TransForce Acquisition Strategy Leads to Improvement in the Second Quarter



    
    - Increased quarterly revenues 9% to $495.7 million
    - Increased EBITDA 4% to $64.1 million
    - Concluded strategic acquisitions in new Fleet Management & Personnel
      Services division
    

    MONTREAL, Aug. 8 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN), the
leader in the Canadian transportation and logistics industry, today announced
results for the second quarter, ended June 30, 2007, that demonstrate both the
benefits of its acquisition strategy and the challenging environment faced by
its existing operations.
    The Fund increased revenues by 9% to $495.7 million, from $455.6 million
in the second quarter of 2006. EBITDA (earnings before interest, taxes,
depreciation and amortization and equivalent to operating income on
TransForce's financial statements) increased by 4% to $64.1 million in the
quarter, from $61.6 million in the same period last year. Cash flow from
operating activities, before net change in non-cash working capital balances,
was $52.2 million in the second quarter, compared with $53.8 million in the
second quarter of 2006.
    Distributable cash from ongoing operations was $55.2 million, compared
with $57.2 million in the second quarter of 2006. Net capital expenditure was
$10.0 million in the quarter, compared with $15.9 million in the same period
last year. The Fund's regular distribution payout ratio, or cash distributed
as a percent of cash available for distribution, was 78.0% in the second
quarter of 2007, compared with 84.5% in the same period of 2006.
    "We increased revenue and EBITDA through strategic acquisitions made in
the past year as we continued to pursue opportunities to acquire good
companies that will help TransForce create long-term value for unitholders,"
said Alain Bédard, Chairman, President and CEO of TransForce Income Fund.
"Overall, our existing operations have had to adjust to weaker market
conditions, particularly in the Truckload segment due to weaker demand and in
oilfield services which were affected by lower drilling activity in Western
Canada."

    New Fleet Management & Personnel Services division

    During the quarter, TransForce acquired three companies that provide
clients with vehicles and drivers and formed them into a new Fleet Management
& Personnel Services division, which is now part of the Specialized Services
segment.
    "The companies that we acquired in the second quarter meet our criteria
in having solid track records and management teams. They complement the other
businesses in the TransForce group of companies but are not as asset-intensive
and we expect them to generate higher-than-average returns for unitholders,"
said Mr. Bédard.

    Year-to-Date Results

    TransForce increased revenues for the first half of 2007 to
$960.4 million, from $889.3 million in the first half of 2006. EBITDA also
increased to $116.8 million in the first six months of 2007 compared with
$110.7 million in the first six months of 2006. Cash flow from operating
activities, before net change in non-cash working capital balances, was $97.3
million in the first half of 2007 compared with $94.9 million in the same
period of 2006.
    Distributable cash from ongoing operations for the first half of 2007 was
$100.7 million, a slight increase from $100.1 million in the first half of
2006. Total distributions declared in the first six months of the year were
$63.9 million compared with $59.0 million in the first six months of 2006. The
Fund's regular distribution payout ratio or cash distributed as a percent of
cash available for distribution for the year-to-date is 88.4% compared with
86.1% in the same period of 2006.
    "We expect the marketplace for most of our operating companies to
continue to be challenging for the balance of the year with more competitive
pressure and greater price sensitivity among our clients," Mr. Bédard said.
"Throughout the TransForce group, we are taking the necessary steps to adjust
to these conditions."

    Recent Acquisition

    Subsequent to the end of the second quarter, on August 2, 2007,
TransForce announced the signing of a letter of intent to acquire all the
issued and outstanding shares of Century II Holdings Inc (TSX: CH) whose
wholly owned subsidiary, operating as ICS Courier, operates a fixed route
courier business that services more than 35,000 accounts. ICS Courier is based
in Toronto and had revenues of approximately $90 million in 2006.

    Management Conference Call

    TransForce will host a conference call for investors to discuss the
results for the second quarter of 2007 today, August 8 at 5:00 pm Eastern
Time. Participating from the Fund will be Alain Bédard, Chairman, President
and Chief Executive Officer, and Salvatore Vitale, Chief Financial Officer.
    To participate in the teleconference, investors are invited to call
1-800-926-9793. A recording of the call will be available until midnight
August 15, 2007, by dialing 1-800-558-5253 or 416-626-4100 and entering
passcode 21344435. Media are invited to participate in listen-only mode and to
use the media contact listed below for further information.

