TransForce Inc. announced its results for the third quarter ended September 30, 2013. Total revenue during the quarter increased by 1.8 per cent, to $775.1 million, mainly due to higher revenue in the Package & Courier (P&C) segment as a result of the Velocity acquisition.
Third-quarter EBIT amounted to $59.0 million, or 7.6 per cent of total revenue, versus $66.9 million, or 8.8 per cent of total revenue in the same period a year earlier. Excluding the loss at Velocity, the EBIT margin of the P&C segment was 7.5 per cent, up from 6.0 per cent a year ago, while Less-than-Truckload (LTL)’s EBIT margin, excluding a $1.9 million gain on the disposal of excess assets, reached 6.9 per cent, versus 6.7 per cent last year. Net income for the period stood at $44.0 million versus $53.8 million in the third quarter of 2012.
Free cash flow for the third quarter of 2013 amounted to $53.0 million, including proceeds from the sale of property and equipment of $14.1 million, as TransForce further optimized its asset base to maximize return. Free cash flow was mainly used to finance business acquisitions ($35.8 million) and to repurchase common shares ($4.5 million) during the period.
For the nine months ended September 30, 2013, total revenue reached $2.32 billion, versus $2.36 billion a year earlier. EBIT amounted to$165.8 million, or 7.2 per cent of total revenue, compared with $183.0 million, or 7.7 per cent of total revenue a year earlier. Net income was $89.4 million, down from $118.1 million a year ago. Finally, free cash flow stood at $164.7 million.
“The profitability of the P&C and LTL segments further improved, as Transforce reaped the benefits from its initiatives to optimize asset utilisation and maximize efficiency. In P&C, margins from existing operations improved significantly. At Velocity, while TransForce is proceeding with operational changes, losses were still being incurred during the quarter. Meanwhile, successful asset rationalization in the LTL segment yielded another year-over-year EBIT margin improvement, before gains on asset disposal. The Truckload segment experienced a small decline, while our Energy sector experienced a major decrease in EBIT affected mostly by rig moving operations. The acquisition of E.L. Farmer, completed in August, provides revenue diversification and a solid platform to leverage going forward in pipe storage and hauling services for the oilfield industry. This acquisition, as well as that of Total Delivery Systems in September, was financed through free cash flow generation of $53.0 million during the quarter,” said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce.
Outlook
“Looking ahead, we see further growth in the U.S. same-day P&C market and we are progressing according to plan with the optimization of our local activities, but the U.S. energy sector remains challenging over the short-term. In Canada, industry conditions in all business segments are not expected to improve materially over the next few quarters, particularly in the energy sector, where we must continue to proactively align supply to demand levels, as operating results and return on assets are currently unacceptable.
In this difficult context, TransForce will continue to diligently improve its operating efficiency and maximize return on assets in order to generate a strong free cash flow. The rigorous execution of our proven strategies in regards to business operation and disciplined acquisitions remain core elements in our goal to create further value for our shareholders,” concluded Mr. Bédard.