Genesee & Wyoming (G&W) has reported its financial results for the first quarter of 2017, with net income of $26.2 million compared to $27.0 million in the first quarter of 2016. Diluted earnings per share (EPS) for the 2017 first quarter were $0.42, compared with last year’s first quarter diluted EPS of $0.47.
Excluding the net impact of certain items affecting comparability between periods, adjusted net income was reported at $32.9 million, compared with $38.6 million in the 2016 first quarter. Adjusted diluted EPS in the 2017 first quarter was $0.53, compared with last year’s adjusted diluted EPS of $0.67.
“In the first quarter of 2017, we successfully completed the integration of the Providence & Worcester in the U.S., we operated the first full quarter of Glencore Rail in Australia, and we made good progress in the restructuring of ERS in Continental Europe,” said Jack Hellmann, G&W president and CEO. “Nonetheless, our first quarter financial results were weaker than expected as North American same railroad carload growth of 3 percent was at the low end of our outlook and our operating ratio was a bit higher than plan, primarily due to track washout and derailment expense.”
“Meanwhile, our 51 percent-owned Australian business performed better than planned due to the re-opening of a customer manganese mine in March, while our U.K./Europe operations were below plan due to a customer bankruptcy in Continental Europe and higher operating costs in our U.K. intermodal business,” added Hellmann.
The company’s total operating revenues increased 7.6 percent to $519.1 million compared to $482.6 million in the first quarter of 2016. Operating income was $77.5 million for the quarter, an increase of 35.9 percent compared to last year’s first quarter.
The company’s North American Operations saw first quarter operating revenues increase 6.6 percent to $319.5 million compared with $299.8 million for the 2016 first quarter, primarily due to an increase in agricultural products and coal freight revenues and $7.4 million from new operations. Reported income from operations for the 2017 first quarter decreased 3.4 percent to $67.6 million.
Traffic for North American Operations increased 19,824 carloads, or 5.2 percent, to 403,016 carloads in the first quarter of 2017. The traffic increase was primarily due to increases of 14,621 carloads of coal and coke traffic (mostly in the Midwest Region), 2,376 carloads of mineral and stone traffic (primarily in the Northeast and Southern regions) and 2,172 carloads of waste traffic (primarily in the Northeast Region), partially offset by decreases of 2,607 carloads of pulp and paper traffic (primarily in the Southern Region), 1,474 carloads of other commodity traffic (primarily in the Canada and Southern regions), 1,465 carloads of lumber and forest products traffic (primarily in the Pacific Region), 1,393 carloads of petroleum products traffic (primarily in the Northeast Region) and 1,301 carloads of metallic ores traffic (primarily in the Coastal and Mountain West regions). All remaining traffic increased by 987 carloads.
“As we look to the remainder of 2017, our overall view of business trends in G&W markets is unchanged,” continued Hellmann. “In North America, we continue to see modest carload growth with several customer projects starting up later in the year. In Australia, we expect to benefit from shipments from a re-opened manganese mine in the Northern Territory and continue to see significant new business opportunities, making us optimistic for 2017 and beyond. In the U.K./Europe, we expect to complete the restructuring of ERS in the second quarter, to close on the previously announced acquisition of Pentalver in early May, and to see improving intermodal performance as new U.K. port calling patterns are established by the shipping lines, collectively yielding a significant improvement in financial performance in the second half of 2017.”
“Finally, we continue to generate strong free cash flow and to evaluate a range of acquisition and investment opportunities across our global footprint of railroads,” concluded Hellmann.