(RailAmerica issued the following press release on February 24, 2010.)
JACKSONVILLE, Fla. — RailAmerica, Inc. (NYSE: RA) today reported financial results for the quarter and year ended December 31, 2009. Reported results reflect the Ottawa Valley Railway (OVR) as a discontinued operation. In December 2009, the Company received C$73 million gross proceeds upon the termination of its lease of the OVR.
Fourth quarter highlights included:
* Operating income of $14.2 million, after $6.3 million expense related to initial public offering (IPO)(1).
* Adjusted EBITDA(2) $33.5 million up 1% from fourth quarter 2008.
* Net cash provided by operating activities of $4.4 million versus $6.9 million in fourth quarter 2008.
* Strengthened balance sheet; year-end cash of $190.2 million.
Compared to the prior year period, Adjusted EBITDA(2) increased 1% to $33.5 million for fourth quarter 2009. Net cash provided by operating activities was $4.4 million and $6.9 million, respectively, for the fourth quarters of 2009 and 2008.
John Giles, RailAmerica’s President and Chief Executive Officer, said, “In the fourth quarter we posted solid financial results as we increased Adjusted EBITDA 1% to $33.5 million in a challenging economic environment. Excluding the $6.3 million IPO-related charge our operating income was up 7% for the quarter to $20.5 million. This was a result of our continued focus on running safe railroads and driving operating efficiencies. With the completion of the IPO and the OVR transaction, we have strengthened our balance sheet and are well positioned to pursue external growth opportunities. We will apply the same discipline to strategic investments that we have used over the past three years to improve the Company’s operational and financial performance.”
Mr. Giles continued, “Although still evolving, we are encouraged by the recent growth in carloads and have positioned RailAmerica for strong performance as volumes improve. This year, we plan to maintain a sharp focus on our three strategic priorities: delivering organic growth and efficiency gains, strengthening our balance sheet, and capitalizing on external growth opportunities.”
Including charges totaling $0.24 per diluted share for the early retirement of debt, interest rate swap termination and the IPO, RailAmerica reported a fourth quarter 2009 loss from continuing operations of $12.5 million, or $0.24 per diluted share. This compares to income from continuing operations of $6.0 million, or $0.14 per diluted share, for fourth quarter 2008. The prior year quarter included expenses of $0.08 per diluted share for foreign exchange loss on former bridge debt and an income tax benefit of $0.29 per diluted share primarily related to 45G tax credits.
Net loss, which includes discontinued operations, for the fourth quarter of 2009 was $6.9 million, compared to net income of $8.9 million for the fourth quarter of 2008. The OVR is now included in discontinued operations, and for the fourth quarter of 2009 it generated total revenue of $3.7 million, operating income of $2.3 million and minimal depreciation/amortization expense. For the fourth quarter of 2008, the OVR had total revenue of $4.1 million, operating income of $1.0 million and minimal depreciation/amortization expense.
Below are details of the fourth quarter 2009 charges for debt retirement, swap amortization and the IPO. These expenses total $19.8 million on a pre-tax basis, of which $17.6 million are non-cash.
* $6.9 million ($4.5 million after tax, or $0.08 per diluted share) related to the early retirement of $74.0 million in senior notes. $4.7 million of this pre-tax expense is non-cash.
* $6.6 million ($4.3 million after tax, or $0.08 per diluted share) for the non-cash amortization of swap termination costs in connection with terminating an interest rate swap on former variable rate debt.
* $6.3 million ($4.1 million after tax, or $0.08 per diluted share) for a non-cash charge related to the IPO for the expiration of restricted stock repurchase feature.
Fourth quarter 2009 revenue declined 9% to $105.4 million from $115.7 million in the prior year quarter. Freight revenue declined 10% to $86.1 million primarily due to lower fuel surcharge and carloads. Non-freight revenue declined 5% to $19.3 million primarily due to lower car hire and demurrage revenue, which offset strong growth in car repair and storage revenue.
Fourth quarter 2009 operating income declined 26% to $14.2 million from $19.1 million in the fourth quarter of 2008 primarily due to the $6.3 million IPO-related expense. The impact of lower revenue was offset by operating expense reductions resulting from lower volumes and productivity initiatives. Additionally, the Company had a $3.9 million operating expense benefit in the fourth quarter of 2009 from a Track Maintenance Agreement executed in 2009 to monetize 45G tax credits. Fourth quarter 2008 results include a $1.7 million impairment charge and $1.9 million in expenses for headquarters relocation compared to fourth quarter 2009 results which include $0.4 million in expenses for headquarters relocation.
Full year 2009 loss from continuing operations was $5.5 million, or $0.11 per diluted share, compared to earnings of $9.6 million, or $0.22 per diluted share, for full year 2008. Full year 2009 net income, which includes discontinued operations, was $15.8 million, compared to $16.5 million for full year 2008. Full year 2009 results include the $19.8 million of expenses discussed above ($0.28 per diluted share, after tax, on a full year basis) plus an additional $10.0 million ($6.5 million after tax, or $0.14 per diluted share) for the non-cash amortization of swap termination costs and a $1.2 million non-cash, benefit ($0.8 million after tax, or $0.02 per diluted share) for foreign exchange gain on former bridge debt. Full year 2008 results include $8.3 million ($5.5 million after tax, or $0.13 per diluted share) of non-cash expense for foreign exchange loss on former bridge debt.
As previously announced, RailAmerica, Inc. will present its fourth quarter earnings on Thursday, February 25, 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 52696051. 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 March 8, 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 52696051.
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.