TransForce Inc. Announces 2009 Fourth Quarter and Annual Results

    
    - Annual revenues of $1.8 billion, down 18%
    - Annual costs down 18%
    - EBITDA margin maintained above 12%
    - Total debt reduced by $100 million
    

MONTREAL, Feb. 25 /CNW Telbec/ - TransForce Inc. ("TransForce" or "the Company") (TSX: TFI - T), the leader in the Canadian transportation and logistics industry, today announced its results for the fourth quarter and full year, ended December 31, 2009.

"Continuing weak economic activity affected revenues in the fourth quarter. Our success in reducing costs maintained EBITDA margin at 12.3%," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc. "We began our cost-reduction effort in 2007 in anticipation of the general economic slowdown and have remained focused on our controls since then. The economy is now expected to recover over the coming months and TransForce is well-positioned to turn higher activity into enhanced results for our shareholders."

Fourth Quarter Results

For the three months ended December 31, 2009, TransForce reported total revenues of $488.6 million, a 10.3% decrease from $544.5 million in the same period of 2008. Revenue excluding fuel surcharge decreased 6.8% to $452.4 million. The year-over-year decrease in revenue is mainly the result of the continuing low economic activity and its effect on volume of shipments.

TransForce's continued focus on efficiency reduced operating expenses and fixed costs, general and administrative expenses by 9.1% to $427.7 million in the quarter from $470.7 million a year earlier.

In the fourth quarter, EBITDA (earnings before interest, taxes, depreciation and amortization and equivalent to operating income on TransForce's financial statements) decreased 18.4% to $60.3 million from $73.8 million in the same quarter of 2008. EBITDA as a percentage of revenue ("EBITDA margin") was 12.3% in the quarter, down somewhat from 13.6% in the fourth quarter of 2008 but consistent with previous quarters in 2009.

Interest expense decreased to $7.8 million from $11.3 million a year earlier, primarily as a result of TransForce's continuing significant reduction of debt as well as lower interest rates.

At December 31, 2009, the Company recognized a goodwill impairment of $45.0 million, or $0.47 per share, ("non-recurring charge") in the oilfield services group of the Specialized Services segment. A write-down of goodwill is a non-cash charge on the consolidated statement of income and has no effect on TransForce's cash flows or consolidated EBITDA.

TransForce generated an income before income taxes and the non-recurring charge of $21.5 million in the fourth quarter compared with $18.5 million in the same quarter of 2008.

Net income before the non-recurring charge in the quarter was $17.8 million, or $0.19 per share, compared with $14.8 million, or $0.17 per share, in the same quarter of 2008. The Company's net loss for the quarter was $27.2 million, or $0.29 per share.

Cash flow from operations, before net change in non-cash operating working capital, was $50.7 million, an increase from $48.0 million in the fourth quarter of 2008.

TransForce paid out a dividend of $0.10 per share during the quarter.

"While some of our businesses are growing, such as the Matrec waste management operation, and others stayed stable, such as ICS and Canpar in the Package and Courier segment, for most of the Company, volumes remain low in every part of the country. Decreased demand for Truckload services tended to be less important than previous quarter, while the profitability decreased in the higher-cost Less-Than-Truckload segment due to the overcapacity in this industry resulting in price pressures, particularly in Western Canada where revenue in the oilfield segment has been hard hit as well. We have no control over volume, but we have responded well in adjusting our costs promptly. " said Mr. Bédard. "We have seen some signs of renewed activity but, overall, we expect the operating environment in 2010 to be only slightly better than 2009 with increases in the latter months. We are committed to our disciplined approach to managing costs now and when the economy recovers."

Completed Acquisition of ATS Andlauer Retail Solutions Division

In November, TransForce announced it had completed its previously announced agreement to acquire the Retail Solutions Division of ATS Andlauer Transportation Services Limited Partnership. The acquired division generates approximately $120 million in annual revenues and employs a total of 447 employees as well as 165 owner-operators. Its results are included in the Package and Courier segment.

Annual Results

For the full year ended December 31, 2009, total revenue decreased 18% to $1.8 billion from $2.3 billion in 2008. Revenue excluding fuel surcharge decreased 13% to $1.7 billion from $2.0 billion in the previous year.

TransForce's reduced its operating expenses and fixed costs, general and administrative expenses ("costs") by the same percentage as its revenue declined. The Company cut these costs by 18% to $1.6 billion for 2009 from $2.0 billion a year earlier.

EBITDA for 2009 was $226.5 million, a 19% decrease from $280.0 million in 2008. The Company's EBITDA margin for the year was virtually unchanged from the previous year at 12.3%.

Interest expense fell to $35.0 million from more than $46.6 million in 2008. Earnings before income taxes and the non-recurring charge were $77.3 million for 2009, compared with $99.2 million in the previous year.

Before the non-recurring charge taken in the fourth quarter, net income was $55.9 million or $0.62 per share for 2009 compared with $79.7 million, or $0.92 per share, a year earlier. The Company's net income for 2009 was $10.9 million, or $0.12 per share.

