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TransForce Inc. Announces Solid 2011 Second Quarter Results

  • 31% increase in second-quarter total revenue
  • EBIT growth of 21% to $49.3 million
  • Second-quarter adjusted profit rose 20% to $28.0 million
  • Net cash from operating activities, before net change in non-cash working capital, up 11% to $67.3 million
  • Acquisition of expedited cross border carrier Concord Transportation Inc.

Montreal, Quebec, August 2, 2011 – TransForce Inc. (TSX: TFI), a North American leader in the transportation and logistics industry, today announced its results for the second quarter ended June 30, 2011.


“TransForce achieved a solid performance in the second quarter. Revenue growth was driven by recent acquisitions and our relentless focus on operating efficiencies yielded another solid increase in the key EBIT metric despite a hesitant economy. With the addition of Dynamex and the creation of Loomis Express through the acquisition of DHL Express Canada’s domestic operations, we are positioned to further leverage the strength of our expanded Package and Courier network. The Less-Than-Truckload (“LTL”) market remains challenging and we continue to proactively implement measures to further optimize asset utilization. Such initiatives were beneficial to our Truckload (“TL”) activities, as profitability further increased despite stable revenue. Finally, stronger demand from the energy sector remains a key performance driver in the Specialized Services segment,” said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce.

 

Financial highlights
(in millions of dollars, except per share data)
Quarters ended June 30, Six months ended June 30,
Q1 ending Mar. 31
2011 2010 2011 2010
Total revenue 650.8 496.9 1,212.1 963.0
Revenue excluding fuel surcharge 581.5 455.9 1,090.5 885.1
Profit from operating activities (EBIT 1) 49.3 40.9 73.7 59.0
Adjusted profit 2 28.0 23.3 40.2 29.2
      Per share – diluted ($) 0.29 0.24 0.42 0.31
Profit for the period 26.2 17.0 41.2 43.1
      Per share – diluted ($) 0.27 0.18 0.43 0.45

 

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.

 

Second-quarter results

Total revenue increased $153.9 million, or 31%, to $650.8 million. The acquisition of Dynamex on February 22, 2011 and of the assets of Speedy Heavy Hauling Inc. (“Speedy”) in August 2010, jointly contributed revenue of approximately $140 million in the second quarter of 2011.


Second-quarter EBIT totalled $49.3 million, or 7.6% of total revenue, up from $40.9 million, or 8.2% of total revenue in the corresponding period a year earlier. The increase in monetary terms mostly reflects the aforementioned acquisitions, ongoing cost management and asset optimization initiatives, while the reduction as a percentage of total revenue stems from reduced profitability for the LTL segment, Dynamex’s lower margins, and the year-over-year impact of the depreciation of the U.S. dollar versus the Canadian currency.


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, rose 20% to $28.0 million, or $0.29 per share, fully diluted, from $23.3 million, or $0.24 per share, fully diluted, last year. Finally, profit for the period ended June 30, 2011 stood at $26.2 million, or $0.27 per share, fully diluted, versus $17.0 million, or $0.18 per share, fully diluted, in the second 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 $67.3 million, representing an increase of 11% from $60.4 million a
year earlier. 

 

Six-month results

For the six-month period ended June 30, 2011, consolidated total revenue was $1.2 billion, up from $963.0 million in the six-month period ended June 30, 2010. EBIT rose 25% to $73.7 million, from $59.0 million. Adjusted profit increased 37% to $40.2 million, or $0.42 per share, fully diluted, from $29.2 million, or $0.31 per share, fully diluted. Profit for the period stood at $41.2 million, or $0.43 per share, fully diluted, versus $43.1 million, or $0.45 per share, fully diluted. Of note, profit for the prior-year period included a non-recurring gain of $15.7 million. Finally, net cash from operating activities, before net change in non-cash operating working capital, grew 15% to $112.3 million.

 

Segmented results

(in millions of dollars) Quarters ended June 30, Q1 ending Mar. 31
Titre
2011 2010 2011 2010
  $   $ $ $
Total revenue
     Package and Courier 225.3 94.0 374.0 183.6
     Less-Than-Truckload 121.6 138.4 244.7 265.5
     Truckload 175.0 165.6 339.5 318.8
     Specialized Services 142.7 112.8 282.2 221.2
     Eliminations (13.8) (13.9) (28.3) (26.1)
Total 650.8 496.9 1,212.1 963.0
$ % of Rev. $ % of Rev. $ % of Rev. $ % of Rev.
Profit from operating activities (EBIT)
     Package and Courier 16.6 7.4 11.1 11.8 25.9 6.9 15.8 8.6
     Less-Than-Truckload 5.3 4.4 9.8 7.1 2.9 1.2 11.7 4.4
     Truckload 13.0 7.4 11.3 6.8 19.1 5.6 14.4 4.5
     Specialized Services 16.8 11.8 10.1 9.0 31.4 11.1 21.9 9.9
     Corporate (2.4) (1.4) (5.6) (4.8)
Total 49.3 7.6 40.9 8.2 73.7 6.1 59.0 6.1


 

Financial position remains solid

TransForce continues to focus on cash flow generation to maintain the flexibility to pursue its carefully targeted acquisition strategy. During the second quarter, a solid cash flow generation allowed for liquidities required for the acquisition of DHL Express Canada’s domestic business and ongoing capital investments to support growth initiatives. However, the labour conflict at Canada Post at the end of June had a negative impact on the collection of accounts receivable, which slightly increased working capital and indebtedness at the end of the second quarter. The situation normalized during the first few weeks of the third quarter.

 

Acquisition of concord transportation

TransForce also announced today that effective August 1, 2011 it has acquired the shares of Toronto-based Concord Transportation Inc., an expedited carrier specializing in cross border transportation solutions. With three decades of cross border experience, Concord provides full coverage throughout North America in the premium transport of LTL and truckload freight. Its logistics division adds additional resources to meet the time and budget constraints of customers and further supplements their own fleet operations.


Concord has a network of offices in Ontario and British Columbia as well as in Illinois, California and Washington and enjoys partnerships with ATS Retail Solutions, a TransForce company, and several other US carriers. An asset light company with annual revenues in excess of $35 million, Concord has 96 employees and has agreements with approximately 130 independent contractors.


A portion of the consideration was paid by the issuance of 134,228 common shares from the treasury of TransForce Inc. at the price of $14.90 per share.

 

Outlook

“As economic signals remain mixed, particularly in the U.S., TransForce will seek to maximize efficiencies and profitability from its recent acquisitions while focusing on cash flow generation and debt reduction. In parallel, we intend to remain active, yet highly disciplined and selective when acquiring businesses in our key market segments. To carry out its strategic plan, TransForce recently strengthened its management team with the appointment of five Executive Vice Presidents and, together with its talented and dedicated employees, the entire organization is firmly committed to providing innovative, value-added solutions to its growing customer base. More importantly, shareholder value creation remains the focal point of all strategic growth initiatives,” concluded Mr. Bédard.

 

Conference call

TransForce will hold a conference call for analysts and portfolio managers on Tuesday, August 2, 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, August 9, 2011, by dialing 1-877-289-8525 or 416-640-1917 and entering passcode 4455398#.