Genesee & Wyoming Inc. (G&W) (NYSE:GWR)
First Quarter 2019 Consolidated Highlights Compared with
First Quarter 2018
- 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.”
First Quarter Segment Highlights
- North America: Operating revenues from
G&W's North American Operations increased 2.1% to $332.4
million from $325.6 million. Revenue for the first quarter of 2018
included $5.5 million of revenues from leased railroads in Canada,
for which the leases expired at the end of 2018. Reported operating
income from G&W's North American Operations, which was
negatively impacted by severe winter weather in the United States
and Canada and flooding in the Midwestern United States, decreased
5.3% to $69.3 million; Adjusted operating income from G&W's
North American Operations decreased 4.2% to $70.3 million.(1)
- Australia: Operating revenues from
G&W's 51.1% owned Australian Operations decreased 13.0% to
$65.1 million from $74.8 million. Reported operating income from
G&W's Australian Operations decreased 21.7% to $12.5 million;
Adjusted operating income from G&W's Australian Operations
decreased 11.9% to $14.1 million. Operating income from G&W's
Australian Operations were negatively impacted by $1.5 million from
foreign currency depreciation and $1.5 million from drought
conditions in South Australia and New South Wales, which were
partially offset by a decrease in expenses.(1)
- U.K./Europe: Operating revenues from
G&W's U.K./European Operations decreased 7.8% to $160.5 million
from $174.2 million. Revenues for the first quarter of 2018
included $14.7 million of revenues from G&W's former
Continental Europe intermodal business, ERS Railways B.V. (ERS),
which was sold in June 2018. Reported operating loss from G&W's
U.K./European Operations remained relatively flat at $2.1 million.
Adjusted operating income from G&W's U.K./European Operations
increased to $3.4 million from an adjusted operating loss of $2.0
million in 2018.(1)
Financial Results
G&W's operating revenues decreased $16.6 million, or 2.9%,
to $558.1 million in the first quarter of 2019, compared with
$574.7 million in the first quarter of 2018. G&W's operating
income in the first quarter of 2019 was $79.7 million, compared
with $86.9 million in the first quarter of 2018. Excluding certain
items affecting comparability between periods discussed below,
G&W's adjusted operating income in the first quarter of 2019
was $87.8 million, compared with $87.4 million in the first quarter
of 2018.(1)
G&W's provision for income taxes in the first quarter of
2019 was $14.3 million, while the benefit from income taxes for the
first quarter of 2018 was $15.9 million. G&W's effective tax
rate for the first quarter of 2019 was 26.9%, compared with 26.2%
in the first quarter of 2018, excluding the $31.6 million income
tax benefit from the retroactive extension of the of the U.S. Short
Line Tax Credit for fiscal year 2017 that was enacted in February
2018.
Reported net income attributable to G&W in the first quarter
of 2019 was $38.7 million, compared with reported net income
attributable to G&W of $75.1 million in the first quarter of
2018. 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 2019 was
$44.4 million, compared with $43.8 million in the first quarter of
2018.(1)
G&W's reported diluted EPS in the first quarter of 2019 were
$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.
G&W's adjusted diluted EPS in the first quarter of 2019 were
$0.78 with 57.1 million weighted average shares outstanding,
compared with adjusted diluted EPS in the first quarter of 2018 of
$0.70 with 62.9 million weighted average shares outstanding.(1)
Items Affecting Comparability
In the first quarter of 2019 and 2018, 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 Income
Taxes Impact
After-Tax Net Income/(Loss)
Attributable to G&W Impact
Diluted EPS Impact
Three Months Ended
March 31, 2019
Corporate development and related costs $ (0.4 ) $ (0.3 ) $ (0.01 )
Restructuring and related costs $ (7.6 ) $ (5.4 ) $ (0.10 )
Three Months Ended
March 31, 2018
Corporate development and related costs $ (0.2 ) $ (0.1 ) $ —
Restructuring and related costs $ (0.3 ) $ (0.2 ) $ — 2017 Short
Line Tax Credit $ — $ 31.6 $ 0.50
In the first quarter of 2019, G&W's results included
restructuring and related costs of $7.6 million, primarily driven
by our optimization activities in the U.K., and corporate
development and related costs of $0.4 million.
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.