    Financial Statements

    The included financial statements for the quarters ended June 30, 2007
and 2006 and are an integral part of this news release.

    Profile

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

    
    - Less Than Truckload and Parcel Delivery;
    - Specialized Services, which includes its ancillary transportation
      services and fleet management & personnel services businesses;
    - Specialized Truckload; and
    - Truckload.

    TransForce's trust units (TIF.UN) are listed on the Toronto Stock Exchange
and are included in the S&P/TSX Composite Index.

    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 Fund's website www.transforce.ca.



    CONSOLIDATED STATEMENTS OF INCOME
    (unaudited)
                                Three        Three          Six          Six
                               months       months       months       months
    (In thousands of            ended        ended        ended        ended
    dollars, except per       June 30,     June 30,     June 30,     June 30,
    unit amounts)                2007         2006         2007         2006

    Revenues                  450,125      409,697      877,122      804,883
    Fuel surcharge revenues    45,527       45,885       83,288       84,451
    -------------------------------------------------------------------------
    Total revenues            495,652      455,582      960,410      889,334

    Expenses
    Operating expenses        353,567      326,205      686,388      640,171
    Fixed costs, general
     and administrative
     expenses                  75,470       66,720      152,223      136,274
    Incentive plan expense      2,496        1,092        4,992        2,193
    -------------------------------------------------------------------------
    Operating income from
     continuing operations
     before the following:     64,119       61,565      116,807      110,696
      Depreciation of fixed
       assets                  24,642       19,697       47,455       39,320
      Amortization of
       intangible assets        2,841        2,788        5,459        4,339
      Interest on long-term
       debt                     8,644        3,822       15,726        8,468
      Other interest                -        1,451            -        3,639
      Gain on disposal of
       fixed assets              (673)         127       (1,241)        (940)
    -------------------------------------------------------------------------
    Income from continuing
     operations before
     provision for income
     taxes                     28,665       33,680       49,408       55,870

    Provision for income
     taxes
      Current                   2,806        1,744        5,326        3,362
      Future                     (442)      (2,338)      (3,082)      (3,590)
    -------------------------------------------------------------------------
                                2,364         (594)       2,244         (228)

    Income from continuing
     operations                26,301       34,274       47,164       56,098
    Earnings from
     discontinued
     operations                     -          662            -          915
    -------------------------------------------------------------------------
    Net income                 26,301       34,936       47,164       57,013

    Earnings per unit
    From continuing
     operations
      Basic                      0.31         0.40         0.55         0.67
      Diluted                    0.31         0.40         0.55         0.67
    Net earnings
      Basic                      0.31         0.41         0.55         0.68
      Diluted                    0.31         0.40         0.55         0.68
    -------------------------------------------------------------------------

    Outstanding weighted
     average number of
      Units                72,174,911   72,496,144   72,251,410   69,647,344
      Tracking shares      13,765,854   13,768,063   13,766,084   13,781,813
    -------------------------------------------------------------------------
    Total                  85,940,765   86,264,207   86,017,494   83,429,157

    Units outstanding
    Number of Trust units
     of the Fund           73,024,381   73,023,781   73,024,381   73,023,781
    Number of Tracking
     shares                13,765,716   13,766,316   13,765,716   13,766,316
    -------------------------------------------------------------------------
    Total                  86,790,097   86,790,097   86,790,097   86,790,097



    CONSOLIDATED BALANCE SHEETS

    (in thousands of dollars)                             As at        As at
                                                        June 30, December 31,
                                                           2007         2006
                                                     (unaudited)    (audited)
    ASSETS
    Current assets
    Accounts receivable                                 301,662      270,683
    Inventories                                           9,743        9,623
    Prepaid expenses                                     20,282       14,998
    -------------------------------------------------------------------------
                                                        331,687      295,304
    -------------------------------------------------------------------------
    Fixed assets                                        635,755      533,054
    Goodwill                                            368,102      320,716
    Intangible assets                                    58,879       52,642
    Other assets                                          8,110        8,688
    Future income taxes                                   5,082        5,315
    -------------------------------------------------------------------------
                                                      1,407,615    1,215,719
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY
    Current liabilities
    Bank indebtedness                                    11,938       20,223
    Accounts payable and accrued liabilities            200,564      177,846
    Cash distributions payable to unitholders             9,675        9,310
    Dividends payable on Tracking Share Units of
     TFI Holdings Inc.                                    1,655        2,134
    Income taxes payable                                  2,537        4,765
    Current portion of long-term debt                    34,205       35,758
    -------------------------------------------------------------------------
                                                        260,574      250,036
    -------------------------------------------------------------------------
    Long-term debt                                      555,087      358,624
    Non-controlling interest                              2,325        2,002
    Asset retirement obligations                          3,735        3,660
    Future income taxes                                  22,971       22,147

