Tfi International Inc. · TSX:TFII
Tfi International — Investor Day (November 2022)
53 slides from Tfi International's investor day presentation, Nov 10, 2022
Slide 1: Investor Day 2022
INVESTOR DAY 2022 | NOVEMBER 10, 2022 | 1
Slide 2: Forward-Looking Statements and Non-IFRS Measures
Forward-Looking Statements and Non-IFRS Measures 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 su
Slide 3: Welcome & Overview
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL Package & Courier Logistics WELCOME Capital Allocation & Outlook & OVERVIEW Alain Bedard CHAIRMAN OF THE BOARD, PRESIDENT & CEO 3
Slide 4: TFI is stronger than ever.
TFI is stronger than ever. Superior Record of Growth Transportation & Logistics Diversification by Sector & Shareholder Value Creation Market Leader & Geography Robust Return M&A Track Record with on Invested Capital Well-defined Pipeline Welcome & Overview 4
Slide 5: Business segments and leaders
46% 23% 7% 24% LESS-THAN-TRUCKLOAD TRUCKLOAD PACKAGE & COURIER LOGISTICS US CANADIAN SPECIALIZED CANADIAN Paul Hoelting Rick Hashie Steven Brookshaw Bob McGonigal Kal Atwal Rick Hashie Chris Traikos Welcome & Overview 3Q22 annualized and pro forma for the sale of CFI 5
Slide 6: Agenda
AGENDA 8:00–8:30 ARRIVAL & BREAKFAST SPEAKER(S) MODERATOR 8:30–8:45 Welcome & Overview Alain Bedard, President & CEO 8:45–9:20 United States LTL Paul Hoelting, President, TForce Freight Jack Atkins, Stephens 9:20–9:55 Specialized & Canadian TL Steven Brookshaw, EVP Scott Group, Wolfe 9:55–10:10 BREA
Slide 7: A Brief Historical Perspective
A Brief Historical Perspective Welcome & Overview 7
Slide 8: Companies Acquired & Integrated Since 2008
111 Companies Acquired & Integrated Since 2008 Welcome & Overview 8
Slide 9: Acquisitions per year and select acquisitions
14 ACQUISITIONS PER YEAR SELECT ACQUISITIONS 13 AC Logistics Canada MCT Transportation BeavEx National Fast Freight Brasseur Normandin 10 10 BTC Quik X Cavalier SGT 9 CFI South Shore 8 8 Clarke St-Michel Logistique Coastal Transport Total Transfer 7 Contrans TForce Critical 6 6 Driving Force TForce
Slide 10: Our operating philosophy guides everything we do
Our operating philosophy guides everything we do regardless of economic cycles. NET CAPEX 1 1.40 % Of Total Revenue Decentralized Focus on Operating Operating Structure Fundamentals IMPRESSIVE LEVERAGE RATIOS 1.00x 6.04x Funded Debt-to-EBITDA1 Ratio EBITDAR 1-to-Interest & Rent Ratio (Requirement: <
Slide 11: Our unique growth strategy yields consistent results.
Our unique growth strategy yields consistent results. 10.3% 2 DILUTED ADJUSTED EPS1 FROM NET CASH FROM TTM FCF YIELD CONTINUING OPERATIONS OPERATING ACTIVITIES (US$) (US$ IN MILLIONS) 88.4% 3 42.5% CAGR 24.5% CAGR TTM FCF CONVERSION 1 914 7.86 855 COMPANY-WIDE 5.23 611 TTM FCF CONVERSION 1 501 BY SE
Slide 12: Greater efficiencies remain within our grasp.
Greater efficiencies remain within our grasp. US LTL Recent M&A in Specialized TL Diversification Ability to Deploy Capital Welcome & Overview 12
Slide 13: Our vision for value creation guides our path forward.
Our vision for value creation guides our path forward. 1 Adhere to operating principals regardless of economy 2 Make decisions that drive Free Cash Flow, generate strong ROIC & grow EPS 3 Invest to maintain fleet & lower Operating Costs 4 Continue selective & disciplined M&A 5 Return capital to Shar
Slide 14: We have a history of returning capital to our shareholders.
