RRA Railamerica

RailAmerica, Inc. (NYSE:RRA) today reported its financial results for the fourth quarter and full year ended December 31, 2005. Income from continuing operations for the fourth quarter ended December 31, 2005 was $9.4 million, or $0.24 per share compared to $4.3 million, or $0.11 per share for the same period in 2004. Consolidated revenue from continuing operations for the fourth quarter of 2005 increased $15.3 million, or 15.7%, to $112.1 million, from $96.8 million in 2004. On a "same railroad" basis, revenue for the fourth quarter of 2005 increased $8.9 million, or 9.1%, to $105.7 million, from $96.8 million in the fourth quarter of 2004. Consolidated operating income for the fourth quarter of 2005 increased to $14.0 million, compared to $11.9 million in 2004. The operating ratio for the fourth quarter of 2005 was 87.5% compared to 87.7% in the 2004 quarter. Casualty expense in the fourth quarter of 2005 decreased to $5.6 million from $6.1 million in the same period in 2004. Interest expense in the fourth quarter of 2005 increased to $6.6 million from $4.0 million in the 2004 quarter. The fourth quarter 2005 track maintenance tax credit was $4.6 million. Net income for the fourth quarter of 2005, which includes discontinued operations, was $7.7 million, or $0.20 per share, compared to $4.3 million, or $0.11 per share in 2004. As a result of the sale of the San Luis & Rio Grande railroad property and the three Alberta railroad properties, the financial results of those railroads have been reclassified to discontinued operations. For the year ended December 31, 2005, revenue from continuing operations increased 14.7% to $423.7 million from $369.4 million in 2004. Income from continuing operations for the year ended December 31, 2005 was $30.8 million, or $0.80 per share, compared to a loss of $23.1 million or $0.66 per share from continuing operations for the year ended December 31, 2004. The Company believes that presenting the results of 2004 operations adjusted for the refinancing costs, the E&N impairment charge and the former CEO's retirement charge provide a better basis for comparison of 2005's financial results with those of the prior year. Excluding charges of $12.6 million, ($8.7 million net-of-tax, or $0.25 per share) for the impairment of the E&N Railway, the $39.5 million (of which $20 million was non-cash) ($26.9 million net-of-tax, or $0.77 per share) for the debt refinancing, and the $6.7 million, ($5.6 million net-of-tax, or $0.16 per share) for the former CEO's retirement in 2004, earnings from continuing operations were $18.1 million or $0.52 per share. The operating ratio for 2005 was 87.9% compared to 84.3% in 2004, including the above 2004 adjustments. The full year 2005 track maintenance tax credit was $12.7 million. Net income for the year ended December 31, 2005, which includes discontinued operations, was $30.8 million, or $0.80 per share, compared to a loss of $25.9 million or a loss of $0.74 per share for the year ended December 31, 2004. Charles Swinburn, RailAmerica's Chief Executive Officer said, "Notwithstanding the challenges from our Ohio operations and Class I congestion, I am pleased with our fourth quarter. Those results included our recently acquired Alcoa railroads, whose performance exceeded our initial expectations. I am especially pleased with the safety and training initiatives that we implemented in 2005. In the fourth quarter, casualty and insurance expense declined to 5.0% of revenue from 6.3% in the 2004 quarter." Michael Howe, RailAmerica's Executive Vice President and Chief Financial Officer said, "Due to the sales of the SLRG and Alberta properties, the results of those railroads are now in discontinued operations. The four properties sold generated revenue of approximately $7.8 million and earnings per share of $0.01 in the fourth quarter 2005, and revenue of approximately $30 million and earnings per share of $0.05 per share for the full year. As of December 31, 2005, our net debt-to-capital ratio was 49.3%, which is well within our desired range of 45 to 55 