TransForce Inc. Announces Third Quarter Results

    
    - Revenues of $451.4 million
    - EBITDA of $62.0 million
    - EPS of $0.19 per share
    

MONTREAL, Oct. 23 /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 third quarter, ended September 30, 2009.

"By focusing on cost containment and operating efficiency, we were able to maintain our EBITDA margin, despite lower revenues resulting from current weak economic conditions; EBITDA as a percentage of revenue was 13.7%, virtually unchanged from the third quarter of 2008," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc. "We are carefully managing those parts of our business that we can control. We reduced fixed costs and administrative expenses by $13.8 million in the quarter which kept them to 16% of revenue. Our efficiency continues to serve shareholders during this difficult period and positions us strongly for the eventual economic recovery."

Third Quarter Results

For the three months ended September 30, 2009, TransForce reported total revenues of $451.4 million, a 24% decrease from $595.5 million in the same period of 2008. Revenue excluding fuel surcharge decreased 18% to $418.9 million. The year-over-year decrease in revenue is mainly the result of the continuing low economic activity.

EBITDA (earnings before interest, taxes, depreciation and amortization and equivalent to operating income on TransForce's financial statements) decreased 25% to $62.0 million in the third quarter from $82.3 million in the third quarter of 2008. EBITDA margin (EBITDA as a percentage of revenue) was 13.7% in the quarter, consistent with 13.8% in the same period of 2008.

Cash flow from operations, before net changes in non-cash working capital balances related to operations, was $51.9 million compared with $66.9 million in the third quarter of 2008.

TransForce's earnings before income taxes were $25.2 million, compared with $38.4 million in the third quarter of 2008.

Interest expense decreased to $8.2 million from $12.3 million in the same period of 2008, primarily as a result of the Company's actions to reduce debt, as well as lower interest rates.

Net income was $17.0 million, or $0.19 per share, compared with $26.5 million, or $0.31 per share, in the third quarter of 2008.

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

"Demand continues to be depressed across Canada, and particularly in Western Canada, where continuing lower levels of activity in Alberta's energy sector contributed to weaker results in TransForce's Less-Than-Truckload segment," said Mr. Bédard. "Business improved somewhat in September from what was an unusually slow August. Now we must monitor the effect of the appreciating Canadian dollar on a recovery in the manufacturing sector."

Acquisition of ATS Andlauer Retail Solutions Division

In September, TransForce announced that it had entered into an agreement to acquire the Retail Solutions Division of ATS Andlauer Transportation Services Limited Partnership. The Retail Solutions Division generates approximately $120 million in annual revenues. It relies on 165 owner-operators for the bulk of its business and employs a total of 447 employees. The transaction is conditional on the signing of a definitive agreement, normal closing and regulatory conditions.

    
    Completion of $41.2 million Equity Financing and $8.3 Million Concurrent
    Private Placement
    

In August, TransForce completed its previously announced bought-deal public offering by issuing 7,040,000 common shares, at a price of $5.85 per share, for gross proceeds to TransForce of $41.2 million. TransForce also completed its previously announced private placement with Jolina Capital Inc., its principal shareholder, pursuant to which Jolina purchased, concurrent with the closing of the bought-deal offering, a further 1,423,840 common shares from TransForce in order to maintain its ownership level of the outstanding shares of TransForce of approximately 16.82%. Jolina purchased the shares at the offering price of $5.85 per share, for proceeds to TransForce of $8.3 million.

The net proceeds of the offering and concurrent private placement to Jolina will be used by TransForce to reduce indebtedness and for general corporate purposes.

Year-to-Date Results

During the nine months ended September 30, 2009, total revenue decreased 21% to $1.4 billion from $1.7 billion in 2008. Revenue excluding fuel surcharge decreased 15% to $1.3 billion from $1.5 billion in the first three quarters of 2008.

EBITDA decreased by 19% to $166.3 million from $206.1 million in the first three quarters of 2008. In a very challenging environment, the Company's EBITDA ratio for the first nine months was 12.2%, an improvement from 12.0% in the year-earlier period.

Cash flow from operations, before net changes to non-cash working capital balances related to operations, was $134.2 million, compared with $172.8 million in the first nine months of 2008.

Earnings before income taxes were $55.9 million through three quarters of 2009, compared with $80.7 million in the same period of 2008.

Net income during the first nine months of 2009 declined to $38.1 million, or $0.43 per share, from $64.9 million, or $0.75 per share, a year earlier.

