TFI International Inc.
Results below expectations; but LTL service improving and price inflecting
NYSE: TFII | USD 140.74 | Outperform | Price Target USD 173.00
Sentiment: Neutral
Our view: Overall, we are taking a neutral view on today's results. On one hand, results came in below consensus and below our estimate in each segment (see Exhibit 1 below). However, we believe this was somewhat priced in given the recent share price reaction following peer reporting in recent weeks. Management also flagged improving service in its LTL segment as driving tonnage growth, resulting in revenue per shipment before fuel surcharge increasing +12% - a key positive from the release in our view given that LTL has been an important driver of sentiment in the shares. Tomorrow on the call, we will look to management for commentary on a potential bottoming of freight volumes and pricing as well as for an update on the LTL outlook given recent service improvement.
First impression
Q1/24 results below. TFII reported adjusted EBITDA of $268MM, which compares to consensus $284MM and our $290MM. Adjusted EPS came in at $1.24, compared to consensus $1.36 (RBC: $1.34). FCF of $137MM was below consensus of $147MM, (RBCe: $150MM). See Exhibit 1.
• P&C – EBITDA below (EBITDA $34MM: RBC $24M). Revenue was down -8% y/y to $103MM (RBC: $114MM) mainly due to a decrease in weight per package and volume of packages. Results were below expectations on revenue and margin.
• LTL – EBITDA below (EBITDA $113MM: RBC $119MM). EBITDA came in below expectations on margin. We will look for further color on margins tomorrow on the call.
• TL – EBITDA below (EBITDA $90MM: RBC $98MM). Results were below our estimates due to both revenue and margin driven by lower volume and yield from a softer market.
• Logistics – EBITDA below (EBITDA $60MM: RBC $55MM). Results were below our expectations on lower revenue; but up y/ y due to M&A.
Conference call details
April 26 @ 8:30 AM EST; Dial-in #: 1-877-704-4453