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Genesee & Wyoming Reports Results for the Third Quarter of 2018

Category:

Tuesday, October 30, 2018 6:00 am EDT

Dateline:

DARIEN, Conn.

Public Company Information:

NYSE:
GWR
US3715591059

DARIEN, Conn.--(BUSINESS WIRE)--Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Third Quarter 2018 Consolidated Highlights Compared with Third Quarter 2017

  • Operating revenues increased 4.6% to $603.3 million from $576.9 million.
  • Reported operating income increased 16.4% to $127.8 million; Adjusted operating income increased 14.3% to $130.5 million.(1)
  • Reported diluted earnings per common share (EPS) increased 45.0% to $1.16 with 60.1 million weighted average shares outstanding, compared with reported diluted EPS in the third quarter of 2017 of $0.80 with 62.5 million weighted average shares outstanding; Adjusted diluted EPS increased 51.9% to $1.23.(1)
  • G&W completed its previously authorized $300 million share repurchase plan as of October 19, 2018; G&W authorized a new $500 million share repurchase plan on October 25, 2018.

Jack Hellmann, Chairman, President and CEO of G&W, commented, "Our financial results for the third quarter of 2018 were strong, with reported diluted earnings per share increasing 45% and adjusted diluted earnings per share increasing 52%. Our North American financial results (approximately 80% of operating income) were uniformly positive led by 11.5% revenue growth, an operating ratio that improved around 300 basis points to 71.2%, and a 25% increase in operating income. Meanwhile, third quarter results in our Australia Region (approximately 15% of operating income) and U.K./Europe Region (approximately 5% of operating income) were slightly below our expectations."

"Our commercial outlook remains positive in all three of our geographic segments, however, we expect our fourth quarter financial results to be adversely impacted by three items. In North America, Hurricane Michael struck our Bay Line Railroad and customer facilities in Panama City, Florida in October, which will result in higher expenses and lower shipment levels. In Australia, we expect delays in certain coal shipments in New South Wales that will shift into early 2019. And in the U.K., where our restructuring is proceeding on plan, our ability to staff new and existing business is being constrained by near-term locomotive driver shortages, which will squeeze fourth quarter margins as we further ramp up training and hiring."

"We continue to actively analyze investment opportunities in multiple geographies, as well as investments in our own shares. In mid-October, we completed our previously announced $300 million share repurchase program, and our Board recently approved a share repurchase program for an additional $500 million of Common Stock. We expect to execute this program opportunistically, as we evaluate the intrinsic value of our shares, the relative attractiveness of acquisitions and investments, as well as our leverage profile and overall business conditions."

Third Quarter Segment Highlights

  • North America: Operating revenues from G&W's North American Operations increased 11.5% to $355.7 million from $318.9 million. Reported operating income from G&W's North American Operations increased 24.7% to $102.5 million; Adjusted operating income from G&W's North American Operations increased 23.4% to $102.6 million.(1)
  • Australia: Operating revenues from G&W's 51.1% owned Australian Operations decreased 5.6% to $76.7 million from $81.3 million. Reported operating income from G&W's Australian Operations decreased 7.0% to $20.7 million; Adjusted operating income from G&W's Australian Operations decreased 9.2% to $19.8 million.(1)
  • U.K./Europe: Operating revenues from G&W's U.K./European Operations decreased 3.3% to $170.9 million from $176.7 million. Revenues for the third quarter of 2017 included $13.9 million of revenues from G&W's Continental Europe intermodal business, ERS Railways B.V. (ERS), which was sold in June 2018. Reported operating income from G&W's U.K./European Operations, which included $2.6 million in 2017 from ERS, decreased to $4.6 million from $5.4 million; Adjusted operating income from G&W's U.K./European Operations, which included $3.3 million in 2017 from ERS, decreased to $8.1 million from $9.3 million.(1)

Financial Results

G&W's operating revenues increased $26.4 million, or 4.6%, to $603.3 million in the third quarter of 2018, compared with $576.9 million in the third quarter of 2017. G&W's operating income in the third quarter of 2018 was $127.8 million, compared with $109.8 million in the third quarter of 2017. G&W's adjusted operating income in the third quarter of 2018 was $130.5 million, compared with $114.2 million in the third quarter of 2017.(1)

G&W's effective income tax rate in the third quarter of 2018 was 30.0%, compared with 36.4% in the third quarter of 2017. The decrease in the effective income tax rate was primarily a result of the Tax Cuts and Jobs Act of 2017 (TCJA), which decreased the United States federal corporate income tax rate from 35% to 21%.

