Tfi International Inc. · TSX:TFII
Tfi International — Q3 2023 Earnings Presentation
47 slides from Tfi International's earnings presentation, October 2023
Slide 1: Third Quarter Ended September 30, 2023
Third Quarter Ended September 30, 2023
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 Number of Extensive American Operating Network: Leader: Companies: 608 facilities, Operations across 19,518 trucks1, U.S. and Canada 90+ 35,056 trail
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 ◼ 12.2% Operating Margin2 Best-in-class operating margins, ◼ 6.5% FCF Yield1,3 FCF yield and FCF conversion ◼ 80.2% FCF Conversion1,4 Proven track record of growth ◼ Completed 89 acquisitions since 2014, through disciplined of which 5 were major acquisitions6 acquisition strate
Slide 7: Low Capex Facilitates Asset-Light Model
Low Capex Facilitates Asset-Light Model TTM Net Capex (% of Total Revenue) 16.8% 11.2% 7.6% 3.2% 1.0% 2 3 4 Truckload Peer Average 1 Package & Courier Peer Average Less-than-Truckload Peer Average Logistics Peer Average Note: TFI Net Capex excludes purchases and sales of property. 1 Truckload: Heart
Slide 8: Market Leadership in Key Segments: TTM FCF Conversion
Market Leadership in Key Transportation and Logistics Segments: TTM FCF Conversion Package & Courier Less-Than-Truckload 88.5% 63.2% 42.1% 40.9% 1 2 Peer Average Peer Average Truckload Logistics 91.1% 98.9% 89.4% 4.4% 4 Peer Average 3 Peer Average Note: FCF Conversion (%) calculated as (Adjusted EBI
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 89 acquisitions since 2014, of which 5 were major acquisitions1. – Strong focus on integration, operations and realization of synergies ◼ Our disciplined acquis
Slide 10: Overview of the TFI International Platform
Overview of the TFI International Platform Package & Courier Less-Than-Truckload Truckload Logistics (8% of YTD Q3-2023 (45% of YTD Q3-2023 (26% of YTD Q3-2023 (21% of YTD Q3-2023 Revenue) Revenue) Revenue) Revenue) US Specialized Canadian Conventional (36% of YTD (21% of YTD (9% of YTD Q3- (5% of Y
Slide 11: Services by Geography
Services by Geography ◼ TFI has built a robust and well-diversified revenue base By Geography (YTD Q3-2023) — No client accounts for > 5% of consolidated revenue 34.3% 65.7% Package & Less-Than- Truckload Logistics Courier Truckload By Top Customers' Industry1 (YTD Q2-2023) 3% 1% 1% 4% 3% Canada ✔ ✔
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 ◼ 8% of YTD Q3-2023 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 Q3-2023
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 ◼ 26% of YTD Q3-2023 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 ◼ 21% of YTD Q3-2023 Revenue Logistics Operating Companies AC Logistics Canada DSN Chemical Transportation SAF Logistics TForce
Slide 16: Return on Invested Capital by Operating Segment
Return on Invested Capital¹ by Operating Segment 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Package & Courier 31.0% 32.5% 31.5% 28.8% 27.6% Canadian Less-Than-Truckload 23.1% 24.0% 23.2% 21.1% 19.6% US Less-Than-Truckload 25.2% 23.8% 17.4% 16.0% 15.2% Canadian Truckload 20.6% 21.3% 21.3% 17.0% 13.8% 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$)1,2,3 Net Cash fro
Slide 19: Total Shareholder Return
Total Shareholder Return Over Various Periods Peer Package & Less-Than- Average Courier1 Truckload2 Truckload3 Logistics4 15-Year 1,321% 4,478% 765% 289% 2,363% 171% 236% Total Shareholder Return 10-Year 1,030% 893% 270% 146% 672% 116% 145% 5-Year 145% 305% 66% 38% 186% 23% 19% 1-Year 41% 49% 22% 41
Slide 20: Resilience Through the Cycle
Resilience Through the Cycle ◼ TFI’s operating income, adjusted EPS – Diluted and Free Cash Flow continued growing despite the global pandemic of COVID-19. (US$ in millions) 2018 2019* 2020 2021 2022 Total Revenue 3,954.8 3,903.5 3,781.1 7,220.4 8,812.5 Operating Income 332.0 382.9 416.6 979.2 1146.
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) 457 10.2% 34% 41% 43% 41% 42% CAGR 53% 58% 59% 67% 165 66% 59% 57% 59% 58% 47
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 TTM Q3 2023 E-Commerce Revenue by Segment (US$ in millions) United States Canada 39.0 151.2 155.5 10.7 85.9 ◼ TFI services E-Commerce from nearly 14.4 Logistics TL P&C LTL 80 North American cities ◼ Further opportunities for the Logistics ◼ Total Ca
Slide 24: Robust Balance Sheet With Strategic Flexibility
Robust Balance Sheet With Strategic Flexibility As at Covenants Requirements September 30, 2023 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 89 companies across our highly fragmented markets since 2014, of which 5 were major acquisitions1. Number of Acquisitions per Year TForce Worldwide MCT TForce Grammer Dry Freight Bulk Laser Coastal Transport SGT South Shore JHT Cavalier CFI GB
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-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Revenue before fuel surcharge (in thousands 150,074 124,580 125,082 120,236 129,074 112,560 115,588 111,749 of dollars) Revenue per pound (including fuel) $0.43 $0.47 $0.
