TransForce Inc. Announces 2010 Second Quarter Results

    
    - Revenues increased 9% to $497 million
    - Operating income before depreciation increased 29% to $71 million
    - Adjusted net income increased $12 million to $23 million
    - Adjusted EPS increased 85% to $0.24
    

MONTREAL, July 29 /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 second quarter and first half ended June 30, 2010. The Company improved its performance in key measures including revenues, operating income before depreciation, EBITDA, and adjusted net income.

"While the economic environment remains challenging, the steps we have taken to increase efficiency, combined with some revenue growth, continue to help generate positive results for our shareholders," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc. "We expect to see some improvement for the industry later in the year but, for now, we welcome relative stability after many quarters of volume declines and pricing pressure."

Second Quarter Results

For the three months ended June 30, 2010, TransForce reported total revenues of $496.9 million, a 9% increase over $454.2 million for the same period of 2009. Revenue excluding fuel surcharge increased 7% to $455.9 million compared with $424.8 million a year ago.

Operating income before depreciation was $71.4 million, compared with $55.3 million in the second quarter of last year, a 29% improvement resulting from improved cost control. The increase in TransForce's operating expenses and fixed costs and general and administrative expenses has been efficiently managed. As a percentage of revenue, operating income before depreciation increased to 14.2% from 12.2% in the second quarter of 2009. EBITDA for the second quarter was $67.1 million compared with $59.8 million in the year-earlier quarter.

Adjusted net income, which excludes the after-tax effect of items that are not in the Company's normal business, more than doubled to $23.3 million from $11.3 million in the second quarter of 2009. The adjustment reflects changes in the fair value of derivatives. Adjusted earnings per share increased to $0.24 from $0.13 a year ago.

Cash flow from operations before net change in non-cash operating working capital was $49.6 million in the second quarter, compared with $54.4 million in the same quarter of 2009.

TransForce's capital expenditures in the quarter were $28.1 million, including $12.5 million related to properties and $13.7 million for rolling stock acquisitions which is $3.8 million or 38% more than the $9.9 million invested in the same quarter of last year.

The Company reduced debt by $10.5 million in the second quarter and this continuing debt repayment resulted in a decrease in interest expense for the quarter to $8.7 million from $9.1 million a year earlier.

TransForce paid out a dividend of $0.10 per share during the quarter, equal to the year-ago period.

"Oilfield and oilsands operations benefited from increased activity in the second quarter and the Package and Courier segment grew as a result of an acquisition" said Mr. Bédard. "These quarterly results are the best since 2008 and make us cautiously optimistic for the future."

Results for First Six Months

Total revenues for the six months ended June 30, 2010 were $963.0 million, a 6% increase from $906.5 million in the first half of 2009. Excluding fuel surcharges, revenue was $885.1 million compared with $847.0 million a year ago.

Revenues grew faster than operating expenses and fixed costs and general and administrative expenses in the first half, resulting in operating income before depreciation of $118.9 million, a 17% increase from the first six months of 2009. Operating income before depreciation as a percentage of revenue increased to 12.4% from 11.2% in the same period of 2009. EBITDA for the first half was $117.7 million compared with $104.3 a year ago.

Adjusted net income was $29.2 million or $0.31 per share in the first six months, up significantly from $15.6 million, or $0.18 per share, at the same point last year.

For the first half, cash flow from operations before net change in non-cash operating working capital was $93.1 million compared with $87.8 million in the first six months of 2009.

TransForce reduced long-term debt by $28.1 million to $679.8 million at the end of the half resulting in a reduction of interest expense of almost $1.9 million to $17.1 million.

TransForce paid out dividends of $0.20 per share during the first half, unchanged from a year earlier.

Outlook

During the second quarter of 2010, the Company's revenues stabilized, notwithstanding the good performance of its energy-related operations. The pressure on pricing still offset the slight increase in volume. TransForce is recovering from the full effects of the economic slowdown and it is positive to note that conditions have not deteriorated further in the past three months.

