Exhibit 99.1
Quality Distribution, Inc. Announces Fourth Quarter and Year End 2011 Results
— Company Reports Fourth Quarter 2011 GAAP Net Income of $0.22 per Diluted Share —
— Q4 2011 Adjusted Earnings of $0.15 per Diluted Share Up Over 100% versus Q4 2010 —
— Quality Achieves Record Full Year 2011 Adjusted EBITDA of $74.2 million —
— Energy Logistics Revenue of $9.8 Million in Fourth Quarter —
— Greensville Transport Company Acquired —
TAMPA, FL – February 28, 2012 – Quality Distribution, Inc. (NASDAQ: QLTY) (“Quality” or the “Company”), which operates within North America, the largest chemical bulk tank truck network, a frac shale energy logistics business, and is the largest provider of intermodal tank container and depot services, today reported net income of $5.5 million, or $0.22 per diluted share, for the fourth quarter ended December 31, 2011, compared to a net loss of $10.7 million, or $(0.51) per diluted share, in the fourth quarter ended December 31, 2010. Net income for the year ended December 31, 2011 was $23.4 million, or $0.96 per diluted share compared to a net loss of $7.4 million, or $(0.36) per diluted share, for 2010.
After applying a normalized tax rate of 39%, adjusted net income for the fourth quarter of 2011 was $3.8 million, or $0.15 per diluted share, compared to adjusted net income of $1.3 million, or $0.06 per diluted share, for the same quarter in 2010. Adjusted net income for the fourth quarter of 2010 was derived by excluding $9.1 million of charges associated with the Company’s debt refinancing, $3.2 million of pre-tax restructuring charges, and $0.7 million of costs associated with an unconsummated stock offering, and then applying a normalized tax rate of 39%. The Company presents adjusted net income to neutralize the effect of the Company’s net operating loss and other tax credit carryforwards on after-tax earnings, and to exclude certain items it does not consider to be part of regular operating activities. A reconciliation of net income (loss) to adjusted net income is included in the attached financial exhibits.
The significant improvement in adjusted net income for the fourth quarter of 2011 versus the prior-year period was driven by a solid increase in operating income resulting from increased energy market revenue and profitability, enhanced earnings at Boasso, reduced maintenance expense and lower insurance costs. Additionally, interest expense declined 28.1% versus the prior year period, due primarily to the retirement of high-cost 2013 PIK Notes.
“I am very pleased with the Company’s growth in earnings this quarter versus the fourth quarter of last year,” said Gary Enzor, Chief Executive Officer. “The typical sequential decline in fourth quarter revenues was more than offset by improvements in certain cost areas, and by new and profitable energy logistics business. During the fourth quarter, we continued our expansion beyond the Marcellus Shale and began hauling oil in the Eagle Ford Shale. We are focused on exploring additional opportunities in these and other shale regions, including potential acquisitions, as we believe this market will continue to be a significant driver of our future growth.”
Total revenue for the fourth quarter ended December 31, 2011 was $178.8 million, an increase of 7.8% versus the same quarter last year. Excluding fuel surcharges, revenue for the fourth quarter of 2011 increased 3.8% compared to the prior year quarter. This quarter-over-quarter increase in revenue of $5.5 million (excluding fuel surcharges) was driven primarily by $9.7 million of revenues from the Company’s new energy logistics business and a $2.2 million increase in intermodal revenues, partially offset by $6.4 million of lower revenues in the chemical logistics business. While the Company successfully completed the installation of electronic on-board recorders (“EOBRs”) within its U.S. chemical logistics network, this initiative continued to adversely impact driver turnover during the fourth quarter, which constrained volumes within the chemical logistics business.
Operating income for the fourth quarter of 2011 was $13.3 million, which includes an insurance premium refund of $1.1 million and increased environmental expense of $0.7 million. Operating income for the fourth quarter of 2010 was $7.0 million, and included a restructuring charge of $3.2 million. Excluding these items, fourth quarter operating income increased $2.7 million, or 26.5%, versus the prior year period.
