Genesee & Wyoming Inc. (NYSE:GWR) reported its second-quarter results bright and early on Monday morning. The regional railroad operator's quarter was really a tale of two companies. Genesee and Wyoming's legacy operations struggled under the weight of a weak coal market and several mine closures in Australia. However, recent acquisitions enabled the combined company to more than overcome those weaknesses as revenue soared while earnings beat expectations. Here's a closer look at the quarter and what to expect in the second half of the year.

A look at the numbers
Genesee & Wyoming reported second-quarter revenue of $542.2 million, which was 30.8% higher than the second quarter of last year. That being said, same railroad revenue, adjusted for foreign currency fluctuations, slipped 10.2% due to weakness with iron ore, coal, and steel shipments.

In the U.S., the company's results were significantly affected by weak coal shipments, which were down 31% year over year, as natural gas continues to be the fuel of choice for power generation. Meanwhile, operations in Australia were affected by the fact that several customers closed iron ore mines as a result of weak commodity prices. That said, the overall jump in revenue was the result of the acquisitions of Pinsly Arkansas and the Freightliner Group as well as the Rapid City, Pierre & Eastern start-up.

Those new additions, however, couldn't overcome the aforementioned weaknesses when it came to the company's profitability. As a result, second-quarter adjusted income from operations fell 9.6% year over year to $99.8 million. Meanwhile, adjusted earnings per share fell even farther, down 17% year over year to $0.93 per share. However, that did manage to squeak past the consensus estimate by two pennies per share.

Driving this decline was a 10% reduction in North American operating income, which was not only hurt by the weak coal market but a 21% decline in steel and scrap shipments as a result of increased competition from imported steel. That said, the company was able to mitigate some of this weakness with cost-cutting measures. In addition to that, it endured significant weakness in Australia were operating income plunged 40% from the year-ago quarter. However, it is working to manage costs, and it expects to see future benefits from new business development opportunities by Freightliner Australia.

Speaking for Freightliner, Genesee & Wyoming said that the acquisition integration is progressing well in the U.K. and Europe. While that business is also being affected by weak coal shipments, the company is pleased with the way things are heading.

A look at the outlook
Genesee & Wyoming expects to deliver better financial results in the second half of the year. It expects to see some modest improvements in North American shipments as well as some seasonal improvements in its newly acquired U.K./Europe business. Furthermore, the company is focused on reducing its costs to help mitigate some of the impact from weaker shipments in the U.S. and Australia.

In addition, it expects to continue to deliver strong free cash flow, which jumped from $57.3 million in the year-ago quarter to $81.3 million this past quarter. That cash flow gives the company the ability to continue to evaluate strategic acquisitions as well as other investment opportunities around the globe.

Investor takeaway
All things considered, Genesee & Wyoming delivered a pretty good quarter. While its earnings were down, it did manage to beat expectations, driven by recent acquisitions and cost-cutting initiatives. Also, the company does see better days ahead as it expects some improvements in shipments, and it has plenty of capacity to make additional strategic acquisitions to drive growth.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Genesee & Wyoming. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.