2014

RailAmerica, Inc. Reports First Quarter 2012 Results

JACKSONVILLE, Fla., April 25, 2012 /PRNewswire/ --

First Quarter Highlights

  • Operating income up 32%; (up 57% excluding 45G benefit and asset sales[1]).
  • Net loss of $0.80 per share after $1.03 per share tender / refinancing charges.
  • Adjusted net income per share[1] of $0.26.
  • Continued execution of acquisition strategy.

RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter ended March 31, 2012.  First quarter 2012 revenue increased 15% to $143.4 million from $124.9 million in the first quarter of 2011.  Freight revenue increased 10% to $107.8 million with average revenue per car up 7% and carloads up 3%.  Non-freight revenue increased 30% to $35.6 million.  

RailAmerica President and Chief Executive Officer John Giles said, "Our positive momentum continues to build as reflected in our record first quarter revenue and operating income excluding 45G benefits and asset sales.  On a comparable basis, operating income was up 57% as we leveraged strong revenue growth and productivity gains.  During the quarter, we completed our senior notes tender / refinancing, which will reduce our interest expense sharply while providing additional financial flexibility."  

Giles continued, "We remain active in the corporate development area, closing on the Wellsboro & Corning and its affiliated transload operations, TransRail North America, investment in early April.  We expect to close on the Marquette Railroad acquisition in May, and our pipeline of additional opportunities remains promising."

RailAmerica reported a first quarter 2012 net loss of $40.2 million, or $0.80 per diluted share, including $51.9 million after tax, or $1.03 per diluted share, of refinancing charges.  This compares to net income of $4.1 million, or $0.07 per diluted share in the first quarter of 2011.  The Company had adjusted net income[1] of $13.0 million and $6.4 million for the first quarters of 2012 and 2011, respectively.  Noteworthy items impacting the first quarters of 2012 and 2011 include:  

  • Early retirement of debt:  First quarter of 2012 included $82.4 million of charges related to the early retirement of debt.
  • 45G tax credits:  A $4.2 million income statement benefit was recorded in the first quarter of 2011, but no benefit was recognized in the first quarter of 2012 since the credit is currently not in effect for 2012.
  • Amortization of swap termination costs:  Non-cash charges of $1.6 million and $3.7 million were recorded in interest expense during the first quarters of 2012 and 2011, respectively, due to the June 2009 termination of an interest rate swap agreement.
  • Restricted stock amortization:  First quarter 2012 restricted stock amortization (included in labor and benefits) increased $3.5 million primarily related to retirement eligibility vesting for certain participants.
  • Asset life study:  First quarter 2012 depreciation and amortization includes $1.7 million in lower depreciation expense resulting from changes in the useful lives of certain road and track assets based on a required periodic asset life study.
  • Severance costs:  First quarter 2011 labor and benefits costs include $1.6 million in severance expenses related to consolidating dispatching services and other organizational changes.
  • Styrene resolution:  The Company resolved outstanding legal issues from a 2005 styrene car incident resulting in a $1.2 million favorable adjustment to casualty and insurance costs during the first quarter of 2011.



For the Three Months Ended March 31,


($ in thousands except EPS)

2011


2012



Pre Tax

EPS


Pre Tax

EPS









Loss on extinguishment of debt

$0

$0.00


($82,441)

($1.03)


45G benefit

4,150

0.05


-

-


Amortization of swap termination costs

(3,677)

(0.04)


(1,591)

(0.02)


Restricted stock amortization increase

-

-


(3,496)

(0.04)


Asset life study

-

-


1,736

0.02


Severance

(1,587)

(0.02)


-

-


Styrene resolution

1,200

0.01


-

-









    Note:  Effective tax rates of 39% and 37% for 2011 and 2012, respectively



The Company reported operating income of $31.9 million in the first quarter of 2012 compared to $24.2 million in the first quarter of 2011.  First quarter 2011 and 2012 operating income and expenses were impacted by 45G credits, restricted stock amortization, severance, the asset life study and the styrene resolution, as discussed above.  In addition, first quarter 2012 operating expenses reflect increased purchased services primarily to support engineering services growth.  Labor costs were up mainly due to increased carloads.  The increase in materials was due to higher levels of car repair activity and growth in engineering services.  Operating income excluding the impact of 45G benefit, asset sales and impairments is shown below.