"The people of TransForce have done an outstanding job of controlling costs and I thank them for their dedicated efforts as we move through this challenging period. We have made significant progress in cost containment and our streamlined structure and processes will remain in place," said Mr. Bédard. "While managing through the current recession, we continue to implement our strategy for the future. We are on track to meet our debt repayment target for 2009. Our acquisition strategy remains in place but we will only consider acquisitions that are immediately accretive for our shareholders."

Third 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 third quarter and year-to-date 2009 on Friday, October 23, 2009, at 9:00 a.m. Eastern Time.

To participate in the conference call, investors are invited to call 1-800-734-4208. A recording of the call will be available until 12:00 a.m., October 31, 2009, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21440036.

Financial Statements

The financial statements for the periods ended September 30, 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, warehousing & dedicated services, fleet
      management & personnel services; oilfield & oilsand services, and;
      waste management;
    - Truckload, which includes specialized truckload 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
    -------------------------------------------------------------------------
    (in thousands of dollars)                      As at              As at
                                      September 30, 2009  December 31, 2008
                                              (unaudited)          (audited)
    -------------------------------------------------------------------------

    ASSETS
    Current assets
    Accounts receivable                          261,420            302,801
    Inventories                                    9,799             11,296
    Prepaid expenses                              14,282             14,285
    Income tax receivable                            448                519
    Future income taxes                              350              1,666
    -------------------------------------------------------------------------
                                                 286,299            330,567
    -------------------------------------------------------------------------
    Fixed assets                                 676,415            718,713
    Goodwill                                     439,027            435,851
    Intangible assets                            118,321            128,672
    Other assets                                   6,573              6,258
    Future income taxes                                8              1,846
    -------------------------------------------------------------------------
                                               1,526,643          1,621,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Bank indebtedness                              3,970             12,517
    Accounts payable and accrued liabilities     195,145            218,763
    Dividends payable                              9,525              9,250
    Current portion of long-term debt             28,664             69,028
    -------------------------------------------------------------------------
                                                 237,304            309,558
    -------------------------------------------------------------------------
    Long-term debt                               644,883            738,986
    Asset retirement obligations                  10,756              8,204
    Future income taxes                           64,301             55,309

    Shareholders' equity
    Share capital                                567,551            519,404
    Contributed surplus                              200                  -
    Retained earnings (deficit)                    1,648             (9,554)
    -------------------------------------------------------------------------
                                                 569,399            509,850
    -------------------------------------------------------------------------
                                               1,526,643          1,621,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    (unaudited)                   Three       Three        Nine        Nine
                                 months      months      months      months
    (In thousands of              ended       ended       ended       ended
     dollars, except per      September   September   September   September
     share amounts)            30, 2009    30, 2008    30, 2009    30, 2008
    -------------------------------------------------------------------------

    Revenue                     418,901     511,708   1,265,912   1,495,299
    Fuel surcharge revenue       32,451      83,823      91,986     222,131
    -------------------------------------------------------------------------
    Total revenue               451,352     595,531   1,357,898   1,717,430

    Expenses
      Operating expenses        314,987     425,177     956,958   1,244,375
      Fixed costs, general
       and administrative
       expenses                  74,158      88,006     234,446     258,046
      Incentive compensation
       plan                         200           -         200       8,885
    -------------------------------------------------------------------------
    Operating income before
     the following:              62,007      82,348     166,294     206,124
      Depreciation of fixed
       assets                    25,791      26,653      78,949      78,473
      Amortization of
       intangible assets          4,389       4,102      13,148      12,029
      Interest on long-term
       debt                       8,249      12,256      27,212      35,336
      Change in fair value
       of interest rate
       swap contracts              (870)      2,000      (6,370)      2,125
      Gain on disposal of
       business                       -           -        (134)          -
      Gain on disposal of
       fixed assets                (797)     (1,038)     (2,391)     (2,566)
    -------------------------------------------------------------------------
    Income before provision
     for income taxes            25,245      38,375      55,880      80,727
    Provision for income
     taxes:
      Current                     2,581       3,482       6,650       7,836
      Future                      5,670       8,393      11,142       8,013
    -------------------------------------------------------------------------
                                  8,251      11,875      17,792      15,849

    -------------------------------------------------------------------------
    Net income and
     comprehensive income        16,994      26,500      38,088      64,878
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
       Basic                       0.19        0.31        0.43        0.75
       Diluted                     0.19        0.31        0.43        0.75
    -------------------------------------------------------------------------

