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Press release from CNW Group

TransForce Inc. Announces 2010 Second Quarter Results

Thursday, July 29, 2010

TransForce Inc. Announces 2010 Second Quarter Results06:30 EDT Thursday, July 29, 2010 << - Revenues increased 9% to $497 million - Operating income before depreciation increased 29% to $71 million - Adjusted net income increased $12 million to $23 million - Adjusted EPS increased 85% to $0.24 >> MONTREAL, July 29 /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 second quarter and first half ended June 30, 2010. The Company improved its performance in key measures including revenues, operating income before depreciation, EBITDA, and adjusted net income."While the economic environment remains challenging, the steps we have taken to increase efficiency, combined with some revenue growth, continue to help generate positive results for our shareholders," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc. "We expect to see some improvement for the industry later in the year but, for now, we welcome relative stability after many quarters of volume declines and pricing pressure."Second Quarter ResultsFor the three months ended June 30, 2010, TransForce reported total revenues of $496.9 million, a 9% increase over $454.2 million for the same period of 2009. Revenue excluding fuel surcharge increased 7% to $455.9 million compared with $424.8 million a year ago.Operating income before depreciation was $71.4 million, compared with $55.3 million in the second quarter of last year, a 29% improvement resulting from improved cost control. The increase in TransForce's operating expenses and fixed costs and general and administrative expenses has been efficiently managed. As a percentage of revenue, operating income before depreciation increased to 14.2% from 12.2% in the second quarter of 2009. EBITDA for the second quarter was $67.1 million compared with $59.8 million in the year-earlier quarter.Adjusted net income, which excludes the after-tax effect of items that are not in the Company's normal business, more than doubled to $23.3 million from $11.3 million in the second quarter of 2009. The adjustment reflects changes in the fair value of derivatives. Adjusted earnings per share increased to $0.24 from $0.13 a year ago.Cash flow from operations before net change in non-cash operating working capital was $49.6 million in the second quarter, compared with $54.4 million in the same quarter of 2009.TransForce's capital expenditures in the quarter were $28.1 million, including $12.5 million related to properties and $13.7 million for rolling stock acquisitions which is $3.8 million or 38% more than the $9.9 million invested in the same quarter of last year.The Company reduced debt by $10.5 million in the second quarter and this continuing debt repayment resulted in a decrease in interest expense for the quarter to $8.7 million from $9.1 million a year earlier.TransForce paid out a dividend of $0.10 per share during the quarter, equal to the year-ago period."Oilfield and oilsands operations benefited from increased activity in the second quarter and the Package and Courier segment grew as a result of an acquisition" said Mr. Bédard. "These quarterly results are the best since 2008 and make us cautiously optimistic for the future."Results for First Six MonthsTotal revenues for the six months ended June 30, 2010 were $963.0 million, a 6% increase from $906.5 million in the first half of 2009. Excluding fuel surcharges, revenue was $885.1 million compared with $847.0 million a year ago.Revenues grew faster than operating expenses and fixed costs and general and administrative expenses in the first half, resulting in operating income before depreciation of $118.9 million, a 17% increase from the first six months of 2009. Operating income before depreciation as a percentage of revenue increased to 12.4% from 11.2% in the same period of 2009. EBITDA for the first half was $117.7 million compared with $104.3 a year ago.Adjusted net income was $29.2 million or $0.31 per share in the first six months, up significantly from $15.6 million, or $0.18 per share, at the same point last year.For the first half, cash flow from operations before net change in non-cash operating working capital was $93.1 million compared with $87.8 million in the first six months of 2009.TransForce reduced long-term debt by $28.1 million to $679.8 million at the end of the half resulting in a reduction of interest expense of almost $1.9 million to $17.1 million.TransForce paid out dividends of $0.20 per share during the first half, unchanged from a year earlier.OutlookDuring the second quarter of 2010, the Company's revenues