TransForce Announces 2013 Second Quarter Results

• Total revenue of $792.3 million, compared with $812.0 million last year
• EBIT increased in the Package and Courier and LTL segments, but decreased on a consolidated basis
• Adjusted EPS of $0.39 per share, up from $0.38 per share a year ago
• Strong free cash flow of $91.1 million used to reimburse debt and repurchase common shares
• Agreement to acquire Texas-based E.L. Farmer
  
  

MONTREAL, July 29, 2013 /CNW Telbec/ - 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, 2013.

"Profit improvements in Package and Courier and Less-Than-Truckload ("LTL") activities were overshadowed by continued weakness in rig moving activities of the energy sector, resulting in lower year-over-year revenue and EBIT for TransForce in the second quarter," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce. "More importantly, relentless efforts to optimize asset utilization, including disposing of excess assets, resulted in a solid free cash flow generation of $91.1 million, which was used to reimburse debt and repurchase common shares."

"On the operating front, margins from existing Package and Courier operations further improved, as additional efficiency gains more than offset a loss at Velocity Express ("Velocity"), while overall volume held steady. In the LTL segment, successful measures to rationalize our asset base and reduce costs resulted in a higher year-over-year EBIT before gains on the disposal of property and equipment. A weak economy negatively impacted the Truckload ("TL") segment and we vigilantly allocated resources to reflect demand variations. Finally, services to the Energy sector remained considerably affected by the severe decline in drilling activity in North America and we have taken proactive measures to better align supply to new demand levels," added Mr. Bédard.

SECOND-QUARTER RESULTS
Total revenue declined by 2.4%, to $792.3 million mainly due to lower revenue in services to the Energy sector and in TL activities, partially offset by the contribution from Velocity, acquired on February 1, 2013. Second-quarter EBIT amounted to $62.3 million, or 7.9% of total revenue, versus $68.6 million, or 8.5% of total revenue in the corresponding period a year earlier. Excluding the loss at Velocity, the EBIT margin remained essentially stable at 8.4%.

Adjusted net income, which excludes the after-tax effect of changes in the fair value of derivatives and net foreign exchange gain or loss, was $37.4 million versus $37.8 million last year. Considering the repurchase of 4.1 million common shares in the last twelve months, adjusted EPS increased to $0.39 from $0.38 a year ago on a fully diluted basis. Net income for the period stood at $26.6 million, or $0.28 per share, fully diluted, versus $34.1 million, or $0.34 per share, fully diluted, in the second quarter of 2012.

Free cash flow for the second quarter of 2013 amounted to $91.1 million, or $0.98 per share, up from $58.0 million, or $0.61 per share last year. Free cash flow includes proceeds from the sale of property and equipment of $22.5 million, which further reflects TransForce's commitment to maximize return on assets. Funds were primarily used to reimburse long-term debt ($37.2 million) and repurchase common shares ($14.7 million) during the period. Based on a June 30, 2013 closing share price of $20.55, the strong free cash flow of $271.4 million, or $2.93 per share, generated in the last twelve months represented a solid free cash flow yield of 14.2%.

SIX-MONTH RESULTS
For the six-month period ended June 30, 2013, total revenue reached $1.5 billion, versus $1.6 billion a year earlier. EBIT amounted to $106.8 million, or 6.9% of total revenue, compared with $116.1 million, or 7.3% of total revenue, last year. Adjusted net income totalled $61.2 million, or $0.65 per share, fully diluted, versus $62.5 million, or $0.63 per share, fully diluted, in the prior year. Net income was $45.4 million, or $0.48 per share, fully diluted, down from $64.2 million, or $0.65 per share, fully diluted. Finally, free cash flow rose 15.9% to $111.7 million, or $1.20 per share.

SEGMENTED RESULTS

AGREEMENT TO ACQUIRE TEXAS-BASED E.L. FARMER
TransForce has entered into an agreement, subject to customary closing conditions, to acquire 100% of the issued and outstanding shares of JCF Inc. and its subsidiary, E.L. Farmer & Company (together referred to as "E.L. Farmer"). Founded in 1910, E.L. Farmer is headquartered in Odessa, Texas. Operating mainly in all regions of Texas, E.L. Farmer is an asset-light dedicated provider of pipe storage and hauling services for the oilfield industry. The transaction is expected to generate annual revenues of approximately $70.0 million and is expected to be completed in the third quarter.

RENEWAL OF NORMAL COURSE ISSUER BID
Earlier today, TransForce also announced its intention to renew its normal course issuer bid ("NCIB"), subject to the approval of the Toronto Stock Exchange. Under the current NCIB, TransForce repurchased 738,900 common shares during the three-month period ended June 30, 2013 for a total amount of $14.7 million.

OUTLOOK
"TransForce is committed to create shareholder value by carefully executing its business strategy of improving operating efficiency and asset utilization, while leveraging its enhanced density and seeking accretive acquisition opportunities. In the United States, we are progressing well with the integration of our same-day Package and Courier operations and the market for these services is growing, but softness persists in the energy sector and we do not see any short-term significant improvement. Meanwhile, industry conditions remain difficult in Canada across all business segments and we do not expect the situation to improve for the remainder of 2013. As these conditions limit organic growth, key drivers for revenue and EBIT growth remain efficiency improvement, asset rationalization and a disciplined acquisition strategy, like the proposed E.L. Farmer acquisition. Accordingly, we will deploy resources in initiatives that will allow us to maximize return on assets and generate a strong cash flow," concluded Mr. Bédard.

CONFERENCE CALL
TransForce will hold a conference call for analysts and portfolio managers on Monday, July 29, 2013 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 1-888-231-8191. A recording of the call will be available until midnight, August 5, 2013, by dialling 1-855-859-2056 or 416-849-0833 and entering passcode 14965453.

ABOUT TRANSFORCE
TransForce Inc. is a North American leader in the transportation and logistics industry operating across Canada and the United States through its subsidiaries. TransForce creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned, operating subsidiaries. Under the TransForce umbrella, companies benefit from corporate financial and operational resources to build their businesses and increase their efficiency. TransForce companies service the following segments:

• Package and Courier; 
• Less-Than-Truckload; 
• Truckload, which includes specialized truckload and dedicated services;
• Specialized Services, which includes services to the energy sector, waste management, logistics and ancillary transportation services.

TransForce Inc. (TFI) is publicly traded on the Toronto Stock Exchange (TSX). For more information, visit http://www.transforcecompany.com.

FORWARD-LOOKING STATEMENTS
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of TransForce. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for TransForce's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

NON-IFRS MEASURES
EBIT, adjusted net income and free cash flow are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these to be useful information to assist investors in evaluating the Company's profitability, liquidity and ability to generate funds to finance its operations.

Note to readers: Consolidated financial statements and Management's Discussion & Analysis are available on TransForce's website at www.transforcecompany.com.

SOURCE: TRANSFORCE INC.