Florida East Coast Industries Reports Strong First Quarter 2005 Results
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Thursday April 21, 7:30 am ET
- Railway Reports Record Results -
- Full-Year 2005 Outlook Increased for Railway and Flagler -Railway* First quarter 2005 Railway segment's revenues increased 16% to $56.5 million, compared to the prior-year period, driven by stronger-than expected demand, improved pricing and new business. * Railway segment's operating profit increased 35% to $15.0 million, compared to the 2004 first quarter, benefiting primarily from stronger revenues. The operating ratio improved to 73.5% from 77.1%. * The Company increased its full-year 2005 outlook for Railway segment's revenues and operating profit as a result of stronger-than-expected demand in the first quarter.Realty Operations* First quarter 2005 Flagler Development Company's (Flagler) rental and services' revenues increased 21% to $20.6 million as a result of improvements in "same store" occupancy, new buildings delivered in 2004 and 2005, and recent building acquisitions compared to the 2004 first quarter. * Rental properties' operating profit increased to $7.2 million from $4.2 million, and rental properties' operating profit before depreciation and amortization expense(1) increased 21% to $13.3 million compared to the prior
- year period. * "Same store" occupancy rate continues to improve, increasing to 96% in the first quarter 2005, up sequentially from 95% in fourth quarter 2004, compared to 89% in the first quarter 2004. * The Company increased its full-year 2005 outlook for Flagler's rental and services' revenues, rental properties' operating profit and rental properties' operating profit before depreciation and amortization expense(1) as a result of recent building acquisitions.Realty Acquisition and Sales* Flagler purchased a 240,000-square-foot building located in Miami for $41.0 million and a 107,000-square-foot building located in Sunrise for $19.5 million utilizing tax-deferred proceeds from 2004 realty sales. * In addition, Flagler significantly grew its development opportunities with the purchase of 665 gross acres in Lakeland, Florida, which will be planned and developed as an industrial business park. * Realty sales proceeds in the quarter totaled $4.9 million.(1) A reconciliation to the most comparable GAAP measures is provided in the table labeled "RECONCILIATION OF NON-GAAP TO GAAP MEASURES."
ST. AUGUSTINE, Fla., April 21 /PRNewswire-FirstCall/ -- Florida East Coast Industries, Inc. announced results for the first quarter of 2005.
Adolfo Henriques, Chairman, President and Chief Executive Officer of Florida East Coast Industries, stated, "Our Railway and Realty businesses continue to generate outstanding results that achieve new records. Our first quarter results for both businesses demonstrated significant improvement compared to the first quarter of 2004, as we capitalized on the improving national and Florida economies. The overall growth in Florida remains strong and we continue to see additional demand for transportation benefiting from Florida's population growth as well as hurricane rebuilding efforts. The momentum in the Railway's first quarter revenues and operating profit was better than expected, and as a result we are increasing our 2005 full-year outlook."
Mr. Henriques continued, "Flagler also delivered record results as new buildings were delivered to the market and 'same store' occupancy climbed to 96%. In anticipation of existing tenant growth and rental demand in Flagler's markets, Flagler expects to deliver six buildings in 2005 (approximately 954,000 square feet). In support of Flagler's longer-term growth, during the quarter, two Class-A office buildings in South Florida and 665 gross acres earmarked for future development in Lakeland, Florida, along the I-4 corridor between Tampa and Orlando, were acquired utilizing tax-deferred proceeds from 2004 realty sales."
Mr. Henriques concluded, "I am pleased to join FECI at a time when both businesses are performing well and the Company is poised for its next stage of growth. FECI is a unique Company with exceptional assets that embodies the past as well as the future of the state of Florida. I am confident about the future prospects for Florida and FECI and the opportunities and possibilities that will unfold as we grow together. With the businesses performing well, I will focus my attention on the future, looking for opportunities to create and realize value for the shareholders of FECI."
For the first quarter 2005, FECI reported consolidated revenues of $82.9 million, compared to $71.4 million for the first quarter 2004. Revenues for the first quarter 2005 included realty sales of $4.9 million, compared to $5.0 million in the first quarter 2004. Income from continuing operations was $8.1 million, or $0.25 per diluted share, for the first quarter 2005 (which includes $2.7 million of after-tax profit from land sales and $5.5 million of after-tax expenses related to the CEO transition), compared to income of $5.9 million, or $0.16 per diluted share, for the first quarter 2004 (which includes $1.8 million of after-tax profit from land sales). FECI reported consolidated first quarter 2005 net income of $8.1 million, or $0.25 per diluted share, compared to $8.3 million, or $0.22 per diluted share, for the prior-year quarter. Included in the first quarter 2004 net income is income from discontinued operations related to the 2004 sale of two office buildings.
The Company's outlook for full-year 2005 financial results assumes continued strength in the national and Florida economies. Given the Railway's strong first quarter results, the Company is increasing its 2005 full-year outlook (previously provided in the fourth quarter 2004 press release). Railway segment revenues are now expected to range between $216 and $223 million, an increase of 8% to 11% over 2004, and Railway segment operating profit is now expected to range between $54 and $56 million, an increase of 14% to 18% over 2004. Capital expenditures for the Railway, before the purchase of any strategic land parcels to be inventoried for future Railway customers, are expected to remain between $32 and $36 million.
