Canadian company TransForce Inc. is actively seeking a substantial U.S. truckload market acquisition, CEO Alain Bedard said on a conference call, during which the diversified freight and package carrier reported lower second-quarter earnings.
Bedard said TransForce, which two years ago acquired Transport America to gain a foothold in the U.S. truckload business, is talking with four or five identified carriers with between 1,000 and 5,000 tractors. He also said that the Montreal-based company intends to add a U.S. carrier with a significant presence in Mexico.
Several dozen carriers in that size range are on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, and TransForce is No. 10. Bedard's comments highlighted weaker results in the U.S. truckload sector in the quarter due to overcapacity and rate pressure, making an acquisition attractive.
“Our focus is going to be probably on growing our U.S. TL base,” Bedard said July 22. “If you look at valuations of TL companies in the U.S., valuations have come down big time so I think the focus of M&A is going to be in the U.S. for us in 2016.”
Bedard also noted that the truckload sector should be stronger next year because of reduction in capacity partly from the electronic logging device mandate.
TransForce earned C$44.3 million ($34.3 million), or 47 Canadian cents, from continuing operations, down 27% on a year-over-year basis in the quarter. Revenue fell 5% to C$977.8 million.
Bedard said the company is targeting organic growth in the package and courier business, tied to e-commerce. Package and courier profitability, before taxes and interest, rose nearly 20% as revenue increased 6% to C$323.2 million. Truckload revenue slipped 4% to C$353.3 million, accompanied by a 22% drop in profit on that basis. Profits also fell at TransForce’s less-than-truckload and logistics units.