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Genesee & Wyoming (GWR) Misses on Q1 Earnings & Revenues

Zacks Equity Research

Genesee & Wyoming Inc.’s GWR first-quarter 2019 adjusted earnings of 78 cents per share missed the Zacks Consensus Estimate of 83 cents. However, the bottom line skyrocketed 11.4% on a year-over-year basis. Results were partly affected by bad weather conditions.

Operating revenues slipped 2.9% year over year to $558 million and also lagged the Zacks Consensus Estimate of $569 million. Freight revenues accounting for bulk (69.7%) of the top line dipped 2.7% to $388.79 million. Freight-related revenues contributing to 24.4% of the top line also slid 3.5% to $136.26 million. The balance came from ‘other revenues’.

Total operating expenses (on a reported basis) decreased 1.9% to $478.38 million. Operating income (on a reported basis) was down 8.3% to $79.71 million in the reported quarter. The metric, on an adjusted basis, inched up 0.5% to $87.8 million, despite severe weather conditions.

During the first quarter of 2019, this Zacks Rank #3 (Hold) company repurchased 64,860 shares worth $4.8 million. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Genesee & Wyoming, Inc. Price, Consensus and EPS Surprise

 

Genesee & Wyoming, Inc. Price, Consensus and EPS Surprise | Genesee & Wyoming, Inc. Quote


Segmental Results

Geographically, operating revenues from North American operations increased 2.1% in the quarter under discussion. However, the same from the company’s Australian (51.1% owned) and U.K./European operations decreased 13% and 7.8%, respectively. Notably, North American, Australian and U.K./European operations represented 59.6%, 11.7% and 28.8% each of the total operating revenues in the quarter under review.

At the North American unit, adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated to 78.9% compared with 77.5% in the first quarter of 2018. Notably, lower the value of the metric, the better. At its Australian operations, the same improved to78.4% compared with 78.6% in the year-ago period. Also, at the U.K./European operations, adjusted operating ratio improved to 97.9% compared with 101.2% in first-quarter 2018. On a consolidated basis, the metric (reported) stood at 85.7% compared with 84.9% a year ago.

Q2 &2019 Outlook

Operating revenues are estimated to be $570 $590 million in the ongoing quarter. Meanwhile, operating revenues for North America, Australia and U.K./Europe operations are expected in the ranges of $340- 350 million, $70- 75 million and $160-$170 million respectively. Consolidated operating ratio is forecast between 80% and 81% in the second quarter. Tax rate is projected to be 28% in the current quarter. Additionally, earnings per share are forecast between $1 and $1.10 in the period. The Zacks Consensus Estimate for the same stands at $1.10. The company retains its earnings per share view in the band of $4.30-$4.50 for 2019. The mid-point-$4.4-of the guided range lies above the Zacks Consensus Estimate of $4.38.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting first-quarter earnings reports from key players, such as like Expeditors International of Washington, Inc. EXPD, Air Lease Corporation AL and Hertz Global Holdings, Inc HTZ. While Hertz Global will report first-quarter earnings on May 6, Expeditors and Air Lease will announce the same on May 7 and May 9, respectively.

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