Canada-based freight and parcels group TransForce has unveiled double-digit growth in revenues and adjusted profits for the second quarter of 2015, driven by freight acquisitions and organic growth in parcels activities.
The group’s revenue (before fuel surcharges) rose by 27% to C$988 million while adjusted operating profits were 23% higher at $97.8 million. Adjusted net profits rose to C$71.3 million from C$56.3 million in the second quarter of last year.
The revenue increase reflected acquisitions completed in the previous twelve months, as well as the effect of local currency appreciation on US-dollar denominated revenue, the group said. 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.
The increase in EBIT and adjusted EBIT reflected 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.
For the first six months of 2015, net revenues rose by 31% to $1.91 billion while adjusted EBIT rose 27% to $142.8 million.
The group’s Package and Courier division, with express parcel businesses in Canada and the US, increased Q2 revenues by 5.6% to C$304.8 million, while half-year revenues were up by 4.6% to C$591.5 million. But its profits weakened slightly to C$26.6 million in the second quarter, which was an 8.7% profit margin, while half-year profits improved somewhat to C$41.3 million, representing a 7% margin.
“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.
Looking ahead, he added: “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.”