Adjusted EBITDA for the fourth quarter of 2011 was $17.9 million, up 22.0% versus the comparable prior year quarter, driven primarily from the new energy logistics business, improved intermodal results, and lower insurance and other costs. A reconciliation of net income (loss) to adjusted EBITDA is included in the attached financial exhibits.
Gary Enzor commented further, “Our multifaceted growth strategy is delivering positive results. In the fourth quarter of 2011, we completed the acquisition of Greensville, which provides a strong new market for our intermodal business, and we added a new energy business affiliate to service the Eagle Ford shale. With the U.S. EOBR implementation now complete, we are looking forward to getting our chemical logistics business back on track, and we are well-positioned to capitalize on organic and external growth opportunities in 2012.”
Full Year 2011 Results
Total revenue for the year ended December 31, 2011 was $746.0 million, an increase of 8.6% versus the same period last year. Excluding fuel surcharges, revenue increased 3.7% for the full year compared to the prior year primarily driven by new energy logistics revenues of $30.4 million.
Operating income for the year ended December 31, 2011 was $57.7 million, which includes the insurance premium refund and increased environmental expense noted above, and a restructuring credit of $0.5 million. Operating income for the year ended December 31, 2010 was $36.7 million, which includes a restructuring charge of $7.8 million.
Adjusted net income for the year ended December 31, 2011 was $17.1 million, or $0.70 per diluted share, up more than 100% versus the prior year period, and adjusted EBITDA for the year ended December 31, 2011 was a record $74.2 million, up 18.3% versus the comparable prior year period. These improvements were driven primarily from the new energy logistics business, improved intermodal results, and lower insurance and other costs. A reconciliation of net income (loss) to adjusted net income and adjusted EBITDA is included in the attached financial exhibits.
New Segment Reporting
In connection with the Company’s entry into the gas and oil frac shale energy market in 2011, a new segment for financial reporting purposes was identified during the fourth quarter of 2011, to better distinguish logistics services to the energy markets from logistics services to the chemical markets based upon how these businesses are managed.
The Company has three reportable business segments for financial reporting purposes that are distinguished primarily on the basis of services offered:
| | • | | Chemical Logistics, which consists of the transportation of bulk chemicals primarily through a network of 29 independent affiliates, and equipment rental income; |
| | • | | Energy Logistics, which consists primarily of the transportation of fresh water, disposal water and oil for the energy logistics markets, primarily through 2 independent affiliates; and |
| | • | | Intermodal, which consists solely of Boasso and Greensville’s International Organization for Standardization or intermodal ISO tank container transportation and depot services supporting the international movement of bulk liquids. |
Significant Transactions and Other
On November 1, 2011, Boasso, a wholly-owned subsidiary of Quality, completed its previously announced acquisition of Greensville Transport Company (“Greensville”). The purchase price was $8.6 million, paid in cash, with an additional $0.5 million to be paid in cash, contingent upon Greensville meeting certain future operating performance criteria.
Availability under the Company’s asset-based lending facility, which was entered into on August 19, 2011, was $82.3 million at December 31, 2011, an increase of $2.7 million versus December 31, 2010. As previously reported, the facility provided enhanced borrowing base formulas, and was utilized in the fourth quarter for the Greensville acquisition and normal debt service requirements.
Operating cash flow for the year ended December 31, 2011 was $35.4 million, an increase of $14.3 million, or 67.8%, versus the same period last year. Net capital expenditures for the year ended December 31, 2011 were $21.9 million, of which $12.6 million were for energy equipment.
“We continue to generate strong free cash flow, and our capital structure improvements have provided us the platform to pursue acquisitions and invest in our energy business,” said Joe Troy, Chief Financial Officer. “We are currently investing in multiple shales within our energy business, which have attractive return profiles and allow us to diversify our customer base. We remain focused on various internal and external opportunities to deploy capital that will enhance shareholder value.”