First Quarter Results by Segment
Operating revenues from G&W's North American Operations
increased $6.8 million, or 2.1%, to $332.4 million in the first
quarter of 2019, compared with $325.6 million in the first quarter
of 2018. Excluding $5.5 million of revenues from lease expirations
in Canada for the first quarter of 2018 and a $1.1 million decrease
due to the impact of foreign currency depreciation, North American
Operations same railroad revenues increased $13.3 million, or 4.2%,
primarily due to increases in freight and freight-related
revenues.
G&W's North American Operations were negatively impacted by
extreme winter weather in the United States and Canada and flooding
in the Midwestern United States. Operating income from G&W's
North American Operations was $69.3 million in the first quarter of
2019, compared with $73.2 million in the first quarter of 2018. The
operating ratio for North American Operations was 79.1% in the
first quarter of 2019, compared with 77.5% in the first quarter of
2018. Adjusted operating income from G&W's North American
Operations in the first quarter of 2019 was $70.3 million, compared
with $73.4 million in the first quarter of 2018. The adjusted
operating ratio for North American Operations was 78.9% in the
first quarter of 2019, compared with an adjusted operating ratio of
77.5% in the first quarter of 2018.(1)
Operating revenues from G&W's Australian Operations
decreased $9.7 million, or 13.0%, to $65.1 million in the first
quarter of 2019, compared with $74.8 million in the first quarter
of 2018. Excluding a $7.0 million decrease due to the impact of
foreign currency depreciation, Australian Operations revenues
decreased $2.7 million, or 4.0%, primarily due to decreases in
drought impacted agricultural products freight revenues and
freight-related revenues.(2)
G&W's Australian Operations had operating income of $12.5
million in the first quarter of 2019, compared with $16.0 million
in the first quarter of 2018. The operating ratio for Australian
Operations was 80.8% in the first quarter of 2019, compared with
78.7% in the first quarter of 2018. Adjusted operating income from
G&W's Australian Operations was $14.1 million in the first
quarter of 2019, compared with $16.0 million in the first quarter
of 2018. The adjusted operating ratio for Australian Operations was
78.4% in the first quarter of 2019, compared with 78.6% in the
first quarter of 2018. Operating income from G&W's Australian
Operations was negatively impacted by $1.5 million from foreign
currency depreciation and $1.5 million from drought conditions in
South Australia and New South Wales, which were partially offset by
a decrease in expenses.(1)
Operating revenues from G&W's U.K./European Operations
decreased $13.7 million, or 7.8%, to $160.5 million in the first
quarter of 2019, compared with $174.2 million in the first quarter
of 2018. Excluding $14.7 million of revenues from G&W's
divested ERS operations for the first quarter of 2018 and an $11.0
million decrease due to the impact of foreign currency
depreciation, U.K./European Operations same railroad revenues
increased $12.1 million, or 8.1%, primarily due to increases
in U.K. intermodal freight-related and freight revenues.(2)
G&W's U.K./European Operations had an operating loss of $2.1
million in the first quarter of 2019, compared with and operating
loss of $2.2 million in the first quarter of 2018, which included
operating income of $0.5 million from ERS. The operating ratio for
G&W's U.K./European Operations of 101.3% in the first quarter
of 2019 remained unchanged compared with the first quarter of 2018.
Adjusted operating income from G&W's U.K./European Operations
was $3.4 million in the first quarter of 2019, compared with an
adjusted operating loss of $2.0 million in the first quarter of
2018, which included operating income of $0.5 million from ERS. The
adjusted operating ratio for U.K./European Operations was 97.9% in
the first quarter of 2019, compared with 101.2% in the first
quarter of 2018.(1)
Adjusted Free Cash Flow Measures (1)
Adjusted free cash flow measures for the three months ended
March 31, 2019 and 2018 were as follows (in millions):
Three Months Ended March 31,
2019 2018 Net cash provided by
operating activities $ 103.4 $ 101.4 Allocation of adjusted cash
flow to noncontrolling interest(a) (7.1 ) (9.0 ) Adjusted net cash
provided by operating activities attributable to G&W $ 96.3 $
92.4 Core capital expenditures(b) (59.5 ) (41.4 ) Adjusted free
cash flow attributable to G&W before new business investments
and grant funded projects $ 36.8 $ 51.0 New business investments
(1.6 ) (7.5 ) Grant funded projects, net of proceeds received from
outside parties(c) 2.4 (0.4 ) Adjusted free cash flow
attributable to G&W $ 37.6 $ 43.1 (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. No such distributions were made for the three months
ended March 31, 2019 and 2018. 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 2019, G&W repurchased 64,860
shares of Class A Common Stock for $4.8 million, which resulted in
a reduction of 59,095 shares in our weighted average diluted shares
outstanding for the first quarter of 2019. 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 reduction of 51,106 shares
in our weighted average diluted shares outstanding for the first
quarter of 2018.
