Our view: Our early view on the quarter is very positive as solid margins drove better than expected EBITDA across the board. Particularly impressive was the adjusted TForce Freight O/R of 89.4%, an improvement of 130 bps vs. Q3, in what has historically been a seasonally weak quarter. Our view is that this sets the stage for robust EPS growth in 2022, well above current consensus expectations. Key from the call will be management's color on 2022 trends and outlook for M&A. Overall, an impressive result that reaffirms our positive view on the shares.
First impression:
Q4/21 results above consensus. TFII reported adjusted EBITDA of $319MM, well above consensus $272MM and our $277MM. The beat was driven by particularly strong results in LTL - though all segments were higher. Adjusted EPS came in at $1.57, above consensus $1.23 (RBC: $1.30). Highlights by segment as follows, with details in Exhibit 1:
• P&C – EBITDA better (EBITDA $43MM: RBC $32M). Revenue was down -3% Y/Y to $150MM (RBC: $145MM), but came in ahead of our expectations on solid tonnage. EBITDA margin of 29% was well above our 22%, an improvement of 615 bps y/y, driven by lower Materials & Services expense. We will look for further color on the lower expenses tomorrow on the call.
• LTL – EBITDA better (EBITDA $141MM: RBC $120MM). EBITDA came in better on robust margin improvement q/q. Particularly impressive was the adjusted TForce Freight O/R of 89.4%, in what has historically been a seasonally weak quarter. We will look to mgmt tomorrow on the call for indications on the sustainability of margins into 2022. Overall, very impressive LTL results.
• TL – EBITDA better (EBITDA $112MM: RBC $105MM). Revenue was up +16% Y/Y to $506MM (RBC: $488MM). Adjusted EBITDA margin was 22.1% vs. our 21.5% due to in our view a solid pricing backdrop and effective cost control.
• Logistics better (EBITDA $42MM: RBC $38MM). Revenue was up 33% y/ y to $428MM (RBC: $403MM) due to in our view solid pricing and strong demand. Adjusted EBITDA margin was also better at 9.9% vs. our 9.4%.
Share repurchases. Management accelerated share repurchases in the quarter which we view as positive from a FCF trend perspective; with room to expand M&A activity in the near-term if the opportunity exists.