Quality Distribution (QLTY) Prelim. Q4 Results Outpace Expectations

Quality Distribution (NASDAQ: QLTY) announced the following estimated preliminary fourth quarter 2014 results:

• For the three-month period ended December 31, 2014, Quality expects total revenue to be approximately $243 million, operating income to be within the range of $10.4 million to $10.8 million, adjusted EBITDA to be within the range of $20.4 million to $20.8 million, and adjusted net income per diluted share to be within the range of $0.17 to $0.18; (The Street sees Q4 revs of $241.2 million and EPS of $0.16.)
• Estimated adjusted EBITDA and estimated adjusted net income per diluted share for the three-month period ended December 31, 2014 primarily excludes cash and non-cash pre-tax reorganization costs within the Energy Logistics business of approximately $3.8 million. Reconciliations of estimated net income to estimated adjusted net income and estimated operating income to estimated adjusted EBITDA are included in the financial exhibits below;
• For the three-month period ended December 31, 2014, Quality expects revenue from its Chemical Logistics business to be approximately $164 million, revenue from its Energy Logistics business to be approximately $41 million and revenue from its Intermodal business to be approximately $38 million;
• Total debt at December 31, 2014 was $351 million. Availability under the ABL Facility was approximately $62 million at December 31, 2014 and the outstanding borrowings under the ABL Facility were approximately $151 million. At December 31, 2014, the Company's total net debt to adjusted EBITDA ratio is expected to be approximately 4.1x; and
• For the three-month period ended December 31, 2014, gross capital expenditures were $10.5 million and sales of equipment were $13.2 million. For fiscal year 2014, capital expenditures, net of proceeds from asset sales, were $6.0 million.

"We expect our fourth quarter results to be in line with the expectations we shared during our third quarter conference call," stated Gary Enzor, Chairman and Chief Executive Officer. "Revenues were strong in the fourth quarter, and we expect both adjusted operating income and adjusted EBITDA, on a consolidated basis, to be up versus the prior year quarter. Our Chemical Logistics and Intermodal businesses delivered solid fourth quarter results and we remain optimistic about these businesses moving forward."

"At Energy Logistics, the decline in commodity prices within the frac shale industry has created some uncertainty in our business, although we have not seen a significant decline in volumes," Mr. Enzor continued. "Our team is focusing on controllable areas such as improving customer service levels and asset efficiency, as well as reducing capital outlays and overhead costs."

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 the fiscal year 2015, the Company expects adjusted net income per diluted share to be in the range of $0.77 to $0.87. These estimates assume a 39% tax rate, and exclude any impacts from non-operating items and costs related to any potential debt refinancing activity. The Company expects its free cash flow to be in the range of $50 to $55 million.

This information is being provided in anticipation of the Company's participation in the Stifel Nicolaus Transportation and Logistics Conference and the BB&T Annual Transportation Services Conference on February 10-11, 2015.

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