* Q2 EPS exl items C$0.16 vs est C$0.12
* Revenue falls 24 percent
* Shares rise as much as 6 pct (Recasts; adds conference call details, share movement)
by Isheeta Sanghi
BANGALORE, July 23 (Reuters) - Transportation and logistics provider TransForce Inc TFI.TO posted a better-than-expected quarterly profit as the company could largely sustain its operating margin, sending its shares up as much as 6 percent.
Excluding fuel, the company reported an EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 14.1 percent.
"The company was certainly able to defend its margins quite a bit better than what we were expecting," Cormark Securities analyst Aleem Israel told Reuters.
TransForce operates in four business segments -- less than truckload (LTL), package and courier, specialized services and truckload.
"Our LTL volume is down in the double-digits, so it was a hell of a fight to protect our EBITDA margins," Chief Executive Alain Bedard said in a conference call with analysts.
The drop in volume is a short-term event, according to Bedard, who added that he was not sure when the company will start to see volume pickup.
Weak demand weighed down on the company's second-quarter results and analyst Israel believes the company will witness similar demand in the third quarter, with volumes stabilizing only in the last quarter.
"This (environment) continues to be a challenge because so much of what we are seeing is unprecedented, it is probable that we have reached the bottom," Bedard said.
The company, which has total long-term debt of C$694.4 million, said "debt reduction remains a priority and we are committed to our target of reducing debt by C$100 million in 2009."
Montreal, Quebec-based TransForce, which paid out a dividend of 10 Canadian cents a share, said its first focus, when looking for an acquisition, is to look at something "good" instead of a company in distress.
"Distress takes too long to turn around, so we would like to buy something good and make it better," Bedard said, adding that if he could find a good packaging business to fit in with TransForce's Canpar unit, he would consider acquiring it.
Bedard added that he would not look to acquire any companies on the truckload side of his business this year, saying the timing is not right since there is no demand.
Earlier this year, TransForce added a few small businesses to its specialized services sector, including deals within its waste management unit Matrec.
The company posted net income of C$18 million ($16.38 million) or 21 Canadian cents a share, compared with C$19.3 million, or 22 Canadian cents a share in the year-ago quarter.
Excluding a change in fair-value interest rate, swap contracts, and other gains, TransForce earned 16 Canadian cents a share.
Analysts on average were expecting the company to post earnings of 12 Canadian cents a share on revenue of C$498.4 million, according to Reuters Estimates.
Quarterly revenue fell to C$454.2 million compared with C$595.6 million in the same period last year.
TransForce shares, which surged more than 60 percent over the past six months, were trading up nearly 6 percent at C$6.28 Thursday on the Toronto Stock Exchange.
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