(RailAmerica issued the following news release on October 31.)
BOCA RATON, Fla. — RailAmerica, Inc. today reported third quarter 2006 earnings from continuing operations of $7.0 million, or $0.18 per share, compared to $7.5 million, or $0.19 per share, for the third quarter of 2005. The 2006 results include expenses of $1.8 million, or $0.03 per share, related to the Company’s previously announced Process Improvement Project.
Net income for the three months ended September 30, 2006, which includes discontinued operations, was $6.9 million, or $0.18 per share, compared to $7.7 million, or $0.20 per share in the three months ended September 30, 2005.
Revenue for the third quarter of 2006 increased $12.2 million, or 12%, to $117.3 million, from $105.1 million in the third quarter of 2005. On a “same railroad” basis, revenue for the third quarter of 2006 increased $5.9 million, or 6%, from the third quarter of 2005, while “same railroad” carloads declined 2%. Operating income for the third quarter of 2006 increased 7%, to $13.5 million, from $12.8 million in the third quarter of 2005. The operating ratio for the third quarter of 2006 was 88.5% compared to 87.8% in the 2005 third quarter.
For the nine months ended September 30, 2006, the Company reported earnings from continuing operations of $19.1 million, or $0.49 per share, compared to earnings from continuing operations of $21.4 million, or $0.56 per share for the nine months ended September 30, 2005. Total costs associated with the Process Improvement Project were $4.8 million, or $0.07 per share, during the nine months ended September 30, 2006. A change in Canadian tax laws resulted in a continuing operations tax benefit of $1.7 million, or $0.04 per share, in the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006, which includes discontinued operations, was $29.7 million, or $0.76 per share, compared to $23.2 million, or $0.60 per share in the nine months ended September 30, 2005. The 2006 results include the recognition of a $13.4 million pre-tax gain ($8.3 million net of tax) in the first quarter of 2006 for the expiration of the warranty period related to the sale of Freight Australia and the resulting adjustment to the reserves in discontinued operations, as well as a pre-tax gain of $2.5 million ($2.4 million net of tax) on the disposition of the Company’s E & N Railway on June 30.
Revenue for the nine months ended September 30, 2006, increased $38.9 million, or 13%, to $348.5 million, from $309.6 million in 2005. On a “same railroad” basis, revenue for the nine months ended September 30, 2006 increased $20.1 million, or 7%, while “same railroad” carloads declined 2%, from the nine months ended September 30, 2005. Operating income for the nine months ended September 30, 2006 was $36.9 million, compared to $37.2 million for the nine months ended September 30, 2005. The operating ratio for the nine months ended September 30, 2006 was 89.4% compared to 88.0% for the nine months ended September 30, 2005.
Charles Swinburn, RailAmerica’s Chief Executive Officer, said, “We are pleased with our results this quarter. Despite the declines in our carloads, caused in significant part by the slowdown in the housing market, which resulted in a 12% decline in our lumber carloads compared to the third quarter of 2005, and the continued work stoppage at a paper facility in Nova Scotia, coupled with the expense of a single personal injury during the quarter, we continued to improve our operating results. Production recommenced in October at the paper facility in Nova Scotia and we expect carloads from this facility to begin to return to normal levels during the fourth quarter. In addition, we have made significant progress at our Ohio railroad, which saw its revenue increase 17% and its operating loss decline 78% from the second quarter.”
Michael Howe, RailAmerica’s Chief Financial Officer, said, “We continue to make progress on our Process Improvement Project. We have now completed our implementation planning and will commence implementation of our plan in the fourth quarter. We have already begun to realize savings through our staff reductions in June and our strategic sourcing initiatives. In addition, we have now completed the first year of operations of the four railroads purchased from Alcoa. The operating results of those railroads have exceeded our financial and cash flow targets since we acquired them on September 30, 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 www.railamerica.com.