August 2, 2011 / 11:48 AM / 6 years ago

UPDATE 3-Package & courier buys to deliver growth at TransForce

* Q2 adj EPS C$0.29 vs est C$0.24

* Q2 revenue up 31 pct at C$650.8 mln vs est C$664.8 mln

* Says less-than-truckload market to remain challenging (Rewrites throughout with details on acquisition plans, LTL market, Dynamex)

Aug 2 (Reuters) - TransForce Inc is eyeing more acquisitions in the high-margin package and courier space to drive growth, as the Canadian trucker continues to move away from its traditional business of small freight shipping.

The company, which posted a second-quarter profit that beat market expectations, is looking for takeover targets to add to its Dynamex business. It bought Texas-based Dynamex for about $248 million to boost its courier operations, late last year.

“Dynamex has a bright future over there (U.S.) in terms of growing revenue organically, and sometime in 2012, we’ll grow through some acquisition as soon as we have a solid base in the United States,” Chief Executive Alain Bedard said in a conference call.

TransForce has traditionally grown through acquisitions, like Dynamex, and has also been benefiting from rising demand for energy services, which has spurred a run of market-beating profits for over two years.

Many truckers faced declining demand for small freight shipping during the recession, forcing companies like TransForce and Contrans Group Inc to reshape their businesses and shift their focus to other niche services like waste management and courier delivery.

TransForce’s package and courier sales more than doubled to C$225.3 million, making it the largest contributor to revenue, as a result of the Dynamex acquisition, and volume increases at its parcel delivery units Canpar and ATS Retail Solutions.

A rise in drilling activity in the Alberta oil sands, as well as last year’s acquisition of Speedy Heavy Hauling assets, drove up revenue from TransForce’s energy services segment 27 percent.

Trucking peer Mullen group also posted market-topping quarterly results last week, helped by higher oil prices, which have boosted demand for energy-related transportation services in western Canada.

However, TransForce’s revenue came in at C$650.8 million, missing market estimates, as a result of a 12 percent drop in less-than-truckload (LTL), or small freight sales.

“Clearly, in the North American trucking industry, LTL remains the slowest recovering segment. Pricing has remained depressed and service capacity has not yet adjusted to demand,” CEO Bedard said, adding that he sees stability in freight volumes by early next year.

TransForce also bought Toronto-based Concord Transportation Inc, a cross border freight and small cargo shipping carrier, to add to its ATS parcel delivery unit on Monday. Bedard said the deal valued Concord at less than $10 million.

For April-June, the company earned 29 Canadian cents a share, excluding items, topping analysts’ forecast of 24 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Shares of TransForce, which currently has a market capitalisation of about $1.4 billion, have gained almost 40 percent in value in the past one year. They were almost flat at C$13.89 on Tuesday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Joyjeet Das, Viraj Nair)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below