For the Three Months Ended



March 31,



2011


2012


($ in thousands)










Operating revenue

$124,937


$143,442


Operating expense

100,734


111,566


Operating income, reported

24,203


31,876







Less: Benefit from 45G credits

(4,150)


-


Operating income excluding 45G Benefit [1]

20,053


31,876







Net (gain) loss on sale of assets

207


(163)


Operating income excluding 45G Benefit, Asset Sales and Impairments [1]

$20,260


$31,713







  [1] See schedule at the end of press release for a reconciliation of non-GAAP financial measure



As previously announced, RailAmerica, Inc. will present its first quarter earnings on Thursday, April 26, 2012 at 9:45 a.m. Eastern Time via live teleconference and webcast.  Those interested in participating via teleconference may dial (877) 756-2088.  Callers outside the U.S. may dial (706) 643-9763.  The conference ID number is 69716160.  Participants should dial in no later than 10 minutes prior to the call.  Presentation materials and access to the live webcast will be available in the Investors section of RailAmerica's website (www.railamerica.com).  Following the earnings call, a webcast replay will be archived on the Company's website.  A telephone replay will be available through May 10, 2012 beginning approximately two hours after the call.  The recording can be accessed by dialing (800) 585-8367 or (404) 537-3406.  The conference ID number is 69716160.

RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 44 individual railroads with approximately 7,400 miles of track in 28 U.S. states and three Canadian provinces.

Cautionary Note Regarding Forward-Looking Statements

Certain items in this press release and other information we provide from time to time may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future events and financial performance. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "appears," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. RailAmerica, Inc. can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from RailAmerica, Inc.'s expectations include, but are not limited to, prolonged capital markets disruption and volatility, general economic conditions and business conditions, our relationships with Class I railroads and other connecting carriers, our ability to obtain railcars and locomotives from other providers on which we are currently dependent, legislative and regulatory developments including rulings by the Surface Transportation Board or the Railroad Retirement Board, strikes or work stoppages by our employees, our transportation of hazardous materials by rail, rising fuel costs, goodwill assessment risks, acquisition risks, competitive pressures within the industry, risks related to the geographic markets in which we operate; and other risks detailed in RailAmerica, Inc.'s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.  In addition, new risks and uncertainties emerge from time to time, and it is not possible for RailAmerica, Inc. to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. RailAmerica, Inc. expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

[1] See schedule at end of press release for a reconciliation of non-GAAP financial measure.

RAILAMERICA, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)








For the Three Months Ended



March 31,



2011


2012



(In thousands, except per share data)







Operating revenue

$       124,937


$       143,442


Operating expenses:





Labor and benefits

41,617


45,552


Equipment rents

8,666


8,396


Purchased services

9,106


10,970


Diesel fuel

14,167


13,425


Casualties and insurance

2,134


2,879


Materials

5,085


6,409


Joint facilities

2,205


2,591


Other expenses

9,933


11,101


Track maintenance expense reimbursement

(4,150)


-


Net loss (gain) on sale of assets

207


(163)


Depreciation and amortization

11,764


10,406


Total operating expenses

100,734


111,566


Operating income

24,203


31,876


Interest expense (including amortization costs of $2,616 and $4,858, respectively)

(18,591)


(13,411)


Other (loss) income

540


(81,942)


    (Loss) income from continuing operations before income taxes

6,152


(63,477)


(Benefit from) provision for income taxes

2,067


(23,258)


    Net (loss) income

$           4,085


$        (40,219)







Basic earnings per common share:





    Net (loss)  income

$             0.07


$           (0.80)







Diluted earnings per common share:





    Net (loss) income

$             0.07


$           (0.80)







Weighted Average common shares outstanding:





Basic

54,651


50,518


Diluted

54,651


50,518




RAILAMERICA, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS

(Unaudited)






December 31,


March 31,


2011


2012


(In thousands, except share data)





ASSETS




Current assets:




Cash and cash equivalents

$           90,999


$           98,480

Accounts and notes receivable, net of allowance of $7,291 and $8,617, respectively

