TransForce Q1 profits plummet to $5.9 million due to severe winter weather
MONTREAL - Transportation firm TransForce says its first-quarter profits plummeted to $5.9 million from $18.9 million a year ago due to severe winter weather, higher costs and persistent economic softness.
The Montreal-based trucking, logistics and waste management firm earned six cents per diluted share for the period ended March 31, compared with 20 cents per share a year earlier.
Adjusting for one-time items including the fair value of derivatives and currency gains, TransForce (TSX:TFI) earned $19.9 million or 20 cents per share, one cent less than analyst forecasts. That compared to $24.4 million or 26 cents per share in the prior-year period.
Revenues increased 2.8 per cent to $770.5 million, including $44.1 million from January's acquisition of Clarke Transport and Clarke Road Transport. Excluding acquisitions, revenues declined due to lower volume and a planned reduction in rig moving activities across North America, partially offset by the higher U.S. dollar.
TransForce said earnings before interest and taxes was $33.2 million, down from $44.6 million in the prior year.
It generated $35.1 million of free cash flow due to lower taxes and proceeds from asset sales, which was mainly used to repurchase $25.9 million of its common shares.
TransForce shut its Canadian rig-moving business last year and followed that up by closing four additional rig-moving terminals in the U.S. and putting the assets up for sale.
Energy services revenues sustained the biggest revenue hit in the quarter, falling 14.3 per cent, while the less-than-truckload segment's profits were down the most at nearly 67 per cent despite a 20.5 per cent increase in revenues.
The largest segment â€” package and courier â€” earned $12.9 million on $306.6 million of revenues, compared with $17.2 million on $304.1 million a year ago.
Although business conditions remain challenging due to the weak economy, the company said it was encouraged by signs of firmer pricing in less-than-truckload and truckload segments.
Walter Spracklin of RBC Capital Markets said the results were negative despite positive trucking pricing trends.
"While severe weather impeded operating progress in the first quarter, we are optimistic that management can overcome these setbacks given recent actions to reduce exposure to unprofitable businesses and ongoing restructuring initiatives in traditional trucking operations," he wrote in a report.
Spracklin added that unchanged market conditions should result in cost controls, efficiency gains and acquisitions that should drive earnings growth in 2014.
On the Toronto Stock Exchange, TransForce shares closed down eight cents to $24.58 in Thursday morning trading.
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