TFI International Inc.
(TFII-T) C$128.71
Q3/22 First Look Event
After market close yesterday, TFI reported Q3/22 adjusted diluted EPS of $2.01 ($2.06 excl. non-recurring) compared with TD/consensus at $1.91/$1.97. Adjusted EBITDA of $348 million ($354 million excl. non-recurring) compared with TD/ consensus at $346/$364 million. Organic revenue growth (incl. fuel surcharges) was 4.7% vs our forecast of 4.9%.
Impact: MIXED
We view the 30% dividend increase and strong FCF positively, while the adjusted EBITDA and EPS should be viewed as neutral when considering our estimates and consensus. We believe that commentary which reflects growing conservatism regarding economic headwinds is prudent and should not be surprising to investors. We believe that investors with a 12-month view should focus on the 38% adjusted EPS growth, strong FCF, balance sheet strength, M&A potential and company specific initiatives that TFI can use to limit the impact of broader economic conditions. However, we realize that the market and short-term share price response may be sensitive to language that acknowledges the potential for slowing or negative growth in certain markets and service segments due to economic conditions.
Package and Courier: Revenue ex-fuel surcharges decreased 10% y/y to $120 million, below our $133-million forecast. Adjusted EBITDA increased 33% y/y to $40.4 million (33.6% margin), above our $32.8 million.
Less-than-Truckload: Revenue ex-fuel surcharges of $817 million was slightly below our forecast of $831 million. Adjusted EBITDA was $136 million when excluding the gain on equipment disposition (16.7% margin), below our $164 million (19.7% margin) forecast.
Truckload: Revenue ex-fuel surcharges increased 4% y/y to $510 million, above our $452-million forecast. Adjusted EBITDA (excl. non-recurring impact) increased 43% y/y to $145 million (28.3%), above our $119 million (26.3%) forecast.
Logistics: Revenue ex-fuel surcharges increased 4% to $424 million, in line with our forecast. Adjusted EBITDA (excl. non-recurring impact) increased 18% y/y to $50.0 million (11.8% margin), above our $44.8 million forecast.
FCF (TFI definition) was $292 million (up 73% y/y) versus our forecast of $216 million. Cash earnings and working capital inflows were in-line with our forecast with the difference due primarily to lower-than-expected capex.
Outlook: Management typically provides an update to full year guidance during the conference call.