- Increased revenues to $493.5 million
- Generated EBITDA of $61.1 million
- Completed acquisitions of ICS Courier and Thibodeau
MONTREAL, Feb. 28 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN), the leader in the Canadian transportation and logistics industry, today announced its results for the fourth quarter and for the year ended December 31, 2007.
Fourth Quarter Results
In the fourth quarter of 2007, the Fund continued to deliver steady results despite continued weakness in the economy. In the quarter, TransForce increased revenues to $493.5 million from $456.8 million in the same period of 2006. EBITDA (earnings before interest, taxes, depreciation and amortization and equivalent to operating income on TransForce's financial statements) was $61.1 million compared with $65.8 million in the same period in 2006. Significant acquisitions contributed $2.3 million of EBITDA in the fourth quarter of 2007 compared with a year earlier. Cash flow from operating activities, before net change in non-cash working capital balances was $51.1 million compared with $55.9 million in the fourth quarter.
Distributable cash from operating activities was $49.8 million in the fourth quarter of 2007, compared with $60.7 million in the fourth quarter of 2006. TransForce's regular distribution payout ratio, or cash distributed as a percent of cash available for distribution, was 155.9% in the quarter, compared with 90.3% in the same period a year earlier.
"High fuel costs and the strong Canadian dollar in the fourth quarter of 2007 continued to be challenging for our industry and for some of the TransForce companies. However, our geographic and business line diversification meant that unitholders were able to benefit from gains in our parcel division as well as our waste management, logistics, fleet management and personnel and leasing businesses," said Alain Bedard, Chairman, President and Chief Executive Officer of TransForce Income Fund. "Through acquisition, diversification and disciplined management, TransForce continued to create value."
2007 Results
Despite the difficult economic environment, the Fund continued to produce positive financial results in 2007. Revenue increased to $1.9 billion from $1.8 billion in 2006. Significant acquisitions were responsible for $124.1 million of the growth in revenue over 2006. TransForce also increased EBITDA by 1% in 2007 to $243.0 million from $241.7 million in 2006.
In 2007, the Fund paid a total of $128.7 million in regular distributions to tracking shareholders and unitholders. Regular distributions declared as a percentage of cash available for distribution was 97.0% in 2007, compared with 81.9% in 2006.
"The downturn in economic activity is unfortunate but not unexpected and we were prepared to respond effectively. While some businesses such as cross-border Less-than-Truckload and Truckload have been negatively affected by declines in trade activity, we have other businesses performing very well. Because of our investments in a range of activities, TransForce is better positioned than many for this environment and to continue to generate value for unitholders," Mr. Bedard said. "TransForce is benefiting from its focus on disciplined management and its diversification across geographies and market segments. We do not expect a return to a more buoyant North American economy in the short-term but remain convinced that our strategy and operating management are working effectively.
Mr. Bedard noted that overall business conditions may encourage further outsourcing by client companies and that this would be a positive development for the Fund's acquisitions in the logistics, dedicated fleet and personnel services businesses.
TransForce also announced that, as a result of the acquisition of scheduled courier service ICS in 2007, it intends to separate its Parcel businesses, Canpar and ICS, into a new business segment, distinct from Less-Than-Truckload. It will begin reporting its operations in five segments beginning with the first quarter of 2008.
TransForce conducted its annual goodwill impairment at December 31, 2007 and found that the carrying amount of the Oilfield Services division's assets exceeded their fair value. Accordingly, the Fund recognized a goodwill impairment loss of $56.0 million in that division in the fourth quarter. While management is confident in the long term fundamentals of the Canadian oil and gas industry, the impairment is the result of lower natural gas prices, the related decline in activity and downward price pressure, as well as the Alberta government's changes to royalty levels for the oil and gas industry served by the division. This charge had no effect on the Fund's cash generation.
Outlook
TransForce's strategic objective todate has been to be a leader and consolidator in Canada's trucking and transportation logistics industry. In this respect, TransForce has acquired more than 75 competitors over the last 5 years. There continues to be a significant opportunity for TransForce to play a leading role in the consolidation of the Canadian transportation industry, particularly in light of the current business and economic environment. In this context, the Fund's Board of Trustees' objective is to ensure that TransForce's financing capabilities and capital structure are aligned with its strategic objective. The rules concerning Income Trusts as announced by the Federal Government on October 31, 2006 may limit TransForce's ability to continue with its strategic objectives especially as it relates to the ability to raise funds and thereby effect acquisitions. As a result, the Fund's Board of Trustees has directed management to investigate all alternatives available to TransForce, including possible conversion to a corporate structure. Any future decision by the Fund's Board of Trustees concerning these alternatives will be announced in due course.
