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Revenue excluding fuel surcharge was down 13.5% for the third quarter of 2009, compared to the third quarter of 2008, and down 19.2% for the nine months ended September 30, 2009, compared with the nine months ended September 30, 2008, reflecting continued pressure from the current economic environment.
Applying a normalized tax rate of 39% and excluding adjustment items, Quality had adjusted net income per diluted share of $0.06 for the third quarter of 2009, compared to adjusted net income per diluted share of $0.10 for the third quarter of 2008. Net income for the third quarter of 2009 includes a pre-tax restructuring charge of $0.3 million. Net income for the third quarter of 2008 contains a $1.7 million pre-tax restructuring charge.
As previously announced, on October 10, 2009, Quality sold substantially all of the operating assets of its Quala Systems, Inc. ("QSI") tank wash subsidiary for $13.0 million, of which $10.0 million was paid in cash and the remaining $3.0 million in a subordinated note. The QSI business that was sold generated approximately $21.0 million of revenue for the nine months ended September 30, 2009 from tank wash and related operations.
Gary Enzor, Chief Executive Officer, stated, "This is an exciting time for our company. We have made significant progress this year in transforming Quality's platform to a leaner, stronger and more efficient model. Sequentially, our revenue excluding fuel surcharge was up approximately 7% this quarter and we continue to generate solid cash flows. We're still cautious in terms of this economic environment in the near term; however, we believe we are well positioned to take on the challenges and opportunities that 2010 will bring."
Also, on October 15, 2009, Quality announced the completion of the previously announced private exchange offer and retail tender offer of its subsidiaries' 9% Senior Subordinated Notes and Senior Floating Rate Notes. Steve Attwood, Chief Financial Officer, commented further, "Restructuring our debt pushed all major debt maturities out to 2013, eliminating any questions about our economic viability. Our new debt structure, coupled with positive cash flow from operations, and current availability under our ABL facility in excess of $50.0 million, provide the company with the flexibility to take full advantage of opportunities that present themselves as we move forward into 2010."
Quality will host a conference call for investors to discuss these results on Wednesday, November 4, 2009 at 1:00 p.m. Eastern Time. The toll free dial-in number is 877-548-7911; the toll number is 719-325-4826; the passcode is 4350413. A replay of the call will be available through December 3, 2009, by dialing 888-203-1112; passcode: 4350413. A webcast of the conference call may be accessed in the Investor Relations section of Quality's website at www.qualitydistribution.com or http://investor.shareholder.com/qualitydistribution/events.cfm. Copies of this earnings release and other financial information about Quality may be accessed in the Investor Relations section of Quality's website at www.qualitydistribution.com. The Company regularly posts or otherwise makes available information on the Investor Relations section that may be important to investors.
Headquartered in Tampa, Florida, Quality Distribution, Inc. through its subsidiaries, Quality Carriers, Inc. and Boasso America Corporation, and through its affiliates and owner-operators, provides bulk transportation and related services. Quality Distribution is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing.
The Quality Distribution, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5285
This release contains certain forward-looking information that is subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995 and is subject to certain risks and uncertainties that could cause actual results to differ materially from those expected or projected in the forward-looking statements. Without limitation, additional risks and uncertainties regarding forward-looking statements include the effect of local and national economic, credit and capital market conditions on the economy in general, and on the industries in which we operate in particular; recent turmoil in credit and capital markets; access to available and reasonable financing on a timely basis; the availability of diesel fuel; adverse weather conditions; competitive rate fluctuations; our substantial leverage and restrictions contained in our debt arrangements and interest rate fluctuations in our floating rate indebtedness; the cyclical nature of the transportation industry due to various economic factors such as excess capacity in the industry, the availability of qualified drivers, changes in fuel and insurance prices, interest rate fluctuations, and downturns in customers' business cycles and shipping requirements; changes in demand for our services due to the cyclical nature of our customers' businesses; potential disruption at U.S. ports of entry; our dependence on affiliates and owner-operators and our ability to attract and retain drivers; changes in the future, or our inability to comply with, governmental regulations and legislative changes affecting the transportation industry; our material exposure to both historical and changing environmental regulations and the increasing costs relating to environmental compliance; our liability as a self-insurer to the extent of our deductibles, as well as our ability or inability to reduce our claims exposure through insurance due to changing conditions and pricing in the insurance marketplace; the cost of complying with existing and future anti-terrorism security measures enacted by federal, state and municipal authorities; increased unionization, which could increase our operating costs or constrain operating flexibility; changes in senior management; our ability to successfully manage workforce restructurings; our ability to successfully integrate acquired businesses and converted affiliates; and interests of Apollo, our largest shareholder, which may conflict with your interests. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and its Quarterly Reports on Form 10-Q, as well as other reports filed with the Securities and Exchange Commission. The Company disclaims any obligations to update any forward-looking statement as a result of developments occurring after the date of this release.
