July 27, 2018 - 6:00 AM EDT
Print Email Article Font Down Font Up
Genesee & Wyoming Reports Results for the Second Quarter of 2018

DARIEN, Conn.

Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Second Quarter 2018 Consolidated Highlights Compared with Second Quarter 2017

  • Operating revenues increased 10.1% to $595.0 million from $540.4 million.
  • Reported operating income increased 3.4% to $103.1 million; Adjusted operating income increased 1.1% to $107.0 million.(1)
  • Reported diluted earnings per common share (EPS) decreased 1.4% to $0.73 with 60.9 million weighted average shares outstanding, compared with reported diluted EPS in the second quarter of 2017 of $0.74 with 62.4 million weighted average shares outstanding; Adjusted diluted EPS increased 17.5% to $0.94.(1)
  • G&W repurchased approximately 1.9 million shares of its Class A Common Stock for $134.9 million during the second quarter of 2018.

Jack Hellmann, Chairman, President and CEO of G&W, commented, “Our reported financial results for the second quarter of 2018 of $0.73 per diluted share were generally consistent with the second quarter of 2017, primarily because of our previously announced U.K. restructuring charges. Our adjusted diluted EPS of $0.94 for the second quarter of 2018 were at the high end of our outlook as business conditions continued to improve in each of our three geographies, led by North America. Our same railroad carloads increased 8% in North America with particular strength in coal, steel and minerals and stone traffic. While our operating leverage in North America during the quarter was adversely impacted by several variables including the mix of business, the lag in fuel surcharge recovery, and legal fees associated with an arbitration proceeding, we expect to see our customarily strong operating leverage for the remainder of 2018 based on our current volume outlook.”

“In Australia, our second quarter results were as expected with particular growth in our spot coal traffic due to the early delivery of a new train set. In the UK/Europe, we successfully initiated our restructuring activities and achieved financial results that were ahead of our expectations.”

“Our business outlook for the remainder of 2018 remains promising thanks to growing customer demand for rail shipments across most commodity groups, particularly in North America. In addition, we have refinanced our senior credit facility with improved terms through 2023, we have more than $600 million of capacity under our revolving credit facility, and we continue to evaluate investment opportunities in multiple markets including the opportunistic purchase of our own shares.”

Second Quarter Segment Highlights

  • North America: Operating revenues from G&W's North American Operations increased 7.6% to $339.6 million from $315.7 million. Reported operating income from G&W's North American Operations increased 0.7% to $80.3 million; Adjusted operating income from G&W's North American Operations remained relatively flat at $81.0 million.(1)
  • Australia: Operating revenues from G&W's 51.1% owned Australian Operations increased 2.9% to $79.0 million from $76.8 million. Reported operating income from G&W's Australian Operations increased 27.9% to $25.9 million; Adjusted operating income from G&W's Australian Operations decreased 3.6% to $19.6 million.(1)
  • U.K./Europe: Operating revenues from G&W's U.K./European Operations increased 19.2% to $176.4 million from $148.0 million, primarily due to new operations and the impact from foreign currency appreciation. Reported operating loss from G&W's U.K./European Operations increased to $3.0 million from $0.2 million; Adjusted operating income from G&W's U.K./European Operations increased to $6.3 million from $4.2 million.(1)

Financial Results

G&W's operating revenues increased $54.6 million, or 10.1%, to $595.0 million in the second quarter of 2018, compared with $540.4 million in the second quarter of 2017. G&W's operating income in the second quarter of 2018 was $103.1 million, compared with $99.7 million in the second quarter of 2017. G&W's adjusted operating income in the second quarter of 2018 was $107.0 million, compared with $105.8 million in the second quarter of 2017.(1)

Reported net income attributable to G&W in the second quarter of 2018 was $44.2 million, compared with reported net income attributable to G&W of $46.0 million in the second quarter of 2017. Excluding the net impact of certain items affecting comparability between periods discussed below, G&W's adjusted net income attributable to G&W in the second quarter of 2018 was $57.2 million, compared with $49.9 million in the second quarter of 2017.(1)

G&W's reported diluted EPS in the second quarter of 2018 were $0.73 with 60.9 million weighted average shares outstanding, compared with reported diluted EPS in the second quarter of 2017 of $0.74 with 62.4 million weighted average shares outstanding. G&W's adjusted diluted EPS in the second quarter of 2018 were $0.94 with 60.9 million weighted average shares outstanding, compared with adjusted diluted EPS in the second quarter of 2017 of $0.80 with 62.4 million weighted average shares outstanding.(1)

Items Affecting Comparability

In the second quarter of 2018 and 2017, G&W's results included certain items affecting comparability between the periods that are set forth in the following table (in millions, except per share amounts):

             

Income/(Loss)
Before Income
Taxes Impact

After-Tax Net
Income/(Loss)
Attributable to
G&W Impact

Diluted EPS
Impact

Three Months Ended June 30, 2018

Corporate development and related costs $ (0.4 ) $ (0.3 ) $
Restructuring costs $ (9.4 ) $ (7.6 ) $ (0.12 )
Loss on sale of business $ (1.4 ) $ (1.4 ) $ (0.02 )
Gain on settlement $ 6.3 $ 2.3 $ 0.04
Credit facility refinancing-related costs $ (2.7 ) $ (2.0 ) $ (0.03 )
Prior period tax adjustment $ $ (4.1 ) $ (0.07 )
 

Three Months Ended June 30, 2017

Corporate development and related costs $ (3.7 ) $ (2.7 ) $ (0.04 )
Restructuring costs $ (2.4 ) $ (2.2 ) $ (0.03 )
Gain on sale of investment $ 1.6 $ 1.0 $ 0.02
 

In the second quarter of 2018, G&W's results included corporate development and related costs of $0.4 million, restructuring and related costs of $9.4 million, primarily driven by our optimization activities in the U.K., a $1.4 million loss on sale of our Continental Europe intermodal business, ERS Railways B.V. (ERS), and a gain on settlement of $6.3 million from the recovery of pre-petition claims associated with Arrium Limited's voluntary administration (bankruptcy) in the second quarter of 2016. The second quarter of 2018 also included credit facility refinancing-related costs of $2.7 million and a $4.1 million income tax expense associated with uncertain tax deductions on intercompany financing arrangements in the U.K. previously recorded from March 25, 2015, the date of the Freightliner acquisition when the arrangements were established, through March 31, 2018.

