Quality Reports Q4 Diluted EPS of $0.09
and Adjusted Diluted EPS of $0.18
Fiscal Year 2014 Revenue Increased 6.7%
to $991.8 million
Quality Generates Fiscal Year 2014 Free
Cash Flow of $54.7 million
Quality Distribution, Inc. (Nasdaq:QLTY) ("Quality" or the
"Company"), a North American logistics and transportation provider
with market leading businesses, today announced its results for the
fourth quarter and fiscal year ended December 31, 2014. Unless
stated otherwise, all fourth quarter 2014 comparisons are relative
to the fourth quarter of 2013 and all fiscal year 2014 comparisons
are relative to the fiscal year ended December 31, 2013.
Fourth Quarter 2014 Highlights
- Revenue of $243.2 million was higher by 7.9% compared to $225.4
million.
- Net income increased to $2.6 million, or $0.09 per diluted
share, compared to a net loss of $22.8 million, or ($0.85) per
diluted share. Adjusted net income increased 37.9% to $5.0 million,
or $0.18 per diluted share, compared to $3.6 million, or $0.13 per
diluted share. A reconciliation of net income (loss) to adjusted
net income is included in the attached financial exhibits.
Fiscal Year 2014 Highlights
- Revenue of $991.8 million was higher by 6.7% compared to $929.8
million.
- Net income increased to $20.6 million, or $0.74 per diluted
share, compared to a net loss of $42.0 million, or ($1.58) per
diluted share. Adjusted net income increased 14.8% to $21.2
million, or $0.75 per diluted share, compared to $18.4 million, or
$0.68 per diluted share. A reconciliation of net income (loss) to
adjusted net income is included in the attached financial
exhibits.
- Free cash flow (defined below) was $54.7 million.
- Quality reduced its leverage by 40 basis points, ending the
year with a ratio of Net Debt to Adjusted EBITDA of 4.0x.
"Our Chemical and Intermodal businesses delivered continued
growth during the fourth quarter, which led to solid profitability
at the high end of our earnings expectation range," stated Gary
Enzor, Chairman and Chief Executive Officer. "Chemical's expansion
efforts delivered strong results as well as increased international
demand at Intermodal drove enhanced top and bottom line
profitability. Our Energy Logistics revenue was down slightly
versus last year, but adjusted operating income was up, primarily
reflecting efforts to transition company-operated terminals to
independent affiliates alongside our focus on reducing costs
through asset optimization. Overall, we delivered a solid fourth
quarter and look forward to continuing this positive momentum in
2015."
Fourth Quarter 2014 Consolidated Results
Revenue was higher by 7.9% at $243.2 million. Excluding fuel
surcharges, revenue increased to $212.1 million, up 8.2% compared
to $196.0 million. This revenue improvement was due to continued
growth in Chemical Logistics, which was driven by increased volumes
and positive contribution from new terminals established in 2014,
along with strong growth in the Intermodal business.
Operating income was $10.8 million compared to an operating loss
of $28.1 million. After adjusting for the non-operating items
presented in the attached financial exhibits, operating income was
$14.6 million, up 12.6% compared to $13.0 million, driven primarily
by improvements in each operating segment and lower insurance
costs.
Adjusted EBITDA was higher by 8.0% at $20.8 million compared to
$19.3 million. A reconciliation of net income (loss) to adjusted
EBITDA is included in the attached financial exhibits.
Fiscal Year 2014 Consolidated Results
Revenue was higher by 6.7% at $991.8 million. Excluding fuel
surcharges, revenue increased to $854.1 million, up 6.1%, compared
to $804.9 million, driven primarily by the Chemical Logistics and
Intermodal operating segments.
Operating income was $51.2 million compared to an operating loss
of $42.8 million. After adjusting for the non-operating items
presented in the attached financial exhibits, operating income was
$61.5 million, up 6.5% compared to $57.8 million, driven primarily
by increases in each operating segment.