stabilized, notwithstanding the good performance of its energy-related operations. The pressure on pricing still offset the slight increase in volume. TransForce is recovering from the full effects of the economic slowdown and it is positive to note that conditions have not deteriorated further in the past three months.TransForce will continue its efforts to control costs, improve operating effectiveness, and maintain pricing discipline as far as possible in the current environment. The Company's objective is to protect and improve its operating margin. This should allow TransForce to remain well-positioned so that, when higher general economic activity returns to North America, the resulting increased volumes will be translated into value for shareholders. The Company is confident that the quality of its revenues will improve within the next twelve months.The effectiveness of TransForce in the second quarter and first half translated into significant cash flows which were used to reduce its long-term debt. TransForce intends to continue to pay down debt in 2010 by about $100 million, eventually reaching a debt-to-EBITDA ratio of between 2 and 2.5 times.TransForce's solid second quarter performance is the result of discipline and determination to get back to "lean and mean". Consequently, the Company expects to emerge from the economic slowdown in a much better position to generate more profits and to stay alert to business acquisition opportunities that meet its strict criteria. Current market conditions may dictate continued restraint, but TransForce remains committed to its strategy of growth through selective acquisitions.Second Quarter Management Conference CallTransForce's Chairman, President and Chief Executive Officer Alain Bédard, will host a conference call for investors to discuss the results of the periods ended June 30, 2010 on Thursday, July 29, 2010, at 9:00 a.m. Eastern Time.To participate in the conference call, investors are invited to call 1-800-707-9445. A recording of the call will be available until midnight, August 5, 2010, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21476550.Financial StatementsThe partial financial statements for the three-month and six-month periods ended June 30, 2010 and 2009 included below are an integral part of this news release.For more detailed financial information, reconciliation of non-GAAP financial measures and integral financial statements, please see Management's Discussion and Analysis which can be found on SEDAR at www.sedar.com and on the Company's website www.transforce.ca.ProfileTransForce 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 oilfield & oilsand services, waste management, logistics, fleet management, and personnel services; - Truckload, specialized truckload and dedicated services. >> TransForce Inc. shares are listed on the Toronto Stock Exchange under the symbol TFI.Forward-Looking StatementsExcept 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. << CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- (in thousands of dollars) As at As at (unaudited) June 30, December 31, 2010 2009 ------------------------------------------------------------------------- ASSETS Current assets: Accounts receivable 278,731 262,219 Inventories 8,903 9,116 Prepaid expenses 18,583 9,480 Income tax receivable - 751 ------------------------------------------------------------------------- 306,217 281,566 ------------------------------------------------------------------------- Property, plant and equipment 635,909 667,315 Intangible assets 183,060 146,946 Goodwill 428,840 418,951 Other assets 8,092 6,774 Future income taxes 4,440 4,104 ------------------------------------------------------------------------- 1,566,558 1,525,656 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank indebtedness 12,910 6,826 Accounts payable and accrued liabilities 194,863 187,934 Income tax payable 807 - Dividends payable 9,525 9,525 Current portion of long-term debt 21,667 403,763 ------------------------------------------------------------------------- 239,772 608,048 ------------------------------------------------------------------------- Long-term debt 658,178 304,166 Asset retirement obligations 14,676 10,794 Deferred gain on sale and leaseback 8,933 - Future income taxes 86,105 69,233 ------------------------------------------------------------------------- Shareholders' equity: Share capital 567,551 567,551 Contributed surplus 1,800 900 Deficit (10,457) (35,036) ------------------------------------------------------------------------- 558,894 533,415 ------------------------------------------------------------------------- 1,566,558 1,525,656 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND DEFICIT ------------------------------------------------------------------------- (In thousands of Three months Three months Six months Six months dollars, except ended ended ended ended per share amounts) June 30, June 30, June 30, June 30, (unaudited) 2010 2009 2010 2009 ------------------------------------------------------------------------- Revenue 455,860 424,762 885,065 847,011 Fuel surcharge revenue 40,998 29,404 77,887 59,535 ------------------------------------------------------------------------- 496,858 454,166 962,952 906,546 Expenses: Operating expenses 346,502 323,899 680,042 644,418 Fixed costs, general and administrative expenses 78,932 74,968 163,976 160,288 ------------------------------------------------------------------------- Income before the following 71,424 55,299 118,934 101,840 Depreciation of property, plant and equipment 24,644 26,246 49,215 52,393 Amortization of intangible assets 6,904 4,749 13,469 9,524 Interest on long-term debt 8,665 9,075 17,097 18,963 Change in fair value of derivatives 8,912 (9,686) 2,588 (7,947) Remeasurement to fair value of existing interest in acquiree - - (16,279) - Gain on disposal of business - (134) - (134) Gain on disposal of property, plant and equipment (1,098) (1,323) (1,782) (1,594) ------------------------------------------------------------------------- Income before provision for income taxes 23,397 26,372 54,626 30,635 Provision for income taxes: Current 5,241 1,993 8,261 4,069 Future 1,080 6,396 2,735 5,472 ------------------------------------------------------------------------- 6,321 8,389 10,996 9,541 ------------------------------------------------------------------------- Net income and comprehensive income 17,076 17,983 43,630 21,094 Deficit, beginning of period (18,007) (15,122) (35,036) (9,554) Dividends (9,526) (8,682) (19,051) (17,361) ------------------------------------------------------------------------- Deficit, end of period (10,457) (5,821) (10,457) (5,821) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share: Basic 0.18 0.21 0.46 0.24 Diluted 0.18 0.21 0.46 0.24 ------------------------------------------------------------------------- Weighted average number of shares outstanding 95,253,937 86,790,097 95,253,937 86,790,097 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------- (in thousands of Three months Three months Six months Six months dollars) ended ended ended ended (unaudited) June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES: Net income for the period 17,076 17,983 43,630 21,094 Non-cash items: Depreciation of property, plant and equipment 24,644 26,246 49,215 52,393 Amortization of intangible assets 6,904 4,749 13,469 9,524 Stock-based compensation 450 - 900 - Amortization of deferred financing charges 390 390 780 780 Future income taxes 1,080 6,396 2,735 5,472 Gain on disposal of business - (134) - (134) Gain on disposal of property, plant and equipment (1,098) (1,323) (1,782) (1,594) Remeasurement to fair value of existing interest in acquiree - - (16,279) - Others 162 135 395 247 ------------------------------------------------------------------------- 49,608 54,442 93,063 87,782 Net change in non-cash operating working capital (9,603) (2,662) (25,098) 17,495 ------------------------------------------------------------------------- 40,005 51,780 67,965 105,277 ------------------------------------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES: Increase (decrease) in bank advances and overdraft 2,714 (7,197) 6,084 (6,755) Repayment of long-term debt (7,851) (20,745) (19,896) (33,806) Increase (decrease) in long term revolving facility (3,331) (11,462) (13,227) (30,256) Dividends paid (9,526) (9,253) (19,051) (17,932) ------------------------------------------------------------------------- (17,994) (48,657) (46,090) (88,749) ------------------------------------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (28,078) (9,651) (37,875) (20,560) Proceeds from disposal of property, plant and equipment 7,865 9,272 43,920 12,759 Business acquisitions (including bank advances net of cash) (1,040) (3,611) (30,143) (9,352) Proceeds from disposal of business - 1,053 - 1,053 Others (758) (186) 2,223 (428) ------------------------------------------------------------------------- (22,011) (3,123) (21,875) (16,528) ------------------------------------------------------------------------- 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 - - - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- >> %SEDAR: 00026947EFFor further information: Investors: Alain Bédard, Chairman, President and CEO, TransForce Inc., (514) 331-4200, abedard@transforce.ca; Media: John Lute, Lute & Company, (416) 929-5883, jlute@luteco.com