Blanchard Railroad Week in Review, Second Quarter 2003

The Railroad Week in Review:
Second Quarter 2003

Current Issues

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Week ending June 27, 2003
The latest RCAF exceeds 6%; impact on revenues could be a percentage point or more. Montreal Maine & Atlantic is on the mend. Mexico's Competition Commission OKs NAFTA Rail. CN makes divisional changes in leadership and boundaries. The TRH soap opera continues. RRA buys ex-DRGW line in Colorado. How to spot industry trends in a sideways stock market.
Week ending June 20, 2003
Three reasons why the news is less than cheerful for the merchandise carload side of the house. Rail stock analysts see most rails overpriced today based on current vs. historical PEs. Table. Chicago to get $billions in funding to solve rail congestion problems. Shortline track expenditures trending up in sample. CP writes down value of the D&H, exploring options. FEC's winning ways. Tranz Rail stops asset sales program.
Week ending June 13, 2003
New Zealand as a cautionary tale about the care and feeding of branchline traffic. Commentary on the implications of US parallels with the lessons in NZ. GWR and RRA report carloads for May 2003 and YTD.
Week ending June 6, 2003
NS shortline meeting another bell-ringer. How NS copes with tradeoffs between and among line capacity, line density, capex, operating costs and revenue. Strategic Planning's "Thoughts on the NS Network" PPT. CN backs away from the Ontario Northland on labor protection issues. Great Lakes Transportation (B&LE, DMI&IR) is for sale. RailAmerica wins BNSF lines in western Alabama plus the BNSF rights on NS to Mobile. CSX and NS file to control outright the ex-Conrail lines they now lease from the holding company. CSAO is NOT, NO HOW, NO WAY affected. Nor is the CSAO about to go away, contrary to rumor.
Week ending May 30, 2003
Railroad stock prices and dividend yields relative to growth prospects (Table). CP buying lumber cars and selling branchlines. The Fat Lady has yet to sing in the New Zealand soap opera. NS to host shortlines in Roanoke this week.
Week ending May 23, 2003
Notes on the ASLRRA'a Annual Meeting in Philadelphia. Why shortlines are doing a great job wooing and winning customers. RailAmerica pulls its TranzRail offer saying the due dilgence results didn't measure up. More on why RR sales reps "gotta know the territory." CN posts shortline presentation slides to www.cn.ca.
Week ending May 16, 2003
Genesee & Wyoming (GWR) posts 1Q03 net income of $5.4 mm, about even with 1Q02. ASLRRA's Rich Timmons makes the railroads' case at Transportation Week Luncheon at Philadelphia's Union League. Observations on why railroad account managers can do a better job managing accounts. Technical indicators for rail stock prices at odds with fundamentals; convergence is at hand. RailAmerica in bid for New Zealand railroad. What is a shortline?
Week ending May 9, 2003
RailAmerica 1Q03 results show marginally higher sales and somewhat diminished operating income. North American revenues up 5%, no change in expenses, OR shaves four points. KCS preferred stock buyers pick up another $25 mm on options. NS shareholders narrowly defeat motion to end staggered Board member terms. Annual Penn DOT Rail Freight Seminar another success. CN has locos for sale at www.cn.ca under "Sale of Surplus Assets."
Week ending May 2, 2003
KCS yoy operating and net incomes decline due to lowered revenues and increased operating expenses; further steps toward combining the KCS Railroad, Tex-Mex and TFM. CSX reports 1Q03 with ops income down 13%; OR goes north of 90.RRA kept net income about even with last year in spite of another operting loss in Australia. Details next week, though for now let me congratulate RRA for taking the NA operating ratio down four points to 77.9 and reducing quarterly interest expense 21% to less than $10 mm. On the equities side we look at yoy changes in net income and stock price and compare potential earnings growth with price-earnings multiples. Viewed in this light some names would appear pricey.
Week ending April 25, 2003
First quarter results for BNSF. CP, CN, NS, UP. Commentary on the core merchandise carload business. UP's Ike Evans: "We just got through the merger changes when the economy headed south. Now we're looking for the opportunity to show what we can do with the product." NS says price increases sticking because it's a better product.
Week ending April 18, 2003
It's becoming evident shipper have problems with railroads partly because they don't see enough of the same railroad reps. We saw it a week ago and NEARS and shippers were again in the minority at the Southeast meeting. A reader offers some constructive thoughts. Two measures to watch in the AAR weekly reports. CSX tapped as a GM "Supplier of the Year." RMI's RailConnect (R) opens in St Louis. Greenbrier Industries turns the corner.
Week ending April 11, 2003
RailAmerica launches "Hearts and Rails" letter campaign for US troops in Iraq, posts gains in total and "same railroad" traffic levels. AAR rail freight volumes through Week 13 up 2.8% overall with merchandise carloads ex-coal and ex-ag up 3.8%. Housatonic Railroad shortline 2002 carloads up 20% yoy. BNSF to reacquire 52-mile branch in western Montana. North East Assn of Rail Shippers holds spring session on Cape Cod.
Week ending April 4, 2003
Solving the problem of the time lag between a car movement event and the shortline reporting thereof. Three studies that highlight the degree of lag and solutions from BNSF, NS, and RMI. FY 2002 results from the Providence & Worcester.

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