TransForce Inc. Announces 2010 Second Quarter Results
- 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
Montreal, July 29, 2010 – 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
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 halfresulting 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.
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.
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.transforcecompany.com.