Railroad owner and operator Genesee & Wyoming Inc. is reportedly exploring the possibility of a sale of part or all of its operations, Bloomberg reported this week. G&W has its administrative offices in Rochester.
G&W is working with a financial adviser and is in talks with Brookfield Asset Management Inc. and other infrastructure-investment firms, Bloomberg reported, citing people close to the matter. G&W has not released information on a potential sale, although several media outlets have requested comment.
During the third quarter of 2018, G&W repurchased roughly 900,000 shares of Class A common stock for $78.2 million, which resulted in a reduction of 300,000 shares in its weighted average diluted shares outstanding.
Last month, the company reported increases in fourth-quarter and full-year earnings. During the fourth quarter of 2018, G&W repurchased 2.4 million shares of its common stock for roughly $190 million.
Also in February, G&W Chief Operating Officer David Brown stepped down, according to a filing with the Securities and Exchange Commission. The filing stated that “Brown is no longer serving in the capacity of chief operating officer.” He will continue to lead select operational performance projects and serve on the subsidiary boards of the company’s 51 percent-owned Australian operations and 100 percent-owned U.K./European operations, according to the filing.
G&W owns or leases 120 freight railroads organized in nine locally managed operating regions. Some 8,000 employees serve 3,000 customers in those regions. Its seven North American regions serve 41 states and four Canadian provinces.
Shares of company stock (NYSE: GWR) spiked Monday following Bloomberg’s report, and have remained elevated. Midday Monday shares were trading at $80.94; on Wednesday, G&W stock opened at $86.00.
Genesee & Wyoming Inc. on Wednesday reported an increase in fourth-quarter sales and earnings, besting analyst expectations.
For the quarter ended Dec. 31, the railroad, which has its administrative offices in Rochester, posted revenue of $575.6 million—led by North American operating revenues of $337.97 million—up slightly from $571.6 million in the fourth quarter last year. Net income for the quarter rose to $59.1 million from $48.6 million in the same quarter last year. On a per-share basis, adjusted earnings increased nearly 30 percent to $1.
Analysts had expected earnings of 90 cents on revenues of $573.64 million. In three of the last four quarters G&W has beat analyst estimates.
For the full year, G&W reported operating revenues of $2.35 billion, up from $2.21 billion last year. Adjusted operating income for the full year was $434.7 million, up from $409 million in the previous year. Earnings per diluted share fell to $4.03 from $8.79 last year.
“In addition to solid earnings growth, G&W generated record cash flow in 2018,” G&W Chairman and CEO Jack Hellmann said in a statement. “With strong cash generation, which significantly exceeded our reported net income, and approximately $455 million of availability under our revolving credit facility, we continue to evaluate potential investments in multiple geographies as well as investments in our own shares.”
During the fourth quarter of 2018, G&W repurchased 2.4 million shares of its common stock for roughly $190 million, Hellman noted.
G&W owns or leases 120 freight railroads organized in nine locally managed operating regions. Some 8,000 employees serve 3,000 customers. Shares of company stock (NYSE: GWR) opened Wednesday at $84.44 and were $83.11 in average trading this afternoon.
Genesee & Wyoming Inc. this week reported a rise in operating revenues and earnings, beating Street estimates.
For the fourth quarter ended Dec. 31, G&W posted a nearly 11 percent increase in operating revenues to $571.6 million from $516.5 million in the same quarter last year. Reported operating income more than doubled to $108.2 million, while adjusted operating income increased 2.2 percent to $105.7 million.
Reported diluted earnings per share were $6.81, compared with reported earnings of 15 cents a year ago. Adjusted diluted earnings fell 8.3 percent to 77 cents per share.
Analysts polled by Zacks Investment Research had expected EPS of 75 cents on revenue of $566.05 million.
“Our reported diluted EPS for the fourth quarter of 2017 were $6.81, of which a significant portion was a $372 million benefit from new tax legislation in the United States,” G&W CEO Jack Hellmann said in a statement. “Excluding the tax benefit and certain other items, our adjusted diluted EPS were 77 cents in the fourth quarter, as revenues in each of our geographic segments, North America, Australia and the U.K./Europe, finished the year in line with our expectations.”
Operating revenues from G&W’s North American Operations decreased 0.6 perent to $320.2 million. Reported operating income decreased 10.5 percent to $74.6 million, while adjusted operating income from G&W’s North American operations decreased 13.6 percent to $75.5 million.
G&W’s Australian operations operating revenues increased more than 23 percent to $75.5 million, while reported operating income increased from $2.8 million to $17.6 million. Adjusted operating income increased 66 percent to $22.5 million.
Operating revenues from the company’s U.K./European operations increased more than 32 percent to $175.8 million. Reported operating income was $16 million, while adjusted operating income rose from $2.4 million to $7.6 million in the fourth quarter.
For the full year, G&W reported net income of $549.1 million, compared with $141.1 million for the year ended Dec. 31, 2016. Excluding the impact of certain items, G&W’s adjusted net income for the year was $182 million, compared with $182.4 million in the previous year.
G&W’s diluted earnings per share were $8.79, compared with diluted EPS of $2.42 for the year ended Dec. 31, 2016. G&W’s adjusted diluted EPS for the year were $2.91, compared with adjusted EPS of $3.13 the previous year.
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 organized in nine locally managed operating regions with 8,000 employees serving 3,000 customers.
Separately, G&W announced an investment in and a strategic alliance with Cargomatic Inc., a technology platform connecting shippers and truck carriers with a focus on short-haul markets. Terms of the investment were not disclosed.
Headquartered in Long Beach, Calif., Cargomatic focuses on the fragmented short-haul and drayage trucking markets connecting shippers and carriers real-time via its web platform and apps. The Cargomatic platform facilitates increased truck capacity, real-time tracking and an efficient transportation solution for shippers while providing owner-operator and smaller truck carriers visibility to traffic volumes and operational flexibility.
“The Cargomatic team has built a world-class platform combining the best of technology and streamlined processes to connect shippers and carriers to drive supply chain efficiency. In addition to our investment in Cargomatic, we are pleased to add the Cargomatic platform as an extension of G&W’s rail service at terminal and transload locations across G&W’s U.S. rail network and to work with the Cargomatic team as they expand internationally to Europe and Australia,” said Michael Miller, chief commercial officer of G&W, in a statement. “By extending our first and last mile service offering, Cargomatic not only improves the efficiency of first and last mile logistics between rail and road, but it also simplifies the multimodal touchpoints for our customers.”
Shares of company stock (Nasdaq: GRW) were down more than 4 percent to $70.23 in midday trading Thursday.
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