Adjusted EBITDA was flat at $86.9 million compared to $86.6
million. A reconciliation of net income (loss) to adjusted EBITDA
is included in the attached financial exhibits.
Fourth Quarter 2014 Reporting Segment
Results
Chemical Logistics
Revenue was $163.7 million, up 9.0% compared to $150.1 million.
Excluding fuel surcharges, revenue increased $13.0 million or
10.4%, due primarily to the opening of several new terminal
locations in 2014, which increased volume. Active recruiting and
retention actions continue to improve driver counts, helping
Chemical Logistics to meet strong customer demand.
Operating income was $19.4 million, up 15.0% compared to $16.9
million. After adjusting for the non-operating items presented in
the attached financial exhibits, operating income increased by $1.1
million, driven primarily by incremental revenues from top-line
growth. Comparable margins declined slightly as profitability from
revenue growth was primarily offset by ongoing growth incentives
for independent affiliates and lower margins from start-up
terminals.
Intermodal
Revenue was $37.9 million, up 15.4% compared to $32.9 million.
Excluding fuel surcharges, revenue increased $4.7 million, up
16.2%. Strong domestic and international customer activity drove
higher overall shipments, and stronger import volumes resulted in
an increase in depot services revenue.
Operating income was $4.4 million, up 16.6% compared to $3.8
million, driven by incremental profits on higher trucking revenue
and strong margins from increases in depot services revenue.
Energy Logistics
Revenue was $41.4 million, down slightly compared to $42.2
million. Excluding fuel surcharges, revenue was lower by 3.6%,
primarily due to reduced volumes in the Woodford shale region,
partially offset by higher volumes in the Marcellus, Utica and
Bakken shale regions.
Operating loss was $2.2 million compared to $39.2 million.
Adjusting for non-operating items presented in the attached
financial exhibits, operating income increased to $1.7 million
compared to $0.5 million, due primarily to cost control and asset
optimization efforts that improved operating performance.
Shared Services
Shared services costs totaled $10.9 million compared to $9.7
million. This increase related primarily to higher driver
recruitment and retention expenses, as well as increased
performance-based incentive compensation costs.
Summary
Mr. Enzor continued, "The new Chemical terminals opened in 2014
contributed to our overall revenue growth in addition to our
increased driver recruiting and retention actions that resulted in
higher driver counts, which bodes well for 2015. Our Intermodal
business continued to deliver solid top and bottom line improvement
that we expect to continue this year. At Energy, we remain focused
on our transition efforts to shift our mix of business toward
steadier post-production activity versus drilling related work. In
addition, the recent affiliation of our Jourdanton, TX terminal
should help stabilize this business going forward."
Balance Sheet and Cash Flow
On November 3, 2014, the Company amended its asset-based loan
facility and term loan facility (collectively, the "ABL Facility").
The amendments resulted in lower credit spreads on borrowed funds,
enhanced flexibility and extended maturities.
On January 15, 2015, Quality redeemed $10.0 million of 9.875%
Second-Priority Senior Secured Notes due 2018 ("Senior Notes").
This optional redemption required a premium payment of $0.5 million
and will result in a non-cash charge of $0.2 million to write off
debt issuance costs in the first quarter of 2015.
The Company generated operating cash flow of $33.5 million in
2014, which was primarily used to repay debt.
Capital expenditures for 2014 were $40.1 million and proceeds
from equipment sales were $34.1 million, resulting in net capital
expenditures for 2014 of $6.0 million, compared to net capital
expenditures for 2013 of $1.5 million. Net capital expenditures
were higher in 2014 to support growth in the Chemical Logistics
business.
Borrowing availability under the Company's ABL Facility was
$62.0 million at December 31, 2014, representing a decrease from
December 31, 2013 due primarily to borrowings used for the partial
redemption of the Senior Notes in the third quarter of 2014, and
the full retirement of subordinated promissory notes that occurred
in the second quarter of 2014.
