Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RAILAMERICA INC /DE | d247174d8k.htm |
| EX-99.1 - EX-99.1 - RAILAMERICA INC /DE | d247174dex991.htm |
 Third Quarter
2011 Earnings Conference Call
October 26, 2011
Exhibit 99.2 |
 Forward-Looking Statements
2
Certain items in this presentation and other information we provide from time to time may
constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 including, but not necessarily limited to, statements
relating to future events and financial performance. Words such as
“anticipates,” “expects,”
“intends,”
“plans,”
“projects,”
“believes,”
“appears,”
“may,”
“will,”
“would,”
“could,”
“should,”
“seeks,”
“estimates”
and variations on these words and similar
expressions are intended to identify such forward-looking statements. These statements are
based on management’s current expectations and beliefs and are subject to a number
of factors that could lead to actual results materially different from those described
in the forward-looking statements in this presentation, including operating ratio goals. RailAmerica, Inc. can give no
assurance that its expectations will be attained. Accordingly, you should not place undue
reliance on any forward-looking statements contained in this presentation. Factors
that could have a material adverse effect on our operations and future prospects or
that could cause actual results to differ materially from RailAmerica, Inc.’s expectations include, but are not limited to, prolonged
capital markets disruption and volatility, general economic conditions and business
conditions, our relationships with Class I railroads and other connecting carriers, our
ability to obtain railcars and locomotives from other providers on which we are
currently dependent, legislative and regulatory developments including rulings by the Surface
Transportation Board or the Railroad Retirement Board, strikes or work stoppages by our
employees, our transportation of hazardous materials by rail, rising fuel costs,
goodwill assessment risks, acquisition risks, competitive pressures within the industry, risks
related to the geographic markets in
which we operate; and other risks detailed in RailAmerica, Inc.'s filings with the Securities
and Exchange Commission, including our
Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. In addition,
new risks and uncertainties emerge from time to time, and it is not possible for
RailAmerica, Inc. to predict or assess the impact of every factor that may cause its
actual results to differ from those contained in any forward-looking statements.
Such forward-looking statements speak only as of the date of this presentation.
RailAmerica, Inc. expressly disclaims any obligation to release publicly any updates or revisions to any forward-
looking statements contained herein to reflect any change in its
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based. |
 Executive
Summary John Giles, President and Chief Executive Officer
3 |
 Third quarter
2011 overview 4
Strategic Focus
Accomplishments
Organic Growth
External Growth
Financial Flexibility
Revenue increased 9%
•
Carloads declined 6%
•
Average freight revenue per car up 14%
•
Non-freight revenue up 14%
Operating income (excluding 45G, impairments & asset sales)
up 10%
1
Adjusted
income
from
continuing
operations
2
of
$0.24
per
share
Robust pipeline of industrial development and acquisition
opportunities
$96 million of cash as of 9/30/11
Initiated $25 million share repurchase program
New $75 million revolver
Note:
(1)
See page 23 for a reconciliation to GAAP. Reported operating income up 11%
for Q3 2011 versus Q3 2010. (2)
See page 24 for a reconciliation to GAAP. Reported income from continuing
operations of $0.17 per share for Q3 2011. |
 Commercial
Update
Charlie Patterson, Chief Commercial Officer
5 |
 6
($in millions)
Q3 2011 revenue up $11.4 million versus Q3 2011.
Strong pricing and growth in non-freight revenue and fuel surcharge offset lower
volume. $128.3
($5.3)
$8.8
$3.5
$4.4
$139.7
Q3 2010
Volume
Rev. Per Car
Fuel Surcharge
Non-Freight
Q3 2011
Freight Revenue
$7.0
Third quarter 2011 revenue up 9%
Note:
Numbers may not add or recalculate due to rounding.
+9% |
   Third quarter 2011
carloads declined 6%, flat excluding coal 7
Note:
Numbers may not add or recalculate due to rounding.
Revenue
Q3
Q3
Q3 2011 vs.