Reported net income attributable to G&W in the third quarter of 2018 was $69.6 million, compared with reported net income attributable to G&W of $50.2 million in the third 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 third quarter of 2018 was $73.8 million, compared with $50.6 million in the third quarter of 2017.(1)

G&W's reported diluted EPS in the third quarter of 2018 were $1.16 with 60.1 million weighted average shares outstanding, compared with reported diluted EPS in the third quarter of 2017 of $0.80 with 62.5 million weighted average shares outstanding. G&W's adjusted diluted EPS in the third quarter of 2018 were $1.23 with 60.1 million weighted average shares outstanding, compared with adjusted diluted EPS in the third quarter of 2017 of $0.81 with 62.5 million weighted average shares outstanding.(1)

Items Affecting Comparability

In the third 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 September 30, 2018

Corporate development and related costs $ (0.3 ) $ (0.3 ) $
Restructuring and related costs $ (3.3 ) $ (2.7 ) $ (0.04 )
Gain on settlement $ 0.9 $ 0.3 $ 0.01
TCJA measurement period adjustment $ $ (1.6 ) $ (0.03 )
 

Three Months Ended September 30, 2017

Corporate development and related costs $ (1.7 ) $ (1.4 ) $ (0.02 )
Restructuring costs $ (2.6 ) $ (2.2 ) $ (0.04 )
Recognition of unrecognized tax benefits $ $ 3.3 $ 0.05
 

In the third quarter of 2018, G&W's results included restructuring and related costs of $3.3 million, primarily driven by our optimization activities in the U.K., corporate development and related costs of $0.3 million and a gain on a settlement in Australia of $0.9 million from the recovery of pre-petition claims associated with Arrium Limited's voluntary administration (bankruptcy) in the second quarter of 2016. As a result of the TCJA, the third quarter of 2018 also included a $1.6 million measurement period adjustment to the one-time transition (toll) tax on earnings of certain foreign subsidiaries.

In the third quarter of 2017, G&W's results included restructuring costs of $2.6 million, primarily in G&W's U.K./European Region, as well as corporate development and related costs of $1.7 million, primarily related to the acquisition and integration of Pentalver Transport Limited (Pentalver). The third quarter of 2017 also included the recognition of $3.3 million of previously unrecognized tax benefits resulting from the lapse of the statute of limitations on acquired liabilities for uncertain tax positions.

Third Quarter Results by Segment

Operating revenues from G&W's North American Operations increased $36.8 million, or 11.5%, to $355.7 million in the third quarter of 2018, compared with $318.9 million in the third quarter of 2017.

G&W's North American Operations had operating income of $102.5 million in the third quarter of 2018, compared with $82.2 million in the third quarter of 2017. The operating ratio for North American Operations was 71.2% in the third quarter of 2018, compared with an operating ratio of 74.2% in the third quarter of 2017. Adjusted operating income from G&W's North American Operations in the third quarter of 2018 was $102.6 million, compared with adjusted operating income of $83.1 million in the third quarter of 2017. The adjusted operating ratio for North American Operations was 71.2% in the third quarter of 2018, compared with an adjusted operating ratio of 73.9% in the third quarter of 2017.(1)

Operating revenues from G&W's Australian Operations decreased $4.6 million, or 5.6%, to $76.7 million in the third quarter of 2018, compared with $81.3 million in the third quarter of 2017. Excluding a $6.0 million decrease due to the impact of foreign currency depreciation, Australian Operations revenues increased $1.4 million, or 1.9%, primarily due to an increase in freight revenues.(2)

G&W's Australian Operations had operating income of $20.7 million in the third quarter of 2018, compared with $22.3 million in the third quarter of 2017. The operating ratio for Australian Operations was 73.0% in the third quarter of 2018, compared with an operating ratio of 72.6% in the third quarter of 2017. Adjusted operating income from G&W's Australian Operations was $19.8 million in the third quarter of 2018, compared with adjusted operating income of $21.8 million in the third quarter of 2017. The adjusted operating ratio for Australian Operations was 74.2% in the third quarter of 2018, compared with an adjusted operating ratio of 73.2% in the third quarter of 2017.(1)

Operating revenues from G&W's U.K./European Operations decreased $5.8 million, or 3.3%, to $170.9 million in the third quarter of 2018, compared with $176.7 million in the third quarter of 2017. Excluding $13.7 million of revenues from G&W's divested ERS operations for the third quarter of 2017 and a $1.2 million decrease due to the impact of foreign currency depreciation, U.K./European same railroad revenues increased $9.1 million, or 5.6%, primarily due to increases in freight-related and freight revenues in the U.K. and Poland.(2)

G&W's U.K./European Operations had operating income of $4.6 million in the third quarter of 2018, compared with $5.4 million in the third quarter of 2017, which included $2.6 million from ERS. The operating ratio for U.K./European Operations was 97.3% in the third quarter of 2018, compared with an operating ratio of 97.0% in the third quarter of 2017. Adjusted operating income from G&W's U.K./European Operations was $8.1 million in the third quarter of 2018, compared with adjusted operating income of $9.3 million in the third quarter of 2017, which included $3.3 million from ERS. The adjusted operating ratio for U.K./European Operations was 95.2% in the third quarter of 2018, compared with an adjusted operating ratio of 94.7% in the third quarter of 2017.(1)

