Brightline Trains Florida discussion

[Anderson]

The OIA station for SunRail will be a single low level platform two track separate new setup east of the Brightline Station. There is space set aside for that.

Gotcha. I got it in my head they were going to use the single track on the west side while Brightline would use the other two tracks.

[I'll blame several aspects of this morphing repeatedly. At one point MiamiCentral had 8 tracks, then it was 6, then 5. And for some reason I thought the MCO station was planned, by the airport, as a "one and done" project vs two phases, and they'd just have to physically connect the tracks up...but the various "go west from MCO" projects have also changed a few times, too...]

 

[JWM]

How does the experience compare when traveling from each station to the theme parks in the area?

Is there any way to get to Busch Gardens in Tampa without a car?

I live in Sarasota and getting to Busch Gardens would involve the "HART Line" busses or taxi, Uber etc. With one train, the Silver Star, in and out of Tampa there isn't much choice, either.

 

[jis]

Gotcha. I got it in my head they were going to use the single track on the west side while Brightline would use the other two tracks.

The yet to be installed third track will be installed together with the Tampa extension. It is for Brightline use.

[I'll blame several aspects of this morphing repeatedly. At one point MiamiCentral had 8 tracks, then it was 6, then 5. And for some reason I thought the MCO station was planned, by the airport, as a "one and done" project vs two phases, and they'd just have to physically connect the tracks up...but the various "go west from MCO" projects have also changed a few times, too...]

Yes. The Sunshine Corridor as defined now came about with Universal stepping into the fray and NIMBY opposition with some legal basis opposing the original plan, and Disney playing too coy. The Mayor of Orlando finally forced a decision, and Disney left field in a huff.

 

[jis]

https://www.thenextmiami.com/demand...WQOU76N5N-lle0tEA3_xogvXp8QII&mibextid=kdkkhi

 

[Anderson]

https://www.thenextmiami.com/demand...WQOU76N5N-lle0tEA3_xogvXp8QII&mibextid=kdkkhi

I think that makes this the first "corridor" to turn an operating profit outside of the NEC* since the Surfliner back in the 1990s.

One thing this suggests is that, ironically, working up the commuter agreement with the counties down there might end up turning into them shooting themselves in the foot (at least from a business perspective).

*I'm including the Lynchburger as being part of the NEC given that Amtrak managed to pass a bill to VA regardless...

Edit: Thinking further...this is basically a commuter train.

When is the last time something like that turned a profit as a standalone? One of the Pacific Electric lines in the 20s? [Maybe NJT's NEC line is, but it's integrated with the NEC...]

 

[user 1215]

Private enterprise has incentive to return on their investment. Much fewer levels of bureaucratic accountability. They're going to lose small or lose big. Or, maybe, just maybe, turn a profit.

Guvm'nt just shouldn't be in the business of business.

 

[Anderson]

Private enterprise has incentive to return on their investment. Much fewer levels of bureaucratic accountability. They're going to lose small or lose big. Or, maybe, just maybe, turn a profit.

Guvm'nt just shouldn't be in the business of business.

I mean, I still think there's a chance that Brightline has to reorganize their debts at some point. But they're making money with 4-5 car trains.

[I think this is about to turn into a very messy kick in Amtrak's rear. "Why can't you do this on X route?" is going to enter into the dialogue in several places. The answer is likely a mix of congestion and pricing decisions...but I feel like Brightline may be setting themselves up *very* well for some future ventures here.]

 

[user 1215]

I mean, I still think there's a chance that Brightline has to reorganize their debts at some point. But they're making money with 4-5 car trains.

[I think this is about to turn into a very messy kick in Amtrak's rear. "Why can't you do this on X route?" is going to enter into the dialogue in several places. The answer is likely a mix of congestion and pricing decisions...but I feel like Brightline may be setting themselves up *very* well for some future ventures here.]

And they almost did it unintentionally:

“We never really intended to make money on that segment on a standalone basis,” Brightline chairman Wes Edens told CNBC.

