Quality Distribution, Inc. Announces Preliminary Fourth Quarter 2014 Results
February 09 2015 - 4:10PM
Quality Distribution, Inc. (Nasdaq:QLTY) ("Quality" or the
"Company"), a North American logistics and transportation provider
with market leading businesses, today announced the following
estimated preliminary fourth quarter 2014 results:
- For the three-month period ended December 31, 2014, Quality
expects total revenue to be approximately $243 million, operating
income to be within the range of $10.4 million to $10.8 million,
adjusted EBITDA to be within the range of $20.4 million to $20.8
million, and adjusted net income per diluted share to be within the
range of $0.17 to $0.18;
- Estimated adjusted EBITDA and estimated adjusted net income per
diluted share for the three-month period ended December 31, 2014
primarily excludes cash and non-cash pre-tax reorganization costs
within the Energy Logistics business of approximately $3.8 million.
Reconciliations of estimated net income to estimated adjusted net
income and estimated operating income to estimated adjusted EBITDA
are included in the financial exhibits below;
- For the three-month period ended December 31, 2014, Quality
expects revenue from its Chemical Logistics business to be
approximately $164 million, revenue from its Energy Logistics
business to be approximately $41 million and revenue from its
Intermodal business to be approximately $38 million;
- Total debt at December 31, 2014 was $351
million. Availability under the ABL Facility was approximately
$62 million at December 31, 2014 and the outstanding borrowings
under the ABL Facility were approximately $151 million. At
December 31, 2014, the Company's total net debt to adjusted EBITDA
ratio is expected to be approximately 4.1x; and
- For the three-month period ended December 31, 2014, gross
capital expenditures were $10.5 million and sales of equipment were
$13.2 million. For fiscal year 2014, capital expenditures, net
of proceeds from asset sales, were $6.0 million.
"We expect our fourth quarter results to be in line with the
expectations we shared during our third quarter conference call,"
stated Gary Enzor, Chairman and Chief Executive Officer. "Revenues
were strong in the fourth quarter, and we expect both adjusted
operating income and adjusted EBITDA, on a consolidated basis, to
be up versus the prior year quarter. Our Chemical Logistics
and Intermodal businesses delivered solid fourth quarter results
and we remain optimistic about these businesses moving
forward."
"At Energy Logistics, the decline in commodity prices within the
frac shale industry has created some uncertainty in our business,
although we have not seen a significant decline in volumes," Mr.
Enzor continued. "Our team is focusing on controllable areas such
as improving customer service levels and asset efficiency, as well
as reducing capital outlays and overhead costs."
For the first quarter of 2015, Quality expects adjusted net
income per diluted share to be in the range of $0.11 to $0.16.
For the fiscal year 2015, the Company expects adjusted net
income per diluted share to be in the range of $0.77 to
$0.87. These estimates assume a 39% tax rate, and exclude any
impacts from non-operating items and costs related to any potential
debt refinancing activity. The Company expects its free cash flow
to be in the range of $50 to $55 million.
This information is being provided in anticipation of the
Company's participation in the Stifel Nicolaus Transportation and
Logistics Conference and the BB&T Annual Transportation
Services Conference on February 10-11, 2015.
Quality intends to release its fourth quarter and fiscal year
2014 financial results after the market closes on Wednesday,
February 25, 2015. Quality will host a conference call for
analysts and investors to discuss these results on Thursday,
February 26, 2015 at 10:00 a.m. Eastern Standard Time. The toll
free dial‑in number is 888-778-9064; the toll number is
913-312-1427; the passcode is 1985088. A replay of the call
will be available through March 28, 2015, by dialing 888-203-1112;
the passcode is 1985088. A webcast of the conference call may be
accessed in the Investor Relations section of Quality's website.
Copies of the earnings release and other financial information
about Quality may also be accessed in the Investor Relations
section of Quality's website at www.qualitydistribution.com.
The Company regularly posts or otherwise makes available
information within the Investor Relations section that may be
important to investors.
