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.

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.”