Q3 2011 vs.
2010
2011
Q3 2010
Q3 2010
Industrial Products Subtotal
92,732
94,409
2%
12%
Chemicals
23,947
24,037
0%
11%
Pulp, Paper & Allied Products
17,565
18,639
6%
15%
Metallic Ores and Metals
18,145
17,828
-2%
6%
Waste & Scrap Materials
14,231
14,965
5%
8%
Petroleum
9,027
8,274
-8%
-10%
Other
7,175
7,906
10%
82%
Motor Vehicles
2,642
2,760
4%
10%
Agricultural & Food Products Subtotal
46,390
43,076
-7%
0%
Agricultural Products
32,730
29,044
-11%
-5%
Food or Kindred Products
13,660
14,032
3%
13%
Coal
47,176
35,335
-25%
-15%
Construction Products Subtotal
33,201
34,155
3%
16%
Non-Metallic Minerals and Products
21,421
21,508
0%
15%
Forest Products
11,780
12,647
7%
18%
Total
219,499
206,975
-6%
7%
Total (excluding coal)
172,323
171,640
0%
10%
"Same Railroad"
219,499
205,824
-6%
7%
Carloads |
 Third quarter 2011
average freight revenue per carload up 14% 8
Change in Average Freight Revenue per Carload
(Versus Prior Year Period)
13.6%
9.4%
Q3 2011 vs. Q3 2010
Reported
Excl Fuel Surcharge & Foreign Exchange
Core price increases of ~5% |
 Third quarter
non-freight revenue up 14% 9
Note:
Numbers may not add or recalculate due to rounding.
(1)
Acquisitions include three Alabama railroads (closed 5/11/11)
Non-freight revenue increase driven by solid growth in all areas except car hire
and car storage.
Q3 is the first quarter with Atlas in prior year numbers (effective July 1,
2010). ($ millions)
Q3 2010
Q3 2011
% Change
Non-Freight Revenue (Reported)
$30.6
$35.0
14%
Less Acquisitions
1
(0.3)
Organic Non-Freight Revenue
$30.6
$34.7
14%
Non-Freight Revenue Detail:
Engineering Services
$9.2
$11.1
21%
Car Storage
4.3
3.4
-21%
Demurrage
3.2
4.5
38%
Car Repair
2.9
3.2
12%
Real Estate Lease Income
2.7
3.5
28%
Switching
1.7
2.4
44%
Car Hire Revenue
1.3
1.0
-23%
Other
5.2
5.8
12%
Total
$30.6
$35.0
14% |
 Operational
Update John Giles, President and Chief Executive Officer
10 |
 Continued focus
on operating ratio improvement 11
Operating Ratio –
excluding 45G benefit, asset sales and impairments negatively
impacted by fuel and weather
Fuel expense up 180
basis points
Other expenses down 200
basis points
Note:
(1)
See page 23 for a reconciliation to GAAP.
(2)
Numbers may not add or recalculate due to rounding.
Q3 2010
Q3 2011
Operating Ratio -
Reported
77.8%
77.5%
Gain/Loss on Sale of Assets
1.3%
0.0%
Impairment of Assets
0.0%
-1.4%
Operating Ratio -
excluding asset sales and impairments
79.1%
76.1%
45G Credit
0.0%
2.8%
Operating Ratio -
excluding 45G benefit, asset sales and impairments
79.1%
78.9%
Fuel
7.6%
9.4%
Remaining expenses excluding fuel
71.5%
69.5%
% of Operating Revenue
1 |
 Safety
trends 12
40
41
26
23
27
15
2006
2007
2008
2009
2010
2011
YTD
FRA Reportable Personal
Injuries
2.2
2.5
1.6
1.8
2.1
1.5
2006
2007
2008
2009
2010
2011
YTD
Personal Injury (PI) Ratio
Note:
RailAmerica includes Canadian railroads and excludes Atlas.
PI ratio rate per 200,000 man hours worked.
