RailAmerica, Inc. Reports Second Quarter 2012 Results

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

Second Quarter Highlights

  • Revenue increased 12% versus second quarter 2011.
  • Operating income up 19%; (up 28% excluding 45G benefit, asset sales and impairments(1)).
  • Net income of $0.23 per share.
  • Adjusted net income per share(1) of $0.34.

RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter ended June 30, 2012.  Second quarter 2012 revenue increased 12% to $156.1 million from $139.2 million in the second quarter of 2011.  Freight revenue increased 8% to $113.6 million with average revenue per car up 4% and carloads up 4%.  Non-freight revenue increased 26% to $42.5 million.  

RailAmerica President and Chief Executive Officer John Giles said "Exceptional execution by our team drove another strong quarter with operating income on a comparable basis up 28%.  We remain well positioned for continued progress in the months ahead.  During the second quarter we began integrating our two recent acquisitions.  Additionally, our commercial and industrial development teams are pursuing a robust pipeline of opportunities."

RailAmerica reported second quarter 2012 net income of $11.4 million, or $0.23 per diluted share.  This compares to net income of $8.7 million, or $0.17 per diluted share in the second quarter of 2011.  Noteworthy items impacting the second quarters of 2012 and 2011 include:  

  • Early retirement of debt:  Second quarter of 2012 included $5.7 million of charges related to the redemption of the remaining $74 million of our 9.25% senior notes.
  • Acquisition / Transaction costs:  In the second quarter of 2012 the Company incurred $2.2 million of transaction related expenses.  A large portion was due to the Company's previously announced exploration of strategic alternatives.  In the second quarter of 2011 the Company spent $0.2 million on acquisition related activity.
  • 45G tax credits:  A $5.1 million income statement benefit was recorded in the second quarter of 2011, but no benefit was recognized in the second quarter of 2012 since the credit is currently not in effect for 2012.
  • Amortization of swap termination costs:  Non-cash charges of $1.4 million and $3.2 million were recorded in interest expense during the second quarters of 2012 and 2011, respectively, due to the June 2009 termination of an interest rate swap agreement.
  • Asset impairment:  Second quarter of 2011 includes a non-cash, $3.2 million impairment charge resulting from a comprehensive evaluation of our locomotive fleet and the identification of surplus units.

Summary of Noteworthy Items Impacting Second Quarter 2011 and 2012








For the Three Months Ended June 30,

($ in thousands except EPS)

2011


2012


Pre Tax

EPS


Pre Tax

EPS







Loss on extinguishment of debt

$0

$0.00


($5,666)

($0.07)

Acquisition / Transaction Costs

(243)

(0.00)


(2,184)

(0.03)

45G benefit

5,133

0.06


-

-

Amortization of swap termination costs

(3,201)

(0.04)


(1,363)

(0.02)

Impairment of assets

(3,220)

(0.04)


-

-







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




The Company reported operating income of $34.2 million in the second quarter of 2012 compared to $28.7 million in the second quarter of 2011.  In addition to the items mentioned above impacting operating income, second quarter 2012 expenses were up primarily due to operating expenses from acquisitions and higher engineering services activity.  Operating income excluding the impact of 45G credits, asset sales and impairments is shown below.


For the Three Months Ended


June 30,


2011


2012

($ in thousands)








Operating revenue

$139,215


$156,096

Operating expense

110,517


121,921

Operating income, reported

28,698


34,175





Less: Benefit from 45G credits

(5,133)


-

Operating income excluding 45G Benefit (1)

23,565


34,175





Net (gain) loss on sale of assets

(64)


5

Impairment of assets

3,220


-

Operating income excluding 45G Benefit, Asset Sales and Impairments(1)

$26,721


$34,180





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



On July 23, 2012 RailAmerica and Genesee & Wyoming Inc. (GWI) (NYSE: GWR) issued a joint press release announcing they had entered into an agreement under which GWI will acquire RailAmerica for an all cash purchase price of $27.50 per share.  RailAmerica will not be holding a conference call to present its second quarter earnings.  The Company will post a presentation containing supplemental information for the second quarter and year to date results in the Investors section of RailAmerica's website (www.railamerica.com).

RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 45 individual railroads with approximately 7,500 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.

INVESTOR CONTACT
Ira Berger
Vice President & Treasurer    
Office: 904.999.5332

MEDIA CONTACT    
Donia Crime        
Cell: 404.271.1437  
Office: 904.645.6200                  

RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)







For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2011


2012


2011


2012


(In thousands, except per share data)









Operating revenue

$     139,215


$         156,096


$     264,152


$     299,538

Operating expenses:








Labor and benefits

41,859


43,228


83,476


88,780

Equipment rents

8,889


9,939


17,555


18,335

Purchased services

11,327


15,550


20,433


26,520

Diesel fuel

14,578


13,210


28,745


26,635

Casualties and insurance

4,955


5,306


7,089


8,185

Materials

5,928


9,746


11,013


16,155

Joint facilities

2,550


2,755


4,755


5,346

Other expenses

10,672


10,588


20,605


21,689

Track maintenance expense reimbursement

(5,133)


-


(9,283)


-

Net (gain) loss on sale of assets

(64)


5


143


(158)

Impairment of assets

3,220


-


3,220


-

Depreciation and amortization

11,736


11,594


23,500


22,000

Total operating expenses

110,517


121,921


211,251


233,487

Operating income

28,698


34,175


52,901


66,051

Interest expense (including amortization costs of $4,384, $2,163, $9,242 and $4,779, respectively)

(18,143)


(10,267)


(36,734)


(23,678)

Other income (loss)

495


(5,476)


1,035


(87,418)

Income (loss) before income taxes

11,050


18,432


17,202


(45,045)

Provision for (benefit from) income taxes

2,350


7,235


4,417


(16,023)

Net income (loss)

8,700


11,197


12,785


(29,022)

Less:  Net loss attributable to noncontrolling interest

-


(202)


-


(202)

Net income (loss) attributable to the Company

$         8,700


$           11,399


$       12,785


$     (28,820)









Basic earnings per common share:








Net income (loss) attributable to the Company

$           0.17


$               0.23


$           0.24


$         (0.57)









Diluted earnings per common share:








Net income (loss) attributable to the Company

$           0.17


$               0.23


$           0.24


$         (0.57)









Weighted Average common shares outstanding:








Basic

52,282


50,407


53,467


50,462

Diluted

52,282


50,578


53,467


50,462



RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)






December 31,


June 30,


2011


2012


(In thousands, except share data)





ASSETS




Current assets:




Cash and cash equivalents

$        90,999


$        50,987

Accounts and notes receivable, net of allowance of $7,291 and $8,817, respectively

96,813


105,747

Current deferred tax assets

9,886


13,659

Other current assets

17,967


24,967

Total current assets

215,665


195,360

Property, plant and equipment, net

1,021,545


1,051,479

Intangible assets

134,851


175,202

Goodwill

211,841


233,922

Other assets

13,478


12,615

Total assets

$   1,597,380


$   1,668,578





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$          71,991


$         64,120

Accounts payable

78,844


101,502

Accrued expenses

28,616


29,468

Total current liabilities

179,451


195,090

Long-term debt, less current maturities

1,827


576,628

Senior secured notes

501,876


-

Deferred income taxes

213,421


200,512

Other liabilities

20,680


31,825

Total liabilities

917,255


1,004,055

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 50,396,991 shares issued and outstanding at June 30, 2012

506


504

Additional paid in capital and other

591,341


594,988

Retained earnings

84,272


55,337

Accumulated other comprehensive income

4,006


6,221

Total stockholders' equity

680,125


657,050

Noncontrolling interest

-


7,473

Total equity

680,125


664,523

Total liabilities and stockholders' equity

$   1,597,380


$   1,668,578



RAILAMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




For the Six Months Ended


June 30,


2011


2012


(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income (loss)

$                 12,785


$               (29,022)

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




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

25,864


23,825

Amortization of swap termination costs

6,878


2,954

Net loss (gain) on sale or disposal of properties

143


(158)