"Since 2013, we have redeemed $55.0 million of our higher cost
Senior Notes which represents a nearly 25% reduction from the
original amount of this note issuance, and also extinguished $21.3
million of our subordinated promissory notes. We have been
successful in maintaining strong liquidity under our ABL Facility,
while significantly reducing our higher cost debt using our ample
free cash flow," stated Joe Troy, Chief Financial Officer. "These
redemptions, along with the 2014 amendment of our ABL Facility,
have strengthened our balance sheet and reduced our leverage. We
ended the year at a 4.0x ratio of Net Debt to Adjusted
EBITDA. In 2015, we remain committed to deploying our free
cash flow primarily to further reduce leverage as we make strides
toward our targeted long-term goal of a 2.5x ratio of Net Debt to
Adjusted EBITDA."
Mr. Troy continued, "We continue to monitor the bank and bond
markets for a potential refinancing of our Senior Notes, and will
be prepared to opportunistically access these markets if conditions
warrant. In the absence of improved market conditions, we are
prepared to use a portion of our free cash flow throughout the year
to redeem additional Senior Notes."
2015 Outlook
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 fiscal year 2015, Quality expects:
- Adjusted net income per diluted share to be in the range of
$0.77 to $0.87;
- Free cash flow (defined as Adjusted EBITDA, less net capital
expenditures, less cash interest, less cash taxes) to be in the
range of $50 to $55 million; and
- Net capital expenditures to be in the range of $10 to $15
million.
These estimates assume a 39% tax rate, and exclude any impacts
from non-operating items and costs related to any potential debt
refinancing activity. These estimates also reflect anticipated
interest savings from potential bond redemptions throughout the
year assuming a Senior Note refinancing does not occur.
Mr. Enzor continued, "Our first quarter earnings estimate
reflects some caution around our Energy business due to oil price
decreases, although we have not seen significant, non-weather
related declines in volumes. We have experienced some adverse
impact from severe winter weather conditions in each of our
businesses. Overall, our asset-light business model continues
to deliver strong free cash flow and we look forward to another
year of positive results."
Fourth Quarter and Fiscal Year Results Conference
Call
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, which can be accessed as follows:
Toll free dial-in: 888-778-9064 |
Toll dial-in: 913-312-1427 |
Passcode: 1985088 |
A live audio 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.
A replay of the call will be available through March 28, 2015,
which can be accessed as follows:
Dial-In: 888-203-1112 |
Passcode: 1985088 |
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 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 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.
|
|
|
|
|
QUALITY DISTRIBUTION,
INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In 000's) Except Per
Share Data |
Unaudited |
|
|
|
|
|
|
Three months
ended |
Year
ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
OPERATING REVENUES: |
|
|
|
|
Transportation |
$ 177,536 |
$ 164,554 |
$ 717,495 |
$ 675,094 |
Service revenue |
34,544 |
31,437 |
136,652 |
129,765 |
Fuel surcharge |
31,102 |
29,430 |
137,611 |
124,951 |
Total operating
revenues |
243,182 |
225,421 |
991,758 |
929,810 |
OPERATING EXPENSES: |
|
|
|
|
Purchased transportation |
161,821 |
148,303 |
667,799 |
594,708 |
Compensation |
24,354 |
22,279 |
92,435 |
98,681 |
Fuel, supplies and
maintenance |
26,384 |
25,927 |
99,985 |
105,917 |
Depreciation and
amortization |
5,432 |
6,381 |
21,617 |
26,121 |
Selling and administrative |
8,726 |
7,569 |
32,795 |
31,534 |
Insurance costs |
4,450 |
5,692 |
21,070 |
19,169 |
Taxes and licenses |
1,004 |
853 |
3,536 |
3,758 |
Communications and
utilities |
988 |
893 |
3,872 |
3,840 |
(Gain) loss on disposal of
property and equipment |
(743) |
62 |
(2,581) |
(2,450) |
Impairment charges |
-- |
35,604 |
-- |
91,296 |
Total operating
expenses |
232,416 |
253,563 |
