TransForce Inc.
TSX : TFI
OTCQX : TFIFF

TransForce Inc.

July 23, 2015 17:05 ET

TransForce Announces 2015 Second Quarter Results-Acquisition Strategy Benefits Shareholders

- Revenue before fuel surcharge up 27% to $988.1 million

- Adjusted EBIT(i) of $97.8 million, up 23% from $79.5 million last year

- Adjusted net income(i) of $71.3 million, or $0.69 per diluted share(i), versus $56.3 million last year

- Free cash flow(i) of $98.2 million, or $0.97 per share(i), used to repurchase $52.1 million in common shares

(i) These are non-IFRS measures. For a reconciliation, please refer to the "Non-IFRS Measures" section below.

MONTREAL, QUEBEC--(Marketwired - July 23, 2015) - TransForce Inc. (TSX:TFI)(OTCQX:TFIFF), a North American leader in the transportation and logistics industry, today announced its results for the second quarter ended June 30, 2015.

"TransForce delivered solid operating results driven by the contribution from last year's selective acquisitions. This strategy more than offset the impact of a weaker economy on business volumes and of lower oil prices which affected both our Truckload ("TL") divisions servicing the oil and gas industry and our U.S.-based rig moving activities. The latter's downsizing, combined with the sale of excess properties throughout the organization, resulted in proceeds of $56.0 million. These proceeds and cash flow from operating activities, led to the generation of a healthy free cash flow of $98.2 million, which was applied to debt reimbursement and benefited shareholders through stock repurchases and dividends," said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce.

Financial highlights Quarters ended June 30 Six months ended June 30
(in millions of dollars, except per share data) 2015 2014 2015 2014
Total revenue 1,097.1 889.1 2,128.9 1,659.6
Revenue before fuel surcharge 988.1 779.1 1,914.4 1,458.9
Income from operating activities (EBIT) 97.8 51.6 142.8 84.9
Adjusted income from operating activities (Adj. EBIT1) 97.8 79.5 142.8 112.7
Net cash from operating activities 83.5 55.1 153.8 79.1
Free cash flow2 98.2 97.4 138.7 124.2
Adjusted net income3 71.3 56.3 100.7 80.3
Per share - diluted4 ($) 0.69 0.55 0.97 0.79
Net income 64.1 37.3 78.2 43.2
Per share - diluted ($) 0.62 0.37 0.75 0.43
Weighted average shares outstanding ('000s) 101,462 98,590 101,919 98,343
1 Earnings before finance income and costs, income taxes and impairment of intangible assets.
2 Net cash from operating activities, less additions to property and equipment, plus proceeds from sale of property and equipment and assets held for sale.
3 Excluding amortization of intangible assets related to acquisitions, net changes in the fair value of derivatives, net foreign exchange gain or loss, and items not in the Company's normal business, net of tax.
4 Adjusted net income divided by the weighted average number of diluted common shares outstanding.

SECOND-QUARTER RESULTS

Total revenue reached $1.1 billion, up $208.0 million, or 23%, over last year. Net of fuel surcharge, revenue increased 27% to $988.1 million. This increase reflects the acquisitions completed in the previous twelve months, as well as the effect of local currency appreciation on US-dollar denominated revenue. Before fuel surcharge and acquisitions, revenue decreased due to lower activity in the specialized TL divisions servicing the oil and gas industry as well as in the U.S. rig moving business.

Adjusted EBIT amounted to $97.8 million, or 9.9% of revenue before fuel surcharge, up 23% from $79.5 million, or 10.2% of revenue before fuel surcharge, a year earlier. The increase in EBIT and adjusted EBIT reflects a strong $25.5 million contribution from acquisitions, while existing operations recorded a $7.2 million reduction, essentially due to deteriorating conditions in oil-related markets.

