Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Genesee & Wyoming (GWR +0.00%) finished up 2017 on a solid note, delivering revenue and earnings that were in line with its expectations thanks to several new additions over the course of the year. Those new operations, when combined with improving business conditions across all its operating regions, has the rail company expecting even stronger results in 2018.
Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Change |
---|---|---|---|
Revenue |
$571.6 million |
$516.5 million |
10.7% |
Adjusted net income |
$105.7 million |
$103.4 million |
2.2% |
Adjusted earnings per share |
$0.77 |
$0.84 |
(8.3%) |
Data source: Genesee & Wyoming.
The start-up of new international operations led the way:
Image source: Getty Images.
CEO Jack Hellmann commented on the company's results:
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. Excluding the tax benefit and certain other items, our adjusted diluted EPS were $0.77 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. In 2017, we generated adjusted free cash flow attributable to G&W of $250 million, a 3.6% increase over 2016, as we effectively managed both expenses and capital expenditures to more than offset flat revenue.
As Hellmann pointed out, after adjusting for the big one-time boost from the tax-law change, Genesee & Wyoming's results came in about as expected. New operations helped push revenue and earnings higher, though the per-share results slipped because of an increase in the share count. However, that should even out over time as the company's new operations continue driving growth.
That's exactly what Hellmann sees happening in 2018, with the CEO stating that "in 2018, with an improving business outlook in each of our operating regions, we expect double-digit growth in both adjusted earnings per share and adjusted free cash flow attributable to G&W." Meanwhile, he noted that the company has about $400 million of borrowing capacity on its credit facility, giving it ample firepower to make additional acquisitions and investments this year to move the needle even further.