Conference Call and Webcast Details
As previously announced, G&W's conference call to discuss
financial results for the first quarter of 2019 will be held on
Tuesday, April 30, 2019, at 11 a.m. EDT. The dial-in number
for the teleconference in the U.S. is (800) 230-1085; outside the
U.S., the dial-in number is (612) 288-0329, 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 April 30,
2019, by dialing (800) 475-6701 (or outside the U.S., dialing
320-365-3844). The access code is 458667.
About G&W
G&W owns or leases 120 freight railroads organized in eight
locally managed operating regions with 8,000 employees serving
3,000 customers.
- G&W's six North American regions
serve 41 U.S. states and four Canadian provinces and include 114
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 2018 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, 2019 AND 2018 (in thousands, except
per share amounts) (unaudited)
Three Months Ended March 31,
2019 2018 OPERATING REVENUES $ 558,089 $ 574,661
OPERATING EXPENSES 478,379 487,748 OPERATING INCOME
79,710 86,913 INTEREST INCOME 547 498 INTEREST EXPENSE (27,610 )
(25,236 ) OTHER INCOME/(LOSS), NET 419 (2,040 ) INCOME
BEFORE INCOME TAXES 53,066 60,135 (PROVISION FOR)/BENEFIT FROM
INCOME TAXES (14,260 ) 15,890 NET INCOME $ 38,806 $ 76,025
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 100
927 NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. $
38,706 $ 75,098 BASIC EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $
0.69 $ 1.21 WEIGHTED AVERAGE SHARES - BASIC 56,368
61,918 DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE
TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $ 0.68 $
1.19 WEIGHTED AVERAGE SHARES - DILUTED 57,132 62,887
GENESEE & WYOMING INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH
31, 2019 AND DECEMBER 31, 2018 (in thousands)
(unaudited) March
31, December 31, 2019 2018 ASSETS CURRENT
ASSETS: Cash and cash equivalents $ 70,108 $ 90,387 Accounts
receivable, net 439,527 426,305 Materials and supplies 59,368
56,716 Prepaid expenses and other 66,125 54,185 Total
current assets 635,128 627,593 PROPERTY AND EQUIPMENT, net
4,643,936 4,613,014 GOODWILL 1,120,212 1,115,849 INTANGIBLE ASSETS,
net 1,429,602 1,430,197 DEFERRED INCOME TAX ASSETS, net 5,261 4,616
OTHER ASSETS, net(a) 547,669 77,192 Total assets $ 8,381,808
$ 7,868,461 LIABILITIES AND EQUITY CURRENT LIABILITIES:
Current portion of long-term debt $ 26,522 $ 28,303 Accounts
payable 282,917 288,070 Accrued expenses(a) 232,731 165,280
Total current liabilities 542,170 481,653 LONG-TERM DEBT,
less current portion 2,391,695 2,425,235 DEFERRED INCOME TAX
LIABILITIES, net 886,183 877,721 DEFERRED ITEMS - grants from
outside parties 328,347 326,520 OTHER LONG-TERM LIABILITIES(a)
576,133 127,280 TOTAL EQUITY 3,657,280 3,630,052 Total
liabilities and equity $ 8,381,808 $ 7,868,461 (a) On
January 1, 2019, G&W adopted Accounting Standards Update (ASU)
2016-02, Leases. The new standard requires lessees to recognize
operating leases on their balance sheet as a right-of-use asset
with a corresponding lease liability. This resulted in
approximately $495 million of assets and a corresponding amount of
liabilities being recognized on G&W's balance sheet as of March
31, 2019. Capital leases will continue to be recognized on the
balance sheet but are now referred to as "finance" leases, as
required by the new standard.
