TransForce plans to shed its truckload and waste operations in the next few years, according to media reports.
In a conference call, TransForce CEO Alain Bédard said the Montreal-based company will spin-off the truckload business, possibly in 2015, followed by the waste division, which includes landfills, possibly a couple years later.
"[The] waste [business] is a diamond in the rough...[but] it's not valued properly," he said.
Bedard foresees TransForce becoming "a huge cash flow machine" in three years, focusing on three core areas of operation: package and courier, small truckload and logistics business.
TransForce reported that its third-quarter net income fell to $41.5 million or 41 cents a share from $44 million or 45 cents in the year-earlier period. Its revenue for the three months ended Sept. 30 soared to $981.1 million from $775.1 million a year earlier, mainly because of acquisitions.
"TransForce recorded a solid year-over-year growth during the third quarter essentially driven by our disciplined acquisition strategy,” Bédard said. “Acquisitions led to revenue and EBIT improvements in all operating segments, while relentless efforts to increase the return on capital employed once again resulted in a strong free cash flow generation.”
The company is yet to close its $495-million cash takeover of trucking firm Contrans. TransForce claims to have received enough shareholder support for the takeover, but is waiting for a response from Canadian competition authorities. TransForce is talking with the Competition Bureau and expects the 30-day waiting period will expire on Wednesday, so it has extended the offer deadline to Nov. 11.
"As the Canadian economy is only modestly improving, with more signs of vitality in the United States, TransForce must continue to focus on maximizing profitability. We are making steady progress in certain segments, as evidenced by higher margins from existing operations, but more has to be done in terms of efficiency improvement, asset rationalization and acquisition optimization to generate superior returns to the benefit of our shareholders. Precise execution on these aspects will maximize cash flow generation that, in the short term, will be used to reimburse debt," Bédard said.
In the meantime, TransForce is growing its e-commerce business, has partnered with Google and an unnamed U.S. national retailer to provide same-day deliveries in some major U.S. markets.
"We're going to do great things in 2015 … and that's the area that we're focusing on," Bédard said.