Genesee & Wyoming (G&W) has reported its financial results for the third quarter of 2016, with net income of $56.8 million compared to $63.4 million in the third quarter of 2015. Diluted earnings per share (EPS) for the 2016 third quarter were $0.98, compared with last year’s third quarter diluted EPS of $1.10.
Excluding the net impact of certain items affecting comparability between periods, adjusted net income was reported at $55.4 million, compared with $63.7 million in the 2015 third quarter. Adjusted diluted EPS in the 2016 third quarter was $0.95, compared with last year’s adjusted diluted EPS of $1.10.
“Our financial results for the third quarter of 2016 were consistent with our expectations with reported diluted EPS of $0.98 and adjusted diluted EPS of $0.95,” said Jack Hellmann, G&W president and CEO. “In North America, better than expected steam coal shipments combined with strong cost controls yielded a better than expected operating ratio of 71.9 percent.”
“In Australia, financial results were in-line with our outlook as we continued to effectively manage costs in the weak commodity environment,” continued Hellmann. “In the U.K./Europe, our financial results in the first full quarter since we restructured the U.K. coal business were below our expectations for three reasons: congestion in the port of Felixstowe which weakened U.K. intermodal shipments; unscheduled reductions in U.K. infrastructure services; and weak performance from continental European intermodal.”
The company’s total operating revenues decreased 8.3 percent to $501 million compared to $546.3 million in the third quarter of 2015. Operating income was $91.9 million for the quarter, compared with $117.6 million for the same time period last year. Adjusted operating income in the third quarter of 2016 was $95.8 million, compared with $118.3 million in the 2015 third quarter.
The company’s North American Operations saw third quarter operating revenues drop 1.4 percent to $310.2 million compared with $314.6 million for the 2015 third quarter, primarily due to lower fuel surcharges and a decline in coal shipments. Reported income from operations for the 2016 third quarter decreased 3.8 percent to $87.2 million.
Traffic for North American Operations decreased 17,572 carloads, or 4.2 percent, to 401,999 carloads in the third quarter of 2016. This was due mostly to decreases of 8,169 carloads of coal and coke traffic (primarily in the Central, Northeast and Midwest regions), 3,549 carloads of pulp and paper traffic (primarily in the Southern, Canada and Northeast regions), and 3,447 carloads of minerals and stone traffic (primarily in the Northeast Region). This was partially offset by an increase of 3,014 carloads of agricultural products traffic (primarily in the Central and Pacific regions).
“Looking to year-end, our priorities by region are threefold,” Hellmann added. “In North America, we remain focused on maximizing cost efficiency amidst an uneven economic environment. In Australia, we expect to close on the recently announced acquisition of Glencore Rail and the concurrent issuance of a 49 percent equity stake in our Australian subsidiary to Macquarie, in a transaction that yields a highly competitive Australian growth platform going forward. In the U.K./Europe, we continue to restructure the continental European business and to reduce costs in the U.K. Despite the weak third quarter, we see a clear path to improvement in the U.K./European segment as we finish the year and enter 2017."
"Over the past three months we have announced two important acquisitions, one in Australia, Glencore Rail (expected to close December 1), and one in North America, the Providence and Worcester (expected to close into a voting trust later today). In addition, we continue to be active with a significant pipeline of acquisition opportunities in multiple geographies for which we are maintaining close working relationships with potential financial partners. The broad reach of our global rail footprint is yielding an increasing number of contiguous or adjacent investment opportunities," concluded Hellmann.