Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RAILAMERICA INC /DE | d339264d8k.htm |
| EX-99.1 - EX-99.1 - RAILAMERICA INC /DE | d339264dex991.htm |
 First Quarter
2012 Earnings Conference Call
April 26, 2012
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 |
 First quarter 2012
overview 4
Strategic Focus
Accomplishments
Organic Growth
External Growth
Financial Flexibility
Revenue increased 15%
•
Carloads up 3%
•
Average freight revenue per car up 7%
•
Non-freight revenue up 30%
Operating income (excl. 45G, impairments & asset sales) up 57%
Adjusted net income of $0.26 per share
Closed on Wellsboro & Corning Railroad and TransRail North
America (April 2012)
Expect to close on Marquette Rail in May 2012
Redeemed $518 million of 9.25% Senior Notes
•
Plan to redeem $74 million of outstanding notes late June 2012
Implemented new $585 million, 7-year credit facility
Increased revolver to $100 million
Note:
(1)
See page 24 for a reconciliation to GAAP. Reported operating income up 32%%
for Q1 2012 versus Q1 2011. (2)
See page 25 for a reconciliation to GAAP. Reported net loss of $0.80 per
share for Q1 2012. 1
2 |
 Commercial
Update 5 |
 6
($in millions)
Q1 2012 revenue up $18.5 million versus Q1 2011.
Strong freight and non-freight revenue growth.
$124.9
$3.0
$3.6
$3.7
$8.3
$143.4
Q1 2011
Volume
Rev. Per Car
Fuel Surcharge
Non-Freight
Q1 2012
Freight Revenue up $10.3
First quarter 2012 revenue up 15%
Note:
Numbers may not add or recalculate due to rounding.
+15% |
 First quarter 2012
carloads increased 3%, up 6% excluding coal 7
Note:
Numbers may not add or recalculate due to rounding.
Revenue
Q1
Q1
Q1 2012 vs.
Q1 2012 vs.
2011
2012
Q1 2011
Q1 2011
Industrial Products Subtotal
92,669
99,102
7%
12%
Chemicals
24,902
23,905
-4%
3%
Pulp, Paper & Allied Products
17,007
16,536
-3%
-5%
Metallic Ores and Metals
16,599
18,906
14%
20%
Waste & Scrap Materials
13,093
13,971
7%
17%
Petroleum
11,316
10,862
-4%
3%
Other
7,055
9,530
35%
43%
Motor Vehicles
2,697
5,392
100%
111%
Agricultural & Food Products Subtotal
44,346
46,443
5%
10%
Agricultural Products
30,710
32,624
6%
11%
Food or Kindred Products
13,636
13,819
1%
6%
Coal
40,745
37,835
-7%
-5%
Construction Products Subtotal
31,282
32,361
3%
15%
Non-Metallic Minerals and Products
19,850
18,696
-6%
4%
Forest Products
11,432
13,665
20%
31%
Total
209,042
215,741
3%
10%
Total (excluding coal)
168,297
177,906
6%
12%
"Same Railroad"
209,042
214,081
2%
10%
Carloads |
 First quarter 2012
average freight revenue per carload up 7% 8
Change in Average Freight Revenue per Carload
(Versus Prior Year Period)
7.0%
3.9%
Q1 2012 vs. Q1 2011
Reported
Excl Fuel Surcharge & Foreign Exchange
Core price increases of ~ 5% |
 First quarter
non-freight revenue up 30% 9
Note:
Numbers may not add or recalculate due to rounding.
Non-freight revenue increase was broad based led by engineering services,
demurrage, car repair and switching.
