Quality Distribution, Inc. (QLTY)
Q1 2010 Earnings Call Transcript
May 6, 2010 10:00 am ET
Joan Rodgers – Director, Financial Reporting & IR
Steve Attwood – CFO
Gary Enzor – CEO
Alex Brand – Stephens
Mickey Schleien – Ladenburg Thalmann
David Campbell – Thompson, Davis
Jeff Kauffman – Sterne Agee
Kevin Sterling – BB&T Capital Markets
John Larkin – Stifel Nicolaus
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Good day, everyone. Welcome to the Quality Distribution first quarter 2010 conference call. Today’s call is being recorded. For opening remarks and introductions I would like to turn the conference over to Ms. Joan Rodgers. Please go ahead, ma’am.
Thank you, Melanie, and good morning, everyone. We are delighted to have you join us today for our first quarter 2010 earnings call. Our speakers today are Gary Enzor, our CEO and Steve Attwood, our CFO.
Before I turn the call over to Steve, I’d like to caution all participants that comments made by Quality’s employees during this conference call may contain forward-looking statements. Actual results could differ materially from those projected or expected in these forward-looking statements. Listeners are urged to carefully review and consider the various disclosures made by the company in this conference call and the risk factors disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2009 as well as other reports filed with the Securities and Exchange Commission.
Copies of the Company’s annual report on Form 10-K and other SEC reports are available on our Web site at
and on the SEC’s Web site. The company disclaims any obligation to update any forward-looking statements after this conference call. At this time all participants have been placed in listen-only mode. The forum will be open for questions following the presentation.
With that I’d now like to turn the call over to our CFO, Steve Attwood.
Thanks, Joan. Good morning, everyone. Thank you for joining us today. I’m pleased to provide the following overview of our first quarter results. Q1 revenue excluding fuel surcharge increased 3.7% over the same period last year even though 2009 results included revenues from our QSI wash business which was sold later in the year. More importantly, transportation revenues were 7.1% higher year-over-year and increased steadily during the quarter.
We achieved double-digit volume increases with many of our national accounts as demand increased in every geographical region and were particularly strong with freight originating out of the Gulf of Mexico.
GAAP earnings for the quarter of $0.04 per diluted share included pretax restructuring charges of $1.1 million, after adjusting for restructuring charges and normalizing tax rates the Company had $0.04 of adjusted earnings compared to an adjusted loss of $0.01 in Q1 of 2009. It’s worth noting although Q1 is historically our toughest quarter on an adjusted basis our Q1 earnings this year are more than half of what we earn for the entire year of 2009.
Our cash position continues to improve as well. We currently have $54.1 million of availability under our ABL facility, an increase of $9.4 million during the quarter and an $11.1 million since the end of Q1 2009. The Company is beginning to realize the earnings potential and cash flow benefits of our new business model.
As previously communicated now that our debt has been restructured and we’ve affiliated trucking operations our focus is on growing our business, both organically and through acquisition.
In April, Randy Strutz joined our team as Senior Vice President of Sales. Randy is aligning his team with our affiliates to jointly pursue new business opportunities.
On May 1
we announced the addition of F.T. Silfies, a dry bulk carrier with annual revenues were approximately $20 million to our affiliate network. We will continue to pursue acquisition opportunities to have the potential to help us grow profitably.
That concludes my prepared remarks. I’ll now turn the call over to Gary.
Thanks, Steve. This is a very exciting time for our Company. In the past two years, we’ve taken several major actions to strengthen our Company and better position us for future success.
We’ve changed our business model by affiliating trucking operations with partners who run independent businesses with average revenues in excess of 20 million. Our affiliates are strong operators who build excellent relationships with their customers and drivers. They also share our interest and profitably growing our business.
We dramatically reduced our cost infrastructure to by implementing close to 50 million of cost savings initiatives. Corporate headcount excluding Boasso has been reduced 35% since the beginning of 2008. Contracts for IT services, employee benefits, and fuel purchases have been renegotiated. We’re a much leaner company than we were two years ago.
We restructured our debt removing any question about our financial viability while moving all major maturities out to mid-2013. As earnings improve so will our ability to strengthen our balance sheet by reducing our leverage.
We continue to focus on safety. It makes good business sense. The regulatory agencies that govern our industry are pushing every carrier in that direction and is the right thing to do.
Our insurance and claims expense for Q1 was 2.1% of revenue, well below the industry average of other public carriers.
As I said in our earnings release, it’s great to be able to report year-over-year revenue growth. None of our competitors have the ability to bring additional capacity to the market to the extent that we do. Our pipeline of opportunities with both new and existing accounts continues to be strong.