In the second quarter of 2017, G&W's results included corporate development and related costs of $3.7 million, primarily related to the acquisition and integration of Pentalver Transport Limited, as well as restructuring costs of $2.4 million, primarily in G&W's U.K./European Region. The second quarter of 2017 also included a $1.6 million gain on the sale of an investment in the U.S.

Second Quarter Results by Segment

Operating revenues from G&W's North American Operations increased $23.9 million, or 7.6%, to $339.6 million in the second quarter of 2018, compared with $315.7 million in the second quarter of 2017.

North American Operations traffic increased 33,306 carloads, or 8.4%, to 430,353 carloads in the second quarter of 2018. Excluding 1,243 carloads from new operations, same railroad traffic increased 32,063 carloads, or 8.1%. The same railroad traffic increase was principally due to increases of 12,845 carloads of coal and coke traffic (primarily in the Central, Midwest and Northeast regions), 6,111 carloads of metals traffic (primarily in the Southern, Midwest and Central regions), 5,383 carloads of mineral and stone products traffic (primarily in the Northeast and Coastal regions), 2,841 carloads of other commodity traffic (primarily in the Southern, Central and Midwest regions), 1,949 carloads of pulp and paper products traffic (primarily in the Coastal and Central regions), 1,449 carloads of intermodal traffic (primarily in the Northeast Region) and 1,438 carloads of lumber and forest products traffic (primarily in the Western and Central regions), partially offset by a decrease of 1,256 carloads of agricultural products traffic (primarily in the Central Region). All remaining traffic increased by a net 1,303 carloads.

G&W's North American Operations had operating income of $80.3 million in the second quarter of 2018, compared with $79.7 million in the second quarter of 2017. The operating ratio for North American Operations was 76.4% in the second quarter of 2018, compared with an operating ratio of 74.8% in the second quarter of 2017. Adjusted operating income from G&W's North American Operations in the second quarter of 2018 was $81.0 million, compared with adjusted operating income of $81.2 million in the second quarter of 2017. The adjusted operating ratio for North American Operations was 76.1% in the second quarter of 2018, compared with an adjusted operating ratio of 74.3% in the second quarter of 2017.(1)

Operating revenues from G&W's Australian Operations increased $2.2 million, or 2.9%, to $79.0 million in the second quarter of 2018, compared with $76.8 million in the second quarter of 2017. Excluding a $0.6 million increase due to the impact of foreign currency appreciation, Australian Operations revenues increased $1.6 million, or 2.1%, primarily due to an increase in freight revenues.(2)

Australian Operations traffic increased 1,876 carloads to 147,965 carloads in the second quarter of 2018. The traffic increase was principally due to increases of 4,623 carloads of coal and coke traffic and 2,913 carloads of minerals and stone traffic, partially offset by decreases of 3,268 carloads of metallic ores traffic, 1,202 carloads of intermodal traffic and 1,200 carloads of agricultural products traffic. All remaining traffic increased by 10 carloads.

G&W's Australian Operations had operating income of $25.9 million in the second quarter of 2018, compared with $20.3 million in the second quarter of 2017. The operating ratio for Australian Operations was 67.2% in the second quarter of 2018, compared with an operating ratio of 73.6% in the second quarter of 2017. Adjusted operating income from G&W's Australian Operations was $19.6 million in the second quarter of 2018, compared with adjusted operating income of $20.3 million in the second quarter of 2017. The adjusted operating ratio for Australian Operations was 75.2% in the second quarter of 2018, compared with an adjusted operating ratio of 73.5% in the second quarter of 2017.(1)

Operating revenues from G&W's U.K./European Operations increased $28.5 million, or 19.2%, to $176.4 million in the second quarter of 2018, compared with $148.0 million in the second quarter of 2017. Excluding $12.0 million from new operations, a decrease of $3.8 million from G&W's divested ERS operations and a $9.2 million increase due to the impact of foreign currency appreciation, U.K./European same railroad revenues increased $11.0 million, or 7.7%, primarily due to an increase in freight revenues in the U.K. and Poland.(2)

U.K./European Operations traffic decreased 10,901 carloads, or 4.1%, to 256,045 carloads in the second quarter of 2018. Excluding traffic from ERS, same railroad traffic decreased 4,076 carloads, or 1.7%, to 235,222. The same railroad traffic decrease was principally due to decreases of 9,208 carloads of intermodal traffic in the U.K., partially offset by an increase of 5,187 carloads of minerals and stone traffic (primarily in the U.K.). All remaining traffic decreased by 55 carloads.

G&W's U.K./European Operations had an operating loss of $3.0 million in the second quarter of 2018, compared with an operating loss of $0.2 million in the second quarter of 2017. The operating ratio for U.K./European Operations was 101.7% in the second quarter of 2018, compared with an operating ratio of 100.1% in the second quarter of 2017. Adjusted operating income from G&W's U.K./European Operations was $6.3 million in the second quarter of 2018, compared with adjusted operating income of $4.2 million in the second quarter of 2017. The adjusted operating ratio for U.K./European Operations was 96.4% in the second quarter of 2018, compared with an adjusted operating ratio of 97.1% in the second quarter of 2017.(1)

Adjusted Free Cash Flow Measures (1)

Adjusted free cash flow measures for the six months ended June 30, 2018 and 2017 were as follows (in millions):