percent." RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 43 railroads operating approximately 8,000 miles in the United States and Canada. The Company is a member of the Russell 2000(R) Index. Its website may be found at http://www.railamerica.com. DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements regarding future events that involve risks and uncertainties that could cause actual results to differ materially. Forward-looking statements speak only as of the date the statement was made. The Company assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. We refer you to the documents that RailAmerica files from time to time with the Securities and Exchange Commission, such as the Form 10-K, Form 10-Q and Form 8-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release. -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) (Amounts in thousands, except per share) Three Months Ended Years Ended December 31, December 31, 2005 2004 2005 2004 --------------------- -------------------- Operating revenue $112,069 $96,821 $423,682 $369,432 --------------------- -------------------- Operating expenses 88,820 76,894 341,303 302,324 Depreciation and amortization 9,295 8,007 31,114 28,462 --------------------- -------------------- Total operating expenses 98,115 84,901 372,417 330,786 --------------------- -------------------- Operating income 13,954 11,920 51,265 38,646 Interest and other expense (including amortization costs) (6,604) (3,957) (20,329) (27,696) Financing costs -- -- (621) (39,549) --------------------- -------------------- Income (loss) from continuing operations before income taxes 7,350 7,963 30,315 (28,599) Provision (benefit) for income taxes (2,010) 3,626 (530) (5,465) --------------------- -------------------- Income (loss) from continuing operations 9,360 4,337 30,845 (23,134) Loss from disposal of discontinued operations (net of tax) (2,120) (28) (1,881) (1,706) Income (loss) from operations of discontinued segment (net of tax) 415 5 1,858 (1,099) --------------------- -------------------- Net income (loss) $7,655 $4,314 $30,822 $(25,939) ===================== ==================== Diluted earnings per share: Continuing operations $0.24 $0.11 $0.80 $(0.66) Discontinued operations (0.04) -- -- (0.08) --------------------- -------------------- Net income (loss) $0.20 $0.11 $0.80 $(0.74) ===================== ==================== Weighted average diluted common shares outstanding 38,768 37,855 38,460 34,982 ===================== ==================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2005 and 2004 2005 2004 ---------------------------------------------------------------------- (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 14,310 $ 24,331 Accounts and notes receivable, net of allowance of $573 and $518, respectively 82,395 63,414 Current assets of discontinued operations 3,140 -- Other current assets 14,114 14,935 ---------------------------------------------------------------------- Total current assets 113,959 102,680 Property, plant and equipment, net 904,588 875,883 Long-term assets of discontinued operations 25,879 -- Other assets 102,950 37,580 ---------------------------------------------------------------------- Total assets $1,147,376 $1,016,143 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 6,079 $ 6,097 Accounts payable 75,222 61,276 Accrued expenses 43,524 41,950 Current liabilities of discontinued operations 4,275 -- ---------------------------------------------------------------------- Total current liabilities 129,100 109,323 Long-term debt, less current maturities 427,794 357,253 Subordinated debt -- 4,028 Deferred income taxes 141,606 149,306 Long-term liabilities of discontinued operations 2,261 -- Other liabilities 15,337 15,307 ---------------------------------------------------------------------- 716,098 635,217 ---------------------------------------------------------------------- Commitments and contingencies Stockholders' equity: Common stock, $0.001 par value, 60,000,000 shares authorized; 38,688,496 shares issued and outstanding at December 31, 2005 and 