G&W Operating Fell in 2nd Quarter

Genesee & Wyoming reported this week that its operating income in the second quarter of 2019 fell by 9 percent to $4.2 million.

Revenue declined 4 percent, to $571.5 million, G&W said, while earnings per share increased 23 percent, to 90 cents.

The company attributed the operating income decline to slumping international operations that offset improved North American results.

On a same-railroad basis, G&W reported higher revenue and profits for its North American operations despite a 3.5 percent decline in traffic.

Operating income rose 5 percent to $84.3 million, as revenue increased 2.6 percent, to $333,934 on a same-railroad basis.

The North American operating ratio improved by a point, to 75.4 percent for the quarter.

Traffic declined at G&W’s 114 North American railroads amid a volume slump.

“The decrease in traffic from existing operations included decreases of 11,206 carloads of coal and coke traffic, 4,221 carloads of metals traffic, 3,734 carloads of pulp and paper traffic, 2,307 carloads of lumber and forest products traffic and 1,683 carloads of other commodity traffic, partially offset by increases of 5,418 carloads of agricultural products traffic and 1,015 carloads of chemicals and plastics traffic,” G&W said in a regulatory filing.

G&W 3rd Quarter Net Income $69.6M

Genesee & Wyoming reported third-quarter net income of $69.6 million, or $1.16 per diluted common share, compared with net income of $50.2 million, or 80 cents per share, in the same quarter of 2017.

In a news release, G&W said operating revenue rose 4.6 percent to $603.3 million; operating income increased 16.4 percent to $127.8 million; and adjusted operating income jumped 14.3 percent to $130.5 million compared with the third quarter of 2017.

Adjusted diluted earnings per share rose 51.9 percent to $1.23.

G&W CEO Jack Hellman described the financial results as strong.

“Our North American financial results (approximately 80 percent of operating income) were uniformly positive led by 11.5 percent revenue growth, an operating ratio that improved around 300 basis points to 71.2 percent and a 25 percent increase in operating income,” he said.

Hellman said G&W’s commercial outlook remains positive in all three geographic segments but the company expects fourth-quarter results to be adversely affected by three issues.

In North America that include the effect of  Hurricane Michael, which struck the Bay Line Railroad and customer facilities in Panama City, Florida.

In mid-October, G&W completed a previously announced $300 million share repurchase program, and the board recently approved a share repurchase program for an additional $500 million of common stock.

G&W 2nd Quarter Revenue up 10%

Genesee & Wyoming reported that second quarter operating revenue rose 10 percent to $595 million from $540.4 million and operating income increased 3.4 percent to $103.1 million compared with the same quarter a year ago.

Diluted earnings per share fell 1.4 percent to 0.73 cents per share for the quarter compared with last year’s EPS in the same period.

Adjusted diluted EPS in the second quarter of this year rose 17.5 percent to 94 cents compared with a year ago.

G&W repurchased 1.9 million shares of its stock for $134.9 million during this year’s second quarter.

The diluted EPS of 73 cents was “generally consistent” with the second quarter of 2017, primarily because of previously announced restructuring charges related to the company’s U.K. operations, said Chairman, President and Chief Executive Officer Jack Hellmann.

He said the diluted EPS of 94 cents in the quarter were at the “high end of our outlook as business conditions continued to improve in each of our three geographies led by North America.”

“Our same railroad carloads increased 8 percent in North America with particular strength in coal, steel and minerals and stone traffic,” Hellmann said. “While our operating leverage in North America during the quarter was adversely impacted by several variables including the mix of business, the lag in fuel surcharge recovery, and legal fees associated with an arbitration proceeding, we expect to see our customarily strong operating leverage for the remainder of 2018 based on our current volume outlook.”

G&W expects growth in customer demand for rail shipments across most commodity groups — particularly in North America — to continue for the rest of the year.

“In addition, we have refinanced our senior credit facility with improved terms through 2023, we have more than $600 million of capacity under our revolving credit facility, and we continue to evaluate investment opportunities in multiple markets including the opportunistic purchase of our own shares,” Hellmann said.

Congestion Hurt G&W 1st Quarter Results

Genesee & Wyoming said that its North American 2018 first quarter financial result were hindered by congestion at several connecting Class 1 railroad that resulted in a limited car supply.

G&W said it posted a 32 percent jump in adjusted diluted earnings per share during the period and that revenue increased 10.7 percent to $574.7 million from $519.1 million a year ago.

Operating income rose 14.5 percent to $86.9 million, while adjusted operating income climbed 2.7 percent to $87.4 million compared to first-quarter 2017.

Diluted earnings per common share rose to $1.19 versus 42 cents a year ago while adjusted diluted EPS rose 32 percent to 70 cents a share.

The operating ratio for North American operations fell 1.3 points year over year to 77.5.

The reported net income and diluted EPS included a $31.6 million, or 50 cents per share, income tax benefit as a result of the U.S. Short Line Tax Credit for fiscal year 2017.

G&W CEO Jack Hellmann said the company was also negatively affected by lower utility coal shipments in the Midwest.

“Our North American business strengthened in March and we see a favorable outlook for rates and volume for the remainder of 2018, despite ongoing pockets of rail system congestion,” Hellmann said in a statement.

Also in the first quarter, the company repurchased 800,000 shares of G&W stock.

“At the same time, we are actively evaluating acquisition and investment opportunities in all geographies in which we operate,” Hellmann said. “We expect to continue to pursue both traditional M&A opportunities as well as opportunistic share repurchases in 2018.”

G&W Posted Gains in 4th Quarter 2017

Genesee & Wyoming had fourth-quarter 2017 operating revenue of $571.6 million, an increase of 10.7 percent over the fourth quarter of 2016.

Operating income rose 101.9 percent to $108.2 million, while adjusted operating income increased by 2.2 percent to $105.7 million.

Net income for the quarter was $426.6 million compared with $8.9 million in the fourth quarter of 2016.

Diluted earnings per share were $6.81 with 62.7 million weighted average shares outstanding, compared with reported diluted earnings per share of 15 cents with 58.8 million weighted average shares outstanding in the fourth quarter of 2016. The adjusted diluted EPS fell 8.3 percent to 77 cents.

The income and diluted EPS for the period include a $371.9 million, or $5.94 per share, income tax benefit associated with the U.S. Tax Cuts & Jobs Act that became law in December.

In a statement, G&W President and Chief Executive Officer Jack Hellmann said revenue in each of the company’s geographic segments — North America, Australia and U.K./Europe — finished the year in line with expectations.

“In 2017, we generated adjusted free cash flow attributable to G&W of $250 million, a 3.6 percent increase over 2016, as we effectively managed both expenses and capital expenditures to more than offset flat revenue,” he said.

In a news release, G&W said it sees an improving business outlook in each operating region and thus expects double-digit growth in adjusted EPS and adjusted free cash flow.

“At the same time, we continue to evaluate acquisition and investment opportunities across G&W’s global footprint and have approximately $400 million of borrowing capacity under our revolving credit facility,” Hellmann added.

For all of 2017, G&W posted net income of $549.1 million, compared with $141.1 million in 2016. Adjusted net income in 2017 was $182.0 million, compared with $182.4 million in 2016.