Adjusted Free Cash Flow Measures (1)

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

     
Nine Months Ended
September 30,
2018     2017
Net cash provided by operating activities $ 397.5 $ 350.4
Allocation of adjusted cash flow to noncontrolling interest(a) (21.6 ) (21.9 )
Adjusted net cash provided by operating activities attributable to G&W $ 375.8 $ 328.5
Core capital expenditures(b) (141.7 ) (123.7 )
Adjusted free cash flow attributable to G&W before new business investments and grant funded projects $ 234.1 $ 204.8
New business investments (31.0 ) (4.5 )
Grant funded projects, net of proceeds received from outside parties(c)

 

1.8  

 

0.7  
Adjusted free cash flow attributable to G&W $ 204.9   $ 201.1  
(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 the period it was paid) of such distributions made for the nine months ended September 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 nine months ended September 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 third quarter of 2018, G&W repurchased approximately 0.9 million shares of Class A Common Stock for $78.2 million, which resulted in a reduction of approximately 0.3 million shares in our weighted average diluted shares outstanding for the third quarter.

Conference Call and Webcast Details

As previously announced, G&W's conference call to discuss financial results for the third quarter of 2018 will be held on Tuesday, October 30, 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 October 30, 2018, by dialing (800) 475-6701 (or outside the U.S., dialing 320-365-3844). The access code is 439197.

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 NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(in thousands, except per share amounts)
(unaudited)
                 
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
OPERATING REVENUES $ 603,304 $ 576,927 $ 1,772,955 $ 1,636,468
OPERATING EXPENSES 475,484   467,085   1,455,097   1,350,993  
OPERATING INCOME 127,820 109,842 317,858 285,475
INTEREST INCOME 417 463 1,499 1,271
INTEREST EXPENSE (26,429 ) (28,281 ) (80,605 ) (80,431 )
OTHER INCOME/(LOSS), NET 1,515   1,868   (237 ) 4,519  
INCOME BEFORE INCOME TAXES 103,323 83,892 238,515 210,834
PROVISION FOR INCOME TAXES (31,013 ) (30,507 ) (41,569 ) (82,032 )
NET INCOME $ 72,310 $ 53,385 $ 196,946 $ 128,802
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 2,720   3,145   8,090   6,317  
NET INCOME ATTRIBUTABLE TO GENESEE & WYOMING INC. $ 69,590   $ 50,240   $ 188,856   $ 122,485  
BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $ 1.18   $ 0.82   $ 3.13   $ 1.99  
WEIGHTED AVERAGE SHARES - BASIC 59,168   61,629   60,343   61,518  
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO GENESEE & WYOMING INC. COMMON STOCKHOLDERS: $ 1.16   $ 0.80   $ 3.08   $ 1.96  
WEIGHTED AVERAGE SHARES - DILUTED 60,131   62,477   61,255   62,399  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017
(in thousands)
(unaudited)
         
September 30, December 31,
2018 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 74,067 $ 80,472
Accounts receivable, net 441,105 416,705
Materials and supplies 52,517 57,750
Prepaid expenses and other 54,292   34,606
Total current assets 621,981   589,533
PROPERTY AND EQUIPMENT, net 4,613,295 4,656,921
GOODWILL 1,128,580 1,165,587
INTANGIBLE ASSETS, net 1,466,137 1,567,038
DEFERRED INCOME TAX ASSETS, net 3,883 3,343
OTHER ASSETS 70,122   52,475
Total assets $ 7,903,998   $ 8,034,897
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 25,138 $ 27,853
Accounts payable 271,539 253,993
Accrued expenses 171,011   185,935
Total current liabilities 467,688   467,781
LONG-TERM DEBT, less current portion 2,300,556 2,303,442
DEFERRED INCOME TAX LIABILITIES, net 866,821 873,194
DEFERRED ITEMS - grants from outside parties 323,370 321,592
OTHER LONG-TERM LIABILITIES 162,993 172,796
TOTAL EQUITY 3,782,570   3,896,092
Total liabilities and equity $ 7,903,998   $ 8,034,897
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(in thousands)
(unaudited)
      Nine Months Ended
September 30,
2018     2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 196,946 $ 128,802
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 197,127 186,509
Stock-based compensation 13,029 13,354
Deferred income taxes 7,978 51,231
Net gain on sale and impairment of assets (2,501 ) (1,096 )
Changes in assets and liabilities which provided/(used) cash, net of effect of acquisitions:
Accounts receivable, net (50,143 ) (18,020 )
Materials and supplies 3,133 8,998
Prepaid expenses and other (11,663 ) 14,257
Accounts payable and accrued expenses 33,818 (41,529 )
Other assets and liabilities, net 9,750   7,883  
Net cash provided by operating activities 397,474   350,389  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (194,132 ) (149,105 )
Grant proceeds from outside parties 16,696 15,998
Net cash paid for acquisitions, net of cash acquired (107,586 )
Proceeds from sale of business 7,927
Proceeds from sale of investment 2,100
Insurance proceeds for the replacement of assets 2,780 1,406
Proceeds from disposition of property and equipment 3,710 4,238
Other investing activities (2,921 )  
Net cash used in investing activities (165,940 ) (232,949 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and capital leases (766,713 ) (498,925 )
Proceeds from revolving line-of-credit and long-term borrowings 821,666 418,735
Debt amendment/issuance costs (5,318 )
Common share repurchases (270,488 )
Distribution to noncontrolling interest (14,898 )
Installment payments on Freightliner deferred consideration (6,255 )
Other financing related activities, net 5,006   4,728  
Net cash used in financing activities (237,000 ) (75,462 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (939 ) 5,980  
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (6,405 ) 47,958
CASH AND CASH EQUIVALENTS, beginning of period 80,472   32,319  
CASH AND CASH EQUIVALENTS, end of period $ 74,067   $ 80,277  
 