96,813


93,512

Current deferred tax assets

9,886


9,886

Other current assets

17,967


23,724

Total current assets

215,665


225,602

Property, plant and equipment, net

1,021,545


1,023,422

Intangible assets

134,851


134,935

Goodwill

211,841


212,020

Other assets

13,478


14,158

Total assets

$      1,597,380


$        1,610,137





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$            71,991


$           77,934

Accounts payable

78,844


72,840

Accrued expenses

28,616


23,430

Total current liabilities

179,451


174,204

Long-term debt, less current maturities

1,827


577,950

Senior secured notes

501,876


-

Deferred income taxes

213,421


190,352

Other liabilities

20,680


21,855

Total liabilities

917,255


964,361

Commitments and contingencies




Stockholders' equity:




Common stock, $0.01 par value, 400,000,000 shares authorized; 50,605,440 shares issued and outstanding at December 31, 2011; and 50,424,800 shares issued and outstanding at March 31, 2012

506


504

Additional paid in capital and other

591,341


593,627

Retained earnings

84,272


43,938

Accumulated other comprehensive income

4,006


7,707

Total stockholders' equity

680,125


645,776

Total liabilities and stockholders' equity

$      1,597,380


$        1,610,137



RAILAMERICA, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)






For the Three Months Ended


March 31,


2011


2012


(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income (loss)

$            4,085


$         (40,219)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization, including amortization of debt issuance costs classified in

12,945


11,432

  interest expense




Amortization of swap termination costs

3,677


1,591

Net loss (gain) on sale or disposal of properties

207


(163)

Loss on extinguishment of debt

-


82,441

Equity compensation costs

2,609


5,727

Deferred income taxes and other

615


(24,280)

Changes in operating assets and liabilities:




Accounts receivable

(3,025)


3,582

Other current assets

(3,924)


(6,046)

Accounts payable

4,198


(9,481)

Accrued expenses

2,124


(5,250)

Other assets and liabilities

(388)


218

    Net cash provided by operating activities

23,123


19,552





CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of property, plant and equipment

(15,786)


(12,791)

NECR government grant reimbursements

2,400


273

Proceeds from sale of assets

848


3,507

Other

-


(140)

    Net cash used in investing activities

(12,538)


(9,151)





CASH FLOWS FROM FINANCING ACTIVITIES:




Principal payments on long-term debt

(263)


(7,125)

Proceeds from issuance of long-term debt

-


589,075

Repurchase of senior secured notes

-


(573,500)

Repurchase of common stock

(33,634)


(520)

Financing costs paid

(119)


(11,037)

    Net cash used in financing activities

(34,016)


(3,107)





Effect of exchange rates on cash

517


187





Net (decrease) increase in cash

(22,914)


7,481

Cash, beginning of period

152,968


90,999

Cash, end of period

$         130,054


$          98,480



RAILAMERICA, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Dollars in thousands)

(Unaudited)







Three Months Ended March 31,


2011


2012

Operating revenue

$      124,937


100.0%


$      143,442


100.0%

Operating expenses:








Labor and benefits

41,617


33.3%


45,552


31.8%

Equipment rents

8,666


6.9%


8,396


5.8%

Purchased services

9,106


7.3%


10,970


7.6%

Diesel fuel

14,167


11.3%


13,425


9.4%

Casualties and insurance

2,134


1.7%


2,879


2.0%

Materials

5,085


4.1%


6,409


4.5%

Joint facilities

2,205


1.8%


2,591


1.8%

Other expenses

9,933


7.9%


11,101


7.7%

Track maintenance expense reimbursement

(4,150)


-3.3%


-


0.0%

Net (gain) loss on sale of assets

207


0.2%


(163)


-0.1%

Depreciation and amortization

11,764


9.4%


10,406


7.3%

Total operating expenses

100,734


80.6%


111,566


77.8%

Operating income

24,203


19.4%


31,876


22.2%



RAILAMERICA, INC. AND SUBSIDIARIES

Railroad Freight Revenue, Carloads and Average Freight Revenue

Per Carload

Comparison by Commodity Group (Unaudited)










