Quality Distribution reports lower 4Q income, revenue

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Quality Distribution on Monday, Feb. 26, posted fourth-quarter net income of $6.17 million, compared to $6.19 million during the same period last year. The results for the latest quarter included a non-cash tax benefit of $6.7 million resulting from an additional release of the company’s deferred tax valuation allowance. Operating income for the quarter declined to $9.94 million from $12.61 million in the prior year. Quarterly revenues declined 2.4 percent to $171.1 million from $175.3 million in the previous year.

Total revenue for the year was $730.2 million, a 7.7 percent increase over the $678.1 million of revenue recorded last year, representing the fourth consecutive year-over-year increase. Revenue, excluding fuel surcharges, increased 4.9 percent to $643.9 million in 2006 as compared to $613.8 million last year. Transportation revenues were $577.2 million, a 5.6 percent increase over the prior year, primarily due to rate increases and an increase in the number of miles driven. Net income for 2006 was $54.2 million, compared to $11.9 million for the same period last year.

“While we expected that our fourth-quarter results for this year would be below last year’s hurricane- influenced record levels, we did not anticipate the extent to which our load counts would be down,” sais Timothy Page, chief financial officer of Tampa, Fla.-based Quality Distribution. “In the fourth quarter last year, both volume and rate were positively impacted by the aftermath of hurricanes Katrina and Wilma due to rail and traffic diversions and from supply disruptions in the Gulf region. Margins suffered not only from the reduced level of activity, but also from the quality of the freight that was available. Our fourth-quarter results this year contain $4.2 million of gains on sales of properties, and were negatively impacted by $2.1 million of costs associated with environmental remediation projects and $1.0 million for expenses related to the filing of a shelf registration statement and expenses for potentially issuing new shares.”

Demand has shown signs of recovery in the past few weeks, but ran at levels below company expectations for the first six weeks of 2007, Page said. “We are focused on a number of initiatives to drive additional demand, improve productivity, reduce costs and continue to pay down debt,” he said.