Genesee & Wyoming Inc. (G&W) (NYSE:GWR)
First Quarter 2018 Consolidated Highlights Compared with
First Quarter 2017
- Operating revenues increased 10.7% to
$574.7 million from $519.1 million.
- Reported operating income increased
14.5% to $86.9 million; Adjusted operating income increased 2.7% to
$87.4 million.(1)
- Reported diluted earnings per common
share (EPS) increased to $1.19 with 62.9 million weighted average
shares outstanding, compared with reported diluted EPS in the first
quarter of 2017 of $0.42 with 62.4 million weighted average shares
outstanding; Adjusted diluted EPS increased 32.1% to $0.70.(1)
- Reported net income and diluted EPS
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 in February 2018.
- Net cash provided by operating
activities increased $16.3 million to $101.4 million; Adjusted free
cash flow attributable to G&W decreased $7.9 million to $43.1
million, primarily due to the timing of core capital
expenditures.(1)
- G&W repurchased 792,921 shares of
its Class A Common Stock for $57.4 million during the first quarter
of 2018.
Jack Hellmann, Chairman, President and CEO of G&W,
commented, “G&W reported diluted earnings per share of $1.19 in
the first quarter of 2018, or $0.70 per diluted share excluding the
retroactive benefit from the U.S. Short Line Tax Credit for 2017.
Although our adjusted diluted EPS increased 32%, our financial
results in North America were adversely impacted by congestion at
several connecting Class I railroads that limited car supply as
well as by lower utility coal shipments in the Midwest. Meanwhile,
our results in Australia and the U.K./Europe were consistent with
our expectations.”
“Our North American business strengthened in March and we see a
favorable outlook for rates and volume for the remainder of 2018,
despite ongoing pockets of rail system congestion. In Australia, we
continue to see an uplift in our business in the second half of
2018 as we take delivery of new rail cars for spot coal movements
in the Hunter Valley of New South Wales.”
“In the U.K., we are accelerating improvements to our rail,
terminal and road business through an optimization plan to further
rationalize rail equipment, to streamline management and to
implement technology investments to enhance productivity. Over the
coming 12 months, we plan to incur approximately US$55 million in
restructuring and related costs so as to unlock annualized savings
of approximately US$18 million, with the initial benefits
recognized in the second half of 2018. We believe the
reorganization will not only meet strong customer demand for all of
our supply chain services but also will enhance the quality and
efficiency of our operations.”(1)
“Finally, given G&W’s strong free cash flow generation and
modest leverage, in the first quarter we commenced a share
repurchase program under our existing $300 million authorization.
During the quarter, we repurchased approximately 800,000 shares of
G&W stock. At the same time, we are actively evaluating
acquisition and investment opportunities in all geographies in
which we operate. We expect to continue to pursue both traditional
M&A opportunities as well as opportunistic share repurchases in
2018.”
First Quarter Segment Highlights
- North America: Operating revenues from
G&W's North American Operations increased 1.9% to $325.6
million from $319.5 million. Reported operating income from
G&W's North American Operations increased 8.1% to $73.2
million; Adjusted operating income from G&W's North American
Operations increased 0.6% to $73.4 million.(1)
- Australia: Operating revenues from
G&W's 51.1% owned Australian Operations increased 1.3% to $74.8
million from $73.9 million. Reported operating income from
G&W's Australian Operations decreased 6.9% to $16.0 million;
Adjusted operating income from G&W's Australian Operations
decreased 9.3% to $16.0 million.(1)
- U.K./Europe: Operating revenues from
G&W's U.K./European Operations increased 38.6% to $174.2
million from $125.7 million, primarily due to new operations.
Reported operating loss from G&W's U.K./European Operations
decreased to $2.2 million from $8.9 million; Adjusted operating
loss from G&W's U.K./European Operations decreased to $2.0
million from $5.5 million.(1)
Financial Results
G&W's operating revenues increased $55.6 million, or 10.7%,
to $574.7 million in the first quarter of 2018, compared with
$519.1 million in the first quarter of 2017. G&W's operating
income in the first quarter of 2018 was $86.9 million, compared
with $75.9 million in the first quarter of 2017. G&W's adjusted
operating income in the first quarter of 2018 was $87.4 million,
compared with $85.1 million in the first quarter of 2017.(1)
Reported net income attributable to G&W in the first quarter
of 2018 was $75.1 million, compared with reported net income
attributable to G&W of $26.2 million in the first quarter of
2017. Excluding the net impact of certain items affecting
comparability between periods discussed below, G&W's adjusted
net income attributable to G&W in the first quarter of 2018 was
$43.8 million, compared with $32.9 million in the first quarter of
2017.(1)
G&W's reported diluted EPS in the first quarter of 2018 were
$1.19 with 62.9 million weighted average shares outstanding,
compared with reported diluted EPS in the first quarter of 2017 of
$0.42 with 62.4 million weighted average shares outstanding.
G&W's adjusted diluted EPS in the first quarter of 2018 were
$0.70 with 62.9 million weighted average shares outstanding,
compared with adjusted diluted EPS in the first quarter of 2017 of
$0.53 with 62.4 million weighted average shares outstanding.(1)
G&W's benefit from income taxes in the first quarter of 2018
was $15.9 million, while the provision for income taxes in the
first quarter of 2017 was $21.9 million. Excluding the $31.6
million benefit from the retroactive extension of the U.S. Short
Line Tax Credit, G&W's effective income tax rate in the first
quarter of 2018 was 26.2%, compared with 44.6% in the first quarter
of 2017. The decrease in G&W's effective income tax rate was
primarily a result of the Tax Cuts and Jobs Act of 2017 (TCJA),
which decreased the United States federal corporate income tax rate
from 35% to 21%.
