Fourth quarter numbers for the remaining Canadian Edge Portfolio picks to report continue to trickle in at a patience-trying rate. The good news is when we’ve finally gotten numbers they’ve been very encouraging indeed.

That was the case with the picks that reported before this week. And, based on the favorable guidance and affirmations of dividend strength we’ve been hearing from management, we can expect another set of solid numbers from them in the first quarter, particularly our recession-resistant, financially strong Conservative Holdings.

Since the March CE went to press last week, four Portfolio trusts reported fourth quarter earnings, and one oil and gas producer turned in numbers on its reserves. One reporter was from the Conservative Holdings, the other four from the Aggressive Holdings.

Since it converted to a corporation in early 2008, Conservative Holding TransForce (TSX: TFI, OTC: TFIFF) has been facing an ever-intensifying perfect storm of a deepening recession on both sides of the border, tight credit conditions squeezing both the company and its customers, volatile fuel prices, and a sharp decline in its share price. The latter has basically taken away the trucking and transportation company’s ability to raise equity capital, which it had hoped to tap more effectively when it converted.

Nonetheless, TransForce reported a 10 percent boost in 2008 revenue, 21 percent growth in cash flow and a jump in annual earnings to CAD0.92 a share from CAD0.52 a year ago. Those robust results continued in the fourth quarter as well, as the company also grew revenue and cash flow by 10 and 21 percent, respectively. Earnings per share, meanwhile, swung into the black at CAD0.17 a share, up from a year ago loss of CAD0.36. Adjusted for one-time items, fourth quarter profits per share were down slightly at CAD0.26 per share, versus CAD0.29 last year.

Three of the company’s four operating units–Less than Truckload, Specialty Truckload and Package/Courier–reported stronger fourth quarter results, as management successfully expanded services and integrated recent acquisitions. The other, Truckload, saw a 6 percent decline in sales, hardly surprising given the steep contraction in the US economy especially. The fact they didn’t fall further is largely a testament to the company’s high quality service, cost containment and solid marketing.

Those are skills TransForce will need in plenty in 2009. Happily, there are few real credit worries. The company is well within its debt covenants with a debt-to-cash flow ratio of 2.97-to-1 versus an upward limit of 3.5. Further, it expects to generate CAD100 million in free cash flow in 2009, which it will use to cut debt. And thanks to timely purchases of equipment last year, it expects only CAD50 million in capital spending, reducing further its need to rely on credit. The company has also announced a plan to buy back up to 7.5 percent of its outstanding shares, a further affirmation of financial strength.

TransForce has been a tough stock to hold since its shares peaked three years ago. The underlying company, however, has continued to grow and strengthen. That’s the reason I recommended it initially, and it’s why I continue to hold onto it, despite one of the worst markets in memory. Now trading at barely half book value, TransForce remains a buy up to USD4.

As I wrote in the March CE, the colossal drop in energy prices since last summer is still the main event when it comes to the Aggressive Portfolio. But energy-producing trusts that show good reserve numbers and are holding their debt in check are positioned to profit when energy prices regain their stride. In fact, as we saw last year and have seen on odd days this year, share price recoveries can come much faster than investors can react.

Advantage Energy Income Fund (TSX: AVN-U, NYSE: AAV) scored its biggest one-day gain in some months after reporting reserve replacement of 290 percent of its annual production and an extension of proved plus probable reserve life to more than 15 years. Finding, Development and Acquisition costs were just CAD7.67 per barrel of oil equivalent (boe). Proved reserve life was extended to 8 years.

The strong reserve additions were the result of success at the trust’s Montney shale play, Glacier. Management anticipates spending CAD2.5 billion to “fully develop” the Glacier property, though given its 2009 capital budget of just CAD155 million, that will likely take some years. In the meantime, Glacier represents a long-life, deep pool of reserves that will continue to provide the cash flow needed to keep Advantage a big dividend payer for years to come. Reserves are 67 percent gas and 33 percent oil.

