MONTREAL, Oct. 23 /CNW Telbec/ -- TransForce Inc. ("TransForce" or "the Company") (TSX: TFI - T), the leader in the Canadian transportation and logistics industry, today announced its results for the third quarter, ended September 30, 2009.
"By focusing on cost containment and operating efficiency, we were able to maintain our EBITDA margin, despite lower revenues resulting from current weak economic conditions; EBITDA as a percentage of revenue was 13.7%, virtually unchanged from the third quarter of 2008," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc. "We are carefully managing those parts of our business that we can control. We reduced fixed costs and administrative expenses by $13.8 million in the quarter which kept them to 16% of revenue. Our efficiency continues to serve shareholders during this difficult period and positions us strongly for the eventual economic recovery."
Third Quarter Results
For the three months ended September 30, 2009, TransForce reported total revenues of $451.4 million, a 24% decrease from $595.5 million in the same period of 2008. Revenue excluding fuel surcharge decreased 18% to $418.9 million. The year-over-year decrease in revenue is mainly the result of the continuing low economic activity.
EBITDA (earnings before interest, taxes, depreciation and amortization and equivalent to operating income on TransForce's financial statements) decreased 25% to $62.0 million in the third quarter from $82.3 million in the third quarter of 2008. EBITDA margin (EBITDA as a percentage of revenue) was 13.7% in the quarter, consistent with 13.8% in the same period of 2008.
Cash flow from operations, before net changes in non-cash working capital balances related to operations, was $51.9 million compared with $66.9 million in the third quarter of 2008.
TransForce's earnings before income taxes were $25.2 million, compared with $38.4 million in the third quarter of 2008.
Interest expense decreased to $8.2 million from $12.3 million in the same period of 2008, primarily as a result of the Company's actions to reduce debt, as well as lower interest rates.
Net income was $17.0 million, or $0.19 per share, compared with $26.5 million, or $0.31 per share, in the third quarter of 2008.
During the quarter, TransForce paid out a dividend of $0.10 per share.
"Demand continues to be depressed across Canada, and particularly in Western Canada, where continuing lower levels of activity in Alberta's energy sector contributed to weaker results in TransForce's Less-Than-Truckload segment," said Mr. Bédard. "Business improved somewhat in September from what was an unusually slow August. Now we must monitor the effect of the appreciating Canadian dollar on a recovery in the manufacturing sector."
Acquisition of ATS Andlauer Retail Solutions Division
In September, TransForce announced that it had entered into an agreement to acquire the Retail Solutions Division of ATS Andlauer Transportation Services Limited Partnership. The Retail Solutions Division generates approximately $120 million in annual revenues. It relies on 165 owner-operators for the bulk of its business and employs a total of 447 employees. The transaction is conditional on the signing of a definitive agreement, normal closing and regulatory conditions.
Completion of $41.2 million Equity Financing and $8.3 Million Concurrent
Private Placement
In August, TransForce completed its previously announced bought-deal public offering by issuing 7,040,000 common shares, at a price of $5.85 per share, for gross proceeds to TransForce of $41.2 million. TransForce also completed its previously announced private placement with Jolina Capital Inc., its principal shareholder, pursuant to which Jolina purchased, concurrent with the closing of the bought-deal offering, a further 1,423,840 common shares from TransForce in order to maintain its ownership level of the outstanding shares of TransForce of approximately 16.82%. Jolina purchased the shares at the offering price of $5.85 per share, for proceeds to TransForce of $8.3 million.
The net proceeds of the offering and concurrent private placement to Jolina will be used by TransForce to reduce indebtedness and for general corporate purposes.
Year-to-Date Results
During the nine months ended September 30, 2009, total revenue decreased 21% to $1.4 billion from $1.7 billion in 2008. Revenue excluding fuel surcharge decreased 15% to $1.3 billion from $1.5 billion in the first three quarters of 2008.
EBITDA decreased by 19% to $166.3 million from $206.1 million in the first three quarters of 2008. In a very challenging environment, the Company's EBITDA ratio for the first nine months was 12.2%, an improvement from 12.0% in the year-earlier period.
Cash flow from operations, before net changes to non-cash working capital balances related to operations, was $134.2 million, compared with $172.8 million in the first nine months of 2008.
Earnings before income taxes were $55.9 million through three quarters of 2009, compared with $80.7 million in the same period of 2008.
Net income during the first nine months of 2009 declined to $38.1 million, or $0.43 per share, from $64.9 million, or $0.75 per share, a year earlier.
"The people of TransForce have done an outstanding job of controlling costs and I thank them for their dedicated efforts as we move through this challenging period. We have made significant progress in cost containment and our streamlined structure and processes will remain in place," said Mr. Bédard. "While managing through the current recession, we continue to implement our strategy for the future. We are on track to meet our debt repayment target for 2009. Our acquisition strategy remains in place but we will only consider acquisitions that are immediately accretive for our shareholders."
Third Quarter Management Conference Call
TransForce's Chairman, President and Chief Executive Officer Alain Bédard, will host a conference call for investors to discuss the results of the third quarter and year-to-date 2009 on Friday, October 23, 2009, at 9:00 a.m. Eastern Time.
To participate in the conference call, investors are invited to call 1-800-734-4208. A recording of the call will be available until 12:00 a.m., October 31, 2009, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21440036.
