TFI International Inc.
(TFII-T) C$106.72
Q1/22 First Look Event
TFI reported Q1/22 results after market close yesterday. Adjusted diluted EPS of $1.68 compared with TD/consensus at $1.33/$1.30. Adjusted EBITDA of $330 million ($311 million excl. gain on equipment disposition) compared with TD/ consensus at $283/$288 million.
Impact: SLIGHTLY POSITIVE
We view the 17% higher-than-forecast adjusted EBITDA, 26% higher adjusted EPS, and ROIC improvements positively. Revenue was 7.3% higher than our forecast and margins were stronger-than-expected in each segment. Not surprisingly, the report noted signs of a potential slow down in the North American economy as a result of inflation, rising interest rates, elevated fuel prices, and other factors. TFI's share price has weakened since the Q4/21 report, reflecting concerns over rate pressures and economic headwinds. We do not believe that the strong Q1/22 results will entirely alleviate these concerns. However, based on our first look, we do believe that they will be positive for the stock while demonstrating a higher level of earnings power upon which to apply any assumed future revenue and margin headwinds.
Package and Courier: Revenue ex-fuel surcharges decreased 5% to $125 million, above our $116-million forecast. Adjusted EBITDA increased 32% y/y to $32.9 million (26.4% margin). Tonnage was flat y/y, while package volume was down.
Less-than-Truckload: Revenue ex-fuel surcharges of $835 million was above our forecast of $772 million, with a stronger-than-expected contribution from TForce Freight and Canada. Adjusted EBITDA was $132 million (15.8% margin), in line with our $128-million forecast. The TForce Freight operating ratio was in line.
Truckload: Revenue ex-fuel surcharges increased 22% to $516 million, in line with our forecast. U.S. volume was lower-than-forecast, and Canada in line. Adjusted EBITDA (excl. gain on sale of equipment disposition) increased 14% y/y (20.9% margin), in line with our $111.8-million forecast.
Logistics: Revenue ex-fuel surcharges increased 15% to $435 million, above our $374-million forecast. Adjusted EBITDA increased 13% y/y to $44.3 million (10.2% margin), slightly above our $41.9-million forecast.
FCF (TFI definition) was $91.8 million, below our estimate, and down from $143 million in Q1/21. The decline relative to our forecast was due to receivables for fuel surcharges, partially offset by capex and cash earnings.