Impairment of assets

3,220


-

Loss on extinguishment of debt

-


88,107

Equity compensation costs

4,979


7,647

Deferred income taxes and other

1,533


(18,022)

Changes in operating assets and liabilities, net of acquisitions:




Accounts receivable

(23,767)


(5,230)

Other current assets

(10,031)


(6,817)

Accounts payable

11,914


9,471

Accrued expenses

19,691


339

Other assets and liabilities

(481)


218

    Net cash provided by operating activities

52,728


73,312





CASH FLOWS FROM INVESTING ACTIVITIES:




Purchase of property, plant and equipment

(36,185)


(42,914)

NECR government grant reimbursements

6,954


3,681

Proceeds from sale of assets

2,788


4,513

Acquisitions, net of cash acquired

(12,706)


(55,443)

Other

(45)


(238)

    Net cash used in investing activities

(39,194)


(90,401)





CASH FLOWS FROM FINANCING ACTIVITIES:




Principal payments on long-term debt

(263)


(1,588)

Proceeds from issuance of long-term debt

-


582,075

Repurchase of senior secured notes

-


(649,720)

Repayment of revolving credit facility

-


(7,000)

Proceeds from revolving credit facility

-


65,000

Repurchase of common stock

(50,091)


(520)

Financing costs paid

(119)


(11,179)

    Net cash used in financing activities

(50,473)


(22,932)





Effect of exchange rates on cash

453


9





Net decrease in cash

(36,486)


(40,012)

Cash, beginning of period

152,968


90,999

Cash, end of period

$               116,482


$                 50,987











RAILAMERICA, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Dollars in thousands)

(Unaudited)






Three Months Ended June 30,


2011


2012

Operating revenue

$         139,215


100.0%


$         156,096


100.0%

Operating expenses:








Labor and benefits

41,859


30.1%


43,228


27.7%

Equipment rents

8,889


6.4%


9,939


6.4%

Purchased services

11,327


8.1%


15,550


10.0%

Diesel fuel

14,578


10.5%


13,210


8.4%

Casualties and insurance

4,955


3.5%


5,306


3.4%

Materials

5,928


4.3%


9,746


6.2%

Joint facilities

2,550


1.8%


2,755


1.8%

Other expenses

10,672


7.7%


10,588


6.8%

Track maintenance expense reimbursement

(5,133)


(3.7%)


-


0.0%

Net (gain) loss on sale of assets

(64)


(0.0%)


5


0.0%

Impairment of assets

3,220


2.3%


-


0.0%

Depreciation and amortization

11,736


8.4%


11,594


7.4%

Total operating expenses

110,517


79.4%


121,921


78.1%

Operating income

$           28,698


20.6%


$           34,175


21.9%












Six Months Ended June 30,


2011


2012

Operating revenue

$         264,152


100.0%


$         299,538


100.0%

Operating expenses:








Labor and benefits

83,476


31.6%


88,780


29.6%

Equipment rents

17,555


6.7%


18,335


6.1%

Purchased services

20,433


7.7%


26,520


8.9%

Diesel fuel

28,745


10.9%


26,635


8.9%

Casualties and insurance

7,089


2.7%


8,185


2.7%

Materials

11,013


4.2%


16,155


5.4%

Joint facilities

4,755


1.8%


5,346


1.8%

Other expenses

20,605


7.8%


21,689


7.2%

Track maintenance expense reimbursement

(9,283)


(3.5%)


-


0.0%

Net loss (gain) on sale of assets

143


0.0%


(158)


(0.1%)

