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Class I railroad CSX Corp. is acquiring bulk liquid carrier Quality Carriers Inc. in a deal that expands the railroad’s footprint in the United States, Canada and Mexico.
Quality Carriers, one of North America’s largest truck transporters of bulk liquid chemicals, has an estimated 2,500 drivers and a network of more than 100 company-owned and affiliated terminals and other facilities in the U.S., Canada and Mexico.
“The acquisition of Quality Carriers further demonstrates our commitment to the strategic growth of our business and deepening our relationships with customers,” CSX CEO James Foote said in a statement announcing the purchase. “Our new partnership will provide chemical producers and shippers with a first-of-its-kind multimodal solution that capitalizes on the powerful synergies between Quality Carriers’ truck transportation fleet and our cost-advantaged rail network. We believe that this new capability will create meaningful long-term value for our company.”
$CSX has reached an agreement to acquire @QualityCarriers Inc., the largest provider of bulk liquid chemical truck transportation in North America. This acquisition will enable CSX to further expand the comprehensive supply chain solutions we provide to our customers.— CSX (@CSX) May 12, 2021
Terms of the deal Jacksonville, Fla.-based CSX reached for the 108-year-old Tampa-based company were not disclosed, but Foote said Quality’s existing management team, led by President Randy Strutz, will remain.
“Quality Carriers is excited to become a new and integral part of CSX, which has unparalleled knowledge, experience and presence in the rail-based bulk chemicals transportation space,” Strutz said. “Together, we will be exceptionally positioned to provide our customers — many of which have existing relationships with both CSX and Quality Carriers — with a unique and seamless rail-to-highway offering. We look forward to partnering with CSX and to create a new level of efficiency for bulk chemicals transportation.”
Quality Distribution, the parent company of Quality Carriers, ranks No. 38 on the Transport Topics list of Top 100 For-Hire-Carriers in North America and it is No. 2 after Kenan Advantage Group on the list of Top Tank Truck/Bulk Carriers.
The transaction is expected to close in the third quarter of 2021, subject to regulatory review and regular closing conditions. Goldman Sachs is acting as a financial adviser.
Quality’s existing management team, led by President Randy Strutz, will remain. (Quality Distribution Inc.)
CSX provides intermodal and rail-to-truck services for transport of energy, industrial, construction, agricultural and consumer products. Its network is linked to major metropolitan areas in the Eastern U.S. and has direct ties to more than 230 short-line railroads and over 70 ocean, river and lake ports near major population centers and farming communities.
In its first-quarter financial report, CSX posted lower income and revenue compared with 2020. Officials on April 20 said February’s extreme cold weather and continuing supply chain disruptions caused by the COVID-19 pandemic impacted the company’s financial bottom line.
The railroad’s Q1 net income was down 8% to $706 million, or 93 cents per share, compared with $770 million, or $1, the year before. Revenue dropped 1% to $2.81 billion from $2.85 billion a year ago.
The company’s price per share figure missed Wall Street expectations. According to the Zacks consensus estimate, analysts were expecting 95 cents per share. However, the company’s revenue estimates beat Wall Street expectations of $2.79 billion.
On an earnings conference call last month with reporters and analysts, CEO Foote said as the economy improves CSX was positioned well for future growth.
“Any way you look at the data, we have dramatically transformed how CSX operates, which has created the capacity to absorb significant growth for years to come,” he said. “We remain focused on driving the network back to record performance levels as well as realizing the incremental efficiency benefits this will provide. The opportunities identified during the early stages of the pandemic last year continued to drive sustained efficiency improvements and the more streamlined network is well positioned for growth.”
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