Halls of Shrewd'm / US Policy❤
No. of Recommendations: 5
No. of Recommendations: 10
No mention of DG here for those not interested in BRK information.
For the true rhetor, I guess that counts as apophasis, possibly paralipsis, but not proslepsis?
More seriously, thanks for the rail link. It's a great read. Certainly both interlocutors know vastly more about rails than I will ever manage.
An interesting number in there, for those who like me are always trying to reconcile the bookkeeping with the reality in rails.
He mentions $3.96bn in capex for 2023, of which $2.85bn will have been maintenance capex.
Though I haven't looked it up, you can be sure that this period's depreciation on what they were maintaining will be very small compared to $2.85bn, so naive calculations of free cash flow are always off by a mile in rails.
The big projects to improve resilience in the face of weather "outliers" is very interesting. It's not something I thought about a lot for the railroad.
e.g., "Over the past few years, we have raised over 3,100 miles of track over 12' in areas prone to flooding."
12 feet is quite a bit!
Jim
No. of Recommendations: 3
Thanks for posting the article. I had missed the news that BNSF was taking over Montana Rail Link. Or buying out their lease for $2 Billion it sounded like.
It's a small world, as MRL is/was owned by the Washington Companies, which have a David Sokol connection through both Atlas/Seaspan as well as Sokol being an advisor to the family and previous board member of their family foundation. There is also a Matt Rose (retired CEO of BNSF) connection in that he is a member of the Washington Companies board of directors and president of their family foundation.
No. of Recommendations: 2
He mentions $3.96bn in capex for 2023, of which $2.85bn will have been maintenance capex.
Though I haven't looked it up, you can be sure that this period's depreciation on what they were maintaining will be very small compared to $2.85bn, so naive calculations of free cash flow are always off by a mile in rails.
I have long thought the same as Jim - that D&A significantly understated the the real maintenance capex for BNSF. Warren evens said so early on.
But I just looked at the 2023 quarterly reports for BNSF. D&A was $620 million for Q1. Q2 was $653 billion, a 5.3% increase. Scaling forward, 2023 D&A might be around $2650-$2680 if inflation continues.
So the $2850 million maintenance capex for 2023 isn't that far ahead of D&A.
I guess all the heavy total capex in recent years has caused D&A to mostly catch up with real maintenance capex.
No. of Recommendations: 0
Capex depreciated for tax and maintenance is deducted as current expense. This would make maybe a small difference to Charlie but I'm sure he would deduct anything that could be. Years ago remember a case study showed lots of disgression.
