TFI International (TSX:TFI) reported a 13 percent jump in net income in the second quarter as its Canadian and U.S. truckload businesses continued to grow profits in the face of lower revenues.
TFI had an adjusted net income of C$102 million (the Canadian dollar equals US$0.76) compared to C$89.9 million a year ago. It had C$1.34 billion in revenue, a 2 percent increase from the second quarter of 2018.
Adjusted earnings per share of C$1.16 handily beat analyst estimates of C$1.05.
“TFI International again produced record quarterly results, continuing our strong momentum,” CEO Alain Bédard said in a statement on July 25. “Our consistent ability to perform even during challenging freight environments is a result of our relentless focus on profitable growth through strong execution of business fundamentals.”
Operating income rose by 21 percent to C$149 million, setting a second-quarter record. TFI’s largest business, truckload, increased by 22 percent to C$67.2 million.
Logistics and last mile jumped by 45 percent to C$28.7 million, while less-than-truckload increased by 22 percent to C$30.3 million. Package and courier was the weakest segment, decreasing by 1 percent to $29.9 million.
Improvement in truckload profits happened as revenues slumped by 4.6 percent in the U.S. and 6.8 percent in Canada. Specialized truckload, however, which isn’t segmented by country, increased by 25 percent.
Continued improvement in operating ratio helped TFI’s performance. It fell to 88.3 percent from 89.5 percent a year earlier. The improvement was particularly pronounced in the U.S. truckload division, dropping to 90.2 percent compared to 94.5 percent during the second quarter of 2018, something Bédard has been pushing for.
Its Canadian truckload business saw the operating ratio increase slightly to 87.1 percent, versus 86.6 percent a year ago.
TFI recorded a C$10.8 million bargain purchase gain on the acquisition of assets of bankrupt courier BeavEx, reflecting that it paid well below the market value. The relatively weak performance of TFI’s package and courier segment suggest BeavEx has yet to generate serious revenues yet.
TFI holds a conference call with analysts July 26.