($ millions)
Q1 2011
Q1 2012
% Change
Non-Freight Revenue
$27.3
$35.6
30%
Non-Freight Revenue Detail:
Engineering Services
$3.5
$6.9
96%
Car Storage
5.0
5.0
1%
Demurrage
3.6
5.4
51%
Car Repair
3.1
4.7
50%
Real Estate Lease Income
3.0
3.3
9%
Switching
1.8
2.9
64%
Car Hire Revenue
0.9
0.9
-4%
Other
6.4
6.5
2%
Total
$27.3
$35.6
30% |
 2012 Commercial
Overview 10
Growth Component
Opportunity Pipeline
Organic Growth
Over 400 active commercial opportunities
Industrial Development
•
Fourteen announcements in Q1
•
Two new facilities announced with one already under
construction
•
Six plant expansions
•
Six new transload facilities announced with two already
moving traffic
Modest GDP growth
Continued headwinds for coal
Stable outlook for 2012 harvest
Favorable outlook for international trade |
 Operations
Update 11 |
 Continued focus
on operating ratio improvement 12
Operating Ratio –
excluding 45G benefit, asset sales and impairments improved
significantly (590 basis points)
Fuel improved 190 basis points.
Other expenses excluding fuel, severance, restricted stock and life study improved 390
basis points.
Note:
(1)
See page 24 for a reconciliation to GAAP.
(2)
Numbers may not add or recalculate due to rounding.
590 bps
improvement
390 bps
improvement
Q1 2011
Q1 2012
Operating Ratio -
Reported
80.6%
77.8%
Gain/Loss on Sale of Assets
-0.2%
0.1%
Operating
Ratio
-
excluding
asset
sales
and
impairments
80.5%
77.9%
45G Credit
3.3%
0.0%
Operating
Ratio
-
excluding
45G
benefit,
asset
sales
and
impairments
¹
83.8%
77.9%
Fuel
11.3%
9.4%
Severance / Restricted Stock Amortization
1.3%
2.4%
Asset Life Study
0%
-1.2%
Remaining
expenses
excluding
fuel,
severance,
restricted
stock
&
asset
life
study
71.2%
67.3%
% of Operating Revenue |
 Safety
trends 13
26
23
28
25
6
2008
2009
2010
2011
2012
QTD
FRA Reportable Personal
Injuries
1.6
1.8
2.1
1.9
1.9
2008
2009
2010
2011
2012
QTD
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.
0.77
0.76
0.66
0.85
0.37
2008
2009
2010
2011
2012 QTD
FRA Reportable Train
Accidents
FRA Reportable Train
Accident Ratio
44
34
30
38
4
2008
2009
2010
2011
2012
QTD |
 Financial
Update Clyde Preslar, Chief Financial Officer
14 |
 First quarter
2012 net loss of $0.80 per share due to $1.03 per share of debt retirement costs
15
Note:
Numbers may not add due to rounding.
($ in millions except EPS)
Q1 2011
Q1 2012
($)
(%)
Operating revenue
$124.9
$143.4
$18.5
15%
Operating expenses
(100.7)
(111.6)
(10.8)
(11%)
Operating income
$24.2
$31.9
$7.7
32%
Interest expense
(18.6)
(13.4)
Other income (loss)
0.5
(81.9)
Income (loss) before taxes
$6.2
($63.5)
($69.6)
NM
Provision for income taxes
2.1
(23.3)
Net income (loss)
$4.1
($40.2)
($44.3)
NM
EPS - diluted
$0.07
($0.80)
Change |
 First quarter
2012 adjusted net income was $0.26 per share 16
Note:
(1)
Q1 2012 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
Net income (loss)
($40,219)
($0.80)
Add:
Amortization of swap termination costs
1,002
0.02
Loss on extinguishment of debt and credit facility
51,938
1.03
Acquisition costs
239
0.00
Adjusted net income
$12,961
$0.26
Weighted Average common shares outstanding (diluted)
50,518
Q1 2012 |
 First quarter
2012 detailed results compared to prior year 17
Note:
(1)
See page 24 for a reconciliation to GAAP.
(2)
Numbers may not add due to rounding.
