- Increased revenues by 10% to $544.5 million - Increased EBITDA by 21% to $73.8 million - Increased fourth quarter earnings per share to $0.17 from a loss of $0.36 - Increased annual earnings per share to $0.92 per share from $0.52 per share in 2007
MONTREAL, March 12 /CNW Telbec/ - TransForce Inc. ("TransForce" or "the Company") (TSX: TFI - T), the leader in the Canadian transportation and logistics industry, today announced steady growth across its top line and bottom line results for the fourth quarter and year ended December 31, 2008.
"We were able to deliver strong results in the fourth quarter, while also taking a number of steps to address imminent challenges posed by the deteriorating economic conditions," said Alain Bedard, President and Chief Executive Officer of TransForce Inc. "While we increased revenues, our focus was on decreasing operating expenses across the Company. Initiatives taken to curtail costs included implementing hiring and salary freezes, and placing strict controls on capital and discretionary expenditures. We also continued to adjust staffing levels to align with lower demand. Management's conservative, disciplined approach to operating TransForce will serve us well as we face significant challenges in 2009."
Fourth Quarter Results
In the quarter, TransForce delivered year-over-year increases across key
financial performance indicators.
For the three months ended December 31, 2008 the Company increased
revenues by 10% to $544.5 million from $493.5 million in the same period of
2007. This increase was partly due to significant acquisitions concluded in or
after the fourth quarter of 2007, including ICS Courier and Groupe Thibodeau.
The Company increased EBITDA (earnings before interest, taxes,
depreciation and amortization and equivalent to operating income on
TransForce's financial statements) by 21% to $73.8 million, from $61.1 million
in the fourth quarter of 2007. Significant acquisitions contributed $2.8
million in new EBITDA. The remaining increase was the result of efficiency
gains and cost containment efforts.
TransForce's earnings before income taxes were $18.5 million (including
$11.7 million unrealized loss on interest rate swap contracts) compared with a
loss of $30.2 million in the fourth quarter of 2007, when TransForce reported
a goodwill impairment of $56.0 million. Adjusted earnings before taxes were
$30.2 million in the fourth quarter of 2008 compared with $25.8 million in the
same period of 2007, before non-recurring items.
Earnings per share were $0.17 per share compared with a loss of $0.36 per
share in the same period of 2007. Adjusted earnings per share were $0.26
compared with $0.29 per share in the fourth quarter of 2007 before one-time
costs.
During the fourth quarter, TransForce reorganized its segments, combining
its Truckload segment with Specialized Truckload. The Company now reports
revenues from its four segments: Less-Than-Truckload, Package and Courier,
Specialized Services and Truckload.
"TransForce increased revenues in three of its four operating segments,
with fourth quarter revenues in the Truckload segment off by six percent. In
the context of a weakening economy, this is a considerable achievement," said
Mr. Bedard. "However, the deteriorating trend is clear so during the fourth
quarter we introduced a series of cost containment initiatives to ensure
TransForce remains strong. We know what TransForce will be up against in 2009,
and have moved proactively to position the Company to meet these challenges."
FY 2008 Results
During the 12 months ended December 31, 2008, TransForce increased
revenues to a record $2.3 billion from $1.9 billion in 2007. Significant
acquisitions accounted for $160.6 million in additional revenues in 2008. The
Company also increased EBITDA by 15% to $280 million from $243 million in
2007. Adjusted EBITDA increased 19% to $288.7 million, before one-time
conversion costs of $8.7 million and a $13.8 million unrealized loss on
interest rate swap contracts. Earnings before income taxes increased to $99.2
million from $48.4 million in 2007. Adjusted earnings before taxes increased
to $121.7 million from $104.4 million.
The Company increased earnings per share to $0.92 per share in 2008 from
$0.52 per share the previous year. Adjusted earnings per share were $1.14 per
share in 2008 compared with $1.17 per share in 2007.
"TransForce increased revenues across all operating segments in 2008. The
Company is diversified across various industries and geographies, so while
some areas of the economy experienced difficulties, TransForce was able to
benefit from its investment in other regions and businesses," said Mr. Bedard.
"Like many companies, our outlook for 2009 is uncertain as a result of the
broader economic picture. The operating environment is worsening and
TransForce will continue to focus its disciplined efforts on controlling
costs. We see a difficult period ahead although it may be mitigated somewhat
by a lower Canadian dollar, lower fuel costs, reduced capital costs and
economic stimulus packages on both sides of the border."
Outlook on Liquidity
Although the Company's results for 2008 were satisfactory, the economic
environment in 2009 is uncertain. Compounding this problem, volatility in the
North American credit markets has resulted in much tougher credit markets and
conditions.
Notwithstanding this, the Company is well positioned to weather these
current conditions.
The Company's current outlook for 2009 is that it will generate cash flow
after interest expense, current income tax expense, dividends and capital
expenditures in the range of $100 million. This excess cash flow will serve to
reduce its revolving line of credit.
