Tfi International Inc. · TSX:TFII
Tfi International — Q1 2017 Earnings Presentation
40 slides from Tfi International's earnings presentation, May 2017
Slide 1: First Quarter Ended March 31, 2017
First Quarter Ended March 31, 2017 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* Adjusted EBITDA* and Diluted Adj. EPS* (millions of CA$) 5,000 550 2.25 2.07 3,897 500 2.00 4,000 450 400 475 1.75 3,000 350 1.50 300 250 1.25 2,000 200 1.00 150 1,000 100 0.75 12 13 14 15 16 TTM 12 13 14 15 16 TTM Adj. EBITDA (millions of
Slide 6: Commitment to Generating Free Cash Flow
Commitment to Generating Free Cash Flow Cumulative Cash Returned Free Cash Flow (FCF)* (millions of CA$) to Shareholders (millions of CA$) 350 800 713 700 293 300 600 500 250 400 200 300 200 150 100 100 0 12 13 14 15 16 TTM 12 13 14 15 16 Q1'17 12.3% FCF CAGR (2012-TTM) 88.5% FCF CONVERSION (TTM) *
Slide 7: Delivering Shareholder Value
Delivering Shareholder Value 300% 5-year total return* 250% 200% 187% 150% TSX Total Return 147% 100% 50% 0% Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-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 • 17,891 tractors transportation and logistics company o 7,836 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 Q1-2017 2016 (before inter-segment eliminations) Package and Courier (P&C) 29% 34% Less-Than-Tru
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 (Q4-2016) By Geography (Q1-2017) E-Commerce 3% 2% Retail 0.8% 3% 3% Manufactured Goods 21% Automotive 4% Servic
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 (63%) INTERMO
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 (48%) SPECIA
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 Cavalier Logistics E&L Logistics Quik X Logistics CFI L
Slide 17: Growth Opportunities
TF International Growth Opportunities 17
Slide 18: Growth Through Acquisitions - Strategy
Growth Through Acquisitions - Strategy • Strategic, disciplined, and accretive acquisitions – Proven track record of executing acquisition strategy • Completed over 80 acquisitions in the past 10 years • Strong focus on integration, operations and realization of synergies • Other recent significant
Slide 19: Growth in E-Commerce
Growth in E-Commerce • TFI services e-commerce from 80 North American cities • E-commerce TTM revenue of CA$433.1 million • Further opportunities for the Package and Courier segment, both through acquisitions and organic growth • Increasing facility utilization with addition of same-day service 19
Slide 20: TFI in E-Commerce Throughout the Portfolio
TFI in E-Commerce Throughout the Portfolio TTM E-Commerce Revenue by Segment (millions of $CA) P&C TL LTL Logistics Total Canada 65.5 8.9 2.1 - 76.5 United 250.4 104.2 - 2.0 356.6 States Total 315.9 113.1 2.1 2.0 433.1 20
Slide 21: Evolution of E-Commerce Fulfillment
Evolution of E-Commerce Fulfillment The evolution of E-Commerce fulfillment has created numerous opportunities for TFI International companies Next-Day Services Same-Day Services Shipper - Shipper - Warehouse Warehouse Pickup Region A Sorting Facility Direct Delivery Linehaul Sorting Facility Region
Slide 22: Growth in TFI E-Commerce Revenue
Growth in TFI E-Commerce Revenue E-Commerce Revenue (millions of CA$) 500 433 450 400 350 300 250 200 150 100 12 13 14 15 16 TTM 25.4% E-Commerce Revenue CAGR (2012-TTM) 22
Slide 23: 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$) 120 112 100 Evolution of B2B/B2C Split 80 60 40 26% 31% 32% 34% 41% 41% 20 0 12 13 14 15 16 TTM 99.1% Revenue CAGR (2012-TTM) E-Commerce Revenue with Customer B 74% 69% 68% 66% (millions of CA$) 5
Slide 24: Financial Highlights
Financial Highlights (From continuing operations) 24
Slide 25: Five-Year Financial Highlights
Five-Year Financial Highlights Revenue before Fuel Surcharge Adjusted EBITDA* (billions of CA$) (millions of CA$) 475 3.9 500 4 450 3 400 350 2 300 250 1 200 13 14 15 16 TTM 13 14 15 16 TTM Free Cash Flow* Adjusted Operating Income* (millions of CA$) 350 (millions of CA$) 350 293 300 260 300 250 250
