10/23/2015 14:42 EDT | Updated 10/23/2016 01:12 EDT

TransForce expects e-commerce business to take off as it grows urban reach

MONTREAL — Canadian trucking and courier company TransForce is gearing up for a busy year delivering online purchases.

The Montreal-based company, whose customers include Amazon and Google, says it is on track for a big boost in e-commerce related revenues.

"We're just going to go through the roof," CEO Alain Bedard said Friday during a conference call.

TransForce (TSX:TFI) anticipates $18 million in revenues this year from providing same-day service in about six markets for Amazon, the world's largest e-commerce player. The addition of eight to 10 urban markets should almost double its take next year.

The company's relationship with Amazon started slowly this year with a few markets such as San Diego, Orlando and Tampa. It recently opened operations in Los Angeles and Chicago.

Bedard said he expects e-commerce will grow "big time" over the next 10 to 15 years as online purchases are delivered for store pickup, to community collection locations or to homes.

While rival Canada Post provides cheap service across the country, Bedard said TransForce will only compete in large metropolitan cities like Vancouver, Calgary, Edmonton, Toronto and Montreal.

Cities like Sudbury, Ont., Red Deer, Alta, Kamloops, B.C., and Chicoutimi, Que., are just too small.

"Where there's no density, like all the remote locations in Canada, we'll never be a player," he told analysts.

Meanwhile, TransForce said it is on the cusp of announcing the sale of its waste management business as it eyes truckload acquisition opportunities in the U.S.

Waste management is a highly profitable business, but accounts for just five per cent of overall revenues. Bedard said the company has received interest from several strategic players and should be prepared to announce a deal in the coming months.

TransForce would then look to take advantage of cheap asking prices to purchase a publicly traded U.S. company to create a separately listed North American company focused on trucking. It would initially merge its Transport America operations acquired last year into the purchased company, eventually adding TransForce's leading Canadian trucking business.

Meanwhile, TransForce said weak market conditions have forced it to exit the U.S. oil rig hauling business, about two years after it make a similar move in Canada.

TransForce's net earnings in the third quarter were flat at $41.6 million. Excluding the discontinued rig business it earned $43 million up from $38.6 million a year earlier. Adjusting for one-time items including currency fluctuations, earnings from continuing operations were $60.6 million or 60 cents per diluted share. That compared with $58.1 million or 58 cents per share in the prior year quarter.

Revenues from continuing operations grew 12.6 per cent to $1.07 billion.

Adjusted profits were expected to come in at 49 cents per share on $1.09 billion of revenues, according to analysts polled by Thomson Reuters.

Analyst Walter Spracklin of RBC Capital Markets said TransForce shares are on the verge of taking off, saying the sale of its waste assets would be a catalyst for a higher price.

On the Toronto Stock Exchange, they gained nearly eight per cent to $25.86 in Friday afternoon trading.


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Ross Marowits, The Canadian Press