Post by retiredcfon Feb 08, 2022 12:26pm
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Post# 34409050
CIBC
CIBCCurrently have a US$130 target. GLTA
TFI INTERNATIONAL INC.
Q4 First Pass: Strong End To The Year As U.S. LTL
Outperforms
Key Takeaway: Positive impact. TFII reported strong Q4 results,
outperforming the top end of consensus expectations. We continue to see
the company benefiting from its recent acquisitions, strong yield environment and expense management. TFII is hosting a call at 8:30am ET on February 8.
Q4 Recap – Ahead Of Expectations: TFII reported strong Q4 results which
were ahead of expectations. We provide a divisional recap in the exhibit
herein.
- Revenue: Net revenue came in at $1.89B, up from $1.05B the year prior
and versus our estimate of $1.75B (cons. $1.81B, ranging from $1.75B to
$1.86B). The main variance versus our estimate was in LTL.
- Operating Income: Operating income came in at $215MM, up from
$117MM the year prior and versus our estimate of $176MM (cons.
$169MM, ranging from $162MM to $179MM). TFII’s operating income
includes a ~$14MM gain in asset sales, predominantly in TL. We had
included asset sales of $3MM in our estimates. The driver of the beat
was LTL, with operating income coming in at $103MM versus our
estimate of $67MM, as well as from P&C which posted an operating
income of $37MM versus our estimate of $29MM. LTL outperformed on
the back of stronger margins with an operating ratio of 87.4% versus our
estimate of 90.5%. The U.S.LTL OR came in at 89.4%, a sequential
improvement from Q3’s 90.7%. Canadian LTL also saw sequential
improvement coming in at 78.3%, down from 80.3% in Q3. We had
assumed U.S. LTL OR would be in the mid-90% range with Canadian
LTL OR staying at ~80%. The margin expansion opportunity within U.S.
LTL is a key driver of TFII’s earnings growth over the next couple of
years as the company targets a mid-80% OR in 2023.
- EPS: Adjusted FD EPS came in at $1.57, up from $0.98 the year prior
and versus our estimate of $1.40 (cons. $1.24, ranging from $1.13 to
$1.40).
- FCF: FCF (CFO less net capex) in Q4 came in at $121MM, down from
$135MM the year prior and versus consensus of $128MM and us at
$104MM. Note, we had estimated FCF of $83.5MM backing out cash
lease payments. Cash lease payments in the quarter came in at
$32.3MM versus our estimate of $20MM.
Liquidity Update: TFII’s leverage ratio was 1.51x, down from 1.58x at the
end of Q3. At December 31, 2021, TFII had $798MM of availability on its
revolver.