TransForce Inc. Announces Solid 2011 First Quarter Results
- 20% increase in first-quarter total revenue
- EBIT growth of 35% to $24.4 million
- First-quarter adjusted profit more than doubled to $12.2 million
- Net cash from operating activities, before net change in non-cash working capital, up 19%
- Increase in quarterly dividend to $0.115 per share
Montreal, Quebec, May 17, 2011 – TransForce Inc. (TSX: TFI), a North American leader in the transportation and logistics industry, today announced its results for the first quarter ended March 31, 2011. These results are the first presented by TransForce following the adoption, on January 1, 2011, of International Financial Reporting Standards (“IFRS”). Results for the prior year period have been restated. The Company’s strong start to the year was achieved in spite of a weak economic recovery and rising fuel costs.
“TransForce posted a most satisfying performance in what has historically been a seasonally-weak quarter. Our leading and growing position in strategic markets and constant focus on providing innovative, value-added solutions to our customers delivered solid dollar increases in our key EBIT metric, as well as in cash flow and adjusted profit. This momentum offset headwinds caused by the rapid rise in fuel costs and the persisting strength in the value of the Canadian dollar. Above all, TransForce remained proactive in the management of operating costs, while continuing to improve efficiencies in its expanding continental network. In parallel with our drive to optimize operating asset utilization, we have pursued our vision of strategic growth as we remain concentrated on shareholder enhancement,” said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce.
(in millions of dollars, except per share data)
|Quarters ended March 31,
|Revenue excluding fuel surcharge
|Profit from operating activities (EBIT1)
| Per share – diluted ($)
|Profit for the period
| Per share – diluted ($)
|Weighted avg. number of shares outst. (basic, in thousands)
1 Earnings before finance income and costs and income taxes.
2 Excluding the after-tax effect of changes in the fair value of derivatives and of items that are not in the Company’s normal business.
Consolidated total revenue increased $95.2 million to $561.3 million. The acquisition of Dynamex Inc. (“Dynamex”) on February 22, 2011 and of the assets of Speedy Heavy Hauling Inc. (“Speedy”) in August 2010, jointly contributed revenue of approximately $70 million in the first quarter this year.
First-quarter EBIT totalled $24.4 million, or 4.3% of total revenue, up from $18.1 million, or 3.9% of total revenue in the corresponding period a year earlier. This increase in monetary terms is mainly attributable to the aforementioned acquisitions and ongoing cost management initiatives. First-quarter operating margins increased despite Dynamex’s lower margins, reduced profitability for the Less-Than-Truckload (“LTL”) segment, and timing differences between rapid variations in fuel costs and adjustments in fuel surcharges.
Adjusted profit, which excludes the after-tax effect of changes in the fair value of derivatives and of items that are not in the Company’s normal business, more than doubled to $12.2 million, or $0.12 per share, fully diluted, from $6.0 million, or $0.06 per share, fully diluted, last year. In the first quarter of 2010, TransForce recorded a non-recurring gain of $15.7 million related to the remeasurement to fair value of the existing interest in Laflèche Environmental Inc. following the acquisition of the remaining 50% during the period. As a result, profit for the period ended March 31, 2011 stood at $14.9 million, or $0.15 per share, fully diluted, versus $26.1 million, or $0.27 per share, fully diluted, in the first quarter of 2010.
As a result of improved operating profitability, net cash from operating activities, before net change in non-cash operating working capital, reached $45.0 million, representing an increase of 19% over $37.7 million a
Package and Courier revenue before fuel surcharge totalled $135.6 million in the first quarter of 2011, up significantly from $82.9 million in the prior year. This 64% increase is mainly attributable to a $45-million contribution from Dynamex and, to a lesser extent, to volume increases from Canpar and ATS. Driven by improved operating efficiencies and the contribution of Dynamex, segment EBIT doubled to reach $9.3 million, up from $4.7 million a year ago.
Less-Than-Truckload (“LTL”) first-quarter revenue before fuel surcharge decreased 6% to $105.4 million due to lower volume resulting from the consolidation of certain operating companies and weak market conditions, as well as the appreciation of the Canadian dollar. Reflecting these factors, in addition to non-recurring expenses of $1.2 million for employee termination costs related to the consolidation of certain operating companies, EBIT showed a loss of $2.4 million, versus a profit of $1.9 million last year.
Truckload (“TL”) revenue before fuel surcharge was $144.4 million in the first quarter of 2011, up from $139.0 million in the corresponding period in 2010. This 4% increase is mostly attributable to volume increases, partially offset by unfavourable currency movements. A better fleet utilization, including a reduction of approximately 150 power units in comparison with the year-earlier period, more than offset the normal timing differences between rapid variations in fuel costs and adjustments in fuel surcharges. As a result, EBIT increased 92% to $6.2 million, up from $3.2 million last year.
Specialized Services first-quarter revenue before fuel surcharge reached $138.1 million, up from $107.2 million a year earlier. This 29% increase stems mainly from the acquisition of Speedy and solid internal growth in energy sector services. EBIT rose 24% to $14.6 million, from $11.8 million a year ago, as margins remained stable in waste management and ancillary transportation services, partially offset by lower yields in certain energy sector
Financial position remains solid
Reflecting the acquisition of Dynamex, the ratio of total long-term debt, including the current portion of long-term debt and convertible debentures, to shareholders’ equity was 1.35 as at March 31, 2011, up from 1.04 as at December 31, 2010. Subsequent to the end of the quarter, TransForce amended the $100 million unsecure debenture with Solidarity Fund QFL, reducing the fixed interest rate by 0.9% until maturity in October 2017.
Quarterly dividend increased to $0.115 per share
The Board of Directors of TransForce has declared a quarterly dividend of $0.115 per outstanding common share of its capital, representing a 15% increase over its previous quarterly dividend of $0.10 per share. The dividend is payable on July 15, 2011 to shareholders of record at the close of business on June 30, 2011. This dividend is designated to be an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and any applicable provincial legislation pertaining to eligible dividends.
“Since the beginning of 2011, TransForce has further enhanced its leadership in the North American Package and Courier industry by broadening its geographical reach, service offering and customer base,” commented Mr. Bédard. “The acquisition of Dynamex brings us a strong brand and a significant presence in the U.S. It also provides additional opportunities, as the U.S. market remains highly fragmented. The acquisition of DHL’s Canadian domestic operations, as well as the ten-year strategic alliance with DHL Express Canada announced last month, once completed, will create greater scale and density for TransForce in the Canadian market, while providing additional international services to our existing customers. As we gradually achieve all synergies and efficiencies, these new and upcoming acquisitions will further increase shareholder value.”
“While in the short-term we will focus on cash flow generation and debt reduction, TransForce intends to remain an active, yet highly disciplined and selective consolidator in its strategic market segments. As questions persist concerning a sustained recovery in the economy, TransForce will continue its successful program of controlling costs, improving operating efficiencies, as well as protecting and improving its operating margins,” concluded Mr. Bédard.
TransForce will hold a conference call for analysts and portfolio managers on Wednesday, May 18, 2011 at 9:00 a.m. Eastern Time, to discuss these results. Business media are also invited to listen to the call. Interested parties can join the call by dialling 1-800-731-5319. A recording of the call will be available until midnight, May 25, 2011, by dialing 1-877-289-8525 or 416-640-1917 and entering passcode 4436291#.