Reconciliation of Estimated Net Income to Estimated
Adjusted Net Income and Estimated Adjusted Net Income per
Share
Estimated Adjusted Net Income and Estimated Adjusted Net Income
per Share are not measures of financial performance or liquidity
under United States Generally Accepted Accounting Principles
("GAAP"). Estimated Adjusted Net Income and Adjusted Net
Income per Share are presented herein because they are important
metrics used by management to evaluate and understand the
performance of the ongoing operations of Quality's
business. For Estimated Adjusted Net Income, management uses a
38.2% tax rate for calculating the provision for income taxes to
normalize Quality's tax rate to that of competitors. In
addition, in arriving at Estimated Adjusted Net Income and
Estimated Adjusted Net Income per Share, the Company adjusts for
significant items that are not part of regular operating
activities. These adjustments include energy reorganization
costs and write-off of debt issuance costs.
The following table presents the calculation of Estimated
Adjusted Net Income and Estimated Adjusted Net Income per Share
ranges for the period presented:
(in millions,
except per share amounts) |
Three-months
ended December 31, 2014 |
|
Low |
High |
Estimated net income |
$ 2.2 |
$ 2.6 |
|
|
|
Estimated net income per common
share: |
|
|
Basic |
$ 0.08 |
$ 0.09 |
Diluted |
$ 0.08 |
$ 0.09 |
|
|
|
Weighted average number of
shares: |
|
|
Basic |
27.8 |
27.8 |
Diluted |
28.2 |
28.2 |
|
|
|
Reconciliation: |
|
|
|
|
|
Estimated net income |
$ 2.2 |
$ 2.6 |
Adjustments to estimated net income: |
|
|
Provision for income taxes |
1.6 |
1.6 |
Energy reorganization costs |
3.8 |
3.8 |
Write-off of debt issuance costs |
0.1 |
0.1 |
|
|
|
Estimated adjusted income before income
taxes |
7.7 |
8.1 |
Provision for income taxes at 38.2% |
2.9 |
3.1 |
Estimated adjusted net
income |
$ 4.8 |
$ 5.0 |
|
|
|
Estimated adjusted net income per
common share: |
|
|
Basic |
$ 0.17 |
$ 0.18 |
Diluted |
$ 0.17 |
$ 0.18 |
|
|
|
Weighted average number of
shares: |
|
|
Basic |
27.8 |
27.8 |
Diluted |
28.2 |
28.2 |
Reconciliation of Estimated Operating Income to
Estimated Adjusted EBITDA
Estimated Adjusted EBITDA is not a measure of financial
performance or liquidity under GAAP. Quality's Estimated
Adjusted EBITDA for the reconciliation below is defined as
operating income before depreciation and amortization, employee
non-cash compensation, other expense items, and energy
reorganization costs. Estimated Adjusted EBITDA may not
be directly comparable to similarly titled measures reported by
other companies due to differences in accounting policies and items
excluded or included in the adjustments, which limits its
usefulness as a comparative measure. Estimated Adjusted EBITDA is a
measure used by our management to facilitate internal comparisons
to competitors' results and the bulk transportation industry in
general. We believe that financial information based on GAAP for
highly leveraged businesses, such as ours, should be supplemented
by Estimated Adjusted EBITDA so investors better understand our
financial information in connection with their evaluation of our
business.
The following table presents the calculation of Estimated
Adjusted EBITDA for the period presented:
|
Three-months
ended December 31, 2014 |
(in millions) |
Low |
High |
Estimated operating
income |
$ 10.4 |
$ 10.8 |
|
|
|
Reconciliation: |
|
|
Depreciation and amortization |
5.4 |
5.4 |
Employee non-cash compensation |
1.0 |
1.0 |
Other non-operating expense items |
(0.2) |
(0.2) |
Energy reorganization costs |
3.8 |
3.8 |
Estimated Adjusted
EBITDA |
$ 20.4 |
$ 20.8 |
About Quality
Headquartered in Tampa, Florida, Quality operates the largest
chemical bulk logistics network in North America through its
wholly-owned subsidiary, Quality Carriers, Inc., and is the largest
North American provider of intermodal tank container and depot
services through its wholly-owned subsidiary, Boasso America
Corporation. Quality also provides logistics and transportation
services to the unconventional oil and gas industry including crude
oil, fresh water and production fluids, through its wholly-owned
subsidiaries, QC Energy Resources, Inc. and QC Environmental
Services, Inc. Quality's network of independent affiliates and
independent owner-operators provides nationwide bulk transportation
and related services. Quality is an American Chemistry Council
Responsible Care® Partner and is a core carrier for many of the
Fortune 500 companies that are engaged in chemical production and
processing.
