Tfi International Inc. · TSX:TFII
Tfi International — Q4 2022 Earnings Presentation
48 slides from Tfi International's earnings presentation, February 2023
Slide 1: Fourth Quarter Ended December 31, 2022
Fourth Quarter Ended December 31, 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements In the interest of providing shareholders and potential investors with information regarding TFI International, including management’s assessment of future plans and operations, certain statements in this presentation are forward-looking statements subject to risks, uncert
Slide 3: TFI International: Who We Are
TFI International: Who We Are Diversified: Full service: Package & Courier, Transport and Less-Than-Truckload, logistics Truckload and Logistics North Extensive American Network: Leader: 544 facilities, Operations across 18,347 trucks1, U.S. and Canada 38,091 trailers 25,836 Decentralized, employees
Slide 4: Our Customer Value Proposition
Our Customer Value Proposition ◼ We create transportation and supply chain advantages to… …mitigate risk for customers …improve their efficiency and delivery timing …reduce their delivery costs …drive satisfaction for the end consumer 4
Slide 5: Why Invest in TFI International?
Why Invest in TFI International? Superior record Market leader in of growth and key transportation shareholder value and logistics creation segments Track record of M&A execution Diversification by with well-defined industry sectors acquisition and geography pipeline Robust Return on Invested Capita
Slide 6: Investment Highlights
Investment Highlights ◼ 15.6% Operating Margin2 Best-in-class operating margins, ◼ 10.2% FCF Yield1,3 FCF yield and FCF conversion ◼ 87.7% FCF Conversion1,4 Proven track record of growth ◼ Completed 114 acquisitions since 2008 through disciplined acquisition strategy ◼ Industry remains fragmented Ba
Slide 7: Low Capex Facilitates Asset-Light Model
Low Capex Facilitates Asset-Light Model TTM Q4-2022 Net Capex (% of Total Revenue) 9.0% 5.6% 4.8% 1.0% 0.9% 2 3 4 TFII Truckload Peer Average1 Package & Courier Peer Average Less-than-Truckload Peer Average Logistics Peer Average Note: TFI Net Capex excludes purchases and sales of property. TFII dat
Slide 8: Market Leadership in Key Transportation and Logistics Segments: FCF Conversion
Market Leadership in Key Transportation and Logistics Segments: FCF Conversion Package & Courier Less-Than-Truckload 93.4% 76.6% 56.4% 60.4% 1 2 Peer Average Peer Average Truckload Logistics 94.3% 99.6% 94.3% 53.7% 4 Peer Average 3 Peer Average Note: FCF Conversion (%) calculated as (Adjusted EBITDA
Slide 9: Our Strategy of Growth Through Acquisitions
Our Strategy of Growth Through Acquisitions ◼ Proven track record of executing on M&A strategy across highly fragmented markets – Completed 114 acquisitions since 2008 – Strong focus on integration, operations and realization of synergies ◼ Our disciplined acquisition criteria: – Immediately accreti
Slide 10: Overview of the TFI International Platform
Overview of the TFI International Platform Package & Courier Less-Than-Truckload Truckload Logistics (7% of YTD Q4-2022 (45% of YTD Q4-2022 (28% of YTD Q4-2022 (20% of YTD Q4-2022 Revenue) Revenue) Revenue) Revenue) Specialized Conventional (19% of YTD (9% of YTD Q4- Q4-2022 2022 Revenue) Revenue) 1
Slide 11: Services by Geography
Services by Geography ◼ TFI has built a robust and well-diversified revenue base By Geography (YTD Q4-2022) — No client accounts for > 5% of consolidated revenue United States 45% Canada 55% Package & Less-Than- Truckload Logistics Courier Truckload By Top Customers' Industry1 (YTD Q4-2022) 3% 1% 3%
