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Genesee & Wyoming (GWR +0.00%) faced several weather-related headwinds during the third quarter. The company temporarily shut down several short lines as a precaution because of two hurricanes while grain shipments from the Midwest came in below expectations due to drought conditions. Those factors caused its financial results to come in a bit less than anticipated.
Metric |
Q3 2017 |
Q3 2016 |
Year-Over-Year Change |
---|---|---|---|
Revenue |
$576.9 million |
$501.0 million |
15.2% |
Adjusted net income |
$50.6 million |
$47.9 million |
5.6% |
Adjusted EPS |
$0.81 |
$0.82 |
-1.2% |
Data source: Genesee & Wyoming.
Image source: Getty Images.
Recent acquisitions continue to drive revenue growth:
CEO Jack Hellmann commented on the company's third-quarter results, noting that:
In the third quarter of 2017, we reported financial results that were modestly weaker than expected, with reported diluted EPS of $0.80 and adjusted diluted EPS of $0.81. In North America, our same railroad shipments declined 1.9% in the third quarter, primarily due to lower agricultural products carloads caused by drought in the Midwest. Overall, we were pleased with the performance of our North American operating team in the third quarter as we successfully navigated through two hurricanes and related precautionary shutdowns of several short lines.
Genesee & Wyoming's results came in a bit less than expected during the quarter due to weather-related headwinds in North America. That said, the company was able to partially overcome that weakness due to the strength of its international operations. Hellmann noted that the turn-around in its U.K./Europe business was "right on target" and that "business conditions have continued to improve." Meanwhile, the company was able to overcome mining strikes in Australia and post excellent results thanks to the structure of its contracts as well as taking advantage of openings to move more volumes for new customers.
Hellmann stated that "our outlook for G&W remains positive." He pointed out that in North America, "broader economic activity is solid" and that the company "expects to benefit from a tightening trucking market." Meanwhile, it's pursuing several new projects in Australia now that commodity prices have improved. Finally, he noted that the company continues to generate strong free cash flow, giving it the ability to "evaluate a range of acquisition and investment opportunities across our global footprint of railroads."