TFI International Q2 Earnings Call Highlights

TFI International exceeded expectations in Q2: Adjusted EPS rose 38% year over year to CAD 1.85, while revenue before fuel surcharge increased 6% to CAD 1.9 billion and operating income climbed nearly 30% to CAD 220 million. Truckload led segment performance, with operating income up 50% and the adjusted operating ratio improving to 86.1%, supported by tighter capacity, stronger pricing and growth in specialized freight. LTL also grew profitably, but management plans to cut low-priced 3PL volume and prioritize pricing discipline. TFI forecast third-quarter adjusted EPS of CAD 1.70–CAD 1.80 but withheld full-year earnings guidance pending greater confidence in the LTL recovery. The company remains positioned for acquisitions and is beginning an autonomous-trucking pilot for U.S. LTL line-haul operations. TFI International NYSE: TFII reported second-quarter results that Chairman, President and Chief Executive Officer Alain Bédard said exceeded the company’s expectations, led by double-digit operating-income growth across its less-than-truckload, truckload and logistics segments. Adjusted diluted earnings per share reached CAD 1.85, above the company’s previously cited CAD 1.50-to-CAD 1.60 range and 38% higher than a year earlier. Revenue before fuel surcharge increased 6% year over year to CAD 1.9 billion, while operating income rose nearly 30% to CAD 220 million. The company’s operating margin expanded to 11.6% from 9.5% in the prior-year quarter. Get TFI International alerts: Sign Up Can SAIA Continue its Stratospheric Rally? Bédard said investments made during the recent freight-market slowdown, including internal operational work and acquisitions, are beginning to benefit results. TFI generated more than CAD 200 million in free cash flow during the quarter, ended June with funded debt to EBITDA of 2.4 times, down from 2.5 times at the start of the year, and paid nearly CAD 40 million in quarterly dividends. Truckload Results Lead Segment Gains Truckload was the strongest-performing segment in the quarter. Revenue before fuel surcharge rose 7% year over year to CAD 761 million, representing 40% of segmented revenue. Revenue per truck per week, excluding fuel surcharge, increased 13%, while brokerage revenue climbed 34%. Truckload operating income rose 50% to CAD 106 million, and the adjusted operating ratio improved by 400 basis points to 86.1%. Bédard attributed the improvement to tighter supply in the truckload market, reduced capital intensity, equipment rationalization and a more favorable mix of specialized operations. Chief Financial Officer David Saperstein said truckload pricing and revenue per tractor accelerated through the quarter. Revenue per truck per week was up 11.1% in April, 13.3% in May and 14.4% in June, with July tracking at roughly the June pace through the date of the call. The company said approximately 25% of its U.S. flatbed business is exposed to the spot market, while highly specialized operations and its Canadian specialized business have limited spot exposure. Management said it has also been renegotiating with customers where contracted rates lag market conditions. Bédard pointed to demand in wind energy, data centers, aerospace and steel-related freight as areas of strength for specialized flatbed operations. He said some other areas, including drywall, remain weaker amid subdued housing construction. Canadian truckload operations are also facing softer conditions in steel and forest products, while aluminum-related freight has been strong. LTL Pricing Actions Take Priority TFI’s LTL segment generated CAD 725 million in revenue before fuel surcharge, up 3% year over year. Operating income increased 17% to CAD 86 million, and the ...