Quality will host a conference call for investors to discuss these results on Wednesday, February 29, 2012 at 10:00 a.m. Eastern Time. The toll free dial-in number is 877-719-9791; the toll number is 719-325-4779; the passcode is 2164362. A replay of the call will be available through March 29, 2012, by dialing 888-203-1112; passcode: 2164362. A webcast of the conference call may be accessed in the Investor Relations section of Quality’s website at www.qualitydistribution.com. Copies of this earnings release and other financial information about Quality may also be accessed in the Investor Relations section of Quality’s website. The Company regularly posts or otherwise makes available information within the Investor Relations section that may be important to investors.
About Quality
Headquartered in Tampa, Florida, Quality operates the largest chemical bulk tank truck 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 for fresh water, disposal water and oil hauling, serving the gas and oil frac shale energy markets through its wholly owned subsidiaries QC Energy Resources, Inc. and QC Energy Resources, LLC. 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 and the oral public statements made by a Quality representative during the webcast announced in this press release may contain 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, on our ability to obtain desired debt financing and on the particular industries in which we operate, including 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; our substantial leverage and our ability to make required payments and restrictions contained in our debt arrangements; competition and rate fluctuations; our reliance on independent affiliates and independent owner-operators; the loss of or material reduction in the services to one or more of our major customers; our liability as a self-insurer to the extent of our deductibles as well as changing conditions and pricing in the insurance marketplace; changes in health insurance benefit regulations; changes in the future, 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; increased unionization, which could increase our operating costs or constrain operating flexibility; our ability to comply with current and future environmental regulations and the increasing costs relating to environmental compliance; potential disruption at U.S. ports of entry; diesel fuel prices and our ability to recover costs through fuel surcharges; our ability to attract and retain qualified drivers; terrorist attacks and the cost of complying with existing and future anti-terrorism security measures; our dependence on senior management; the potential loss of our ability to use net operating losses to offset future income; potential future impairment charges; the interests of our largest shareholder, which may conflict with your interests; our ability to successfully identify acquisition opportunities, consummate such acquisitions and integrate acquired businesses; our ability to execute plans to profitably operate in the energy logistics markets, our success in entering new markets; adverse weather conditions; our liability for our proportionate share of unfunded vested benefit liabilities in the event of our withdrawal from any of our multi-employer pension plans; and changes in planned or actual capital expenditures due to operating needs, changes in regulation, covenants in our debt arrangements and other expenses, including interest expenses. Readers are urged to carefully review and consider the various disclosures, 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, 2010 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 as a result of developments occurring after the date of this release.
| | |
| Contact: | | Joseph J. Troy |
