TFI International Inc TFII

RBC

[retiredcf]

October 17, 2022

TFI International Inc.
Connecting The Dots: TFII flash read-through – Marten and XPO report Q3 results

NYSE: TFII | USD 97.61 | Outperform | Price Target USD 113.00

Sentiment: Neutral

Our view. Marten Transport (US-based trucking company; not covered) and XPO (LTL and Brokerage provider; not covered) today reported Q3 results, with XPO only releasing preliminary numbers. Marten reported EPS of $0.32 versus consensus $0.34 and XPO reported EBITDA of $348MM to $352MM, versus consensus $340MM. Overall, we view results from Marten and XPO as in line with consensus expectations for TFII, and therefore neutral to sentiment. Marten's TL operating income was down -11% in Q3 q/ q (on a +7% increase in drivers) versus consensus expectations for TFII's TL EBITDA of down -22% q/q. However, we highlight that Marten's results were negatively impacted by numerous one-time items, including prior period gains, Hurricane Ian and weak rail service, therefore reducing the quality of the read through in our view. On the other hand, XPO highlighted Q3 LTL revenue per hundredweight ex. fuel up +7% and volume down -3%, in line with our TFII estimate for a +3% increase in LTL revenue ex. fuel y/ y. XPO did note however that volume inflected positive in September, an incremental positive in our view. Overall, we view these results as roughly in line with our expectations for TFII into Q3; key however going forward will be colour on the outlook as North American transportation companies report results over the coming weeks (see our Q3 preview for TFII here).

What happened?

• Marten Transport today reported Q3 results. Marten reported a +23% improvement y/y in EPS to $0.32 for Q3/22, up from $0.26 for Q3/21. Excluding fuel surcharges, operating revenue improved +22% for Q3/22.

• XPO today reported preliminary Q3 results. XPO reported preliminary EBITDA of $348MM to $352MM versus consensus $340MM. XPO expects in Q3 in its LTL business a y/y increase in revenue per hundredweight, excluding fuel, of approximately +7% and y/y decrease in weight per day of approximately -2.9%, with weight per day improving each month and inflecting positive year-over-year in September.