Slide 12: Package & Courier Segment
Package & Courier Segment Geographic Footprint Segment Overview ◼ Next-day in Canada and globally through partnership with DHL ◼ Cutting edge technology ◼ Specialized supply chain services ◼ 7% of YTD Q4-2022 Revenue Package & Courier Operating Companies Canpar Express Loomis Express ICS Courier TFo
Slide 13: Less-Than-Truckload Segment
Less-Than-Truckload Segment Geographic Footprint Segment Overview ◼ Over-the-road and asset-light intermodal LTL services ◼ Significant scale in both Canada and US, now with Tforce Freight ◼ Solid track record for safety and on-time delivery ◼ Focus on customer facing technology ◼ 45% of YTD Q4-2022
Slide 14: Truckload Segment
Truckload Segment Geographic Footprint Segment Overview ◼ Dry van full truckload ◼ Flatbed, tanks, dumps, oversized and other specialized services ◼ Modern fleet ◼ We own the majority of our assets and have long established partner carrier relationships ◼ 28% of YTD Q4-2022 Revenue Truckload Operati
Slide 15: Logistics Segment
Logistics Segment Geographic Footprint Segment Overview ◼ Same day parcel delivery nationwide in the United States and Canada ◼ Truck brokerage and other logistics services ◼ 20% of YTD Q4-2022 Revenue Logistics Operating Companies AC Logistics Canada DSN Chemical Transportation Quik X Logistics TFo
Slide 16: Return on Invested Capital by Operating Segment
Return on Invested Capital¹ by Operating Segment 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Package & Courier 25.3% 26.4% 27.6% 31.0% 32.5% Canadian Less-Than-Truckload 17.8% 18.4% 20.4% 23.1% 24.0% US Less-Than-Truckload N/A ² 22.0% 24.5% 25.2% 23.8% Canadian Truckload 10.9% 11.9% 16.7% 20.6% 21.3% Sp
Slide 17: Our Decentralized Structure: Uniquely Delivering Value for Shareholders
Our Decentralized Structure: Uniquely Delivering Value for Shareholders ◼ Our four segments are constituted of wholly-owned subsidiaries operating under their own brands ◼ Our differentiated approach to operating our businesses enables us to create shareholder value by… …reaping the benefits of both
Slide 18: Superior Track Record of Growth
Superior Track Record of Growth Revenue Before Fuel Surcharge (US$ in millions) Adjusted EBITDA1,2 (US$ in millions) 8000 7,357 1600 1,425 7000 1400 6000 1200 5000 1000 4000 800 3000 600 2000 400 1000 200 0 0 2002 2022 2002 2022 Diluted Adjusted EPS from Continuing Operations (US$)1,2,3 Net Cash fro
Slide 19: Total Shareholder Return
Total Shareholder Return Over Various Periods Peer Package & Less-Than- Average Courier1 Truckload2 Truckload3 Logistics4 15-Year 1,321% 2,057% 530% 177% 1,461% 214% 267% Total Shareholder Return 10-Year 1,030% 877% 368% 178% 903% 167% 226% 5-Year 145% 365% 61% 26% 141% 9% 69% 1-Year 6% 49% (8)% (10
Slide 20: Resilience Through the Cycle
Resilience Through the Cycle ◼ TFI’s Adjusted EBITDA margin1, 3 held virtually flat through the Great Recession (US$ in Millions) 2007 2008 2009 2010 2011 2012 Total Revenue¹ 1,805 2,122 1,617 1,944 2,721 3,141 Annual Growth 14% 18% -24% 20% 40% 15% Adjusted EBITDA ¹˒ ² 226 263 198 255 316 386 Annua
Slide 21: E-Commerce Provides Additional Growth
E-Commerce Provides Additional Growth ◼ E-Commerce is a powerful secular force, driving new shipping demands including greater emphasis on last-mile logistics E-Commerce Revenue Evolution of B2B/B2C Split (US$ in millions) 606 32% 34% 41% 43% 41% 42% 58% 53% 13.9% 67% CAGR 165 68% 66% 59% 57% 59% 58
Slide 22: Evolution of E-Commerce Fulfillment
Evolution of E-Commerce Fulfillment ◼ The evolution of E-Commerce fulfillment has created numerous opportunities for TFI companies – both next-day (Canada) and same-day (Canada & U.S.) Next-Day Services Same-Day Services Shipper - Warehouse Shipper - Warehouse Pickup Sorting Facility Region A Lineha