This press release contains certain forward-looking information
that is subject to the safe harbor provisions created by the
Private Securities Litigation Reform Act of
1995. Forward-looking information is any statement other than
a statement of historical fact and includes our 2014 and 2015
expectations. Forward-looking statements are 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, risks and
uncertainties regarding forward-looking statements include (1) the
effect of local, national and international economic, credit,
capital and labor market conditions on the economy in general, on
our ability to obtain desired debt financing and on the particular
industries in which we operate, including excess capacity in the
industry, changes in fuel and insurance prices, interest rate
fluctuations, and downturns in customers' business cycles and
shipping requirements; (2) our substantial leverage and our ability
to make required payments and comply with restrictions contained in
our debt arrangements or to otherwise generate sufficient cash flow
from operations or borrowing under our ABL Facility to fund our
liquidity needs; (3) competition and rate fluctuations, including
fluctuations in prices and demand for transportation services as
well as for commodities such as natural gas and oil; (4) our
reliance on independent affiliates and independent owner-operators;
(5) our liability related to third party equipment leasing
programs; (6) a shift away from or slowdown in production in the
shale regions in which we have energy logistics operations; (7) our
ability to attract and retain qualified drivers; (8) our liability
as a self-insurer to the extent of our deductibles as well as
changing conditions and pricing in the insurance marketplace; (9)
increased unionization, which could increase our operating costs or
constrain operating flexibility; (10) changes in, or our inability
to comply with, governmental regulations and legislative changes
affecting the transportation industry generally or in the
particular segments in which we operate; (11) federal and state
legislative and regulatory initiatives, which could result in
increased costs and additional operating restrictions upon us or
our oil and gas frac shale energy customers; (12) our ability to
access and use disposal wells and other disposal sites and
methods in our energy logistics business; (13) our ability to
comply with current and future environmental laws and regulations
and the increasing costs relating to environmental compliance; (14)
potential disruptions at U.S. ports of entry; (15) diesel fuel
prices and our ability to recover costs through fuel surcharges;
(16) terrorist attacks and the cost of complying with
existing and future anti-terrorism security measures; (17) our
dependence on senior management; (18) the potential loss of our
ability to use net operating losses to offset future income; (19)
potential future impairment charges; (20) our ability to
successfully identify acquisition opportunities, consummate such
acquisitions and successfully integrate acquired businesses,
converted independent affiliates and new independent affiliates and
achieve the anticipated benefits and synergies of acquisitions and
conversions, the effects of the acquisitions and conversions on the
acquired businesses' existing relationships with customers,
governmental entities, independent affiliates, independent
owner-operators and employees, and the impact that acquisitions and
conversions could have on our future financial results and business
performance and other future conditions in the market and industry
from the acquired businesses; (21) our ability to execute plans to
profitably operate in the transportation business and disposal well
business within the energy logistics market; (22) our success in
entering new markets; (23) adverse weather conditions; (24)
disruptions of our information technology and communications
systems; (25) our liability for our proportionate share of unfunded
vested benefit liabilities, particularly in the event of our
withdrawal from any of our multi-employer pension plans; (26) the
assumptions underlying our expectations of financial results in
2015; and (27) changes in planned or actual capital expenditures
due to operating needs, changes in regulation, covenants in our
debt arrangements and other expenses, including interest expense.
Readers are urged to carefully review and consider the various
disclosures regarding these and other risks and uncertainties,
including but not limited to risk factors contained in Quality
Distribution, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2013 and its Quarterly Reports on Form 10-Q, as well
as other reports filed with the Securities and Exchange Commission.
Quality disclaims any obligation to update any forward-looking
statement, whether as a result of developments occurring after the
date of this release or for any other reasons.
CONTACT: Joseph J. Troy
Executive Vice President and Chief Financial Officer
800-282-2031 ext. 7195
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