37,389,660 shares issued and outstanding at December 31, 2005 39 37 Additional paid in capital and other 330,919 319,417 Retained earnings 67,628 36,806 Accumulated other comprehensive income 32,692 24,666 ---------------------------------------------------------------------- Total stockholders' equity 431,278 380,926 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $1,147,376 $1,016,143 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005 2004 ---------------------------------------------------------------------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $30,822 $(25,939) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 33,451 43,075 Financing costs 621 39,549 Net loss (gain) on sale or disposal of properties 1,350 (25,304) Impairment of assets -- 16,595 Initial lease payment to CSX -- (10,000) Non-cash CEO retirement costs -- 3,600 Deferred income taxes and other (2,155) 10,198 Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable (16,903) (14,964) Other current assets 1,263 (4,428) Accounts payable 3,166 17,291 Accrued expenses 951 (3,821) Other assets and liabilities 1,571 2,225 ---------------------------------------------------------------------- Net cash provided by operating activities 54,137 48,077 ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (75,907) (75,800) Proceeds from sale of assets, net of cash on hand 14,920 222,741 Acquisitions, net of cash acquired (77,850) (33,209) Deferred transaction costs and other (143) (3,063) ---------------------------------------------------------------------- Net cash provided by (used in) investing activities (138,980) 110,669 ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 130,900 494,478 Principal payments on long-term debt (60,375) (523,815) Repurchase of senior subordinated notes (4,540) (144,905) Proceeds from exercise of stock options and warrants 9,009 28,843 Purchase of treasury stock -- -- Financing costs (492) (2,976) ---------------------------------------------------------------------- Net cash provided by (used in) financing activities 74,502 (148,375) ---------------------------------------------------------------------- Effect of exchange rates on cash 320 246 ---------------------------------------------------------------------- Net increase (decrease) in cash (10,021) 10,617 Cash, beginning of period 24,331 13,714 ---------------------------------------------------------------------- Cash, end of period $14,310 $24,331 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Selected Financial Information (Unaudited) (Amounts in thousands) Three Months Ended December 31, 2005 % of Rev. 2004 % of Rev. -------------------- -------------------- Operating revenue $112,069 100.0% $96,821 100.0% -------------------- -------------------- Operating expenses: Maintenance of way 13,181 11.7% 12,992 13.4% Maintenance of equipment 4,359 3.9% 3,618 3.7% Transportation 37,519 33.4% 32,819 33.9% Equipment rental 12,997 11.6% 10,353 10.7% SG&A 21,151 18.9% 19,275 19.9% Net gain on sale of assets (387) -0.3% (2,163) -2.2% Depreciation and amortization 9,295 8.3% 8,007 8.3% -------------------- -------------------- Total operating expenses 98,115 87.5% 84,901 87.7% -------------------- -------------------- Operating income $13,954 12.5% $11,920 12.3% ==================== ==================== Operating revenue $112,069 100.0% $96,821 100.0% -------------------- -------------------- Operating expenses: Labor 33,188 29.6% 30,138 31.1% Equipment rent 13,623 12.1% 10,841 11.2% Purchased services 9,058 8.1% 7,764 8.0% Diesel fuel 13,618 12.1% 10,531 10.9% Casualties and insurance 5,632 5.0% 6,112 6.3% Materials 2,578 2.3% 2,173 2.2% Joint facilities 2,896 2.6% 3,253 3.4% Other expense 8,614 7.7% 8,245 8.5% Net gain on sale of assets (387) -0.3% (2,163) -2.2% Depreciation 9,295 8.3% 8,007 8.3% -------------------- -------------------- Total operating expenses 98,115 87.5% 84,901 87.7% -------------------- -------------------- Operating income $13,954 12.5% $11,920 12.3% ==================== ==================== Year Ended December 31, 2005 % of Rev. 2004 % of