Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TFI International Inc (TFII, Financial) reported a strong year-over-year increase in free cash flow by 37% to over $270 million.
- The company successfully reduced its debt by $130 million during the quarter, improving its funded debt-to-EBITDA ratio.
- TFI International Inc (TFII)'s logistics segment performed well, with operating income up 19% and an improved operating margin.
- The truckload segment saw significant revenue growth, largely due to the acquisition of Daseke, with operating income rising from $50 million to $72 million.
- The company announced a 13% increase in its quarterly dividend and a renewal of its share repurchase program, reflecting confidence in its financial position.
Negative Points
- Operating income margin decreased to 10.7% from 12.3% a year earlier, indicating pressure on profitability.
- US LTL segment experienced a decline in revenue and operating income, with a 2% drop in tonnage and a 35% decline in GFP revenue.
- The Canadian LTL segment saw a decrease in revenue per shipment by 5%, despite an increase in the number of shipments.
- TFI International Inc (TFII) faced challenges in improving service levels, with claims ratio increasing to 0.8% of revenue.
- The company anticipates that its full-year performance for 2024 will be similar to 2023, indicating limited growth expectations due to challenging market conditions.
Q & A Highlights
Q: Can you clarify the earnings pressure in the US LTL segment and whether it's cyclical or due to industry changes post-Yellow?
A: Alain Bedard, CEO: The focus is on improving our cost base and service. Market conditions have been challenging, but we aim to enhance service quality and cost efficiency. Our service is currently rated poorly, and we are working on improvements, including moving more freight from rail to road.
Q: Is the 2024 EPS expected to be similar to 2023?
A: Alain Bedard, CEO: Yes, we expect 2024 EPS to be similar to 2023 due to ongoing market conditions. We initially hoped for better performance, but current forecasts suggest a repeat of last year's results.
Q: How do you view the consensus EPS for 2025, which is significantly higher than your 2024 guidance?
A: Alain Bedard, CEO: It's too early to predict 2025, but if the market normalizes, reaching around $8 EPS, similar to 2022, is possible. We are focused on reducing debt and improving operational efficiency, which should help achieve this target.
Q: What is your approach to capital allocation in 2025, considering your debt reduction efforts?
A: Alain Bedard, CEO: We plan to invest $200 million to $300 million annually in tuck-ins and M&A, focusing on logistics and LTL in the US. We will also consider stock buybacks based on market conditions and stock price.
Q: Can you discuss the pricing environment in the US LTL segment and the impact of your recent GRI announcement?
A: Alain Bedard, CEO: We are experiencing pricing pressure due to market conditions and competition. Our focus is on improving service and cost efficiency to remain competitive. We are not chasing freight but rather improving our service to reduce churn and grow organically.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