| | Executive Vice President and Chief Financial Officer |
| | 800-282-2031 ext. 7195 |
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In 000’s) Except Per Share Data
Unaudited
| | | | | | | | | | | | | | | | |
| | | Three months ended
December 31, | | | Year ended
December 31, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
OPERATING REVENUES: | | | | | | | | | | | | |
Transportation | | $ | 122,728 | | | $ | 117,380 | | | $ | 517,780 | | | $ | 498,446 | |
Service revenue | | | 28,070 | | | | 27,917 | | | | 110,588 | | | | 107,474 | |
Fuel surcharge | | | 27,952 | | | | 20,468 | | | | 117,583 | | | | 80,678 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 178,750 | | | | 165,765 | | | | 745,951 | | | | 686,598 | |
| | | | | | | | | | | | | | | | |
OPERATING EXPENSES: | | | | | | | | | | | | |
Purchased transportation | | | 122,429 | | | | 114,025 | | | | 522,866 | | | | 471,792 | |
Compensation | | | 15,686 | | | | 14,584 | | | | 61,098 | | | | 57,563 | |
Fuel, supplies and maintenance | | | 14,546 | | | | 13,646 | | | | 51,102 | | | | 54,367 | |
Depreciation and amortization | | | 3,943 | | | | 3,765 | | | | 14,413 | | | | 16,004 | |
Selling and administrative | | | 5,702 | | | | 4,219 | | | | 21,647 | | | | 19,339 | |
Insurance costs | | | 2,501 | | | | 3,859 | | | | 14,042 | | | | 15,546 | |
Taxes and licenses | | | 474 | | | | 530 | | | | 2,211 | | | | 2,218 | |
Communications and utilities | | | 678 | | | | 811 | | | | 2,732 | | | | 4,119 | |
(Gain) loss on disposal of property and equipment | | | (470 | ) | | | 145 | | | | (1,318 | ) | | | 1,136 | |
Restructuring costs (credit) | | | — | | | | 3,190 | | | | (521 | ) | | | 7,779 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 165,489 | | | | 158,774 | | | | 688,272 | | | | 649,863 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating income | | | 13,261 | | | | 6,991 | | | | 57,679 | | | | 36,735 | |
| | | | |
Interest expense | | | 7,279 | | | | 10,129 | | | | 29,497 | | | | 36,170 | |
Interest income | | | (151 | ) | | | (147 | ) | | | (585 | ) | | | (622 | ) |
Write-off of debt issuance costs | | | — | | | | 7,391 | | | | 3,181 | | | | 7,391 | |
Other (income) expense | | | (36 | ) | | | 567 | | | | 214 | | | | 791 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 6,169 | | | | (10,949 | ) | | | 25,372 | | | | (6,995 | ) |
Provision for (benefit from) income taxes | | | 693 | | | | (268 | ) | | | 1,941 | | | | 411 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 5,476 | | | $ | (10,681 | ) | | $ | 23,431 | | | $ | (7,406 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
PER SHARE DATA: | | | | | | | | | | | | | | | | |
Net income (loss) per common share | | | | | | | | | | | | |
Basic | | $ | 0.23 | | | $ | (0.51 | ) | | $ | 1.01 | | | $ | (0.36 | ) |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.22 | | | $ | (0.51 | ) | | $ | 0.96 | | | $ | (0.36 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of shares | | | | | | | | | | | | |
Basic | | | 23,519 | | | | 20,918 | | | | 23,088 | | | | 20,382 | |
Diluted | | | 24,667 | | | | 20,918 | | | | 24,352 | | | | 20,382 | |
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In 000’s)
Unaudited
| | | | | | | | |
| | | December 31,
2011 | | | December 31,
2010 | |
ASSETS | | | | | | | | |
| | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 4,053 | | | $ | 1,753 | |
Accounts receivable, net | | | 90,567 | | | | 80,895 | |
Prepaid expenses | | | 7,849 | | | | 6,911 | |
Deferred tax asset | | | 4,048 | | | | 3,848 | |
Other | | | 3,858 | | | | 4,891 | |
| | | | | | | | |
Total current assets | | | 110,375 | | | | 98,298 | |
Property and equipment, net | | | 125,892 | | | | 113,419 | |
Goodwill | | | 31,344 | | | | 27,023 | |
Intangibles, net | | | 18,471 | | | | 16,924 | |