 

[user 1215]

When is the last time something like that turned a profit as a standalone? One of the Pacific Electric lines in the 20s? [Maybe NJT's NEC line is, but it's integrated with the NEC...]

How about the Auto Train? Though that was kind of a unique business model.

 

[Anderson]

So, there's something that doesn't sit right with “We never really intended to make money on that segment on a standalone basis" (versus, say, "this month was unexpectedly profitable and we didn't expect to be in the black for another year"). That's...uh...not what the bond offering from 2017 says. Per page 48 of the PDF (lists as page 41 in the document), South Segment ridership at the conclusion of ramp-up (at the time, slated for 2020) was supposed to be about 2,936,800 (or just under 250k/month) and revenue would have been about $96,046,300/yr (each in 2016 dollars). Per page 71 in the PDF (lists as page 64), overall ticket revenue was/is supposed to be $107.3m (don't ask me why there's an $11.3m difference there...), ancillary revenue was estimated at $34.4m, and total revenue would be $141.6m. This was also on the basis of three stations (MIA, FLL, WPB) and not five (AVE+BOC). And, of course, there's also been the intervening slug of inflation which would suggest that the revenue figures, at least, would need to be bumped upwards to correspond to "2016 dollars".

As I discussed earlier in this thread (post 4,356), the annualized ridership rate from March (179,576 for the month -> 5,806/day) would come to about 2.1m (2,119,354). Annualized ticket revenue from March ($4.71m/31 days -> $151,954/day) would come to just under $55.4m for the year while annualized overall revenue from March ($6.5m/31 days -> $209,667/day) would come to about $76.5m for the year.

At least to me, "We're at just over 50% of our official projections for revenue after ramp-up, but this profit is a surprise" is an oddly revealing statement. This bluntly suggests that Brightline's management probably did not believe the data in their own prospectus.

[To their credit, they also indicated that they only needed to be at a bit over half of the projected revenue/ridership levels to make the project work...and lo and behold, here we are.]

Link to the bond offering:
https://emma.msrb.org/ER1107449-ER866075-ER1266758.pdf

 

[west point]

[I think this is about to turn into a very messy kick in Amtrak's rear. "Why can't you do this on X route?" is going to enter into the dialogue in several places. The answer is likely a mix of congestion and pricing decisions...but I feel like Brightline may be setting themselves up *very* well for some future ventures here.]

It would be nice if at Amtrak ---- The fit hits the shan!

 

[Qapla]

HSR Constructors: Brightline Phase 2 Orlando to West Palm Beach Expansion Sizzle Reel 2023

 

[cirdan]

I think that makes this the first "corridor" to turn an operating profit outside of the NEC* since the Surfliner back in the 1990s.

Before we get too excited, we should maybe dig down and see if we can see actual balance sheets.

There are lots of ways accountants can move costs around to make something appear profitable (or not). We have often discussed Amtrak doing this.

Brightline, we have seen, are very good at courting the media and playing out good stories (Amtrak take note) and although i wish them every success, one should not lose sight of the ultimate intention.

 

[Anderson]

Before we get too excited, we should maybe dig down and see if we can see actual balance sheets.

There are lots of ways accountants can move costs around to make something appear profitable (or not). We have often discussed Amtrak doing this.

Brightline, we have seen, are very good at courting the media and playing out good stories (Amtrak take note) and although i wish them every success, one should not lose sight of the ultimate intention.

This is definitely true. I am inclined to believe the profitability statement for a two reasons:
-First, they seem to be claiming something close to being "EBITDA profitable" - that is, ignoring interest and depreciation. If they said they were covering interest payments, etc. right now I'd likely laugh at the idea. But direct operating costs are a lot easier to cover - several of Amtrak's LD trains have pulled it off at times.
-Second, going back to page 64 (the 71st page in the PDF), estimated costs for 2020 (full ramp-up, etc.) were to be $64.7m, which translates into $5.495m for the 31 days of March. Now...I know that those numbers don't necessarily hold, owing to inflation and so on. But all-in revenue was about $6.5m, so if those expenses aren't up more than 18% since that estimate, this would hold per that report. The 2021 study doesn't have the two segments' expenses broken out (since the operation would be integrated and assigning costs would arguably be a messy academic exercise - how do you allocate costs on a through train?), so I think 2017's data is the best we're getting.

