Post by
retiredcf on Oct 28, 2022 11:10am
CIBC
Have a US$127.00 target. GLTA
EQUITY RESEARCH
October 27, 2022 Flash Research
TFI INTERNATIONAL INC.
Q3 Results Operationally In Line; 30% Dividend Bump
Key Takeaway: Neutral impact. TFII reported Q3 results that were in line
with expectations. The company also announced a 30% dividend increase, above our expectations (we modelled a 10% increase). TFII is hosting a conference call on October 28 at 8:30 a.m. ET.
Q3 Recap – Operationally In-line Results: TFII reported Q3 results that
were operationally in line after adjusting for a number of non-recurring items. We provide a divisional recap in the exhibit herein.
- Revenue: Net revenue came in at $1.9B, flat Y/Y from $1.9B the year
prior and versus our estimate of $1.9B.
- Operating Income: Operating income came in at $318MM, up 66% Y/Y
from $192MM the year prior. The increase in operating income was
impacted by non-recurring items – a gain on the sale of CFI’s TL, Temp
Control and Mexican non-asset logistics business of $75.7MM, an
$11.4MM charge reflecting the settlement of a legal claim in California in
TFII’s Logistics segment, and the write-off of software of $3.9MM.
Excluding these one-offs, adjusted operating income was $258MM, in
line with our estimate of $262MM and consensus of $256MM for the
quarter.
- EPS: Adj. FD EPS came in at $2.01, up from $1.46 the year prior and
versus our estimate of $2.11 (cons. $1.97).
- FCF: FCF (CFO less net capex) in Q3 came in at $292MM, up from
$169MM the year prior and versus our estimate of $328MM (cons.
$277MM).
Tuck-in Acquisitions Continue In The Quarter: TFII disclosed that it
acquired Transport St-Amour, HO-RO Trucking Company, St-Michel
Logistique, and LLT Transport. This is in line with TFII’s tuck-in acquisition strategy to drive density and expand its network reach. TFII spent $79MM in acquisitions in Q3.
30% Dividend Bump; Active On The NCIB: Concurrent with Q3 results,
TFII raised its quarterly dividend to $0.35/share, a 30% increase. We were modelling a 10% bump, while consensus was for an 11% increase. Under the recently expanded NCIB which allows TFII to repurchase ~8.8MM common shares, it has repurchased ~6.5MM common shares, of which ~2.1MM were repurchased in Q3 for $199MM.
Balance Sheet Position: At the end of Q3, TFII’s funded debt to EBITDA
ratio was 1.00x versus 1.32x last quarter (covenant <3.5x) and EBITDAR
coverage ratio was 6.04x versus 6.34x last quarter (covenant >1.75x).
Conference Call Details: TFII is hosting a call at 8:30 a.m. ET on October
28. Dial-in number is 877-704-4453 or 201-389-0920.