Genesee & Wyoming’s earnings report light of estimates, maintains 2019 outlook

Genesee & Wyoming, Inc. (NYSE: GWR) reported adjusted earnings per share (EPS) of $0.78 for the first quarter of 2019, which were 11.4 percent better year-over-year, but less than NASDAQ’s consensus estimate of $0.83.

Genesee & Wyoming Inc. is an American short-line railroad holding company that owns or maintains an interest in more than 120 railroads worldwide.

“In the first quarter of 2019, our adjusted diluted EPS increased over 11 percent, 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 percent, 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,” said GWR’s Chairman and Chief Executive Officer Jack Hellmann.

GWR reported operating revenue of $558.1 million, down 2.9 percent year-over-year as total carloads declined 6.1 percent to 761,513 units. Adjusted operating income increased 0.5 percent to $87.8 million. The company reported a consolidated adjusted operating ratio (OR) of 84.3 percent which was 50 basis points better year-over-year.

Revenue from GWR’s North American operations (approximately 80 percent of operating income) increased 2.1 percent year-over-year to $332.4 million as carloads declined 3 percent. Adjusted operating income in North America declined 4.2 percent to $70.3 million. Management said that severe winter weather and flooding in the Midwest were the reasons for the decline.

Revenue declined 13 percent in Australia to $65.1 million as carloads declined 4.3 percent and revenue per carload declined 7.5 percent. Adjusted operating income declined 11.9 percent.

Lastly, revenue in the United Kingdom and Europe was down 7.8 percent to $160.5 million as the prior comparison included revenue from a now divested intermodal unit. The company reported $1.4 million in operating income from this region, up from the prior period loss of $2 million.

Management said that its annual guidance remains unchanged. During the company’s fourth quarter 2018 earnings report in February, the company issued 2019 adjusted EPS guidance of $4.30 to $4.50 per share with revenue of $2.36 billion and a consolidated operating ratio of 80 percent to 81 percent (73 percent to 74 percent OR in North America). Earnings of $4.38 per share is the current NASDAQ consensus estimate.

GWR will hold a call at 11:00 AM EDT to discuss these results.