QLTYE
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In 000's) Except Per Share Data
Unaudited
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
OPERATING REVENUES
Transportation $ 120,444 $ 144,774 $ 343,554 $ 445,798
Other service revenue 26,793 25,494 80,241 78,916
Fuel surcharge 15,568 44,473 38,528 122,490
------------------------------------------
Total operating
revenues 162,805 214,741 462,323 647,204
------------------------------------------
OPERATING EXPENSES:
Purchased
transportation 102,393 124,800 273,269 376,378
Compensation 19,040 27,519 61,791 83,518
Fuel, supplies
and maintenance 16,129 30,031 49,591 93,199
Depreciation
and amortization 5,055 5,207 15,694 15,435
Selling and
administrative 5,592 8,699 19,614 26,515
Insurance costs 3,081 3,202 11,076 11,629
Taxes and licenses 1,023 1,583 3,096 4,042
Communications
and utilities 1,977 3,104 6,785 10,109
Loss (gain) on disposal
of property and
equipment 279 (867) 14 (2,832)
Impairment charge -- -- 148,630 --
Restructuring costs 340 1,700 2,105 4,075
------------------------------------------
Total operating
expenses 154,909 204,978 591,665 622,068
------------------------------------------
Operating income
(loss) 7,896 9,763 (129,342) 25,136
Interest expense 6,462 8,455 19,980 26,246
Interest income (25) (128) (211) (333)
Gain on early
extinguishment
of debt -- -- (675) --
Other (income) expense (8) 15 (284) 171
------------------------------------------
Income (loss)
before income taxes 1,467 1,421 (148,152) (948)
Provision for (benefit
from) income taxes 41 704 36,951 (98)
------------------------------------------
Net income (loss) $ 1,426 $ 717 $(185,103) $ (850)
==========================================
PER SHARE DATA:
Net income (loss)
per common share
Basic $ 0.07 $ 0.04 $ (9.55) $ (0.04)
==========================================
Diluted $ 0.07 $ 0.04 $ (9.55) $ (0.04)
==========================================
Weighted average
number of shares
Basic 19,458 19,387 19,373 19,377
Diluted 19,653 19,556 19,373 19,377
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In 000's)
Unaudited
Sept. 30, Dec. 31,
2009 2008
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 2,831 $ 6,787
Accounts receivable, net 80,728 81,612
Prepaid expenses 6,382 12,922
Deferred tax assets, net 6,774 14,707
Other 5,772 7,950
--------- ---------
Total current assets 102,487 123,978
Property and
equipment, net 131,802 148,692
Assets held-for-sale 4,927 --
Goodwill 27,289 173,519
Intangibles, net 18,859 22,698
Non-current deferred
tax asset, net -- 22,636
Other assets 8,203 10,580
--------- ---------
Total assets $ 293,567 $ 502,103
========= =========
LIABILITIES, REDEEMABLE NONCONTROLLING
INTEREST AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Current maturities of indebtedness $ 3,538 $ 8,361
Current maturities of capital
lease obligations 6,063 7,994
Accounts payable 9,646 16,126
Affiliates and independent
owner-operators payable 11,052 7,649
Accrued expenses 22,937 25,357
Environmental liabilities 4,563 4,819
Accrued loss and damage claims 9,074 8,705
--------- ---------
Total current liabilities 66,873 79,011
Long-term indebtedness, less
current maturities 316,547 330,409
Capital lease obligations, less
current maturities 12,862 15,822
Environmental liabilities 6,695 6,035
Accrued loss and damage claims 11,152 12,815
Other non-current liabilities 30,430 25,158
--------- ---------
Total liabilities 444,559 469,250
Redeemable noncontrolling interest 1,833 1,833
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 363,365 362,945
