Severe Winter Hurts TransForce's Profits
MONTREAL, QC — Canadian carriers emerged from a severe winter and work in challenging business conditions caused by a weak economy, but there are encouraging signs of firmer pricing in LTL and Truckload segments, too, according to TransForce, Canada’s largest carrier.
"TransForce's first-quarter results were affected by more severe winter weather this year compared to last. This factor and persistent softness in certain key sectors of the North American economy explain most of the EBIT decline in the Package and Courier and Less-than-Truckload segments, which overshadowed another solid performance from our Waste Management operations,” said Alain Bédard, TransForce’s president and CEO.
Despite the challenging business environment this past winter, the company’s overall revenue was up $20.8 million, or 2.8 percent, to $770.5 million. The increase is mainly because of the company’s acquisition of Clark Transport at the beginning of January, which brought in $44.1 million in revenues.
Excluding acquisitions, revenue declined due to lower volume and a planned reduction in rig moving activities across North America. These factors were partially offset by the effect of the U.S. currency appreciation on U.S.-dollar denominated sales, mainly in the P&C sector.
“Notwithstanding challenging market conditions, we continued to further optimize asset utilization and operating efficiency. This ongoing focus, and proceeds from the disposition of assets from rig moving operations that were previously shut down, produced a solid free cash flow of more than $35 million that was mainly used to repurchase our shares," Bédard said.
TransForce’s take-home profit for the period ending March 31 was $5.9 million, or $0.06 per share, compared to $18.9 million, or $0.20 per share, the same time last year.
After adjusting for one-time items such as currency changes, the company earned $19.9 million or 20 cents per share, versus $24.4 million or 26 cents per share, the same time last year.
The company had a free cash flow of $35.1 million, up from $20.5 million last year. The increase is mainly due to the sale of assets amounting to $32.8 million and to a reduction in income tax paid during the first quarter of 2014, compared with last year. TransForce used the extra money to repurchase $25.9 million in common shares during the quarter.
"Still, we must continue to adapt supply to demand by optimizing our asset base. In this regard, we closed four additional rig moving terminals in the U.S. and put these assets up for sale. Going forward, we will also focus on unlocking synergies from the Clarke and Vitran acquisitions, while maximizing return on assets in all segments. Achieving optimal efficiency will further drive cash flow generation, which we will use to reimburse long-term debt, repurchase shares and carry out our disciplined acquisition strategy," Bédard said.