940,528 |
972,574 |
|
|
|
|
|
Operating income
(loss) |
10,766 |
(28,142) |
51,230 |
(42,764) |
|
|
|
|
|
Interest expense |
6,477 |
7,371 |
28,562 |
31,147 |
Interest income |
(122) |
(196) |
(496) |
(855) |
Gain on extinguishment of
debt |
-- |
-- |
(4,217) |
-- |
Write-off of debt issuance
costs |
54 |
-- |
476 |
521 |
Other expense (income) |
178 |
89 |
(144) |
(7,256) |
Income (loss) before
income taxes |
4,179 |
(35,406) |
27,049 |
(66,321) |
Provision for (benefit
from) income taxes |
1,555 |
(12,608) |
6,409 |
(24,283) |
Net income
(loss) |
$ 2,624 |
$ (22,798) |
$ 20,640 |
$ (42,038) |
|
|
|
|
|
PER SHARE DATA: |
|
|
|
|
Net income (loss) per common
share |
|
|
|
|
Basic |
$ 0.09 |
$ (0.85) |
$ 0.75 |
$ (1.58) |
Diluted |
$ 0.09 |
$ (0.85) |
$ 0.74 |
$ (1.58) |
|
|
|
|
|
Weighted average number of
shares |
|
|
|
|
Basic |
27,847 |
26,690 |
27,539 |
26,560 |
Diluted |
28,198 |
26,690 |
28,077 |
26,560 |
|
|
|
|
|
|
|
|
QUALITY DISTRIBUTION,
INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(In
000's) |
Unaudited |
|
|
|
|
December 31, |
December 31, |
|
2014 |
2013 |
|
|
|
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 1,358 |
$ 1,957 |
Accounts receivable, net |
136,790 |
120,932 |
Prepaid expenses |
14,118 |
13,401 |
Deferred tax asset, net |
29,333 |
20,709 |
Other current assets |
10,374 |
9,919 |
Total current
assets |
191,973 |
166,918 |
|
|
|
Property and equipment,
net |
156,249 |
170,114 |
Assets held-for-sale |
2,040 |
1,129 |
Goodwill |
34,896 |
32,955 |
Intangibles, net |
15,388 |
16,149 |
Non-current deferred tax asset,
net |
18,942 |
31,401 |
Other assets |
8,295 |
8,583 |
Total
assets |
$ 427,783 |
$ 427,249 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
DEFICIT |
|
|
Current liabilities: |
|
|
Current maturities of
indebtedness |
$ 2,699 |
$ 8,692 |
Current maturities of capital
lease obligations |
334 |
1,888 |
Accounts payable |
12,955 |
10,248 |
Independent affiliates and
independent owner-operators payable |
15,110 |
14,398 |
Accrued expenses |
32,617 |
30,580 |
Environmental liabilities |
4,389 |
3,818 |
Accrued loss and damage
claims |
8,851 |
8,532 |
Total current
liabilities |
76,955 |
78,156 |
|
|
|
Long-term indebtedness, less
current maturities |
348,080 |
369,730 |
Capital lease obligations, less
current maturities |
182 |
2,995 |
Environmental liabilities |
3,830 |
4,479 |
Accrued loss and damage
claims |
10,493 |
10,747 |
Other non-current
liabilities |
19,937 |
17,393 |
Total
liabilities |
459,477 |
483,500 |
|
|
|
SHAREHOLDERS' DEFICIT |
|
|
Common stock |
450,625 |
441,877 |
Treasury stock |
(11,860) |
(10,557) |
Accumulated deficit |
(249,865) |
(270,505) |
Stock recapitalization |
(189,589) |
(189,589) |
Accumulated other comprehensive
loss |
(31,005) |
(27,477) |
Total shareholders'
deficit |
(31,694) |
(56,251) |
Total liabilities and
shareholders' deficit |
$ 427,783 |
$ 427,249 |
|
|
|
QUALITY DISTRIBUTION, INC. AND
SUBSIDIARIES SEGMENT OPERATING RESULTS
(In 000's) Unaudited
The Company has three reportable business segments for financial
reporting purposes that are distinguished primarily on the basis of
services offered. The Company also separately reports Shared
Services, which consists of corporate and shared services overhead
costs, including information technology, driver recruiting,
accounting, stock-based compensation, pension, environmental and
other corporate headquarters costs. Segment results for
prior-year periods were reclassified to conform to the current year
presentation. The Company's reportable business segments
are:
- Chemical Logistics, which consists of the transportation of
bulk chemicals primarily through our network that includes
independent affiliates and company-operated terminals, and
equipment rental income;
- Energy Logistics, which consists primarily of the
transportation of crude oil, fresh water and disposal water for the
unconventional oil and gas market, through company-operated
terminals and independent affiliates, and equipment rental income;
and
- Intermodal, which consists of Boasso's intermodal ISO tank
container transportation and depot services supporting the
international movement of bulk liquids.