Rev. -------------------- -------------------- Operating revenue $423,682 100.0% $369,432 100.0% -------------------- -------------------- Operating expenses: Maintenance of way 52,902 12.5% 45,378 12.3% Maintenance of equipment 16,078 3.8% 13,350 3.6% Transportation 140,775 33.2% 112,093 30.3% Equipment rental 48,425 11.4% 37,196 10.1% SG&A 84,262 19.9% 85,701 23.2% Net gain on sale of assets (1,139) -0.3% (3,963) -1.1% Impairment of E&N Railway 0 0% 12,569 3.4% Depreciation and amortization 31,114 7.4% 28,462 7.7% -------------------- -------------------- Total operating expenses 372,417 87.9% 330,786 89.5% -------------------- -------------------- Operating income $51,265 12.1% $38,646 10.5% ==================== ==================== Operating revenue $423,682 100.0% $369,432 100.0% -------------------- -------------------- Operating expenses: Labor 131,107 30.9% 125,679 34.0% Equipment rent 51,088 12.1% 38,865 10.5% Purchased services 32,718 7.7% 26,368 7.2% Diesel fuel 46,699 11.0% 33,504 9.1% Casualties and insurance 23,083 5.5% 19,948 5.4% Materials 10,345 2.4% 8,274 2.2% Joint facilities 12,375 2.9% 11,902 3.2% Other expense 35,027 8.3% 29,178 7.9% Net gain on sale of assets (1,139) -0.3% (3,963) -1.1% Impairment of E&N Railway 0 0.0% 12,569 3.4% Depreciation 31,114 7.4% 28,462 7.7% -------------------- -------------------- Total operating expense 372,417 87.9% 330,786 89.5% -------------------- -------------------- Operating income $51,265 12.1% $38,646 10.5% ==================== ==================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads And Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload) (unaudited) Three months ended Three months ended December 31, 2005 December 31, 2004 -------------------------- -------------------------- Average Average Revenue Revenue Freight Per Freight Per Commodity Group Revenue Carloads Carload Revenue Carloads Carload --------------- ------- -------- ------- ------- -------- ------- Lumber & Forest Products $13,861 30,194 $459 $11,835 29,263 $404 Chemicals 11,509 27,439 419 10,935 27,254 401 Metals 10,038 25,725 390 7,707 21,242 363 Agricultural & Farm Products 8,984 25,031 359 8,587 27,994 307 Paper Products 8,484 22,209 382 7,763 22,247 349 Food Products 7,975 23,073 346 7,724 23,746 325 Coal 7,903 37,718 210 6,831 37,516 182 Metallic/Non- metallic Ores 6,732 21,605 312 4,126 14,925 276 Bridge Traffic 6,387 48,986 130 6,364 47,364 134 Minerals 6,085 15,477 393 4,738 13,179 360 Petroleum Products 4,760 12,419 383 4,202 12,154 346 Other 3,653 10,700 341 2,826 9,702 291 Autos 1,663 6,278 265 1,673 6,726 249 Intermodal 899 7,588 118 917 8,881 103 -------------------------- -------------------------- Totals $98,933 314,442 $315 $86,228 302,193 $285 *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Railroad Freight Revenue, Carloads And Average Revenue Per Carload Comparison by Commodity Group (dollars in thousands, except average revenue per carload) (unaudited) Twelve months ended Twelve months ended December 31, 2005 December 31, 2004 -------------------------- -------------------------- Average Average Commodity Group Revenue Revenue --------------- Freight Per Freight Per Revenue Carloads Carload Revenue Carloads Carload ------- -------- ------- ------- -------- ------- Lumber & Forest Products $55,556 126,421 $439 $47,830 119,012 $402 Chemicals 45,991 112,475 409 40,428 103,410 391 Metal 37,690 98,874 381 31,662 88,309 359 Agricultural & Farm Products 35,458 106,043 334 30,239 97,397 310 Paper Products 32,936 89,899 366 29,298 88,552 331 Coal 32,622 150,344 217 28,137 149,584 188 Food Products 29,428 87,973 335 26,474 79,618 333 Bridge Traffic 25,217 201,275 125 24,494 191,237 128 Minerals 22,953 59,700 384 19,214 53,093 362 Metallic/Non- metallic Ores 19,485 69,090 282 16,691 59,835 279 Petroleum Products 17,657 48,260 366 15,267 44,730 341 Other 12,986 40,618 320 10,185 36,010 283 Autos 6,339 24,619 257 6,759 28,034 241 Intermodal 3,782 33,444 113 3,703 35,231 105 -------------------------- -------------------------- Totals $378,100 1,249,035 $303 $330,381 1,174,052 $281 *T