TAMPA, Fla., Aug. 5, 2009 (GLOBE NEWSWIRE) -- Quality Distribution, Inc. (Nasdaq:QLTY) ("Quality") today reported the results for its second quarter and the six months ended June 30, 2009. In the quarter, Quality generated adjusted earnings per diluted share of $0.02 and $8.8 million of net cash from operating activities, and reduced total debt by $8.4 million.
On a GAAP basis, Quality recorded a net loss for the second quarter of 2009 of $186.2 million, or ($9.58) per diluted share, compared to net income of $0.4 million, or $0.02 per diluted share, for the same quarter in 2008. Applying a normalized tax rate of 39% and excluding adjustment items, Quality had adjusted net income per diluted share of $0.02 for the second quarter of 2009, compared to adjusted net income per diluted share of $0.07 for the second quarter of 2008. The net loss for the second quarter of 2009 includes a pre-tax restructuring charge of $1.2 million and a pre-tax non-cash charge of $148.6 million related to the impairment of goodwill and other intangible assets. The goodwill impairment charge was taken in connection with Quality's annual impairment testing. The size of the impairment is primarily driven by the fact that Quality's tangible fixed assets have a market value significantly higher than their book value. Included in the provision for income taxes is a deferred tax asset valuation allowance of $42.5 million which was primarily related to the goodwill impairment charge. The second quarter of 2008 contains a $2.4 million pre-tax restructuring charge offset by a pre-tax gain of $1.2 million from the sale of real property.
Revenue excluding fuel surcharge was down 23% for the second quarter of 2009, compared to the second quarter of 2008, and down 22% for the six months ended June 30, 2009, compared with the six months ended June 30, 2008, due to a continued softness in market activity.
Gary Enzor, Chief Executive Officer, stated, "Cost reductions and our leaner business model have enabled us to generate positive net operating cash of $8.8 million for the quarter and $22.5 million for the six months in the most challenging months yet of this economic downturn. Sequentially, revenue was flat and is slightly increasing thus far in the third quarter."
Steve Attwood, Chief Financial Officer, commented further, "The impairment charge and write down of the deferred tax asset are non-cash. Quality's financial performance during the quarter continued to reflect a positive trend. Also, the write down of the deferred tax asset has no impact on our ability to offset the asset against tax liabilities related to future earnings."
Quality will host a conference call for investors to discuss these results on Thursday, August 6, 2009 at 10:00 a.m. Eastern Time. The toll free dial in number is 877-718-5106; the toll number is 719-325-4822; the passcode is 4669052. A replay of the call will be available through September 4, 2009, by dialing 888-203-1112; passcode: 4669052. 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 also provides tank cleaning services to the bulk transportation industry through its QualaWash(r) facilities. 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 Company's substantial leverage and restrictions contained in our debt instruments; economic factors; turmoil in the credit and capital markets; downturns in customers' business cycles or in the national economy; the cyclical nature of the transportation industry; claims exposure and insurance costs; adverse weather conditions; dependence on affiliates and owner-operators; changes in government regulation including transportation, environmental and anti-terrorism laws; the Company's environmental remediation costs; fluctuations in fuel pricing or availability; increases in interest rates; potential disruption at U.S. ports of entry; changes in senior management; the Company's ability to achieve projected operating objectives and debt reduction in 2009; its ability to effectively manage terminal operations that are converted from Company-controlled to affiliate; the Company's ability to achieve projected reductions in payroll-related costs; increased unionization, which could increase our operating costs or constrain operating flexibility; the potential loss of our ability to use net operating losses to offset future income; and the Company's ability to attract and retain qualified drivers. 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.