|
|
|
|
|
|
|
Three Months
Ended December 31, 2014 |
|
|
|
Chemical |
Energy |
|
Shared |
|
|
Logistics |
Logistics (a) |
Intermodal |
Services |
Total |
Operating
Revenues: |
|
|
|
|
|
Transportation |
$ 119,321 |
$ 38,486 |
$ 19,729 |
$ -- |
$ 177,536 |
Service revenue |
18,444 |
2,228 |
13,711 |
161 |
34,544 |
Fuel surcharge |
25,937 |
691 |
4,474 |
-- |
31,102 |
|
|
|
|
|
|
Total operating revenues |
$ 163,702 |
$ 41,405 |
$ 37,914 |
$ 161 |
$ 243,182 |
|
|
|
|
|
|
Segment revenue % of total revenue |
67.3% |
17.0% |
15.6% |
0.1% |
100.0% |
Segment operating income
(loss)* |
$ 20,295 |
$ 1,583 |
$ 5,281 |
$ (11,704) |
$ 15,455 |
Depreciation and
amortization |
2,384 |
2,163 |
851 |
34 |
5,432 |
(Gain) loss on disposal of
property and equipment |
(1,518) |
1,581 |
(16) |
(790) |
(743) |
Operating income (loss) |
$ 19,429 |
$ (2,161) |
$ 4,446 |
$ (10,948) |
$ 10,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31, 2013 |
|
|
|
Chemical |
Energy |
|
Shared |
|
|
Logistics (b) |
Logistics (c) |
Intermodal |
Services |
Total |
Operating
Revenues: |
|
|
|
|
|
Transportation |
$ 107,186 |
$ 40,293 |
$ 17,075 |
$ -- |
$ 164,554 |
Service revenue |
17,609 |
1,932 |
11,707 |
189 |
31,437 |
Fuel surcharge |
25,345 |
-- |
4,085 |
-- |
29,430 |
|
|
|
|
|
|
Total operating revenues |
$ 150,140 |
$ 42,225 |
$ 32,867 |
$ 189 |
$ 225,421 |
|
|
|
|
|
|
Segment revenue % of total revenue |
66.6% |
18.7% |
14.6% |
0.1% |
100.0% |
Segment operating income
(loss)* |
$ 18,820 |
$ 643 |
$ 4,425 |
$ (9,983) |
$ 13,905 |
Depreciation and
amortization |
2,757 |
2,677 |
832 |
115 |
6,381 |
Impairment charges |
-- |
35,604 |
-- |
-- |
35,604 |
(Gain) loss on disposal of
property and equipment |
(837) |
1,565 |
(220) |
(446) |
62 |
Operating income (loss) |
$ 16,900 |
$ (39,203) |
$ 3,813 |
$ (9,652) |
$ (28,142) |
|
|
|
|
|
|
(a) Operating loss in the
Energy Logistics segment during the three months ended December 31,
2014, includes $3.8 million of energy reorganization costs. |
(b) Operating income in the
Chemical Logistics segment during the three months ended December
31, 2013 includes $1.4 million of excess claims settlement
expenses. |
(c) Operating loss in the
Energy Logistics segment during the three months ended December 31,
2013 includes $35.6 million of impairment charges and $4.1 million
of energy reorganization costs. |
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|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2014 |
|
|
|
Chemical |
Energy |
|
Shared |
|
|
Logistics (d) |
Logistics (e) |
Intermodal (f) |
Services |
Total |
Operating
Revenues: |
|
|
|
|
|
Transportation |
$ 483,272 |
$ 154,282 |
$ 79,941 |
$ -- |
$ 717,495 |
Service revenue |
71,803 |
8,867 |
54,846 |
1,136 |
136,652 |
Fuel surcharge |
113,348 |
4,333 |
19,930 |
-- |
137,611 |
|
|
|
|
|
|
Total operating revenues |
$ 668,423 |
$ 167,482 |
$ 154,717 |
$ 1,136 |
$ 991,758 |
|