Other assets | | | 16,313 | | | | 15,671 | |
| | | | | | | | |
Total assets | | $ | 302,395 | | | $ | 271,335 | |
| | | | | | | | |
| | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ DEFICIT | | | | | | | | |
Current liabilities: | | | | | | | | |
Current maturities of indebtedness | | $ | 4,139 | | | $ | 3,991 | |
Current maturities of capital lease obligations | | | 5,261 | | | | 4,572 | |
Accounts payable | | | 7,571 | | | | 7,200 | |
Independent affiliates and independent owner-operators payable | | | 9,795 | | | | 11,059 | |
Accrued expenses | | | 25,327 | | | | 24,363 | |
Environmental liabilities | | | 3,878 | | | | 3,687 | |
Accrued loss and damage claims | | | 8,614 | | | | 8,471 | |
| | | | | | | | |
Total current liabilities | | | 64,585 | | | | 63,343 | |
| | |
Long-term indebtedness, less current maturities | | | 293,823 | | | | 300,491 | |
Capital lease obligations, less current maturities | | | 3,840 | | | | 8,278 | |
Environmental liabilities | | | 6,222 | | | | 7,255 | |
Accrued loss and damage claims | | | 9,768 | | | | 10,454 | |
Other non-current liabilities | | | 30,342 | | | | 26,060 | |
| | | | | | | | |
Total liabilities | | | 408,580 | | | | 415,881 | |
| | |
Redeemable noncontrolling interest | | | — | | | | 1,833 | |
| | |
SHAREHOLDERS’ DEFICIT | | | | | | | | |
Common stock | | | 393,859 | | | | 371,288 | |
Treasury stock | | | (1,878 | ) | | | (1,593 | ) |
Accumulated deficit | | | (278,543 | ) | | | (301,974 | ) |
Stock recapitalization | | | (189,589 | ) | | | (189,589 | ) |
Accumulated other comprehensive loss | | | (31,381 | ) | | | (26,194 | ) |
Stock purchase warrants | | | 1,347 | | | | 1,683 | |
| | | | | | | | |
Total shareholders’ deficit | | | (106,185 | ) | | | (146,379 | ) |
| | | | | | | | |
Total liabilities, redeemable noncontrolling interest and shareholders’ deficit | | $ | 302,395 | | | $ | 271,335 | |
| | | | | | | | |
QUALITY DISTRIBUTION, INC. AND SUBSIDIARIES
SEGMENT OPERATING RESULTS
(In 000’s)
Unaudited
In connection with the Company’s entry into the gas and oil frac shale energy market in fiscal 2011, a new segment for financial reporting purposes was identified during the fourth quarter of 2011, to better distinguish logistics services to the energy markets from logistics services to the chemical markets based upon how these businesses are managed. The previous logistics segment was renamed Chemical Logistics.
The Company has three reportable business segments for financial reporting purposes that are distinguished primarily on the basis of services offered:
| | • | | Chemical Logistics, which consists of the transportation of bulk chemicals primarily through a network of 29 independent affiliates, and equipment rental income; |
| | • | | Energy Logistics, which consists primarily of the transportation of fresh water, disposal water and oil for the energy logistics markets, primarily through 2 independent affiliates; and |
| | • | | Intermodal, which consists solely of Boasso and Greensville’s International Organization for Standardization or intermodal ISO tank container transportation and depot services supporting the international movement of bulk liquids. |
| | | | | | | | | | | | | | | | |
| | | Year Ended December 31, 2011 | | | | |
| | | Chemical | | | Energy | | | | | | | |
| | | Logistics | | | Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 429,769 | | | $ | 29,432 | | | $ | 58,579 | | | $ | 517,780 | |
Service revenue | | | 67,414 | | | | 1,006 | | | | 42,168 | | | | 110,588 | |
Fuel surcharge | | | 103,487 | | | | 64 | | | | 14,032 | | | | 117,583 | |
| | | | | | | | | | | | | | | | |
| | | | |
Total operating revenues | | $ | 600,670 | | | $ | 30,502 | | | $ | 114,779 | | | $ | 745,951 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 80.5 | % | | | 4.1 | % | | | 15.4 | % | | | 100.0 | % |
