- Increased revenues to $493.5 million
- Generated EBITDA of $61.1 million
- Completed acquisitions of ICS Courier and Thibodeau
MONTREAL, February 28, 2008 - TransForce Income Fund (TSX: TIF.UN), the leader in the
Canadian transportation and logistics industry, today announced its results for the fourth quarter
and for the year ended December 31, 2007.
Fourth Quarter Results
In the fourth quarter of 2007, the Fund continued to deliver steady results despite continued
weakness in the economy. In the quarter, TransForce increased revenues to $493.5 million from
$456.8 million in the same period of 2006. EBITDA (earnings before interest, taxes, depreciation
and amortization and equivalent to operating income on TransForce’s financial statements) was
$61.1 million compared with $65.8 million in the same period in 2006. Significant acquisitions
contributed $2.3 million of EBITDA in the fourth quarter of 2007 compared with a year earlier. Cash
flow from operating activities, before net change in non-cash working capital balances was $51.1
million compared with $55.9 million in the fourth quarter.
Distributable cash from operating activities was $49.8 million in the fourth quarter of 2007,
compared with $60.7 million in the fourth quarter of 2006. TransForce’s regular distribution payout
ratio, or cash distributed as a percent of cash available for distribution, was 155.9% in the quarter,
compared with 90.3% in the same period a year earlier.
“High fuel costs and the strong Canadian dollar in the fourth quarter of 2007 continued to be
challenging for our industry and for some of the TransForce companies. However, our geographic
and business line diversification meant that unitholders were able to benefit from gains in our
parcel division as well as our waste management, logistics, fleet management and personnel and
leasing businesses,” said Alain Bédard, Chairman, President and Chief Executive Officer of
TransForce Income Fund. “Through acquisition, diversification and disciplined management,
TransForce continued to create value.”
Despite the difficult economic environment, the Fund continued to produce positive financial results
in 2007. Revenue increased to $1.9 billion from $1.8 billion in 2006. Significant acquisitions were
responsible for $124.1 million of the growth in revenue over 2006. TransForce also increased
EBITDA by 1% in 2007 to $243.0 million from $241.7 million in 2006.
In 2007, the Fund paid a total of $128.7 million in regular distributions to tracking shareholders
and unitholders. Regular distributions declared as a percentage of cash available for distribution
was 97.0% in 2007, compared with 81.9% in 2006.
“The downturn in economic activity is unfortunate but not unexpected and we were prepared to
respond effectively. While some businesses such as cross-border Less-than-Truckload and Truckload
have been negatively affected by declines in trade activity, we have other businesses performing
very well. Because of our investments in a range of activities, TransForce is better positioned than
many for this environment and to continue to generate value for unitholders,” Mr. Bédard said.
“TransForce is benefiting from its focus on disciplined management and its diversification across
geographies and market segments. We do not expect a return to a more buoyant North American
economy in the short-term but remain convinced that our strategy and operating management are
Mr. Bédard noted that overall business conditions may encourage further outsourcing by client
companies and that this would be a positive development for the Fund’s acquisitions in the
logistics, dedicated fleet and personnel services businesses.
TransForce also announced that, as a result of the acquisition of scheduled courier service ICS in
2007, it intends to separate its Parcel businesses, Canpar and ICS, into a new business segment,
distinct from Less-Than-Truckload. It will begin reporting its operations in five segments beginning
with the first quarter of 2008.
TransForce conducted its annual goodwill impairment at December 31, 2007 and found that the
carrying amount of the Oilfield Services division’s assets exceeded their fair value. Accordingly, the
Fund recognized a goodwill impairment loss of $56.0 million in that division in the fourth quarter.
While management is confident in the long term fundamentals of the Canadian oil and gas industry,
the impairment is the result of lower natural gas prices, the related decline in activity and
downward price pressure, as well as the Alberta government’s changes to royalty levels for the oil
and gas industry served by the division. This charge had no effect on the Fund’s cash generation.
TransForce's strategic objective to date has been to be a leader and consolidator in Canada's
trucking and transportation logistics industry. In this respect, TransForce has acquired more than
75 competitors over the last 5 years. There continues to be a significant opportunity for TransForce
to play a leading role in the consolidation of the Canadian transportation industry, particularly in
light of the current business and economic environment. In this context, the Fund's Board of
Trustees' objective is to ensure that TransForce's financing capabilities and capital structure are
aligned with its strategic objective. The rules concerning Income Trusts as announced by the
Federal Government on October 31, 2006 may limit TransForce's ability to continue with its
strategic objectives especially as it relates to the ability to raise funds and thereby effect
acquisitions. As a result, the Fund's Board of Trustees has directed management to investigate all
alternatives available to TransForce, including possible conversion to a corporate structure. Any
future decision by the Fund's Board of Trustees concerning these alternatives will be announced in
Management Conference Call
TransForce will host a conference call for investors to discuss the results for the fourth quarter and
2007 year today, February 28, at 9:00 a.m. 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 1-800-741-0104. A recording of the
call will be available until midnight March 6, 2008, by dialing 1-800-558-5253 or 416-626-4100
and entering passcode 21375836. Media are invited to participate in listen-only mode and to use
the media contact listed below for further information.
The financial statements for the periods ended December 31, 2007 and 2006 included below are an
integral part of this news release.