Tfi International Inc. · TSX:TFII
Tfi International — Q4 2023 Earnings Presentation
49 slides from Tfi International's earnings presentation, February 2024
Slide 1: Fourth Quarter Ended December 31, 2023
Fourth Quarter Ended December 31, 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: 598 facilities, Operations across 18,959 trucks1, U.S. and Canada 90+ 34,599 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 11.8% Operating Margin2 Best-in-class operating margins, 6.9% FCF Yield1,3 FCF yield and FCF conversion 82.5% FCF Conversion1,4 Proven track record of growth Completed 90 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) 16.6% 10.6% 7.7% 3.2% 1.5% 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 85.7% 67.3% 41.2% 48.4% 1 2 Peer Average Peer Average Truckload Logistics 93.2% 98.2% 77.1% -4.7% 4 Peer Average 3 Peer Average Note: FCF Conversion (%) calculated as (Adjusted EB
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 90 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 Q4-2023 (44% of YTD Q4-2023 (26% of YTD Q4-2023 (22% of YTD Q4-2023 Revenue) Revenue) Revenue) Revenue) US Specialized Canadian Conventional (35% of YTD (21% of YTD (9% of YTD Q4- (5% of Y
Slide 11: Services by Geography
Services by Geography TFI has built a robust and well-diversified revenue base By Geography (YTD Q4-2023) — No client accounts for > 5% of consolidated revenue 34.1% 65.9% Package & Less-Than- Truckload Logistics Courier Truckload By Top Customers' Industry1 (YTD Q4-2023) 3% 1% 1% 6% 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 Q4-2023 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 44% of YTD Q4-2023
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 Q4-2023 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 22% of YTD Q4-2023 Revenue Logistics Operating Companies AC Logistics Canada Craler SAF Logistics TForce Premier Distribution
Slide 16: Return on Invested Capital by Operating Segment
Return on Invested Capital¹ by Operating Segment 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Package & Courier 32.5% 31.5% 28.8% 27.6% 28.1% Canadian Less-Than-Truckload 24.0% 23.2% 21.1% 19.6% 20.1% US Less-Than-Truckload 23.8% 17.4% 16.0% 15.2% 15.1% Canadian Truckload 21.3% 21.3% 17.0% 13.8% 12.6% 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) 8,000 1,600 6,417 1,400 7,000 1,188 6,000 1,200 5,000 1,000 4,000 800 3,000 600 2,000 400 1,000 200 0 0 2002 2023 2002 2023 Diluted Adjusted EPS from Continuing Operations (US$)1,2,3
Slide 19: Total Shareholder Return
Total Shareholder Return Over Various Periods “TFII maintained the longest winning streak in our coverage as it's now outperformed the S&P 500 for 6 straight years.” – Scott Group, analyst at Wolfe Research, January 2, 2024 Peer Package & Less-Than- Average Courier1 Truckload2 Truckload3 Logistics4
Slide 20: Resilience Through the Cycle
Resilience Through the Cycle TFI’s operating income, adjusted EPS – Diluted and Free Cash Flow continued growing despite the global pandemic of COVID-19. (US$ 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) 528 34% 11.1% 41% 43% 41% 42% CAGR 53% 51% 58% 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 Q4 2023 E-Commerce Revenue by Segment (US$ in millions) 46.5 United States Canada 213.6 139.1 13.3 96.2 TFI services E-Commerce from nearly 19.6 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 December 31, 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 90 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 JHT Coastal Transport South Shore SGT STG Cavalier CF
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 4)
Additional Operational Data (Slide 1 of 4) Operational Data – P&C 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Revenue before fuel surcharge (in thousands 124,580 125,082 120,236 129,074 112,560 115,588 111,749 122,033 of dollars) Revenue per pound (including fuel) $0.47 $0.51 $0.