Segment operating income* | | $ | 48,444 | | | $ | 3,081 | | | $ | 18,728 | | | $ | 70,253 | |
Depreciation & amortization | | | 10,418 | | | | 785 | | | | 3,210 | | | | 14,413 | |
Other income | | | (1,684 | ) | | | — | | | | (155 | ) | | | (1,839 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 39,710 | | | $ | 2,296 | | | $ | 15,673 | | | $ | 57,679 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Year Ended December 31, 2010 | | | | |
| | | Chemical | | | Energy | | | | | | | |
| | | Logistics | | | Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 442,576 | | | | — | | | $ | 55,870 | | | $ | 498,446 | |
Service revenue | | | 70,470 | | | | — | | | | 37,004 | | | | 107,474 | |
Fuel surcharge | | | 72,053 | | | | — | | | | 8,625 | | | | 80,678 | |
| | | | | | | | | | | | | | | | |
| | | | |
Total operating revenues | | $ | 585,099 | | | | — | | | $ | 101,499 | | | $ | 686,598 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 85.2 | % | | | — | | | | 14.8 | % | | | 100.0 | % |
Segment operating income* | | $ | 44,791 | | | | — | | | $ | 16,863 | | | $ | 61,654 | |
Depreciation & amortization | | | 13,033 | | | | — | | | | 2,971 | | | | 16,004 | |
Other expense | | | 8,901 | | | | — | | | | 14 | | | | 8,915 | |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 22,857 | | | | — | | | $ | 13,878 | | | $ | 36,735 | |
| | | | | | | | | | | | | | | | |
Summarized segment operating results by quarter for 2011 are as follows (in thousands):
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2011 | |
| | | Chemical
Logistics | | | Energy
Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 99,146 | | | $ | 9,099 | | | $ | 14,483 | | | $ | 122,728 | |
Service revenue | | | 16,847 | | | | 623 | | | | 10,600 | | | | 28,070 | |
Fuel surcharge | | | 24,407 | | | | 64 | | | | 3,481 | | | | 27,952 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 140,400 | | | | 9,786 | | | | 28,564 | | | | 178,750 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 78.5 | % | | | 5.5 | % | | | 16.0 | % | | | 100.0 | % |
| | | | |
Segment operating income* | | | 11,249 | | | | 1,539 | | | | 3,946 | | | | 16,734 | |
Depreciation & amortization | | | 2,668 | | | | 457 | | | | 818 | | | | 3,943 | |
Other income | | | (338 | ) | | | — | | | | (132 | ) | | | (470 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 8,919 | | | $ | 1,082 | | | $ | 3,260 | | | $ | 13,261 | |
| | | | | | | | | | | | | | | | |
| |
| | | Three Months Ended September 30, 2011 | |
| | | Chemical
Logistics | | | Energy
Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 107,693 | | | $ | 18,341 | | | $ | 14,940 | | | $ | 140,974 | |
Service revenue | | | 16,981 | | | | 306 | | | | 10,851 | | | | 28,138 | |
Fuel surcharge | | | 26,428 | | | | — | | | | 3,758 | | | | 30,186 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 151,102 | | | | 18,647 | | | | 29,549 | | | | 199,298 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 75.8 | % | | | 9.4 | % | | | 14.8 | % | | | 100.0 | % |
| | | | |
Segment operating income* | | | 12,080 | | | | 1,224 | | | | 5,384 | | | | 18,688 | |
Depreciation & amortization | | | 2,518 | | | | 287 | | | | 795 | | | | 3,600 | |
Other income | | | (145 | ) | | | — | | | | (53 | ) | | | (198 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 9,707 | | | $ | 937 | | | $ | 4,642 | | | $ | 15,286 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, 2011 | |
| | | Chemical
Logistics | | | Energy
Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 112,318 | | | $ | 1,992 | | | $ | 15,087 | | | $ | 129,397 | |
Service revenue | | | 17,078 | | | | 77 | | | | 10,487 | | | | 27,642 | |