We have a history of returning capital to our shareholders. $1.5B 1 STOCK REPURCHASES (US$ IN MILLIONS) 485 Returned Since 2017 (US$) 193 198 1.5% 2 114 108 95 52 63 38 Annual Forward 19 Dividend Yield 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1. As of September 30, 2022 Welcome & Overview 2
Slide 15: United States LTL
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL UNITED STATES Package & Courier Logistics LTL Capital Allocation & Outlook Paul Hoelting PRESIDENT, TFORCE FREIGHT MODERATED BY Jack Atkins STEPHENS 15
Slide 16: Specialized & Canadian TL
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL SPECIALIZED Package & Courier Logistics & CANADIAN TL Capital Allocation & Outlook Steven Brookshaw EXECUTIVE VICE-PRESIDENT MODERATED BY Scott Group WOLFE 16
Slide 17: 15 Minute Break
15 MINUTE BREAK 8:00–8:30 ARRIVAL & BREAKFAST SPEAKER(S) MODERATOR 8:30–8:45 Welcome & Overview Alain Bedard, President & CEO 8:45–9:20 United States LTL Paul Hoelting, President, TForce Freight Jack Atkins, Stephens 9:20–9:55 Specialized & Canadian TL Steven Brookshaw, EVP Scott Group, Wolfe 9:55–1
Slide 18: Canadian LTL
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL CANADIAN Package & Courier Logistics LTL Capital Allocation & Outlook Rick Hashie Chris Traikos EXECUTIVE VICE-PRESIDENT EXECUTIVE VICE-PRESIDENT MODERATED BY Walter Spracklin RBC 18
Slide 19: Package & Courier
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL PACKAGE Package & Courier Logistics & COURIER Capital Allocation & Outlook Bob McGonigal EXECUTIVE VICE-PRESIDENT MODERATED BY Benoit Poirier DESJARDINS 19
Slide 20: Logistics
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL Package & Courier Logistics LOGISTICS Capital Allocation & Outlook Kal Atwal Rick Hashie EXECUTIVE VICE-PRESIDENT EXECUTIVE VICE-PRESIDENT MODERATED BY Ravi Shanker MORGAN STANLEY 20
Slide 21: Capital Allocation & Outlook
Welcome & Overview United States LTL Specialized & Canadian TL Canadian LTL CAPITAL Package & Courier Logistics ALLOCATION Capital Allocation & Outlook & OUTLOOK David Saperstein CHIEF FINANCIAL OFFICER 21
Slide 22: Superior Track Record of Growth
Superior Track Record of Growth REVENUE BEFORE FUEL SURCHARGE (US$ IN MILLIONS) ADJUSTED EBITDA1 (US$ IN MILLIONS) 33.1% CAGR 33.6% CAGR 7,629 1,439 6,469 1,077 3,478 3,484 649 700 2019 2020 2021 TTM Q3 '22 2019 2020 2021 TTM Q3 '22 DILUTED ADJ. EPS FROM CONTINUING OPERATIONS1 (US$) NET CASH FROM OP
Slide 23: Key Financial Metrics – United States LTL
Key Financial Metrics – United States LTL REVENUE 1 (US$ IN MILLIONS) OPERATING INCOME 2 (US$ IN MILLIONS) 614 581 586 141 569 544 403 67 72 65 64 48 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 3 ROIC 3 (US$ IN MIL
Slide 24: Key Financial Metrics – Canadian LTL
Key Financial Metrics – Canadian LTL REVENUE (US$ IN MILLIONS) OPERATING INCOME (US$ IN MILLIONS) -3.4% CAGR 22.6% CAGR 627 144 523 557 570 114 82 88 2019 2020 2021 TTM Q3'22 2019 2020 2021 TTM Q3'22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 1 ROIC 1 (US$ IN MILLIONS) 23.1% 22.7% CAGR 16.7% 156
Slide 25: Key Financial Metrics – Specialized TL
Key Financial Metrics – Specialized TL REVENUE (US$ IN MILLIONS) OPERATING INCOME (US$ IN MILLIONS) 10.3% CAGR 29.7% CAGR 236 1,234 1,366 1,043 137 150 977 115 2019 2020 2021 TTM Q3'22 2019 2020 2021 TTM Q3'22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 1 ROIC 1 (US$ IN MILLIONS) 12.7% 27.8% CAGR
Slide 26: Key Financial Metrics – Canadian TL
Key Financial Metrics – Canadian TL REVENUE (US$ IN MILLIONS) OPERATING INCOME (US$ IN MILLIONS) 13.0% CAGR 26.6% CAGR 62 317 227 250 206 33 28 30 2019 2020 2021 TTM Q3'22 2019 2020 2021 TTM Q3'22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 1 ROIC 1 (US$ IN MILLIONS) 20.6% 32.5% CAGR 83 12.4% 47 4
Slide 27: Key Financial Metrics – Package & Courier