Net asset value is over CAD14 per share, or more than four times the trust’s current share price. Advantage has fallen sharply over the past six months, in part because of a 67 percent cut in its distribution, but also due to fears about its outstanding debt load and capital needs driven by Montney.

We won’t know for certain where the company stands on its debt until earnings are released March 18. But at a current price of just 32 percent of book value and still yielding in the mid teens, Advantage Energy Income Fund remains a worthy buy up to USD5.

Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF), my other super aggressive bet on a natural gas price recovery, has announced its fourth quarter numbers. Production fell 9 percent in the quarter from year earlier levels, due to asset sales, cold weather-related interruptions and natural declines at certain fields, which were only partly offset by fewer gains at newer wells due to project delays.

Funds from operations per share were flat versus last year’s levels at CAD0.55, as the trust was able to lock in higher prices with hedging than it realized a year ago. That’s a strategy management has continued to follow, locking up 57 percent of projected April through December output at an average price of CAD7.74 per thousand cubic feet. That’s 60 percent above prevailing prices.

Hedging output has helped the trust cut its bank debt by 15 percent over the past year, freeing up space under its credit line and cutting the net debt-to-cash flow ratio to 2.1 from 2.4 last year. That’s not as deep a cut as management had hoped for at the beginning of 2008, largely because of falling gas prices. But achieving that reduction is proof positive of management’s skill in projecting cash flow in even the most difficult scenario. That speaks well for its chances of outlasting this downturn, though its dividend will be cut again to a monthly rate of CAD0.05 beginning with the April payment.

Looking ahead, the new payout ratio is only 27 percent of fourth quarter 2008 funds from operations. The trust has slashed projected 2009 capital spending to CAD65 million, down from an initial budget of CAD113 million. With CAD40 million to be spent by the end of the first quarter, that leaves relatively little cash outlay for the rest of the year, leaving a lot of upside for debt reduction particularly if gas prices can bounce up a bit.

Management remains focused on being able to fund all capital expenditures and distributions with internally generated cash flow, preferably with a surplus left over for debt reduction. That means there’s still some near term dividend risk, should natural gas prices fail to recover as hedges expire. On the other hand, this one still yields nearly 20 percent, even after the recent cuts. Paramount’s only suitable for very aggressive investors. But if you are one and don’t yet own this trust, the shares are a buy up to USD5.

Provident Energy Trust (TSX: PVE-U, NYSE: PVX) shares jumped nearly 20 percent on Thursday, the day it announced its fourth quarter earnings and reserve information. The jump is probably best termed a “relief” rally. But the results did include a number of encouraging items for the trust’s ability to survive the near term and thrive over the long haul.

Baseline funds from continuing operations–the account from which distributions are paid–fell from CAD0.72 to just CAD0.32 in the fourth quarter, as the trust felt the bite of falling commodity prices. The bright spot was midstream operations, which posted basically flat profits from a year ago despite weaker natural gas liquids spreads. But with trust-wide production costs up from the sale of the US operations, a slight drop in output from year earlier levels due to an outage at a pipeline owned by a third party and falling energy prices took their toll.

Anticipation of these disappointing results had already induced management to cut the trust’s distribution to CAD0.06 per month starting with this month’s payment. The good news is that rate is only 56.3 percent of fourth quarter funds from operations. These in turn are based on realized oil prices of just USD47 and gas of just USD6.63 million thousand cubic feet, which are not too far from current forward curve pricing. In addition, midstream margins have improved greatly in the first quarter of 2009, which should offset any price weakness on the production side.

As for debt, Provident’s fourth quarter interest expense was 38 percent less than a year ago, thanks to a 45 percent reduction in bank debt. The trust now has CAD620 million undrawn on a CAD1.125 billion bank line. Proved reserve life was steady versus year earlier levels at 6.1 years, proved plus probable increased to 10 years.

