RRA Railamerica

RailAmerica, Inc. (NYSE:RRA) today reported first quarter 2006 earnings from continuing operations of $6.6 million, or $0.17 per diluted share, compared to $4.9 million, or $0.13 per diluted share, for the first quarter of 2005. The 2006 results include a pre-tax charge of $350,000, or $0.01 per share, to facilitate earlier receipt of funds from two notes held by the Company related to the 2004 sale of its Chilean railroad, Ferronor. Net income for the first quarter of 2006, which includes discontinued operations, was $15.0 million, or $0.39 per share, compared to $6.2 million, or $0.16 per share in the first quarter of 2005. The 2006 results include the recognition of a $13.4 million pre-tax gain ($8.3 million net of tax) for the expiration of the warranty period related to the sale of Freight Australia and a resulting adjustment to the reserves in discontinued operations. Consolidated revenue from continuing operations for the first quarter of 2006 increased $13.3 million, or 13.1%, to $115.0 million, from $101.7 million in 2005. On a "same railroad" basis, revenue for the first quarter of 2006 increased $7.3 million, or 7.2%, from the first quarter of 2005. Consolidated operating income for the first quarter of 2006 increased 45% to $14.3 million from $9.9 million in 2005. The operating ratio for the first quarter of 2006 was 87.6% compared to 90.3% in the 2005 first quarter. Charles Swinburn, RailAmerica's Chief Executive Officer, said, "We are very pleased with our results this quarter. Our "same railroad" revenue growth was led by improving yields related to pricing and commodity mix. Additionally, the railroads that were acquired from Alcoa continue to produce strong results. Finally, we are also seeing positive results from the training and safety initiatives that we rolled out in late 2004, with casualty and insurance expense declining $1.5 million to $4.5 million, or 3.9% of revenue, from $6.0 million, or 5.9% of revenue in the 2005 first quarter." Michael Howe, RailAmerica's Executive Vice President and Chief Financial Officer said, "We are pleased with the operating income increase of 45% compared to a revenue increase of 13%. Proceeds from the sale of the Alberta properties in January were used to pay down debt, bringing our net debt to capital at March 31, 2006 to 46.8% from 49.3% at December 31, 2005." RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 42 railroads operating approximately 7,800 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 For the three months ended March 31, 2006 and 2005 (in thousands, except earnings per share) (unaudited) Three months ended March 31, 2006 2005 ---------------------------------------------------------------------- Operating revenue $115,025 $101,681 ---------------------------------------------------------------------- Operating expenses: Transportation 67,798 62,908 Selling, general and administrative 23,810 21,825 Net gain on sale of assets (468) (82) Depreciation and amortization 9,633 7,169 ---------------------------------------------------------------------- Total operating expenses 100,773 91,820 ---------------------------------------------------------------------- Operating income 14,252 9,861 Interest expense (6,773) (4,309) Other expense (480) -- ---------------------------------------------------------------------- Income from continuing operations before income taxes 6,999 5,552 Provision for income taxes 350 644 ---------------------------------------------------------------------- Income from continuing operations 6,649 4,908 Gain from sale of discontinued operations, net of income taxes 8,313 239 Income from discontinued operations, net of income taxes 58 1,069 ---------------------------------------------------------------------- Net income $ 15,020 $ 6,216 ====================================================================== Basic earnings per common share: Continuing operations $ 0.17 $ 0.13 Discontinued operations 0.22 0.04 ---------------------------------------------------------------------- Net income $ 0.39 $ 0.17 ====================================================================== Diluted earnings per common share: Continuing operations $ 0.17 $ 0.13 Discontinued operations 0.22 0.03 ---------------------------------------------------------------------- Net income $ 0.39 $ 0.16 ====================================================================== Weighted average common shares outstanding: Basic 38,436 37,445 ==================== Diluted 38,827 38,266 ==================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2006 and December 31, 2005 (in thousands, except share data) (unaudited) March 31, December 31, 2006 2005 ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 11,774 $ 14,310 Accounts and notes receivable, net 75,480 82,395 Current assets of discontinued operations -- 3,140 Other current assets 14,293 14,114 ---------------------------------------------------------------------- Total current assets 101,547 113,959 Property, plant and equipment, net 905,277 904,588 Long-term assets of discontinued operations -- 25,879 Other assets 96,697 102,950 ---------------------------------------------------------------------- Total assets $1,103,521 $1,147,376 ====================================================================== Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt $ 4,984 $ 6,079 Accounts payable 57,500 75,222 Accrued expenses 29,461 43,524 Current liabilities of discontinued operations -- 4,275 ---------------------------------------------------------------------- Total