 12 rail shipper complaints from the Morgan Stanley study and what shortlines can do about them.
Week ending January 12, 2002
STB lists 11 new rail line construction projects. Guidance from the WSJ on whether or not to sell your small business to a larger business. Two Morgan Stanley reports on the rail industry. In one, all rails downgraded to neutral. In the other, shippers place CN in the lead with UP and CP runners-up.
Week ending January 5, 2002
Summary of Year 2001 stock performance by railroad: BNSF, CN, CP, CSXT, KCS, NS, UP plus RailAmerica and Genesee & Wyoming. Suppliers results for GATX and carbuilders. Why a shipper opts for truck over rail.

THE BLANCHARD COMPANY
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Roy Blanchard.215-913-7740 mobile, royblan@icloud.com
Laura Blanchard, 215-985-1445, lblanchard@rblanchard.com