GENESEE &
WYOMING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND
2018 (in thousands) (unaudited)
Three Months Ended March 31, 2019
2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 38,806 $ 76,025
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 62,626 65,990 Stock-based
compensation 3,880 4,052 Deferred income taxes 9,312 (24,148 ) Net
gain on sale and impairment of assets (1,490 ) (1,036 ) Changes in
assets and liabilities which provided/(used) cash: Accounts
receivable, net 4,393 (6,299 ) Materials and supplies (1,972 )
2,593 Prepaid expenses and other 819 (7,025 ) Accounts payable and
accrued expenses (21,062 ) (12,381 ) Other assets and liabilities,
net 8,077 3,588 Net cash provided by operating
activities 103,389 101,359 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of property and equipment (67,788 ) (58,222 )
Grant proceeds from outside parties 6,495 5,934 Insurance proceeds
for the replacement of assets — 1,600 Proceeds from disposition of
property and equipment 2,594 1,423 Net cash used in
investing activities (58,699 ) (49,265 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Principal payments on revolving line-of-credit,
long-term debt and finance leases (155,045 ) (121,850 ) Proceeds
from revolving line-of-credit and long-term borrowings 95,951
176,840 Common share repurchases (4,796 ) (57,376 ) Installment
payments on Freightliner deferred consideration — (6,255 ) Other
financing related activities, net (1,989 ) (1,973 ) Net cash used
in financing activities (65,879 ) (10,614 ) EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS 910 (562 )
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (20,279 ) 40,918
CASH AND CASH EQUIVALENTS, beginning of period 90,387 80,472
CASH AND CASH EQUIVALENTS, end of period $ 70,108 $
121,390
GENESEE & WYOMING INC. AND
SUBSIDIARIES SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands) (unaudited)
Three Months
Ended March 31, 2019 2018 Amount
% of Revenue
Amount
% of Revenue
Operating
revenues:
Freight revenues $ 388,789 69.7 % $ 399,639 69.5 % Freight-related
revenues 136,262 24.4 % 141,197 24.6 % All other revenues 33,038
5.9 % 33,825 5.9 % Total operating revenues $ 558,089
100.0 % $ 574,661 100.0 %
Operating
expenses:
Labor and benefits(a) $ 184,308 33.0 % $ 183,716 32.0 % Equipment
rents 32,233 5.8 % 34,087 5.9 % Purchased services 51,248 9.2 %
64,102 11.2 % Depreciation and amortization 62,626 11.2 % 65,990
11.5 % Diesel fuel used in train operations 44,637 8.0 % 46,151 8.0
% Electricity used in train operations 2,324 0.4 % 2,234 0.4 %
Casualties and insurance 11,372 2.0 % 9,966 1.7 % Materials 31,220
5.6 % 32,469 5.7 % Trackage rights 21,640 3.9 % 20,978 3.7 % Net
gain on sale and impairment of assets (1,490 ) (0.3 )% (1,036 )
(0.2 )% Restructuring and related costs 7,634 1.4 % 283 — % Other
expenses(b) 30,627 5.5 % 28,808 5.0 % Total operating
expenses $ 478,379 85.7 % $ 487,748 84.9 % (a)
Includes $0.1 million of corporate development and related costs
for both the three months ended March 31, 2019 and 2018. (b)
Includes $0.4 million and $0.1 million of corporate development and
related costs for the three months ended March 31, 2019 and 2018,
respectively.
GENESEE & WYOMING INC. AND
SUBSIDIARIES NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED
FINANCIAL INFORMATION (dollars in thousands)
(unaudited)
Three Months Ended March 31, 2019
2018 Amount
% of Revenue
Amount
% of Revenue
Operating
revenues:
Freight revenues $ 251,763 75.7 % $ 245,417 75.4 % Freight-related
revenues 64,476 19.4 % 63,832 19.6 % All other revenues 16,207
4.9 % 16,381 5.0 % Total operating revenues $ 332,446
100.0 % $ 325,630 100.0 %
Operating
expenses:
Labor and benefits(a) $ 117,352 35.3 % $ 111,917 34.4 % Equipment
rents 12,277 3.7 % 12,500 3.8 % Purchased services 16,295 4.9 %
13,930 4.3 % Depreciation and amortization 38,431 11.6 % 40,631
12.5 % Diesel fuel used in train operations 25,468 7.6 % 25,480 7.8
% Casualties and insurance 8,851 2.6 % 6,457 2.0 % Materials 13,165
3.9 % 13,190 4.0 % Trackage rights 11,189 3.4 % 9,112 2.8 % Net
gain on sale and impairment of assets (679 ) (0.2 )% (912 ) (0.3 )%
Restructuring and related costs 589 0.2 % 34 — % Other expenses(b)
20,193 6.1 % 20,131 6.2 % Total operating expenses $
263,131 79.1 % $ 252,470 77.5 % Operating income $
69,315 $ 73,160 Expenditures for additions to
property & equipment, net of grants from outside parties $
48,071 $ 38,563 (a) Includes $0.1 million of corporate
development and related costs for both the three months ended March
31, 2019 and 2018. (b) Includes $0.4 million and $0.1 million of
corporate and development and related costs for the three months
ended March 31, 2019 and 2018, respectively.
