RailAmerica Q3 net income up nearly 14% year-over-year to US$9M as revenues rise 9% to US$139.7M; CEO says results driven by continued focus on pricing, non-freight revenue, productivity offsetting lower carloads, disruptions from Hurricane Irene

JACKSONVILLE, Florida , October 25, 2011 (press release) – Third Quarter Highlights

* Revenue increased 9% versus third quarter 2010.
* Income from continuing operations of $0.17 per share.
* Adjusted income from continuing operations (1) of $0.24 per share.
RailAmerica, Inc. (NYSE:RA - News) today reported financial results for the quarter ended September 30, 2011. Third quarter 2011 revenue increased 9% to $139.7 million from $128.3 million in the third quarter of 2010. Freight revenue increased 7% to $104.7 million with average revenue per car up 14% and carloads down 6%. Non-freight revenue increased 14% to $35.0 million.

RailAmerica President and Chief Executive Officer John Giles, said, "This was another strong quarter for us. Operating income excluding 45G credits, impairments and asset sales increased 10%. We achieved these results through our continuing focus on pricing, non-freight revenue and productivity. Our success in these areas allowed us to perform well despite lower carloads and the temporary disruption of service on our New England Central Railroad from Hurricane Irene."

RailAmerica reported third quarter 2011 income from continuing operations of $9.1 million, or $0.17 per diluted share. This compares to $8.0 million, or $0.15 per diluted share in the third quarter of 2010. Noteworthy items impacting the third quarters of 2011 and 2010 include:

* 45G credits: Because the latest extension of the tax credits (for 2010 and 2011) did not occur until December 2010, no maintenance reimbursements were recognized in the third quarter of 2010. A $3.9 million reduction of expense was recorded in the third quarter of 2011.
* Amortization of swap termination costs: Non-cash charges of $2.7 million and $4.9 million were recorded in interest expense during the third quarters of 2011 and 2010, respectively, due to the June 2009 termination of an interest rate swap agreement.
* Asset impairment: Third quarter of 2011 includes a non-cash, $1.9 million impairment charge resulting from further evaluation of our locomotive fleet.
* Credit facility replacement: Third quarter of 2011 includes a $0.7 million non-cash charge related to the replacement of our asset backed loan facility with a new revolving credit facility.
* Acquisition income and expenses: The Company received a break-up fee in the third quarter of 2010 that offset other acquisition expenses resulting in a net $1.7 million of income.
* Asset sales: Third quarter of 2010 includes $1.7 million of gains on asset sales.
* Taxes: Cash taxes paid in the third quarter of 2011 were $1.1 million compared to the financial statement provision for income tax expense of $4.4 million.

The Company reported operating income of $31.5 million in the third quarter of 2011 compared to $28.5 million in the third quarter of 2010. Third quarter 2011 operating income and expenses were favorably impacted by 45G credits as discussed above. In addition, third quarter 2011 operating expenses were up primarily due to higher fuel prices, labor expense and increases in materials and purchased services expenses largely due to growth in engineering services revenue. Operating income excluding the impact of 45G benefit, asset sales and impairments is shown below.  

 

For the Three Months Ended

 
 

September 30,

 
 

2010

 

2011

 

($ in thousands)

       
         

Operating revenue

$128,257

 

$139,665

 

Operating expense

99,766

 

108,177

 

Operating income, reported

28,491

 

31,488

 
         

Less: Benefit from 45G credits

-

 

(3,879)

 

Operating income excluding 45G Benefit (1)

28,491

 

27,609

 
         

Net (gain) / loss on sale of assets

(1,708)

 

8

 

Impairment of assets

-

 

1,949

 

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

26,783

 

29,566

 
         

(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 third quarter earnings on Wednesday, October 26, 2011 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 (706) 643-9763.  The conference ID number is 14222844.  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 November 2, 2011 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 14222844.

RailAmerica, Inc. owns and operates short-line and regional freight railroads in North America, operating a portfolio of 43 individual railroads with approximately 7,400 miles of track in 27 U.S. states and three Canadian provinces.

   

RAILAMERICA, INC. AND SUBSIDIARIES

 
   

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 
                 
 

For the Three Months Ended

 

For the Nine Months Ended

 
 

September 30,

 

September 30,

 
 

2011

 

2010

 

2011

 

2010

 
 

(In thousands, except per share data)

 
                 

Operating revenue

$139,665

 

$128,257

 

$403,817

 

$362,655

 

Operating expenses:

               

Labor and benefits

41,379

 

38,745

 

124,855

 

114,381

 

Equipment rents

9,046

 

8,721

 

26,601

 

25,857

 

Purchased services

10,996

 

9,830

 

31,429

 

28,058

 

Diesel fuel

13,142

 

9,760

 

41,887

 

31,522

 

Casualties and insurance

4,006

 

4,816

 

11,095

 

13,255

 

Materials

7,879

 

6,782

 

18,892

 

14,581

 

Joint facilities

2,459

 

2,454

 

7,214

 

6,545

 

Other expenses

9,271

 

8,785

 

29,876

 

26,162

 

Track maintenance expense reimbursement

(3,879)

 

-

 

(13,162)

 

-

 

Net loss (gain) on sale of assets

8

 

(1,708)

 

151

 

(1,717)

 

Impairment of assets

1,949

 

-

 

5,169

 

-

 

Depreciation and amortization

11,921

 

11,581

 

35,421

 

33,259

 

Total operating expenses

108,177

 

99,766

 

319,428

 

291,903

 

Operating income

31,488

 

28,491

 

84,389

 

70,752

 

Interest expense (including amortization costs of $3,973, $6,020, $13,215 and $20,194, respectively)

(17,792)

 

(19,735)

 

(54,526)

 

(64,592)

 

Other (loss) income

(231)

 

2,264

 

804

 

(5,177)

 

Income from continuing operations before income taxes

13,465

 

11,020

 

30,667

 

983

 

Provision for (benefit from) income taxes

4,407

 

3,052

 

8,824

 

(250)

 

Net income

$    9,058

 

$    7,968

 

$  21,843

 

$    1,233

 
                 

Basic earnings per common share:

               

Net income

$      0.17

 

$      0.15

 

$      0.41

 

$      0.02

 
                 

Diluted earnings per common share:

               

Net income

$      0.17

 

$      0.15

 

$      0.41

 

$      0.02

 
                 

Weighted Average common shares outstanding:

             

Basic

52,083

 

54,872

 

53,006

 

54,769

 

Diluted

52,083

 

54,872

 

53,006

 

54,769

 
   
               

 

 

   

 

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