FRA = Federal Railroad Administration.
58
48
44
34
30
29
2006
2007
2008
2009
2010
2011
YTD
0.89
0.78
0.77
0.76
0.66
0.86
2006
2007
2008
2009
2010
2011 YTD
FRA Reportable Train
Accidents
FRA Reportable Train
Accident Ratio |
 Financial
Update Clyde Preslar, Chief Financial Officer
13 |
 Third quarter
2011 EPS totaled $0.17 per share including 45G benefit 14
Note:
Numbers may not add due to rounding.
($ in millions except EPS)
Q3 2010
Q3 2011
($)
(%)
Operating revenue
$128.3
$139.7
$11.4
9%
Operating expenses
(99.8)
(108.2)
(8.4)
8%
Operating income
$28.5
$31.5
$3.0
11%
Interest expense
(19.7)
(17.8)
Other income (loss)
2.3
(0.2)
Income (loss) from continuing operations before taxes
$11.0
$13.5
$2.4
22%
Provision for income taxes
3.1
4.4
Income (loss) from continuing operations
$8.0
$9.1
$1.1
14%
Net Income (loss)
$8.0
$9.1
$1.1
14%
EPS income (loss) from continuing operations - diluted
$0.15
$0.17
EPS net income (loss) - diluted
$0.15
$0.17
Change |
 Third quarter
2011 adjusted income from continuing operations was $0.24 per share including $0.05 per
share from 45G benefit 15
Note:
(1)
Q3 2011 cash taxes paid were $1.1 million .
(2)
Numbers may not add due to rounding.
(In thousands, except per share data)
After Tax
Per Share
Income (loss) from continuing operations
$9,058
$0.17
Add:
Amortization of swap termination costs
1,675
0.03
Impairment of assets
1,189
0.02
Loss on extinguishment of debt and credit facility
439
0.01
Acquisition costs
124
0.00
Adjusted income from continuing operations
$12,485
$0.24
Weighted Average common shares outstanding (diluted)
52,083
Q3 2011 |
 Third quarter
2011 detailed results compared to prior year 16
Note:
(1)
See page 23 for a reconciliation to GAAP.
(2)
Numbers may not add due to rounding.
(in thousands, except carloads and revenue per carload)
Q3 2010
% of
Revenue
Q3 2011
% of
Revenue
($)
(%)
Carloads
219,499
206,975
(12,524)
-6%
Average Freight Revenue/Carload
$445
$506
$61
14%
Freight revenue
$97,665
$104,659
$6,994
7%
Non-freight revenue
30,592
35,006
4,414
14%
Operating revenue
$128,257
$139,665
$11,408
9%
Labor & benefits
$38,745
30%
$41,379
30%
$2,634
Equipment rents
8,721
7%
9,046
6%
325
Purchased services
9,830
8%
10,996
8%
1,166
Diesel fuel
9,760
8%
13,142
9%
3,382
Casualties & insurance
4,816
4%
4,006
3%
(810)
Materials
6,782
5%
7,879
6%
1,097
Joint facilities
2,454
2%
2,459
2%
5
Other expenses
8,785
7%
9,271
7%
486
Track maintenace expense reimbursement
-
0%
(3,879)
-3%
(3,879)
Loss (gain) on sales of assets
(1,708)
-1%
8
0%
1,716
Impairment of assets
-
0%
1,949
1%
1,949
Depreciation expense
11,581
9%
11,921
9%
340
Operating expenses
$99,766
77.8%
$108,177
77.5%
$8,411
8%
Operating income
$28,491
22.2%
$31,488
22.5%
$2,997
11%
$26,783
20.9%
$29,566
21.2%
$2,783
10%
Change
Operating income excluding 45G benefit, asset sales and
impairments
(1) |
 Capital
expenditures 17
Capital Expenditures
Note:
Numbers may not add due to rounding.
