Genesee & Wyoming (GWR) Misses Q1 EPS by 4c, Revenues Miss

Genesee & Wyoming (NYSE: GWR) reported Q1 EPS of $0.78, $0.04 worse than the analyst estimate of $0.82. Revenue for the quarter came in at $558.1 million versus the consensus estimate of $568.53 million.

• Operating revenues decreased 2.9% to $558.1 million from $574.7 million.
• Reported operating income decreased 8.3% to $79.7 million; Adjusted operating income increased 0.5% to $87.8 million despite negative effects from severe winter weather and flooding in North America.(1)
• Reported diluted earnings per common share (EPS) decreased 42.9% to $0.68 with 57.1 million weighted average shares outstanding, compared with reported diluted EPS in the first quarter of 2018 of $1.19 with 62.9 million weighted average shares outstanding; Adjusted diluted EPS increased 11.4% to $0.78.(1)
• Reported net income and diluted EPS for the first quarter of 2019 included $5.4 million, or $0.10 per share, of restructuring and related costs. Reported net income and diluted EPS for the first quarter of 2018 included a $31.6 million, or $0.50 per share, income tax benefit associated with the U.S. Short Line Tax Credit for fiscal year 2017 that was enacted retroactively in February 2018.

Company Comments

Jack Hellmann, Chairman and Chief Executive Officer of G&W, commented, “In the first quarter of 2019, our adjusted diluted EPS increased over 11%, despite severe winter weather and flooding in North America that impeded shipments from connecting Class I railroads to our Midwest and Canada regions. These weather impacts resulted in a $0.09, or 10%, reduction in diluted EPS compared with our first quarter guidance. We expect to recover a portion of the winter-affected traffic in the coming months, our outlook for North American rail shipments remains positive and our 2019 annual guidance remains unchanged.”

“In the first quarter of 2019, we implemented cost reduction initiatives in each of our three geographic segments. In North America, we consolidated our Central Region into our Midwest and Southern regions. In the U.K./Europe, we continued to make reductions in our overhead cost structure and to invest in technology, and in Australia, we streamlined rail operations concurrent with the termination of grain operations on the Eyre Peninsula narrow gauge network.”

“Finally, in the first quarter of 2019, we evaluated several potential acquisitions and investments. And in March, we signed two long-term leases of short line railroads in Indiana that create a contiguous 400-mile, four-railroad footprint (CERA-TPW-TZPR-IMRR) within our Midwest Region, spanning from Eastern Indiana to Western Illinois with connections to six Class I railroads.”

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

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