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

Genesee & Wyoming Inc.’s (NYSE: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.

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. (NASDAQ:EXPD) , Air Lease Corporation (NYSE:AL) and Hertz Global Holdings, Inc (NYSE: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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