Management Conference Call
TransForce will host a conference call for investors to discuss the results for the fourth quarter and 2007 year today, February 28, at 9:00 a.m. eastern time. Participating from the Fund will be Alain Bedard, Chairman, President and Chief Executive Officer, and Salvatore Vitale, Chief Financial Officer.
To participate in the teleconference, investors are invited to call 1-800-741-0104. A recording of the call will be available until midnight March 6, 2008, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 2175836. Media are invited to participate in listen-only mode and to use the media contact listed below for further information.
Financial Statements
The financial statements for the periods ended December 31, 2007 and 2006 included below are an integral part of this news release.
Profile
TransForce Income Fund (www.transforce.ca) is the leader in Canada's transportation and logistics industry. Headquartered in Montreal, Quebec, the Fund's objective is to create value for unitholders through managing and investing in a growing network of independent operating subsidiaries. TransForce provides a comprehensive and unique combination of capabilities, resources and geographical coverage in both domestic and trans-border markets. Its companies operate in four well-defined business segments:
- Less Than Truckload and Parcel Delivery;
- Specialized Services, which includes its ancillary transportation
services and fleet management & personnel services businesses;
- Specialized Truckload; and
- Truckload.
TransForce's trust units (TIF.UN) are listed on the Toronto Stock Exchange
and are included in the S&P/TSX Composite Index.
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.
For further details, please see the Financial Statements below. The
Financial Statements and Management's Discussion and Analysis can also be
found on Sedar at www.sedar.com and on the Fund's website www.transforce.ca.
CONSOLIDATED STATEMENTS OF INCOME
Three Three Twelve Twelve
(unaudited) months months months months
(in thousands of ended ended ended ended
dollars, except December 31, December 31, December 31, December 31,
per unit amounts) 2007 2006 2007 2006
Revenue 447,029 418,600 1,767,101 1,627,483
Fuel surcharge
revenue 46,499 38,224 173,048 167,364
-------------------------------------------------------------------------
Total revenues 493,528 456,824 1,940,149 1,794,847
Expenses
Operating 354,206 319,844 1,388,508 1,277,084
Fixed costs,
general and
administrative 76,937 67,093 301,382 268,724
Long-term incentive
plan 1,266 4,085 7,254 7,370
-------------------------------------------------------------------------
Operating income
before the
following: 61,119 65,802 243,005 241,669
Depreciation of
fixed assets 24,548 22,191 96,593 82,884
Amortization
of Intangible
assets 2,801 708 11,075 7,220
Interest on
long-term debt 11,053 5,446 36,245 17,867
Other interest - 620 - 5,796
Goodwill
impairment 56,000 - 56,000 -
(Gain) loss on
disposal of
fixed assets (3,065) (553) (5,293) (5,186)
-------------------------------------------------------------------------
Income (loss)
before provision
for income taxes (30,218) 37,390 48,385 133,088
Provision for
income taxes
Current 1,523 3,119 8,828 8,796
Future (884) (3,341) (5,253) (7,402)
-------------------------------------------------------------------------
639 (222) 3,575 1,394
Net income (loss)
from continuing
operations (30,857) 37,612 44,810 131,694
Earnings from
discontinued
operations - 17,441 - 19,317
-------------------------------------------------------------------------
Net income (loss) (30,857) 55,053 44,810 151,011
Earnings (loss)
per unit
From continuing
operations
Basic (0.36) 0.44 0.52 1.55
Diluted (0.36) 0.44 0.52 1.55
Net earnings (loss)
Basic (0.36) 0.64 0.52 1.78
Diluted (0.36) 0.64 0.52 1.78
-------------------------------------------------------------------------
Outstanding
weighted average
number of
Units 71,961,101 72,247,055 72,087,302 70,952,038
Tracking shares 13,765,716 13,766,316 13,765,898 13,774,001
-------------------------------------------------------------------------
Total 85,726,817 86,013,371 85,853,200 84,726,039
Units outstanding
Number of Trust
units of the Fund 73,024,381 73,023,781 73,024,381 73,023,781
Number of Tracking
shares 13,765,716 13,766,316 13,765,716 13,766,316
-------------------------------------------------------------------------
Total 86,790,097 86,790,097 86,790,097 86,790,097
CONSOLIDATED BALANCE SHEETS
As at As at
December 31, December 31,
(in thousands of dollars) 2007 2006
(audited) (audited)
ASSETS
Current assets
Accounts receivable 288,126 270,683
Inventories 9,970 9,623
Prepaid expenses 11,872 14,998
-------------------------------------------------------------------------
309,968 295,304
-------------------------------------------------------------------------
Fixed assets 649,348 533,054
Goodwill 399,828 320,716
Intangible assets 68,619 52,642