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

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 423,374 70.2 % $ 400,735 69.5 % $ 1,241,245 70.0 % $ 1,161,635 71.0 %
Freight-related revenues 145,450 24.1 % 140,923 24.4 % 429,049 24.2 % 387,881 23.7 %
All other revenues 34,480   5.7 % 35,269   6.1 % 102,661   5.8 % 86,952   5.3 %
Total operating revenues $ 603,304   100.0 % $ 576,927   100.0 % $ 1,772,955   100.0 % $ 1,636,468   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 175,853 29.1 % $ 169,576 29.4 % $ 539,407 30.4 % $ 500,936 30.6 %
Equipment rents 35,325 5.9 % 33,291 5.8 % 104,214 5.9 % 100,399 6.1 %
Purchased services(b) 53,717 8.9 % 68,562 11.9 % 178,864 10.1 % 176,358 10.8 %
Depreciation and amortization 65,392 10.9 % 64,222 11.1 % 197,127 11.1 % 186,509 11.4 %
Diesel fuel used in train operations 45,713 7.6 % 34,535 6.0 % 137,487 7.8 % 105,718 6.5 %
Electricity used in train operations 2,742 0.5 % 765 0.1 % 7,020 0.4 % 6,072 0.4 %
Casualties and insurance 9,912 1.6 % 10,624 1.9 % 32,862 1.8 % 33,346 2.0 %
Materials 32,744 5.4 % 30,664 5.3 % 97,589 5.5 % 77,861 4.8 %
Trackage rights 22,838 3.8 % 22,632 3.9 % 67,119 3.8 % 66,652 4.1 %
Net gain on sale and impairment of assets (642 ) (0.1 )% (315 ) (0.1 )% (2,501 ) (0.1 )% (1,096 ) (0.1 )%
Restructuring and related costs 3,286 0.5 % 2,628 0.5 % 12,931 0.7 % 8,744 0.5 %
Other expenses(c) 28,604   4.7 % 29,901   5.2 % 82,978   4.7 % 89,494   5.5 %
Total operating expenses $ 475,484   78.8 % $ 467,085   81.0 % $ 1,455,097   82.1 % $ 1,350,993   82.6 %
(a)   Includes $0.1 million and $0.4 million of corporate development and related costs for the three and nine months ended September 30, 2018, respectively. Includes $0.4 million and $3.2 million of corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily associated with severance costs related to the integration of the Providence & Worcester Railroad Company (P&W).
(b)

Includes $0.2 million and $0.3 million of corporate development and related costs for the three and nine months ended September 30, 2018, respectively. Includes $0.1 million and $0.4 million of corporate development and related costs for the three and nine months ended September 30, 2017, respectively.