In essence, what we have is a plausible claim that lines up with previously-published numbers. I doubt they "made" $1m in March, but it looks like something smaller (maybe $100k) is doable. To me, that's enough to pass the "smell test" for now.

 

[Qapla]

Why is it so difficult to accept that Brightline can turn a profit. It almost seems as though some are wanting Brightline to fail. Until facts and figures prove otherwise, I will accept that Brightline can turn a profit and, since they claim that they are now, will accept that also.

 

[jis]

Why is it so difficult to accept that Brightline can turn a profit. It almost seems as though some are wanting Brightline to fail. Until facts and figures prove otherwise, I will accept that Brightline can turn a profit and, since they claim that they are now, will accept that also.

Given the total corridor travel demand and given that it will be easy for Brightline to pick up 3+% of it, I think the probability that Brightline will be a profitable venture is very very high. Most people don't have a clue about how massive the travel demands are on this corridor and how progressively difficult it is becoming to drive, and how it is impossible to create enough road surface to meet the growing travel demand on this corridor exclusively using roads, no matter how hard FDOT tries. This is not a random corridor across farmland country though it does traverse some such. It is the one single premier travel corridor in the third most populous state in the country connecting two of its four largest blobs of population (numbers one and three) together, even more so after the extension to Tampa happens, which adds the number two. Maybe not quite New York and Philly, but nothing to sneeze at either.

 

[Brian_tampa]

It is the one single premier travel corridor in the third most populous state in the country connecting its two largest blobs of population together, even more so after the extension to Tampa happens.

Actually the Orlando MSA is the 3rd most populous in Florida with 2.794M residents. Tampa Bay is 2nd with 3.285M residents. South Florida is 1st with 6.245M residents. Jacksonville is 4th with 1.679M residents. These numbers are from the state's Office of Economic and Demographic Research using 2022 estimates.

The population of Tampa Bay is why Brightline has always wanted to build here first after Orlando opens. With Sarasota/Bradenton having almost 900k and Lakeland/Polk County with almost 800k, there are a huge number of potential riders within 40 miles of their proposed Tampa station.

 

[jis]

Actually the Orlando MSA is the 3rd most populous in Florida with 2.794M residents. Tampa Bay is 2nd with 3.285M residents. South Florida is 1st with 6.245M residents. Jacksonville is 4th with 1.679M residents. These numbers are from the state's Office of Economic and Demographic Research using 2022 estimates.

The population of Tampa Bay is why Brightline has always wanted to build here first after Orlando opens. With Sarasota/Bradenton having almost 900k and Lakeland/Polk County with almost 800k, there are a huge number of potential riders within 40 miles of their proposed Tampa station.

Good points. I revised my post to clarify these points.

 

[Anderson]

Given the total corridor travel demand and given that it will be easy for Brightline to pick up 3+% of it, I think the probability that Brightline will be a profitable venture is very very high. Most people don't have a clue about how massive the travel demands are on this corridor and how progressively difficult it is becoming to drive, and how it is impossible to create enough road surface to meet the growing travel demand on this corridor exclusively using roads, no matter how hard FDOT tries. This is not a random corridor across farmland country though it does traverse some such. It is the one single premier travel corridor in the third most populous state in the country connecting two of its four largest blobs of population (numbers one and three) together, even more so after the extension to Tampa happens, which adds the number two. Maybe not quite New York and Philly, but nothing to sneeze at either.

So, the biggest issue (until the last few years) has been the lack of useful transit connections at either end combined with how spread out things are. Simply put, the trouble with the 2010 proposal (as much as I might have wanted a bullet train down there) is that it was only marginally faster than driving...if it was on your way. Going 20-ish minutes to the east to get on the train to Tampa (roughly what you'd be looking at to go from I-4 over to MCO) was a questionable proposition at the time. The addition of rideshare last-mile connections with Brightline+ is probably a major breakthrough, and if they can work out a way to allow longer bookings for a premium that'd also go a long way (no pun intended).

