G&W announces 'weaker than expected' Q1 results
Genesee & Wyoming Inc. (G&W) reported first-quarter operating revenue rose 7.6 percent to $519.1 million from $482.6 million, while operating income increased nearly 36 percent to $77.5 million compared with results in first quarter a year ago. Adjusted operating income climbed 8.6 percent to $86.6 million compared with $79.8 million in Q1 2016. Net income declined to $26.2 million in the quarter from $27 million a year ago. Excluding the net impact of certain items affecting comparisons between the quarters, G&W's adjusted net income in the first quarter of 2017 was $32.9 million, compared with $38.6 million in the first quarter of 2016. G&W posted adjusted diluted earnings per share (EPS) were 53 cents compared with 67 cents in the year-ago quarter. "In the first quarter of 2017, we successfully completed the integration of the Providence & Worcester in the U.S., we operated the first full quarter of Glencore Rail in Australia, and we made good progress in the restructuring of ERS in Continental Europe," said President and Chief Executive Officer Jack Hellman in a press release.
"Nonetheless, our first quarter financial results were weaker than expected as North American same railroad carload growth of 3 percent was at the low end of our outlook and our operating ratio was a bit higher than plan, primarily due to track washout and derailment expense," he added.
G&Ws Australian business performed better than expected due to the re-opening of a customer manganese mine in March. The company's U.K./Europe operations were below plan due to a customer bankruptcy in Europe and higher operating costs in the company's U.K. intermodal business, Hellman said.
Looking ahead to the rest of 2017, the company's view of business trends in its markets remains unchanged, he said.
"In North America, we continue to see modest carload growth with several customer projects starting up later in the year. In Australia, we expect to benefit from shipments from a re-opened manganese mine in the Northern Territory and continue to see significant new business opportunities, making us optimistic for 2017 and beyond," Hellman said.
Additionally, the company announced this week that it had closed on its acquisition of Pentalver in the United Kingdom and expects to see improving intermodal business there.
"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," Hellman said.