(c) Includes $0.9 million and $7.3 million gain on settlement related to Arrium Limited's voluntary administration for the three and nine months ended September 30, 2018, respectively. Includes $0.4 million of credit facility refinancing-related costs for the nine months ended September 30, 2018. Includes $0.1 million and $0.2 million of corporate development and related costs for the three and nine months ended September 30, 2018, respectively. Includes $1.3 million and $7.2 million of corporate development and related costs for the three and nine months ended September 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 September 30, Nine Months Ended September 30,
2018 2017 2018   2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 273,432 76.9 % $ 242,968 76.2 % $ 778,717 76.3 % $ 719,622 75.4 %
Freight-related revenues 66,045 18.6 % 60,286 18.9 % 193,344 18.9 % 186,814 19.6 %
All other revenues 16,232   4.5 % 15,673   4.9 % 48,835   4.8 % 47,641   5.0 %
Total operating revenues $ 355,709   100.0 % $ 318,927   100.0 % $ 1,020,896   100.0 % $ 954,077   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 107,940 30.3 % $ 102,692 32.2 % $ 329,146 32.2 % $ 314,932 33.0 %
Equipment rents 15,441 4.4 % 12,623 4.0 % 41,574 4.1 % 39,993 4.2 %
Purchased services(b) 14,968 4.2 % 15,254 4.8 % 43,550 4.3 % 45,350 4.8 %
Depreciation and amortization 41,388 11.6 % 40,036 12.5 % 123,266 12.1 % 117,822 12.3 %
Diesel fuel used in train operations 23,230 6.5 % 16,934 5.3 % 71,963 7.0 % 54,038 5.7 %
Casualties and insurance 6,636 1.9 % 8,488 2.7 % 23,249 2.3 % 26,532 2.8 %
Materials 12,836 3.6 % 11,889 3.7 % 39,189 3.8 % 38,413 4.0 %
Trackage rights 10,586 3.0 % 10,025 3.1 % 30,225 2.9 % 28,732 3.0 %
Net gain on sale and impairment of assets (506 ) (0.1 )% (110 ) % (2,124 ) (0.2 )% (870 ) (0.1 )%
Restructuring and related costs 1 % 316 0.1 % 42 % 384 %
Other expenses(c) 20,705   5.8 % 18,577   5.8 % 64,898   6.4 % 59,206   6.2 %
Total operating expenses $ 253,225   71.2 % $ 236,724   74.2 % $ 764,978   74.9 % $ 724,532   75.9 %
Operating income $ 102,484   $ 82,203   $ 255,918   $ 229,545  
Expenditures for additions to property & equipment, net of grants from outside parties $ 42,120 $ 41,713 $ 129,607 $ 105,940
(a)   Includes $0.1 million and $0.4 million of corporate development and related costs for the three and nine months ended September 30, 2018, respectively. Includes $0.4 million and $3.1 million of corporate development and related costs for the three and nine months ended September 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 nine months ended September 30, 2017.
(c) Includes $0.4 million of credit facility refinancing-related costs for the nine months ended September 30, 2018. Includes $0.1 million and $0.2 million of corporate and development and related costs for the three and nine months ended September 30, 2018, respectively. Includes $0.2 million and $4.2 million of corporate development and related costs for the three and nine months ended September 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 September 30, Nine Months Ended September 30,
2018 2017 2018   2017
Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Amount

% of
Revenue

Operating revenues:

Freight revenues $ 65,249 85.1 % $ 66,404 81.7 % $ 194,335 84.3 % $ 191,031 82.3 %
Freight-related revenues 10,136 13.2 % 12,880 15.8 % 32,214 14.0 % 36,089 15.6 %
All other revenues 1,318   1.7 % 1,986   2.5 % 4,017   1.7 % 4,866   2.1 %
Total operating revenues $ 76,703   100.0 % $ 81,270   100.0 % $ 230,566   100.0 % $ 231,986   100.0 %
 

Operating expenses:

Labor and benefits $ 17,400 22.7 % $ 17,618 21.6 % $ 55,318 24.0 % $ 52,447 22.6 %
Equipment rents 1,452 1.9 % 1,480 1.8 % 3,950 1.7 % 4,215 1.8 %
Purchased services 6,319 8.2 % 7,139 8.8 % 19,603 8.5 % 19,821 8.6 %
Depreciation and amortization 14,937 19.5 % 15,753 19.4 % 46,232 20.1 % 45,915 19.8 %
Diesel fuel used in train operations 8,074 10.5 % 6,003 7.4 % 23,557 10.2 % 18,913 8.2 %
Casualties and insurance 1,651 2.2 % 1,367 1.7 % 5,198 2.3 % 4,219 1.8 %
Materials 3,003 3.9 % 3,398 4.2 % 8,725 3.8 % 8,629 3.7 %
Trackage rights 1,932 2.5 % 3,500 4.3 % 6,510 2.8 % 10,392 4.5 %
Net gain on sale and impairment of assets (20 ) % (37 ) % (133 ) (0.1 )% (59 ) %
Restructuring and related costs % % % 338 0.1 %
Other expenses, net(a) 1,242   1.6 % 2,773   3.4 % (979 ) (0.4 )% 7,471   3.2 %
Total operating expenses $ 55,990   73.0 % $ 58,994   72.6 % $ 167,981   72.9 % $ 172,301   74.3 %
Operating income $ 20,713   $ 22,276   $ 62,585   $ 59,685  
Expenditures for additions to property & equipment, net of grants from outside parties $ 8,185 $ 4,545 $ 27,936 $ 9,721
(a)  

Includes $0.9 million and $7.3 million gain on settlement related to Arrium Limited's voluntary administration for the three and nine months ended September 30, 2018, respectively. Includes $0.5 million and $0.3 million of credits (corporate development and related costs) for the three and nine months ended September 30, 2017, respectively, primarily associated with a refund.