(in thousands, except carloads and revenue per carload)
Q1 2011
% of
Revenue
Q1 2012
% of
Revenue
($)
(%)
Carloads
209,042
215,741
6,699
3%
Average Freight Revenue/Carload
$467
$500
$33
7%
Freight revenue
$97,635
$107,818
$10,183
10%
Non-freight revenue
27,302
35,624
8,322
30%
Operating revenue
$124,937
$143,442
$18,505
15%
Labor & benefits
$41,617
33%
$45,552
32%
$3,935
Equipment rents
8,666
7%
8,396
6%
(270)
Purchased services
9,106
7%
10,970
8%
1,864
Diesel fuel
14,167
11%
13,425
9%
(742)
Casualties & insurance
2,134
2%
2,879
2%
745
Materials
5,085
4%
6,409
4%
1,324
Joint facilities
2,205
2%
2,591
2%
386
Other expenses
9,933
8%
11,101
8%
1,168
Track maintenace expense reimbursement
(4,150)
-3%
-
0%
4,150
Loss (gain) on sales of assets
207
0%
(163)
0%
(370)
Impairment of assets
-
0%
-
0%
-
Depreciation expense
11,764
9%
10,406
7%
(1,358)
Operating expenses
$100,734
80.6%
$111,566
77.8%
$10,832
11%
Operating income
$24,203
19.4%
$31,876
22.2%
$7,673
32%
$20,260
16.2%
$31,713
22.1%
$11,453
57%
Change
Operating income excluding 45G benefit, asset sales and
impairments
(1) |
 Capital
expenditures 18
Capital Expenditures
Note:
Numbers may not add due to rounding.
($ in millions)
2011
2012
Maintenance
$7.7
$9.0
Project (non-NECR)
3.8
3.3
NECR High Speed Rail Project *
4.3
0.5
Reported Capex
$15.8
$12.8
* Sources of NECR Project Funding
$4.3
$0.5
NECR Grant
2.4
0.3
Scrap Sales Related to NECR Project
0.5
0.7
RA Contribution
1.4
(0.5)
First Quarter |
 Strong capital
structure supports organic growth and strategic investments 19
Capitalization
Note:
Numbers may not add due to rounding.
Tender / Refinancing completed in Q1
Remaining Senior Notes callable at 103 in June 2012
($ in millions)
At December
31, 2011
At March 31,
2012
Cash & equivalents
$91.0
$98.5
Senior Secured Notes
573.6
71.8
Term Loan B
582.1
Other debt
2.1
2.0
Total debt
$575.7
$655.9
Stockholders equity
$680.1
$645.8
Total capitalization
$1,255.8
$1,301.7
Total debt / Total capitalization
46%
50%
Net debt / Total capitalization
39%
43% |
 Annualized cash
interest impact of refinancing and June redemption is $0.39 per share
20
Note:
(1)
Assumes 37% tax rate.
(2)
1% LIBOR floor.
(3)
Excludes non-cash interest savings.
(4)
Numbers may not add due to rounding.
($ in millions except EPS)
Pre-tax
EPS
(1)
Debt tender / refinancing
Cash interest on $518 million of 9.25% notes tendered
$47.9
$0.60
Cash interest on $74 million of 9.25% to be redeemed in June
6.8
0.09
Cash
interest
on
new
$585
million
term
loan
at
L+300
(2)
(23.4)
(0.29)
Total cash interest impact
$31.4
$0.39 |
 Q2 and Full Year
Estimates 21
Note:
(1)
Assumes Marquette closes in May
($ in millions)
Q2 2012
FY 2012
Carload Growth (incl announced acquisitions)
(1)
1% to 3%
3% to 5%
Core Pricing
~ 5%
~ 5%
Non-freight Revenue $'s (incl announced acquisitions)
(1)
$38 to $40
$154 to $158
Operating Ratio (excluding 45G, Asset Sales & Impairments)
~ 78%
77% to 78%
Interest expense:
Interest
$8.2
$32.1
Swap loss amortization
1.4
5.3
Original issue discount
0.2
0.8
Deferred loan costs
0.6
2.2
Total
$10.4
$40.4
45G credits:
Operating expense benefit
$0.0
$0.0
Capital expenditure benefit
$0.0
$0.0
Capital expenditures:
Capex excluding 45G & NECR High Speed Rail Project
(1)
$24 to $27
~ $76
NECR Project (net of grants & scrap sales)
~ $1
~ $4
Effective tax rate
37% to 38%
37% to 38%
Cash taxes
~ $1.5
$4 to $5 |
 22 |
 Appendix
23 |
 Operating Income
and Operating Ratio Excluding 45G Benefit Reconciliation to GAAP & Operating Income
and Operating Ratio Excluding 45G Benefit, Asset Sales & Impairments Reconciliation to GAAP
24
Note:
(1)
Numbers may not add due to rounding.