     
Six Months Ended
June 30,
2018     2017
Net cash provided by operating activities $ 231.3 $ 224.3
Allocation of adjusted cash flow to noncontrolling interest(a) (13.0 ) (18.7 )
Adjusted net cash provided by operating activities attributable to G&W $ 218.3 $ 205.6
Core capital expenditures(b) (95.3 ) (74.7 )
Adjusted free cash flow attributable to G&W before new business investments and grant funded projects $ 123.1 $ 130.9
New business investments (21.5 ) (1.6 )
Grant funded projects, net of proceeds received from outside parties(c) $ 1.0   $ 1.1  
Adjusted free cash flow attributable to G&W $ 102.5   $ 130.4  
(a)   Allocation of adjusted cash flow to noncontrolling interest (Macquarie Infrastructure and Real Assets' (MIRA's) 48.9% equity ownership of G&W Australia Holdings LP (GWA) since December 1, 2016) is calculated as 48.9% of the total of (i) cash flow provided by operating activities of G&W’s Australian Operations, less (ii) net purchases of property and equipment of G&W’s Australian Operations. The timing and amount of actual distributions, if any, from GWA to G&W and MIRA made in any given period will vary and could differ materially from the amounts presented. There were A$40.0 million (or $30.0 million at the average exchange rate in June 2018) of such distributions made for the six months ended June 30, 2018, of which $15.3 million and $14.9 million was distributed to G&W and MIRA, respectively, and no such distributions were made for the six months ended June 30, 2017. G&W expressly disclaims any direct correlation between the allocation of adjusted cash flow to noncontrolling interest and actual distributions made in any given period.
(b) Core capital expenditures represent purchases of property and equipment as presented on the Statement of Cash Flows less grant proceeds from outside parties, insurance proceeds for the replacement of assets and proceeds from disposition of property and equipment, each of which as presented on the Statement of Cash Flows, less new business investments and grant funded projects.
(c) Grant funded projects represent purchases of property and equipment for projects partially or entirely funded by outside parties, net of grant proceeds from outside parties as presented on the Statement of Cash Flows.
 

Share Repurchase Program

During the second quarter of 2018, G&W repurchased approximately 1.9 million shares of Class A Common Stock for $134.9 million, which resulted in a reduction of approximately 1.3 million shares in our weighted average diluted shares during the second quarter.

Conference Call and Webcast Details

As previously announced, G&W's conference call to discuss financial results for the second quarter of 2018 will be held on Friday, July 27, 2018, at 11 a.m. EDT. The dial-in number for the teleconference in the U.S. is (800) 288-9626; outside the U.S., the dial-in number is (612) 332-0345, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors. Management will be referring to a slide presentation that will also be available at gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors until the following quarter's earnings press release. Telephone replay is available for 30 days beginning at 1 p.m. EDT on July 27, 2018, by dialing (800) 475-6701 (or outside the U.S., dialing 320-365-3844). The access code is 439196.

About G&W

G&W owns or leases 121 freight railroads organized in nine locally managed operating regions with 8,000 employees serving 3,000 customers.

  • G&W's seven North American regions serve 41 U.S. states and four Canadian provinces and include 115 short line and regional freight railroads with more than 13,000 track-miles.
  • G&W's Australia Region serves New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line. The Australia Region is 51.1% owned by G&W and 48.9% owned by a consortium of funds and clients managed by Macquarie Infrastructure and Real Assets.
  • G&W's U.K./Europe Region includes the U.K.'s largest rail maritime intermodal operator and second-largest freight rail provider, as well as regional services in Continental Europe.

G&W subsidiaries and joint ventures also provide rail service at more than 40 major ports, rail-ferry service between the U.S. Southeast and Mexico, transload services, contract coal loading, and industrial railcar switching and repair.

From time to time, we may use our website as a channel of distribution of material company information. Financial and other material information regarding G&W is routinely posted on and accessible at www.gwrr.com/investors. In addition, you may automatically receive email alerts and other information about us by enrolling your email address in the "Email Alerts" section of www.gwrr.com/investors. The information contained on or connected to our Internet website is not deemed to be incorporated by reference in this press release or filed with the United States Securities and Exchange Commission.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that are based on current expectations, estimates and projections about our industry, management’s beliefs and assumptions made by management. Words such as “anticipates,” “intends,” “plans,” “believes,” “could,” “should,” “seeks,” “expects,” “will,” “estimates,” “trends,” “outlook,” variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including the following: risks related to the operation of our railroads; severe weather conditions and other natural occurrences, which could result in shutdowns, derailments, railroad network and port congestion or other substantial disruption of operations; customer demand and changes in our operations or loss of important customers; exposure to the credit risk of customers and counterparties; changes in commodity prices; consummation and integration of acquisitions; economic, political and industry conditions, including employee strikes or work stoppages; retention and contract continuation; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we or our customers are subject; increased competition in relevant markets; funding needs and financing sources, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth, including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to and outcome of various legal claims, lawsuits and arbitrations; increase in, or volatility associated with, expenses related to estimated claims, self-insured retention amounts and insurance coverage limits; consummation of new business opportunities; decrease in revenues and/or increase in costs and expenses; susceptibility to the risks of doing business in foreign countries; uncertainties arising from a referendum in which voters in the United Kingdom (U.K.) approved an exit from the European Union (E.U.), commonly referred to as Brexit; our ability to integrate acquired businesses successfully or to realize the expected synergies associated with acquisitions; risks associated with our substantial indebtedness; failure to maintain satisfactory working relationships with partners in Australia; failure to maintain an effective system of internal control over financial reporting as well as disclosure controls and procedures and other risks including, but not limited to, those noted in our 2017 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this press release or as of the date they were made. G&W does not undertake, and expressly disclaims, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

