Tfi International Inc. · TSX:TFII
Tfi International — Q4 2016 Earnings Presentation
43 slides from Tfi International's earnings presentation, February 2017
Slide 1: Fourth Quarter and Year Ended December 31, 2016
Fourth Quarter and Year Ended December 31, 2016 1
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: Why Invest in TFI International
Why Invest in TFI International Profitable Proven earnings acquisition growth strategy company Superior Portfolio of record of value added shareholder solutions and value creation services Diversification Financial by industry discipline sectors and Market leader in geography key transportation and
Slide 4: Creating Shareholder Value
Creating Shareholder Value • Solidifying our position as a leader in the North American transportation and logistics industry • Delivering profitable earnings growth – both organic and through our proven acquisition strategy – Disciplined, strategic, and profitable acquisitions and partnerships – Fo
Slide 5: Consistent, Profitable Growth
Consistent, Profitable Growth Revenue Before Fuel Surcharge* EBITDA* and Diluted Adjusted EPS* (millions of CA$) 4,000 3,705 550 2.25 2.04 500 2.00 450 3,000 400 451 1.75 350 1.50 300 2,000 250 1.25 200 1.00 150 1,000 100 0.75 11 12 13 14 15 16 11 12 13 14 15 16 EBITDA (millions of CA$) Diluted Adj.
Slide 6: Commitment to Generating Free Cash Flow
Commitment to Generating Free Cash Flow Cumulative Cash Returned Free Cash Flow (FCF)* (millions of CA$) to Shareholders (millions of CA$) 350 800 737 700 288 300 600 500 250 400 200 300 200 150 100 100 0 11 12 13 14 15 16 11 12 13 14 15 16 9.5% FCF CAGR (2011-16) 89.0% FCF CONVERSION (2016) * Defin
Slide 7: Delivering Shareholder Value
Delivering Shareholder Value 300% 5-year total return* 250% 225% 200% 150% TSX Total Return 143% 100% 50% 0% Feb/12 Feb/13 Feb/14 Feb/15 Feb/16 Feb/17 * Total return performance includes dividends 7
Slide 8: Review of TFI International
Review of TFI International 8
Slide 9: Overview of TFI International
Overview of TFI International Package & Less-Than- Truckload Logistics Courier Truckload Same-Day/Last Next-Day Over-the-road Intermodal Conventional Specialized Mile Delivery Delivery • TFI International is a full service • 18,535 tractors transportation and logistics company o 8,265 owned or lease
Slide 10: TFI Services by Geography
TFI Services by Geography Package & LTL Truckload Logistics Courier Canada ✔ ✔ ✔ ✔ United States ✔ ✔ ✔ ✔ Mexico* ✔ ✔ ✔ * LTL and Truckload in Mexico provided by CFI Logistica 10
Slide 11: Diversification by Service Type
Diversification by Service Type • Diversified across four core business segments • Focus on growing asset-light and value-added operations and lower capital intensity Segment’s Total Revenue Contribution 2016 2015 (before inter-segment eliminations) Package and Courier (P&C) 34% 33% Less-Than-Truckl
Slide 12: Diversification by Industry and Geography
Diversification by Industry and Geography • TFI has built a robust and well-diversified revenue base – No single client accounts for > 5% of consolidated revenue By Top Customers' Industry (2016) By Geography (2016) Retail 3% 2% Manufactured Goods 0.1% 4% Automotive 4% Services 4% Food & Beverage 5%
Slide 13: TFI Package & Courier Division
TFI Package & Courier Division Geographic Footprint Division Overview • Same-day and last mile in the US and Canada • Next-day in Canada and globally through partnership with DHL • Cutting edge technology • Specialized supply chain services Package & Courier Operating Companies SAME-DAY / LAST MILE
Slide 14: TFI Less-Than-Truckload Division
TFI Less-Than-Truckload Division Geographic Footprint* Division Overview • Over-the-road and intermodal LTL services • Solid track record for safety and on-time delivery • Focus on customer facing technology • Asset light intermodal Less-Than-Truckload Operating Companies OVER-THE-ROAD INTERMODAL Ca
Slide 15: TFI Truckload Division
TFI Truckload Division Geographic Footprint* Division Overview • Dry van full truckload • Flatbed, tanks, dumps, oversized and other specialized services • Modern fleet • We own our assets and have long established partner carrier relationships Truckload Operating Companies CONVENTIONAL SPECIALIZED
