TFI International Inc T.TFII

RBC

[retiredcf]

March 6, 2024

TFI International Inc.
Connecting The Dots: TFII flash read-through – US LTL companies provide Q1 update

NYSE: TFII | USD 150.52 | Outperform | Price Target USD 155.00

Sentiment: Positive

Our view. XPO, ODFL and SAIA (all not rated) each provided a Q1 QTD operating update this week which we view as a positive read- through for TFII. Both SAIA and XPO pointed to solid demand QTD as measured by weight per day (although weight per day at ODFL was down) and ODFL highlighted revenue ex. fuel up +7%. While the updates reflect company specific factors, we nevertheless view them as pointing to a solid pricing and demand environment, which we believe positions TFII well to drive further density at TForce Freight (and subsequent margin improvement) as it works through fixing its service issues. However, given the recent run- up in the shares we believe valuation is increasingly reflecting better margins and improved valuation post Truckload spinout.

What happened? XPO, ODFL and SAIA each provided a Q1 QTD operating update:

• XPO: LTL tonnage per day increased +3.5%, as compared with February 2023, attributable to a year-over-year increase of 5.8% in shipments per day and a decrease of 2.2% in weight per shipment.

• ODFL: Revenue per day increased +1.2% as compared to February 2023 due to an increase in LTL revenue per hundredweight that was slightly offset by a -3.0% decrease in LTL tons per day. The change in LTL tons per day was attributable to a -3.2% decrease in LTL weight per shipment that was partially offset by a +0.2% increase in LTL shipments per day. For the quarter-to- date period, LTL revenue per hundredweight and LTL revenue per hundredweight, excluding fuel surcharges, increased +3.7% and +7.1%, respectively, as compared to the same period last year.

• SAIA: In January 2024, LTL shipments per workday increased +11.8%, LTL tonnage per workday increased +3.3% and LTL weight per shipment declined 7.5% to 1,334 pounds. In February 2024, LTL shipments per workday increased +19.0%, LTL tonnage per workday increased +11.0% and LTL weight per shipment declined -6.7% to 1,311 pounds.