TFI International Inc.
(TFII-T) C$121.81
Q2/22 First Look Event
After market close yesterday, TFI reported Q2/22 Adjusted diluted EPS of $2.61 ($2.41 excl. gain on equipment disposition) compared with TD/consensus at $2.02/ $1.80. Adjusted EBITDA of $442 million ($418 million excl. gain on equipment disposition) compared with TD/consensus at $364/$350 million.
Impact: POSITIVE
We view the in line revenue, higher-than-forecast Adjusted EBITDA across most segments and strong adjusted EPS positively. Adjusted EBITDA margin was stronger-than-expected, primarily due to the Truckload and P&C segments. TFI's share price has rebounded since reporting Q1/22 despite ongoing consumer spending and broader economic uncertainty. We believe that these results justify the rebound and, subject to the company's conference call, could provide a catalyst for further appreciation.
Package and Courier: Revenue ex-fuel surcharges decreased 14% to $125 million, below our $138-million forecast. Adjusted EBITDA increased 21% y/y to $43.6 million (34.8% margin), above our $36.7 million (26.6% margin) forecast.
Less-than-Truckload: Revenue ex-fuel surcharges of $870 million was in line with our forecast of $877 million. Contribution from Canada was stronger-than-forecast while U.S. LTL was 3% below. Adjusted EBITDA was $172 million (19.7% margin), in-line our $170 million (19.4% margin) forecast.
Truckload: Revenue ex-fuel surcharges increased 16% to $557 million, in line with our forecast. U.S. volume was higher-than-forecast, and Canada in line. Adjusted EBITDA (excl. gain on sale of equipment disposition) increased 41% y/y to $154 million above our $129 million forecast.
Logistics: Revenue ex-fuel surcharges increased 12% to $454 million, in line with our forecast. Adjusted EBITDA increased 16% y/y to $52.3 million (11.5% margin), slightly above our $49.7 million forecast.
FCF (TFI definition) was $310 million (up 16% y/y) versus our forecast of $330 million. The y/y increase was largely due to cash earnings and proceeds from the sale of assets. FCF (ex-proceeds from asset sales) declined 27% y/y due to higher capex and significantly greater cash requirements for working capital.
Outlook: The only change in outlook language was a shift from suggesting that the North American economy has the 'potential' for slowing to 'economic growth has recently slowed'. This should not be surprising to investors. As usual, we expect updated earnings guidance during the conference call.