Financial Statements
The financial statements for the periods ended September 30, 2009 and 2008 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 BALANCE SHEETS
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(in thousands of dollars) As at As at
September 30, 2009 December 31, 2008
(unaudited) (audited)
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ASSETS
Current assets
Accounts receivable 261,420 302,801
Inventories 9,799 11,296
Prepaid expenses 14,282 14,285
Income tax receivable 448 519
Future income taxes 350 1,666
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286,299 330,567
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Fixed assets 676,415 718,713
Goodwill 439,027 435,851
Intangible assets 118,321 128,672
Other assets 6,573 6,258
Future income taxes 8 1,846
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1,526,643 1,621,907
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness 3,970 12,517
Accounts payable and accrued liabilities 195,145 218,763
Dividends payable 9,525 9,250
Current portion of long-term debt 28,664 69,028
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237,304 309,558
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Long-term debt 644,883 738,986
Asset retirement obligations 10,756 8,204
Future income taxes 64,301 55,309
Shareholders' equity
Share capital 567,551 519,404
Contributed surplus 200 -
Retained earnings (deficit) 1,648 (9,554)
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569,399 509,850
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1,526,643 1,621,907
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
-------------------------------------------------------------------------
(unaudited) Three Three Nine Nine
months months months months
(In thousands of ended ended ended ended
dollars, except per September September September September
share amounts) 30, 2009 30, 2008 30, 2009 30, 2008
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Revenue 418,901 511,708 1,265,912 1,495,299
Fuel surcharge revenue 32,451 83,823 91,986 222,131
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Total revenue 451,352 595,531 1,357,898 1,717,430
Expenses
Operating expenses 314,987 425,177 956,958 1,244,375
Fixed costs, general
and administrative
expenses 74,158 88,006 234,446 258,046
Incentive compensation
plan 200 - 200 8,885
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Operating income before
the following: 62,007 82,348 166,294 206,124
Depreciation of fixed
assets 25,791 26,653 78,949 78,473
Amortization of
intangible assets 4,389 4,102 13,148 12,029
Interest on long-term
debt 8,249 12,256 27,212 35,336
Change in fair value
of interest rate
swap contracts (870) 2,000 (6,370) 2,125
Gain on disposal of
business - - (134) -
Gain on disposal of
fixed assets (797) (1,038) (2,391) (2,566)
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Income before provision
for income taxes 25,245 38,375 55,880 80,727
Provision for income
taxes:
Current 2,581 3,482 6,650 7,836
Future 5,670 8,393 11,142 8,013
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8,251 11,875 17,792 15,849
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Net income and
comprehensive income 16,994 26,500 38,088 64,878
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Earnings per share
Basic 0.19 0.31 0.43 0.75
Diluted 0.19 0.31 0.43 0.75
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Outstanding weighted
average number of:
Shares 91,206,013 86,790,097 88,278,244 42,600,267
Units - - - 36,749,988
Tracking shares - - - 7,008,918
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Total 91,206,013 86,790,097 88,278,244 86,359,173
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Shares outstanding
Number of shares 95,253,937 86,790,097 95,253,937 86,790,097
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
-------------------------------------------------------------------------
(unaudited) Three Three Nine Nine
months months months months
ended ended ended ended
(in thousands of September September September September
dollars) 30, 2009 30, 2008 30, 2009 30, 2008
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Deficit, beginning of
period (5,821) (29,156) (9,554) (15,146)
Net income for the
period 16,994 26,500 38,088 64,878
Distributions to
unitholders - - - (43,541)
Dividends (9,525) (13,019) (26,886) (18,600)
Incentive compensation - - - (3,266)
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Retained earnings
(deficit),
end of period 1,648 (15,675) 1,648 (15,675)
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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, 2009 30, 2008 30, 2009 30, 2008
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CASH FLOW FROM OPERATING
ACTIVITIES
Net income for the
period 16,994 26,500 38,088 64,878
Non-cash items:
Depreciation of
fixed assets 25,791 26,653 78,949 78,473
Amortization of
intangible assets 4,389 4,102 13,148 12,029
Incentive plan
expense 200 - 200 8,885
Purchase of units
held by the fund for
the Incentive plan - - - (400)
Deferred financing
charges 390 390 1,170 954
Future income taxes 5,670 8,393 11,142 8,013
Change in fair value
of interest rate
Swap contracts (870) 2,000 (6,370) 2,125
Gain on disposal of
business - - (134) -
Gain on disposal of
fixed assets (797) (1,038) (2,391) (2,566)
Other 131 (120) 378 396
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51,898 66,880 134,180 172,787
Net change in non-cash
working capital balances
related to operations 4,374 (5,458) 27,369 (52,410)
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56,272 61,422 161,549 120,377
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CASH FLOW FROM FINANCING
ACTIVITIES
Increase (decrease)
in bank advances and
overdraft (1,792) (10,587) (8,547) (104)
Increase in long-term
debt - - - 97,928
Repayment of long-term
debt (41,823) (33,719) (75,629) (71,906)
Increase (decrease)
in long term revolver
facility (38,802) 10,328 (69,058) 20,161
Cash distributions paid
to unitholders - - - (53,216)
Dividends paid (8,679) (4,340) (26,611) (11,541)
Issuance of shares 47,616 - 47,616 -
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(43,480) (38,318) (132,229) (18,678)
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CASH FLOW FROM INVESTING
ACTIVITIES
Additions to fixed
assets (19,385) (30,518) (40,435) (66,194)
Proceeds from disposal
of fixed assets 6,832 6,124 19,591 17,263
Business acquisitions
(including bank
advances net of cash) 138 1,041 (9,214) (52,948)
Proceeds from disposal
of business - - 1,053 -
Other assets, net (377) 249 (315) 180
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(12,792) (23,104) (29,320) (101,699)
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Net change in cash and
cash equivalent during
the period - - - -
Cash and cash equivalent,
beginning of the period - - - -
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Cash and cash equivalent,
end of the period - - - -
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Supplemental cash flow
information:
Cash paid during the
period for:
Interest 8,167 12,104 26,658 34,705
Income taxes 224 4,395 6,579 8,417
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%SEDAR: 00026947EF
