TFI International CEO Alain Bédard said he is “cautiously optimistic” that the Canadian transportation and logistics company will have a strong 2019 – following a strong start to the year despite challenging freight market conditions in North America.
“I just fell off my chair when I looked at January. It was really, really good,” Bédard said during a call with analysts today, a day after the transportation and logistics company released record fourth-quarter and full year results.
The company announced earnings guidance for the year today (February 28), saying it projected C$3.80 to C$C3.90 in earnings per share (the Canadian dollar is currently valued at $0.76), compared to C$3.22 in 2018. TFI will also continue to buy back shares.
“Probably not a stellar year for market conditions, but it’s going to be a good year,” he said.
TFI plans to continue growing its North American footprint through small acquisitions in the U.S. and Canada, expecting to spend C$150-C$200 million during the year. In February alone, TFI announced the purchase of specialty carriers Schilli, in the U.S., and Toronto Tank Lines, in Canada, and is attempting the purchase the assets of bankrupt U.S. courier BeavEX.
Bédard hinted that TFI has an interest in strengthening its specialty business on both sides of the border.
“Schilli was the first step of [TFI] trying to grow specialty. We like this business. If we could do a deal in Canada to beef up the density, we would,” Bédard said.
TFI will continue to work on improving its operating efficiencies, Bédard said. The company reported that the operating ratios of its U.S. units were at 93 percent compared with about 86 percent for its Canadian units.
“The U.S. is a little sweet and sour,” Bédard said. “The objective is to bring [the operating ratios] to Canadian levels. We’re building a team to get those ratios down.”
TFI also expects to increase cash flow by selling real estate. “Every quarter, we’re shedding terminals,” Bédard said.
The company will also continue to buy more trucks as it phases out leasing in Canada. Capital expenditures are expected to be in the C$225 million to C$250 million range.
Bédard also addressed the bankruptcy of New England Motor Freight (NEMF) earlier in February. He said TFI and its regional partner are working to pick up NEMF customers – but it will take some time to convince them to pay higher prices.
Montreal-based TFI employs more than 17,000 people across North America. It has more than 7,400 power units and 26,000 trailers.