($ in millions)
2010
2011
2010
2011
Maintenance
$11.9
$16.1
$37.5
$40.6
Project (non-NECR)
4.3
7.5
9.3
12.6
NECR High Speed Rail Project *
-
33.8
-
44.4
45G Credit
-
-
-
(4.0)
Reported Capex
$16.2
$57.3
$46.8
$93.5
* Sources of NECR Project Funding
$0.0
$33.8
$0.0
$44.4
NECR Grant
-
24.4
-
31.3
Scrap Sales Related to NECR Project
-
3.0
-
4.9
RA Contribution
-
6.5
-
8.1
Third Quarter
Third Quarter YTD |
 Favorable tax
attributes enhance cash flow and value to shareholders 18
Federal net operating loss carryforward (NOL’s) of more than $100 million
Unused 45G credits of $95 million
45G credits approved for 2011
Minimal cash tax payer
Third quarter 2011 summary
•
Financial statement income tax expense:
$4.4 million
•
Cash taxes paid:
$1.1 million |
 Strong capital
structure supports organic growth and strategic investments 19
Capitalization
Note:
Numbers may not add due to rounding.
($ in millions)
At December
31, 2010
At September
30, 2011
Cash & equivalents
$153.0
$95.8
Senior Secured Notes due 2017
571.2
573.0
Other long-term debt
2.6
2.3
Total debt
$573.7
$575.2
Stockholders equity
$704.7
$673.6
Total capitalization
$1,278.5
$1,248.8
Total debt / Total capitalization
45%
46%
Net debt / Total capitalization
33%
38% |
 Q4
Estimates 20
Note:
(1)
Assumes no acquisitions or debt repayment and does not include interest income on
cash balances. (2)
Assumes ~ $18 million in full year project capital.
($ in millions)
Q4 2011
FY 2011
Carload Growth
-2% to -4%
-3% to -4%
Core Pricing
4% to 5%
~ 4%
Non-freight Revenue $'s (including Atlas)
$32 to $34
$128 to $130
Interest expense:
(1)
Swap loss amortization
$2.3
$11.9
Deferred loan costs
0.6
2.3
Original issue discount
0.6
2.4
Senior note interest
13.7
54.8
Other interest
0.2
0.6
Total
$17.4
$72.0
45G credits:
Operating expense benefit
~$3.8
~$17
Capital expenditure benefit
~$1.0
~$5
Capital expenditures:
Capex excluding 45G & NECR High Speed Rail Project
(2)
$16 to $19
~ $70
NECR Project (net of grants & scrap sales)
($6) to ($4)
$2 to $4
Effective tax rate
35% to 36%
31% to 33%
Cash taxes
$1 to $2
$4 to $5 |
 21 |
 Appendix
22 |
 Operating Income
and Operating Ratio Excluding 45G Benefit Reconciliation to GAAP & Operating Income
and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments Reconciliation to GAAP
23
Note:
(1)
Numbers may not add due to rounding.
