TransForce Inc. Announces Growth in Fourth Quarter and Annual Results for 2008
- Increased revenues by 10% to $544.5 million
- Increased EBITDA by 21% to $73.8 million
- Increased fourth quarter earnings per share to $0.17 from a loss of $0.36
- Increased annual earnings per share to $0.92 per share from $0.52 per share in 2007
Montreal, March 12, 2009 – TransForce Inc. (“TransForce” or “the Company”) (TSX: TFI - T), the
leader in the Canadian transportation and logistics industry, today announced steady growth across
its top line and bottom line results for the fourth quarter and year ended December 31, 2008.
“We were able to deliver strong results in the fourth quarter, while also taking a number of steps to
address imminent challenges posed by the deteriorating economic conditions,” said Alain Bédard,
President and Chief Executive Officer of TransForce Inc. “While we increased revenues, our focus
was on decreasing operating expenses across the Company. Initiatives taken to curtail costs
included implementing hiring and salary freezes, and placing strict controls on capital and
discretionary expenditures. We also continued to adjust staffing levels to align with lower demand.
Management’s conservative, disciplined approach to operating TransForce will serve us well as we
face significant challenges in 2009.”
Fourth Quarter Results
In the quarter, TransForce delivered year-over-year increases across key financial performance indicators.
For the three months ended December 31, 2008 the Company increased revenues by 10% to
$544.5 million from $493.5 million in the same period of 2007. This increase was partly due to
significant acquisitions concluded in or after the fourth quarter of 2007, including ICS Courier and
The Company increased EBITDA (earnings before interest, taxes, depreciation and amortization and
equivalent to operating income on TransForce’s financial statements) by 21% to $73.8 million, from
$61.1 million in the fourth quarter of 2007. Significant acquisitions contributed $2.8 million in new
EBITDA. The remaining increase was the result of efficiency gains and cost containment efforts.
TransForce’s earnings before income taxes were $18.5 million (including $11.7 million unrealized
loss on interest rate swap contracts) compared with a loss of $30.2 million in the fourth quarter of
2007, when TransForce reported a goodwill impairment of $56.0 million. Adjusted earnings before
taxes were $30.2 million in the fourth quarter of 2008 compared with $25.8 million in the same
period of 2007, before non-recurring items.
Earnings per share were $0.17 per share compared with a loss of $0.36 per share in the same
period of 2007. Adjusted earnings per share were $0.26 compared with $0.29 per share in the
fourth quarter of 2007 before one-time costs.
During the fourth quarter, TransForce reorganized its segments, combining its Truckload segment
with Specialized Truckload. The Company now reports revenues from its four segments: Less-Than-
Truckload, Package and Courier, Specialized Services and Truckload.
“TransForce increased revenues in three of its four operating segments, with fourth quarter
revenues in the Truckload segment off by six percent. In the context of a weakening economy, this
is a considerable achievement,” said Mr. Bédard. “However, the deteriorating trend is clear so
during the fourth quarter we introduced a series of cost containment initiatives to ensure TransForce
remains strong. We know what TransForce will be up against in 2009, and have moved proactively
to position the Company to meet these challenges.”
FY 2008 Results
During the 12 months ended December 31, 2008, TransForce increased revenues to a record $2.3
billion from $1.9 billion in 2007. Significant acquisitions accounted for $160.6 million in additional
revenues in 2008. The Company also increased EBITDA by 15% to $280 million from $243 million
in 2007. Adjusted EBITDA increased 19% to $288.7 million, before one-time conversion costs of
$8.7 million and a $13.8 million unrealized loss on interest rate swap contracts. Earnings before
income taxes increased to $99.2 million from $48.4 million in 2007. Adjusted earnings before taxes
increased to $121.7 million from $104.4 million.
The Company increased earnings per share to $0.92 per share in 2008 from $0.52 per share the
previous year. Adjusted earnings per share were $1.14 per share in 2008 compared with $1.17 per
share in 2007.
“TransForce increased revenues across all operating segments in 2008. The Company is diversified
across various industries and geographies, so while some areas of the economy experienced
difficulties, TransForce was able to benefit from its investment in other regions and businesses,”
said Mr. Bédard. “Like many companies, our outlook for 2009 is uncertain as a result of the broader
economic picture. The operating environment is worsening and TransForce will continue to focus its
disciplined efforts on controlling costs. We see a difficult period ahead although it may be mitigated
somewhat by a lower Canadian dollar, lower fuel costs, reduced capital costs and economic stimulus
packages on both sides of the border.”
Outlook on Liquidity
Although the Company’s results for 2008 were satisfactory, the economic environment in 2009 is
uncertain. Compounding this problem, volatility in the North American credit markets has resulted
in much tougher credit markets and conditions.
Notwithstanding this, the Company is well positioned to weather these current conditions.
The Company’s current outlook for 2009 is that it will generate cash flow after interest expense,
current income tax expense, dividends and capital expenditures in the range of $100 million. This
excess cash flow will serve to reduce its revolving line of credit.
During 2008, the Company took advantage of lower rolling stock acquisition costs as a result of the
strong Canadian dollar and deep manufacturers’ discounts in order to acquire new equipment. As
such, the Company’s outlook for capital expenditures in 2009 is less than $50 million.
The above mentioned items will allow the Company to reduce its overall debt levels in 2009. The
Company forecasts its long term debt position to be approximately $700 million by the end of
2009. The 4 year revolving term loan component of the Company’s syndicated bank debt comes
due in October 2010 while the 7 year term loan component comes due in October 2013.
As part of the Company’s syndicated bank debt, two financial covenants must be maintained. The
first is an adjusted debt (balance sheet debt plus 5 times rent expense) to earnings before interest,
income taxes, depreciation and amortization and rent expense (“EBITDAR”) ratio. This covenant is
measured on a consolidated last twelve month basis and must be kept below 3.5 times. As at
December 31, 2008, the Company’s adjusted debt to EBITDAR ratio was 2.97. The second is an
EBITDAR to fixed cost (interest and rent expense) ratio. This covenant is measured on a
consolidated last twelve month basis and must be kept above 2.75 times. As at December 31,
2008, the Company’s EBITDAR to fixed cost ratio was 3.21 times. The Company’s outlook with
regard to these covenants is that it will be in compliance throughout 2009.
Management Conference Call
TransForce will host a conference call for investors to discuss the results of the fourth quarter and
2008 year later today, March 12, 2009, at 9:00 Eastern Time. Participating from the Company will
be Alain Bédard, Chairman, President and Chief Executive Officer, and Salvatore Vitale, Chief
To participate in the conference call, investors are invited to call 1-800-909-4804
A recording of the call will be available until 11:00 p.m., March 19, 2009, by dialing
1-800-558-5253 or 416-626-4100 and entering passcode 21413858.
The financial statements for the periods ended December 31, 2008 and 2007 included below are an
integral part of this news release.