Darien, Conn.-based GWI reported net income in the first quarter $39.6 million, or diluted earnings per share of 70 cents, compared with net income of $82.7 million, or diluted earnings per share of $1.46, in the first quarter of 2013.
GWI estimated a $15 million to $20 million reduction in anticipated revenue during the quarter, "primarily driven by temporary line closures, congestion in the North American rail network that impeded interchange with connecting carriers, and reduced supply of available freight cars." Estimated higher operating costs due to weather were approximately $12 million, primarily due to increased overtime, higher diesel fuel consumption, higher car-hire, and extensive snow removal, the company said.
The company's adjusted operating ratio increased 3.3 percentage points to 80.0%.
Said GWI President and CEO Jack Hellmann, "G&W's financial results for the first quarter of 2014 were significantly impacted by extreme winter weather that disrupted several of our North American operations. Four G&W operating regions, Canada, Midwest, Northeast, and Ohio Valley, suffered the most serious weather-related conditions, first from the direct impact of a series of winter storms on the 45 railroads in those geographies and then from congestion at connecting railroads.”
"As a result, rail shipments were reduced and traffic was also diverted to truck," Hellmann said. "But through all of this, our employees worked tirelessly and safely under extremely harsh winter conditions. The Board of Directors and I are grateful for the efforts of these dedicated men and women over the past several months."
“While expectations had come down somewhat over the past few weeks, GWI’s results would have still been solid without the weather impacts,” said Cowen and Co. Managing Director and Railway Age Contributing Editor Jason Seidl. “GWI appears to be zooming in on new acquisition targets, and the expected expansion of the company’s credit facility to $2.4 billion, from $2.0 billion, could be partly attributable to a potential deal in the not-too-distant future. Organically, freight demand in the rail industry is making a notable comeback. About 85% of GWI’s North American traffic is interchanged with Class I railroads. Total North American Class I traffic grew just 1.2% year-over-year in weather-plagued first-quarter 2014, following a 3.8% increase in fourth-quarter 2013. Sequentially, 1Q14 traffic was down 2.4%. However, further examination of the volume trends in the quarter offers optimism about the balance of the year. Weather was likely the key culprit behind a 0.6% year-over-year decline in the quarter’s first nine weeks. Traffic in the final four weeks jumped 5.4%, an increase that is likely attributable to a combination of pent-up demand and improving freight market fundamentals. Thus far in 2Q14, Class I traffic growth has accelerated to 7.8%. GWI has experienced record weekly carloads in late March and April.”