Items Affecting Comparability
In the first quarter of 2018 and 2017, G&W's results
included certain items affecting comparability between the periods
that are set forth in the following table (in millions, except per
share amounts):
Income/(Loss)Before
IncomeTaxes Impact
After-Tax
NetIncome/(Loss)Attributable to G&W
Impact
Diluted EPSImpact
Three Months Ended
March 31, 2018
Corporate development and related costs $ (0.2 ) $ (0.1 ) $ —
Restructuring costs $ (0.3 ) $ (0.2 ) $ — 2017 Short Line Tax
Credit $ — $ 31.6 $ 0.50
Three Months Ended
March 31, 2017
Corporate development and related costs $ (5.4 ) $ (3.2 ) $ (0.05 )
Restructuring costs $ (3.8 ) $ (3.5 ) $ (0.06 )
In the first quarter of 2018, G&W's results included a $31.6
million income tax benefit associated with the U.S. Short Line Tax
Credit for fiscal year 2017 that was enacted in February 2018.
In the first quarter of 2017, G&W's results included
corporate development and related costs of $5.4 million, about half
of which related to the Providence and Worcester integration and
the remainder of which related to other corporate development
activities, as well as restructuring costs of $3.8 million,
primarily related to severance costs associated with G&W's
restructuring of ERS Railways B.V. (ERS).
First Quarter Results by Segment
Operating revenues from G&W's North American Operations
increased $6.2 million, or 1.9%, to $325.6 million in the first
quarter of 2018, compared with $319.5 million in the first quarter
of 2017.
North American Operations traffic increased 2,997 carloads, or
0.7%, to 406,013 carloads in the first quarter of 2018. Excluding
1,570 carloads from new operations, same railroad traffic increased
1,427 carloads, or 0.4%. The same railroad traffic increase was
principally due to increases of 2,583 carloads of pulp and paper
(primarily in the Southern and Central regions), 2,131 carloads of
other commodity traffic (primarily Class I overhead traffic in the
Central and Midwest regions) and 1,662 carloads of lumber and
forest products traffic (primarily in the Western Region),
partially offset by decreases of 3,597 carloads of agricultural
products traffic (primarily in the Midwest and Central regions) and
2,835 carloads of chemicals and plastics (primarily in the Western
and Northeast regions). All remaining traffic decreased by a net
1,483 carloads.
G&W's North American Operations had operating income of
$73.2 million in the first quarter of 2018, compared with $67.7
million in the first quarter of 2017. The operating ratio for North
American Operations was 77.5% in the first quarter of 2018,
compared with an operating ratio of 78.8% in the first quarter of
2017. Adjusted operating income from G&W's North American
Operations in the first quarter of 2018 was $73.4 million, compared
with adjusted operating income of $73.0 million in the first
quarter of 2017. The adjusted operating ratio for North American
Operations was 77.5% in the first quarter of 2018, compared with an
adjusted operating ratio of 77.2% in the first quarter of
2017.(1)
Operating revenues from G&W's Australian Operations
increased $0.9 million, or 1.3%, to $74.8 million in the first
quarter of 2018, compared with $73.9 million in the first quarter
of 2017. Excluding a $2.7 million increase due to the impact of
foreign currency appreciation, Australian Operations same railroad
revenues decreased $1.8 million, or 2.3%, primarily due to a
decrease in switching revenues.(2)
Australian Operations traffic decreased 5,901 carloads to
143,515 carloads in the first quarter of 2018. The traffic decrease
was principally due to a decrease of 2,154 carloads of agricultural
products traffic and 2,035 carloads of metallic ores traffic. All
remaining traffic decreased by a net 1,712 carloads.
G&W's Australian Operations had operating income of $16.0
million in the first quarter of 2018, compared with $17.2 million
in the first quarter of 2017. The operating ratio for Australian
Operations was 78.7% in the first quarter of 2018, compared with an
operating ratio of 76.8% in the first quarter of 2017. Adjusted
operating income from G&W's Australian Operations was $16.0
million in the first quarter of 2018, compared with adjusted
operating income of $17.6 million in the first quarter of 2017. The
adjusted operating ratio for Australian Operations was 78.6% in the
first quarter of 2018, compared with an adjusted operating ratio of
76.1% in the first quarter of 2017.(1)
Operating revenues from G&W's U.K./European Operations
increased $48.5 million, or 38.6%, to $174.2 million in the first
quarter of 2018, compared with $125.7 million in the first quarter
of 2017. Excluding $34.7 million from new operations and a $16.9
million increase due to the impact of foreign currency
appreciation, U.K./European same railroad revenues decreased $3.2
million, or 2.2%, primarily due to a decrease in Continental Europe
intermodal revenues following the discontinuation of certain
intermodal train services as part of the restructuring of ERS
Railways B.V. (ERS) in the first half of 2017 and decreased U.K.
infrastructure revenues, partially offset by increased revenues
from minerals and stones traffic in Poland.(2)
U.K./European Operations traffic decreased 7,031 carloads, or
2.6%, to 261,785 carloads in the first quarter of 2018. The traffic
decrease was principally due to decreases of 13,033 carloads of
intermodal traffic in the U.K. and Continental Europe and 4,666
carloads of coal and coke traffic (primarily in the U.K.),
partially offset by an increase of 11,215 carloads of minerals and
stone traffic (primarily in Poland). All remaining traffic
decreased by 547 carloads.
