RailAmerica, Inc. Reports First Quarter 2010 Results
JACKSONVILLE, Fla., April 28 /PRNewswire-FirstCall/ --
First Quarter Highlights
- Revenue increased 14% versus first quarter 2009.
- Carloads up 5% versus first quarter 2009.
- Operating income of $18.7 million.
- Loss from continuing operations of $0.05 per share including $0.07 per share non-cash charge for swap amortization.
RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter ended March 31, 2010. First quarter 2010 revenue increased 14% to $112.7 million from $99.2 million in the first quarter of 2009. Freight revenue increased 14% to $93.1 million while carloads increased 5%. Non-freight revenue increased 14% to $19.6 million.
John Giles, RailAmerica's President and Chief Executive Officer, said "We are off to a solid start in 2010 and are encouraged by a clearly improving economy. The pickup in business activity appears sustainable, and we are optimistic this year will mark our return to positive full year carload growth for the first time since 2006. In the operating expense area, we continued to reduce our overall cost structure though higher fuel prices hurt our earnings in the first quarter. Operating income was up 15% versus a year ago excluding the impact of the 45G tax credit monetization that we recognized in the first quarter of 2009. Our cash flow performance was also strong in the first quarter as we continue our focus on effective management of capital expenditures and working capital. In the corporate development area, we are moving forward in a disciplined manner to create value for our shareholders by pursuing acquisition opportunities."
After recognizing non-cash charges totaling $3.6 million after tax for interest rate swap termination costs, RailAmerica reported a first quarter 2010 loss from continuing operations of $2.8 million, or $0.05 per diluted share. This compares to a loss from continuing operations of $0.1 million, or $0.00 per diluted share, for first quarter 2009. Net loss, which includes discontinued operations, was $0.05 per diluted share in the first quarter of 2010 compared to net income of $0.02 per diluted share for the first quarter of 2009.
First quarter 2010 operating income declined 8% to $18.7 million from $20.4 million in the first quarter of 2009. Higher fuel prices and lower fuel surcharge had a combined $4.5 million unfavorable impact on operating income. Higher fuel prices accounted for a $3.0 million increase in fuel expense and fuel surcharge revenue was $1.5 million lower primarily due to the lag inherent in our fuel surcharge programs. Incentive compensation and health insurance costs also increased for the quarter. Another factor in the expense increase was the absence of any operating expense benefit in the first quarter of 2010 from monetizing 45G tax credits; first quarter 2009 operating expenses were favorably impacted by a $4.1 million 45G benefit as shown in the table below.
For the Three Months Ended
March 31,
--------------------------
($ in thousands) 2010 2009
-------- -------
Operating revenue $112,744 $99,237
Operating expense (94,001) (78,854)
-------- -------
Operating income, reported 18,743 20,383
Less: Benefit from 45G tax credit
monetization - (4,124)
-------- -------
Operating income before 45G benefit (1) $18,743 $16,259
(1) See schedule at the end of press release for a reconciliation of
non-GAAP financial measures.
As previously announced, RailAmerica, Inc. will present its first quarter earnings on Thursday, April 29, 2010 at 8:30 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 (574) 941-1456. The conference ID number is 64379335. 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 13, 2010 beginning approximately two hours after the call. The recording can be accessed by dialing (800) 642-1687 or (706) 645-9291. The conference ID number is 64379335.
RailAmerica, Inc. owns and operates short line and regional freight railroads in North America, operating a portfolio of 40 individual railroads with approximately 7,400 miles of track in 27 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, 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 filed with the Commission on March 26, 2010. 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.
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
--------------------------
2010 2009
-------- -------
(In thousands, except
per share data)
Operating revenue $112,744 $99,237
Operating expenses:
Transportation 52,410 45,262
Selling, general and administrative 30,708 23,832
Net gain on sale of assets (32) (454)
Depreciation and amortization 10,915 10,214
-------- -------
Total operating expenses 94,001 78,854
-------- -------
Operating income 18,743 20,383
Interest expense (including amortization costs
of $7,304 and $5,112, respectively) (22,704) (18,590)
Other income (loss) 459 (1,164)
-------- -------
Income (loss) from continuing operations before
income taxes (3,502) 629
Provision for (benefit from) income taxes (672) 766
-------- -------
Loss from continuing operations (2,830) (137)
Discontinued operations:
Gain on disposal of discontinued business (net
of income taxes of $1 and $90, respectively) 1 184
Income from operations of discontinued business
(net of income taxes of $141 and $466,
respectively) 315 946
-------- -------
Net income (loss) $(2,514) $993
======== =======
Basic earnings (loss) per common share:
Continuing operations $(0.05) $0.00
Discontinued operations 0.00 0.02
-------- -------
Net income (loss) $(0.05) $0.02
Diluted earnings (loss) per common share:
Continuing operations $(0.05) $0.00
Discontinued operations 0.00 0.02
-------- -------
Net income (loss) $(0.05) $0.02
Weighted Average common shares outstanding:
Basic 54,568 43,604
Diluted 54,568 43,604
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2010 2009
---------- ------------
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents $204,148 $190,218
Accounts and notes receivable, net of
allowance of $5,106 and $4,557,
respectively 76,861 66,619
Current deferred tax assets 12,697 12,697
Other current assets 15,165 21,958
---------- ----------
Total current assets 308,871 291,492
Property, plant and equipment, net 955,653 952,527