($ in thousands)
Operating revenue
$128,257
$139,665
Operating expense
99,766
108,177
Operating Income, reported
28,491
31,488
Operating ratio Reported
77.8%
77.5%
Less: Benefit from 45G credits
-
0.0%
(3,879)
2.8%
Operating income excuding 45G Benefit
28,491
27,609
Operating ratio excluding 45G Benefit
77.8%
80.3%
Net (gain) loss on sale of assets
(1,708)
1.3%
8
0.0%
Impairment of assets
-
1,949
-1.4%
Operating income excluding 45G Benefit, Asset Sales & Impairments
$26,783
$29,566
Operating ratio, excluding 45G Benefit, Asset Sales & Impairments
79.1%
78.9%
Q3 2011
Q3 2010
Operating Income Excluding 45G Benefit, Operating Ratio Excluding 45G Benefit, Operating Income
Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit,
Asset Sales & Impairments are supplemental measures of profitability that are not calculated or presented in accordance with U.S. generally accepted
accounting principles (“GAAP”). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors
and trends affecting our business. However, Operating Income Excluding 45G Benefit, Operating
Ratio Excluding 45G Benefit, Operating Income Excluding 45G Benefit, Asset Sales &
Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments have limitations as analytical tools. They are not measurements of our profitability
under GAAP and should not be considered as alternatives to Operating Income or Operating Ratio as
measures of profitability. Operating Income Excluding 45G Benefit and Operating Ratio Excluding 45G Benefit assist us in
measuring our performance and profitability of our operations without the impact of monetizing
the 45G tax benefit. Operating Income Excluding 45G Benefit, Asset Sales & Impairments and Operating Ratio Excluding 45G Benefit, Asset Sales &
Impairments assist us in measuring our performance and profitability of our operations without the
impact of monetizing the 45G tax benefit, Asset Sales and Impairments. The following
table sets forth the reconciliation of Operating Income Excluding 45G Benefit from our Operating Income, Operating Ratio Excluding 45G Benefit from our Operating
Ratio, Operating Income Excluding 45G Benefit, Asset Sales & Impairments from our Operating Income
and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments from our Operating
Ratio. |
 Adjusted income
from continuing operations reconciliation to GAAP 24
Note:
(1)
Numbers may not add due to rounding.
Adjusted income from continuing operations is a supplemental measure of
profitability that is not calculated or presented in accordance with U.S.
generally accepted accounting principles (“GAAP”). We use non-GAAP financial measures as a supplement to our GAAP results in
order to provide a more complete understanding of the factors and trends affecting
our business. However, Adjusted income from continuing operations has
limitations as an analytical tool. It is not a measurement of our profitability under GAAP and should not be considered as an
alternative to Income (loss) from continuing operations as a measure of
profitability. Adjusted income from continuing operations assists us in
measuring our performance and profitability of our operations without the impact of
transaction costs related to debt and credit facility extinguishment, acquisitions,
impairment of assets and swap termination. The following table sets forth
the reconciliation of Adjusted income from continuing operations. (In thousands, except per
share data) After Tax
Per Share
After Tax
Per Share
Income (loss) from continuing operations
$7,968
$0.15
$9,058
$0.17
Add:
Amortization of swap termination costs
2,973
0.05
1,675
0.03
Impairment of assets
-
-
1,189
0.02
Loss on extinguishment of debt and credit facility
-
-
439
0.01
Acquisition costs
(1,043)
(0.02)
124
0.00
Adjusted income from continuing operations
$9,898
$0.18
$12,485
$0.24
Weighted Average common shares outstanding (diluted)
54,872
52,083
Q3 2010
Q3 2011 |
 Adjusted EBITDA
reconciliation to GAAP 25
Adjusted EBITDA, is a supplemental measure of liquidity that is not calculated or
presented in accordance with U.S. generally accepted accounting principles
(“GAAP”). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business. However, Adjusted
EBITDA has limitations as an analytical tool. It is not a measurement of our
cash flows from operating activities under GAAP and should not be considered as an alternative to cash flow from operating
activities as a measure of liquidity.
Adjusted EBITDA assists us in monitoring our ability to undertake key investing and
financing functions such as making investments, transferring property,
paying dividends, and incurring additional indebtedness, which are generally prohibited by the covenants under our senior secured notes
unless we meet certain financial ratios and tests. Adjusted EBITDA represents
EBITDA before impairment of assets, equity compensation costs and
acquisition costs. EBITDA, also a non-GAAP financial measure, is defined as net income (loss) before interest expense, provision for (benefit
from) income taxes and depreciation and amortization.