With that being said, I don't think it is hard to see Brightline picking up a good deal of ridership from airline connections at MCO. (FWIW I'd love to see Brightline aim to connect to the Tampa and Fort Lauderdale airports. Tampa is trickier, but they basically go under a terminal at Fort Lauderdale IIRC.)

 

[cbustrains]

There's been some speculation that only Brightline knows about its financials, but I think we can get a fairly decent glimpse into their financials when combining a couple reports together. I'm including a link to a Google Sheets that I created lays out what the March financials might've looked like.

In March 2023, Brightline's revenue report listed them making $6.5MM (ticket revenue plus ancillary revenue). In a September 2022 Quarterly Report, they list a full P&L; using Brightline's definitions of expenses, their own line for train operating expenses (minus depreciation and amortization) was $22.7MM, or $7.6MM monthly.

Based on this estimate, March would've fallen just short of breaking even on profitability (6.5MM / 7.6MM = ~86% recovery ratio). Now, more than half of the 'train operating expenses' line comes from a 'facilities and other operating expenses' line...though I would expect this line to increase in March (vs. the $7.6MM estimate) because they added 2 new stations, I wonder if they are taking some liberties in extracting some fixed vs. variable costs within this line item to achieve an "operating profit" and a good news story.

Regardless, it's good to see a ~86% recovery ratio, particularly given that 3Q22 was an abysmal 33% by comparison. Though seasonality of travel patterns is a major factor here, Brightline has made significant strides in increasing their ridership over a short time period. And, as a side note, I apologize if I'm using the farebox recovery ratio term incorrectly-- not sure if that should be including SG&A and interest on debt expenses.

Though I do find this reason to celebrate this milestone, I can't help but agree with the sentiment others have echoed. It's a long, narrow road to success. From that 3Q22 quarterly report, the monthly average debt payment in 2023 is expected to be ~$26MM and SG&A monthly expenses may be ~$6MM. Even if these expense categories stay flat with the Orlando expansion, these two buckets alone are still 5x the best revenue generating month that Brightline has had to date in the south segment. Gaining operational profitability is such a small hurdle relative to the overall goal. Here's to hoping the Orlando segment is able to generate that shortfall...and quickly.

 

[Anderson]

There's been some speculation that only Brightline knows about its financials, but I think we can get a fairly decent glimpse into their financials when combining a couple reports together. I'm including a link to a Google Sheets that I created lays out what the March financials might've looked like.

In March 2023, Brightline's revenue report listed them making $6.5MM (ticket revenue plus ancillary revenue). In a September 2022 Quarterly Report, they list a full P&L; using Brightline's definitions of expenses, their own line for train operating expenses (minus depreciation and amortization) was $22.7MM, or $7.6MM monthly.

Based on this estimate, March would've fallen just short of breaking even on profitability (6.5MM / 7.6MM = ~86% recovery ratio). Now, more than half of the 'train operating expenses' line comes from a 'facilities and other operating expenses' line...though I would expect this line to increase in March (vs. the $7.6MM estimate) because they added 2 new stations, I wonder if they are taking some liberties in extracting some fixed vs. variable costs within this line item to achieve an "operating profit" and a good news story.

Regardless, it's good to see a ~86% recovery ratio, particularly given that 3Q22 was an abysmal 33% by comparison. Though seasonality of travel patterns is a major factor here, Brightline has made significant strides in increasing their ridership over a short time period. And, as a side note, I apologize if I'm using the farebox recovery ratio term incorrectly-- not sure if that should be including SG&A and interest on debt expenses.

Though I do find this reason to celebrate this milestone, I can't help but agree with the sentiment others have echoed. It's a long, narrow road to success. From that 3Q22 quarterly report, the monthly average debt payment in 2023 is expected to be ~$26MM and SG&A monthly expenses may be ~$6MM. Even if these expense categories stay flat with the Orlando expansion, these two buckets alone are still 5x the best revenue generating month that Brightline has had to date in the south segment. Gaining operational profitability is such a small hurdle relative to the overall goal. Here's to hoping the Orlando segment is able to generate that shortfall...and quickly.

