G&W attributes Q4 operating income growth to North American operations

Genesee & Wyoming Inc. announced this week its fourth-quarter 2018 operating revenue rose 0.7 percent to $575.6 million from $571.6 million in Q4 2017.

Operating income for the quarter slipped 0.8 percent to $105.7 million, while adjusted operating income climbed 5.6 percent to $109.9 million.

Reported diluted earnings per share (EPS) fell to 94 cents with 58.9 million weighted average shares outstanding compared with reported diluted EPS of $6.81 with 62.7 million weighted average shares outstanding in Q4 2017.

A number of factors affect the year-over-year comparison, the most significant of which was the impact of the U.S. Tax Cuts and Jobs Act enacted in December 2017, company officials said in a press release.

The short-line holding company's adjusted diluted EPS jumped nearly 30 percent to $1, led by a 17 percent increase in North American operating income, said Chairman and Chief Executive Officer Jack Hellmann.

Hellmann attributed the North American operating income growth to a 5.8 percent increase in carloads and a 250 basis-point improvement in the operating ratio. The North American operations generated Q4 operating income of $87.2 million versus $74.7 million in Q4 2017, and adjusted operating income totaled $89.3 million versus $75.6 million in the year-ago period.

The North American operations' operating ratio clocked in at 73.6 percent versus 76.4 percent a year earlier.

"The strong results in North America more than offset weaker performance in our Australian and U.K./European operations," Hellmann said.

Meanwhile, for the full year, G&W reported diluted EPS of $4.03 compared with $8.79 in 2017. Year over year, the adjusted diluted EPS climbed 32.8 percent to $3.85 in 2018.

G&W's North American operations reported revenue rose 6.6 percent to $1.36 billion; reported operating income climbed 12.8 percent to $343.1 million; and adjusted operating income increased 10.7 percent to $346.3 million compared with 2017 figures.

As for 2019, the company expects double-digit growth in the adjusted diluted EPS, Hellmann said.

"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,” he said.