 

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

Operating revenues:

Freight revenues $ 84,693 49.6 % $ 91,363 51.7 % $ 268,193 51.4 % $ 250,982 55.8 %
Freight-related revenues 69,269 40.5 % 67,757 38.3 % 203,491 39.0 % 164,978 36.6 %
All other revenues 16,930   9.9 % 17,610   10.0 % 49,809   9.6 % 34,445   7.6 %
Total operating revenues $ 170,892   100.0 % $ 176,730   100.0 % $ 521,493   100.0 % $ 450,405   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 50,513 29.6 % $ 49,266 27.9 % $ 154,943 29.7 % $ 133,557 29.6 %
Equipment rents 18,432 10.8 % 19,188 10.9 % 58,690 11.3 % 56,191 12.5 %
Purchased services(b) 32,430 19.0 % 46,169 26.1 % 115,711 22.2 % 111,187 24.7 %
Depreciation and amortization 9,067 5.3 % 8,433 4.8 % 27,629 5.3 % 22,772 5.1 %
Diesel fuel used in train operations 14,409 8.4 % 11,598 6.6 % 41,967 8.0 % 32,767 7.3 %
Electricity used in train operations 2,742 1.6 % 765 0.4 % 7,020 1.3 % 6,072 1.2 %
Casualties and insurance 1,625 1.0 % 769 0.4 % 4,415 0.8 % 2,595 0.6 %
Materials 16,905 9.9 % 15,377 8.7 % 49,675 9.5 % 30,819 6.8 %
Trackage rights 10,320 6.0 % 9,107 5.2 % 30,384 5.8 % 27,528 6.1 %
Net (gain)/loss on sale and impairment of assets (116 ) (0.1 )% (168 ) (0.1 )% (244 ) % (167 )

%
Restructuring and related costs 3,285 1.9 % 2,312 1.3 % 12,889 2.5 % 8,022 1.8 %
Other expenses(c) 6,657   3.9 % 8,551   4.8 % 19,059   3.7 % 22,817   5.1 %
Total operating expenses $ 166,269   97.3 % $ 171,367   97.0 % $ 522,138   100.1 % $ 454,160   100.8 %
Operating income/(loss) $ 4,623   $ 5,363   $ (645 ) $ (3,755 )
 
Expenditures for additions to property & equipment, net of grants from outside parties $ 6,704 $ 6,981 $ 19,893 $ 17,446
(a)   Includes $0.1 million of corporate development and related costs for the nine months ended September 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 nine months ended September 30, 2018. Includes $0.1 and $0.3 million of corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily 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 nine months ended September 30, 2018. Includes $1.5 million and $3.3 million of corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily 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 September 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 $ 30,565 50,989 $ 599 $ 4,150 6,529 $ 636 $ 1,053 776 $ 1,357 $ 35,768 58,294 $ 614
Autos & Auto Parts 5,513 8,724 632

5,513 8,724 632
Chemicals & Plastics 38,436 43,903 875

38,436 43,903 875
Coal & Coke 23,006 70,314 327 32,357 106,809 303 2,588 4,271 606 57,951 181,394 319
Food & Kindred Products 8,761 15,312 572

8,761 15,312 572
Intermodal 514 4,922 104 17,538 14,610 1,200 58,609 188,002 312 76,661 207,534 369
Lumber & Forest Products 24,113 37,328 646

24,113 37,328 646
Metallic Ores 3,573 4,655 768 8,914 6,464 1,379

12,487 11,119 1,123
Metals 34,904 43,752 798

34,904 43,752 798
Minerals & Stone 38,570 60,496 638 2,066 16,813 123 22,344 48,111 464 62,980 125,420 502
Petroleum Products 18,236 26,231 695 224 93 2,409 99 222 446 18,559 26,546 699
Pulp & Paper 31,961 44,403 720 31,961 44,403 720
Waste 8,089 15,859 510 8,089 15,859 510
Other 7,191 19,331 372 7,191 19,331 372
Totals $ 273,432 446,219 $ 613 $ 65,249 151,318 $ 431 $ 84,693 241,382 $ 351 $ 423,374 838,919 $ 505
 
