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Quality Distribution Inc. Reports Operating Results (10-Q)

November 04, 2011 | About:
10qk

10qk

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Quality Distribution Inc. (QLTY) filed Quarterly Report for the period ended 2011-09-30.

Quality Distribution Inc. has a market cap of $286.2 million; its shares were traded at around $12.01 with a P/E ratio of 23.6 and P/S ratio of 0.4.

Highlight of Business Operations:

Purchased transportation expense increased $15.8 million, or 12.5%, due primarily to an increase of $17.1 million in costs related to servicing the energy market, offset by a decrease of $2.6 million in costs related to servicing the bulk chemical markets resulting from a reduction in revenue. Total purchased transportation as a percentage of transportation revenue and fuel surcharge revenue increased to 83.0% for the current quarter versus 82.1% for the prior-year quarter. Our independent affiliates generated 93.1% of our transportation revenue and fuel surcharge revenue for the three months ended September 30, 2011 compared to 94.3% for the comparable prior-year period. We pay our independent affiliates a greater percentage of transportation revenues generated by them than is paid to independent owner-operators, so our purchased transportation costs will change as revenues generated by independent affiliates change as a percentage of total transportation revenue. During the quarters ended September 30, 2011 and 2010 for bulk chemical transport, we paid our independent affiliates approximately 85% of transportation revenue while we typically paid independent owner-operators approximately 65% of transportation revenue. Hauling for the energy market is performed by independent affiliates and other independent third-party carriers. In this market, we typically pay between 85% to 95% of the transportation revenue depending upon whether the independent affiliate or a third-party carrier does the hauling.

For the nine months ended September 30, 2011, total revenues were $567.2 million, an increase of $46.4 million, or 8.9%, from revenues of $520.8 million for the same period in 2010. Transportation revenue increased $14.0 million, or 3.7%, primarily due to an increase in new energy market revenue of $20.3 million generated from our delivery of fresh and disposal water in the frac shale energy market offset by a decrease in linehaul revenue of $6.3 million due to a decrease in bulk chemical shipments. We expect transportation services to the frac shale energy market to be a significant contributor to our revenue growth. We believe that our bulk chemical volume during the year ended September 30, 2011 was adversely affected by a high level of driver turnover primarily driven by our implementation of EOBRs in our fleet. We expect to install EOBRs in substantially all of our fleet by the end of 2011 in order to improve efficiency and proactively address regulatory requirements that we expect in the future. This could adversely impact our volumes for the remainder of 2011.

Purchased transportation increased $42.7 million, or 11.9%, due to an increase of $19.3 million in costs related to servicing the bulk chemical markets resulting from an increase in independent affiliates and linehaul revenue, and an $18.8 million increase for costs related to servicing the energy market. Total purchased transportation as a percentage of transportation revenue and fuel surcharge revenue increased to 82.6% for the current nine months versus 81.1% for the prior-year nine months due primarily to the conversion of certain company-operated terminals to independent affiliate terminals. Our independent affiliates generated 93.9% of our transportation revenue and fuel surcharge revenue for the nine months ended September 30, 2011 compared to 93.5% for the comparable prior-year period. Hauling for the energy market is performed by independent affiliates and other independent third-party carriers. In this market, we typically pay between 85% to 95% of the transportation revenue depending upon whether the independent affiliate or a third-party carrier does the hauling.

Logistics revenues increased $14.9 million, or 9.6%, for the quarter ended September 30, 2011 compared to the same period for 2010 due to an increase of $8.3 million in transportation revenue of which $18.3 million resulted from an increase in revenue from our entry into the energy market, partially offset by a decrease of $10.0 million in revenue from the bulk chemical market. In addition, we had an increase of $7.7 million of fuel surcharge revenue which was partially offset by a decrease of $1.1 million in service revenue.

Logistics revenues increased $36.6 million, or 8.2%, for the nine months ended September 30, 2011 compared to the same period for 2010 due to an increase of $25.4 million of fuel surcharge revenue. Transportation revenue increased by $12.6 million of which $20.3 million resulted from an increase in revenue from our entry into the energy market, partially offset by a decrease of $7.7 million in revenue from the bulk chemical business. In addition, service revenue decreased by $1.4 million.

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