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Rail News: Financials

RailAmerica improves safety, operating ratio – and profits


The North American railroad earnings renaissance is alive and well in the short-line realm.

Today, short-line holding company RailAmerica Inc. reported second-quarter 2005 earnings from continuing operations of $9.3 million compared with a $13,000 loss for the same 2004 period. The 2005 results include a $0.01 per share benefit from a change in Ohio’s tax laws; the 2004 results include a $6.7 million ($5.6 million net-of-tax) charge for the retirement of former Chief Executive Officer Gary Marino.

The company had consolidated revenue from continuing operations of $110.8 million, a 15.3 percent increase compared with second-quarter 2004. On a “same railroad” basis, revenue increased $9.6 million, a 10 percent hike compared with the same period a year earlier.

RailAmerica recorded consolidated operating income of $15 million, a 40.2 percent increase compared with second-quarter 2004’s $10.7 million. RailAmerica’s operating ratio was 86.4, a 2.5 percentage-point improvement compared with the second-quarter 2004 ratio.

“Our earnings were in line with our forecast,” said RailAmerica CEO Charles Swinburn in a prepared statement. “Second, and more importantly, we are now seeing the results of the safety and training initiatives that we began late last year. … Third, we have noticeably improved the operations of the Ohio Midland Subdivision. Finally, the operating ratio improvement … was significant, and was in large part due to our accomplishments regarding safety and the Ohio operations.”

Meanwhile, the RailAmerica executive team is “taking a cautious outlook for the second half of the year because of the possible negative effects of Class I congestion, equipment supply issues and decreases in traffic from the Powder River Basin,” said Executive Vice President and Chief Financial Officer Michael Howe. “On the positive side, this may be partially offset by an increase in our expected benefit from the track maintenance tax credit.”

RailAmerica owns and operates 43 railroads in the United States and Canada.

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More News from 7/28/2005