During 2008, the Company took advantage of lower rolling stock acquisition
costs as a result of the strong Canadian dollar and deep manufacturers'
discounts in order to acquire new equipment. As such, the Company's outlook
for capital expenditures in 2009 is less than $50 million.
The above mentioned items will allow the Company to reduce its overall
debt levels in 2009. The Company forecasts its long term debt position to be
approximately $700 million by the end of 2009. The 4 year revolving term loan
component of the Company's syndicated bank debt comes due in October 2010
while the 7 year term loan component comes due in October 2013.
As part of the Company's syndicated bank debt, two financial covenants
must be maintained. The first is an adjusted debt (senior balance sheet debt
plus 5 times rent expense) to earnings before interest, income taxes,
depreciation and amortization and rent expense ("EBITDAR") ratio. This
covenant is measured on a consolidated last twelve month basis and must be
kept below 3.5 times. As at December 31, 2008, the Company's adjusted debt to
EBITDAR ratio was 2.97. The second is an EBITDAR to fixed cost (interest and
rent expense) ratio. This covenant is measured on a consolidated last twelve
month basis and must be kept above 2.75 times. As at December 31, 2008, the
Company's EBITDAR to fixed cost ratio was 3.21 times. The Company's outlook
with regard to these covenants is that it will be in compliance throughout
2009.
Management Conference Call
TransForce will host a conference call for investors to discuss the
results of the fourth quarter and 2008 year later today, March 12, 2009, at
9:00 Eastern Time. Participating from the Company will be Alain Bedard,
Chairman, President and Chief Executive Officer, and Salvatore Vitale, Chief
Financial Officer.
To participate in the conference call, investors are invited to call
1-800-909-4804 A recording of the call will be available until 11:00 p.m.,
March 19, 2009, by dialing 1-800-558-5253 or 416-626-4100 and entering
passcode 21413858.
Financial Statements
The financial statements for the periods ended December 31, 2008 and 2007
included below are an integral part of this news release.
Profile
TransForce Inc. (www.transforce.ca) is the leader in Canada's
transportation and logistics industry. Headquartered in Montreal, Quebec,
TransForce creates value for shareholders through managing and investing in a
growing network of wholly-owned, operating subsidiaries. TransForce provides a
comprehensive and unique combination of capabilities, resources and
geographical coverage in both domestic and trans-border markets. Its companies
currently operate in four well-defined business segments:
- Less-Than-Truckload;
- Package and Courier;
- Specialized Services, which includes its ancillary transportation
services such as logistics, warehousing & dedicated services, fleet
management & personnel services; oilfield & oilsand services, and;
waste management;
- Truckload, which includes specialized truckload services.
TransForce Inc. shares are listed on the Toronto Stock Exchange under the
symbol TFI.
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 Company's website
www.transforce.ca.
CONSOLIDATED
STATEMENTS
OF INCOME
(unaudited)
(In thousands Three Three Twelve Twelve
of dollars, months months months months
except per ended ended ended ended
share or December 31, December 31, December 31, December 31,
unit amounts) 2008 2007 2008 2007
Revenues 485,244 447,029 1,980,543 1,767,101
Fuel surcharge
revenues 59,255 46,499 281,386 173,048
-------------------------------------------------------------------------
Total revenues 544,499 493,528 2,261,929 1,940,149
Expenses
Operating expenses 384,859 354,206 1,629,234 1,388,508
Fixed costs, general
and administrative
expenses 85,801 76,937 343,847 301,382
Incentive plan - 1,266 8,885 7,254
-------------------------------------------------------------------------
Operating income
before the
following: 73,839 61,119 279,963 243,005
Depreciation of
fixed assets 27,834 24,548 106,307 96,593
Amortization of
intangible assets 4,670 2,801 16,699 11,075
Interest on
long-term debt 11,261 11,053 46,597 36,245
Unrealized loss on
interest rate
Swap contracts 11,715 - 13,840 -
Goodwill
impairment - 56,000 - 56,000
Gain on disposal
of fixed assets (91) (3,065) (2,657) (5,293)
-------------------------------------------------------------------------
Income before
provision for
income taxes 18,450 (30,218) 99,177 48,385
Provision for
income taxes
Current 3,167 1,523 11,003 8,828
Future 483 (884) 8,496 (5,253)
-------------------------------------------------------------------------
3,650 639 19,499 3,575
-------------------------------------------------------------------------
Net income 14,800 (30,857) 79,678 44,810
Earnings per share
or unit
Basic 0.17 (0.36) 0.92 0.52
Diluted 0.17 (0.36) 0.92 0.52
-------------------------------------------------------------------------
Outstanding
weighted average
number of
Shares 86,790,097 - 53,738,526 -
Units - 71,961,101 27,486,976 72,087,302
Tracking shares - 13,765,716 5,242,286 13,765,898
-------------------------------------------------------------------------
Total 86,790,097 85,726,817 86,467,788 85,853,200
Outstanding
number of
