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 Operating Revenue up in 1st Quarter

Genesee & Wyoming reported that its first quarter 2016 operating revenue rose 21.6 percent to $482.6 while its adjusted income fell 8.2 percent to $79.6 million. Reported income declined by 21.5 percent to $57 million.

All percentages are in comparison with the first quarter of 2015.

In a news release, G&W, which is the parent company of the Ohio Central System, said the decline of reported net income primarily was due to $21.1 million in charges related to an Australian iron ore customer that entered voluntary administration.

Adjusted diluted earnings per share were down 7.2 percent to 77 cents while the adjusted diluted EPS excluding the short-line tax credit fell by  20.5 percent to 66 cents per share.

Reported diluted EPS rose 11.9 percent to 47 cents per share.

“G&W’s core financial results for the first quarter of 2016 were slightly better than our expectations, although our reported results were negatively impacted by our last remaining iron ore customer in Australia entering voluntary administration,” said President and Chief Executive Officer Jack Hellmann. “Effective management of operating costs in both North America and Australia more than offset weak results from our U.K./Europe operations.”

In North America, which represents about 80 percent of G&W’s operating income, revenue from operations fell 5.6 percent to $299.8 million, while adjusted income from operations remained relatively flat at $70.7 million compared with a year ago.

Reported income from operations rose 22.6 percent to $70.0 million due mostly to $12.6 million of costs related to the company’s Freightliner Group Limited acquisition in 2015.

In the news release, G&W said its 2016 outlook remains unchanged for North America and U.K./Europe, while the outlook for Australia is “modestly weaker.”