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Business Observer Thursday, Mar. 10, 2011 8 years ago

Quality's business improving

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The Tampa-based truck network operator recovers from a challenging 2009.

TAMPA — Rarely does a $7.4 million net loss count as a significant improvement. But after losing $180.5 million in 2009, Quality Distribution Inc. (symbol: QLTY) appears to have benefitted from changes to its business model in 2010.

Things look even better a bit farther up the financial statement: the Tampa-based tank truck network generated a $36.7 million operating income in 2010, compared to a $115.2 million operating loss in 2009. And revenues grew 11% during the year, to $686.6 million.

But the firm's long-term indebtedness played a large part in preventing Quality from being profitable. The company spent nearly all of its operating gains on $36.2 million in interest payments over the course of the year.

A preponderance of one-time expenses in 2010 bode well for Quality's chances at being profitable in 2011. For example, Quality spent $9.1 million on debt refinancing in the fourth quarter, and another $7.8 million on various restructuring costs over the course of the year. Not having to spend that money on those items again next year will help move the firm towards net gains.

And as the company's strong operating profit suggests, Quality's core business is moving forward. “Demand for our services continues to show improvement and we are realizing the earnings power of our asset-light business model," argued Gary Enzor, the firm's CEO, in a prepared statement.

The value of Quality's stock was down slightly in early Thursday trading, to a per-share price of roughly $9.70. But as a whole, the past year has been a boost to the company's value: share values are up roughly 83% from a year ago.

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