1.   Adjusted operating income, adjusted operating ratio, adjusted net income attributable to G&W, adjusted diluted earnings per common share (EPS), and the adjusted free cash flow measures of adjusted net cash provided by operating activities attributable to G&W, adjusted free cash flow attributable to G&W and adjusted free cash flow attributable to G&W before new business investments and grant funded projects are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, is included in the tables attached to this press release.
2. Foreign exchange impact is calculated by comparing the prior period results translated from local currency to U.S. dollars using current period exchange rates to the prior period results in U.S. dollars as reported.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(in thousands, except per share amounts)
(unaudited)
                 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
OPERATING REVENUES $ 594,990 $ 540,433 $ 1,169,651 $ 1,059,541
OPERATING EXPENSES 491,865   440,700   979,613   883,908  
OPERATING INCOME 103,125 99,733 190,038 175,633
INTEREST INCOME 584 581 1,082 808
INTEREST EXPENSE (28,940 ) (25,785 ) (54,176 ) (52,150 )
OTHER LOSS, NET 288   3,196   (1,752 ) 2,651  
INCOME BEFORE INCOME TAXES 75,057 77,725 135,192 126,942
PROVISION FOR INCOME TAXES (26,446 ) (29,597 ) (10,556 ) (51,525 )
NET INCOME $ 48,611 $ 48,128 $ 124,636 $ 75,417
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 4,443   2,121   5,370   3,172  
NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. $ 44,168   $ 46,007   $ 119,266   $ 72,245  
BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $ 0.74   $ 0.75   $ 1.96   $ 1.18  
WEIGHTED AVERAGE SHARES - BASIC 59,996   61,551   60,946   61,472  
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $ 0.73   $ 0.74   $ 1.93   $ 1.16  
WEIGHTED AVERAGE SHARES - DILUTED 60,879   62,415   61,841   62,371  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2018 AND DECEMBER 31, 2017
(in thousands)
(unaudited)
         