Fuel surcharge | | | 29,014 | | | | — | | | | 3,940 | | | | 32,954 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 158,410 | | | | 2,069 | | | | 29,514 | | | | 189,993 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 83.4 | % | | | 1.1 | % | | | 15.5 | % | | | 100.0 | % |
| | | | |
Segment operating income* | | | 14,333 | | | | 318 | | | | 4,735 | | | | 19,386 | |
Depreciation & amortization | | | 2,537 | | | | 41 | | | | 800 | | | | 3,378 | |
Other (income) expense | | | (954 | ) | | | — | | | | 23 | | | | (931 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 12,750 | | | $ | 277 | | | $ | 3,912 | | | $ | 16,939 | |
| | | | | | | | | | | | | | | | |
| |
| | | Three Months Ended March 31, 2011 | |
| | | Chemical
Logistics | | | Energy
Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 110,612 | | | $ | — | | | $ | 14,069 | | | $ | 124,681 | |
Service revenue | | | 16,508 | | | | — | | | | 10,230 | | | | 26,738 | |
Fuel surcharge | | | 23,638 | | | | — | | | | 2,853 | | | | 26,491 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 150,758 | | | | — | | | | 27,152 | | | | 177,910 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 84.7 | % | | | 0.0 | % | | | 15.3 | % | | | 100.0 | % |
| | | | |
Segment operating income* | | | 10,782 | | | | — | | | | 4,663 | | | | 15,445 | |
Depreciation & amortization | | | 2,695 | | | | — | | | | 797 | | | | 3,492 | |
Other (income) expense | | | (247 | ) | | | — | | | | 7 | | | | (240 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 8,334 | | | $ | — | | | $ | 3,859 | | | $ | 12,193 | |
| | | | | | | | | | | | | | | | |
Summarized segment operating results for the three months ended December 31, 2010 are as follows (in thousands):
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2010 | |
| | | Chemical
Logistics | | | Energy
Logistics | | | Intermodal | | | Total | |
Operating Revenues: | | | | | | | | | | | | | | | | |
Transportation | | $ | 104,253 | | | $ | — | | | $ | 13,127 | | | $ | 117,380 | |
Service revenue | | | 18,137 | | | | — | | | | 9,780 | | | | 27,917 | |
Fuel surcharge | | | 18,361 | | | | — | | | | 2,107 | | | | 20,468 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 140,751 | | | | — | | | | 25,014 | | | | 165,765 | |
| | | | | | | | | | | | | | | | |
| | | | |
Segment revenue % of total revenue | | | 84.9 | % | | | 0.0 | % | | | 15.1 | % | | | 100.0 | % |
| | | | |
Segment operating income* | | | 10,336 | | | | — | | | | 3,755 | | | | 14,091 | |
Depreciation & amortization | | | 2,970 | | | | — | | | | 795 | | | | 3,765 | |
Other expense (income) | | | 3,342 | | | | — | | | | (7 | ) | | | 3,335 | |
| | | | | | | | | | | | | | | | |
Operating income | | $ | 4,024 | | | $ | — | | | $ | 2,967 | | | $ | 6,991 | |
| | | | | | | | | | | | | | | | |
| * | Segment operating income excludes Depreciation and amortization, (Gain) loss on disposal of property and equipment, and Restructuring costs (credit) |
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME, EBITDA AND ADJUSTED EBITDA AND RECONCILIATION OF NET INCOME PER SHARE TO ADJUSTED NET INCOME PER SHARE
For the Three Months and the Year Ended December 31, 2011 and 2010
(In 000’s)
Unaudited
Adjusted Net Income and 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 and 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 Adjusted Net Income, management uses a 39% tax rate for calculating the provision for income taxes to normalize Quality’s tax rate to that of competitors, and to compare Quality’s reporting periods with different effective tax rates. 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 restructuring charges (credits) related to a plan of restructure which began in the second quarter of 2008 and concluded in the fourth quarter of 2010, write-off of debt issuance costs, write-off unconsummated stock offering costs, and excess interest from debt refinancing.