Cash flow from operations, before net change in non-cash operating working capital, was $191.2 million compared with $218.7 million in the prior year.

The Company paid out dividends of $0.40 per share in 2009.

TransForce continued to pay down debt during 2009, reducing it by approximately $100 million and bringing debt as percentage of total capitalization to 57% as of December 31, 2009 from more than 61% at the end of the previous year.

"The appreciable cash flow generated in 2009 has been judiciously used for the equipment, the dividends and our long-term debt. The aggressive debt reduction not only gives TransForce greater financial flexibility for the future, we believe it adds value for shareholders today - the equivalent of $1.00 per share in increased enterprise value," said Mr. Bédard. "Over the year, our management team, supported by our people, has done an outstanding job being consistent and using their own experience with our systems to control costs and maintain margins during this period of low volumes and I thank them for their dedicated efforts"

Fourth Quarter and Annual Results Management Conference Call

TransForce's Chairman, President and Chief Executive Officer Alain Bédard will host a conference call for investors to discuss the results of the fourth quarter and full year of 2009 on Thursday, February 25, 2010, at 9:00 a.m. Eastern Time.

To participate in the conference call, investors are invited to call 1-888-222-4213. A recording of the call will be available until midnight March 4, 2010, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21456986.

Financial Statements

The financial statements for the periods ended December 31, 2009 and 2008 included below are an integral part of this news release.

Profile

TransForce Inc. (www.transforce.ca) is the leader in Canada's transportation and logistics industry. Headquartered in Montreal, Quebec, TransForce creates value for shareholders through managing and investing in a growing network of wholly-owned, operating subsidiaries. TransForce provides a comprehensive and unique combination of capabilities, resources and geographical coverage in both domestic and trans-border markets. Its companies currently operate in four well-defined business segments:

    
    - Less-Than-Truckload;
    - Package and Courier;
    - Specialized Services, which includes its ancillary transportation
      services such as logistics, fleet management & personnel services;
      oilfield & oilsand services, and waste management;
    - Truckload, which includes specialized truckload and dedicated services.
    

TransForce Inc. shares are listed on the Toronto Stock Exchange under the symbol TFI.

Forward-Looking Statements

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of TransForce. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for TransForce's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

For further details, please see the Financial Statements below. The Financial Statements and Management's Discussion and Analysis can also be found on SEDAR at www.sedar.com and on the Company's website www.transforce.ca.

    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                                                   As at              As at
                                       December 31, 2009  December 31, 2008
    (in thousands of dollars)                   (audited)          (audited)
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Accounts receivable                        262,219            302,801
       Inventories                                 9,116             11,296
      Prepaid expenses                             9,480             14,285
      Income tax receivable                          751                519
      Future income taxes                              -              1,666
    -------------------------------------------------------------------------
                                                 281,566            330,567
    Property, plant and equipment                667,315            715,261
    Goodwill                                     418,951            435,851
    Intangible assets                            146,946            132,124
    Other assets                                   6,774              6,258
    Future income taxes                            4,104              1,846
    -------------------------------------------------------------------------
                                               1,525,656          1,621,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Bank indebtedness                            6,826             12,517
      Accounts payable and accrued liabilities   187,934            218,763
      Dividends payable                            9,525              9,250
      Current portion of long-term debt          403,763             69,028
    -------------------------------------------------------------------------
                                                 608,048            309,558
    Long-term debt                               304,166            738,986
    Asset retirement obligations                  10,794              8,204
    Future income taxes                           69,233             55,309

    Shareholders' equity
      Share capital                              567,551            519,404
      Contributed surplus                            900                  -
      Deficit                                    (35,036)            (9,554)
    -------------------------------------------------------------------------
                                                 533,415            509,850
    -------------------------------------------------------------------------
                                               1,525,656          1,621,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    (Three months: unaudited)    Three months ended          Year ended
                                     December 31,            December 31,
    (In thousands of dollars,
     except per share amounts)     2009        2008        2009        2008
    -------------------------------------------------------------------------

    Revenue                     452,445     485,244   1,718,357   1,980,543
    Fuel surcharge revenue       36,183      59,255     128,169     281,386
    -------------------------------------------------------------------------
                                488,628     544,499   1,846,526   2,261,929

    Expenses:
      Operating expenses        351,872     384,859   1,308,830   1,629,234
      Fixed costs, general and
       administrative expenses   75,806      85,801     310,252     343,847
      Incentive compensation
       plan                         700           -         900       8,885
    -------------------------------------------------------------------------
    Operating income before
     the following               60,250      73,839     226,544     279,963
    Depreciation of property,
     plant and equipment         24,740      27,457     102,557     104,826
    Amortization of intangible
     assets                       5,765       5,047      20,045      18,180
    Interest on long-term debt    7,784      11,261      34,996      46,597
    Change in fair value of
     interest rate swap
     contracts                      824      11,715      (5,546)     13,840
    Loss (gain) on disposal
     of business                     15           -        (119)          -
    Gain on disposal of property,
     plant and equipment           (338)        (91)     (2,729)     (2,657)
    -------------------------------------------------------------------------
    Income before the following  21,460      18,450      77,340      99,177
    Goodwill impairment          45,000           -      45,000           -
    -------------------------------------------------------------------------
    Income (loss) before
     provision for income
     taxes                      (23,540)     18,450      32,340      99,177
    Provision for income taxes:
      Current                     2,405       3,167       9,055      11,003
      Future                      1,214         483      12,356       8,496
    -------------------------------------------------------------------------
                                  3,619       3,650      21,411      19,499

