RailAmerica, Inc reports fourth quarter and full year 2010 results

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RailAmerica, Inc. reported financial results for the quarter and year ending December 31, 2010. Fourth quarter 2010 revenue increased 17% to $127.6 million from $109.2 million in the fourth quarter of 2009. Freight revenue increased 13% to $98.0 million with carloads up 4%. Non-freight revenue increased 34% to $29.6 million.

Excluding the acquisition of Atlas Railroad Construction Company and the new Ottawa Valley Railway operating agreement, non-freight revenue increased 18% versus fourth quarter 2009.

John Giles, RailAmerica’s President and Chief Executive Officer, said “We had a strong finish to 2010 and are well positioned for further progress as we move into 2011. Our fourth quarter operating income was up 35% excluding the impacts of 45G tax credits, asset sales and last year’s IPO-related charges. We intend to build on this solid base during 2011 as we continue to leverage a slow, but improving economy, continuous improvements in productivity, and the effective deployment of capital.”

“Given our strong cash position and cash flow, we have announced a $50 million share repurchase program. We see repurchasing our shares as an excellent investment, which complements our focus on building shareholder value through organic growth and acquisitions.”

RailAmerica reported fourth quarter 2010 income from continuing operations of $17.9 million, or$0.33 per diluted share. This compares to a loss from continuing operations of $6.9 million, or$0.13 per diluted share in the fourth quarter of 2009. Noteworthy items impacting the fourth quarters of 2010 and 2009 include:

  • 45G tax credits: Congress extended the credits in December 2010 resulting in the full-year income statement amount of $17.6 million benefiting the fourth quarter of 2010. In 2009, credits totaling $16.7 million were recognized in the income statement throughout the year with $3.9 million occurring in the fourth quarter. In addition to the income statement impact, a portion of the 45G tax credit was recognized as credits to capital expenditures in 2010 and 2009.
  • Gain on asset sales: The Company recorded a $26.8 million pre-tax gain in the fourth quarter of 2009 for the termination of the Ottawa Valley Railway lease. Income tax expense included a provision for the gain and repatriation of proceeds.
  • Amortization of swap termination costs: Non-cash charges of $4.3 million and $6.6 million were recorded in interest expense during the fourth quarter of 2010 and 2009, respectively, due to the June 2009 termination of an interest rate swap agreement.
  • Debt retirement costs: The early retirement of $74.0 million of senior notes in the fourth quarter of 2009 resulted in charges of $6.9 million, which are reflected in other income (loss) for that quarter.
  • IPO-related charges: In connection with the fourth quarter 2009 initial public offering (IPO), the company recorded for that quarter a $6.3 million non-cash charge in labor and benefits for the expiration of a restricted stock repurchase feature.

For the full year of 2010, operating revenue increased 15% to $490.3 million from $425.8 million in 2009. Full year 2010 income from continuing operations was $19.1 million, or $0.35 per diluted share. This compares to income from continuing operations of $2.9 million, or $0.07 per diluted share for the full year of 2009.

RailAmerica announced today that its board of directors authorized the repurchase of up to $50 million of the Company’s common stock. Under the program, the Company may purchase common stock from time to time in the open market or in privately negotiated transactions. The amount and timing of the purchase will depend on a number of factors including the price and availability of the Company’s shares, trading volume and general market conditions.

RailAmerica, Inc. owns and operates short line and regional freight railroads in North America, operating a portfolio of 40 individual railroads with approximately 7,300 miles of track in 27 U.S. states and three Canadian provinces.

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