Impairment of assets

3,220


1.2%


-


0.0%

Depreciation and amortization

23,500


8.9%


22,000


7.4%

Total operating expenses

211,251


80.0%


233,487


77.9%

Operating income

$           52,901


20.0%


$           66,051


22.1%











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


June 30, 2011


June 30, 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

$          16,324


24,496


$                      666


$          17,465


24,151


$                      723

Agricultural Products

18,044


34,146


528


18,992


36,273


524

Metallic Ores and Metals

11,335


18,388


616


11,169


16,763


666

Non-Metallic Minerals and Products

10,437


22,774


458


11,426


23,493


486

Pulp, Paper and Allied Products

10,481


17,154


611


9,598


17,177


559

Forest Products

7,925


12,656


626


9,864


14,881


663

Coal

7,802


34,682


225


7,483


33,483


223

Food or Kindred Products

7,578


14,253


532


7,649


13,849


552

Waste and Scrap Materials

6,436


15,517


415


6,635


14,581


455

Petroleum

4,304


8,346


516


5,183


9,912


523

Other

3,401


7,019


485


4,388


9,542


460

Motor Vehicles

1,500


2,664


563


3,703


5,661


654

Total

$        105,567


212,095


$                      498


$        113,555


219,766


$                      517














Six Months Ended


Six Months Ended


June 30, 2011


June 30, 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

$          32,489


49,398


$                      658


$          34,186


48,056


$                      711

Agricultural Products

32,979


64,856


508


35,614


68,897


517

Metallic Ores and Metals

21,533


34,987


615


23,395


35,669


656

Non-Metallic Minerals and Products

19,490


42,624


457


20,806


42,189


493

Pulp, Paper and Allied Products

20,214


34,161


592


18,885


33,713


560

Forest Products

14,759


24,088


613


18,798


28,546


659

Coal

16,389


75,427


217


15,631


71,318


219

Food or Kindred Products

14,669


27,889


526


15,171


27,668


548

Waste and Scrap Materials

11,671


28,610


408


12,778


28,552


448

Petroleum

9,953


19,662


506


10,982


20,774


529

Other

5,974


14,074


424


8,076


19,072


423

Motor Vehicles

3,082


5,361


575


7,051


11,053


638

Total

$        203,202


421,137


$                      483


$        221,373


435,507


$                      508















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, exploration of strategic alternatives, acquisitions, impairment of assets and swap termination. The following table sets forth the reconciliation of Adjusted net income (loss).


2011

(In thousands, except per share data)

Q1

Q2

Q2 YTD


After Tax

Per Share

After Tax

Per Share

After Tax

Per Share








Net income

$4,085

$0.07

$8,700

$0.17

$12,785

$0.24








Add:







Amortization of swap termination costs

2,243

0.04

1,953

0.04

4,196

0.08

Impairment of assets

-

-

1,964

0.04

1,964

0.04

Acquisition expense

44

0.00

148

0.00

192

0.00








Adjusted net income

$6,372

$0.12

$12,765

$0.24

$19,137

$0.36








Weighted Average common shares outstanding (diluted)

54,651


52,282


53,467










2012

(In thousands, except per share data)

Q1

Q2

Q2 YTD


After Tax

Per Share

After Tax

Per Share

After Tax

Per Share








Net income (loss)

($40,219)

($0.80)

$11,399

$0.23

($28,820)

($0.57)








Add:







Amortization of swap termination costs

1,002

0.02

859

0.02

1,861

0.04

Loss on extinguishment of debt

51,938

1.03

3,570

0.07

55,507

1.10

Acquisition / strategic alternatives expense

239

0.00

1,376

0.03

1,615

0.03








Adjusted net income

$12,961

$0.26

$17,203

$0.34

$30,164

$0.60








Weighted Average common shares outstanding (diluted)

50,518


50,578


50,462









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)

Q2 2011

Q2 2012






Operating revenue

$139,215


$156,096


Operating expense

110,517


121,921


Operating income, reported

28,698


34,175







Operating ratio reported


79.4%


78.1%






Less: Benefit from 45G credits

(5,133)

3.7%

-

0.0%

Operating income excluding 45G Benefit

23,565


34,175







Operating ratio excluding 45G Benefit


83.1%


78.1%






Net (gain) loss on sale of assets

(64)

0.0%

5

0.0%

Impairment of assets

3,220

-2.3%

-

0.0%

Operating income excluding 45G Benefit, Asset Sales & Impairments

$26,721


$34,180







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


80.8%


78.1%






Note: Numbers may not add due to rounding



SOURCE RailAmerica, Inc.



RELATED LINKS
http://www.railamerica.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.