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Attention Business/Financial Editors
TransForce Inc. Announces 2010 Second Quarter Results
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- 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
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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:
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- 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.
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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.
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CONSOLIDATED BALANCE SHEETS
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(in thousands of dollars) As at As at
(unaudited) June 30, December 31,
2010 2009
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ASSETS
Current assets:
Accounts receivable 278,731 262,219
Inventories 8,903 9,116
Prepaid expenses 18,583 9,480
Income tax receivable - 751
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306,217 281,566
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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
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1,566,558 1,525,656
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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
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239,772 608,048
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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
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Shareholders' equity:
Share capital 567,551 567,551
Contributed surplus 1,800 900
Deficit (10,457) (35,036)
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558,894 533,415
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1,566,558 1,525,656
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CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND DEFICIT
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(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
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Revenue 455,860 424,762 885,065 847,011
Fuel surcharge revenue 40,998 29,404 77,887 59,535
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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
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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)
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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
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6,321 8,389 10,996 9,541
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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)
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Deficit, end of period (10,457) (5,821) (10,457) (5,821)
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Earnings per share:
Basic 0.18 0.21 0.46 0.24
Diluted 0.18 0.21 0.46 0.24
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Weighted average
number of shares
outstanding 95,253,937 86,790,097 95,253,937 86,790,097
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(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
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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
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49,608 54,442 93,063 87,782
Net change in non-cash
operating working
capital (9,603) (2,662) (25,098) 17,495
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40,005 51,780 67,965 105,277
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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)
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(17,994) (48,657) (46,090) (88,749)
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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)
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(22,011) (3,123) (21,875) (16,528)
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Net change in cash and
cash equivalent during
the period - - - -
Cash and cash equivalent,
beginning of the period - - - -
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Cash and cash equivalent,
end of the period - - - -
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-30-
/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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