The following tables set forth the reconciliation of Adjusted EBITDA from our cash
flow from operating activities (in thousands): Q1 2011
Q2 2011
Q3 2011
YTD 2011
Cash flows from operating activities to Adjusted
EBITDA Reconciliation:
Net cash provided by operating activities
$ 23,123
$ 29,605
$ 19,011
$ 71,739
Changes in working capital accounts
1,015
1,659
13,940
16,614
Depreciation and amortization, including amortization of
debt issuance costs classified in interest expense
(12,945)
(12,919)
(13,148)
(39,012)
Amortization of swap termination costs
(3,677)
(3,201)
(2,747)
(9,625)
Net gain (loss) on sale or disposal of properties
(207)
64
(8)
(151)
Impairment of assets
-
(3,220)
(1,949)
(5,169)
Equity compensation costs
(2,609)
(2,370)
(2,402)
(7,381)
Financing costs
-
-
(719)
(719)
Deferred income taxes
(615)
(918)
(2,920)
(4,453)
Net income
4,085
8,700
9,058
21,843
Add:
Provision for income taxes
2,067
2,350
4,407
8,824
Interest expense, including amortization costs
18,591
18,143
17,792
54,526
Depreciation and amortization
11,764
11,736
11,921
35,421
EBITDA
36,507
40,929
43,178
120,614
Add:
Equity compensation costs
2,609
2,370
2,402
7,381
Impairment of assets
-
3,220
1,949
5,169
Financing costs
-
-
719
719
Acquisition costs
72
243
203
518
Adjusted EBITDA
$ 39,188
$ 46,762
$ 48,451
$134,401 |
 Adjusted EBITDA
reconciliation to GAAP (continued) 26
Q1 2010
Q2 2010
Q3 2010
YTD 2010
Cash flows from operating activities to Adjusted EBITDA Reconciliation:
Net cash provided by operating activities
$ 25,440
$ 33,290
$ 9,142
$ 67,872
Changes in working capital accounts
(10,191)
(13,583)
18,975
(4,799)
Depreciation and amortization, including amortization of debt issuance costs
classified in interest expense
(12,151)
(11,988)
(12,724)
(36,863)
Amortization of swap termination costs
(6,073)
(5,635)
(4,874)
(16,582)
Net gain (loss) on sale or disposal of properties
34
(25)
1,708
1,717
Loss on extinguishment of debt
-
(8,357)
-
(8,357)
Equity compensation costs
(1,525)
(1,965)
(2,035)
(5,525)
Deferred income taxes
1,952
4,042
(2,224)
3,770
Net income (loss)
(2,514)
(4,221)
7,968
1,233
Add:
(Benefit from) provision for income taxes
(530)
(2,772)
3,052
(250)
Interest expense, including amortization costs
22,704
22,153
19,735
64,592
Depreciation and amortization
10,923
10,755
11,581
33,259
EBITDA
30,583
25,915
42,336
98,834
Add:
Equity compensation costs
1,525
1,965
2,035
5,525
Loss on extinguishment of debt
-
8,357
-
8,357
Acquisition costs
-
261
(1,710)
(1,449)
Adjusted EBITDA
$ 32,108
$ 36,498
$ 42,661
$111,267 |
  45G tax
credit 27
Note:
(1)
Numbers may not add due to rounding.
($ in millions)
Q1
Q2
Q3
Q4
FY
2009 Actual
Income Statement Benefit
4.1
4.1
4.5
3.9
16.7
Capital Expenditure Benefit
-
-
-
5.2
5.2
2010 Actual
Income Statement Benefit
-
-
-
17.6
17.6
Capital Expenditure Benefit
-
-
-
4.2
4.2
2011 Projected
Income Statement Benefit
4.2
5.1
3.9
3.8
16.9
Capital Expenditure Benefit
-
4.0
-
1.0
5.0
Financial Impact of 45G Credit Assignment |
 Swap
amortization 28
Note:
(1)
Numbers may not add due to rounding.
($ in millions)
2011
2012
2013
2014
Q1
$3.7
$1.8
$0.9
$0.2
Q2
$3.2
$1.6
$0.8
Q3
$2.7
$1.5
$0.7
Q4
$2.3
$1.2
$0.5
FY
(1)
$11.9
$6.1
$2.9
$0.2 |