Slide 29: Additional Operational Data (Slide 2 of 3)
Additional Operational Data (Slide 2 of 3) Operational Data – LTL 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 U.S. based LTL Revenue (in thousands of dollars) 2 568,761 581,421 585,539 544,318 475,389 460,343 467,903 503,275 Adjusted operating ratio1 89.40% 90.70% 88.00% 90.80% 9
Slide 30: Additional Operational Data (Slide 3 of 3)
Additional Operational Data (Slide 3 of 3) Operational Data – TL 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Specialized TL2 Revenue before fuel surcharge (in thousands of 328,648 328,320 353,146 355,431 325,493 336,159 335,450 325,384 U.S. dollars) Adjusted operating ratio1 89.6
Slide 31: Reconciliations
TF International Reconciliations 31
Slide 32: Five-Year Reconciliation of Adjusted EBITDA
Five-Year Reconciliation of Adjusted EBITDA1 (US$ in millions) TTM Q3 2022 20213 2020 20192 (from Continuing Operations) 2023 Net Income 527.0 823.2 754.4 275.7 244.2 Net Finance Costs 74.6 80.4 73.0 53.9 62.1 Income Tax Expense (Recovery) 174.7 242.4 151.8 87.0 76.5 Depreciation of Property and Equ
Slide 33: Five-Year Reconciliation of Adjusted Net Income and Adjusted EPS – Diluted
Five-Year Reconciliation of Adjusted Net Income1 and Adjusted EPS – Diluted1 TTM Q3 (US$ in millions, except per share data) 2022 20212 2020 2019 2023 Net Income 527.0 823.2 754.4 275.7 233.7 Amortization of Intangible Assets Related to Business Acquisitions 54.6 52.0 50.5 47.6 48.3 Net Change in Fa
Slide 34: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 US Based Less-Than-Truckload Total revenue 788,487 827,594 904,942 849,450 743,616 690,287 649,043 696,734 Total operating expenses 716,410 762,550 764,197 785,265 685,797 662,
Slide 35: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Canadian Based Less-Than-Truckload Total revenue 173,295 175,652 197,412 175,908 164,227 163,035 159,991 178,375 Total operating expenses 141,923 145,926 150,873 139,580 133,80
Slide 36: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Truckload Total revenue 584,009 609,674 703,234 635,370 502,784 500,095 479,779 476,568 Total operating expenses 522,206 538,646 575,864 538,742 430,942 429,599 413,596 426,511
Slide 37: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Truckload - Revenue before fuel surcharge U.S. based Conventional TL2 106,171 113,329 118,361 78,289 - - - - Canadian based Conventional TL 73,786 76,307 88,072 79,073 79,101 7
Slide 38: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Canadian based Conventional TL Operating expenses** 74,635 76,499 82,851 75,866 65,945 78,698 77,613 83,452 Gain on sale of land and buildings - 44 - - 15,485 - - - and assets
Slide 39: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2021-Q4 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Specialized TL2 Operating expenses** 335,865 343,948 365,675 371,313 366,402 352,901 338,416 346,294 Gain on sale of land and buildings 6,649 - 1 1 474 3,398 28 546 and assets
Slide 40: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Package and Courier Operating income 133,456 134,306 135,544 125,848 117,212 (Gain) Loss on sale of land and buildings and assets held for sale - - - - - Amortization of intangible assets 674 645 63
Slide 41: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Less-Than-Truckload – Canadian based LTL Operating income 143,965 143,014 143,895 131,014 126,796 (Gain) loss on sale of land and buildings and assets held for sale (652) (660) (661) (40) (9) Amorti
Slide 42: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands)200,426 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Less-Than-Truckload – US based LTL2 Operating income 342,051 327,793 290,082 196,353 200,426 (Gain) loss on sale of land and buildings 8 8 8 36 36 Gain on sale of assets held for sale (55,054
Slide 43: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Truckload - Canadian based Conventional TL Operating income 62,424 84,321 87,880 76,584 66,882 Gain on sale of land and buildings and assets held for sale (44) (15,529) (15,485) (15,485) (15,485) Am
Slide 44: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Truckload - Specialized TL2 Operating income 235,865 236,414 249,735 222,836 191,696 Gain on sale of land and buildings and assets held for sale (12,885) (6,711) (10,074) (3,888) (4,435) Amortizatio
Slide 45: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 Logistics Operating income 139,111 140,446 137,274 127,799 139,662 Loss on sale of land and buildings and assets held for sale 3 - - - - Amortization of intangible assets 22,473 21,990 22,162 22,386
Slide 46: Reconciliation of Free Cash Flow Measures
Reconciliation of Free Cash Flow Measures (US$ in millions) TTM 2023-Q3 Reconciliation of free cash flow Net cash from operating activities 959.6 Additions to property and equipment (393.5) Proceeds from sale of property and equipment and AHFS 153.5 Free Cash Flow 719.5 (US$ in millions) TTM 2023-Q3
Slide 47: TFI International
TF International