Slide 16: TFI Logistics Division
TFI Logistics Division Geographic Footprint Division Overview • Full service logistics and transportation management • Provides a complete one-stop experience for TFI customers, completing TFI’s portfolio of assets Logistics Operating Companies CFI Logistica E&L Logistics Patriot Freight Services CF
Slide 17: Growth Opportunities
TF International Growth Opportunities 17
Slide 18: Acquisition of XPO Truckload (CFI)
Acquisition of XPO Truckload (CFI) (Announced and Closed on October 27, 2016) • USD 530M revenue Top Quality TL • USD 115M EBITDA Operation of • 29 locations Scale • 3,000 tractors and 7,500 trailers • Approximately 50% of TFI revenue now originates in the Strategic United States Benefits • Approxim
Slide 19: Growth Through Acquisitions - Strategy
Growth Through Acquisitions - Strategy • Strategic, disciplined, and accretive acquisitions – Proven track record of executing acquisition strategy • Completed over 100 acquisitions in the past 10 years • Strong focus on integration, operations and realization of synergies • Other recent significant
Slide 20: Growth in E-Commerce
Growth in E-Commerce • TFI services e-commerce from 80 North American cities • Currently providing same-day delivery for a leading retailer in 18 North American markets, which is more than half the locations that company offers same-day delivery in • E-commerce 2016 revenue of CA$434.5 million • Fur
Slide 21: TFI in E-Commerce Throughout the Portfolio
TFI in E-Commerce Throughout the Portfolio 2016 E-Commerce Revenue by Segment (millions of $CA) P&C TL LTL Logistics Total Canada 61.9 9.2 2.5 - 73.6 United 253.1 106.5 - 1.3 360.9 States Total 315.0 115.7 2.5 1.3 434.5 21
Slide 22: Evolution of E-Commerce Fulfillment
Evolution of E-Commerce Fulfillment The evolution of E-Commerce fulfillment has created numerous opportunities for TFI International companies Next-Day Services Same-Day Services Shipper - Shipper - Warehouse Warehouse Pickup Region A Sorting Facility Direct Delivery Linehaul Sorting Facility Region
Slide 23: Growth in TFI E-Commerce Revenue
Growth in TFI E-Commerce Revenue E-Commerce Revenue (millions of CA$) 500 435 450 400 350 300 250 200 150 100 11 12 13 14 15 16 23.6% E-Commerce Revenue CAGR (2011-16) 23
Slide 24: TFI's E-Commerce Customers Deliver Outsized Growth
TFI’s E-Commerce Customers Deliver Outsized Growth E-Commerce Revenue with Customer A (millions of CA$) 110 98 Evolution of B2B/B2C Split 100 90 80 70 22% 26% 60 31% 32% 34% 50 41% 40 11 12 13 14 15 16 14.4% Revenue CAGR (2011-16) E-Commerce Revenue with Customer B (millions of CA$) 78% 74% 120 69%
Slide 25: Financial Highlights
Financial Highlights (From continuing operations) 25
Slide 26: Five-Year Financial Highlights
Five-Year Financial Highlights Revenue before Fuel Surcharge EBITDA* (billions of CA$) (millions of CA$) 4 3.7 500 451 450 3 400 350 2 300 250 1 200 12 13 14 15 16 12 13 14 15 16 Free Cash Flow* Operating Income (millions of CA$) 350 (millions of CA$) 350 288 300 258 300 250 250 200 200 150 150 100
Slide 27: Five-Year Financial Highlights: Cash Flow Usage
Five-Year Financial Highlights Cash Flow Usage Net Cash Flow from Continuing Operations 400 (in millions of CA$) 337.9 350 300 250 200 150 100 2012 2013 2014 2015 2016 Net maintenance Capex 45.2 26.2 43.9 110.8 70.8 Proceeds from excess assets (12.6) (25.7) (58.8) (45.4) (21.3) Business acquisitions
Slide 28: Five-Year Financial Highlights
Five-Year Financial Highlights • Rolling Stock Capex and depreciation are very low when compared to the industry due to asset-light model, which reduces capital intensity Rolling Stock Capex 4.5% Depreciation (% of Total Revenue) (% of Total Revenue) 4.0% 4.0% 3.5% 3.5% 3.0% 3.5% 2.3% 2.5% 3.0% 2.0%
Slide 29: Segmented Financial Highlights – Q4 2016
Segmented Financial Highlights – Q4 2016 Package and Less-Than- (in millions of $) Truckload Logistics Total (*) Courier Truckload Q4-2015 Q4-2015 Q4-2016 Q4-2015 Q4-2016 Q4-2015 Q4-2016 Q4-2015 Q4-2016 Q4-2016 (restated) (restated) Revenue before fuel 350 340 177 189 458 369 66 59 1,036 939 surchar