Treasury stock (1,580) (1,580)
Accumulated deficit (299,137) (114,034)
Stock recapitalization (189,589) (189,589)
Accumulated other comprehensive loss (25,650) (26,488)
Stock subscriptions receivable (234) (234)
--------- ---------
Total shareholders' (deficit) equity (152,825) 31,020
--------- ---------
Total liabilities, redeemable
noncontrolling interest and
shareholders' (deficit) equity $ 293,567 $ 502,103
========= =========
RECONCILIATION OF NET INCOME (LOSS) TO TAX EFFECTED AND ADJUSTED
NET INCOME (LOSS) AND RECONCILIATION OF NET INCOME (LOSS) PER
SHARE TO TAX EFFECTED AND ADJUSTED NET INCOME (LOSS) PER SHARE
For the Three Months and the Nine Months Ended
September 30, 2009 and 2008
(In 000's)
Unaudited
Tax Effected and Adjusted Net Income (Loss) and Tax Effected and
Adjusted Net Income (Loss) per Share (as defined) are presented
herein because they are important metrics used by management to
evaluate and understand the performance of the ongoing operations
of the Company's business. Management uses a 39% tax rate for
calculating the benefit from income taxes to normalize the
Company's tax rate to that of comparable transportation
companies, and to compare Company periods with different
effective tax rates. In addition, we adjust Net Income (Loss) for
significant items that are not regularly recurring. These
adjustments include restructuring charges related to a plan of
restructure which began in the second quarter of 2008 and which
we expect to conclude in 2010. Tax Effected and Adjusted Net
Income (Loss) and Tax Effected and Adjusted Net Income (Loss) per
Share are not measures of financial performance or liquidity
under United States Generally Accepted Accounting Principles
("GAAP"). Tax Effected and Adjusted Net Income (Loss) and Tax
Effected and Adjusted Net Income (Loss) per Share should not be
considered in isolation or as a substitute for the consolidated
statements of operations prepared in accordance with GAAP as an
indication of the Company's operating performance or liquidity.
Net Income (Loss) Three months ended Nine months ended
Reconciliation: September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net income (loss) $ 1,426 $ 717 $(185,103) $ (850)
Net income (loss) per
common share:
Basic $ 0.07 $ 0.04 $ (9.55) $ (0.04)
==========================================
Diluted $ 0.07 $ 0.04 $ (9.55) $ (0.04)
==========================================
Adjustments to net income
(loss):
Provision for (benefit
from) income taxes 41 704 36,951 (98)
Gain on extinguishment
of debt -- -- (675) --
Restructuring costs 340 1,700 2,105 4,075
Impairment charges -- -- 148,630 --
Gains on property sales -- -- -- (2,128)
------------------------------------------
Adjusted income before
income taxes 1,807 3,121 1,908 999
Provision for income
taxes at 39% 705 1,217 744 390
------------------------------------------
Tax effected and
adjusted net income $ 1,102 $ 1,904 $ 1,164 $ 609
==========================================
Tax effected and
adjusted net income
per common share:
Basic $ 0.06 $ 0.10 $ 0.06 $ 0.03
==========================================
Diluted $ 0.06 $ 0.10 $ 0.06 $ 0.03
==========================================
Weighted average number
of shares:
Basic 19,458 19,387 19,373 19,377
Diluted 19,653 19,556 19,373 19,377
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Quality Distribution, Inc.
CONTACT: Quality Distribution, Inc. Stephen R. Attwood, Senior Vice President and Chief Financial Officer 800-282-2031 ext. 7129
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