- Increased quarterly revenues 8% to $486.2 million
- Generated EBITDA of $65.1 million
MONTREAL, Oct. 24 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN), the leader in the Canadian transportation and logistics industry, today announced results for the nine months and third quarter, ended September 30, 2007.
Despite a challenging operating environment, the Fund increased revenues by 8% to $486.2 million from $448.7 million in the third quarter of 2006. EBITDA (earnings before interest, taxes, depreciation and amortization and equivalent to operating income on TransForce's financial statements) was $65.1 million in the quarter, consistent with $65.2 million in the same period last year. Cash flow from operating activities, before net change in non-cash working capital balances, was $50.8 million in the third quarter, compared with $57.4 million in the third quarter of 2006.
In the quarter, distributable cash from ongoing operations was $54.6 million, compared with $60.4 million in the same quarter of 2006. The Fund's regular distribution payout ratio, or cash distributed as a percent of cash available for distribution, was 81.9% in the quarter, compared with 68.9% a year earlier.
"The disciplined application of our acquisition strategy meant we could deliver increased revenues and solid bottom line results for our unitholders while the North American industry continues to face difficult economic conditions. We have continued to add to our operations for future growth although this has meant an increase in interest expense for the shorter-term," said Alain Bedard, Chairman, President and Chief Executive Officer of TransForce Income Fund. "Our operations continue to adjust to a weak market. Parcel delivery has grown significantly while our Less Than Truckload segment has experienced lower volumes. In central Canada, the strength of the Canadian dollar has resulted in a continuing slowdown in the manufacturing and automotive sectors. This has lowered LTL and TL volumes while creating pricing pressures across the industry. In Western Canada, the oilfield services division is being affected by the decline in drilling activity that has worsened since the Alberta government's announcement of possible changes to oil and gas royalties. The new royalty policy is to be announced shortly and, depending on its effect on the energy industry, we will take the appropriate action possibly including layoffs as others serving the drilling segment have done."
Year-to-Date Results
TransForce increased revenues in the first nine months of 2007 to $1.447 billion, from $1.338 billion in the same period in 2006. The Fund also increased EBITDA to $181.9 million from $175.9 million in the first nine months of 2006. Cash flow from operating activities, before net change in non-cash working capital balances, was $148.1 million compared with $152.3 million in the same period of 2006.
Distributable cash from ongoing operations for the year to date up to September 30, 2007 was $155.4 million compared with $160.5 million in the same period of 2006. Total distributions declared in the first three quarters of the year were $96.3 million compared with $89.7 million in the same period of 2006. The Fund's regular distribution payout ratio, or cash distributed as a percent of cash available for distribution, for the year-to-date is 86.1% compared with 79.4% in the same period of 2006.
"As expected, economic conditions continue to tighten as Canadian and U.S. markets adjust to the significant changes in currency values. We see the marketplace remaining challenging for the balance of 2007 and into the next year," Mr. Bedard said. "TransForce is benefiting from its diversification across geographies and market segments as a result of our acquisition strategy, and our operating companies are adjusting to evolving market conditions. We will continue to execute our proven acquisition strategy and are well positioned to continue to create value for unitholders over the short and longer term."
Management Conference Call
TransForce will host a conference call for investors to discuss the results for the second quarter of 2007 today, October 24 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 1-800-952-1797. A recording of the call will be available until midnight October 31, 2007, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21353199. 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 September 30, 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 STATEMENT OF INCOME
(unaudited)
Three Three Nine Nine
months months months months
(In thousands of ended ended ended ended
dollars, except per September September September September
unit amounts) 30, 2007 30, 2006 30, 2007 30, 2006
Revenues 442,950 404,000 1,320,072 1,208,883
Fuel surcharge
revenues 43,261 44,689 126,549 129,140
-------------------------------------------------------------------------
Total revenues 486,211 448,689 1,446,621 1,338,023
Expenses
Operating expenses 347,914 317,069 1,034,302 957,240
Fixed costs, general
and administrative
expenses 72,222 65,357 224,445 201,631