Slide 26: 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$) 348.0 350 300 250 200 150 100 2013 2014 2015 2016 TTM Net maintenance Capex 26.2 43.9 110.8 70.8 72.4 Proceeds from excess assets (25.7) (58.8) (45.4) (21.3) (17.7) Business acquisitions
Slide 27: 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 Rolling Stock Depreciation 4.0% (% of Total Revenue) 4.0% (% of Total Revenue) 3.5% 3.5% 3.1% 3.0% 3.0% 2.4%
Slide 28: Segmented Financial Highlights – Q1 2017
Segmented Financial Highlights – Q1 2017 Package and Less-Than- (in millions of $) Truckload Logistics Total (*) Courier Truckload Q1-2017 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Q1-2016 Revenue before fuel 320 312 199 177 487 338 68 54 1,059 867 surcharge Adjusted EBITDAR**
Slide 29: Balance Sheet
Balance Sheet • Leverage metrics − Disciplined acquisition strategy with focus on preserving balance sheet strength and attractive cost of capital − Debt as at March 31, 2017: $1,645 million Total Debt / Adjusted EBITDA Total Debt (millions of CA$) 1,618 1,615 1,585 1,645 4.6x 3.6x 3.5x 3.5x 2.9x 77
Slide 30: 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 – $125 million unsecured debentures • Interest rate between 3% and 3.45% and matures in De
Slide 31: Delivering Shareholder Value
Delivering Shareholder Value Adjusted Return on Equity* Expected Amortization of Intangible ROE - % Assets & Incremental EPS 17.5% 80 0.16 0.14 15.0% 0.11 0.12 60 12.5% 11.4% 0.10 48.6 0.08 10.0% 0.06 40 0.04 7.5% 0.02 5.0% 20 0.00 14 15 16 TTM 17 18 19 20 21 Amortization (in M$) Incremental EPS (in
Slide 32: Delivering Shareholder Value
Delivering Shareholder Value • Quarterly dividend was at $0.19; annual dividend yield of 2.4% (on March 31, 2017 share price) – Plan to distribute 20-25% of annualized free cash flow available • Free Cash Flow from continuing operations of $3.18 per share for the last 12 months ended March 31, 2017
Slide 33: 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 34: Outlook
Outlook • TL segment: – Market conditions remain difficult and are not expected to significantly improve before the end of 2017 – Leverage our enhanced density in the U.S. and in Mexican cross-border activities following the acquisition of CFI • Logistics segment: – Will continue to grow our presenc
Slide 35: Five-Year Reconciliation of Adj. EBITDA
Five-Year Reconciliation of Adj. EBITDA* (in millions of $) TTM 2016 2015 2014 2013 (from continuing operations) Q1-2017 Net income 155.9 157.1 145.7 116.2 77.5 Net finance costs 46.1 54.9 75.7 64.2 72.9 Income tax expense 44.8 46.2 55.1 47.2 26.6 Operating income 246.8 258.2 276.5 227.6 177.0 Goodw
Slide 36: Five-Year Reconciliation of Free Cash Flow
Five-Year Reconciliation of Free Cash Flow* (in millions of $) TTM 2016 2015 2014 2013 (from continuing operations) Q1-2017 Net cash from operating activities 348.0 337.9 358.8 228.5 152.2 Additions to property and equipment (118.0) (110.6) (157.8) (69.3) (49.2) Proceeds from sale of property and 63
Slide 37: Five-Year Reconciliation of Adjusted EPS - diluted
Five-Year Reconciliation of Adjusted EPS - diluted* TTM (in millions of $) 2016 2015 2014 2013 Q1-2017 Net income 150.1 639.6 163.4 127.9 62.4 Amortization of intangible assets related to acquisitions, net of tax 33.9 32.7 28.8 21.7 15.1 Change in fair value of derivatives, net of tax (3.1) 3.5 9.5
Slide 38: Three-Month Reconciliation of Adjusted Net Income from Continuing Operations
Three-Month Reconciliation of Adjusted Net Income from Continuing Operations* Three months ended March 31 (in millions of $) 2017 2016 Net income 14.1 503.6 Amortization of intangible assets related to business 9.3 8.1 acquisitions, net of tax Net change in fair value of derivatives, net of tax (0.4
Slide 39: Three-Month Reconciliation of Free Cash Flow
Three-Month Reconciliation of Free Cash Flow* Three months ended March 31 (in millions of $) 2017 2016 Net cash from continuing operations 50.3 40.2 Additions to property and equipment (36.6) (29.1) Proceeds from sale of property and equipment 13.9 13.6 Proceeds from sale of assets held for sale 1.9
Slide 40: TFI International
TF International