St. Augustine, FL-based Florida East Coast Industries Inc., a freight railway operator, increased the 2005 outlook for one of its subsidiaries, Florida East Coast Railway. It also provided an update on the impact of Hurricane Wilma on its operations.
Adolfo Henriques, chairman, president and CEO of Florida East Coast Industries said in a prepared statement, "We are pleased to announce that as a result of our railway's strong performance during the first nine months of 2005 and our fourth quarter forecast, we are raising the railway's 2005 full- year outlook."
Railway segment revenues for 2005 are now expected to range between $230 and $235 million, an increase of 15 to 17% over 2004, and Florida East Coast Railway's operating profit is now expected to range between $59 and $61 million, an increase of 25 to 29% over 2004. This operating profit outlook is $3 million higher than the previous outlook. These results include the impact of Hurricane Wilma but exclude any insurance recoveries or reimbursements.
The railway suspended service early Sunday, October 24 in anticipation of the arrival of Hurricane Wilma. All scheduled rail service was resumed on November 7 on the 351-mile track located along the east coast of Florida after all sections of track and all rail crossings were cleared and passed inspection. During the14- day layoff, power outages left many grade crossings along the railway inoperable and, as a result, train speeds and the number of train starts had been reduced until power was fully restored. The railway, state transportation officials, and local authorities worked together to restore electricity and to temporarily close some of the railway's grade crossings.
The company estimates that Hurricane Wilma will reduce its fourth quarter revenues by approximately $1.5 to $2.5 million. The company also estimates it will incur approximately $2.5 to $3 million of incremental expenses related to clean-up costs, property damage, grade crossing operations and support and additional train crew costs as a result of trains operating at reduced speeds. The total net impact to the railway's fourth quarter operating profit, before any reimbursements or recoveries, is currently estimated to be approximately $3 to $4 million. The railway is in the process of filing claims for reimbursements and recoveries; however, the amount of any recoveries cannot be estimated at this time.
