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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