Key Financial Metrics – Package & Courier REVENUE (US$ IN MILLIONS) OPERATING INCOME (US$ IN MILLIONS) 3.5% CAGR 19.3% CAGR 134 560 520 108 474 482 82 79 2019 2020 2021 TTM Q3'22 2019 2020 2021 TTM Q3'22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 1 ROIC 1 (US$ IN MILLIONS) 31.0% 17.9% CAGR 23.2%
Slide 28: Key Financial Metrics – Logistics
Key Financial Metrics – Logistics REVENUE (US$ IN MILLIONS) OPERATING INCOME (US$ IN MILLIONS) 36.1% CAGR 37.9% CAGR 1,621 1,741 143 139 924 85 745 57 2019 2020 2021 TTM Q3'22 2019 2020 2021 TTM Q3'22 ADJUSTED EBITDA LESS NET CAPITAL EXPENDITURES 1 ROIC 1 (US$ IN MILLIONS) 24.3% 32.8% CAGR 21.1% 169
Slide 29: Return on Invested Capital by Segment
SEGMENT 2022-Q3 RETURN ON Package & Courier 31.0% INVESTED Canadian Less-Than-Truckload 23.1% CAPITAL¹ BY United States Less-Than-Truckload 25.2% OPERATING Canadian Truckload 20.6% SEGMENT Specialized Truckload 12.7% Logistics 21.1% Capital Allocation & Outlook 1. Non-IFRS measure, please refer to t
Slide 30: Drivers of TFI Outperformance
Drivers of TFI Outperformance CONTINUOUS OPERATING IMPROVEMENTS • Data • People BUSINESS FOCUS • Ability to gain strategic competitive advantages • Barriers to entry • Growing end markets • Diversification: End Market, Mode of Transportation, Country CAPITAL DEPLOYMENT Capital Allocation & Outlook 3
Slide 31: Capital Deployment Strategy
Capital Deployment Strategy M&A $250–$350M of capital Large acquisition Target 15-25%+ after tax deployed in tuck-ins annually every 2–3 years ROIC for M&A over time STOCK REPURCHASE $484.5 million worth of shares repurchased in 2022, September YTD ORGANIC GROWTH & INTERNAL PROJECTS Expected Returns
Slide 32: Long-Term Outlook
LONG-TERM OUTLOOK 10 YEAR SEGMENT AVERAGE OR LONG-TERM Package & Courier 80 MARGIN TARGETS Canadian Less-Than-Truckload 80 ORGANIC REVENUE United States Less-Than-Truckload 80 GROWTH EXPECTED IN LINE WITH GDP Canadian Truckload 80-85 Specialized Truckload 80-85 Logistics 88-90 Capital Allocation & O
Slide 33: International
= k International
Slide 34: TFI International
TFi International
Slide 35: Appendix
Appendix
Slide 36: Five-Year Reconciliation of Adjusted EBITDA
Five-Year Reconciliation of Adjusted EBITDA 1 (US$ in millions) TTM Q3 2022 20213 2020 20192 (from Continuing Operations) Net Income 813.8 754.4 275.7 244.2 Net Finance Costs 84.8 73.0 53.9 62.1 Income Tax Expense (Recovery) 245.4 151.8 87.0 76.5 Depreciation of Property and Equipment 257.4 225.0 17
Slide 37: Five-Year Reconciliation of Adjusted Net Income and Adjusted EPS – Diluted
Five-Year Reconciliation of Adjusted Net Income and Adjusted EPS – Diluted 1 (US$ in millions, except per share data) TTM Q3 2022 20212 2020 2019 Net Income 813.8 754.4 275.7 233.7 Amortization of Intangible Assets Related to Business Acquisitions 51.1 50.5 47.6 48.3 Net Change in Fair Value and Acc
Slide 38: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation 1 (US$ in thousands) 2021-Q3 2022-Q3 Package and Courier Operating income 101,129 133,456 (Gain) Loss on sale of land and buildings and assets held for sale (93) - Amortization of intangible assets 965 674 Operating income, net of exclusions 102,001 134,130
Slide 39: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation 1 (US$ in thousands) 2021-Q3 2022-Q3 Less-Than-Truckload – Canadian based LTL Operating income 106,799 143,965 (Gain) Loss on sale of land and buildings and assets held for sale (1,626) (652) Amortization of intangible assets 8,969 8,142 Operating income, ne
Slide 40: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation 1 (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 Less-Than-Truckload – US based LTL2 Operating income 524,115 345,310 342,051 (Gain) loss on sale of land and buildings 17 15 8 Gain on sale of assets held for sale - (54,020) (55,054) Amortization of intangible as