G&W's U.K./European Operations had an operating loss of $2.2
million in the first quarter of 2018, compared with an operating
loss of $8.9 million in the first quarter of 2017. Of note, the
recent change in U.S. GAAP accounting to reclassify pension returns
and interest costs from operating to non-operating income had the
impact of reducing U.K./Europe's operating income by $2.3 million
and $1.6 million for the periods ending March 31, 2018 and 2017,
respectively. The operating ratio for U.K./European Operations was
101.3% in the first quarter of 2018, compared with an operating
ratio of 107.1% in the first quarter of 2017. Adjusted operating
loss from G&W's U.K./European Operations was $2.0 million in
the first quarter of 2018, compared with an adjusted operating loss
of $5.5 million in the first quarter of 2017. The adjusted
operating ratio for U.K./European Operations was 101.2% in the
first quarter of 2018, compared with an adjusted operating ratio of
104.4% in the first quarter of 2017.(1)
Adjusted Free Cash Flow Measures (1)
Adjusted free cash flow measures for the three months ended
March 31, 2018 and 2017 were as follows (in millions):
Three Months Ended March 31,
2018 2017 Net cash provided by operating
activities $ 101.4 $ 85.0 Allocation of adjusted cash flow to
noncontrolling interest(a) (9.0 ) (6.4 ) Adjusted net cash provided
by operating activities attributable to G&W $ 92.4 $ 78.6 Core
capital expenditures(b) (41.4 ) (28.9 )
Adjusted free cash flow attributable to
G&W before new businessinvestments and grant funded
projects
$ 51.0 $ 49.7 New business investments (7.5 ) (0.1 ) Grant funded
projects, net of proceeds received from outside parties(c) $ (0.4 )
$ 1.4 Adjusted free cash flow attributable to G&W $ 43.1
$ 51.0 (a) Allocation of adjusted cash flow to
noncontrolling interest (Macquarie Infrastructure and Real Assets'
(MIRA's) 48.9% equity ownership of G&W Australia Holdings LP
(GWA) since December 1, 2016) is calculated as 48.9% of the total
of (i) cash flow provided by operating activities of G&W’s
Australian Operations, less (ii) net purchases of property and
equipment of G&W’s Australian Operations. The timing and amount
of actual distributions, if any, from GWA to G&W and MIRA made
in any given period will vary and could differ materially from the
amounts presented. There were no such distributions made for both
the three months ended March 31, 2018 and 2017. G&W expressly
disclaims any direct correlation between the allocation of adjusted
cash flow to noncontrolling interest and actual distributions made
in any given period. (b)
Core capital expenditures represent
purchases of property and equipment as presented on the Statement
of Cash Flows less grant proceeds from outside parties, insurance
proceeds for the replacement of assets and proceeds from
disposition of property and equipment, each of which as presented
on the Statement of Cash Flows, less new business investments and
grant funded projects.
(c)
Grant funded projects represent purchases
of property and equipment for projects partially or entirely funded
by outside parties, net of grant proceeds from outside parties as
presented on the Statement of Cash Flows.
Share Repurchase Program
During the first quarter of 2018, G&W repurchased 792,921
shares of Class A Common Stock for $57.4 million, which resulted in
a 51,106 reduction in our weighted average diluted shares during
the first quarter.
Conference Call and Webcast Details
As previously announced, G&W's conference call to discuss
financial results for the first quarter of 2018 will be held on
Tuesday, May 1, 2018, at 11 a.m. EDT. The dial-in number for
the teleconference in the U.S. is (800) 288-9626; outside the U.S.,
the dial-in number is (612) 332-0345, or the call may be accessed
live over the Internet (listen only) at www.gwrr.com/investors.
Management will be referring to a slide presentation that will also
be available at gwrr.com/investors. The webcast will be archived at
www.gwrr.com/investors until the following quarter's earnings press
release. Telephone replay is available for 30 days beginning at 1
p.m. EDT on May 1, 2018, by dialing (800) 475-6701 (or outside
the U.S., dialing 320-365-3844). The access code is 439195.
About G&W
G&W owns or leases 122 freight railroads organized in nine
locally managed operating regions with 8,000 employees serving
3,000 customers.
- G&W's seven North American regions
serve 41 U.S. states and four Canadian provinces and include 115
short line and regional freight railroads with more than 13,000
track-miles.
- G&W's Australia Region serves New
South Wales, the Northern Territory and South Australia and
operates the 1,400-mile Tarcoola-to-Darwin rail line. The Australia
Region is 51.1% owned by G&W and 48.9% owned by a consortium of
funds and clients managed by Macquarie Infrastructure and Real
Assets.
- G&W's U.K./Europe Region includes
the U.K.'s largest rail maritime intermodal operator and
second-largest freight rail provider, as well as regional services
in Continental Europe.
G&W subsidiaries and joint ventures also provide rail
service at more than 40 major ports, rail-ferry service between the
U.S. Southeast and Mexico, transload services, contract coal
loading, and industrial railcar switching and repair.