($ in thousands)
Operating revenue
$124,937
$143,442
Operating expense
100,734
111,566
Operating income, reported
24,203
31,876
Operating ratio reported
80.6%
77.8%
Less: Benefit from 45G credits
(4,150)
3.3%
-
0.0%
Operating income excluding 45G Benefit
20,053
31,876
Operating ratio excluding 45G Benefit
83.9%
77.8%
Net (gain) loss on sale of assets
207
-0.2%
(163)
0.1%
Impairment of assets
-
0.0%
-
0.0%
Operating income excluding 45G Benefit, Asset Sales & Impairments
$20,260
$31,713
Operating ratio, excluding 45G Benefit, Asset Sales & Impairments
83.8%
77.9%
Q1 2012
Q1 2011
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 25
Note:
(1)
Numbers may not add due to rounding.
(In thousands, except per share data)
After Tax
Per Share
After Tax
Per Share
Net income (loss)
$4,085
$0.07
($40,219)
($0.80)
Add:
Amortization of swap termination costs
2,243
0.04
1,002
0.02
Loss on extinguishment of debt and credit facility
-
-
51,938
1.03
Acquisition costs
44
0.00
239
0.00
Adjusted net income (loss)
$6,372
$0.12
$12,961
$0.26
Weighted Average common shares outstanding (diluted)
54,651
50,518
Q1 2011
Q1 2012
Adjusted net income (loss) 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
net income (loss) 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 Net income (loss) as
a measure of profitability.
Adjusted net income (loss) 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 net income (loss). |
 Adjusted EBITDA
reconciliation to GAAP 26
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
Q1 2012
Cash flows from operating activities to Adjusted EBITDA Reconciliation:
Net cash provided by operating activities
$ 23,123
$ 19,552
Changes in working capital accounts
1,015
16,977
Depreciation and amortization, including amortization of debt issuance costs classified in
interest expense
(12,945)
(11,432)
Amortization of swap termination costs
(3,677)
(1,591)
Net (gain) loss on sale or disposal of properties
(207)
163
Impairment of assets
-
Equity compensation costs
(2,609)
(5,727)
Loss on early extinguishment of notes
-
(82,441)
Deferred income taxes
(615)
24,280
Net income
4,085
(40,219)
Add:
Provision for income taxes
2,067
(23,258)
Interest expense, including amortization costs
18,591
13,411
Depreciation and amortization
11,764
10,406
EBITDA
36,507
(39,660)
Add:
Equity compensation costs
2,609
5,727
Severance - non equity
1,210
-
Loss on early extinguishment of notes
-
82,441
Acquisition costs
72
380
Adjusted EBITDA
$ 40,398
$ 48,888 |
 Estimated
charges
associated
with
expected
June
2012
$74
million
senior
notes redemption
27
Note:
(1)
Numbers may not add due to rounding.
Pre Tax, ($ in millions)
Q2 2012
Transaction charges, cash
$2.2
Transaction charges, non-cash
3.4
Total transaction charges
$5.6
After Tax
(1)
, ($ in millions)
Q2 2012
Transaction charges, cash
$1.4
Transaction charges, non-cash
2.1
Total transaction charges
(1)
$3.5
(1) Tax effected at 37% |
  45G tax credit
28
Note:
(1)
Numbers may not add due to rounding.
($ 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 Actual
Income Statement Benefit
4.2
5.1
3.9
3.6
16.7
Capital Expenditure Benefit
-
4.0
-
1.4
5.4
Financial Impact of 45G Credit Assignment |
 Swap
amortization 29
Note:
(1)
Numbers may not add due to rounding.
($ in millions)
2012
2013
2014
Q1
$1.6
$0.8
$0.2
Q2
$1.4
$0.7
Q3
$1.3
$0.6
Q4
$1.1
$0.5
FY
(1)
$5.3
$2.5
$0.2 |