Other assets 6,238 8,688
Future income taxes 8,540 5,315
-------------------------------------------------------------------------
1,442,541 1,215,719
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities
Bank indebtedness 9,081 20,223
Accounts payable and accrued liabilities 204,907 177,846
Cash distributions payable to unitholders 9,675 9,310
Dividends payable on Tracking Share Units
of TFI Holdings Inc. 2,191 2,134
Income taxes payable 5,721 4,765
Current portion of long-term debt 35,003 35,758
-------------------------------------------------------------------------
266,578 250,036
-------------------------------------------------------------------------
Long-term debt 651,636 358,624
Minority interest 2,562 2,002
Asset retirement obligation 5,521 3,660
Future income taxes 23,737 22,147
-------------------------------------------------------------------------
Unitholder's equity
Capital contributions 519,404 519,404
Contributed surplus - 336
Units held by the fund for long-term
incentive plan (11,751) (11,136)
Retained earnings (deficit) (15,146) 70,646
-------------------------------------------------------------------------
Unitholder's equity and Tracking Share Units 492,507 579,250
-------------------------------------------------------------------------
1,442,541 1,215,719
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
(unaudited)
Three Three Twelve Twelve
months months months months
ended ended ended ended
(in thousands December 31, December 31, December 31, December 31,
of dollars) 2007 2006 2007 2006
Retained earnings,
beginning of
period 49,175 63,562 70,646 57,963
Net income for
the period (30,857) 55,053 44,810 151,011
Distributions to
unitholders (29,026) (42,667) (115,378) (122,853)
Dividends on
Tracking Share
Units of
TFI Holdings Inc. (3,626) (5,302) (14,412) (15,475)
Incentive plan
contribution (812) - (812) -
-------------------------------------------------------------------------
Retained earnings
(deficit), end
of period (15,146) 70,646 (15,146) 70,646
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Three Twelve Twelve
months months months months
ended ended ended ended
(in thousands December 31, December 31, December 31, December 31,
of dollars) 2007 2006 2007 2006
CASH FLOW FROM
OPERATING ACTIVITIES
Net income for the
period (30,857) 55,053 44,810 151,011
Non-cash items:
Depreciation of
fixed assets 24,548 22,191 96,593 84,740
Amortization of
intangible
assets 2,801 708 11,075 7,220
Goodwill
impairment 56,000 - 56,000 -
Long-term
incentive plan
expense 1,266 4,085 7,254 7,370
Deferred financing
fees 261 - 737 -
Purchase of units
held by the fund
for long-term
incentive plan (1,019) (4,863) (9,017) (13,417)
Future income
taxes (884) 2,102 (5,253) (1,076)
Gain on disposal
of discontinued
business - (22,884) - (22,884)
Gain on disposal
of fixed assets (3,065) (553) (5,293) (5,192)
Other 2,017 68 2,292 403
-------------------------------------------------------------------------
51,068 55,907 199,198 208,175
Net change in
non-cash working
capital balances
related to
operations 23,249 16,014 11,212 (9,250)
-------------------------------------------------------------------------
74,317 71,921 210,410 198,925
-------------------------------------------------------------------------
CASH FLOW FROM
FINANCING ACTIVITIES
Increase in bank
advances and
overdraft 6,225 (151,643) (11,142) (27,816)
Increase in
long-term debt (99) 9,432 2,112 9,432
Repayment of
long-term debt (12,754) (125,160) (52,845) (192,789)
Increase (decrease)
in new long term
revolver facility 86,700 281,500 262,600 281,500
Cash distributions
paid to
unitholders (29,026) (27,648) (115,013) (111,191)
Dividends paid on
Tracking Share
Units (3,358) (5,083) (14,355) (16,109)
Issuance of trust
units - - - 143,760
-------------------------------------------------------------------------
47,688 (18,602) 71,357 86,787
-------------------------------------------------------------------------
CASH FLOW FROM
INVESTING ACTIVITIES
Additions to fixed
assets (34,287) (46,615) (134,966) (115,464)
Proceeds from
disposal of
discontinued
business - 29,491 - 29,491
Proceeds from
disposal of fixed
assets 7,706 5,039 22,815 25,404
Business
acquisitions
(including bank
advances net of
cash) (97,678) (41,792) (172,897) (228,010)
Other assets, net 2,254 558 3,281 2,867
-------------------------------------------------------------------------
(122,005) (53,319) (281,767) (285,712)
-------------------------------------------------------------------------
Net change in cash
and cash
equivalent during
the period - - - -
Cash and cash
equivalent,
beginning of
the period - - - -
-------------------------------------------------------------------------
Cash and cash
equivalent, end of
the period - - - -
-------------------------------------------------------------------------
Supplemental cash
flow information:
Cash paid during
the period for:
Interest 10,953 6,773 36,037 24,054
