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

First Quarter 2019 Consolidated Highlights Compared with First
Quarter 2018

• Operating revenues decreased 2.9% to $558.1 million from $574.7
  million.
• Reported operating income decreased 8.3% to $79.7 million; Adjusted
  operating income increased 0.5% to $87.8 million despite negative
  effects from severe winter weather and flooding in North America.⁽¹⁾
• Reported diluted earnings per common share (EPS) decreased 42.9% to
  $0.68 with 57.1 million weighted average shares outstanding, compared
  with reported diluted EPS in the first quarter of 2018 of $1.19 with
  62.9 million weighted average shares outstanding; Adjusted diluted EPS
  increased 11.4% to $0.78.⁽¹⁾
• Reported net income and diluted EPS for the first quarter of 2019
  included $5.4 million, or $0.10 per share, of restructuring and
  related costs. Reported net income and diluted EPS for the first
  quarter of 2018 included a $31.6 million, or $0.50 per share, income
  tax benefit associated with the U.S. Short Line Tax Credit for fiscal
  year 2017 that was enacted retroactively in February 2018.

Company Comments

Jack Hellmann, Chairman and Chief Executive Officer of G&W, commented,
“In the first quarter of 2019, our adjusted diluted EPS increased over
11%, despite severe winter weather and flooding in North America that
impeded shipments from connecting Class I railroads to our Midwest and
Canada regions. These weather impacts resulted in a $0.09, or 10%,
reduction in diluted EPS compared with our first quarter guidance. We
expect to recover a portion of the winter-affected traffic in the coming
months, our outlook for North American rail shipments remains positive
and our 2019 annual guidance remains unchanged.”

“In the first quarter of 2019, we implemented cost reduction initiatives
in each of our three geographic segments. In North America, we
consolidated our Central Region into our Midwest and Southern regions.
In the U.K./Europe, we continued to make reductions in our overhead cost
structure and to invest in technology, and in Australia, we streamlined
rail operations concurrent with the termination of grain operations on
the Eyre Peninsula narrow gauge network.”

“Finally, in the first quarter of 2019, we evaluated several potential
acquisitions and investments. And in March, we signed two long-term
leases of short line railroads in Indiana that create a contiguous
400-mile, four-railroad footprint (CERA-TPW-TZPR-IMRR) within our
Midwest Region, spanning from Eastern Indiana to Western Illinois with
connections to six Class I railroads.”

First Quarter Segment Highlights

• North America: Operating revenues from G&W’s North American Operations
  increased 2.1% to $332.4 million from $325.6 million. Revenue for the
  first quarter of 2018 included $5.5 million of revenues from leased
  railroads in Canada, for which the leases expired at the end of 2018.
  Reported operating income from G&W’s North American Operations, which
  was negatively impacted by severe winter weather in the United States
  and Canada and flooding in the Midwestern United States, decreased
  5.3% to $69.3 million; Adjusted operating income from G&W’s North
  American Operations decreased 4.2% to $70.3 million.⁽¹⁾
• Australia: Operating revenues from G&W’s 51.1% owned Australian
  Operations decreased 13.0% to $65.1 million from $74.8 million.
  Reported operating income from G&W’s Australian Operations decreased
  21.7% to $12.5 million; Adjusted operating income from G&W’s
  Australian Operations decreased 11.9% to $14.1 million. Operating
  income from G&W’s Australian Operations were negatively impacted by
  $1.5 million from foreign currency depreciation and $1.5 million from
  drought conditions in South Australia and New South Wales, which were
  partially offset by a decrease in expenses.⁽¹⁾
• U.K./Europe: Operating revenues from G&W’s U.K./European Operations
  decreased 7.8% to $160.5 million from $174.2 million. Revenues for the
  first quarter of 2018 included $14.7 million of revenues from G&W’s
  former Continental Europe intermodal business, ERS Railways B.V.
  (ERS), which was sold in June 2018. Reported operating loss from G&W’s
  U.K./European Operations remained relatively flat at $2.1 million.
  Adjusted operating income from G&W’s U.K./European Operations
  increased to $3.4 million from an adjusted operating loss of $2.0
  million in 2018.⁽¹⁾

Financial Results

G&W’s operating revenues decreased $16.6 million, or 2.9%, to $558.1
million in the first quarter of 2019, compared with $574.7 million in
the first quarter of 2018. G&W’s operating income in the first quarter
of 2019 was $79.7 million, compared with $86.9 million in the first
quarter of 2018. Excluding certain items affecting comparability between
periods discussed below, G&W’s adjusted operating income in the first
quarter of 2019 was $87.8 million, compared with $87.4 million in the
first quarter of 2018.⁽¹⁾

G&W’s provision for income taxes in the first quarter of 2019 was $14.3
million, while the benefit from income taxes for the first quarter of
2018 was $15.9 million. G&W’s effective tax rate for the first quarter
of 2019 was 26.9%, compared with 26.2% in the first quarter of 2018,
excluding the $31.6 million income tax benefit from the retroactive
extension of the of the U.S. Short Line Tax Credit for fiscal year 2017
that was enacted in February 2018.

Reported net income attributable to G&W in the first quarter of 2019 was
$38.7 million, compared with reported net income attributable to G&W of
$75.1 million in the first quarter of 2018. 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 first quarter of
2019 was $44.4 million, compared with $43.8 million in the first quarter
of 2018.⁽¹⁾

G&W’s reported diluted EPS in the first quarter of 2019 were $0.68 with
57.1 million weighted average shares outstanding, compared with reported
diluted EPS in the first quarter of 2018 of $1.19 with 62.9 million
weighted average shares outstanding. G&W’s adjusted diluted EPS in the
first quarter of 2019 were $0.78 with 57.1 million weighted average
shares outstanding, compared with adjusted diluted EPS in the first
quarter of 2018 of $0.70 with 62.9 million weighted average shares
outstanding.⁽¹⁾

Items Affecting Comparability

In the first quarter of 2019 and 2018, 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):

In the first quarter of 2019, G&W’s results included restructuring and
related costs of $7.6 million, primarily driven by our optimization
activities in the U.K., and corporate development and related costs of
$0.4 million.

