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G&W Inc. exceeds fourth quarter estimates

Genesee & Wyoming Inc. on Wednesday reported fourth quarter earnings and income that beat Street estimates.

G&W’s operating revenues for the quarter ended Dec. 31 increased $1.7 million to $516.5 million, compared with $514.9 million in the fourth quarter of 2015. Reported net income in the fourth quarter was $8.9 million, compared with $84.9 million in the fourth quarter of 2015.

Reported diluted earnings per share in the fourth quarter were 15 cents, compared with $1.47 in the fourth quarter last year. Adjusted diluted EPS in the fourth quarter were 99 cents, compared with 98 cents a year ago.

Analysts surveyed by Zacks Investment Research had expected EPS of 88 cents on sales of $494.99 million.

During the quarter, the railroad completed the acquisition of Providence and Worcester Railroad Company, a Class III regional freight railroad operating in Massachusetts, Rhode Island, Connecticut and New York, as well as the acquisition of Glencore Rail (NSW) Pty Limited  the third largest coal haulage business in Australia.

G&W announced an agreement to purchase Pentalver Transport Ltd., a U.K. based maritime container terminal and transportation business. On Tuesday G&W announced plans to acquire the shares of Atlantic Western Transportation Inc., parent company of Heart of Georgia Railroad Inc. Terms of the acquisition were not disclosed.

“The fourth quarter of 2016 was extraordinarily active at G&W as we closed on the acquisition of GRail in Australia, we closed on the acquisition of the P&W in the United States, we signed an agreement to acquire Pentalver in the U.K. and we raised $287 million of equity to position ourselves for additional acquisition and investment opportunities,” said President and CEO Jack Hellman.

In the fourth quarter of 2016, G&W’s results included U.K./Europe impairment and related charges of $32 million, as well as corporate development and related costs of $19.2 million, primarily related to the GRail, P&W and Pentalver transactions.

Operating revenues from G&W’s North American operations increased nearly 8 percent $322.2 million in the fourth quarter, compared with $298.6 million in the fourth quarter of 2015. North American operations traffic increased 14,711 carloads, or 3.8 percent, to 402,939 carloads in the fourth quarter.

For the full year, reported net income was $141.1 million, compared with $225.0 million in 2015. Adjusted net income for the year was $212.4 million, compared with $240.7 million in 2015.

G&W’s diluted earnings per share for the year were $2.42, compared with diluted EPS of $3.89 for 2015. Adjusted diluted EPS for the year were $3.65, compared with adjusted diluted EPS of $4.16 in 2015.

“We continue to evaluate multiple acquisition and investment opportunities across G&W’s global footprint and have over $500 million of borrowing capacity under our revolving credit facility,” Hellman said.

During the fourth quarter, G&W announced that board Chairman Mortimer Fuller III will retire following the company’s annual stockholders’ meeting in May. Hellman will be appointed chairman at that time.

Darien, Conn.-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. G&W owns or leases 122 freight railroads worldwide that are organized in 10 operating regions with roughly 7,300 employees and more than 3,000 customers.

Shares of company stock (NYSE: GWR) have increased from roughly $55 a year ago to a close of $73.75 on Tuesday.

(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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