    Unitholders' equity
    Capital contributions and Tracking Share Units      519,404      519,404
    Contributed surplus                                     908          336
    Units held by the fund for Incentive plan           (10,714)     (11,136)
    Retained earnings                                    53,325       70,646
    -------------------------------------------------------------------------
                                                        562,923      579,250
    -------------------------------------------------------------------------
                                                      1,407,615    1,215,719
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    (unaudited)

                                Three        Three          Six          Six
                               months       months       months       months
                                ended        ended        ended        ended
    (in thousands of          June 30,     June 30,     June 30,     June 30,
    dollars)                     2007         2006         2007         2006

    Retained earnings,
     beginning of period       59,677       51,340       70,646       57,963
    Net income for the
     period                    26,301       34,936       47,164       57,013
    Distributions to
     unitholders              (29,027)     (27,325)     (57,324)     (52,681)
    Dividends on Tracking
     Share Units of TFI
     Holdings Inc.             (3,626)      (3,453)      (7,161)      (6,797)
    -------------------------------------------------------------------------
    Retained earnings,
     end of period             53,325       55,498       53,325       55,498
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (unaudited)
                                Three        Three          Six          Six
                               months       months       months       months
                                ended        ended        ended        ended
    (in thousands of          June 30,     June 30,     June 30,     June 30,
    dollars)                     2007         2006         2007         2006

    CASH FLOW FROM
     OPERATING ACTIVITIES
    Net income for the
     period                    26,301       34,936       47,164       57,013
    Non-cash items:
      Depreciation of fixed
       assets                  24,642       20,330       47,455       40,608
      Amortization of
       intangible assets        2,841        2,788        5,459        4,339
      Incentive plan
       expense                  2,496        1,092        4,992        2,193
      Purchase of units
       held by the fund for
       the Incentive plan      (3,319)      (3,526)      (3,998)      (5,464)
      Deferred financing
       charges                    160            -          310            -
      Future income taxes        (442)      (2,027)      (3,082)      (3,159)
      (Gain) Loss on
       disposal of fixed
       assets                    (673)         125       (1,241)        (942)
      Other                       160          119          240          297
    -------------------------------------------------------------------------
                               52,166       53,837       97,299       94,885

    Net change in non-cash
     working capital
     balances related to
     operations                (2,749)     (11,266)     (12,949)     (15,744)
    -------------------------------------------------------------------------
                               49,417       42,571       84,350       79,141
    -------------------------------------------------------------------------

    CASH FLOW FROM
     FINANCING ACTIVITIES
    Increase in (repayment
     of) bank advances and
     overdraft                 (8,736)      36,095       (8,285)      66,731
    Increase in long-term
     debt                           -            -          556            -
    Repayment of long-term
     debt                     (22,082)     (13,313)     (30,885)     (47,705)
    Increase (decrease) in
     new long term revolver
     facility                  62,900            -      153,400            -
    Cash distributions paid
     to unitholders           (29,027)     (27,145)     (56,959)     (56,038)
    Dividends paid on
     Tracking Share Units      (3,358)      (3,178)      (7,640)      (7,805)
    Issuance of trust units         -            -            -      143,760
    -------------------------------------------------------------------------
                                 (303)      (7,541)      50,187       98,943
    -------------------------------------------------------------------------

    CASH FLOW FROM
     INVESTING ACTIVITIES
    Additions to fixed
     assets                   (18,793)     (33,170)     (78,868)     (44,614)
    Proceeds from disposal
     of fixed assets            5,064        5,530        9,988       11,490
    Business acquisitions
     (including bank
     advances net of cash)    (35,709)      (8,216)     (66,635)    (146,697)
    Other assets, net             324          826          978        1,737
    -------------------------------------------------------------------------
                              (49,114)     (35,030)    (134,537)    (178,084)
    -------------------------------------------------------------------------