current liabilities 91,945 129,100 Long-term debt, less current maturities 401,439 427,794 Deferred income taxes 146,201 141,606 Long-term liabilities of discontinued operations -- 2,261 Other liabilities 15,153 15,337 ---------------------------------------------------------------------- Total liabilities 654,738 716,098 ---------------------------------------------------------------------- Commitments and contingencies Stockholders' equity: Common stock 39 39 Additional paid-in capital and other 332,370 330,919 Retained earnings 82,648 67,628 Accumulated other comprehensive income 33,726 32,692 ---------------------------------------------------------------------- Total stockholders' equity 448,783 431,278 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $1,103,521 $1,147,376 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2006 and 2005 (in thousands) (unaudited) 2006 2005 ---------------------------------------------------------------------- Cash flows from operating activities: Net income $15,020 $ 6,216 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization, including amortization of deferred loan costs 10,507 7,784 Net gain on sale or disposal of properties (13,875) (345) Deferred income taxes and other 5,011 1,430 Changes in operating assets and liabilities, net of acquisitions and dispositions: Accounts receivable 7,682 (7,640) Other current assets (221) 1,078 Accounts payable (17,005) (17,488) Accrued expenses (271) 422 Other assets and liabilities (155) (146) ---------------------------------------------------------------------- Net cash provided by (used in) operating activities 6,693 (8,689) ---------------------------------------------------------------------- Cash flows from investing activities: Purchase of property, plant and equipment (13,006) (13,518) Proceeds from sale of assets, net of cash on-hand 29,777 6,054 ---------------------------------------------------------------------- Net cash provided by (used in) investing activities 16,771 (7,464) ---------------------------------------------------------------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 39,700 -- Principal payments on long-term debt (67,149) (2,000) Proceeds from exercise of stock options and warrants 1,389 3,695 ---------------------------------------------------------------------- Net cash provided by (used in) financing activities (26,060) 1,695 ---------------------------------------------------------------------- Effect of exchange rates on cash 60 (96) ---------------------------------------------------------------------- Net decrease in cash (2,536) (14,554) Cash, beginning of period 14,310 24,331 ---------------------------------------------------------------------- Cash, end of period $11,774 $ 9,777 ====================================================================== *T -0- *T RAILAMERICA, INC. AND SUBSIDIARIES Selected Financial Information (amounts in thousands) (unaudited) Three Months ended March 31, 2006 % of Rev. 2005 % of Rev. -------------------- -------------------- Functional Classification Operating revenue $115,025 100.0% $101,681 100.0% -------------------- -------------------- Operating expenses: Maintenance of way 13,221 11.4% 14,178 13.9% Maintenance of equipment 4,331 3.8% 3,750 3.7% Transportation 37,644 32.7% 33,117 32.6% Equipment rental 12,602 11.0% 11,863 11.7% SG&A 23,810 20.7% 21,825 21.5% Net gain on sale of assets (468) -0.4% (82) -0.1% Depreciation and amortization 9,633 8.4% 7,169 7.0% -------------------- -------------------- Total operating expenses 100,773 87.6% 91,820 90.3% -------------------- -------------------- Operating income $ 14,252 12.4% $ 9,861 9.7% ==================== ==================== Natural Classification Operating revenue $115,025 100.0% $101,681 100.0% Operating expenses: Labor 35,602 31.0% 33,368 32.8% Equipment rent 13,379 11.6% 12,417 12.2% Purchased services 8,307 7.2% 7,372 7.3% Diesel fuel 14,319 12.4% 11,042 10.9% Casualties and insurance 4,507 3.9% 5,991 5.9% Materials 2,704 2.4% 2,600 2.6% Joint facilities 3,191 2.8% 3,190 3.1% Other expense 9,599 8.3% 8,753 8.6% Net gain on sale of assets (468) -0.4% (82) -0.1% Depreciation 9,633 8.4% 7,169 7.0% -------------------- -------------------- Total operating expenses 100,773 87.6% 91,820 90.3% -------------------- -------------------- Operating income $ 14,252 12.4% $ 9,861 9.7% ==================== ==================== *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 March 31, March 31, 2006 2005 ------------------------- ------------------------ Average Average Revenue Revenue Freight Per Freight Per Commodity Group Revenue Carloads Carload Revenue Carloads Carload --------------- ------- -------- ------- ------- -------- ------- Lumber & Forest Products $14,677 32,056 $458 $13,150 30,826 $427 Chemicals 12,219 28,972 422 11,699 29,567 396 Metal 9,595 23,028 417 8,564 23,488 365 Agricultural & Farm Products 9,399 27,753 339 8,784 28,366 310 Coal 9,027 39,896 226 8,032 38,112 211 Food Products 7,829 22,454 349 7,399 22,745 325 Bridge Traffic 7,272 58,946 123 6,646 55,621 119 Paper Products 7,031 19,528 360 7,932 22,451 353 Metallic/Non- metallic Ores 6,900 20,771 332 4,080 13,610 300 Minerals 6,245 15,089 414 5,035 13,635 369 Petroleum Products 4,996 12,053 415 4,427 12,511 354 Other 3,648 11,053 330 2,639 8,414 314 Autos 1,578 5,812 272 1,527 6,744 226 Intermodal 1,070 8,073 133 1,044 9,499 110 ---------------------------------------------------------------------- Totals $101,486 325,484 $312 $90,958 315,589 $288 ======== ======= ==== ======= ======= ==== *T