Fourth-quarter results are expected to be negatively impacted by a hurricane in the U.S., coal shipment delays in Australia and a locomotive driver shortage in the U.K.
Short-line and regional railroad operator Genesee & Wyoming (G&W) reported a net income of $72.3 million for the third quarter of 2018, up 35.5 percent year-over-year.
Based out of Darien, Conn., G&W owns or leases 121 freight railroads, primarily in North America, as well as in Australia, Europe and the United Kingdom.
G&W’s operating revenues for the third quarter totaled $603.3 million, up 4.6 percent year-over-year.
G&W’s effective income tax for the quarter was 30 percent, compared with 36.4 percent for the third quarter of 2017. The decrease in the effective income tax rate was primarily due to the Tax Cuts and Jobs Act of 2017.
On Oct. 19, G&W completed its previously authorized $300 million share repurchase plan, and on Thursday, the company authorized a new $500 million share repurchase plan.
Commenting on the third-quarter results, Jack Hellmann, chairman, president and CEO of G&W, said, “Our North American financial results — approximately 80 percent of operating income — were uniformly positive, led by 11.5 percent revenue growth, an operating ratio that improved around 300 basis points to 71.2 percent and a 25 percent increase in operating income. Meanwhile, third-quarter results in our Australia Region — approximately 15 percent of operating income — and U.K./Europe Region — approximately 5 percent of operating income — were slightly below our expectations.”
Looking ahead, Hellmann said, “Our commercial outlook remains positive in all three of our geographic segments; however, we expect our fourth-quarter financial results to be adversely impacted by three items. In North America, Hurricane Michael struck our Bay Line Railroad and customer facilities in Panama City, Florida, in October, which will result in higher expenses and lower shipment levels.
“In Australia, we expect delays in certain coal shipments in New South Wales that will shift into early 2019. And in the U.K., where our restructuring is proceeding on plan, our ability to staff new and existing business is being constrained by near-term locomotive driver shortages, which will squeeze fourth- quarter margins as we further ramp up training and hiring,” Hellmann said.
G&W’s year-over-year earnings up 35.5 percent
