(RailAmerica issued the following news release on October 30.)
BOCA RATON, Fla. — RailAmerica, Inc. today reported third quarter 2003 earnings of $7.1 million, or $0.22 per diluted share, from continuing operations, compared to $6.2 million, or $0.19 per diluted share, for the same period in 2002. The Company has adopted a plan to sell its Australian railroad, Freight Australia. Accordingly, the results of this subsidiary are included in discontinued operations for all periods presented.
Consolidated revenue from continuing operations for the third quarter ended September 30, 2003 increased 7.5%, or $6.4 million, to $91.2 million, from $84.8 million in 2002. Operating income for the third quarter of 2003 increased 20% to $20.5 million, compared to $17.1 million in 2002. Net income for the 2003 third quarter was $4.2 million, or $0.13 per diluted share, compared to $5.9 million, or $0.18 per diluted share, in 2002. The Australian drought negatively impacted earnings by $0.06 per share in the quarter ended September 30, 2003 compared to the quarter ended September 30, 2002. The 2002 results included $1.1 million of restructuring charges, net-of-tax.
Gary O. Marino, Chairman, President and Chief Executive Officer of RailAmerica, said, “We have made a strategic decision to divest our International operations and focus our efforts on North America. We have several qualified buyers looking at Freight Australia and believe the timing is right to effect a sale of the Company as the outlook for grain recovery in Australia for fiscal year 2004 is quite positive, and a near record grain harvest is anticipated.”
In North America, the Company’s acquisitions of the Mobile, Alabama line and the Colorado-based San Luis & Rio Grande Railroad, the strengthening Canadian Dollar and strong agricultural and coal volumes led to a 7.5% increase in revenue. Revenue increased 2% on a “same railroad” basis. As a result of higher fuel and health insurance costs, the North American operating ratio for the third quarter of 2003 was 75.4%, compared to 74.5% in the third quarter of 2002.
Marino added, “We are quite pleased with the results of our North American operations this quarter despite the challenges of the economy and higher fuel and health insurance costs. We have successfully integrated our two most recent acquisitions and believe these acquisitions, coupled with the improving business climate, should enable RailAmerica to continue to improve the results of its North American operations.”
Freight Australia’s operating loss for the 2003 third quarter was $2.2 million compared to operating income of $0.8 million for the same period in 2002. As a result of the Australian drought, grain tonnage was down 57% in the most recent quarter compared to the same period in 2002.
Michael J. Howe, Senior Vice President and CFO, said, “Our focus remains on strengthening the Company’s balance sheet and improving our financial fundamentals, including our debt ratios. The net debt-to-capital ratio at September 30, 2003 was 60%, compared to 64% at December 31, 2002 (net debt includes the Australian debt which is classified in discontinued operations). We expect that the proceeds from our international divestitures could be used to significantly increase liquidity and improve our capital structure to achieve our goal of a 50% debt-to-capital ratio, much earlier than we originally forecasted. We are particularly pleased that shareholders’ equity rose 24% to $346 million at September 30, 2003 from $279 million at year-end 2002.”
Marino concluded, “The acquisition environment in North America is stronger than it has been in recent years with several Class I railroads and private rail owners looking to divest of branch/short line rail properties. We believe the anticipated sale of our international railroads positions RailAmerica to take advantage of strategic opportunities as they become available in North America.”
As previously announced, RailAmerica has scheduled a live webcast of its third quarter 2003 earnings conference call at 10:30 a.m. eastern time today. To listen to the webcast, visit the Investor Relations section of RailAmerica’s website at http://www.railamerica.com . We suggest that you visit our website at least ten minutes in advance of the conference call to ensure that your computer is configured to receive the webcast. The webcast will also be archived at the RailAmerica website for 30 days.
RailAmerica, Inc. (NYSE:RRA) is the world’s largest short line and regional railroad operator with 50 railroads operating approximately 17,700 miles in the United States, Canada, Australia, Chile and Argentina, including track access arrangements. The Company is a member of the Russell 2000(R) Index. Its website may be found at http://www.railamerica.com.