From time to time, we may use our website as a channel of
distribution of material company information. Financial and other
material information regarding G&W is routinely posted on and
accessible at www.gwrr.com/investors. In addition, you may
automatically receive email alerts and other information about us
by enrolling your email address in the "Email Alerts" section of
www.gwrr.com/investors. The information contained on or connected
to our Internet website is not deemed to be incorporated by
reference in this press release or filed with the United States
Securities and Exchange Commission.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains forward-looking statements regarding
future events and the future performance of Genesee & Wyoming
Inc. that are based on current expectations, estimates and
projections about our industry, management’s beliefs and
assumptions made by management. Words such as “anticipates,”
“intends,” “plans,” “believes,” “could,” “should,” “seeks,”
“expects,” “will,” “estimates,” “trends,” “outlook,” variations of
these words and similar expressions are intended to identify these
forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to forecast, including the
following: risks related to the operation of our railroads; severe
weather conditions and other natural occurrences, which could
result in shutdowns, derailments, railroad network and port
congestion or other substantial disruption of operations; customer
demand and changes in our operations or loss of important
customers; exposure to the credit risk of customers and
counterparties; changes in commodity prices; consummation and
integration of acquisitions; economic, political and industry
conditions, including employee strikes or work stoppages; retention
and contract continuation; legislative and regulatory developments,
including changes in environmental and other laws and regulations
to which we or our customers are subject; increased competition in
relevant markets; funding needs and financing sources, including
our ability to obtain government funding for capital projects;
international complexities of operations, currency fluctuations,
finance, tax and decentralized management; challenges of managing
rapid growth, including retention and development of senior
leadership; unpredictability of fuel costs; susceptibility to and
outcome of various legal claims, lawsuits and arbitrations;
increase in, or volatility associated with, expenses related to
estimated claims, self-insured retention amounts and insurance
coverage limits; consummation of new business opportunities;
decrease in revenues and/or increase in costs and expenses;
susceptibility to the risks of doing business in foreign countries;
uncertainties arising from a referendum in which voters in the
United Kingdom (U.K.) approved an exit from the European Union
(E.U.), commonly referred to as Brexit; our ability to integrate
acquired businesses successfully or to realize the expected
synergies associated with acquisitions; risks associated with our
substantial indebtedness; failure to maintain satisfactory working
relationships with partners in Australia; failure to maintain an
effective system of internal control over financial reporting as
well as disclosure controls and procedures and other risks
including, but not limited to, those noted in our 2017 Annual
Report on Form 10-K and our Quarterly Reports on Form 10-Q under
“Risk Factors.” Therefore, actual results may differ materially
from those expressed or forecasted in any such forward-looking
statements. Forward-looking statements speak only as of the date of
this press release or as of the date they were made. G&W does
not undertake, and expressly disclaims, any duty to publicly update
any forward-looking statement, whether as a result of new
information, future events, or otherwise, except as required by
law.
1. Adjusted operating income, adjusted operating ratio,
adjusted net income attributable to G&W, adjusted diluted
earnings per common share (EPS), and the adjusted free cash flow
measures of adjusted net cash provided by operating activities
attributable to G&W, adjusted free cash flow attributable to
G&W and adjusted free cash flow attributable to G&W before
new business investments and grant funded projects are non-GAAP
financial measures and are not intended to replace financial
measures calculated in accordance with GAAP. The information
required by Item 10(e) of Regulation S-K under the Securities Act
of 1933 and the Securities Exchange Act of 1934 and Regulation G
under the Securities Exchange Act of 1934, including a
reconciliation to their most directly comparable financial measures
calculated in accordance with GAAP, is included in the tables
attached to this press release. 2. Foreign exchange impact
is calculated by comparing the prior period results translated from
local currency to U.S. dollars using current period exchange rates
to the prior period results in U.S. dollars as reported.
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 2018 AND 2017 (in thousands, except
per share amounts) (unaudited)
Three Months Ended March 31, 2018 2017
OPERATING REVENUES $ 574,661 $ 519,108 OPERATING EXPENSES 487,748
443,208 OPERATING INCOME 86,913 75,900 INTEREST
INCOME 498 227 INTEREST EXPENSE (25,236 ) (26,365 ) OTHER LOSS, NET
(2,040 ) (545 ) INCOME BEFORE INCOME TAXES 60,135 49,217 BENEFIT
FROM/(PROVISION FOR) INCOME TAXES 15,890 (21,928 ) NET
INCOME $ 76,025 $ 27,289 LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST 927 1,051 NET INCOME
ATTRIBUTABLE TO GENESEE & WYOMING INC. $ 75,098 $ 26,238
BASIC EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO GENESEE &WYOMING INC. COMMON STOCKHOLDERS:
$ 1.21 $ 0.43 WEIGHTED AVERAGE SHARES - BASIC 61,918
61,413
DILUTED EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO GENESEE &WYOMING INC. COMMON STOCKHOLDERS:
$ 1.19 $ 0.42 WEIGHTED AVERAGE SHARES - DILUTED
62,887 62,353
GENESEE & WYOMING
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS
OF MARCH 31, 2018 AND DECEMBER 31, 2017 (in thousands)
(unaudited) March
31, December 31, 2018 2017 ASSETS CURRENT
ASSETS: Cash and cash equivalents $ 121,390 $ 80,472 Accounts
receivable, net 422,727 416,705 Materials and supplies 56,035
57,750 Prepaid expenses and other 52,968 34,606 Total
current assets 653,120 589,533 PROPERTY AND EQUIPMENT, net
4,640,824 4,656,921 GOODWILL 1,162,657 1,165,587 INTANGIBLE ASSETS,
net 1,562,007 1,567,038 DEFERRED INCOME TAX ASSETS, net 3,465 3,343
OTHER ASSETS 48,703 52,475 Total assets $ 8,070,776 $
8,034,897 LIABILITIES AND EQUITY CURRENT LIABILITIES: Current
portion of long-term debt $ 50,952 $ 27,853 Accounts payable
251,875 253,993 Accrued expenses 157,958 185,935 Total
current liabilities 460,785 467,781 LONG-TERM DEBT, less
current portion 2,341,563 2,303,442 DEFERRED INCOME TAX
LIABILITIES, net 852,731 873,194 DEFERRED ITEMS - grants from
outside parties 321,420 321,592 OTHER LONG-TERM LIABILITIES 170,901
172,796 TOTAL EQUITY 3,923,376 3,896,092 Total liabilities
and equity $ 8,070,776 $ 8,034,897
GENESEE
& WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND
2017 (in thousands) (unaudited)
Three Months Ended March 31, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 76,025 $ 27,289 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
65,990 60,774 Stock-based compensation 4,052 4,213 Deferred income
taxes (24,148 ) 13,572 Net gain on sale and impairment of assets
(1,036 ) (427 ) Changes in assets and liabilities which
provided/(used) cash, net of effect of acquisitions: Accounts
receivable, net (6,299 ) 6,524 Materials and supplies 2,593 (2,140
) Prepaid expenses and other (7,025 ) (2,226 ) Accounts payable and
accrued expenses (12,381 ) (29,330 ) Other assets and liabilities,
net 3,588 6,767 Net cash provided by operating
activities 101,359 85,016 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of property and equipment (58,222 ) (34,738 )
Grant proceeds from outside parties 5,934 4,771
Net cash provided by acquisitions
— 2,935 Insurance proceeds for the replacement of assets 1,600
1,406 Proceeds from disposition of property and equipment 1,423
928 Net cash used in investing activities (49,265 )
(24,698 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments
on revolving line-of-credit, long-term debt and capital leases
(121,850 ) (167,730 ) Proceeds from revolving line-of-credit and
long-term borrowings 176,840 112,294 Common share repurchases
(57,376 ) — Installment payments on Freightliner deferred
consideration (6,255 ) — Other financing related activities, net
(1,973 ) (814 ) Net cash used in financing activities (10,614 )
(56,250 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS (562 ) 1,878 INCREASE IN CASH AND CASH
EQUIVALENTS 40,918 5,946 CASH AND CASH EQUIVALENTS, beginning of
period 80,472 32,319 CASH AND CASH EQUIVALENTS, end
of period $ 121,390 $ 38,265
GENESEE
& WYOMING INC. AND SUBSIDIARIES SELECTED CONSOLIDATED
FINANCIAL INFORMATION (dollars in thousands)
(unaudited) Three
Months Ended March 31, 2018 2017 Amount
% ofRevenue
Amount
% ofRevenue
Operating
revenues:
Freight revenues $ 399,639 69.5% $ 377,745 72.8% Freight-related
revenues 141,197 24.6% 119,337 23.0% All other revenues 33,825
5.9% 22,026 4.2% Total operating revenues $ 574,661
100.0% $ 519,108 100.0%
Operating
expenses:
Labor and benefits(a) $ 183,716 32.0% $ 167,138 32.2% Equipment
rents 34,087 5.9% 33,871 6.5% Purchased services(b) 64,102 11.2%
51,001 9.8% Depreciation and amortization 65,990 11.5% 60,774 11.7%
Diesel fuel used in train operations 46,151 8.0% 38,153 7.4%
Electricity used in train operations 2,234 0.4% 3,173 0.6%
Casualties and insurance 9,966 1.7% 12,543 2.4% Materials 32,469
5.7% 20,546 4.0% Trackage rights 20,978 3.7% 22,223 4.3% Net gain
on sale and impairment of assets (1,036 ) (0.2)% (427 ) (0.1)%
Restructuring costs 283 —% 3,755 0.7% Other expenses(c) 28,808
5.0% 30,458 5.9% Total operating expenses $ 487,748
84.9% $ 443,208 85.4% (a)
Includes $0.1 million and $2.3 million of
corporate development and related costs for the three months ended
March 31, 2018 and 2017, respectively.
(b)
Includes $0.1 million of corporate
development and related costs for the three months ended March 31,
2017.
(c)
Includes $3.0 million of corporate
development and related costs for the three months ended March 31,
2017.
GENESEE & WYOMING INC. AND SUBSIDIARIES
NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION (dollars in thousands) (unaudited)
Three Months Ended March
31, 2018 2017 Amount
% ofRevenue
Amount
% ofRevenue
Operating
revenues:
Freight revenues $ 245,417 75.4% $ 238,281 74.6% Freight-related
revenues 63,832 19.6% 65,345 20.4% All other revenues 16,381
5.0% 15,850 5.0% Total operating revenues $ 325,630
100.0% $ 319,476 100.0%
Operating
expenses:
Labor and benefits(a) $ 111,917 34.4% $ 110,158 34.5% Equipment
rents 12,500 3.8% 13,990 4.4% Purchased services(b) 13,930 4.3%
14,673 4.6% Depreciation and amortization 40,631 12.5% 38,867 12.1%
Diesel fuel used in train operations 25,480 7.8% 20,558 6.4%
Casualties and insurance 6,457 2.0% 10,233 3.2% Materials 13,190
4.0% 13,463 4.2% Trackage rights 9,112 2.8% 9,518 3.0% Net gain on
sale and impairment of assets (912 ) (0.3)% (432 ) (0.1)%
Restructuring costs 34 —% 54 —% Other expenses(c) 20,131
6.2% 20,731 6.5% Total operating expenses $ 252,470
77.5% $ 251,813 78.8% Operating income $ 73,160 $
67,663
Expenditures for additions to property
& equipment, net of grants from outside parties
$ 38,563 $ 24,215 (a)
Includes $0.1 million and $2.3 million of
corporate development and related costs for the three months ended
March 31, 2018 and 2017, respectively.