Capital spending for 2009 is CAD27 million for midstream and CAD88 million for upstream, modest levels that should ensure the trust is able to cover both distributions and capital expenditures (CAPEX) with cash flow. Total debt is just 31 percent of capitalization, versus 40 percent a year ago. Net debt of CAD727 million is still high for a producer trust at 2.2 times annualized fourth quarter cash flow. But it’s actually modest considering much is attached to the much steadier midstream operations.

The bottom line here: Provident’s earnings and reserve numbers paint the picture of a trust able to survive this downturn, and poised to take advantage when prices rise again. That, in essence, is my bar for continuing to hold energy producer trusts in this environment. Yielding 18 percent and selling for just 64 percent of book value, Provident Energy Trust is a buy up to USD5.

Though not itself a producer of energy, Newalta Corp (TSX: NAL, OTC: NWLTF) has nonetheless been deeply affected by the big drop in energy prices since summer, as its western Canada revenue depends heavily on the level of economic activity in the energy patch. The converted corporation did post 19 percent growth in 2008 revenue and a 31 percent increase in cash flow, as it successfully integrated a series of acquisitions and expanded its clean up operations for the environmentally troubled oil sands.

Not surprisingly, activity dropped off steeply in the fourth quarter. And while revenue was still up 6 percent year-over-year, cash flow rose only 2 percent while net earnings dropped 62 percent. Net margin and revenue at the Western Division–all of the company’s operations in conventional energy production–dropped 14 and 13 percent, respectively. The silver lining was the shortfall was entirely due to lower energy prices, which hurt prices for recycled waste products. Activity actually increased, as waste processing volumes rose, auguring strong growth when energy prices do recover.

The bright side of Newalta’s results came in its Eastern division, which primarily processes waste from Canada’s industrial base in the eastern half of the country. Fourth quarter revenue rose 43 percent while margin rose 57 percent, as the company successfully integrated acquisitions and expanded its reach, particularly in Atlantic Canada and Quebec. The results were particularly impressive in light of the fact that Canada’s non-energy industry was arguably weaker than the oil patch. And the company continued to invest in growth, adding CAD38 million plus in new assets in 2008.

Looking ahead, Newalta is better positioned than ever to profit when Canada’s economy returns to growth. Until that point, however, management still projects sufficient cash flow to fund its growth and the remaining dividend. Ensuring that was its main intention when it announced the trust would convert to a corporation last year. And it looks set to do that in 2009, with enough left over for debt reduction.

As with converted corporation TransForce, it’s been a tough slog holding onto Newalta in recent months. Again, what’s kept me in the shares is a belief that management continues to build a dominant franchise in a key area that will only become more important in coming years–environmental cleanup and waste recycling. And management has been able to continue building its position despite extremely difficult conditions in all of its operating areas.

That business performance has been at sharp odds with the collapse in Newalta’s share price, which actually began in late 2006 and has continued with only brief pauses ever since. The company’s current share price is only 21 percent of book value, 18 percent of sales and 1.75 times trailing 12 month earnings per share. The current dividend of 8 percent, meanwhile, is just 36 percent of expected 2009 profits. And there’s no meaningful amount of debt due until 2011.

This has hardly been a winner for me. But from these valuations and given its continuing solid results, this is also hardly a time for those who’ve held this long to sell. It’s going to take a recovery in energy prices to raise Newalta once again. But the shares remain a buy up to USD5 for those who don’t already own them.

Here are the remaining CE Portfolio picks that have yet to report. I’ll have another Flash Alert next week to update on numbers as released, and a full recap on all trusts reporting this month in the April issue.

Conservative Portfolio

• Artis REIT (TSX: AX-U, OTC: ARESF) March 18, 2009
• Atlantic Power Corp (TSX: ATP-U, OTC: ATPWF) March 30, 2009
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF) March 16, 2009
•  Innergex Power Income Fund (TSX: IEF-U, OTC: INRGF) March 25, 2009

Aggressive Portfolio

• Advantage Energy Income Fund (TSX: AVN-U, NYSE: AAV) March 18, 2009 (Estimated)
• Ag Growth Income Fund (TSX: AFN-U, OTC: AGGRF) March 17, 2009