Genesee & Wyoming Reports Results For The Third Quarter Of 2016

Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Third Quarter Consolidated Highlights
  • Operating revenues decreased 8.3% to $501.0 million from $546.3 million.
  • Reported operating income decreased 21.9% to $91.9 million; Adjusted operating income decreased 19.0% to $95.8 million. (1)
  • Reported diluted earnings per common share (EPS) decreased 10.9% to $0.98; Adjusted diluted EPS decreased 13.6% to $0.95; Adjusted diluted EPS excluding the Short Line Tax Credit decreased 25.5% to $0.82. (1)

Third Quarter Segment Highlights
  • North America: Operating revenues from G&W's North American Operations decreased 1.4% to $310.2 million from $314.6 million, primarily due to lower fuel surcharges and a decline in coal shipments. Reported operating income from G&W's North American Operations decreased 3.8% to $87.2 million; Adjusted operating income from G&W's North American Operations decreased 3.2% to $87.8 million. (1)
  • Australia: Operating revenues from G&W's Australian Operations decreased 11.2% to $54.2 million from $61.0 million, primarily due to the loss of a fixed fee payment associated with a now closed iron ore mine and lower metallic ores shipments. Reported operating income from G&W's Australian Operations decreased 70.8% to $4.4 million; Adjusted operating income from G&W's Australian Operations decreased 52.6% to $7.4 million. (1)
  • U.K./Europe: Operating revenues from G&W's U.K./European Operations decreased 20.0% to $136.7 million from $170.7 million, or decreased 10.5% excluding an $18.1 million impact from foreign currency depreciation. Reported operating income from G&W's U.K./European Operations was $0.3 million; Adjusted operating income from G&W's U.K./European Operations was $0.6 million. (1) (2)

Jack Hellmann, President and CEO of G&W, commented, "Our financial results for the third quarter of 2016 were consistent with our expectations with reported diluted EPS of $0.98 and adjusted diluted EPS of $0.95. In North America, better than expected steam coal shipments combined with strong cost controls yielded a better than expected operating ratio of 71.9%. In Australia, financial results were in-line with our outlook as we continued to effectively manage costs in the weak commodity environment. In the U.K./Europe, our financial results in the first full quarter since we restructured the U.K. coal business were below our expectations for three reasons: congestion in the port of Felixstowe which weakened U.K. intermodal shipments; unscheduled reductions in U.K. infrastructure services; and weak performance from continental European intermodal." (1)

"Looking to year-end, our priorities by region are threefold. In North America, we remain focused on maximizing cost efficiency amidst an uneven economic environment. In Australia, we expect to close on the recently announced acquisition of Glencore Rail and the concurrent issuance of a 49% equity stake in our Australian subsidiary to Macquarie, in a transaction that yields a highly competitive Australian growth platform going forward. In the U.K./Europe, we continue to restructure the continental European business and to reduce costs in the U.K. Despite the weak third quarter, we see a clear path to improvement in the U.K./European segment as we finish the year and enter 2017."

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