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Railroad company shares climb after Q4 report

Rochester Business Journal
February 11, 2014

An increase in fourth-quarter and full-year income and earnings per share sent Genesee & Wyoming Inc. shares climbing in midday trading Tuesday.

G&W reported adjusted net income of $60.6 million in the quarter, up from $44.2 million in the fourth quarter 2012. Adjusted diluted earnings per share were $1.07, compared with 79 cents a share a year ago.

The company logged a 72 percent increase in revenues in the fourth quarter from $227.3 million a year ago to $391.7 million in 2013. The increase included $152.9 million in revenues from new operations.

Analysts had expected diluted earnings per share of $1.16 on revenues of $398.12 million.

“The overall trajectory of our business continues to be positive, with adjusted diluted EPS increasing 19 percent in the fourth quarter of 2013,” G&W president and CEO Jack Hellmann said in a statement. “However, G&W’s fourth-quarter financial results were weaker than we expected.”

Hellman noted the strengthening of the U.S. dollar reduced the company’s income from operations in Australia and Canada. He also pointed to two costly derailments in Alabama and Northern Australia during the quarter. Diesel fuel consumption also was unusually high, Hellman said, because of cold temperatures in the United States and Canada.

G&W’s traffic in the fourth quarter was 471,906 carloads, an increase of nearly 8 percent.
 
For the full year G&W reported adjusted net income of $242 million, compared with adjusted net income of $129.7 million for the year ended Dec. 31, 2012. Adjusted diluted earnings per share improved to $4.26 from $2.53 in 2012.

Revenues for the full year increased to $1.57 billion from $874.9 million in 2012.

Analysts had expected diluted earnings per share of $4.37 on revenues of $1.58 billion.

“Our 2013 results were uniformly strong,” Hellman said. “Our safety results led the rail industry for the fifth consecutive year, we successfully integrated the $2 billion acquisition of RailAmerica, we generated record free cash flow and our adjusted diluted earnings per share increased 50 percent.”

Hellman said 2014 is off to a slow start because of the extreme winter weather in North America, but G&W expects its positive momentum to continue.

Connecticut-based G&W, which has its administrative base in Rochester, owns and operates short-line and regional freight railroads in the U.S., Canada, the Netherlands and Australia. The company’s most recent acquisition was announced in January and involves the purchase of the western part of Canadian Pacific Railway Ltd.’s Dakota, Minnesota & Eastern Railroad for $210 million.

Tuesday afternoon, shares of company stock (NYSE: GWR) were trading up more than 5 percent at $94.23.

(c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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