Slide 29: Additional Operational Data (Slide 2 of 4)
Additional Operational Data (Slide 2 of 4) Operational Data – LTL 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 U.S. based LTL Revenue (in thousands of dollars) 2 581,421 585,539 544,318 475,389 460,343 467,903 503,275 481,102 1 Adjusted operating ratio 90.70% 88.00% 90.80% 90.40%
Slide 30: Additional Operational Data (Slide 3 of 4)
Additional Operational Data (Slide 3 of 4) Operational Data – LTL 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Canadian based LTL Revenue (in thousands of dollars) 142,498 148,685 133,654 123,176 124,812 127,936 140,794 138,241 Adjusted operating ratio1 79.10% 69.10% 72.80% 75.30%
Slide 31: Additional Operational Data (Slide 4 of 4)
Additional Operational Data (Slide 4 of 4) Operational Data – TL 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Specialized TL Revenue before fuel surcharge (in thousands of 328,320 353,146 355,431 325,493 336,159 335,450 325,384 323,952 U.S. dollars) Adjusted operating ratio1 87.0%
Slide 32: Reconciliations
TF International Reconciliations 32
Slide 33: Five-Year Reconciliation of Adjusted EBITDA
Five-Year Reconciliation of Adjusted EBITDA1 (US$ in millions) 2023 2022 2021 2020 2019 (from Continuing Operations) Net Income 504.9 823.2 754.4 275.7 244.2 Net Finance Costs 80.9 80.4 73.0 53.9 62.1 Income Tax Expense (Recovery) 171.9 242.4 151.8 87.0 76.5 Depreciation of Property and Equipment 24
Slide 34: Five-Year Reconciliation of Adjusted Net Income and Adjusted EPS
Five-Year Reconciliation of Adjusted Net Income1 and Adjusted EPS – Diluted1 (US$ in millions, except per share data) 2023 2022 2021 2020 2019 Net Income 504.9 823.2 754.4 275.7 233.7 Amortization of Intangible Assets Related to Business Acquisitions 56.2 52.0 50.5 47.6 48.3 Net Change in Fair Value
Slide 35: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 US Based Less-Than-Truckload Total revenue 827,594 904,942 849,450 743,616 690,287 649,043 696,734 674,745 Total operating expenses 762,550 764,197 785,265 685,797 662,954 602,
Slide 36: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Canadian Based Less-Than-Truckload Total revenue 175,652 197,412 175,908 164,227 163,035 159,991 178,375 177,629 Total operating expenses 145,926 150,873 139,580 133,806 132,42
Slide 37: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Truckload Total revenue 609,674 703,234 635,370 502,784 500,095 479,779 476,568 479,596 Total operating expenses 538,646 575,864 538,742 430,942 429,599 413,596 426,511 428,939
Slide 38: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Truckload - Revenue before fuel surcharge U.S. based Conventional TL 113,329 118,361 78,289 - - - - - Canadian based Conventional TL 76,307 88,072 79,073 79,101 77,601 77,389 7
Slide 39: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Canadian based Conventional TL Operating expenses** 76,499 82,851 75,866 65,945 78,698 77,613 83,452 84,518 Gain on sale of land and buildings 44 - - 15,485 - - - - and assets
Slide 40: Adjusted Operating Ratio Reconciliation
Adjusted Operating Ratio1 Reconciliation (US$ in thousands) 2022-Q1 2022-Q2 2022-Q3 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Specialized TL Operating expenses** 343,948 365,675 371,313 366,402 352,901 338,416 346,294 347,245 Gain on sale of land and buildings - 1 1 474 3,398 28 546 (7) and assets hel
Slide 41: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Package and Courier Operating income 134,306 135,544 125,848 117,212 114,360 (Gain) Loss on sale of land and buildings and assets held for sale - - - - 7 Amortization of intangible assets 645 639 63
Slide 42: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Less-Than-Truckload – Canadian based LTL Operating income 143,014 143,895 131,014 126,796 124,198 (Gain) loss on sale of land and buildings and assets held for sale (660) (661) (40) (9) 3 Amortizati
Slide 43: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands)200,426 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Less-Than-Truckload – US based LTL2 Operating income 327,793 290,082 196,353 200,426 186,231 (Gain) loss on sale of land and buildings 8 8 36 36 36 Gain on sale of assets held for sale (55,05
Slide 44: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Truckload - Canadian based Conventional TL Operating income 84,321 87,880 76,584 66,882 45,004 Gain on sale of land and buildings and assets held for sale (15,529) (15,485) (15,485) (15,485) - Amort
Slide 45: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Truckload - Specialized TL Operating income 236,414 249,735 222,836 191,696 192,389 Gain on sale of land and buildings and assets held for sale (6,711) (10,074) (3,888) (4,435) (3,951) Amortization
Slide 46: Return on Invested Capital Reconciliation
Return on Invested Capital1 Reconciliation (US$ in thousands) 2022-Q4 2023-Q1 2023-Q2 2023-Q3 2023-Q4 Logistics Operating income 140,446 137,274 127,799 139,662 160,112 (Gain) Loss on sale of land and buildings and assets held for sale - - - - (226) Amortization of intangible assets 21,990 22,162 22
Slide 47: Reconciliation of FCF Conversion YTD 2023-Q4
Reconciliation of FCF Conversion1 YTD 2023-Q4 Package & Less-Than- (US$ in thousands) Truckload Logistics Courier Truckload Adjusted EBITDA1 reconciliation YTD 2023-Q4 Operating income 114,360 310,429 237,393 160,112 Depreciation and amortization 25,070 173,684 194,761 47,914 (Gain) loss on sale of
Slide 48: Reconciliation of Free Cash Flow Measures
Reconciliation of Free Cash Flow1 Measures (US$ in millions) YTD 2023-Q4 Reconciliation of free cash flow1 Net cash from operating activities 1,013.8 Additions to property and equipment (361.6) Proceeds from sale of property and equipment and AHFS 123.6 Free Cash Flow 775.9 (US$ in millions) YTD 202
Slide 49: TFI International
TF International