Vitran Corp. Inc. has a market cap of $179.2 million; its shares were traded at around $11.02 with and P/S ratio of 0.3. VTNC is in the portfolios of Charles Brandes of Brandes Investment, PRIMECAP Management.
Highlight of Business Operations:The Company incurred interest expense of $1.8 million in the third quarter of 2010 compared to interest expense of $2.6 million for the same quarter a year ago. In addition to the Companys interest rate spread on its syndicated revolving and term debt being 150 bps less than a year ago, the Company reduced interest bearing debt with $21.3 million of proceeds from an equity offering in September 2009 resulting in a reduction in interest expense for the third quarter of 2010. Furthermore, the Company has repaid an additional $7.7 million of debt since December 31, 2009.
Income tax expense for the third quarter of 2010 was $0.4 million compared to a recovery of $0.5 million for the same quarter a year ago due to a profit before income tax expense in the current quarter. On a consolidated basis, for the nine-month period, the Company recognized additional deferred tax assets resulting from tax losses in the United States. Management believes the Company will generate sufficient taxable income to use these losses in the future.
Net income for the 2010 third quarter was $2.0 million compared to net income of $0.3 million for the same quarter in 2009. This resulted in basic and diluted earnings per share of $0.12 for the third quarter of 2010 compared to basic and diluted earnings per share of $0.02 for the third quarter of 2009. The weighted average number of shares for the current quarter was 16.3 million basic and 16.4 million diluted shares compared to 13.9 million basic shares and 14.0 million diluted shares in the third quarter of 2009. For the nine months ended September 30, 2010, the Company posted net income of $2.8 million compared to a net loss of $1.6 million in the same nine-month period a year ago. This resulted in earnings per share of $0.17 basic and diluted compared to a loss per share of $0.12 for the same 2009 nine-month period. The weighted average number of shares for the nine-month period of 2010 was 16.3 million basic and 16.4 million diluted shares compared to 13.6 million basic and diluted shares in the nine-month period of 2009.
Revenue in the LTL segment improved 13.5% to $436.5 million for the nine-month period ended September 30, 2010 compared to $384.5 million for the same nine-month period a year ago. The increase in revenue was influenced by fuel surcharge which represented 12.3% of revenue in the first nine months of 2010 compared to 9.7% of revenue in the first nine months of 2009. Shipments and tonnage improved 7.1% and 8.7%, respectively, in the comparable nine-month period impacting revenue excluding fuel surcharge.
The LTL segment made additional changes in early April 2009, re-engineering its linehaul and pick-up and delivery operations to reduce claims expenses, dock handling costs and linehaul expenses, as well as a 5% reduction in wages and salaries for all employees. These initiatives resulted in improvements in the 2010 third quarter and nine-month income from operations to $3.0 million and $6.2 million respectively. Consequently, the operating ratio for the three-month and nine-month periods ended September 30, 2010 improved to 98.0% and 98.6%, respectively, compared to 98.9% and 100.0% for the same periods in 2009. Management believes that with the new integrated U.S. LTL operating model, the current pricing momentum and additional operating initiatives, the segment is well positioned to contribute income from operations over the long term.
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