TransForce Q3 profit declines to $41.5M; revenue accelerates to $981.1M

MONTREAL – TransForce Inc. (TSX:TFI) says “disciplined acquisitions” were responsible for a big increase in revenue and operating income in the third quarter, even as net income fell to $41.5 million or 41 cents a share from $44 million or 45 cents in the year-earlier period.

The Montreal-based concern, which provides various trucking and courier services, says total revenue in the three months ended Sept. 30 soared to $981.1 million from $775.1 million a year earlier.

“TransForce recorded a solid year-over-year growth during the third quarter essentially driven by our disciplined acquisition strategy,” chairman, president and CEO Alain Bedard said Thursday in the company’s earnings report.

“Acquisitions led to revenue and EBIT improvements in all operating segments, while relentless efforts to increase the return on capital employed once again resulted in a strong free cash flow generation.”

Bedard said that “in a difficult economy” management was focused on exercising constant discipline in adapting supply to demand across all market segments.

The company said total revenue increased $206 million or 27 per cent, mostly reflecting a total contribution of $232 million from acquisitions over the previous 12 months.

Excluding acquisitions, revenue declined due to the phase-out of rig moving activities and the sale of a business unit, it said.

Adjusted net income, which excludes the after-tax effect of changes in the fair value of derivatives, net of foreign exchange gain or loss, transaction costs on acquisitions and accelerated accretion on debentures’ conversion, increased 51 per cent to $53.7 million or 53 cents per share from $35.5 million 37 cents in the year-earlier period.

“As the Canadian economy is only modestly improving, with more signs of vitality in the United States, TransForce must continue to focus on maximizing profitability,” Bedard said in the company’s outlook.

“We are making steady progress in certain segments, as evidenced by higher margins from existing operations, but more has to be done in terms of efficiency improvement, asset rationalization and acquisition optimization. . . . “

Among current acquisition targets is Ontario-based Contras Group Inc. (TSX:CSS), for which it has offered to pay $495 million or $14.60 per share in cash and assume $85 million of debt. The bid has the support of the Contrans board.