A $66 million deal is in the works to sell Minneapolis-based truckload carrier Transport Corporation of America to private equity investment firm Goldner Hawn Johnson & Morrison Inc. At $10 a share for 6.6 million stock shares outstanding, the carrier expects the deal to be completed by the first quarter of 2006, barring any unforeseen issues, said Michael Paxton, Transport’s chairman, president & CEO.
“We considered a variety of strategic alternatives [and] this transaction not only provides a solid return to our shareholders, it also provides the organization with the opportunity to build on the progress we have made over the past several years,” he added.
The carrier has struggled in recent years but remains profitable – though just barely. Transport’s revenues for the third quarter topped $64.3 million, a decline of 2.1% from the same period in 2004. Excluding fuel surcharges, however, total revenue for the quarter slipped 8.5% to $55.7 million compared to the third quarter last year.
Yet profits for the quarter were higher at $433,000 versus just $36,000 in the third quarter of 2004 – largely because the carrier sold its Garland, TX, support center for $182,000.
For the first nine months of 2005, revenues slipped to $188.6 million compared to $193.1 million over the same period in 2004, while net earnings increased slightly to $1 million from $902,000 over first nine months of last year.
Paxton noted that finding good drivers remained one of the biggest roadblocks for Transport in generating more revenues and profits.
“The challenging driver market continued to impede our ability to grow core truckload revenues,” he said. “While we [saw] an increase in the number of company drivers during the [third] quarter, we continued to lose owner operators at a faster pace than we are able to recruit company drivers.”
Still, Paxton believes the “fundamentals” are in place for Transport to grow – especially as truckload capacity remains tight. He said Transport’s amount of deadhead or empty miles decreased almost a full percent in the third quarter, dropping from 11.2% last year to 10.7% in the third quarter this year, while logistics and intermodal revenues increased threefold to $4.4 million compared to $1.1 million for the same period 2004.
Finally, Paxton noted that the Federal Motor Carrier Safety Administration (FMCSA) just completed a follow-up review of Transport’s operations and safety management controls and gave it a safety fitness rating of “satisfactory.”