TFI International Inc T.TFII

Alternate Symbol(s): TFII

TFI International Inc. is a transportation and logistics company, operating across the United States and Canada through its subsidiaries. The Company’s segments include Package and Courier, Less-Than-Truckload, Less-Than-Truckload, and Logistics. The Package and Courier segment is engaged in pickup, transport, and delivery of items across North America. The Less-Than-Truckload segment is engaged in pickup, consolidation, transport, and delivery of smaller loads. The Truckload segment is a provider of conventional and specialized truckload services, including flatbed, tanks, dumps, and oversized. It offers specialized trailers, and a million-plus square feet of industrial warehousing space. The Logistics segment provides asset-light logistics services, including brokerage, freight forwarding and transportation management, as well as small package parcel delivery. The Company’s e-commerce network spans more than 80 North American cities.

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TFI International Inc

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Post by retiredcfon May 02, 2022 9:53am

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Post# 34647233

RBC Report

Their upside scenario target is US$149.00. GLTA

April 29, 2022

Outperform

NYSE: TFII; USD 83.54; TSX: TFII

Price Target USD 100.00 ↑ 97.00

TFI International Inc.

Strong beat and another guidance raise; tight capacity keeping market firm

Our view: TFII continued to exceed expectations with another (very) strong performance delivered in Q1 - despite the challenging operating conditions that typically occur in that quarter. Guidance was raised again - only a quarter after having set it - and we believe that guidance to be conservative (we have brought our estimates to the high end of the range). Further, the company's strong FCF (>$700MM guided) and clean balance sheet (<1.5x leverage guided) provides the company tremendous optionality between ramping up M&A and buying back stock (likely see both this year). TFII remains a top idea, and we reiterate our OP rating.

Key points:

Guidance revised upward. Mgmt increased its guidance as the demand environment drove topline and the company's success in improving costs delivered better margin (despite the mathematical headwind of higher fuel surcharge pass through revenue). EPS guidance is now set at $6.50 to $6.75 (from $6.25 to $6.50). While this compares favourably to consensus going into the quarter of $6.52, the increase of $0.25 is lower than the Q1 beat of ~$0.40. Nevertheless, we believe this is representative more of the company's conservatism, as the CEO on the call pointed to $7.00 as achievable.

M&A now expected to ramp. With the integration of the UPS Freight acquisition now almost complete, mgmt is refocusing on M&A. Indication is that the company will use the balance of this year to focus on tuck-ins in the Logistics area; and looking toward larger deals in 2023.

Estimates go higher again - raising target. We are bringing up our earnings to the high end of the new guidance range, given the strength of the Q1 results relative to the increase in guide. Our 2022 EPS goes to $6.75 (from $6.40), guidance being $6.50 to $6.75. Our 2023E also goes higher, to $7.15 (from $6.96). Note that mgmt's guidance does not include M&A - though we expect this to ramp in H2 (though not in our estimates).

Why TFII is the trucker to own. We continue to view TFII as a top idea in transportation, and Q1 reinforced our positive thesis. We consider TFII as a premium trucking investment on the following basis: 1) earnings growth that is more based on self-help (cost improvement) than on overall demand; 2) a track record of meeting and exceeding financial guidance; and 3) strong free cash flow (>$700MM guide) and low leverage (<1.5x guided), which is giving the company tremendous optionality between acquisitions and buying back stock. We reiterate our Outperform on TFII.