BOCA RATON, Fla. — RailAmerica, Inc., the world’s largest short line and regional railroad operator, today reported its results for the second quarter ended June 30, 2002. Financial highlights included:
* Diluted earnings per share of $.24, excluding special charges for previously announced financing and restructuring, compared to diluted EPS of $.19 for the second quarter of 2001
* Consolidated revenues of $115.3 million, up 23% from $93.5 million for the second quarter of 2001
* Net income of $7.6 million, excluding special charges, up 82% compared to net income of $4.2 million for the second quarter of 2001
Excluding special charges for previously announced financing and restructuring, net income for the quarter ended June 30, 2002 increased 82% to $7.6 million, or $.24 per diluted share, on 32.2 million weighted average shares, compared to net income of $4.2 million, or $.19 per diluted share, on 23.4 million shares for the quarter ended June 30, 2001. Including the special charges, the net loss for the quarter ended June 30, 2002 was $10.7 million, or ($.33) per diluted share.
For the second quarter of 2002, consolidated revenues increased 23% to a record $115.3 million from $93.5 million during the same period in 2001. Operating income and EBITDA for the second quarter of 2002 increased 10% and 14% to $21.6 million and $30.1 million, respectively, compared to operating income of $19.6 million and EBITDA of $26.3 million for the same period in 2001.
“In addition to our strong financial results, another significant achievement in the second quarter of 2002 was the successful completion of a syndicated $475 million senior secured credit facility, the proceeds of which were used to prepay the Company’s existing senior indebtedness and the associated interest rate swap entered into as part of our acquisition of RailTex in 2000,” said Gary O. Marino, Chairman, President and Chief Executive Officer of RailAmerica. “The financing allows us to increase our cash flow in a number of ways. First, by taking advantage of historically low interest rates, we should reduce our interest expense by approximately $8 million over the next 12 months with the expectation of substantial savings in future periods. In fact, our interest expense for the second quarter of 2002 was down approximately $1.8 million from the same period last year due to a combination of lower interest rates as well as the payoff of our swap in conjunction with our loan closing on May 24th. Additionally, we will also increase our cash flow by approximately $14 million over the next twelve months due to reduced principal amortization required under the new credit agreement. Further, the new financing also increases our liquidity, as evidenced by our strong cash position as well as our $100 million unused revolving credit facility.”
North American revenues for the second quarter of 2002 increased 35% to $82.9 million from $61.6 million during the same period in 2001, reflecting the contribution of the recently acquired ParkSierra and StatesRail railroads. Minerals, petroleum, metals, and paper products experienced the greatest increase in carloads in the second quarter of 2002 compared to the same period in 2001, while intermodal, automobiles, and bridge traffic decreased. For the second quarter of 2002, the North American operating ratio improved to 74.6% compared to the operating ratio of 76.2% reported for the same period in 2001, due primarily to reduced fuel costs.
International revenues for the second quarter of 2002 were $32.5 million, up 2% from $31.9 million during the same period in 2001. Revenues in Chile increased due to new copper business. Revenues in Australia were up slightly despite a reduced grain harvest, which resulted in 14% fewer grain carloads than were hauled during the record grain harvest of 2001. For the quarter ended June 30, 2002, the international operating ratio was 81.8%, compared to 75.3% for the same period in 2001, primarily as a result of increased maintenance costs and additional depreciation expense in Australia associated with track upgrades and rolling stock refurbishment to support increased traffic.
While the reported net loss for the second quarter of 2002 was $10.7 million, or $.33 per share, there were certain special items totaling $18.3 million, or $.57 per share, which resulted in adjusted net income of $7.6 million, or $.24 per share. These after-tax special items consisted of: a) financing-related charges of $18.0 million ($.56 per share), primarily for the extinguishment of the interest rate swap and the write-off of deferred loan costs on the prior financing; and b) a restructuring charge of $0.3 million ($.01 per share) relating to the relocation to Florida of certain support functions previously located at the former RailTex offices in Texas. The Company also realized an after-tax gain on the sale of the Texas New Mexico Railroad of $0.9 million ($.03 per share) in the quarter, which is classified as discontinued operations.
Marino added, “RailAmerica’s capital structure is stronger than ever, with a current ratio of 1.3 to 1 and a net debt to equity ratio of 1.7 to 1. These and other balance sheet ratios are exactly where we want them to be, and we intend to sustain these levels as we pursue our growth strategy. We have increased liquidity, reduced interest expense, improved cash flow, and enhanced operating efficiencies, all of which position us to deliver superior service to our customers and value to our shareholders. In addition, we see numerous opportunities to further expand the Company through continued strong organic growth and selective accretive acquisitions, both here and abroad.”
RailAmerica, Inc. (www.railamerica.com), the world’s largest short line and regional railroad operator, owns 49 railroads operating approximately 12,800 route miles in the United States, Canada, Australia and Chile. In North America, the Company’s railroads operate in 27 states and six Canadian provinces. Internationally, the Company operates an additional 4,300 route miles under track access arrangements in Australia and Argentina. RailAmerica is a member of the Russell 2000® Index and in October 2001 was ranked 85th on Forbes magazine’s list of the 200 Best Small Companies in America.