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Press release from CNW Group

TransForce Inc. Announces 2010 Third Quarter Results

Thursday, October 28, 2010

TransForce Inc. Announces 2010 Third Quarter Results16:30 EDT Thursday, October 28, 2010Revenues increased 11% to $499.5 millionEBITDA increased 20% to $74.5 millionRecord EBITDA margin of 14.9%Adjusted EPS increased 71% to $0.24MONTREAL, Oct. 28 /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 and first nine months ended September 30, 2010.  Despite continuing weak industry conditions, TransForce translated a moderate rise in revenues into greater increases in its most important performance measures such as EBITDA and adjusted net income and achieved its highest EBITDA margin in the last five years."The third quarter continued the trends established earlier in the year. The economic recovery is not as robust as some predicted but we kept firm control on our costs. In this difficult environment, we were pleased to see strong performance from the Package and Courier segment and the oilfield and oilsands services companies," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce Inc.  "Real improvement for the industry is slow in coming so we will maintain our highly disciplined approach which has produced good results for our shareholders."In the third quarter, TransForce acquired substantially all the assets of Speedy Heavy Hauling, Inc. Those oilfield services assets are now part of Hemphill Speedy in the Company's Specialized Services segment.TransForce also announced that its Package and Courier subsidiary Canpar won a minimum three-year contract to provide overnight courier services to the Government of Ontario. Third Quarter ResultsFor the three months ended September 30, 2010, TransForce reported total revenues of $499.5 million, an 11% increase over $451.4 million in the same period of 2009. Revenue excluding fuel surcharge increased 10% to $460.8 million, compared with $418.9 million a year ago.TransForce increased operating income before depreciation by 21% to $69.2 million, compared with $57.2 million in the third quarter of 2009 as it held costs essentially flat while increasing revenue.Third quarter EBITDA was $74.5 million, 20% higher than the $62.0 million reported a year earlier. As a percentage of revenue, EBITDA increased to 14.9% from 13.7% in the third quarter of 2009.Adjusted net income, which excludes the after-tax effect of changes in the fair value of derivatives and of items that are not in the Company's normal business, increased by 77% to $23.2 million from $13.1 million in the third quarter of 2009. Adjusted earnings per share increased to $0.24 from $0.14 in the year-earlier period.Cash flow from operations before net change in non-cash operating working capital was $59.4 million in the third quarter, compared with $52.8 million in the same quarter of 2009.During the third quarter, TransForce's capital expenditures were $34.1 million. This included $21.5 million for rolling stock, $8.1 million related to properties, and $4.5 million for other equipment. The Company invested $19.3 million in the same quarter of last year.The Company paid out a dividend of $0.10 per share during the quarter, unchanged from a year ago."Our diversification means that, overall, TransForce continues to improve its performance with Specialized Services adding 21% to revenues and the Package and Courier segment growing revenues by 39% from a year ago, while Truckload and Less-Than-Truckload are essentially unchanged," said Mr. Bédard. "Given industry conditions, these quarterly results are strong and we believe we can continue to improve in the future."Results for First Nine MonthsTotal revenues for the nine months ended September 30, 2010 increased by 8% to $1.46 billion from $1.36 billion in the same period of 2009.  Excluding fuel surcharges, revenue was $1.35 billion compared with $1.27 billion a year ago. Revenue growth was stronger than the increase in operating expenses and fixed costs and general and administrative expenses in the first three quarters. This produced operating income before depreciation of $188.1 million, an 18% increase from the first nine months of 2009. EBITDA for the nine-month period was $192.2 million up 16% from $166.3 in the year-earlier period. EBITDA margin increased to 13.1% from 12.2% a year ago.Adjusted net income was $52.4 million or $0.55 per share in the first nine months, compared with $28.7 million, or $0.33 per share, at the same point last year. This represents increases of 82% and 67% respectively.For the first nine months, cash flow from operations before net change in non-cash operating working capital was $152.5 million compared with $140.6 million in the comparable period of 2009. The Company's free cash flow was $106.6 million or $1.12 per share for the nine months ended September 30, 2010. TransForce negotiated a new credit facility during the quarter and reduced interest expense by approximately $443,000 to $26.8 million for the first nine months. Despite incurring debt to complete acquisitions during the quarter, at September 30, 2010, TransForce's long-term debt was $704.0 million, slightly below the December 31, 2009 level.  