    Outstanding weighted
     average number of:
       Shares                91,206,013  86,790,097  88,278,244  42,600,267
       Units                          -           -           -  36,749,988
       Tracking shares                -           -           -   7,008,918
    -------------------------------------------------------------------------
       Total                 91,206,013  86,790,097  88,278,244  86,359,173
    -------------------------------------------------------------------------

    Shares outstanding
       Number of shares      95,253,937  86,790,097  95,253,937  86,790,097
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
    -------------------------------------------------------------------------
    (unaudited)                   Three       Three        Nine        Nine
                                 months      months      months      months
                                  ended       ended       ended       ended
    (in thousands of          September   September   September   September
     dollars)                  30, 2009    30, 2008    30, 2009    30, 2008
    -------------------------------------------------------------------------

    Deficit, beginning of
     period                      (5,821)    (29,156)     (9,554)    (15,146)
    Net income for the
     period                      16,994      26,500      38,088      64,878
    Distributions to
     unitholders                      -           -           -     (43,541)
    Dividends                    (9,525)    (13,019)    (26,886)    (18,600)
    Incentive compensation            -           -           -      (3,266)
    -------------------------------------------------------------------------
    Retained earnings
     (deficit),
     end of period                1,648     (15,675)      1,648     (15,675)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (unaudited)                   Three       Three        Nine        Nine
                                 months      months      months      months
                                  ended       ended       ended       ended
    (in thousands of          September   September   September   September
     dollars)                  30, 2009    30, 2008    30, 2009    30, 2008
    -------------------------------------------------------------------------

    CASH FLOW FROM OPERATING
     ACTIVITIES
      Net income for the
       period                    16,994      26,500      38,088      64,878
      Non-cash items:
        Depreciation of
         fixed assets            25,791      26,653      78,949      78,473
        Amortization of
         intangible assets        4,389       4,102      13,148      12,029
        Incentive plan
         expense                    200           -         200       8,885
        Purchase of units
         held by the fund for
         the Incentive plan           -           -           -        (400)
        Deferred financing
         charges                    390         390       1,170         954
        Future income taxes       5,670       8,393      11,142       8,013
        Change in fair value
         of interest rate
         Swap contracts            (870)      2,000      (6,370)      2,125
        Gain on disposal of
         business                     -           -        (134)          -
        Gain on disposal of
         fixed assets              (797)     (1,038)     (2,391)     (2,566)
        Other                       131        (120)        378         396
    -------------------------------------------------------------------------
                                 51,898      66,880     134,180     172,787
    Net change in non-cash
     working capital balances
     related to operations        4,374      (5,458)     27,369     (52,410)
    -------------------------------------------------------------------------
                                 56,272      61,422     161,549     120,377
    -------------------------------------------------------------------------

    CASH FLOW FROM FINANCING
     ACTIVITIES
      Increase (decrease)
       in bank advances and
       overdraft                 (1,792)    (10,587)     (8,547)       (104)
      Increase in long-term
       debt                           -           -           -      97,928
      Repayment of long-term
       debt                     (41,823)    (33,719)    (75,629)    (71,906)
      Increase (decrease)
       in long term revolver
       facility                 (38,802)     10,328     (69,058)     20,161
      Cash distributions paid
       to unitholders                 -           -           -     (53,216)
      Dividends paid             (8,679)     (4,340)    (26,611)    (11,541)
      Issuance of shares         47,616           -      47,616           -
    -------------------------------------------------------------------------
                                (43,480)    (38,318)   (132,229)    (18,678)
    -------------------------------------------------------------------------

    CASH FLOW FROM INVESTING
     ACTIVITIES
      Additions to fixed
       assets                   (19,385)    (30,518)    (40,435)    (66,194)
      Proceeds from disposal
       of fixed assets            6,832       6,124      19,591      17,263
      Business acquisitions
       (including bank
       advances net of cash)        138       1,041      (9,214)    (52,948)
      Proceeds from disposal
       of business                    -           -       1,053           -
      Other assets, net            (377)        249        (315)        180
    -------------------------------------------------------------------------
                                (12,792)    (23,104)    (29,320)   (101,699)
    -------------------------------------------------------------------------

    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                  8,167      12,104      26,658      34,705
        Income taxes                224       4,395       6,579       8,417
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%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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