EBITDA is a component of the measure used by Quality’s management to facilitate internal comparisons to competitors’ results and the bulk transportation, logistics and intermodal industries in general. 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 is adjusted for provision for (benefit from) income tax, depreciation and amortization and net interest expense. To calculate Adjusted EBITDA, we calculate EBITDA from Net Income, which is then further adjusted for significant items that are not part of regular operating activities, including the restructuring charges (credits) related to a plan of restructure which began in the second quarter of 2008 and concluded in 2010, write-off of debt issuance costs, write-off of unconsummated stock offering costs, 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
December 31, | | | Year ended
December 31, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | |
Net income (loss) | | $ | 5,476 | | | $ | (10,681 | ) | | $ | 23,431 | | | $ | (7,406 | ) |
| | | | |
Net income (loss) per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.23 | | | $ | (0.51 | ) | | $ | 1.01 | | | $ | (0.36 | ) |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.22 | | | $ | (0.51 | ) | | $ | 0.96 | | | $ | (0.36 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of shares: | | | | | | | | | | | | | | | | |
Basic | | | 23,519 | | | | 20,918 | | | | 23,088 | | | | 20,382 | |
Diluted | | | 24,667 | | | | 20,918 | | | | 24,352 | | | | 20,382 | |
| | | | |
Reconciliation: | | | | | | | | | | | | | | | | |
| | | | |
Net income (loss) | | $ | 5,476 | | | $ | (10,681 | ) | | $ | 23,431 | | | $ | (7,406 | ) |
| | | | |
Adjustments to net income (loss): | | | | | | | | | | | | | | | | |
Provision for (benefit from) income taxes | | | 693 | | | | (268 | ) | | | 1,941 | | | | 411 | |
Write-off of debt issuance costs | | | — | | | | 7,391 | | | | 3,181 | | | | 7,391 | |
Restructuring costs (credit) | | | — | | | | 3,190 | | | | (521 | ) | | | 7,779 | |
Costs associated with unconsummated stock offering | | | — | | | | 735 | | | | — | | | | 735 | |
Excess interest from debt refinancing | | | — | | | | 1,728 | | | | — | | | | 1,728 | |
| | | | | | | | | | | | | | | | |
Adjusted income before income taxes | | | 6,169 | | | | 2,095 | | | | 28,032 | | | | 10,638 | |
Provision for income taxes at 39% | | | 2,406 | | | | 817 | | | | 10,932 | | | | 4,149 | |
| | | | | | | | | | | | | | | | |
Adjusted net income | | $ | 3,763 | | | $ | 1,278 | | | $ | 17,100 | | | $ | 6,489 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted net income per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.16 | | | $ | 0.06 | | | $ | 0.74 | | | $ | 0.32 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.15 | | | $ | 0.06 | | | $ | 0.70 | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | |
Weighted average number of shares: | | | | | | | | | | | | | | | | |
Basic | | | 23,519 | | | | 20,918 | | | | 23,088 | | | | 20,382 | |
Diluted | | | 24,667 | | | | 22,020 | | | | 24,352 | | | | 21,684 | |
| | | | | | | | | | | | | | | | |
| EBITDA and Adjusted EBITDA: | | Three months ended
December 31, | | | Year ended
December 31, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | |
Net income (loss) | | $ | 5,476 | | | $ | (10,681 | ) | | $ | 23,431 | | | $ | (7,406 | ) |
| | | | |
Adjustments to net income (loss): | | | | | | | | | | | | | | | | |
Provision for (benefit from) income taxes | | | 693 | | | | (268 | ) | | | 1,941 | | | | 411 | |
Depreciation and amortization | | | 3,943 | | | | 3,765 | | | | 14,413 | | | | 16,004 | |
Interest expense, net | | | 7,128 | | | | 9,982 | | | | 28,912 | | | | 35,548 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | 17,240 | | | | 2,798 | | | | 68,697 | | | | 44,557 | |
| | | | |
Write-off of debt issuance costs | | | — | | | | 7,391 | | | | 3,181 | | | | 7,391 | |
Restructuring costs (credit) | | | — | | | | 3,190 | | | | (521 | ) | | | 7,779 | |
Costs associated with unconsummated stock offering | | | — | | | | 735 | | | | — | | | | 735 | |
Non-cash stock-based compensation | | | 669 | | | | 568 | | | | 2,874 | | | | 2,273 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 17,909 | | | $ | 14,682 | | | $ | 74,231 | | | $ | 62,735 | |
| | | | | | | | | | | | | | | | |