June 30, December 31,
2018 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,702 $ 80,472
Accounts receivable, net 436,149 416,705
Materials and supplies 53,775 57,750
Prepaid expenses and other 51,263   34,606
Total current assets 610,889   589,533
PROPERTY AND EQUIPMENT, net 4,613,849 4,656,921
GOODWILL 1,136,985 1,165,587
INTANGIBLE ASSETS, net 1,495,458 1,567,038
DEFERRED INCOME TAX ASSETS, net 3,608 3,343
OTHER ASSETS 59,696   52,475
Total assets $ 7,920,485   $ 8,034,897
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 19,074 $ 27,853
Accounts payable 271,672 253,993
Accrued expenses 152,016   185,935
Total current liabilities 442,762   467,781
LONG-TERM DEBT, less current portion 2,357,245 2,303,442
DEFERRED INCOME TAX LIABILITIES, net 853,933 873,194
DEFERRED ITEMS - grants from outside parties 318,611 321,592
OTHER LONG-TERM LIABILITIES 165,556 172,796
TOTAL EQUITY 3,782,378   3,896,092
Total liabilities and equity $ 7,920,485   $ 8,034,897
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(in thousands)
(unaudited)
      Six Months Ended
June 30,
2018     2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 124,636 $ 75,417
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 131,735 122,287
Stock-based compensation 8,601 8,857
Deferred income taxes (11,489 ) 34,320
Net gain on sale and impairment of assets (1,859 ) (781 )
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net (46,519 ) 10,066
Materials and supplies 2,460 2,198
Prepaid expenses and other (7,587 ) 14,617
Accounts payable and accrued expenses 20,665 (48,282 )
Other assets and liabilities, net 10,684   5,627  
Net cash provided by operating activities 231,327   224,326  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (133,328 ) (91,498 )
Grant proceeds from outside parties 12,901 11,630
Net cash paid for acquisitions, net of cash acquired (102,655 )
Proceeds from sale of business 7,927
Proceeds from sale of investment 2,100
Insurance proceeds for the replacement of assets 1,866 1,406
Proceeds from disposition of property and equipment 2,795 3,280
Other investing activities (2,921 )  
Net cash used in investing activities (110,760 ) (175,737 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and capital leases (673,952 ) (322,446 )
Proceeds from revolving line-of-credit and long-term borrowings 762,228 320,191
Debt amendment/issuance costs (5,303 )
Common share repurchases (192,324 )
Distribution to noncontrolling interest (14,898 )
Installment payments on Freightliner deferred consideration (6,255 )
Other financing related activities, net (893 ) 1,708  
Net cash used in financing activities (131,397 ) (547 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 60   3,382  
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (10,770 ) 51,424
CASH AND CASH EQUIVALENTS, beginning of period 80,472   32,319  
CASH AND CASH EQUIVALENTS, end of period $ 69,702   $ 83,743  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
                                 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 418,232 70.3 % $ 383,155 70.9 % $ 817,871 69.9 % $ 760,900 71.8 %
Freight-related revenues 142,402 23.9 % 127,621 23.6 % 283,599 24.2 % 246,958 23.3 %
All other revenues 34,356   5.8 % 29,657   5.5 % 68,181   5.8 % 51,683   4.9 %
Total operating revenues $ 594,990   100.0 % $ 540,433   100.0 % $ 1,169,651   100.0 % $ 1,059,541   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 179,838 30.2 % $ 164,222 30.4 % $ 363,554 31.1 % $ 331,360 31.3 %
Equipment rents 34,802 5.9 % 33,237 6.2 % 68,889 5.9 % 67,108 6.3 %
Purchased services(b) 61,045 10.3 % 56,795 10.5 % 125,147 10.7 % 107,796 10.2 %
Depreciation and amortization 65,745 11.0 % 61,513 11.4 % 131,735 11.3 % 122,287 11.5 %
Diesel fuel used in train operations 45,623 7.7 % 33,030 6.1 % 91,774 7.9 % 71,183 6.7 %
Electricity used in train operations 2,044 0.3 % 2,134 0.4 % 4,278 0.4 % 5,307 0.5 %
Casualties and insurance 12,984 2.2 % 10,179 1.9 % 22,950 2.0 % 22,722 2.1 %
Materials 32,376 5.4 % 26,651 4.9 % 64,845 5.5 % 47,197 4.5 %
Trackage rights 23,303 3.9 % 21,797 4.0 % 44,281 3.8 % 44,020 4.2 %
Net gain on sale and impairment of assets (823 ) (0.1 )% (354 ) (0.1 )% (1,859 ) (0.2 )% (781 ) (0.1 )%
Restructuring costs 9,362 1.6 % 2,361 0.4 % 9,645 0.8 % 6,116 0.6 %
Other expenses(c) 25,566   4.3 % 29,135   5.4 % 54,374   4.6 % 59,593   5.6 %
Total operating expenses $ 491,865   82.7 % $ 440,700   81.5 % $ 979,613   83.8 % $ 883,908   83.4 %
(a)   Includes $0.3 million and $0.4 million of corporate development and related costs for the three and six months ended June 30, 2018, respectively. Includes $0.5 million and $2.8 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively, primarily associated with severance costs related to the integration of the Providence & Worcester Railroad Company (P&W).
(b) Includes $0.1 million of corporate development and related costs for both the three and six months ended June 30, 2018. Includes $0.2 million and $0.3 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively.
(c) Includes $6.3 million gain on settlement related to Arrium Limited's voluntary administration for both the three and six months ended June 30, 2018. Includes $0.4 million of credit facility refinancing-related costs for both the three and six months ended June 30, 2018. Includes $0.1 million of corporate development and related costs for both the three and six months ended June 30, 2018. Includes $3.0 million and $6.0 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively, primarily associated with the acquisition and integration of Pentalver as well as expenses related to ongoing corporate development projects and projects that are no longer active.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
                                 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018     2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 259,868 76.5 % $ 238,373 75.5 % $ 505,285 76.0 % $ 476,654 75.0 %
Freight-related revenues 63,467 18.7 % 61,183 19.4 % 127,299 19.1 % 126,528 20.0 %
All other revenues 16,222   4.8 % 16,118   5.1 % 32,603   4.9 % 31,968   5.0 %
Total operating revenues $ 339,557   100.0 % $ 315,674   100.0 % $ 665,187   100.0 % $ 635,150   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 109,289 32.2 % $ 102,082 32.4 % $ 221,206 33.3 % $ 212,240 33.4 %
Equipment rents 13,633 4.0 % 13,380 4.3 % 26,133 3.9 % 27,370 4.3 %
Purchased services(b) 14,652 4.3 % 15,423 4.9 % 28,582 4.3 % 30,096 4.7 %
Depreciation and amortization 41,247 12.2 % 38,919 12.3 % 81,878 12.3 % 77,786 12.3 %
Diesel fuel used in train operations 23,253 6.8 % 16,546 5.2 % 48,733 7.3 % 37,104 5.8 %
Casualties and insurance 10,156 3.0 % 7,811 2.5 % 16,613 2.5 % 18,044 2.8 %
Materials 13,163 3.9 % 13,061 4.1 % 26,353 4.0 % 26,524 4.2 %
Trackage rights 10,527 3.1 % 9,189 2.9 % 19,639 2.9 % 18,707 3.0 %
Net gain on sale and impairment of assets (706 ) (0.2 )% (328 ) (0.1 )% (1,618 ) (0.2 )% (760 ) (0.1 )%
Restructuring costs 7 % 14 % 41 % 68 %
Other expenses(c) 24,062   7.1 % 19,898   6.3 % 44,193   6.6 % 40,629   6.4 %
Total operating expenses $ 259,283   76.4 % $ 235,995   74.8 % $ 511,753   76.9 % $ 487,808   76.8 %
Operating income $ 80,274   $ 79,679   $ 153,434   $ 147,342  
Expenditures for additions to property & equipment, net of grants from outside parties $ 48,924 $ 40,012 $ 87,487 $ 64,227
(a)   Includes $0.3 million and $0.4 million of corporate development and related costs for the three and six months ended June 30, 2018, respectively. Includes $0.4 million and $2.7 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively, primarily associated with severance costs related to the integration of P&W.
(b) Includes $0.1 million of corporate development and related costs for the six months ended June 30, 2017.
(c) Includes $0.4 million of credit facility refinancing-related costs for both the three and six months ended June 30, 2018. Includes $0.1 million of corporate and development and related costs for both the three and six months ended June 30, 2018. Includes $1.1 million and $4.0 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively, primarily associated with ongoing corporate development projects as well as projects that are no longer active.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
AUSTRALIAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
                                 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018     2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 66,075 83.6 % $ 63,753 83.0 % $ 129,086 83.9 % $ 124,627 82.7 %
Freight-related revenues 11,515 14.6 % 11,500 15.0 % 22,078 14.3 % 23,209 15.4 %
All other revenues 1,439   1.8 % 1,556   2.0 % 2,699   1.8 % 2,880   1.9 %
Total operating revenues $ 79,029   100.0 % $ 76,809   100.0 % $ 153,863   100.0 % $ 150,716   100.0 %
 

Operating expenses:

Labor and benefits $ 18,886 23.9 % $ 17,775 23.1 % $ 37,918 24.7 % $ 34,829 23.1 %
Equipment rents 1,183 1.5 % 1,334 1.7 % 2,498 1.6 % 2,735 1.8 %
Purchased services 6,895 8.7 % 6,470 8.4 % 13,284 8.6 % 12,682 8.4 %
Depreciation and amortization 15,288 19.4 % 14,970 19.5 % 31,295 20.3 % 30,162 20.0 %
Diesel fuel used in train operations 8,173 10.3 % 6,320 8.2 % 15,483 10.1 % 12,910 8.6 %
Casualties and insurance 1,766 2.2 % 1,379 1.8 % 3,547 2.3 % 2,852 1.9 %
Materials 2,761 3.5 % 2,517 3.3 % 5,722 3.7 % 5,231 3.5 %
Trackage rights 2,364 3.0 % 3,484