The Company is also increasing its 2005 outlook for Flagler (previously provided in the fourth quarter 2004 press release) as a result of recent building acquisitions. Flagler's rental and services' revenues are now expected to range between $81 and $85 million, an increase of 16% to 22% over 2004. Operating profit from operating properties' rents is expected to range between $27 and $29 million. Flagler's rental properties' operating profit before depreciation and amortization expense is now expected to range between $54 and $56 million in 2005, an increase of 21% to 25% over 2004. Capital investment at Flagler for 2005 is now expected to be between $145 and $165 million, which includes approximately $75 million for acquisitions of land and finished buildings utilizing proceeds from third and fourth quarter 2004 realty sales.
Railway First Quarter Results
-- Florida East Coast Railway (Railway) segment's revenues in the first quarter 2005 increased 16.4% to $56.5 million from $48.6 million in the prior- year period. Included in the first quarter 2005 revenues were $2.0 million of fuel surcharges, compared to $0.6 million in 2004.
-- Total carload revenues grew 14.8% primarily due to a 12.7% increase in crushed stone revenues, reflecting a combination of strong construction demand, new business from existing customers, improved pricing and increased volume from the hurricane rebuilding effort. In addition, carload revenues benefited from increases in construction materials, paper and lumber and foodstuffs and kindred. Intermodal revenues (which include drayage) increased 18.5% compared to the prior-year period, reflecting improved pricing, new customers, and improvements in local business (international and motor carriers).
-- Railway segment's operating profit increased 35.2% to $15.0 million in the first quarter 2005 versus $11.1 million in the first quarter of 2004 due to higher revenues, partly offset by higher salary and wage expense and increased expenses in support of higher volumes. As a result, the Railway's operating ratio improved to 73.5%, compared to 77.1% in the prior-year quarter.
Realty First Quarter Results
Rental Portfolio and Leasing Results
-- Flagler Development Company's (Flagler) rental and services' revenues increased 20.9% to $20.6 million for the first quarter 2005 versus $17.0 million in the first quarter of 2004. The increased revenues resulted from "same store" properties ($1.1 million), buildings delivered in 2004 ($0.9 million), buildings delivered in 2005 ($0.7 million) and newly acquired properties ($0.8 million).
-- Rental properties' operating profit was $7.2 million for the first quarter 2005 versus $4.2 million in the prior-year period. The rental properties' operating profit in the first quarter 2004 included a $1.5 million write-off of tenant improvements and common areas related to the renovation of two office buildings in Jacksonville.
-- Rental properties' operating profit before depreciation and amortization expense for the quarter increased 20.6% to $13.3 million, compared to $11.0 million in the first quarter 2004 due to improvements in "same store" properties ($0.7 million), buildings delivered in 2004 ($0.6 million), buildings delivered in 2005 ($0.7 million) and newly acquired properties ($0.3 million).
-- Flagler's overall occupancy rates increased to 94% in the first quarter 2005, compared to 89% in the first quarter 2004. Overall occupancy decreased slightly in the first quarter compared to 95% in the fourth quarter 2004 due to the recent acquisition of the Doral Concourse Building, which at the time of acquisition and at the end of the quarter was 66% leased.
-- On January 13, 2005, Flagler announced Marriott Vacations Club International renewed its lease of 70,800 square feet in SouthPark Center, Building 600, located in Orlando.
-- On January 19, 2005, Ryder System, Inc. commenced a 239,000-square-foot build-to-suit office lease in Flagler Station, located in Miami.
-- During the quarter, Flagler signed a five-year lease, commencing in the third quarter of 2005, with GMAC for 29,624 square feet of the Lakeside II building, a 113,000-square-foot Class-A office building at Flagler Center located in Jacksonville, which was completed in April 2005.
-- During the quarter, Flagler signed a seven-year lease, commencing in the fourth quarter of 2005, with H&R Block Mortgage for 29,143 square feet of Deerwood North Building 400, a 113,000-square-foot Class-A office building located in Jacksonville, which is scheduled to be completed in the second quarter of 2005.
Development, Acquisition and Sales Activity
-- At quarter end, Flagler had nine projects, totaling 1,195,000 square feet, in various stages of development (714,000 square feet in the construction stage and 481,000 square feet in pre-development).
-- On January 20, 2005, Flagler announced the execution of a long-term lease with Baker Distributing Company for 122,000 square feet of a 151,000- square-foot build-to-suit warehouse under construction at Flagler Center.
-- On February 7, 2005, Flagler announced the purchase of Doral Concourse, a 240,000-square-foot Class-A office building located in Miami, Florida for $41 million, using tax-deferred proceeds from 2004 realty sales.
-- On March 9, 2005, Flagler announced the purchase of a 107,000-square- foot Class-A office building located in Sunrise, Florida, for $19.5 million. Flagler also announced the purchase of 665 gross acres in Lakeland, Florida, located between Tampa and Orlando along the I-4 corridor, which will be planned and developed as an industrial business park utilizing tax-deferred proceeds from 2004 realty sales.
-- Property under sale contracts at March 31, 2005 totaled $38.7 million and other property listed for sale at asking prices totaling $14.4 million. The Company currently expects full-year 2005 realty sales of $20 to $40 million. Property sale contracts typically have contingencies and exit clauses that enable buyers/sellers to terminate within a specified amount of time.
Capitalization
-- The Company's cash balance on March 31, 2005 was $56.2 million (which includes $25.2 million held as deposits for possible use in 1031 exchanges). Debt on March 31, 2005 was $341.7 million, composed of non-recourse, fixed and variable rate real estate mortgages. |
