Slumping volumes were behind Genesee & Wyoming Inc.'s (GWI) decline in revenue and profit during second-quarter 2016, the company announced yesterday.
Operating revenue fell 7.5 percent to $501.4 million from $542.2 million a year ago. Reported operating income decreased 12.3 percent to $87.2 million; adjusted operating income declined 5.3 percent to $94.4 million.
Reported diluted earnings per common share were down 9.8 percent to 83 cents; adjusted diluted earnings per share remained constant at 93 cents per share, according to a company press release.
GWI reported $48.4 million in net income for the quarter, down from $52.8 million a year ago. Adjusted net income came in at $54 million, compared with $53 million in last year's second-quarter.
In North America, where GWI earns about 80 percent of its operating income, operating revenue fell 2.1 percent to $304.6 million from $311 million in second-quarter 2015. Reported operating income from the North American operations rose 4.8 percent to $80.8 million.
Also in the second quarter, GWI's results included $5 million in restructuring costs primarily associated with the company's U.K./European operations, corporate development and related costs of $2.6 million, and a net gain on the sale of $300,000 in assets. Additionally, the second-quarter 2016 net income includes a $7.2 million income tax benefit associated with the U.S. Short Line Tax Credit, which was not in effect in Q2 2015.
The quarter's results were "well ahead" of GWI's outlook, primarily due to the North American operations' performance, said President and Chief Executive Officer Jack Hellmann.
"Despite a 7 percent decline in North American carloads, favorable revenue mix and effective management of costs led to an improvement in our reported North American operating ratio of 1.3 percentage points to 74.1 percent, and a modest increase in our operating income," he said.
Meanwhile, GWI's Australian and U.K./Europe operations were generally in line with expectations, as the company completed a restructuring of its U.K. coal business, Hellmann added.
"While we are pleased with our second quarter results, our reported diluted EPS declined 10 percent and our adjusted diluted EPS excluding the Short Line Tax Credit declined 13 percent compared to last year," he continued. "As a result, we remain focused on improving the efficiency of our operations amidst uneven business environments in each of our three segments worldwide."
Additionally, the economic uncertainty continues to provide acquisition and investment opportunities that the company is "carefully evaluating in multiple geographies within our global footprint," Hellmann said.