(b)
Includes $0.1 million of corporate
development and related costs for the three months ended March 31,
2017.
(c)
Includes $0.1 million and $2.9 million of
corporate development and related costs for the three months ended
March 31, 2018 and 2017, respectively.
GENESEE & WYOMING INC. AND SUBSIDIARIES
AUSTRALIAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION (dollars in thousands) (unaudited)
Three Months Ended March
31, 2018 2017 Amount
% ofRevenue
Amount
% ofRevenue
Operating
revenues:
Freight revenues $ 63,011 84.2% $ 60,874 82.4% Freight-related
revenues 10,563 14.1% 11,709 15.8% All other revenues 1,260
1.7% 1,324 1.8% Total operating revenues $ 74,834
100.0% $ 73,907 100.0%
Operating
expenses:
Labor and benefits $ 19,032 25.4% $ 17,054 23.1% Equipment rents
1,315 1.8% 1,401 1.9% Purchased services 6,389 8.5% 6,212 8.4%
Depreciation and amortization 16,007 21.4% 15,192 20.6% Diesel fuel
used in train operations 7,310 9.8% 6,590 8.9% Casualties and
insurance 1,781 2.4% 1,473 2.0% Materials 2,961 4.0% 2,714 3.6%
Trackage rights 2,214 3.0% 3,408 4.6% Net gain on sale and
impairment of assets (46 ) (0.1)% (2 ) —% Restructuring costs — —%
338 0.5% Other expenses(a) 1,895 2.5% 2,368 3.2%
Total operating expenses $ 58,858 78.7% $ 56,748
76.8% Operating income $ 15,976 $ 17,159 Expenditures
for additions to property & equipment, net of grants from
outside parties $ 5,262 $ 1,462 (a)
Includes $0.1 million of corporate
development and related costs for the three months ended March 31,
2017.
GENESEE & WYOMING INC. AND SUBSIDIARIES
U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION (dollars in thousands) (unaudited)
Three Months Ended March
31, 2018 2017 Amount
% ofRevenue
Amount
% ofRevenue
Operating
revenues:
Freight revenues $ 91,211 52.4% $ 78,590 62.5% Freight-related
revenues 66,802 38.3% 42,283 33.6% All other revenues 16,184
9.3% 4,852 3.9% Total operating revenues $ 174,197
100.0% $ 125,725 100.0%
Operating
expenses:
Labor and benefits $ 52,767 30.3% $ 39,926 31.7% Equipment rents
20,272 11.6% 18,480 14.7% Purchased services 43,783 25.1% 30,116
24.0% Depreciation and amortization 9,352 5.4% 6,715 5.3% Diesel
fuel used in train operations 13,361 7.7% 11,005 8.8% Electricity
used in train operations 2,234 1.3% 3,173 2.5% Casualties and
insurance 1,728 1.0% 837 0.7% Materials 16,318 9.4% 4,369 3.5%
Trackage rights 9,652 5.5% 9,297 7.4% Net (gain)/loss on sale and
impairment of assets (78 ) —% 7 —% Restructuring costs 249 0.1%
3,363 2.7% Other expenses(a) 6,782 3.9% 7,359 5.8%
Total operating expenses $ 176,420 101.3% $ 134,647
107.1% Operating loss $ (2,223 ) $ (8,922 ) Expenditures for
additions to property & equipment, net of grants from outside
parties $ 8,463 $ 4,290 (a)
Includes a $0.1 million reduction to
corporate development and related costs for the three months ended
March 31, 2018. Includes an accounts receivable reserve of $1.5
million associated with a customer entering into bankruptcy for the
three months ended March 31, 2017.
GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP (dollars in thousands,
except average revenues per carload) (unaudited)
Three Months Ended March 31, 2018 North
American Operations Australian Operations
U.K./European Operations Total Operations
Commodity Group
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
Agricultural Products $ 31,372 53,764 $ 584 $ 5,483 13,112 $ 418 $
1,235 966 $ 1,278 $ 38,090 67,842 $ 561 Autos & Auto Parts
5,367 8,716 616 — — — — — — 5,367 8,716 616 Chemicals &
Plastics 36,217 43,342 836 — — — — — — 36,217 43,342 836 Coal &
Coke 19,945 61,966 322 31,579 96,856 326 3,476 5,895 590 55,000
164,717 334 Food & Kindred Products 8,350 15,183 550 — — — — —
— 8,350 15,183 550 Intermodal 309 3,084 100 15,973 12,754 1,252
67,321 210,780 319 83,603 226,618 369 Lumber & Forest Products
22,439 36,250 619 — — — — — — 22,439 36,250 619 Metallic Ores 3,573
4,396 813 7,731 4,871 1,587 — — — 11,304 9,267 1,220 Metals 28,394
35,238 806 — — — — — — 28,394 35,238 806 Minerals & Stone
30,518 47,696 640 2,094 15,863 132 19,179 44,144 434 51,791 107,703
481 Petroleum Products 18,483 25,660 720 151 59 2,559 — — — 18,634
25,719 725 Pulp & Paper 28,871 41,357 698 — — — — — — 28,871
41,357 698 Waste 5,888 11,981 491 — — — — — — 5,888 11,981 491
Other 5,691 17,380 327 — — — — —
— 5,691 17,380 327 Totals $ 245,417
406,013 $ 604 $ 63,011 143,515 $ 439 $ 91,211
261,785 $ 348 $ 399,639 811,313 $ 493
Three Months Ended March 31,
2017
North American Operations
Australian Operations
U.K./European Operations
Total Operations
Commodity Group
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
FreightRevenues
Carloads*
AverageRevenuesPerCarload
Agricultural Products $ 32,978 57,251 $ 576 $ 5,746 15,266 $ 376 $
1,739 1,513 $ 1,149 $ 40,463 74,030 $ 547 Autos & Auto Parts
5,210 8,793 593 — — — — — — 5,210 8,793 593 Chemicals &
Plastics 37,515 46,008 815 — — — — — — 37,515 46,008 815 Coal &
Coke 21,733 63,299 343 29,521 97,684 302 3,400 10,561 322 54,654
171,544 319 Food & Kindred Products 8,274 14,870 556 — — — — —
— 8,274 14,870 556 Intermodal 177 1,801 98 15,867 13,578 1,169
61,996 223,813 277 78,040 239,192 326 Lumber & Forest Products
20,376 33,555 607 — — — — — — 20,376 33,555 607 Metallic Ores 3,896
4,924 791 7,631 6,906 1,105 — — — 11,527 11,830 974 Metals 26,594
35,798 743 — — — — — — 26,594 35,798 743 Minerals & Stone
28,115 47,045 598 1,979 15,928 124 11,455 32,929 348 41,549 95,902
433 Petroleum Products 18,427 25,137 733 130 54 2,407 — — — 18,557
25,191 737 Pulp & Paper 25,478 38,774 657 — — — — — — 25,478
38,774 657 Waste 5,194 10,744 483 — — — — — — 5,194 10,744 483
Other 4,314 15,017 287 — — — — —
— 4,314 15,017 287 Totals $ 238,281
403,016 $ 591 $ 60,874 149,416 $ 407 $ 78,590
268,816 $ 292 $ 377,745 821,248 $ 460
* Represents physical railcars and the
estimated railcar equivalents of commodities transported by metric
ton or other measure, as well as intermodal units.
Non-GAAP Financial Measures
This earnings release contains references to adjusted operating
income, adjusted operating ratio, adjusted operating expenses,
adjusted net income attributable to G&W, adjusted diluted
earnings per common share (EPS) and the adjusted free cash flow
measures of adjusted net cash provided by operating activities
attributable to G&W, adjusted free cash flow attributable to
G&W and adjusted free cash flow attributable to G&W before
new business investments and grant funded projects, which are
“non-GAAP financial measures” as this term is defined in Item 10(e)
of Regulation S-K under the Securities Act of 1933 and the
Securities Exchange Act of 1934 and Regulation G under the
Securities Exchange Act of 1934. In accordance with these rules,
G&W has reconciled these non-GAAP financial measures to their
most directly comparable U.S. GAAP measures.
Management views these non-GAAP financial measures as important
measures of G&W’s operating performance or, in the case of the
adjusted free cash flow measures, a useful indicator of cash flow
that may be available for discretionary use by G&W. Management
also views these non-GAAP financial measures as a way to assess
comparability between periods. Key limitations of the adjusted free
cash flow measures include the assumptions that G&W will be
able to refinance its existing debt when it matures and meet other
cash flow obligations from financing activities, such as principal
payments on debt.
These non-GAAP financial measures are not intended to represent,
and should not be considered more meaningful than, or as an
alternative to, their most directly comparable GAAP measures. These
non-GAAP financial measures may be different from similarly-titled
non-GAAP financial measures used by other companies.
The following tables set forth reconciliations of each of these
non-GAAP financial measures to their most directly comparable GAAP
measure ($ in millions, except per share amounts).
Reconciliations of Non-GAAP Financial
Measures
Adjusted Operating Income and Adjusted Operating
Ratio
Three Months Ended March 31,
2018
NorthAmericanOperations
AustralianOperations
U.K./EuropeanOperations
Total Operations
Operating revenues $ 325.6 $ 74.8 $ 174.2 $ 574.7 Operating
expenses 252.5 58.9 176.4 487.7
Operating income/(loss)(a)
$ 73.2 $ 16.0 $ (2.2 ) $ 86.9 Operating ratio
(b) 77.5 % 78.7 % 101.3 % 84.9 % Operating expenses $ 252.5
$ 58.9 $ 176.4 $ 487.7 Corporate development and related costs (0.2
) — 0.1 (0.2 ) Restructuring costs — — (0.2 ) (0.3 )
Adjusted operating expenses $ 252.2 $ 58.8 $ 176.2
$ 487.3
Adjusted operating income/(loss)
$ 73.4 $ 16.0 $ (2.0 ) $ 87.4 Adjusted
operating ratio 77.5 % 78.6 % 101.2 % 84.8 % (a) Operating
income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by
operating revenues.