    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                  8,555        5,414       15,610       11,949
      Income taxes              2,534        3,899        5,926        5,745
    -------------------------------------------------------------------------



    Distributable cash

                                Three        Three          Six          Six
                               months       months       months       months
    (in thousands of            ended        ended        ended        ended
    dollars, except per       June 30,     June 30,     June 30,     June 30,
    unit amounts)                2007         2006         2007         2006

    OPERATING ACTIVITIES
    Cash flow from
     operating activities      49,417       42,571       84,350       79,141
    Add (deduct):
      Purchase of units
       held by the fund
       for long-term
       incentive plan           3,319        3,526        3,998        5,464
      Net change in
       non-cash working
       capital                  2,749       11,266       12,949       15,744
      Deferred financing
       charges                   (160)           -         (310)           -
      Other                      (160)        (119)        (240)        (297)
    -------------------------------------------------------------------------
    Distributable cash from
     operating activities      55,165       57,244      100,747      100,052
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Sustaining capital
     expenditures (Note 1)    (15,110)     (21,461)     (33,103)     (32,042)
    Proceeds from disposal
     of fixed assets            5,064        5,530        9,988       11,490
    -------------------------------------------------------------------------
    Distributable cash from
     investing activities     (10,046)     (15,931)     (23,115)     (20,552)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Scheduled debt
     repayment (note 2)        (2,713)      (4,575)      (4,164)      (9,536)
    -------------------------------------------------------------------------
    Distributable cash from
     financing activities      (2,713)      (4,575)      (4,164)      (9,536)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total distributable
     cash                      42,406       36,738       73,468       69,964

    Total distribution
     declared
    Distribution declared
     to Tracking
     shareholders (note 3)      3,357        3,200        6,624        6,291
    Distribution declared
     to Unitholders            29,027       27,325       57,324       52,681
    -------------------------------------------------------------------------
    Total distribution
     declared                  32,384       30,525       63,948       58,972
    -------------------------------------------------------------------------
    Distributable cash
     surplus                   10,022        6,213        9,520       10,992
    -------------------------------------------------------------------------

    Total distribution
     declared per unit
    Distribution declared
     to Tracking
     shareholders              0.2439       0.2324       0.4812       0.4566
    Distribution declared
     to Unitholders            0.3975       0.3800       0.7850       0.7475
    -------------------------------------------------------------------------

    Distributable cash
     earned per unit
    Tracking shareholders      0.3407       0.2967       0.5885       0.5728
    Unitholders                0.5093       0.4496       0.8885       0.8680
    -------------------------------------------------------------------------

    Payout ratio - regular
     distribution                78.0%        84.5%        88.4%        86.1%
    Payout ratio - Total
     distribution                78.0%        84.5%        88.4%        86.1%
    -------------------------------------------------------------------------



    Note 1: Sustaining capex

    On July 1, 2005, the Fund concluded the sale of its Calgary terminal. The
Fund will relocate this terminal to a new facility in Calgary. As part of this
relocation, the Fund has invested $7.2 million for the six-month period ended
June 30, 2007 in the new Calgary facility ($2.0 million - 2006). This
investment has been excluded from distributable cash. Also the Fund invested
$38.5 million as part of a lease buyout for two terminals. ($10.5 million -
2006) This has also been excluded from distributable cash.

    Note 2: Scheduled debt repayment excludes:

    1) Debt payments made on debt acquired as part of business acquisitions.
       This totals $26.7 million for the six-month period ended June 30, 2007
       ($38.2 million - 2006),
    2) Term loan due on September 30, 2013 of $160 million, the revolving
       term loan due on September 30, 2010 of $274.9 million, and single
       payment due on July 15, 2009 of $27.9 million to CIT Financial Ltd for
       its 5 year term loan.

    The total scheduled debt payable as at June 30, 2007 totals $41.0 million
($70.1 million - 2006).

    Note 3: Tracking shareholders dividend

    Dividend declared to Tracking shareholders net of income taxes excludes a
holdback portion which is due and payable to Tracking shareholders no later
than March 31 of the following fiscal year in which the dividend was declared.
    
    %SEDAR: 00018303EF




For further information:

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

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