Slide 23: TFI International Serves a Vast E-Commerce Network
TFI International Serves a Vast E-Commerce Network YTD Q4 2022 E-Commerce Revenue by Segment (US$ in millions) 49.2 United States Canada 206.7 181.3 15.0 125.5 27.9 0.1 ◼ TFI services E-Commerce from nearly Logistics TL P&C LTL 80 North American cities ◼ Further opportunities for the Logistics ◼ Tot
Slide 24: Robust Balance Sheet With Strategic Flexibility
Robust Balance Sheet With Strategic Flexibility As at Covenants Requirements December 31, 2022 Funded debt-to-EBITDA ratio [ratio of total debt, net of cash, plus letters of credit and some other long- term liabilities to earnings before interest, income tax, depreciation and amortization (“EBITDA”)
Slide 25: Track Record of M&A Execution and Integration
Track Record of M&A Execution and Integration ◼ Acquired 114 companies across our highly fragmented markets since 2008 Number of Acquisitions per Year TForce Worldwide MCT Grammer Dry Laser Bulk SGT Winalta Coastal Driving Transport La Crete Force Cavalier KHT Tombro South Shore 14 CFI GBT Unity Con
Slide 26: Our Approach To Creating Shareholder Value
Our Approach To Creating Shareholder Value Growth & ROIC ◼ We deliver earnings Market growth and strong ROIC, both organically and Leadership through our proven acquisition strategy ◼ We continually solidify Our our position as a leader in the North American People transportation and logistics indus
Slide 27: Appendix
TF International Appendix
Slide 28: Additional Operational Data (Slide 1 of 3)
Additional Operational Data (Slide 1 of 3) Operational Data – P&C 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Revenue before fuel surcharge (in thousands 131,523 145,235 133,315 150,074 124,580 125,082 120,236 129,074 of dollars) Revenue per pound (including fuel) $0.46 $0.46 $0.
Slide 29: Additional Operational Data (Slide 2 of 3)
Additional Operational Data (Slide 2 of 3) Operational Data – LTL 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 U.S. based LTL Revenue (in thousands of dollars) 2 638 402,865 613,965 568,761 581,421 585,539 544,318 475,389 Adjusted operating ratio1 89.80% 90.10% 90.70% 89.40% 90.70
Slide 30: Additional Operational Data (Slide 3 of 3)
Additional Operational Data (Slide 3 of 3) Operational Data – TL 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Specialized TL2 Revenue before fuel surcharge (in thousands of 266,431 313,534 325,149 328,648 328,320 353,146 355,431 325,493 U.S. dollars) Adjusted operating ratio1 88.5
Slide 31: Reconciliations
TF International Reconciliations 31
Slide 32: Five-Year Reconciliation of Adjusted EBITDA
Five-Year Reconciliation of Adjusted EBITDA1 (US$ in millions) 2022 20213 2020 20192 20182 (from Continuing Operations) Net Income 823.2 754.4 275.7 244.2 225.4 Net Finance Costs 80.4 73.0 53.9 62.1 37.3 Income Tax Expense (Recovery) 242.4 151.8 87.0 76.5 69.6 Depreciation of Property and Equipment
Slide 33: Five-Year Reconciliation of Adjusted Net Income and Adjusted EPS – Diluted
Five-Year Reconciliation of Adjusted Net Income1 and Adjusted EPS – Diluted1 (US$ in millions, except per share data) 2022 20212 2020 2019 2018 Net Income 823.2 754.4 275.7 233.7 225.4 Amortization of Intangible Assets Related to Business Acquisitions 52.0 50.5 47.6 48.3 45.9 Net Change in Fair Valu
Slide 34: 2007-2012 Reconciliation of Adjusted EBITDA
2007-2012 Reconciliation of Adjusted EBITDA1 (US$ in millions) 2007 2008 2009 2010 2011 2012 Net income 41.7 74.8 9.5 99.7 103.3 154.3 Net Finance Costs 33.7 56.8 25.8 7.8 50.9 38.4 Income Tax Expense 3.3 18.3 18.7 32.5 34.3 54.6 Depreciation of Property and Equipment 89.9 99.7 89.8 95.9 98.6 103.4
