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TFI handily beats consensus Q2 estimates

Company raises full-year EPS and free-cash-flow guidance, plans to repurchase more shares

TFI posts strong Q2 results, raises full-year outlook (Photo: TFI/Fleetway)

Transport and logistics giant TFI International Inc. blew away second-quarter estimates late Thursday, leading the Montreal-based company to significantly raise its guidance for full-year earnings per share and free cash flow.

Adjusted earnings per share of $2.61 handily surpassed the $1.73 EPS analyst estimates and came close to doubling levels from the prior year’s quarter. Revenues including fuel surcharges hit $2.4 billion, a 32% gain. Adjusted operating ratio — the ratio of revenues and expenses — across TFI’s (NYSE and TSX: TFII) business came in at 83.4%, a 500-basis-point improvement over consensus.

Operating income in the quarter came in at $391 million, compared with $470.9 million reported in the 2021 quarter. Net income dipped to $276.8 million from $411.8 million in 2021. Last year’s figures included a so-called bargain purchase gain of $283.6 million related to TFI’s $800 million acquisition of UPS Freight, a predominantly LTL carrier formerly owned by UPS Inc. (NYSE: UPS).

In a bargain purchase, an acquisition is made for an amount that is less than the fair market value of the acquired company’s assets. The UPS Freight acquisition closed during the second quarter of 2021.

TFI’s LTL and truckload segments, which accounted for about 70% of the company’s second-quarter revenue before the impact of fuel surcharges, posted strong gains. LTL revenue increased by 39% year on year. The truckload segment posted a 16% revenue gain and a 103% increase in operating income. The truckload segment’s operating income figure included a $22.9 million gain on the sales of rolling stock and equipment.

TFI’s well-established Canadian LTL operation posted an operating ratio — the ratio of revenues to expenses — of 69.1%, an 800-basis-point year-on-year improvement. This means that the business spent 69 cents for every $1 in revenue, an impressive achievement.


The strong numbers prompted TFI Chairman, President and CEO Alain Bédard to raise full-year EPS guidance to $8 a share from $6.50 to $6.75. Bedard also raised free cash flow expectations by $200 million to $900 million. TFI’s board approved a proposal to repurchase up to 8.79 million shares, which represent about 10% of the company’s public float as of last October, up from the current buyback maximum level of 7 million shares. 

TFI’s shares, which were closing in on $99 a share late afternoon Friday following the strong results, have been climbing steadily since troughing in mid-June in the mid-$70-a-share range. Still, Bédard said that shares remain inexpensive in light of TFI’s long-term outlook. TFI is likely to continue making small, tuck-in acquisitions through the rest of the year, and Bédard hinted at some major M&A in 2023.

Bédard, who is generally a conservative CEO, acknowledged that TFI faces the same macroeconomic challenges that its rivals do. He also said that the integration of UPS Freight, which was rebranded TForce Freight in the U.S. after the deal closed, is a work in progress. TForce Freight’s operating ratio, which was at 90% a little more than a year ago, hit 88% at the end of the second quarter. The objective is to drive the ratio down to around 80%, but it will likely take two to three years, Bèdard said.

At the time the deal closed, UPS Freight had 11,000 to 12,000 dock doors in the U.S., a figure that Bédard said was about 3,000 doors too many. TFI is winnowing down the number in small bites. Last quarter, it sold a 72-door terminal in Southern California that had belonged to UPS for $83 million. Bédard said that TFI has enough terminal capacity in the region to absorb the business and doesn’t need to lease back any space at the terminal.

About one-third of UPS Freight’s LTL business did not fit the TFI profile when the deal closed, and it will take about two years to whittle down that percentage to acceptable levels, Bédard said. The unit needs to boost its average LTL weight per pallet, which averages about 1,100 pounds, to match the 1,300 pounds that its carrier peers generally haul, Bédard said.

He added that he would like to see trucks spend less time driving between stops and more time picking up and delivering freight. Driving distances of 60 miles or more are too high, Bédard said, adding that he would like to see that number drop to 10 to 20 miles.

On Friday’s call, Bédard disclosed that TFI will split its U.S. dedicated and over-the-road truckload businesses. The businesses have different profiles and need to be managed separately, he said. The U.S. dedicated business has 1,200 trucks, 750 of which came from UPS Freight. It had been a significant money-loser for TFI to the tune of $5 million a quarter.

2 Comments

  1. Dick Bischoff

    Bedard is clueless when it comes to the US based TForce Freight operation. Hitting an 80 OR with a teamster based carrier ain’t gonna happen in his lifetime.

    1. Mr Me

      Tforce will not prosper thinking customers is fighting to get a spot on the all new,Tride.
      Come down off your high horse visit with your sales team tell your customers what we can do for you not the other way around!

Comments are closed.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.
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