Slide 41: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation 1 (US$ in thousands) 2021-Q3 2022-Q3 Truckload - Canadian based Conventional TL Operating income 30,475 62,424 Gain on sale of land and buildings and assets held for sale (17) (44) Amortization of intangible assets 2,093 2,005 Operating income, net of exclus
Slide 42: Return on Invested Capital Reconciliation
1 Return on Invested Capital Reconciliation (US$ in thousands) 2021-Q3 2022-Q3 Truckload - Specialized TL2 Operating income 142,350 235,865 Gain on sale of land and buildings and assets held for sale (6,137) (12,885) Amortization of intangible assets 17,049 20,171 Operating income, net of exclusions
Slide 43: Return on Invested Capital Reconciliation
1 Return on Invested Capital Reconciliation (US$ in thousands) 2021-Q3 2022-Q3 Logistics Operating income 136,387 139,111 Loss on sale of land and buildings and assets held for sale 5 3 Amortization of intangible assets 22,516 22,473 Bargain purchase gain (12,000) - Operating income, net of exclusio
Slide 44: Reconciliation of Free Cash Flow Measures
Reconciliation of Free Cash Flow Measures (US$ in millions) TTM 2022-Q3 (US$ in millions) TTM 2022-Q3 Reconciliation of free cash flow Reconciliation of free cash conversion Net cash from operating activities 913.7 Adjusted EBITDA from continuing operations 1,438.6 Additions to property and equipmen
Slide 45: Reconciliation of Net Capex
Reconciliation of Net Capex (US$ in thousands) YTD Q3 ’22 Additions to rolling stock 198,971 Additions to equipment 9,831 Proceeds from the sale of rolling stock (108,307) Proceeds from the sale of equipment (2,296) Net Capital expenditures 98,199 Appendix 1. This is a non-IFRS measure 45
Slide 46: Reconciliation of Free Cash Flow Conversion by Segment
Reconciliation of Free Cash Flow Conversion by Segment (US$ in thousands) TTM Q3'22 P&C LTL TL Log Corporate Total Additions to rolling stock 8,999 124,225 151,614 1 – 284,839 Additions to equipment 2,760 7,483 3,414 830 132 14,619 Proceeds from the sale of rolling stock (1,239) (8,982) (120,405) (7
Slide 47: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 United States Less-Than-Truckload Operating income 319 67 72 65 141 64 Depreciation and amortization 16 24 25 25 27 26 Bargain purchase gain (272) – – – – – (Gain) Loss on sale
Slide 48: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) 2019 2020 2021 TTM Q3 '22 Canadian Less-Than-Truckload Operating income 82 88 114 144 Depreciation and amortization 53 50 50 48 Bargain purchase gain – – – – (Gain) Loss on sale of land and buildings (9) 0 – – (Gain) L
Slide 49: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) 2019 2020 2021 TTM Q3 '22 Specialty Truckload Operating income 115 137 150 236 Depreciation and amortization 111 114 133 139 Bargain purchase gain – – – – (Gain) Loss on sale of land and buildings (0) – (0) 0 (Gain) Lo
Slide 50: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) 2019 2020 2021 TTM Q3 '22 Canadian Truckload Operating income 33 28 30 62 Depreciation and amortization 18 19 22 24 Bargain purchase gain – – – – (Gain) Loss on sale of land and buildings (0) – – (0) (Gain) Loss on sal
Slide 51: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) 2019 2020 2021 TTM Q3 '22 Package & Courier Operating income 82 79 108 134 Depreciation and amortization 25 25 26 26 Bargain purchase gain – – – – (Gain) Loss on sale of land and buildings – – – – (Gain) Loss on sale a
Slide 52: Reconciliation of Adjusted EBITDA Less Net Capital Expenditures
Reconciliation of Adjusted EBITDA Less Net Capital Expenditures (US$ in millions) 2019 2020 2021 TTM Q3 '22 Logistics Operating income 57 85 143 139 Depreciation and amortization 34 32 38 39 Bargain purchase gain (8) (4) (12) - (Gain) Loss on sale of land and buildings – 0 0 0 (Gain) Loss on sale as
Slide 53: TFI International
TFi International