Genesee & Wyoming (GWR) Tops Q4 EPS by 9c, Revenues Beat

Genesee & Wyoming (NYSE: GWR) reported Q4 EPS of $1.00, $0.09 better than the analyst estimate of $0.91. Revenue for the quarter came in at $575.6 million versus the consensus estimate of $573.64 million.

Fourth Quarter 2018 Consolidated Highlights Compared with Fourth Quarter 2017

• Operating revenues increased 0.7% to $575.6 million from $571.6 million.
• Reported operating income decreased 0.8% to $105.7 million; Adjusted operating income increased 5.6% to $109.9 million.(1)
• Reported diluted earnings per share (EPS) were $0.94 with 58.9 million weighted average shares outstanding, compared with reported diluted EPS in the fourth quarter of 2017 of $6.81 with 62.7 million weighted average shares outstanding; Adjusted diluted EPS increased 29.9% to $1.00.(1)
• G&W repurchased approximately 2.4 million shares of its Class A Common Stock for $189.6 million during the fourth quarter of 2018.
• Net cash provided by operating activities for the year ended December 31, 2018 increased 15.4% to $553.1 million; adjusted free cash flow attributable to G&W before new business investments and grant funded projects increased 20.8% to $326.0 million; adjusted free cash flow attributable to G&W increased 12.1% to $280.6 million.(1)
• A number of items affect comparability between the fourth quarter of 2018 and 2017, the most significant of which was the impact of the U.S. Tax Cuts and Jobs Act (TCJA) enacted in December 2017.

Fourth Quarter 2018 Segment Highlights Compared with Fourth Quarter of 2017

• North America: Operating revenues from G&W\'s North American Operations increased 5.5% to $338.0 million from $320.2 million. Reported operating income from G&W\'s North American Operations increased 16.7% to $87.2 million; Adjusted operating income from G&W\'s North American Operations increased 18.1% to $89.3 million.(1)
• Australia: Operating revenues from G&W\'s Australian Operations decreased 5.8% to $71.1 million from $75.5 million. Reported operating income from G&W\'s Australian Operations remained relatively flat at $17.7 million. Adjusted operating income from G&W\'s Australian Operations decreased 21.2% to $17.7 million.(1)
• U.K./Europe: Operating revenues from G&W\'s U.K./European Operations decreased 5.3% to $166.5 million from $175.8 million. Revenues in the fourth quarter of 2017 included $12.2 million of revenues from G&W\'s Continental Europe intermodal business, ERS Railways B.V. (ERS), which was sold in June 2018. Reported operating income from G&W\'s U.K./European Operations, which included $0.8 million in 2017 from ERS, decreased to $0.8 million, compared with $14.2 million in 2017; Adjusted operating income from G&W\'s U.K./European Operations decreased 51.8% to $2.8 million.(1)

Jack Hellmann, Chairman and CEO of G&W, commented, “In the fourth quarter of 2018, our reported diluted EPS were $0.94 compared with $6.81 in the fourth quarter of 2017. Our adjusted diluted EPS increased 30% to $1.00 in the fourth quarter of 2018, led by a 17% increase in our North American operating income due to 5.8% growth in carloads and a 250 basis point improvement in our operating ratio. The strong results in North America more than offset weaker performance in our Australian and U.K./European operations.”(1)

“For the full year, our reported diluted EPS were $4.03 in 2018 compared with $8.79 in 2017. Our adjusted diluted EPS increased 32.3% to $3.85 in 2018 and we expect double digit adjusted diluted EPS growth in 2019.”(1)

“In addition to solid earnings growth, G&W generated record cash flow in 2018. With strong cash generation, which significantly exceeded our reported net income, and approximately $455 million of availability under our revolving credit facility, we continue to evaluate potential investments in multiple geographies as well as investments in our own shares. During the fourth quarter of 2018, we repurchased 2.4 million shares of our common stock for approximately $190 million.”

For earnings history and earnings-related data on Genesee & Wyoming (GWR) click here.

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