Slide 30: Segmented Financial Highlights – FY2016
Segmented Financial Highlights – FY2016 Package and Less-Than- (in millions of $) Truckload Logistics Total (*) Courier Truckload 2015 2015 2016 2015 2016 2015 2016 2015 2016 2016 (restated) (restated) Revenue before fuel 1,321 1,250 715 762 1,489 1,439 237 249 3,704 3,631 surcharge EBITDAR 207 178
Slide 31: Balance Sheet
Balance Sheet • Leverage metrics − Disciplined acquisition strategy with focus on preserving balance sheet strength and attractive cost of capital − Debt as at December 31, 2016: $1,584.8 million Total Debt / EBITDA Total Debt (millions of CA$) 1,618 1,615 1,585 4.6x 3.6x 3.5x 2.9x 2.9x 808 774 12 1
Slide 32: Balance Sheet
Balance Sheet • Debt structure – $1.2 billion unsecured banking credit facility • Matures in June 2020 and can be extended annually • Provides favourable terms and conditions and capital management flexibility – $125 million unsecured debentures • Interest rate between 3% and 3.45% and matures in De
Slide 33: Why Invest in TFI International
Why Invest in TFI International 33
Slide 34: Delivering Shareholder Value
Delivering Shareholder Value Return on Equity Expected Amortization of Intangible ROE - % Assets & Incremental EPS 17.5% 80 0.16 0.14 15.0% 0.12 12.7% 0.12 60 12.5% 51.7 0.10 0.08 10.0% 0.06 40 0.04 7.5% 0.02 5.0% 20 0.00 13 14 15 16 17 18 19 20 21 Amortization (in M$) Incremental EPS (in $) 34
Slide 35: Delivering Shareholder Value
Delivering Shareholder Value • Quarterly dividend was at $0.19; annual dividend yield of 2.2% (on December 31, 2016 share price) – Plan to distribute 20-25% of annualized free cash flow available • Free Cash Flow from continuing operations of $3.08 per share for the last 12 months ended December 31,
Slide 36: Outlook
Outlook • Cautiously optimistic in regards to the North American economy: low unemployment, solid consumer spending and rising oil prices should help produce a gradual recovery in freight volume and rates • However, current conditions remain relatively challenging, which should limit organic growth
Slide 37: Outlook
Outlook • TL segment: – Leverage our enhanced density in the U.S. and in Mexican cross-border activities following the acquisition of CFI – Market conditions will remain difficult in the U.S. in the first half of 2017 and should improve in the second half • Logistics segment: – Will continue to grow
Slide 38: Five-Year Reconciliation of EBITDA*
Five-Year Reconciliation of EBITDA* (in millions of $) 2016 2015 2014 2013 2012 (from continuing operations) Net income 157.0 145.7 116.2 77.5 101.7 Net finance costs 54.9 75.7 64.2 72.9 37.2 Income tax expense 46.3 55.1 47.2 26.6 38.8 Operating income 258.2 276.5 227.6 177.0 177.7 Depreciation of p
Slide 39: Five-Year Reconciliation of Free Cash Flow*
Five-Year Reconciliation of Free Cash Flow* (in millions of $) 2016 2015 2014 2013 2012 (from continuing operations) Net cash from operating activities 337.9 358.8 228.5 152.2 211.7 Additions to property and equipment (110.6) (157.8) (69.3) (49.2) (52.4) Proceeds from sale of property and 61.0 90.5
Slide 40: Five-Year Reconciliation of Adjusted EPS*
Five-Year Reconciliation of Adjusted EPS* (in millions of $) 2016 2015 2014 2013 2012 Net income 639.6 163.4 127.9 62.4 154.2 Amortization of intangible assets related to business acquisitions, net of tax 32.7 28.8 21.7 15.1 17.8 Net change in fair value of derivatives, net of tax 3.6 9.5 3.7 (0.8)
Slide 41: Reconciliation of Adjusted Net Income from Continuing Operations*
Three-Month and Twelve-Month Reconciliation of Adjusted Net Income from Continuing Operations* Three months ended Twelve months ended December 31 December 31 (in millions of $) 2016 2015 2016 2015 Net income 45.3 43.7 639.6 163.4 Amortization of intangible assets related to 9.2 7.6 32.7 28.8 busines
Slide 42: Reconciliation of Free Cash Flow*
Three-Month and Twelve-Month Reconciliation of Free Cash Flow* Three months ended Twelve months ended December 31 December 31 (in millions of $) 2016 2015 2016 2015 Net cash from continuing operations 109.8 136.8 337.9 358.8 Additions to property and equipment (31.0) (29.1) (110.6) (157.8) Proceeds
Slide 43: TF International
TF International