GENESEE & WYOMING INC. AND SUBSIDIARIES AUSTRALIAN
OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands) (unaudited)
Three Months Ended March 31,
2019 2018 Amount
% of Revenue
Amount
% of Revenue
Operating
revenues:
Freight revenues $ 55,819 85.7 % $ 63,011 84.2 % Freight-related
revenues 7,855 12.1 % 10,563 14.1 % All other revenues 1,433
2.2 % 1,260 1.7 % Total operating revenues $ 65,107
100.0 % $ 74,834 100.0 %
Operating
expenses:
Labor and benefits $ 16,278 25.0 % $ 19,032 25.4 % Equipment rents
1,057 1.6 % 1,315 1.8 % Purchased services 5,572 8.6 % 6,389 8.5 %
Depreciation and amortization 14,411 22.1 % 16,007 21.4 % Diesel
fuel used in train operations 6,203 9.5 % 7,310 9.8 % Casualties
and insurance 1,382 2.1 % 1,781 2.4 % Materials 2,798 4.3 % 2,961
4.0 % Trackage rights 1,366 2.1 % 2,214 3.0 % Net gain on sale and
impairment of assets (17 ) — % (46 ) (0.1 )% Restructuring and
related costs 1,549 2.4 % — — % Other expenses, net 2,005
3.1 % 1,895 2.5 % Total operating expenses $ 52,604
80.8 % $ 58,858 78.7 % Operating income $ 12,503 $
15,976 Expenditures for additions to property &
equipment, net of grants from outside parties $ 2,849 $ 5,262
GENESEE & WYOMING INC. AND SUBSIDIARIES
U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL
INFORMATION (dollars in thousands) (unaudited)
Three Months Ended March 31, 2019 2018
Amount
% of Revenue
Amount
% of Revenue
Operating
revenues:
Freight revenues $ 81,207 50.6 % $ 91,211 52.4 % Freight-related
revenues 63,931 39.8 % 66,802 38.3 % All other revenues 15,398
9.6 % 16,184 9.3 % Total operating revenues $ 160,536
100.0 % $ 174,197 100.0 %
Operating
expenses:
Labor and benefits(a) $ 50,678 31.6 % $ 52,767 30.3 % Equipment
rents 18,899 11.8 % 20,272 11.6 % Purchased services 29,381 18.3 %
43,783 25.1 % Depreciation and amortization 9,784 6.1 % 9,352 5.4 %
Diesel fuel used in train operations 12,966 8.1 % 13,361 7.7 %
Electricity used in train operations 2,324
1.4
% 2,234 1.3 % Casualties and insurance 1,139 0.7 % 1,728 1.0 %
Materials 15,257 9.5 % 16,318 9.4 % Trackage rights 9,085 5.7 %
9,652 5.5 % Net (gain)/loss on sale and impairment of assets (794 )
(0.5 )% (78 ) — % Restructuring and related costs 5,496 3.4 % 249
0.1 % Other expenses 8,429
5.2
% 6,782 3.9 % Total operating expenses $ 162,644
101.3 % $ 176,420 101.3 % Operating loss $ (2,108 ) $ (2,223
) Expenditures for additions to property & equipment, net of
grants from outside parties $ 10,373 $ 8,463 (a) Includes a
$0.1 million reduction to corporate development and related costs
for the three months ended March 31, 2018.