4.6

% 4,578 3.0 % 6,892 4.6 %
Net gain on sale and impairment of assets (67 ) (0.1 )% (20 ) % (113 ) (0.1 )% (22 ) %
Restructuring costs % % % 338 0.2 %
Other expenses, net(a) (4,116 ) (5.2 )% 2,330   3.0 % (2,221 ) (1.4 )% 4,698   3.1 %
Total operating expenses $ 53,133   67.2 % $ 56,559   73.6 % $ 111,991   72.8 % $ 113,307   75.2 %
Operating income $ 25,896   $ 20,250   $ 41,872   $ 37,409  
Expenditures for additions to property & equipment, net of grants from outside parties $ 14,489 $ 3,714 $ 19,751 $ 5,176
(a)   Includes $6.3 million gain on settlement related to Arrium Limited's voluntary administration for both the three and six months ended June 30, 2018. Includes $0.1 million and $0.2 million of corporate development and related costs for the three and six months ended June 30, 2017, respectively.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
                               
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 92,289 52.3 % $ 81,029 54.8 % $ 183,500 52.3 % $ 159,619 58.3 %
Freight-related revenues 67,420 38.2 % 54,938 37.1 % 134,222 38.3 % 97,221 35.5 %
All other revenues 16,695   9.5 % 11,983   8.1 % 32,879   9.4 % 16,835   6.2 %
Total operating revenues $ 176,404   100.0 % $ 147,950   100.0 % $ 350,601   100.0 % $ 273,675   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 51,663 29.3 % $ 44,365

29.9

% $ 104,430 29.8 % $ 84,291 30.8 %
Equipment rents 19,986 11.3 % 18,523 12.5 % 40,258 11.5 % 37,003 13.5 %
Purchased services(b) 39,498 22.4 % 34,902 23.6 % 83,281 23.8 % 65,018 23.8 %
Depreciation and amortization 9,210 5.2 % 7,624

5.1

% 18,562 5.3 % 14,339 5.2 %
Diesel fuel used in train operations 14,197 8.0 % 10,164 6.9 % 27,558 7.9 % 21,169 7.7 %
Electricity used in train operations 2,044 1.2 % 2,134 1.4 % 4,278 1.2 % 5,307

2.0

%
Casualties and insurance 1,062 0.6 % 989 0.7 % 2,790 0.8 % 1,826 0.7 %
Materials 16,452 9.3 % 11,073 7.5 % 32,770 9.3 % 15,442 5.6 %
Trackage rights 10,412 5.9 % 9,124 6.2 % 20,064 5.7 % 18,421 6.7 %
Net (gain)/loss on sale and impairment of assets (50 ) % (6 ) % (128 ) % 1 %
Restructuring costs 9,355 5.3 % 2,347 1.6 % 9,604 2.7 % 5,710 2.1 %
Other expenses(c) 5,620   3.2 % 6,907   4.7 % 12,402   3.5 % 14,266   5.2 %
Total operating expenses $ 179,449   101.7 % $ 148,146   100.1 % $ 355,869   101.5 % $ 282,793   103.3 %
Operating loss $ (3,045 ) $ (196 ) $ (5,268 ) $ (9,118 )
 
Expenditures for additions to property & equipment, net of grants from outside parties $ 4,726 $ 6,175 $ 13,189 $ 10,465
(a)   Includes $0.1 million of corporate development and related costs for both the three and six months ended June 30, 2017, associated with severance costs related to the integration of Pentalver.
(b) Includes $0.2 million of corporate development and related costs for both the three and six months ended June 30, 2017, associated with severance costs related to the integration of Pentalver.
(c) Includes a reduction of $0.1 million of corporate development and related costs for the six months ended June 30, 2018. Includes $1.8 million of corporate development and related costs for both the three and six months ended June 30, 2017, associated with severance costs related to the integration of Pentalver.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
                         
Three Months Ended June 30, 2018 North American Operations Australian Operations U.K./European Operations Total Operations
Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 29,693 51,762 $ 574 $ 6,006 14,175 $ 424 $ 785 607 $ 1,293 $ 36,484 66,544 $ 548
Autos & Auto Parts 5,806 9,106 638 5,806 9,106 638
Chemicals & Plastics 38,972 45,285 861 38,972 45,285 861
Coal & Coke 19,087 59,346 322 32,570 97,282 335 2,687 4,038 665 54,344 160,666 338
Food & Kindred Products 8,476 14,907 569 8,476 14,907 569
Intermodal 380 3,816 100 17,102 13,957 1,225 66,483 201,058 331 83,965 218,831 384
Lumber & Forest Products 23,810 37,733 631 23,810 37,733 631
Metallic Ores 3,670 4,448 825 8,125 5,586 1,455 11,795 10,034 1,176
Metals 32,493 40,806 796 32,493 40,806 796
Minerals & Stone 38,034 62,156 612 2,087 16,891 124 22,326 50,322 444 62,447 129,369 483
Petroleum Products 16,151 24,340 664 185 74 2,500 8 20 400 16,344 24,434 669
Pulp & Paper 29,514 41,762 707 29,514 41,762 707
Waste 7,339 14,837 495 7,339 14,837 495
Other 6,443   20,049   321         6,443   20,049   321
Totals $ 259,868   430,353   $ 604 $ 66,075   147,965   $ 447 $ 92,289   256,045   $ 360 $ 418,232   834,363   $ 501
 
Three Months Ended June 30, 2017     North American Operations   Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 31,279 52,953 $ 591 $ 5,932 15,375 $ 386 $ 829 746 $ 1,111 $ 38,040 69,074 $ 551
Autos & Auto Parts 5,730 9,184 624 5,730 9,184 624
Chemicals & Plastics 37,400 44,814 835 37,400 44,814 835
Coal & Coke 15,382 46,501 331 27,758 92,659 300 1,719 3,974 433 44,859 143,134 313
Food & Kindred Products 8,325 14,806 562 8,325 14,806 562
Intermodal 238 2,367 101 17,234 15,159 1,137 60,793 217,091 280 78,265 234,617 334
Lumber & Forest Products 22,323 35,619 627 22,323 35,619 627
Metallic Ores 2,920 4,249 687 10,659 8,854 1,204 13,579 13,103 1,036
Metals 26,079 34,695 752 26,079 34,695 752
Minerals & Stone 34,562 56,768 609 2,016 13,978 144 17,688 45,135 392 54,266 115,881 468
Petroleum Products 15,844 23,912 663 154 64 2,406 15,998 23,976 667
Pulp & Paper 26,077 39,813 655 26,077 39,813 655
Waste 7,144 14,387 497 7,144 14,387 497
Other 5,070   16,979   299         5,070   16,979   299
Totals $ 238,373   397,047   $ 600 $ 63,753   146,089   $ 436 $ 81,029   266,946   $ 304 $ 383,155   810,082   $ 473
 

* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
                         
Six Months Ended June 30, 2018 North American Operations Australian Operations U.K./European Operations Total Operations
Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 61,065 105,526 $ 579 $ 11,489 27,287 $ 421 $ 2,020 1,573 $ 1,284 $ 74,574 134,386 $ 555
Autos & Auto Parts 11,173 17,822 627 11,173 17,822 627
Chemicals & Plastics 75,189 88,627 848 75,189 88,627 848
Coal & Coke 39,032 121,312 322 64,149 194,138 330 6,163 9,933 620 109,344 325,383 336
Food & Kindred Products 16,826 30,090 559 16,826 30,090 559
Intermodal 689 6,900 100 33,075 26,711 1,238 133,804 411,838 325 167,568 445,449 376
Lumber & Forest Products 46,249 73,983 625 46,249 73,983 625
Metallic Ores 7,243 8,844 819 15,856 10,457 1,516 23,099 19,301 1,197
Metals 60,887 76,044 801 60,887 76,044 801
Minerals & Stone 68,552 109,852 624 4,181 32,754 128 41,505 94,466 439 114,238 237,072 482
Petroleum Products 34,634 50,000 693 336 133 2,526 8 20 400 34,978 50,153 697
Pulp & Paper 58,385 83,119 702 58,385 83,119 702
Waste 13,227 26,818 493 13,227 26,818 493
Other 12,134   37,429   324         12,134   37,429   324
Totals $ 505,285   836,366   $ 604 $ 129,086   291,480   $ 443 $ 183,500   517,830   $ 354 $ 817,871   1,645,676   $ 497
 
Six Months Ended June 30, 2017     North American Operations   Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 64,257 110,204 $ 583 $ 11,678 30,641 $ 381 $ 2,568 2,259 $ 1,137 $ 78,503 143,104 $ 549
Autos & Auto Parts 10,940 17,977 609 10,940 17,977 609
Chemicals & Plastics 74,915 90,822 825 74,915 90,822 825
Coal & Coke 37,115 109,800 338 57,279 190,343 301 5,119 14,535 352 99,513 314,678 316
Food & Kindred Products 16,599 29,676 559 16,599 29,676 559
Intermodal 415 4,168 100 33,101 28,737 1,152 122,789 440,904 278 156,305 473,809 330
Lumber & Forest Products 42,699 69,174 617 42,699 69,174 617
Metallic Ores 6,816 9,173 743 18,290 15,760 1,161 25,106 24,933 1,007
Metals 52,673 70,493 747 52,673 70,493 747
Minerals & Stone 62,677 103,813 604 3,995 29,906 134 29,143 78,064 373 95,815 211,783 452
Petroleum Products 34,271 49,049 699 284 118 2,407 34,555 49,167 703
Pulp & Paper 51,555 78,587 656 51,555 78,587 656
Waste 12,338 25,131 491 12,338 25,131 491
Other 9,384   31,996   293         9,384   31,996   293
Totals $ 476,654   800,063   $ 596 $ 124,627   295,505   $ 422 $ 159,619   535,762   $ 298 $ 760,900   1,631,330   $ 466
 

* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.

Non-GAAP Financial Measures

This earnings release contains references to adjusted operating income, adjusted operating ratio, adjusted operating expenses, adjusted net income attributable to G&W, adjusted diluted earnings per common share (EPS) and the adjusted free cash flow measures of adjusted net cash provided by operating activities attributable to G&W, adjusted free cash flow attributable to G&W and adjusted free cash flow attributable to G&W before new business investments and grant funded projects, which are “non-GAAP financial measures” as this term is defined in Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934. In accordance with these rules, G&W has reconciled these non-GAAP financial measures to their most directly comparable U.S. GAAP measures.

Management views these non-GAAP financial measures as important measures of G&W’s operating performance or, in the case of the adjusted free cash flow measures, a useful indicator of cash flow that may be available for discretionary use by G&W. Management also views these non-GAAP financial measures as a way to assess comparability between periods. Key limitations of the adjusted free cash flow measures include the assumptions that G&W will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt.

These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies.

The following tables set forth reconciliations of each of these non-GAAP financial measures to their most directly comparable GAAP measure ($ in millions, except per share amounts).

Reconciliations of Non-GAAP Financial Measures

Adjusted Operating Income and Adjusted Operating Ratio

     
Three Months Ended
June 30, 2018

North
American
Operations

   

Australian
Operations

   

U.K./
European
Operations

   

Total
Operations

Operating revenues $ 339.6 $ 79.0 $ 176.4 $ 595.0
Operating expenses 259.3   53.1   179.4   491.9  
Operating income/(loss)(a) $ 80.3   $ 25.9   $ (3.0 ) $ 103.1  
Operating ratio (b) 76.4 % 67.2 % 101.7 % 82.7 %
 
Operating expenses $ 259.3 $ 53.1 $ 179.4 $ 491.9
Corporate development and related costs (0.3 ) (0.4 )
Restructuring costs (9.4 ) (9.4 )
Credit facility refinancing-related costs (0.4 ) (0.4 )
Gain on settlement   6.3     6.3  
Adjusted operating expenses $ 258.5   $ 59.4   $ 170.1   $ 488.0  
Adjusted operating income $ 81.0   $ 19.6   $ 6.3   $ 107.0  
Adjusted operating ratio 76.1 % 75.2 % 96.4 % 82.0 %
(a)   Operating income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by operating revenues.
 