Shares 86,790,097 - 86,790,097 -
Trust units
of the Fund - 73,024,381 - 73,024,381
Tracking shares - 13,765,716 - 13,765,716
-------------------------------------------------------------------------
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) 2008 2007
(audited) (audited)
ASSETS
Current assets
Accounts receivable 302,801 288,126
Inventories 11,296 9,970
Prepaid expenses 14,285 11,872
Income tax receivable 519 -
Future income taxes 1,666 -
-------------------------------------------------------------------------
330,567 309,968
-------------------------------------------------------------------------
Fixed assets 718,713 649,348
Goodwill 435,851 399,828
Intangible assets 128,672 68,619
Other assets 6,258 6,238
Future income taxes 1,846 8,540
-------------------------------------------------------------------------
1,621,907 1,442,541
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness 12,517 9,081
Accounts payable and accrued liabilities 218,763 204,907
Cash distributions payable to unitholders - 9,675
Dividends payable on Tracking Share Units of
TFI Holdings Inc. 571 2,191
Dividends payable on TransForce inc shares 8,679 -
Income taxes payable - 5,721
Current portion of long-term debt 69,028 35,003
-------------------------------------------------------------------------
309,558 266,578
-------------------------------------------------------------------------
Long-term debt 738,986 651,636
Non-controlling interest - 2,562
Asset retirement obligations 8,204 5,521
Future income taxes 55,309 23,737
Equity
Share capital 519,404 -
Capital contributions and Tracking Share Units - 519,404
Units held by the fund for long-term incentive
plan - (11,751)
Deficit (9,554) (15,146)
-------------------------------------------------------------------------
509,850 492,507
-------------------------------------------------------------------------
1,621,907 1,442,541
-------------------------------------------------------------------------
CONSOLIDATED
STATEMENTS
OF RETAINED
EARNINGS
(DEFICIT) Three Three Twelve Twelve
(unaudited) months months months months
ended ended ended ended
(in thousands December 31, December 31, December 31, December 31,
of dollars) 2008 2007 2008 2007
Retained earnings
(Deficit),
beginning of
period (15,675) 49,175 (15,146) 70,646
Net income for
the period 14,800 (30,857) 79,678 44,810
Distributions to
unitholders - (29,026) (43,541) (115,378)
Dividends on
Tracking Share
Units of TFI
Holdings Inc. - (3,626) (5,581) (14,412)
Dividends (8,679) - (21,698) -
Incentive plan
contribution - (812) (3,266) (812)
-------------------------------------------------------------------------
Retained earnings
(Deficit), end of
period (9,554) (15,146) (9,554) (15,146)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED
STATEMENTS OF
CASH FLOWS Three Three Twelve Twelve
(unaudited) months months months months
ended ended ended ended
(in thousands December 31, December 31, December 31, December 31,
of dollars) 2008 2007 2008 2007
CASH FLOW FROM
OPERATING
ACTIVITIES
Net income for
the period 14,800 (30,857) 79,678 44,810
Non-cash items:
Depreciation of
fixed assets 27,834 24,548 106,307 96,593
Amortization of
intangible assets 4,670 2,801 16,699 11,075
Incentive plan
expense - 1,266 8,885 7,254
Purchase of units
held by the fund
for the Incentive
plan - (1,019) (400) (9,017)
Deferred financing
charges 390 261 1,344 737
Future income taxes 483 (884) 8,496 (5,253)
Goodwill impairment - 56,000 - 56,000
Unrealized loss on
interest rate Swap
contracts 11,715 - 13,840 -
Gain on disposal of
fixed assets (91) (3,065) (2,657) (5,293)
Other (36) 2,017 360 2,292
-------------------------------------------------------------------------
59,765 51,068 232,552 199,198
Net change in
non-cash working
capital balances
related to
operations 27,430 23,249 (24,980) 11,212
-------------------------------------------------------------------------
87,195 74,317 207,572 210,410
-------------------------------------------------------------------------
CASH FLOW FROM
FINANCING ACTIVITIES
Increase (decrease)
in bank advances and
overdraft 3,540 6,225 3,436 (11,142)
Increase in long-term
debt 644 86,601 118,733 264,712
Repayment of
long-term debt (12,234) (12,754) (84,140) (52,845)
Cash distributions
paid to unitholders - (29,026) (53,216) (115,013)
Dividends paid on
Tracking Share Units - (3,358) (7,201) (14,355)
Dividends paid (8,679) - (13,019) -
-------------------------------------------------------------------------
(16,729) 47,688 (35,407) 71,357
-------------------------------------------------------------------------
CASH FLOW FROM
INVESTING ACTIVITIES
Additions to fixed
assets (36,362) (34,287) (102,556) (134,966)
Proceeds from
disposal of fixed
assets 6,904 7,706 24,167 22,815
Business acquisitions
(including bank
advances net of
cash) (40,846) (97,678) (93,794) (172,897)
Other assets, net (162) 2,254 18 3,281
-------------------------------------------------------------------------
(70,466) (122,005) (172,165) (281,767)
-------------------------------------------------------------------------
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 11,429 10,953 46,134 36,037
Income taxes 7,860 1,971 16,277 9,290
-------------------------------------------------------------------------
%SEDAR: 00026947EF