Adjusted net income, which excludes amortization of intangible assets related to acquisitions, the net changes in the fair value of derivatives, net foreign exchange gain or loss, and items not in the Company's normal business, net of tax, reached $71.3 million, or $0.69 per diluted share, up from $56.3 million last year, or $0.55 per diluted share. Net income amounted to $64.1 million, or $0.62 per diluted share, versus $37.3 million, or $0.37 per diluted share, a year ago.

Reflecting a higher cash flow from operating activities and the sale of excess property and equipment, TransForce generated a solid free cash flow of $98.2 million, or $0.97 per share, in the second quarter of 2015. This free cash flow was mainly returned to shareholders through the repurchase of $52.1 million in common shares and dividend payments of $17.4 million, while long-term debt was reduced by a net amount of $6.1 million during the period.

SIX-MONTH RESULTS

For the first six months of 2015, total revenue amounted to $2.13 billion, up 28% from $1.66 billion a year earlier. Net of fuel surcharge, revenue rose 31% to $1.91 billion. Adjusted EBIT rose 27% to $142.8 million, or 7.5% of revenue before fuel surcharge, versus $112.7 million, or 7.7% of revenue before fuel surcharge, last year. Adjusted net income reached $100.7 million, or $0.97 per diluted share, up from $80.3 million, or $0.79 per diluted share, a year ago, while net income stood at $78.2 million, or $0.75 per diluted share, compared with $43.2 million, or $0.43 per diluted share, in the previous year. TransForce generated free cash flow of $138.7 million in the first half of 2015, equivalent to $1.36 per share.

SEGMENTED RESULTS

(in millions of dollars) Quarters
ended June 30
Six months
ended June 30
2015 2014 2015 2014
$ $ $ $
Revenue*
Package and Courier 304.8 288.5 591.5 565.1
Less-Than-Truckload (LTL) 198.2 203.5 381.4 352.7
Truckload (TL) 366.1 181.8 708.6 347.2
Waste Management 55.7 48.4 96.9 83.2
Other segments 80.3 72.6 169.7 142.8
Eliminations (17.0 ) (15.6 ) (33.7 ) (32.1 )
Total 988.1 779.1 1,914.4 1,458.9
$ % of Rev.* $ % of Rev.* $ % of Rev.* $ % of Rev.*
Adjusted EBIT
Package and Courier 26.6 8.7 27.3 9.5 41.3 7.0 40.3 7.1
Less-Than-Truckload 19.8 10.0 20.1 9.9 22.8 6.0 24.5 6.9
Truckload 41.1 11.2 20.9 11.5 66.7 9.4 31.9 9.2
Waste Management 12.8 23.0 11.9 24.6 19.4 20.0 18.8 22.6
Other segments 2.2 2.8 6.3 8.6 1.6 0.9 9.3 6.5
Corporate (4.7 ) (7.0 ) (9.0 ) (12.0 )
Total 97.8 9.9 79.5 10.2 142.8 7.5 112.7 7.7
Note: due to rounding, totals may differ slightly from the sum.
* Revenue before fuel surcharge

OUTLOOK

"We expect organic growth to be restrained in TransForce's main operating markets due to the North American economy which is more sluggish than initially anticipated. Although the U.S. economy is relatively healthy, lower oil prices have led to an economic contraction in Canada, a situation which threatens to persist through 2015. This will likely more than offset the momentum in Central Canada's manufacturing sector, resulting from the benefits of a weaker Canadian dollar. Given this economic environment, we adjusted our 2015 anticipated results and now expect total revenue to reach $4.3 billion (previously between $4.4 billion and $4.5 billion), adjusted EBITDA of between $510 million and $530 million (previously $540 million and $560 million), basic adjusted EPS in the range of $1.97 - $ 2.12 (previously $2.15 and $2.30) and free cash flow to exceed $300 million. TransForce's decentralized structure, coupled with our dedicated teams, provide the flexibility to deal rapidly and effectively with changing business environments at the local level. By strictly adhering to this guiding principle, we will continue to generate a solid free cash flow and optimize the return to our shareholders," concluded Mr. Bédard.