|
|
|
|
|
Segment revenue % of total revenue |
67.4% |
16.9% |
15.6% |
0.1% |
100.0% |
Segment operating income
(loss)* |
$ 79,905 |
$ 9,044 |
$ 25,785 |
$ (44,468) |
$ 70,266 |
Depreciation and
amortization |
9,654 |
8,351 |
3,349 |
263 |
21,617 |
(Gain) loss on disposal of
property and equipment |
(4,791) |
3,035 |
(35) |
(790) |
(2,581) |
Operating income (loss) |
$ 75,042 |
$ (2,342) |
$ 22,471 |
$ (43,941) |
$ 51,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2013 |
|
|
|
Chemical |
Energy |
|
Shared |
|
|
Logistics (g) |
Logistics (h) |
Intermodal |
Services (i) |
Total |
Operating
Revenues: |
|
|
|
|
|
Transportation |
$ 442,164 |
$ 160,614 |
$ 72,316 |
$ -- |
$ 675,094 |
Service revenue |
68,029 |
10,617 |
50,489 |
630 |
129,765 |
Fuel surcharge |
106,845 |
273 |
17,833 |
-- |
124,951 |
|
|
|
|
|
|
Total operating revenues |
$ 617,038 |
$ 171,504 |
$ 140,638 |
$ 630 |
$ 929,810 |
|
|
|
|
|
|
Segment revenue % of total revenue |
66.4% |
18.4% |
15.1% |
0.1% |
100.0% |
Segment operating income
(loss)* |
$ 80,146 |
$ 10,634 |
$ 23,174 |
$ (41,751) |
$ 72,203 |
Depreciation and
amortization |
11,147 |
11,173 |
3,322 |
479 |
26,121 |
Impairment charges |
-- |
91,296 |
-- |
-- |
91,296 |
(Gain) loss on disposal of
property and equipment |
(4,234) |
4,809 |
(161) |
(2,864) |
(2,450) |
Operating income (loss) |
$ 73,233 |
$ (96,644) |
$ 20,013 |
$ (39,366) |
$ (42,764) |
|
|
|
|
|
|
(d) Operating income in the
Chemical Logistics segment during the year ended December 31, 2014
includes $0.2 million of independent affiliate conversion costs and
$0.2 million of severance costs. |
(e) Operating loss in the
Energy Logistics segment during the year ended December 31, 2014
includes $9.8 million of energy reorganization costs. |
(f) Operating income in the
Intermodal segment during the year ended December 31, 2014 includes
$0.1 million of severance costs. |
(g) Operating income in the
Chemical Logistics segment during the year ended December 31, 2013
includes $1.4 million of excess claims settlement expenses, $0.4
million of independent affiliate conversion costs and $0.3 million
of severance costs. |
(h) Operating loss in the
Energy Logistics segment during the year ended December 31, 2013
includes $91.3 million of impairment charges and $9.3 million of
energy reorganization costs. |
(i) Operating loss in
Shared Services during the year ended December 31, 2013 includes
$2.6 million of gains on property dispositions and $0.4 million of
severance costs. |
|
|
|
|
|
|
* Segment operating income (loss)
reported in the business segment tables above excludes amounts such
as depreciation and amortization, impairment charges and gains and
losses on disposal of property and equipment. |
|
|
|
|
|
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET
INCOME AND ADJUSTED NET INCOME PER SHARE. RECONCILIATION OF NET
INCOME (LOSS) TO EBITDA TO ADJUSTED EBITDA.