However, long-term debt as a percentage of total capitalization at the end of the quarter was 55.01%, down from 57.03% at December 31, 2009.TransForce paid out dividends of $0.30 per share during the first nine months, the same as a year earlier.Third 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 September 30, 2010 on Friday, October 29, 2010, at 9:00 a.m. Eastern Time.To participate in the conference call, investors are invited to call 1-800-920-2968.A recording of the call will be available until midnight, November 5, 2010, by dialing 1-800-558-5253 or 416-626-4100 and entering passcode 21482922.Financial StatementsThe partial financial statements for the three-month and nine-month periods ended September 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, which includes 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 September 30, 2010As atDecember 31,2009ASSETS(unaudited)(audited)Current assets:  Accounts receivable311,592 262,219 Inventories8,889 9,116 Prepaid expenses15,396 9,480 Income tax receivable-751 335,877 281,566Property, plant and equipment674,919 667,315Intangible assets179,452 146,946Goodwill432,520 418,951Other assets12,498 6,774Future income taxes4,758 4,104 1,640,024 1,525,656 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:  Bank indebtedness11,865 6,826 Accounts payable and accrued liabilities217,027 187,934 Income tax payable2,617 - Dividends payable9,531 9,525 Current portion of long-term debt16,484 403,763 257,524 608,048Long-term debt687,477 304,166Asset retirement obligations17,631 10,794Deferred gain on sale and leaseback8,853 -Future income taxes92,688 69,233Shareholders' equity:  Share capital567,990 567,551 Contributed surplus2,470 900 Retained earnings (Deficit)5,391 (35,036) 575,851 533,415 1,640,024 1,525,656CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOMEAND RETAINED EARNINGS(in thousands of dollars, except per shareamounts)  (unaudited)Three monthsendedSept. 30, 2010Three monthsendedSept. 30, 2009Nine monthsendedSept. 30, 2010Nine monthsendedSept. 30, 2009Revenue460,751 418,9011,345,816 1,265,912Fuel surcharge revenue38,707 32,451116,594 91,986 499,458 451,3521,462,410 1,357,898 Expenses:  Operating expenses348,630 319,7991,028,672 964,217 Fixed costs, general and administrative expenses81,653 74,358245,629 234,646Income before the following69,175 57,195188,109 159,035Depreciation of property, plant and equipment24,689 25,42473,904 77,817Amortization of intangible assets7,045 4,75620,514 14,280Interest on long-term debt9,672 8,24926,769 27,212Change in fair value of foreign exchange derivatives(5,292) (4,812)(4,101) (7,259)Change in fair value of interest rate derivatives2,192 (870)3,589 (6,370)Remeasurement to fair value of existing interest in acquiree--(16,279) -Gain on disposal of property, plant and equipment(5,022) (797)(6,804) (2,525)Income before provision for income taxes35,891 25,24590,517 55,880Provision for income taxes:  Current5,011 2,58113,272 6,650 Future5,501 5,6708,236 11,142 10,512 8,25121,508 17,792Net income and comprehensive income25,379 16,99469,009 38,088 Deficit, beginning of period(10,457) (5,821)(35,036) (9,554) Dividends(9,531) (9,525)(28,582) (26,886)Retained earnings, end of period5,391 1,6485,391 1,648 Earnings per share:  Basic0.27 0.190.72 0.43 Diluted0.27 0.190.72 0.43 Weighted average number of shares outstanding95,280,513 91,206,01395,262,893 88,278,244CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of dollars)(unaudited)Three monthsendedSept. 30, 2010Three monthsendedSept. 30, 2009Nine monthsendedSept. 30, 2010Nine monthsendedSept. 30, 2009CASH FLOW FROM OPERATING ACTIVITIES: Net income for the period25,379 16,99469,009 38,088Non-cash items:  Depreciation of property, plant and equipment24,689 25,42473,904 77,817 Amortization of intangible assets7,045 4,75620,514 14,280 Stock-based compensation773 2001,673 200 Amortization of financing charges855 3901,635 1,170 Future income taxes5,501 5,6708,236 11,142 Gain on disposal of property, plant and equipment(5,022) (797)(6,804) (2,525) Remeasurement to fair value of existinginterest in acquiree--(16,279) - Others174 131569 378 59,394 52,768152,457 140,550Net change in non-cash operating working capital(5,321) 3,504(30,419) 20,999 54,073 56,272122,038161,549CASH FLOW FROM FINANCING ACTIVITIES: Increase (decrease) in bank advances and overdraft(1,045) (1,792)5,039 (8,547)Increase in long-term debt561,035 -547,808 -Repayment of long-term debt(542,144) (80,625)(562,040) (144,687)Dividends paid(9,525) (8,679)(28,576) (26,611)Issuance of shares336 47,616336 47,616 8,657 (43,480)(37,433) (132,229)CASH FLOW FROM INVESTING ACTIVITIES: Additions to property, plant and equipment(34,064) (19,312)(71,939) (39,872)Proceeds from disposal of property, plant and equipment12,537 6,83256,457 19,591Business acquisitions (including bank advances net of cash)(36,191) 138(66,334) (9,214)Others(5,012) (450)(2,789) 175 (62,730) (12,792)(84,605) (29,320)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.caMedia: John Lute Lute & Company (416) 929-5883 jlute@luteco.com