Operational profitability is key in terms of handling any debt reorganization (and that may yet prove necessary).

The other thing that should help will be the arrival of additional cars. Let's not forget that they're doing this with 4-5 car sets (mostly 4-car sets in March IIRC). Getting up to 6-car sets, if they can keep growing the loads, will go a long way.

As to fibbing on the financials...I'll look over your numbers in a bit, but it's not going to look great if the Q1 data comes out and doesn't line up. "I bought this bond when the owning firm's executive said they achieved this metric on TV and he was lying" is how lawsuits start.

Of course, there might be some north-of-WPB expenses mixed in on those line items (e.g. station expenses including work on OIA), and who knows what's going on with any splits of expenses at MiamiCentral with Tri-Rail...

 

[west point]

What are the reporting items to the feds? Even the private class1s have to report some items. Why not Brightline or at least its stockholders ?

 

[cbustrains]

Operational profitability is key in terms of handling any debt reorganization (and that may yet prove necessary).

The other thing that should help will be the arrival of additional cars. Let's not forget that they're doing this with 4-5 car sets (mostly 4-car sets in March IIRC). Getting up to 6-car sets, if they can keep growing the loads, will go a long way.

As to fibbing on the financials...I'll look over your numbers in a bit, but it's not going to look great if the Q1 data comes out and doesn't line up. "I bought this bond when the owning firm's executive said they achieved this metric on TV and he was lying" is how lawsuits start.

Of course, there might be some north-of-WPB expenses mixed in on those line items (e.g. station expenses including work on OIA), and who knows what's going on with any splits of expenses at MiamiCentral with Tri-Rail...

The additional cars will definitely help! I couldn't find it in this thread, but have we gotten any sense of rationale as to why they went with 4 car train sets with no additional support until a year (or more) after the Orlando launch? It just seems rather odd that their math between operating capacity and forecasted ridership doesn't add up on a multi-billion dollar investment.

As others have alluded to, Brightline will naturally focus on the Orlando ridership to grab the higher revenue riders; with the very limited seat capacity here, I could easily see many commuters get bumped out and the average price point for intra-South Florida trips to significantly rise from the $26 it is at today (with the greatest price hikes coming from rides that cross through the Fort Lauderdale to Boca Raton section that Anderson had pointed out as the bottleneck). It should be interesting to see whether Brightline will get some bad press should they start squeezing out these commuters that they've tried so hard to attract for the last several years...only to hope that they return once they get to 6 car trains.

Anderson, thank you as always for your contributions to this topic! To your note on the financials, I'm not sure if there is some north-of-WPB expenses in there but it's definitely a possibility. There is an explicit line item in that report for "Expansion" but I couldn't find any commentary on what exactly falls into it. For example, running the testing trains through the north segment may technically fall under train operating expenses (labor, fuel, etc.), but I would personally would think that would/should fall into the Expansion line...if only to isolate the true operating profitability of the existing line.

 

[jis]

What are the reporting items to the feds? Even the private class1s have to report some items. Why not Brightline or at least its stockholders ?

They don’t have any shareholders. They are a privately held company. They would not have to statutorily report much beyond what is required for the Bond repayment issues, if any. They have good reason to report publicly aggregate results to help them move their future associated projects along I would think. Also since success breeds success, they would wish to publicize a narrative in line with that whenever they can. As we have seen they have an excellent marketing department.

 

[Touchdowntom9]

They don’t have any shareholders. They are a privately held company. They would not have to statutorily report much beyond what is required for the Bond repayment issues, if any. They have good reason to report publicly aggregate results to help them move their future associated projects along I would think. Also since success breeds success, they would wish to publicize a narrative in line with that whenever they can. As we have seen they have an excellent marketing department.

Not to nitpick, but they absolutely do have shareholders, but it’s just a privately owned company so there are no public reporting requirements beyond the bonds (which are publicly traded)