     
Three Months Ended
June 30, 2017

North
American
Operations

   

Australian
Operations

   

U.K./
European
Operations

   

Total
Operations

Operating revenues $ 315.7 $ 76.8 $ 148.0 $ 540.4
Operating expenses 236.0   56.6   148.1   440.7  
Operating income/(loss) (a) $ 79.7   $ 20.3   $ (0.2 ) $ 99.7  
Operating ratio (b) 74.8 % 73.6 % 100.1 % 81.5 %
 
Operating expenses $ 236.0 $ 56.6 $ 148.1 $ 440.7
Corporate development and related costs (1.5 ) (0.1 ) (2.1 ) (3.7 )
Restructuring costs     (2.3 ) (2.4 )
Adjusted operating expenses $ 234.5   $ 56.5   $ 143.7   $ 434.7  
Adjusted operating income $ 81.2   $ 20.3   $ 4.2   $ 105.8  
Adjusted operating ratio 74.3 % 73.5 % 97.1 % 80.4 %
(a)   Operating income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by operating revenues.
 

Adjusted Net Income and Adjusted Diluted EPS

                 
Three Months Ended June 30, 2018

Income
Before
Income Taxes

Provision for

Income Taxes

Net Income
Attributable
to G&W

Diluted EPS
As reported $ 75.1 $ (26.4 ) $ 44.2 $ 0.73
Add back certain items:
Corporate development and related costs 0.4 (0.1 ) 0.3
Restructuring costs 9.4 (1.8 ) 7.6 0.12
Loss from sale of ERS 1.4 1.4 0.02
Gain on settlement (6.3 ) 1.9 (2.3 ) (0.04 )
Credit facility refinancing-related costs 2.7 (0.7 ) 2.0 0.03
Prior period tax adjustment   4.1   4.1   0.07  
As adjusted $ 82.5   $ (23.0 ) $ 57.2   $ 0.94  
Three Months Ended June 30, 2017      

Income
Before
Income Taxes

   

Provision for
Income Taxes

   

Net Income
Attributable
to G&W

    Diluted EPS
As reported $ 77.7 $ (29.6 ) $ 46.0 $ 0.74
Add back certain items:
Corporate development and related costs 3.7 (0.9 ) 2.7 0.04
Restructuring costs 2.4 (0.2 ) 2.2 0.03
Gain on sale of investment $ (1.6 ) $ 0.7   $ (1.0 ) $ (0.02 )
As adjusted $ 82.1   $ (30.0 ) $ 49.9   $ 0.80  
 

Adjusted Free Cash Flow Measures

     
Six Months Ended
June 30,
2018     2017
Net cash provided by operating activities $ 231.3 $ 224.3
Allocation of adjusted cash flow to noncontrolling interest(a) (13.0 ) (18.7 )
Adjusted net cash provided by operating activities attributable to G&W $ 218.3 $ 205.6
Core capital expenditures(b) (95.3 ) (74.7 )
Adjusted free cash flow attributable to G&W before new business investments and grant funded projects $ 123.1 $ 130.9
New business investments(b) (21.5 ) (1.6 )
Grant funded projects, net of proceeds received from outside parties(b) 1.0   1.1  
Adjusted free cash flow attributable to G&W $ 102.5   $ 130.4  
(a)   Allocation of adjusted cash flow to noncontrolling interest (Macquarie Infrastructure and Real Assets' (MIRA's) 48.9% equity ownership of G&W Australia Holdings LP (GWA) since December 1, 2016) is calculated as 48.9% of the total of (i) cash flow provided by operating activities of G&W’s Australian Operations, less (ii) net purchases of property and equipment of G&W’s Australian Operations. The timing and amount of actual distributions, if any, from GWA to G&W and MIRA made in any given period will vary and could differ materially from the amounts presented. There were A$40.0 million (or $30.0 million at the average exchange rate in June 2018) of such distributions made for the six months ended June 30, 2018, of which $15.3 million and $14.9 million was distributed to G&W and MIRA, respectively, and no such distributions were made for the six months ended June 30, 2017. G&W expressly disclaims any direct correlation between the allocation of adjusted cash flow to noncontrolling interest and actual distributions made in any given period.
(b) See breakout below.
 
     
Six Months Ended June 30, 2018

Core
Capital(c)

   

New Business
Investments

   

Grant
Funded
Projects(d)

    Total
Purchase of property and equipment $ (99.9 ) $ (21.5 ) $ (11.9 ) $ (133.3 )
Grant proceeds from outside parties 12.9 12.9
Insurance proceeds for the replacement of assets 1.9 1.9
Proceeds from disposition of property and equipment 2.8       2.8  
Purchase of property and equipment, net $ (95.3 ) $ (21.5 ) $ 1.0   $ (115.8 )
 
Six Months Ended June 30, 2017

Core
Capital(c)

New Business
Investments

Grant
Funded
Projects(d)

Total
Purchase of property and equipment $ (79.4 ) $ (1.6 ) $ (10.5 ) $ (91.5 )
Grant proceeds from outside parties 11.6 11.6
Insurance proceeds for the replacement of assets 1.4 1.4
Proceeds from disposition of property and equipment 3.3       3.3  
Purchase of property and equipment, net $ (74.7 ) $ (1.6 ) $ 1.1   $ (75.2 )
(c)   Core capital expenditures represent purchases of property and equipment as presented on the Statement of Cash Flows less grant proceeds from outside parties, insurance proceeds for the replacement of assets and proceeds from disposition of property a nd equipment, each of which as presented on the Statement of Cash Flows, less new business investments and grant funded projects.
(d) Grant funded projects represent purchases of property and equipment for projects partially or entirely funded by outside parties, net of grant proceeds from outside parties as presented on the Statement of Cash Flows.

G&W Corporate Communications
Michael Williams, 1-203-202-8900
mwilliams@gwrr.com


Source: Business Wire (July 27, 2018 - 6:00 AM EDT)

News by QuoteMedia
www.quotemedia.com

Legal Notice