Tuesday, October 31, 2017

Ag hits Genesee & Wyoming net in 3Q

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Jack Hellman Jack Hellman

Regional and short line operator Genesee & Wyoming saw higher revenue in the third quarter, but said weaker than expected earnings fell by 18% on lower agricultural shipments out of the U.S. Midwest.

Operating revenues for the Darien, Conn.-based company increased 15.2%, to $576.9 million on-year in the third quarter of 2017, while operating income totaled $111.5 million, up from $91.9 million in the third quarter of 2016. Adjusted operating income was $115.9 million, up from $96.4 million.

Earnings were 80 cents per share, off from 98 cents a year ago. Adjusted EPS was 81 cents, compared to 82 cents.

Net income fell to $50.2 million from $56.8 million, while adjusted net income was $50.6 million, up from $47.9 million in the year-ago quarter.

In North America, G&W’s largest business segment, operating revenues increased 2.8% to $318.9 million from $310.2 million, primarily due to new operations. Operating income decreased 5.8% to $82.1 million; adjusted operating income decreased 5.9% to $83 million.

Operating revenues from G&W's 51.1%-owned Australian Operations increased 50.1% to $81.3 million from $54.2 million, primarily due to new operations as well as an increase in metallic ores revenues and agricultural products revenues. Operating income increased to $22.3 million from $4.4 million; adjusted operating income increased to $21.8 million from $7.4 million.

The company’s U.K./Europe operating revenues increased 29.3% to $176.7 million from $136.7 million, primarily due to new operations. Operating income increased to $7.1 million from $300,000; adjusted operating income increased to $11.0 million from $700,000.

“In the third quarter of 2017, we reported financial results that were modestly weaker than expected,” said Jack Hellmann, Chairman, President and Chief Executive of G&W. “In North America, our same railroad shipments declined 1.9% in the third quarter, primarily due to lower agricultural products carloads caused by drought in the Midwest. Overall we were pleased with the performance of our North American operating team in the third quarter as we successfully navigated through two hurricanes and related precautionary shutdowns of several short lines. In addition, we completed the formation of our CG Railway 50-50 joint venture through which we now provide rail ferry service from Mobile, Ala., to Coatzacoalcos, Mexico.”

“In the U.K./Europe, the turn-around in our financial performance was right on target and business conditions have continued to improve. In Australia, although shipments of coal were disrupted by strikes at certain customer mines in the Hunter Valley in the third quarter, the structure of our contract mitigated much of the financial impact and we also commenced spot movements of coal for new customers.”

Hellmann said the company’s outlook “remains positive. In North America, although we continue to face weather-driven variability in our grain and coal shipments, broader economic activity is solid and we expect to benefit from a tightening trucking market. In Australia, we are pursuing multiple new projects amidst an improved commodity price environment. In the U.K., multiple revenue and efficiency measures have taken effect and we see a good peak season for intermodal shipments in the months ahead. Finally, we continue to generate strong free cash flow and to evaluate a range of acquisition and investment opportunities across our global footprint of railroads.”

 

 

 

 

 

 

 

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