Income taxes 1,971 2,513 9,290 9,910
-------------------------------------------------------------------------
Distributable cash
(in thousands of
dollars, except
per unit amounts)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
OPERATING ACTIVITIES
Cash flow from
operating
activities 74,317 71,921 210,410 198,925
Add (deduct):
Purchase of units
held by the fund
for long-term
incentive plan 1,019 4,863 9,017 13,417
Net change in
non-cash working
capital (23,249) (16,014) (11,212) 9,250
Deferred
financing
charges (261) - (737) -
Other (2,017) (68) (2,292) (403)
-------------------------------------------------------------------------
Distributable
cash from
operating
activities 49,809 60,702 205,186 221,189
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Sustaining capital
expenditures
(note 1) (26,096) (22,823) (76,061) (74,807)
Proceeds from
disposal of
investment - 29,491 - 29,491
Proceeds from
disposal of
fixed assets 7,706 5,039 22,815 25,404
-------------------------------------------------------------------------
Distributable
cash from
investing
activities (18,390) 11,707 (53,246) (19,912)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Long term Incentive
plan disbursement (8,531) (7,734) (8,531) (7,734)
Scheduled debt
repayment (note 2) (2,670) (1,937) (9,448) (15,191)
-------------------------------------------------------------------------
Distributable cash
from financing
activities (11,201) (9,671) (17,979) (22,925)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total distributable
cash 20,218 62,738 133,961 178,352
Regular
distribution
declared (note 3)
Distribution
declared to
Tracking
shareholders 3,358 3,221 13,339 12,733
Distribution
declared to
Unitholders 29,026 27,790 115,378 107,976
Special
distribution
declared
Distribution
declared to
Tracking
shareholders - 1,861 - 1,861
Distribution
declared to
Unitholders - 14,877 - 14,877
Total distribution
declared
Distribution
declared to
Tracking
shareholders 3,358 5,082 13,339 14,594
Distribution
declared to
Unitholders 29,026 42,667 115,378 122,853
-------------------------------------------------------------------------
Total distribution
declared 32,384 47,749 128,717 137,447
-------------------------------------------------------------------------
Distributable cash
surplus (12,166) 14,989 5,244 40,905
-------------------------------------------------------------------------
Regular
distribution
declared per unit
Distribution
declared to
Tracking
shareholders 0.2439 0.2340 0.9690 0.9246
Distribution
declared to
Unitholders 0.3975 0.3825 1.5800 1.5125
Special
distribution
declared per unit
Distribution
declared to
Tracking
shareholders - 0.1352 - 0.1352
Distribution
declared to
Unitholders - 0.2069 - 0.2069
Total distribution
declared per unit
Distribution
declared to
Tracking
shareholders 0.2439 0.3692 0.9690 1.0598
Distribution
declared to
Unitholders 0.3975 0.5894 1.5800 1.7194
-------------------------------------------------------------------------
Distributable cash
earned per unit
Tracking
shareholders 0.1692 0.4992 1.0790 1.4310
Unitholders 0.2549 0.7622 1.6287 2.1851
-------------------------------------------------------------------------
Payout ratio -
regular
distribution 155.9% 90.3% 97.0% 81.9%
Payout ratio -
Total
distribution 155.9% 77.3% 97.0% 78.7%
-------------------------------------------------------------------------
Note 1: Sustaining capex
On July 1, 2005, the Fund concluded the sale of its Calgary terminal. The
Fund will relocate this terminal to a new facility in Calgary. As part of this
relocation, the Fund has invested $4.8 million and 15.8 million for the three-
and twelve-month periods ended December 31, 2007 respectively in the new
Calgary facility ($8.6 million - 2006), This investment has been excluded from
distributable cash. Also the Fund invested $3.4 million and 43.2 million for
the three- and twelve-month ended December 31, 2007 respectively as part of a
lease buyout for five terminals. ($32.0 million - 2006) This has also been
excluded from distributable cash.
Note 2: Scheduled debt repayment excludes:
1) Debt payments made on debt acquired as part of business acquisitions.
This totals $10.1 million and 43.4 million for the three- and
twelve-month period ended December 31, 2007 ($89.9 million - 2006),
2) Term loan due on September 30, 2013 of $160 million, the revolving
term loan due on September 30, 2010 of $384.1 million and single
payment due on July 15, 2009 of $27.9 million to CIT Financial Ltd for
its 5 year term loan.
The total scheduled debt payable as at December 31, 2007 totals
$37.5 million ($28.0 million - 2006)
Note 3: Tracking shareholders dividend
Dividend declared to Tracking shareholders net of income taxes excludes a
holdback portion which is due and payable to Tracking shareholders no later
than March 31 of the following fiscal year in which the dividend was declared.
%SEDAR: 00018303EF