Incentive plan 996 1,092 5,988 3,285
-------------------------------------------------------------------------
Operating income
from continuing
operations before
the following: 65,079 65,171 181,886 175,867
Depreciation of
fixed assets 24,590 21,373 72,045 60,693
Amortization of
intangible assets 2,815 2,173 8,274 6,512
Interest on
long-term debt 9,466 3,953 25,192 12,421
Other interest 0 1,537 0 5,176
Gain on disposal
of fixed assets (987) (3,693) (2,228) (4,633)
-------------------------------------------------------------------------
Income from continuing
operations before
provision for income
taxes 29,195 39,828 78,603 95,698
Provision for income
taxes
Current 1,979 2,315 7,305 5,677
Future (1,287) (471) (4,369) (4,061)
-------------------------------------------------------------------------
692 1,844 2,936 1,616
-------------------------------------------------------------------------
Income from continuing
operations 28,503 37,984 75,667 94,082
Earnings from
discontinued
operations 0 961 0 1,876
-------------------------------------------------------------------------
Net income 28,503 38,945 75,667 95,958
Earnings per unit
From continuing
operations
Basic 0.33 0.44 0.88 1.12
Diluted 0.33 0.44 0.88 1.12
Net earnings
Basic 0.33 0.45 0.88 1.14
Diluted 0.33 0.45 0.88 1.14
-------------------------------------------------------------------------
Outstanding
weighted average
number of
Units 71,890,634 72,223,869 72,129,830 70,515,623
Tracking shares 13,765,716 13,766,316 13,765,960 13,776,591
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Total 85,656,350 85,990,185 85,895,790 84,292,214
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
(in thousands of dollars) As at As at
September December
30, 2007 31, 2006
(unaudited) (audited)
ASSETS
Current assets
Accounts receivable 305,909 270,683
Inventories 9,373 9,623
Prepaid expenses 17,342 14,998
-------------------------------------------------------------------------
332,624 295,304
-------------------------------------------------------------------------
Fixed assets 634,834 533,054
Goodwill 372,423 320,716
Intangible assets 57,205 52,642
Other assets 8,112 8,688
Future income taxes 5,204 5,315
-------------------------------------------------------------------------
1,410,402 1,215,719
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities
Bank indebtedness 2,856 20,223
Accounts payable and accrued liabilities 200,967 177,846
Cash distributions payable to unitholders 9,675 9,310
Dividends payable on Tracking Share Units of
TFI Holdings Inc. 1,923 2,134
Income taxes payable 3,123 4,765
Current portion of long-term debt 34,886 35,758
-------------------------------------------------------------------------
253,430 250,036
-------------------------------------------------------------------------
Long-term debt 573,110 358,624
Non-controlling interest 2,450 2,002
Asset retirement obligations 3,636 3,660
Future income taxes 22,007 22,147
Unitholders' equity
Capital contributions and Tracking Share Units 519,404 519,404
Contributed surplus 1,022 336
Units held by the Fund for long-term incentive
plan (13,832) (11,136)
Retained earnings 49,175 70,646
-------------------------------------------------------------------------
555,769 579,250
-------------------------------------------------------------------------
1,410,402 1,215,719
-------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(unaudited)
Three Three Nine Nine
months months months months
ended ended ended ended
(in thousands of September September September September
dollars) 30, 2007 30, 2006 30, 2007 30, 2006
Retained earnings,
beginning of period 53,325 55,498 70,646 57,963
Net income for the
period 28,503 38,945 75,667 95,958
Distributions to
unitholders (29,028) (27,505) (86,352) (80,186)
Dividends on Tracking
Share Units of TFI
Holdings Inc. (3,625) (3,376) (10,786) (10,173)
-------------------------------------------------------------------------
Retained earnings,
end of period 49,175 63,562 49,175 63,562
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Three Nine Nine
months months months months
ended ended ended ended
(in thousands of September September September September
dollars) 30, 2007 30, 2006 30, 2007 30, 2006
CASH FLOW FROM
OPERATING ACTIVITIES
Net income for the
period 28,503 38,945 75,667 95,958
Non-cash items:
Depreciation of
fixed assets 24,590 21,941 72,045 62,549
Amortization of
intangible assets 2,815 2,173 8,274 6,512
Incentive plan
expense 996 1,092 5,988 3,285
Purchase of units
held by the Fund
for the Incentive
plan (4,000) (3,090) (7,998) (8,554)
Deferred financing
charges 166 0 476 0
Future income taxes (1,287) (19) (4,369) (3,178)
(Gain) Loss on
disposal of fixed
assets (987) (3,697) (2,228) (4,639)
Other 35 38 275 335
-------------------------------------------------------------------------
50,831 57,383 148,130 152,268
Net change in non-cash
working capital
balances related to
operations 912 (9,520) (12,037) (25,264)
-------------------------------------------------------------------------
51,743 47,863 136,093 127,004
