Quality Distribution expecting to grow revenue, delever in '08; posts $15.5 million pre-tax quarterly loss

By Jennifer Lanning Drey

Portland, Ore., Feb. 13 - Quality Distribution Inc. believes cash flow improvements generated through expected revenue growth will put the company in a position to lower its leverage in 2008, Tim Page, the company's chief financial officer, said Wednesday during a presentation at the BB&T Capital Markets 2008 Transportation Conference in Coral Gables, Fla.

However, most of the presentation was devoted to discussing the company's preliminary fourth-quarter and year-end results, which chief executive officer Gary Enzor categorized as "disappointing from an operating perspective."

On top of a weakening economic environment, Page said Quality Distribution's fourth-quarter results were impacted by a $1.2 million non-cash charge related to the recent refinancing of the company's senior credit facility, a $1.6 million charge related to unconsummated acquisition and refinancing activities during the year, an $800,000 charge for bridge commitment fees related to the company's acquisition of Boasso America Corp. and $4.8 million of incremental charges related to several large casualty claims settled at the end of the quarter.

Conversely, in the fourth quarter of 2006, several unusual events had a net positive impact of $4.7 million in pre-tax income.

The company expects to record a pre-tax loss in the fourth quarter of approximately $15.5 million, compared with pre-tax income of $1.2 million for the same period of last year. For the full-year 2007, Quality Distribution expects a pre-tax loss of approximately $9.7 million, compared with pre-tax income of $18.2 million for the full-year 2006.

In 2008, the company expects revenues to increase by 15% to 20% as a result of its acquisitions of Boasso and Brite Clean, a few small tuck-in acquisitions that closed in January, organic trucking load growth and price increases. The increased revenue should lead to EBITDA and cash flow growth, Page said.

Additionally, the company believes it may discover additional opportunities for accretive tuck-in acquisitions in 2008, he said.

Quality Distribution currently has more than $50 million in availability under its senior facility, according to a company news release.

Based in Tampa, Fla., Quality Distribution is a freight company.

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