Three Months Ended September 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 $ 28,699 47,588 $ 603 $ 6,059 13,163 $ 460 $ 964 777 $ 1,241 $ 35,722 61,528 $ 581
Autos & Auto Parts 6,079 9,728 625 6,079 9,728 625
Chemicals & Plastics 36,745 43,739 840 36,745 43,739 840
Coal & Coke 20,008 60,864 329 29,013 81,142 358 2,345 3,798 617 51,366 145,804 352
Food & Kindred Products 8,257 14,415 573 8,257 14,415 573
Intermodal 311 3,145 99 19,012 15,416 1,233 67,374 229,059 294 86,697 247,620 350
Lumber & Forest Products 22,204 35,846 619 22,204 35,846 619
Metallic Ores 3,703 4,667 793 11,305 8,354 1,353 15,008 13,021 1,153
Metals 26,008 34,003 765 26,008 34,003 765
Minerals & Stone 34,769 57,104 609 792 5,488 144 20,680 49,146 421 56,241 111,738 503
Petroleum Products 16,425 24,772 663 223 88 2,534 16,648 24,860 670
Pulp & Paper 28,135 42,244 666 28,135 42,244 666
Waste 6,662 14,330 465 6,662 14,330 465
Other 4,963 15,252 325 4,963 15,252 325
Totals $ 242,968 407,697 $ 596 $ 66,404 123,651 $ 537 $ 91,363 282,780 $ 323 $ 400,735 814,128 $ 492

* 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)
                                                 
Nine Months Ended September 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 $ 91,630 156,515 $ 585 $ 15,639 33,816 $ 462 $ 3,073 2,349 $ 1,308 $ 110,342 192,680 $ 573
Autos & Auto Parts 16,686 26,546 629 16,686 26,546 629
Chemicals & Plastics 113,625 132,530 857 113,625 132,530 857
Coal & Coke 62,038 191,626 324 96,506 300,947 321 8,751 14,204 616 167,295 506,777 330
Food & Kindred Products 25,587 45,402 564 25,587 45,402 564
Intermodal 1,203 11,822 102 50,613 41,321 1,225 192,413 599,840 321 244,229 652,983 374
Lumber & Forest Products 70,362 111,311 632 70,362 111,311 632
Metallic Ores 10,816 13,499 801 24,770 16,921 1,464 35,586 30,420 1,170
Metals 95,791 119,796 800 95,791 119,796 800
Minerals & Stone 107,122 170,348 629 6,247 49,567 126 63,849 142,577 448 177,218 362,492 489
Petroleum Products 52,870 76,231 694 560 226 2,478 107 242 442 53,537 76,699 698
Pulp & Paper 90,346 127,522 708 90,346 127,522 708
Waste 21,316 42,677 499 21,316 42,677 499
Other 19,325 56,760 340 19,325 56,760 340
Totals $ 778,717 1,282,585 $ 607 $ 194,335 442,798 $ 439 $ 268,193 759,212 $ 353 $ 1,241,245 2,484,595 $ 500
Nine Months Ended September 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 $ 92,956 157,792 $ 589 $ 17,737 43,804 $ 405 $ 3,532 3,036 $ 1,163 $ 114,225 204,632 $ 558
Autos & Auto Parts 17,019 27,705 614 17,019 27,705 614
Chemicals & Plastics 111,660 134,561 830 111,660 134,561 830
Coal & Coke 57,123 170,664 335 86,292 271,485 318 7,464 18,333 407 150,879 460,482 328
Food & Kindred Products 24,856 44,091 564 24,856 44,091 564
Intermodal 726 7,313 99 52,113 44,153 1,180 190,163 669,963 284 243,002 721,429 337
Lumber & Forest Products 64,903 105,020 618 64,903 105,020 618
Metallic Ores 10,519 13,840 760 29,595 24,114 1,227 40,114 37,954 1,057
Metals 78,681 104,496 753 78,681 104,496 753
Minerals & Stone 97,446 160,917 606 4,787 35,394 135 49,823 127,210 392 152,056 323,521 470
Petroleum Products 50,696 73,821 687 507 206 2,461 51,203 74,027 692
Pulp & Paper 79,690 120,831 660 79,690 120,831 660
Waste 19,000 39,461 481 19,000 39,461 481
Other 14,347 47,248 304 14,347 47,248 304
Totals $ 719,622 1,207,760 $ 596 $ 191,031 419,156 $ 456 $ 250,982 818,542 $ 307 $ 1,161,635 2,445,458 $ 475

* 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
September 30, 2018

North
American
Operations

   

Australian
Operations

 

U.K./European
Operations

 

Total
Operations

Operating revenues $ 355.7 $ 76.7 $ 170.9 $ 603.3
Operating expenses 253.2   56.0   166.3   475.5  
Operating income(a) $ 102.5   $ 20.7   $ 4.6   $ 127.8  
Operating ratio (b) 71.2 % 73.0 % 97.3 % 78.8 %
 