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,
2019 North American Operations Australian
Operations U.K./European Operations Total
Operations Commodity Group
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
Agricultural Products $ 31,963 54,255 $ 589 $ 3,054 4,260 $ 717 $
736 533 $ 1,381 $ 35,753 59,048 $ 605 Autos & Auto Parts 5,482
8,419 651
—
—
—
— — — 5,482 8,419 651 Chemicals & Plastics 37,173 40,928 908 —
—
— — — — 37,173 40,928 908 Coal & Coke 19,190 54,070 355 29,171
99,502 293 4,693 8,284 567 53,054 161,856 328 Food & Kindred
Products 8,403 14,365 585 —
—
— — — — 8,403 14,365 585 Intermodal 455 3,809 119 13,800 11,701
1,179
59,205 181,002 327 73,460 196,512 374 Lumber & Forest Products
21,857 32,945 663 —
—
—
— — — 21,857 32,945 663 Metallic Ores 2,793 3,602 775 7,618 5,357
1,422 — — — 10,411 8,959 1,162 Metals 29,862 37,250 802 —
—
— — — — 29,862 37,250 802 Minerals & Stone 31,810 47,505 670
2,038 16,499 124 15,882 37,473 424 49,730 101,477 490 Petroleum
Products 20,699 27,068 765 138 59 2,339 691 2,986 231 21,528 30,113
715 Pulp & Paper 30,279 41,313 733 —
—
— — — — 30,279 41,313 733 Waste 6,862 12,974 529 —
—
—
— — — 6,862 12,974 529 Other 4,935 15,354 321 —
—
—
— — — 4,935 15,354 321 Totals $ 251,763 393,857 $ 639 $ 55,819
137,378 $ 406 $ 81,207 230,278 $ 353 $ 388,789 761,513 $ 511
Three Months Ended March 31, 2018 North American
Operations Australian Operations U.K./European
Operations Total Operations Commodity Group
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
Freight Revenues
Carloads*
Average Revenues Per
Carload
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 * 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,
2019
North American
Operations
Australian Operations
U.K./European Operations
Total Operations
Operating revenues $ 332.4 $ 65.1 $ 160.5 $ 558.1 Operating
expenses 263.1 52.6 162.6 478.4
Operating income/(loss)(a) $ 69.3 $ 12.5 $ (2.1 ) $
79.7 Operating ratio (b) 79.1 % 80.8 % 101.3 % 85.7 %
Operating expenses $ 263.1 $ 52.6 $ 162.6 $ 478.4 Corporate
development and related costs (0.4 ) — — (0.4 ) Restructuring and
related costs (0.6 ) (1.5 ) (5.5 ) (7.6 ) Adjusted operating
expenses $ 262.2 $ 51.0 $ 157.1 $ 470.3
Adjusted operating income $ 70.3 $ 14.1 $ 3.4
$ 87.8 Adjusted operating ratio 78.9 % 78.4 % 97.9 % 84.3 %
(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, 2018
North American
Operations
Australian Operations
U.K./European Operations
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 and
related 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.
Adjusted Net Income and Adjusted Diluted EPS
Three Months Ended March 31, 2019
Income Before Income
Taxes
(Provision for)/ Benefit
from Income Taxes
Net Income Attributable
to G&W
Diluted EPS As reported $ 53.1 $ (14.3 ) $ 38.7 $ 0.68 Add
back certain items: Corporate development and related costs 0.4
(0.1 ) 0.3 0.01 Restructuring and related costs 7.6 (1.7 ) 5.4
0.10 As adjusted $ 61.1 $ (16.0 ) $ 44.4 $
0.78
Three Months Ended March 31, 2018
Income Before Income
Taxes
(Provision for)/ Benefit
fromIncome Taxes
Net Income Attributable
to 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 and related 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
Adjusted Free Cash Flow Measures
Three Months Ended March 31,
2019 2018 Net cash provided by
operating activities $ 103.4 $ 101.4 Allocation of adjusted cash
flow to noncontrolling interest(a) (7.1 ) (9.0 ) Adjusted net cash
provided by operating activities attributable to G&W $ 96.3 $
92.4 Core capital expenditures(b) (59.5 ) (41.4 ) Adjusted free
cash flow attributable to G&W before new business investments
and grant funded projects $ 36.8 $ 51.0 New business investments(b)
(1.6 ) (7.5 ) Grant funded projects, net of proceeds received from
outside parties(b) 2.4 (0.4 ) Adjusted free cash flow
attributable to G&W $ 37.6 $ 43.1 (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. No such distributions were made for the three months
ended March 31, 2019 and 2018. 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, 2019
Core Capital(1)
New Business Investments
Grant Funded
Projects(2)
Total Purchase of property and equipment $
(62.1 ) $ (1.6 ) $ (4.1 ) $ (67.8 ) Grant proceeds from outside
parties — — 6.5 6.5 Proceeds from disposition of property and
equipment 2.6 — — 2.6 Purchase of
property and equipment, net $ (59.5 ) $ (1.6 ) $ 2.4 $ (58.7
)
Three Months Ended March 31, 2018
Core Capital(1)
New Business Investments
Grant Funded
Projects(2)
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 )
(1) 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. (2) 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/20190430005200/en/
Michael Williams of G&W Corporate
Communications1-203-202-8900mwilliams@gwrr.com
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