MONTREAL, Que. — TransForce’s Q2 earnings were affected by the slowing Canadian economy and weakness in the North American freight market.
The company reported adjusted net income of $54.9 million compared to $66.6 million over the same period last year.
“TransForce’s second quarter results reflect difficult market conditions in the North American freight market and a weak Canadian economy. Despite these factors restraining organic growth, TransForce made further progress. Our constant efforts to right-size operations, control costs and generate cash flow have produced solid operating results. In keeping with our disciplined capital management, free cash flow was used to repurchase common shares and reimburse debt,” said Alain Bédard, chairman, president and CEO of TransForce.
“We are pleased with further volume and margin increases in the Package and Courier (P&C) segment stemming from increased e-commerce activity in the US. In the Less-than-Truckload (LTL) segment, lower volume was more than offset by additional efficiency gains, leading to a 40 basis point operating margin improvement when gains on the sale of assets are excluded. Volume in the Truckload (TL) segment reflects a challenging market, but our focus on asset-light brokerage activity is generating superior returns on capital. Finally, last year’s non-recurring volume spike due to the port of Los Angeles strike was the primary reason for the lower year-over-year activity in the Logistics segment,” added Bédard.
Total revenue from continuing operations was $977.8 million, a 5% drop from last year. Total revenue for the first six months was $1.9 billion, compared to $2 billion over the same six-month period last year. Bédard said the market is not likely to improve soon.
“The North American freight market is not expected to improve significantly, as manufacturing activity is subdued on both sides of the border, while, additionally, the Canadian economy remains affected by low oil prices,” he said. “In this difficult environment, we are encouraged by the steady progress of our asset-light activities, including e-commerce, intermodal and brokerage. We will seek to further enhance our leadership in these high-return niches. Additionally, our decentralized and diversified business model will allow TransForce to rapidly benefit from market opportunities that may arise. We are committed to maximizing cash flow generation in order to repurchase shares, reimburse debt and carry out our selective acquisition strategy. The addition of a new vice-president, mergers and acquisitions now provides the ability to consistently focus on such activities.”