For the Three Months and the Years Ended
December 31, 2014 and 2013 (In 000's)
Unaudited
Adjusted Net Income, Adjusted Net Income per Share, EBITDA and
Adjusted EBITDA are not measures of financial performance or
liquidity under United States Generally Accepted Accounting
Principles ("GAAP"). Adjusted Net Income, Adjusted Net Income
per Share, EBITDA and Adjusted EBITDA 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 the three months ended December 31, 2014 and 2013 for
Adjusted Net Income, management uses the Company's actual effective
tax rates of 38.2% and 36.6%, respectively, for calculating the
provision for income taxes. For the years ended December 31,
2014 and 2013 for Adjusted Net Income, management uses the
Company's actual effective tax rate of 38.2% (adjusted for the
release of a deferred tax valuation allowance), and 36.6%,
respectively, for calculating the provision for income
taxes. In addition, in arriving at Adjusted Net Income and
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, severance costs,
independent affiliate conversion costs, excess claims settlement
expenses, gain on extinguishment of debt, gain on property
dispositions, impairment charges, note redemption costs, write-off
of debt issuance costs, equity offering costs and earnout
adjustments.
EBITDA is a component of the measure used by Quality's
management to facilitate internal comparisons to competitors'
results and the bulk transportation markets that our chemical and
energy logistics and intermodal segments serve. We believe that
financial information based on GAAP for businesses, such as
Quality's, should be supplemented by EBITDA so investors better
understand the financial information in connection with their
evaluation of the Company's business. This measure addresses
variations among companies with respect to capital structures and
cost of capital (which affect interest expense) and differences in
taxation and book depreciation of facilities and equipment (which
affect relative depreciation expense), including significant
differences in the depreciable lives of similar assets among
various companies. Accordingly, EBITDA allows analysts, investors
and other interested parties in the bulk transportation, logistics
and intermodal industries to facilitate company-to-company
comparisons by eliminating some of the foregoing variations. EBITDA
as used herein may not, however, 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. To calculate EBITDA, Net Income (loss) is adjusted for the
provision for income taxes, depreciation and amortization and net
interest expense. To calculate Adjusted EBITDA, we calculate
EBITDA from Net Income (loss), which is then further adjusted for
items that are not part of regular operating activities, including
energy reorganization costs, severance costs, independent affiliate
conversion costs, excess claims settlement expenses, gain on
extinguishment of debt, gain on property dispositions, impairment
charges, write-off of debt issuance costs, equity offering costs,
earnout adjustments and other non-cash items such as non-cash
stock-based compensation. Adjusted Net Income and Adjusted Net
Income per Share, EBITDA and Adjusted EBITDA should not be
considered in isolation or as a substitute for the consolidated
statements of operations prepared in accordance with GAAP, or as an
indication of Quality's operating performance or liquidity.
