TFI International Inc T.TFII

RBC Upgrade

[retiredcf]

Their upside scenario target is US$161.00. GLTA

February 8, 2022

Outperform

NYSE: TFII; USD 96.56; TSX: TFII

Price Target USD 125.00 ↑ 124.00

TFI International Inc.

Win-Win: Very strong Q4 complemented with better-than-expected 2022 guide

Our view: TFII delivered a strong Q4 that was well above expectations; and later on the call mgmt provided new 2022 guidance that was also solidly above (and ultimately may prove conservative). While meaningful deals were deferred ~12-18 months, we like mgmt's strategy to focus on the significant market opportunity that currently exists — particularly around price, growth and continued synergy capture from ongoing integration. Weview this strategy as having inherently lower risk, and we view it favorably as a result. TFII remains a top idea, and we reiterate our OP rating.

Key Points
Q4/21 results well ahead. Ajdusted EBIDTA of 319MM came in well above consensus $272MM and our $277MM. Details of the segmentedperformance shown in Exhibit 1 demonstrate that the beat was driven by particularly strong results in LTL — though all segments were higher. This led adjusted EPS to come in at $1.57, above consensus $1.23 (RBC: $1.30). Overall a very solid quarter for TFII.

New guidance comes in above expectations. Mgmt provided new 2022  consensus (better even at the lower end) of $6.15 (RBC: $6.08) coming into the quarter. Mgmt also provided FCF guidance of >$700MM (consensus: lower. Furthermore, the tone on the call was suggestive that the guidance is conservative, which historically guidance has indeed been the case. Accordingly, we are encouraged by the guidance provided and see upside particularly in the company's LTL division.

Valuation.Overall, while management deferred larger M&A potential, they pointed to a significant opportunity on internal (integration) and market-based (pricing and volume) opportunities that combined to result in a better-than-expected 2022 guide, and ultimately will likely prove to be conservative. We continue to flag TFII as one of our top names in freight transportation and reiterate our Outperform rating and move our price target to $125 from $124.