TransForce will continue its efforts to control costs, improve operating effectiveness, and maintain pricing discipline as far as possible in the current environment. The Company's objective is to protect and improve its operating margin. This should allow TransForce to remain well-positioned so that, when higher general economic activity returns to North America, the resulting increased volumes will be translated into value for shareholders. The Company is confident that the quality of its revenues will improve within the next twelve months.

The effectiveness of TransForce in the second quarter and first half translated into significant cash flows which were used to reduce its long-term debt. TransForce intends to continue to pay down debt in 2010 by about $100 million, eventually reaching a debt-to-EBITDA ratio of between 2 and 2.5 times.

TransForce's solid second quarter performance is the result of discipline and determination to get back to "lean and mean". Consequently, the Company expects to emerge from the economic slowdown in a much better position to generate more profits and to stay alert to business acquisition opportunities that meet its strict criteria. Current market conditions may dictate continued restraint, but TransForce remains committed to its strategy of growth through selective acquisitions.

Second Quarter 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 periods ended June 30, 2010 on Thursday, July 29, 2010, at 9:00 a.m. Eastern Time.

To participate in the conference call, investors are invited to call 1-800-707-9445. A recording of the call will be available until midnight, August 5, 2010, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21476550.

Financial Statements

The partial financial statements for the three-month and six-month periods ended June 30, 2010 and 2009 included below are an integral part of this news release.

For more detailed financial information, reconciliation of non-GAAP financial measures and integral financial statements, please see Management's Discussion and Analysis which can be found on SEDAR at www.sedar.com and on the Company's website www.transforce.ca.

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 oilfield & oilsand services, waste
      management, logistics, fleet management, and personnel services;
    - Truckload, 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.

    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    (in thousands of dollars)                             As at        As at
    (unaudited)                                         June 30, December 31,
                                                           2010         2009
    -------------------------------------------------------------------------

    ASSETS
    Current assets:
      Accounts receivable                               278,731      262,219
      Inventories                                         8,903        9,116
      Prepaid expenses                                   18,583        9,480
      Income tax receivable                                   -          751
    -------------------------------------------------------------------------
                                                        306,217      281,566
    -------------------------------------------------------------------------
    Property, plant and equipment                       635,909      667,315
    Intangible assets                                   183,060      146,946
    Goodwill                                            428,840      418,951
    Other assets                                          8,092        6,774
    Future income taxes                                   4,440        4,104
    -------------------------------------------------------------------------
                                                      1,566,558    1,525,656
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Bank indebtedness                                  12,910        6,826
      Accounts payable and accrued liabilities          194,863      187,934
      Income tax payable                                    807            -
      Dividends payable                                   9,525        9,525
      Current portion of long-term debt                  21,667      403,763
    -------------------------------------------------------------------------
                                                        239,772      608,048
    -------------------------------------------------------------------------
    Long-term debt                                      658,178      304,166
    Asset retirement obligations                         14,676       10,794
    Deferred gain on sale and leaseback                   8,933            -
    Future income taxes                                  86,105       69,233
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                     567,551      567,551
      Contributed surplus                                 1,800          900
      Deficit                                           (10,457)     (35,036)
    -------------------------------------------------------------------------
                                                        558,894      533,415
    -------------------------------------------------------------------------
                                                      1,566,558    1,525,656
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND DEFICIT
    -------------------------------------------------------------------------
    (In thousands of     Three months Three months   Six months   Six months
     dollars, except            ended        ended        ended        ended
     per share amounts)       June 30,     June 30,     June 30,     June 30,
    (unaudited)                  2010         2009         2010         2009
    -------------------------------------------------------------------------
    Revenue                   455,860      424,762      885,065      847,011
    Fuel surcharge revenue     40,998       29,404       77,887       59,535
    -------------------------------------------------------------------------
                              496,858      454,166      962,952      906,546