Intangible assets 136,116 136,654
Goodwill 201,030 200,769
Other assets 16,668 17,187
---------- ----------
Total assets $1,618,338 $1,598,629
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $675 $669
Accounts payable 63,851 53,948
Accrued expenses 38,616 34,675
---------- ----------
Total current liabilities 103,142 89,292
Long-term debt, less current
maturities 2,715 3,013
Senior secured notes 640,696 640,096
Deferred income taxes 185,658 185,002
Other liabilities 22,149 21,895
---------- ----------
Total liabilities 954,360 939,298
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value,
400,000,000 shares authorized;
54,884,640 shares issued and
outstanding at March 31, 2010; and
54,364,306 shares issued and
outstanding at December 31, 2009 549 544
Additional paid in capital and other 631,114 630,653
Retained earnings 43,872 46,386
Accumulated other comprehensive loss (11,557) (18,252)
---------- ----------
Total stockholders' equity 663,978 659,331
---------- ----------
Total liabilities and stockholders'
equity $1,618,338 $1,598,629
========== ==========
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
March 31,
--------------------------
2010 2009
-------- -------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(2,514) $993
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization, including
amortization of debt issuance costs
classified in interest expense 12,151 15,432
Amortization of swap termination costs 6,073 -
Net gain on sale or disposal of properties (34) (728)
Foreign exchange loss on debt - 1,164
Equity compensation costs 1,525 790
Deferred income taxes and other (1,952) 1,322
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable (9,980) (10,880)
Other current assets 6,618 588
Accounts payable 9,220 (994)
Accrued expenses 4,169 (14,322)
Other assets and liabilities 164 300
-------- -------
Net cash provided by (used in) operating
activities 25,440 (6,335)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (11,679) (11,651)
Proceeds from sale of assets 343 17,335
Deferred acquisition/disposition costs and
other - (355)
-------- -------
Net cash provided by (used in) investing
activities (11,336) 5,329
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (292) (434)
Costs associated with sale of common stock (106) -
Deferred financing costs paid (95) -
-------- -------
Net cash used in financing activities (493) (434)
-------- -------
Effect of exchange rates on cash 319 (179)
-------- -------
Net increase (decrease) in cash 13,930 (1,619)
Cash, beginning of period 190,218 26,951
-------- -------
Cash, end of period $204,148 $25,332
======== =======
RAILAMERICA, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(amounts in thousands)
(unaudited)
Three Months Ended March 31,
----------------------------------
2010 2009
---------------- ---------------
Operating revenue $112,744 100.0% $99,237 100.0%
Operating expenses:
Labor and benefits 36,965 32.8% 31,414 31.7%
Equipment rents 8,432 7.5% 9,034 9.1%
Purchased services 8,497 7.5% 7,865 7.9%
Diesel fuel 10,785 9.6% 7,689 7.7%
Casualties and insurance 3,549 3.1% 4,644 4.7%
Materials 3,851 3.4% 2,611 2.6%
Joint facilities 2,146 1.9% 1,410 1.4%
Other expenses 8,893 7.9% 8,551 8.6%
Track maintenance credit
(45G) - 0.0% (4,124) (4.1)%
Net gain on sale of
assets (32) 0.0% (454) (0.4)%
Depreciation and
amortization 10,915 9.7% 10,214 10.3%
-------- ----- ------- -----
Total operating expenses 94,001 83.4% 78,854 79.5%
-------- ----- ------- -----
Operating income $18,743 16.6% $20,383 20.5%
======== ===== ======= =====
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, 2010 March 31, 2009
--------------------------- ---------------------------
Average Average
Freight Freight
Freight Revenue per Freight Revenue per
Revenue Carloads Carload Revenue Carloads Carload
------- -------- ---------- ------- -------- ----------
(Dollars in thousands, except carloads and average
freight revenue per carload)
Agricultural
Products $15,486 33,942 $456 $12,218 28,566 $428
Chemicals 13,634 22,914 595 11,439 19,874 576
Metallic Ores and
Metals 9,621 17,056 564 5,741 10,159 565
Coal 9,585 42,775 224 9,061 44,510 204
Pulp, Paper and
Allied Products 7,958 13,995 569 7,580 14,465 524
Non-Metallic Minerals
and Products 7,885 17,752 444 8,100 19,559 414
Food or Kindred
Products 6,852 14,018 489 6,731 13,111 513
Forest Products 6,548 11,423 573 6,907 11,661 592
Petroleum 5,645 11,823 477 5,359 12,314 435
Waste and Scrap
Materials 5,298 13,105 404 4,721 13,181 358
Other 2,788 7,104 392 2,913 8,567 340
Motor Vehicles 1,806 3,241 557 1,196 3,261 367
------- ------- ------ ------- ------- ------
Total $93,106 209,148 $445 $81,966 199,228 $411
======= ======= ====== ======= ======= ======
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
Operating Income Before 45G Benefit and Operating Ratio Before 45G Benefit are supplemental measures of profitability that are not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. However, Operating Income Before 45G Benefit and Operating Ratio Before 45G Benefit have limitations as an analytical tool. They are not measurements of our profitability under GAAP and should not be considered as an alternative to Operating Income or Operating Ratio as a measure of profitability.
Operating Income Before 45G Benefit and Operating Ratio Before 45G Benefit assists us in measuring our performance and profitability of our operations without the impact of monetizing the 45G Tax Benefit. The following table sets forth the reconciliation of Operating Income Before 45G Benefit from our Operating Income and Operating Ratio Before 45G Benefit from our Operating Ratio.
Quarter Ended March 31,
-------------------------------------
($ in thousands) 2010 2009
--------------- --------------
Operating revenue $112,744 $99,237
Operating expense (94,001) (78,854)
-------- -------
Operating income, reported $18,743 $20,383
Operating ratio, reported 83.4% 79.5%
Less: Benefit from 45G tax
credit monetization - 0.0% (4,124) (4.1%)
-------- ------ ------- -------
Operating income, before 45G
benefit $18,743 $16,259
Operating ratio, before 45G
benefit 83.4% 83.6%
SOURCE RailAmerica
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