CONFERENCE CALL

TransForce will hold a conference call for analysts and portfolio managers on Friday, July 24, 2015 at 9:00 a.m. Eastern Time, to discuss these results. Business media are also invited to listen to the call. Interested parties can join the call by dialling 1-877-223-4471. A recording of the call will be available until midnight, July 31, 2015, by dialling 1-800-585-8367 or 416-621-4642 and entering passcode 72238681.

ABOUT TRANSFORCE

TransForce Inc. is a North American leader in the transportation and logistics industry operating across Canada and the United States through its subsidiaries. TransForce creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TransForce umbrella, companies benefit from corporate financial and operational resources to build their businesses and increase their efficiency. TransForce companies service the following segments:

  • Package and Courier;
  • Less-Than-Truckload;
  • Truckload;
  • Waste Management;
  • Logistics and Other Services.

TransForce Inc. is publicly traded on the Toronto Stock Exchange (TSX:TFI) and the OTCQX marketplace in the U.S. (OTCQX:TFIFF). For more information, visit http://www.transforcecompany.com.

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.

NON-IFRS MEASURES

Adjusted EBIT, adjusted net income, adjusted earnings per share, free cash flow and free cash flow per share are financial measures not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Management considers these to be useful information to assist investors in evaluating the Company's profitability, liquidity and ability to generate funds to finance its operations. These measures do not have any standardize meaning under IFRS and could be calculated differently by other companies. These measures should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS.

Adjusted income from operating activities ("Adjusted EBIT") Quarters ended June 30 Six months ended June 30
(unaudited, in thousands of dollars) 2015 2014 2015 2014
Income from operating activities ("EBIT") 97,793 51,622 142,797 84,867
Impairment of intangible assets - 27,839 - 27,839
Adjusted income from operating activities ("Adjusted EBIT") 97,793 79,461 142,797 112,706
Adjusted net income Quarters ended June 30 Six months ended June 30
(unaudited, in thousands of dollars, except per share data) 2015 2014 2015 2014
Net income 64,116 37,268 78,161 43,203
Amortization of intangible assets related to acquisitions, net of tax 7,762 5,192 15,572 10,133
Net change in fair value of derivatives, net of tax (2,182 ) (971 ) 4,753 1,626
Net foreign exchange loss (gain), net of tax 1,312 (10,734 ) 1,744 602
Accelerated accretion expense on conversion of debentures, net of tax - - - 4,087
Reclassification to income of accumulated unrealized gain on investment in equity securities, net of tax - - - (5,420 )
Transaction costs on business combinations, net of tax - - - 528
Tax on multi-jurisdiction distributions 296 - 423 -
Impairment of intangible assets, net of tax - 25,499 - 25,499
Adjusted net income 71,304 56,254 100,653 80,258
Adjusted earnings per share - basic 0.70 0.57 0.99 0.82
Adjusted earnings per share - diluted 0.69 0.55 0.97 0.79
Free cash flow Quarters ended June 30 Six months ended June 30
(unaudited, in thousands of dollars) 2015 2014 2015 2014
Net cash from operating activities 83,481 55,138 153,810 79,074
Additions to property and equipment1 (54,570 ) (15,047 ) (93,692 ) (45,044 )
Proceeds from sale of property and equipment 46,030 42,382 55,299 59,659
Proceeds from sale of assets held for sale 23,238 14,966 23,238 30,471
Free cash flow 98,179 97,439 138,655 124,160
Free cash flow per share2 0.97 0.99 1.36 1.26
1 2014 figures have been restated to include additions that did not affect cash.
2 Free cash flow divided by the weighted average number of common shares outstanding.

Note to readers: Consolidated financial statements and Management's Discussion & Analysis are available on TransForce's website at www.transforcecompany.com.

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