Operating expenses $ 253.2 $ 56.0 $ 166.3 $ 475.5
Corporate development and related costs (0.1 ) (0.2 ) (0.3 )
Restructuring and related costs (3.3 ) (3.3 )
Gain on settlement   0.9     0.9  
Adjusted operating expenses $ 253.1   $ 56.9   $ 162.7   $ 472.8  
Adjusted operating income $ 102.6   $ 19.8   $ 8.1   $ 130.5  
Adjusted operating ratio 71.2 % 74.2 % 95.2 % 78.4 %
(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
September 30, 2017

North
American
Operations

 

Australian
Operations

 

U.K./European
Operations

 

Total
Operations

Operating revenues $ 318.9 $ 81.3 $ 176.7 $ 576.9
Operating expenses 236.7   59.0   171.4   467.1  
Operating income (a) $ 82.2   $ 22.3   $ 5.4   $ 109.8  
Operating ratio (b) 74.2 % 72.6 % 97.0 % 81.0 %
 
Operating expenses $ 236.7 $ 59.0 $ 171.4 $ 467.1
Corporate development and related costs (0.6 ) 0.5 (1.6 ) (1.7 )
Restructuring costs (0.3 )   (2.3 ) (2.6 )
Adjusted operating expenses $ 235.8   $ 59.5   $ 167.4   $ 462.7  
Adjusted operating income $ 83.1   $ 21.8   $ 9.3   $ 114.2  
Adjusted operating ratio 73.9 % 73.2 % 94.7 % 80.2 %
(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 September 30, 2018      

Income
Before
Income Taxes

   

Provision for
Income Taxes

   

Net Income
Attributable
to G&W

    Diluted EPS
As reported $ 103.3 $ (31.0 ) $ 69.6 $ 1.16
Add back certain items:
Corporate development and related costs 0.3 (0.1 ) 0.3
Restructuring and related costs 3.3 (0.6 ) 2.7 0.04
Gain on settlement (0.9 ) 0.3 (0.3 ) (0.01 )
TCJA measurement period adjustment   1.6   1.6   0.03  
As adjusted $ 106.0   $ (29.8 ) $ 73.8   $ 1.23  
Three Months Ended September 30, 2017      

Income
Before
Income Taxes

   

Provision for
Income Taxes

   

Net Income
Attributable
to G&W

    Diluted EPS
As reported $ 83.9 $ (30.5 ) $

50.2

$ 0.80
Add back certain items:
Corporate development and related costs 1.7 (0.8 ) 1.4 0.02
Restructuring costs 2.6 (0.4 ) 2.2 0.04
Recognition of unrecognized tax benefits

 

 

 

(3.3 )

 

(3.3 ) (0.05 )
As adjusted $ 88.3   $ (35.0 ) $

50.6

  $ 0.81  
 

Adjusted Free Cash Flow Measures

     
Nine Months Ended
September 30,
2018     2017
Net cash provided by operating activities $ 397.5 $ 350.4
Allocation of adjusted cash flow to noncontrolling interest(a) (21.6 ) (21.9 )
Adjusted net cash provided by operating activities attributable to G&W $ 375.8 $ 328.5
Core capital expenditures(b) (141.7 ) (123.7 )
Adjusted free cash flow attributable to G&W before new business investments and grant funded projects $ 234.1 $ 204.8
New business investments(b) (31.0 ) (4.5 )
Grant funded projects, net of proceeds received from outside parties(b) 1.8   0.7  
Adjusted free cash flow attributable to G&W $ 204.9   $ 201.1  
(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 the period it was paid) of such distributions made for the nine months ended September 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 nine months ended September 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.
 
     
Nine Months Ended September 30, 2018

Core
Capital (1)

   

New Business
Investments

   

Grant
Funded
Projects (2)

    Total
Purchase of property and equipment $ (148.2 ) $ (31.0 ) $ (14.9 ) $ (194.1 )
Grant proceeds from outside parties 16.7 16.7
Insurance proceeds for the replacement of assets 2.8 2.8
Proceeds from disposition of property and equipment 3.7       3.7  
Purchase of property and equipment, net $ (141.7 ) $ (31.0 ) $ 1.8   $ (170.9 )
 

Nine Months Ended September 30, 2017

Core
Capital (1)

New Business
Investments

Grant
Funded
Projects (2)

Total
Purchase of property and equipment $ (129.3 ) $ (4.5 ) $ (15.3 ) $ (149.1 )
Grant proceeds from outside parties 16.0 16.0
Insurance proceeds for the replacement of assets 1.4 1.4
Proceeds from disposition of property and equipment 4.2       4.2  
Purchase of property and equipment, net $ (123.7 ) $ (4.5 ) $ 0.7   $ (127.5 )

(1)

  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.

(2)

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.

Contact:

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

NYSE: GWR