Quality Distribution posts higher 3Q revenue, lower profit

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Quality Distribution on Wednesday, Nov. 7, reported the results for its third quarter ended Sept. 30. Total revenue for the quarter was $192.2 million, a 1.1 percent increase over third-quarter revenues of $190.0 million last year. Total revenue for the nine months ended Sept. 30 increased 1.1 percent to $565.0 million from $559.1 million last year.

Revenue excluding fuel surcharge was $167.6 million for the quarter, a 1.8 percent increase over $164.7 million last year. For the nine-month period ended Sept. 30, revenue excluding fuel surcharge was $497.5 million, an increase of 1.2 percent over the same period last year.

Income before taxes decreased from $5.9 million for the quarter ended Sept. 30, 2006, to $3.3 million for the same period this year. The company said the decrease in pre-tax income is related primarily to credits to its insurance expense and selling and administrative expenses in 2006 that did not occur in the current year.

Net income for the quarter ended Sept. 30 was $1.4 million, as compared with net income of $38.0 million in the third quarter of last year. Net income for the nine months ended Sept. 30 was $3.5 million as compared with net income of $48.0 million last year. The company said net income for both the third quarter and the nine-month period for last year were influenced significantly by the recording, as part of a provision for income taxes, of a net non-cash benefit of $32.1 million resulting from the release of its deferred tax valuation allowance.

The company expects to close its acquisition of Boasso America Corp. in the fourth quarter. Boasso, headquartered in Chalmette, La., is a provider of ISO tank container and depot services. For its most recent fiscal year ended March 31, Boasso had revenues in excess of $70 million. Quality Distribution expects the acquisition to be accretive to earnings immediately.

“Despite today’s tough economic environment, we grew revenues excluding fuel surcharge by 1.8 percent and reduced our net debt by $8.1 million,” said Gary Enzor, president and chief executive officer of Tampa, Fla.-based Quality Distribution. “The Brite Clean acquisition has been a catalyst for profit improvement in our tank wash business, and the Boasso acquisition, which we plan to close this quarter, will be an excellent growth vehicle during 2008.

“Although we are disappointed with our earnings level during the quarter, we believe we enter 2008 with a much stronger company,” Enzor said. “Over the last 24 months, through acquisitions and the conversion of a number of affiliates to company-controlled terminals, we have transformed our model to one where the majority of our revenue will be directly controlled by the company. We believe this focus on more network control will help us both reduce deadhead miles and increase driver productivity, which will ultimately translate into improved profitability.”