Slide 35: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q22 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 US Based Less-Than-Truckload Total revenue 638 549,294 832,302 788,487 827,594 904,942 849,450 743,616 Total operating expenses 573 229,809 764,857 716,410 762,550 764,197 785
Slide 36: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Canadian Based Less-Than-Truckload Total revenue 150,523 167,404 159,834 173,295 175,652 197,412 175,908 164,227 Total operating expenses 128,451 135,593 131,361 141,923 145,92
Slide 37: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Truckload Total revenue 474,606 547,964 566,173 584,009 609,674 703,234 635,370 502,784 Total operating expenses 424,600 485,338 500,420 522,206 538,646 575,864 538,742 430,942
Slide 38: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Truckload - Revenue before fuel surcharge U.S. based Conventional TL2 103,425 108,224 106,318 106,171 113,329 118,080 78,289 - Canadian based Conventional TL 55,792 61,493 59,1
Slide 39: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Canadian based Conventional TL Operating expenses** 55,014 60,194 59,010 74,635 76,499 82,851 75,866 65,945 Gain on sale of land and buildings - 17 - - 44 - - 15,485 and assets
Slide 40: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q1 2021-Q2 2021-Q3 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Specialized TL2 Operating expenses** 260,861 312,858 334,923 335,865 343,949 365,673 371,313 366,402 Gain on sale of business - - - - - - - - Gain on sale of land and buildings
Slide 41: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Package and Courier Operating income 108,440 116,201 123,458 133,456 134,306 (Gain) Loss on sale of land and buildings and assets held for sale - - - - - Amortization of intangible assets 903 811 72
Slide 42: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Less-Than-Truckload – Canadian based LTL Operating income 113,727 121,382 136,111 143,965 143,014 (Gain) loss on sale of land and buildings and assets held for sale (1,640) (1,640) (2,254) (652) (66
Slide 43: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Less-Than-Truckload – US based LTL2 Operating income - 524,115 345,310 342,051 327,793 (Gain) loss on sale of land and buildings - 17 15 8 8 Gain on sale of assets held for sale - - (54,020) (55,054
Slide 44: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Truckload - Canadian based Conventional TL Operating income 30,367 34,804 49,924 62,424 84,321 Gain on sale of land and buildings and assets held for sale (17) (61) (44) (44) (15,529) Amortization o
Slide 45: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Truckload - Specialized TL2 Operating income 149,833 157,740 196,901 235,865 236,414 Gain on sale of land and buildings and assets held for sale (10,553) (6,624) (12,900) (12,885) (6,711) Amortizati
Slide 46: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 Logistics Operating income 142,794 148,616 143,418 139,111 140,446 Loss on sale of land and buildings and assets held for sale 3 3 3 3 - Amortization of intangible assets 22,683 21,673 21,999 22,473
Slide 47: Reconciliation of Free Cash Flow Measures
Reconciliation of Free Cash Flow Measures (US$ in millions) YTD 2022-Q4 Reconciliation of free cash flow Net cash from operating activities 971.6 Additions to property and equipment (350.8) Proceeds from sale of property and equipment and AHFS 260.1 Free Cash Flow 880.9 (US$ in millions) YTD 2022-Q4
Slide 48: TFI International
TF International