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In 000's) Except Per Share Data
Unaudited
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
OPERATING REVENUES:
Transportation $ 112,083 $ 151,765 $ 223,110 $ 301,024
Other service revenue 25,840 26,677 53,448 53,422
Fuel surcharge 11,863 45,520 22,960 78,017
------------------------------------------
Total operating
revenues 149,786 223,962 299,518 432,463
------------------------------------------
OPERATING EXPENSES:
Purchased
transportation 88,985 131,606 170,876 251,578
Compensation 19,540 27,395 42,751 55,999
Fuel, supplies and
maintenance 15,922 33,035 33,462 63,168
Depreciation and
amortization 5,304 5,332 10,639 10,228
Selling and
administrative 6,877 8,568 14,022 17,816
Insurance claims 3,946 2,865 7,995 8,427
Taxes and licenses 736 1,242 2,073 2,459
Communications and
utilities 2,074 3,389 4,808 7,005
Gain on disposal of
property and equipment (162) (1,421) (265) (1,965)
Impairment of goodwill
and intangibles 148,630 -- 148,630 --
Restructuring costs 1,165 2,375 1,765 2,375
------------------------------------------
Total operating
expenses 293,017 214,386 436,756 417,090
------------------------------------------
Operating (loss)
income (143,231) 9,576 (137,238) 15,373
Interest expense 6,518 8,640 13,518 17,791
Interest income (83) (88) (186) (205)
Gain on early
extinguishment of debt -- -- (675) --
Other (income) expense (419) 146 (276) 156
------------------------------------------
(Loss) income before
income taxes (149,247) 878 (149,619) (2,369)
Provision for (benefit
from) income taxes 36,980 526 36,910 (802)
------------------------------------------
Net (loss) income $(186,227) $ 352 $(186,529) $ (1,567)
==========================================
PER SHARE DATA:
Net (loss) income per
common share
Basic $ (9.58) $ 0.02 $ (9.65) $ (0.08)
==========================================
Diluted $ (9.58) $ 0.02 $ (9.65) $ (0.08)
==========================================
Weighted average number
of shares
Basic 19,441 19,375 19,331 19,372
Diluted 19,441 19,519 19,331 19,372
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In 000's)
Unaudited
June 30, December 31,
2009 2008
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,934 $ 6,787
Accounts receivable, net 75,584 81,612
Prepaid expenses 7,320 12,922
Deferred tax assets, net 6,770 14,707
Other 6,757 7,950
------------- -------------
Total current assets 99,365 123,978
Property and equipment, net 140,615 148,692
Goodwill 27,289 173,519
Intangibles, net 19,466 22,698
Non-current deferred tax assets,
net -- 22,636
Other assets 8,950 10,580
------------- -------------
Total assets $ 295,685 $ 502,103
============= =============
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of
indebtedness $ 2,754 $ 8,361
Current maturities of capital
lease obligations 7,179 7,994
Accounts payable 9,833 16,126
Affiliates and independent
owner-operators payable 12,276 7,649
Accrued expenses 20,896 25,357
Environmental liabilities 4,728 4,819
Accrued loss and damage claims 9,311 8,705
------------- -------------
Total current liabilities 66,977 79,011
Long-term indebtedness, less
current maturities 318,343 330,409
Capital lease obligations, less
current maturities 13,678 15,822
Environmental liabilities 6,333 6,035
Accrued loss and damage claims 12,138 12,815
Other non-current liabilities 30,951 25,158
------------- -------------
Total liabilities 448,420 469,250
Redeemable noncontrolling interest 1,833 1,833
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock 363,257 362,945
Treasury stock (1,580) (1,580)
Accumulated deficit (300,563) (114,034)
Stock recapitalization (189,589) (189,589)
Accumulated other comprehensive
loss (25,859) (26,488)
Stock subscriptions receivable (234) (234)
------------- -------------
Total shareholders' equity
(deficit) (154,568) 31,020
------------- -------------
Total liabilities, redeemable
noncontrolling interest and
shareholders' equity (deficit) $ 295,685 $ 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 Six Months
Ended June 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. 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 Six months ended
Reconciliation: June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net income (loss) $(186,227) $ 352 $(186,529) $ (1,567)
Net income (loss)
per common share:
Basic $ (9.58) $ 0.02 $ (9.65) $ (0.08)
==========================================
Diluted $ (9.58) $ 0.02 $ (9.65) $ (0.08)
==========================================
Adjustments to net
income (loss):
Provision for
(benefit from)
income taxes 36,980 526 36,910 (802)
Gain on early debt
extinguishment -- -- (675) --
Restructuring costs 1,165 2,375 1,765 2,375
Impairment of
goodwill and
intangibles 148,630 -- 148,630 --
Gains on property
sales -- (1,161) -- (2,128)
------------------------------------------
Adjusted income (loss)
before income taxes 548 2,092 101 (2,122)
Provision for
(benefit from)
income taxes at 39% 214 816 39 (828)
------------------------------------------
Tax effected and
adjusted net income
(loss) $ 334 $ 1,276 $ 62 $ (1,294)
==========================================
Tax effected and
adjusted net income
(loss) per common
share:
Basic $ 0.02 $ 0.07 $ 0.00 $ (0.07)
==========================================
Diluted $ 0.02 $ 0.07 $ 0.00 $ (0.07)
==========================================
Weighted average
number of shares:
Basic 19,441 19,375 19,331 19,372
Diluted 19,441 19,519 19,331 19,372
QLTYE