Three Months
Ended March 31, 2017
NorthAmericanOperations
AustralianOperations
U.K./EuropeanOperations
Total Operations
Operating revenues $ 319.5 $ 73.9 $ 125.7 $ 519.1 Operating
expenses 251.8 56.7 134.6 443.2
Operating income/(loss) (a)
$ 67.7 $ 17.2 $ (8.9 ) $ 75.9 Operating ratio
(b) 78.8 % 76.8 % 107.1 % 85.4 % Operating expenses $ 251.8
$ 56.7 $ 134.6 $ 443.2 Corporate development and related costs (5.2
) (0.1 ) — (5.4 ) Restructuring costs (0.1 ) (0.3 ) (3.4 ) (3.8 )
Adjusted operating expenses $ 246.5 $ 56.3 $ 131.3
$ 434.1
Adjusted operating income/(loss)
$ 73.0 $ 17.6 $ (5.5 ) $ 85.1 Adjusted
operating ratio 77.2 % 76.1 % 104.4 % 83.6 % (a) Operating
income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by
operating revenues.
Adjusted Net Income and Adjusted Diluted EPS
Three Months Ended March 31, 2018
IncomeBeforeIncome
Taxes
Provision forIncome
Taxes
Net IncomeAttributableto
G&W
Diluted EPS As reported $ 60.1 $ 15.9 $ 75.1 $
1.19 Add back certain items: Corporate development and related
costs 0.2 — 0.1 — Restructuring costs 0.3 — 0.2 — 2017 Short Line
Tax Credit — (31.6 ) (31.6 ) (0.50 ) As adjusted $ 60.6
$ (15.8 ) $ 43.8 $ 0.70
Three Months
Ended March 31, 2017
IncomeBeforeIncome
Taxes
Provision forIncome
Taxes
Net IncomeAttributableto
G&W
Diluted EPS As reported $ 49.2 $ (21.9 ) $
26.2
$ 0.42 Add back certain items: Corporate development and related
costs 5.4 (2.2 ) 3.2 0.05 Restructuring costs 3.8 (0.2 ) 3.5
0.06 As adjusted $ 58.4 $ (24.2 ) $ 32.9 $
0.53
Adjusted Free Cash Flow Measures
Three Months Ended March 31,
2018 2017 Net cash provided by operating
activities $ 101.4 $ 85.0 Allocation of adjusted cash flow to
noncontrolling interest(a) (9.0 ) (6.4 ) Adjusted net cash provided
by operating activities attributable to G&W $ 92.4 $ 78.6 Core
capital expenditures(b) (41.4 ) (28.9 )
Adjusted free cash flow attributable to
G&W before new businessinvestments and grant funded
projects
$ 51.0 $ 49.7
New business investments(b)
(7.5 ) (0.1 ) Grant funded projects, net of proceeds received from
outside parties(c) (0.4 ) 1.4 Adjusted free cash flow
attributable to G&W $ 43.1 $ 51.0 (a)
Allocation of adjusted cash flow to
noncontrolling interest (Macquarie Infrastructure and Real Assets'
(MIRA's) 48.9% equity ownership of G&W Australia Holdings LP
(GWA) since December 1, 2016) is calculated as 48.9% of the total
of (i) cash flow provided by operating activities of G&W’s
Australian Operations, less (ii) net purchases of property and
equipment of G&W’s Australian Operations. The timing and amount
of actual distributions, if any, from GWA to G&W and MIRA made
in any given period will vary and could differ materially from the
amounts presented. There were no such distributions made during the
three months ended March 31, 2018 and 2017. G&W expressly
disclaims any direct correlation between the allocation of adjusted
cash flow to noncontrolling interest and actual distributions made
in any given period.
(b) See breakout below.
Three Months Ended
March 31, 2018
CoreCapital(c)
New BusinessInvestments
Grant
FundedProjects(d)
Total Purchase of property and equipment $ (44.4 ) $
(7.5 ) $ (6.3 ) $ (58.2 ) Grant proceeds from outside parties — —
5.9 5.9 Insurance proceeds for the replacement of assets 1.6 — —
1.6 Proceeds from disposition of property and equipment 1.4
— — 1.4 Purchase of property and equipment,
net $ (41.4 ) $ (7.5 ) $ (0.4 ) $ (49.3 )
Three Months
Ended March 31, 2017
CoreCapital(c)
New BusinessInvestments
Grant
FundedProjects(d)
Total Purchase of property and equipment $ (31.3 ) $ (0.1 )
$ (3.3 ) $ (34.7 ) Grant proceeds from outside parties — — 4.8 4.8
Insurance proceeds for the replacement of assets 1.4 — — 1.4
Proceeds from disposition of property and equipment 0.9 —
— 0.9 Purchase of property and equipment, net
$ (28.9 ) $ (0.1 ) $ 1.4 $ (27.6 ) (c)
Core capital expenditures represent
purchases of property and equipment as presented on the Statement
of Cash Flows less grant proceeds from outside parties, insurance
proceeds for the replacement of assets and proceeds from
disposition of property and equipment, each of which as presented
on the Statement of Cash Flows, less new business investments and
grant funded projects.
(d)
Grant funded projects represent purchases
of property and equipment for projects partially or entirely funded
by outside parties, net of grant proceeds from outside parties as
presented on the Statement of Cash Flows.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180501005596/en/
G&W Corporate CommunicationsMichael Williams,
1-203-202-8900mwilliams@gwrr.com
Genesee and Wyoming (NYSE:GWR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Genesee and Wyoming (NYSE:GWR)
Historical Stock Chart
From Jul 2023 to Jul 2024