In the first quarter of 2018, G&W’s results included a $31.6 million
income tax benefit associated with the U.S. Short Line Tax Credit for
fiscal year 2017 that was enacted in February 2018.

First Quarter Results by Segment

Operating revenues from G&W’s North American Operations increased $6.8
million, or 2.1%, to $332.4 million in the first quarter of 2019,
compared with $325.6 million in the first quarter of 2018. Excluding
$5.5 million of revenues from lease expirations in Canada for the first
quarter of 2018 and a $1.1 million decrease due to the impact of foreign
currency depreciation, North American Operations same railroad revenues
increased $13.3 million, or 4.2%, primarily due to increases in freight
and freight-related revenues.

G&W’s North American Operations were negatively impacted by extreme
winter weather in the United States and Canada and flooding in the
Midwestern United States. Operating income from G&W’s North American
Operations was $69.3 million in the first quarter of 2019, compared with
$73.2 million in the first quarter of 2018. The operating ratio for
North American Operations was 79.1% in the first quarter of 2019,
compared with 77.5% in the first quarter of 2018. Adjusted operating
income from G&W’s North American Operations in the first quarter of 2019
was $70.3 million, compared with $73.4 million in the first quarter of
2018. The adjusted operating ratio for North American Operations was
78.9% in the first quarter of 2019, compared with an adjusted operating
ratio of 77.5% in the first quarter of 2018.⁽¹⁾

Operating revenues from G&W’s Australian Operations decreased $9.7
million, or 13.0%, to $65.1 million in the first quarter of 2019,
compared with $74.8 million in the first quarter of 2018. Excluding a
$7.0 million decrease due to the impact of foreign currency
depreciation, Australian Operations revenues decreased $2.7 million, or
4.0%, primarily due to decreases in drought impacted agricultural
products freight revenues and freight-related revenues.⁽²⁾

G&W’s Australian Operations had operating income of $12.5 million in the
first quarter of 2019, compared with $16.0 million in the first quarter
of 2018. The operating ratio for Australian Operations was 80.8% in the
first quarter of 2019, compared with 78.7% in the first quarter of 2018.
Adjusted operating income from G&W’s Australian Operations was $14.1
million in the first quarter of 2019, compared with $16.0 million in the
first quarter of 2018. The adjusted operating ratio for Australian
Operations was 78.4% in the first quarter of 2019, compared with 78.6%
in the first quarter of 2018. Operating income from G&W’s Australian
Operations was negatively impacted by $1.5 million from foreign currency
depreciation and $1.5 million from drought conditions in South Australia
and New South Wales, which were partially offset by a decrease in
expenses.⁽¹⁾

Operating revenues from G&W’s U.K./European Operations decreased $13.7
million, or 7.8%, to $160.5 million in the first quarter of 2019,
compared with $174.2 million in the first quarter of 2018. Excluding
$14.7 million of revenues from G&W’s divested ERS operations for the
first quarter of 2018 and an $11.0 million decrease due to the impact of
foreign currency depreciation, U.K./European Operations same railroad
revenues increased $12.1 million, or 8.1%, primarily due to increases in
U.K. intermodal freight-related and freight revenues.⁽²⁾

G&W’s U.K./European Operations had an operating loss of $2.1 million in
the first quarter of 2019, compared with and operating loss of $2.2
million in the first quarter of 2018, which included operating income of
$0.5 million from ERS. The operating ratio for G&W’s U.K./European
Operations of 101.3% in the first quarter of 2019 remained unchanged
compared with the first quarter of 2018. Adjusted operating income from
G&W’s U.K./European Operations was $3.4 million in the first quarter of
2019, compared with an adjusted operating loss of $2.0 million in the
first quarter of 2018, which included operating income of $0.5 million
from ERS. The adjusted operating ratio for U.K./European Operations was
97.9% in the first quarter of 2019, compared with 101.2% in the first
quarter of 2018.⁽¹⁾

Adjusted Free Cash Flow Measures ⁽¹⁾

Adjusted free cash flow measures for the three months ended March 31,
2019 and 2018 were as follows (in millions):

Share Repurchase Program

During the first quarter of 2019, G&W repurchased 64,860 shares of Class
A Common Stock for $4.8 million, which resulted in a reduction of 59,095
shares in our weighted average diluted shares outstanding for the first
quarter of 2019. During the first quarter of 2018, G&W repurchased
792,921 shares of Class A Common Stock for $57.4 million, which resulted
in a reduction of 51,106 shares in our weighted average diluted shares
outstanding for the first quarter of 2018.

Conference Call and Webcast Details

As previously announced, G&W’s conference call to discuss financial
results for the first quarter of 2019 will be held on Tuesday, April 30,
2019, at 11 a.m. EDT. The dial-in number for the teleconference in the
U.S. is (800) 230-1085; outside the U.S., the dial-in number is (612)
288-0329, 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 April 30, 2019, by
dialing (800) 475-6701 (or outside the U.S., dialing 320-365-3844). The
access code is 458667.

About G&W

G&W owns or leases 120 freight railroads organized in eight locally
managed operating regions with 8,000 employees serving 3,000 customers.

• G&W’s six North American regions serve 41 U.S. states and four
  Canadian provinces and include 114 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 2018 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.

Contacts

Michael Williams of G&W Corporate Communications
1-203-202-8900
[email protected]

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