Three Months Ended


Three Months Ended


March 31, 2011


March 31, 2012






Average Freight






Average Freight


Freight




Revenue per


Freight




Revenue per


Revenue


Carloads


Carload


Revenue


Carloads


Carload


(Dollars in thousands, except average freight revenue per carload)

Chemicals

$       16,165


24,902


$                649


$       16,721


23,905


$                699

Agricultural Products

14,935


30,710


486


16,622


32,624


510

Metallic Ores and Metals

10,197


16,599


614


12,226


18,906


647

Non-Metallic Minerals and Products

9,053


19,850


456


9,380


18,696


502

Pulp, Paper and Allied Products

9,733


17,007


572


9,287


16,536


562

Forest Products

6,834


11,432


598


8,934


13,665


654

Coal

8,587


40,745


211


8,148


37,835


215

Food or Kindred Products

7,091


13,636


520


7,523


13,819


544

Waste and Scrap Materials

5,235


13,093


400


6,143


13,971


440

Petroleum

5,649


11,316


499


5,799


10,862


534

Other

2,573


7,055


365


3,687


9,530


387

Motor Vehicles

1,583


2,697


587


3,348


5,392


621

Total

$      97,635


209,042


$                467


$     107,818


215,741


$                500



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

Adjusted net income (loss) is a supplemental measure of profitability that is not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP").  We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.  However, Adjusted net income (loss) has limitations as an analytical tool.  It is not a measurement of our profitability under GAAP and should not be considered as an alternative to Net income (loss) as a measure of profitability.

Adjusted net income (loss) assists us in measuring our performance and profitability of our operations without the impact of transaction costs related to debt and credit facility extinguishment, acquisitions, impairment of assets and swap termination. The following table sets forth the reconciliation of Adjusted net income (loss).

(In thousands, except per share data)


Q1 2011

Q1 2012



After Tax

Per Share

After Tax

Per Share







Net income (loss)


$4,085

$0.07

($40,219)

($0.80)







Add:






Amortization of swap termination costs


2,243

0.04

1,002

0.02

Loss on extinguishment of debt and credit facility


-

-

51,938

1.03

Acquisition costs


44

0.00

239

0.00







Adjusted net income (loss)


$6,372

$0.12

$12,961

$0.26







Weighted Average common shares outstanding (diluted)


54,651


50,518



    Note: Numbers may not add due to rounding



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

Operating Income Excluding 45G Benefit, Operating Ratio Excluding 45G Benefit, Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments are supplemental measures of profitability that are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP").  We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.  However, Operating Income Excluding 45G Benefit, Operating Ratio Excluding 45G Benefit, Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments have limitations as analytical tools.  They are not measurements of our profitability under GAAP and should not be considered as alternatives to Operating Income or Operating Ratio as measures of profitability.

Operating Income Excluding 45G Benefit and Operating Ratio Excluding 45G Benefit assist us in measuring our performance and profitability of our operations without the impact of monetizing the 45G tax benefit.  Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments assist us in measuring our performance and profitability of our operations without the impact of monetizing the 45G tax benefit, Asset Sales and Impairments.  The following table sets forth the reconciliation of Operating Income Excluding 45G Benefit from our Operating Income, Operating Ratio Excluding 45G Benefit from our Operating Ratio, Operating Income Excluding 45G Benefit, Asset Sales & Impairments from our Operating Income and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments from our Operating Ratio.

($ in thousands)


Q1 2011

Q1 2012







Operating revenue


$124,937


$143,442


Operating expense


100,734


111,566


Operating income, reported


24,203


31,876








Operating ratio reported



80.6%


77.8%







Less: Benefit from 45G credits


(4,150)

3.3%

-

0.0%

Operating income excluding 45G Benefit


20,053


31,876








Operating ratio excluding 45G Benefit



83.9%


77.8%







Net (gain) loss on sale of assets


207

-0.2%

(163)

0.1%

Impairment of assets


-

-

-

-

Operating income excluding 45G Benefit, Asset Sales & Impairments


$20,260


$31,713








Operating ratio, excluding 45G Benefit, Asset Sales & Impairments



83.8%


77.9%


    Note: Numbers may not add due to rounding



SOURCE RailAmerica, Inc.



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