    Expenses:
      Operating expenses      346,502      323,899      680,042      644,418
      Fixed costs, general
       and administrative
       expenses                78,932       74,968      163,976      160,288
    -------------------------------------------------------------------------
    Income before the
     following                 71,424       55,299      118,934      101,840
    Depreciation of
     property, plant and
     equipment                 24,644       26,246       49,215       52,393
    Amortization of
     intangible assets          6,904        4,749       13,469        9,524
    Interest on long-term
     debt                       8,665        9,075       17,097       18,963
    Change in fair value
     of derivatives             8,912       (9,686)       2,588       (7,947)
    Remeasurement to fair
     value of existing
     interest in acquiree           -            -      (16,279)           -
    Gain on disposal of
     business                       -         (134)           -         (134)
    Gain on disposal of
     property, plant and
     equipment                 (1,098)      (1,323)      (1,782)      (1,594)
    -------------------------------------------------------------------------
    Income before provision
     for income taxes          23,397       26,372       54,626       30,635
    Provision for income
     taxes:
      Current                   5,241        1,993        8,261        4,069
      Future                    1,080        6,396        2,735        5,472
    -------------------------------------------------------------------------
                                6,321        8,389       10,996        9,541
    -------------------------------------------------------------------------
    Net income and
     comprehensive income      17,076       17,983       43,630       21,094

    Deficit, beginning of
     period                   (18,007)     (15,122)     (35,036)      (9,554)

    Dividends                  (9,526)      (8,682)     (19,051)     (17,361)
    -------------------------------------------------------------------------
    Deficit, end of period    (10,457)      (5,821)     (10,457)      (5,821)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                      0.18         0.21         0.46         0.24
      Diluted                    0.18         0.21         0.46         0.24
    -------------------------------------------------------------------------

    Weighted average
     number of shares
     outstanding           95,253,937   86,790,097   95,253,937   86,790,097
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of     Three months Three months   Six months   Six months
     dollars)                   ended        ended        ended        ended
    (unaudited)               June 30,     June 30,     June 30,     June 30,
                                 2010         2009         2010         2009
    -------------------------------------------------------------------------
    CASH FLOW FROM OPERATING
     ACTIVITIES:
    Net income for the
     period                    17,076       17,983       43,630       21,094
    Non-cash items:
      Depreciation of
       property, plant
       and equipment           24,644       26,246       49,215       52,393
      Amortization of
       intangible assets        6,904        4,749       13,469        9,524
      Stock-based
       compensation               450            -          900            -
      Amortization of
       deferred financing
       charges                    390          390          780          780
      Future income taxes       1,080        6,396        2,735        5,472
      Gain on disposal of
       business                     -         (134)           -         (134)
      Gain on disposal of
       property, plant and
       equipment               (1,098)      (1,323)      (1,782)      (1,594)
      Remeasurement to fair
       value of existing
       interest in acquiree         -            -      (16,279)           -
      Others                      162          135          395          247
    -------------------------------------------------------------------------
                               49,608       54,442       93,063       87,782
    Net change in non-cash
     operating working
     capital                   (9,603)      (2,662)     (25,098)      17,495
    -------------------------------------------------------------------------
                               40,005       51,780       67,965      105,277
    -------------------------------------------------------------------------
    CASH FLOW FROM FINANCING
     ACTIVITIES:
    Increase (decrease) in
     bank advances and
     overdraft                  2,714       (7,197)       6,084       (6,755)
    Repayment of long-term
     debt                      (7,851)     (20,745)     (19,896)     (33,806)
    Increase (decrease) in
     long term revolving
     facility                  (3,331)     (11,462)     (13,227)     (30,256)
    Dividends paid             (9,526)      (9,253)     (19,051)     (17,932)
    -------------------------------------------------------------------------
                              (17,994)     (48,657)     (46,090)     (88,749)
    -------------------------------------------------------------------------
    CASH FLOW FROM INVESTING
     ACTIVITIES:
    Additions to property,
     plant and equipment      (28,078)      (9,651)     (37,875)     (20,560)
    Proceeds from disposal
     of property, plant
     and equipment              7,865        9,272       43,920       12,759
    Business acquisitions
     (including bank
     advances net of cash)     (1,040)      (3,611)     (30,143)      (9,352)
    Proceeds from disposal
     of business                    -        1,053            -        1,053
    Others                       (758)        (186)       2,223         (428)
    -------------------------------------------------------------------------
                              (22,011)      (3,123)     (21,875)     (16,528)
    -------------------------------------------------------------------------
    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              -            -            -            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%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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