-------------------------------------------------------------------------
CASH FLOW FROM
FINANCING ACTIVITIES
Increase in (repayment
of) bank advances and
overdraft (9,082) 57,096 (17,367) 123,827
Increase in long-term
debt 1,655 0 2,211 0
Repayment of long-term
debt (9,206) (19,924) (40,091) (67,629)
Increase (decrease) in
new long term revolver
facility 22,500 0 175,900 0
Cash distributions paid
to unitholders (29,028) (27,505) (85,987) (83,543)
Dividends paid on
Tracking Share Units (3,357) (3,221) (10,997) (11,026)
Issuance of trust units 0 0 0 143,760
-------------------------------------------------------------------------
(26,518) 6,446 23,669 105,389
-------------------------------------------------------------------------
CASH FLOW FROM
INVESTING ACTIVITIES
Additions to fixed
assets (21,811) (24,235) (100,679) (68,849)
Proceeds from disposal
of fixed assets 5,121 8,875 15,109 20,365
Business acquisitions
(including bank
advances net of cash) (8,584) (39,521) (75,219) (186,218)
Other assets, net 49 572 1,027 2,309
-------------------------------------------------------------------------
(25,225) (54,309) (159,762) (232,393)
-------------------------------------------------------------------------
Net change in cash and
cash equivalent
during the period 0 0 0 0
Cash and cash
equivalent, beginning
of the period 0 0 0 0
-------------------------------------------------------------------------
Cash and cash
equivalent, end of
the period 0 0 0 0
-------------------------------------------------------------------------
Supplemental cash flow
information:
Cash paid during the
period for:
Interest 9,474 5,332 25,084 17,281
Income taxes 1,393 1,652 7,319 7,397
-------------------------------------------------------------------------
Distributable cash
Three Three Nine Nine
months months months months
(in thousands of ended ended ended ended
dollars, except September September September September
per unit amounts) 30, 2007 30, 2006 30, 2007 30, 2006
OPERATING ACTIVITIES
Cash flow from
operating activities 51,743 47,863 136,093 127,004
Add (deduct):
Purchase of units
held by the Fund
for long-term
incentive plan 4,000 3,090 7,998 8,554
Net change in
non-cash working
capital (912) 9,520 12,037 25,264
Deferred financing
charges (166) 0 (476) 0
Other (35) (38) (275) (335)
-------------------------------------------------------------------------
Distributable cash from
operating activities 54,630 60,435 155,377 160,487
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Sustaining capital
expenditures (note 1) (16,862) (19,942) (49,965) (51,984)
Proceeds from disposal
of investment 0 0 0 0
Proceeds from disposal
of fixed assets 5,121 8,875 15,109 20,365
-------------------------------------------------------------------------
Distributable cash from
investing activities (11,741) (11,067) (34,856) (31,619)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Long term Incentive
plan disbursement 0 0 0 0
Scheduled debt
repayment (note 2) (2,614) (3,718) (6,778) (13,254)
-------------------------------------------------------------------------
Distributable cash from
financing activities (2,614) (3,718) (6,778) (13,254)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total distributable
cash 40,275 45,650 113,743 115,614
Total distribution
declared
Distribution declared
to Tracking
shareholders (note 3) 3,357 3,221 9,981 9,512
Distribution declared
to Unitholders 29,028 27,505 86,352 80,186
-------------------------------------------------------------------------
Total distribution
declared 32,385 30,726 96,333 89,698
-------------------------------------------------------------------------
Distributable cash
surplus 7,890 14,924 17,410 25,916
-------------------------------------------------------------------------
Total distribution
declared per unit
Distribution declared
to Tracking
shareholders 0.2439 0.2340 0.7251 0.6906
Distribution declared
to Unitholders 0.3975 0.3825 1.1825 1.1300
-------------------------------------------------------------------------
Distributable cash
earned per unit
Tracking shareholders 0.3213 0.3590 0.9098 0.9318
Unitholders 0.4853 0.5549 1.3738 1.4229
-------------------------------------------------------------------------
Payout ratio - Total
distribution 81.9% 68.9% 86.1% 79.4%
-------------------------------------------------------------------------
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 $10.8 million for the nine-month period
ended September 30, 2007 in the new Calgary facility ($3.1 million - 2006),
This investment has been excluded from distributable cash. Also the Fund
invested $39.8 million as part of a lease buyout for three terminals.
($13.8 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 $33.3 million for the nine-month period ended September
30, 2007 ($54.4 million - 2006).
2) Term loan due on September 30, 2013 of $160 million, the revolving
term loan due on September 30, 2010 of $297.4 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
September 30, 2007 totals $40.4 million ($59.2 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.