    -------------------------------------------------------------------------
    Net income (loss) and
     comprehensive income       (27,159)     14,800      10,929      79,678
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                       (0.29)       0.17        0.12        0.92
      Diluted                     (0.29)       0.17        0.12        0.92
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of shares outstanding   95,253,937  86,790,097  90,036,501  86,467,788
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
    -------------------------------------------------------------------------
    (Three months: unaudited)    Three months ended          Year ended
                                     December 31,            December 31,
    (in thousands of dollars)      2009        2008        2009        2008
    -------------------------------------------------------------------------

    Retained earnings (deficit),
     beginning of period          1,648     (15,675)     (9,554)    (15,146)
    Net income (loss) for the
     period                     (27,159)     14,800      10,929      79,678
    Distributions declared
     to unitholders                   -           -           -     (43,541)
    Dividends                    (9,525)     (8,679)    (36,411)    (27,279)
    Incentive compensation plan       -           -           -      (3,266)
    -------------------------------------------------------------------------
    Deficit, end of period      (35,036)     (9,554)    (35,036)     (9,554)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (Three months: unaudited)    Three months ended          Year ended
                                     December 31,            December 31,
    (in thousands of dollars)      2009        2008        2009        2008
    -------------------------------------------------------------------------

    CASH FLOW FROM OPERATING
     ACTIVITIES:
      Net income (loss) for the
       period                   (27,159)     14,800      10,929      79,678
      Non-cash items:
        Depreciation of property,
         plant and equipment     24,740      27,457     102,557     104,826
        Amortization of
         intangible assets        5,765       5,047      20,045      18,180
        Incentive compensation
         plan                       700           -         900       8,885
        Purchase of units held
         by the fund for the
         incentive plan               -           -           -        (400)
        Amortization of deferred
         financing charges          390         390       1,560       1,344
        Future income taxes       1,214         483      12,356       8,496
        Loss (gain) on disposal
         of business                 15           -        (119)          -
        Gain on disposal of
         property, plant and
         equipment                 (338)        (91)     (2,729)     (2,657)
        Goodwill impairment      45,000           -      45,000           -
        Others                      357         (36)        735         360
    -------------------------------------------------------------------------
                                 50,684      48,050     191,234     218,712
      Net change in non-cash
       operating working capital (2,427)     39,145      18,572     (11,140)
    -------------------------------------------------------------------------
                                 48,257      87,195     209,806     207,572
    -------------------------------------------------------------------------

    CASH FLOW FROM FINANCING
     ACTIVITIES:
      Increase (decrease) in bank
       advances and overdraft     2,856       3,540      (5,691)      3,436
      Increase in long-term debt    950        (208)        950      97,720
      Repayment of long-term
       debt                      (9,493)    (12,234)    (85,122)    (84,140)
      Increase (decrease) in long
       term revolver facility    42,040         852     (27,018)     21,013
      Cash distributions paid
       to unitholders                 -           -           -     (53,216)
      Dividends paid             (9,525)     (8,679)    (36,136)    (20,220)
      Issuance of shares              -           -      47,616           -
    -------------------------------------------------------------------------
                                 26,828     (16,729)   (105,401)    (35,407)
    -------------------------------------------------------------------------

    CASH FLOW FROM INVESTING
     ACTIVITIES:
      Additions to property,
       plant and equipment      (20,150)    (35,236)    (60,022)   (100,685)
      Proceeds from disposal
       of property, plant and
       equipment                  3,494       6,904      23,085      24,167
      Business acquisitions
       (including bank advances
       net of cash)             (57,881)    (40,846)    (67,095)    (93,794)
      Proceeds from disposal
       of business                  101           -       1,154           -
      Others                       (649)     (1,288)     (1,527)     (1,853)
    -------------------------------------------------------------------------
                                (75,085)    (70,466)   (104,405)   (172,165)
    -------------------------------------------------------------------------

    Net change in cash and cash
     equivalent during the period     -           -           -           -
    Cash and cash equivalent,
     beginning of the period          -           -           -           -
    -------------------------------------------------------------------------
    Cash and cash equivalent,
     end of the period                -           -           -           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information:
      Cash paid during the
       period for:
        Interest                  8,283      11,429      34,941      46,134
        Income taxes              3,816       7,860      10,395      16,277
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00026947EF

SOURCE TransForce Inc.

For further information: For further information: Investors: Alain Bédard, Chairman, President and CEO, TransForce Inc., (514) 331-4200, abedard@transforce.ca; Media: John Lute, Lute & Company, (416) 929-5883, jlute@luteco.com

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