|
|
|
|
|
|
Three months
ended |
Year
ended |
Net Income (Loss)
Reconciliation: |
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Net income (loss) |
$ 2,624 |
$ (22,798) |
$ 20,640 |
$ (42,038) |
|
|
|
|
|
Net income (loss) per
common share: |
|
|
|
|
Basic |
$ 0.09 |
$ (0.85) |
$ 0.75 |
$ (1.58) |
Diluted |
$ 0.09 |
$ (0.85) |
$ 0.74 |
$ (1.58) |
|
|
|
|
|
Weighted average number
of shares: |
|
|
|
|
Basic |
27,847 |
26,960 |
27,539 |
26,560 |
Diluted |
28,198 |
26,960 |
28,077 |
26,560 |
|
|
|
|
|
Reconciliation: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ 2,624 |
$ (22,798) |
$ 20,640 |
$ (42,038) |
|
|
|
|
|
Adjustments to net income (loss): |
|
|
|
|
Provision for (benefit from)
income taxes |
1,555 |
(12,608) |
6,409 |
(24,283) |
Energy reorganization
costs |
3,838 |
4,061 |
9,781 |
9,293 |
Severance and lease termination
costs |
-- |
96 |
267 |
728 |
Independent affiliate
conversion costs |
-- |
-- |
222 |
438 |
Excess claims settlement
expenses |
-- |
1,350 |
-- |
1,350 |
Gain on extinguishment of
debt |
-- |
-- |
(4,217) |
-- |
Gain on property
dispositions |
-- |
-- |
-- |
(2,577) |
Impairment charges |
-- |
35,604 |
-- |
91,296 |
Note redemption costs |
-- |
-- |
675 |
675 |
Write-off of debt issuance
costs |
54 |
-- |
476 |
521 |
Equity offering costs |
-- |
-- |
-- |
476 |
Earnout adjustment |
-- |
-- |
-- |
(6,800) |
Adjusted income before income taxes |
8,071 |
5,705 |
34,253 |
29,079 |
Provision for income taxes at
38.2% for the three months and the year ended December 31,
2014 and 36.6% for the three months and the year ended December 31,
2013 |
3,083 |
2,089 |
13,085 |
10,646 |
Adjusted net
income |
$ 4,988 |
$ 3,616 |
$ 21,168 |
$ 18,433 |
|
|
|
|
|
Adjusted net income per
common share: |
|
|
|
|
Basic |
$ 0.18 |
$ 0.14 |
$ 0.77 |
$ 0.69 |
Diluted |
$ 0.18 |
$ 0.13 |
$ 0.75 |
$ 0.68 |
Weighted average number
of shares: |
|
|
|
|
Basic |
27,847 |
26,690 |
27,539 |
26,560 |
Diluted |
28,198 |
27,398 |
28,077 |
27,099 |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
Year
ended |
EBITDA and Adjusted
EBITDA: |
December 31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Net income (loss) |
$ 2,624 |
$ (22,798) |
$ 20,640 |
$ (42,038) |
|
|
|
|
|
Adjustments to net income (loss): |
|
|
|
|
Provision for (benefit from)
income taxes |
1,555 |
(12,608) |
6,409 |
(24,283) |
Depreciation and
amortization |
5,432 |
6,381 |
21,617 |
26,121 |
Interest expense, net |
6,355 |
7,175 |
28,066 |
30,292 |
EBITDA |
15,966 |
(21,850) |
76,732 |
(9,908) |
|
|
|
|
|
Energy reorganization
costs |
3,765 |
3,467 |
9,630 |
8,136 |
Severance and lease termination
costs |
-- |
96 |
267 |
579 |
Independent affiliate
conversion costs |
-- |
-- |
222 |
438 |
Excess claims settlement
expenses |
-- |
1,350 |
-- |
1,350 |
Gain on extinguishment of
debt |
-- |
-- |
(4,217) |
-- |
Gain on property
dispositions |
-- |
-- |
-- |
(2,577) |
Impairment charges |
-- |
35,604 |
-- |
91,296 |
Write-off of debt issuance
costs |
54 |
-- |
476 |
521 |
Equity offering costs |
-- |
-- |
-- |
476 |
Earnout adjustment |
-- |
-- |
-- |
(6,800) |
Non-cash stock-based
compensation |
1,027 |
596 |
3,762 |
3,085 |
Adjusted
EBITDA |
$ 20,812 |
$ 19,263 |
$ 86,872 |
$ 86,596 |
|
|
|
|
|
CONTACT: Michael C. Massi
Vice President of Financial Planning & Analysis
and Investor Relations
800-282-2031 ext. 7235
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