• Revenue Before Fuel Surcharge: $1.8 billion, up 9% year-over-year.
• Operating Income: $160 million, down from $198 million.
• Operating Margin: 8.8%, down from 11.8% the previous year.
• Adjusted Net Income: $102 million, down from $148 million.
• Adjusted EPS: $1.19, down from $1.71.
• Cash from Operating Activity: $262 million, down from $303 million.
• Free Cash Flow: $208 million, down from $244 million.
• LTL Revenue Before Fuel Surcharge: $737 million, down 10%.
• LTL Operating Income: $70 million, up 34%.
• Truckload Revenue Before Fuel Surcharge: $693 million, up from $399 million.
• Truckload Operating Income: $60 million, up from $51 million.
• Logistics Revenue Before Fuel Surcharge: $410 million, down from $472 million.
• Logistics Operating Income: $43 million, down from $55 million.
• Debt Reduction: Reduced by $156 million.
• Dividend Increase: 13% increase to $0.45 per share.
• Share Repurchase: $42.4 million worth of shares repurchased.

• Warning! GuruFocus has detected 5 Warning Signs with VTLE.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TFI International Inc (NYSE:TFII) reported strong free cash flow of more than $200 million during the fourth quarter, bringing the full-year total to over $750 million.
• The company successfully reduced its debt by $156 million during the quarter, ending the year with a funded debt-to-EBITDA ratio of 2.11.
• TFI International Inc (NYSE:TFII) completed a bolt-on acquisition and increased its quarterly dividend by 13% to $0.45 per share.
• The acquisition of Daseke contributed to a 9% growth in total revenue before fuel surcharge, reaching $1.8 billion for the fourth quarter.
• The company is planning to redomicile from Canada to the US to better align with its shareholder base and commercial presence, which could offer strategic advantages.

Negative Points

• Operating income for the fourth quarter decreased to $160 million from $198 million, with the operating margin dropping to 8.8% from 11.8% the previous year.
• Adjusted net income fell to $102 million from $148 million, and adjusted EPS decreased to $1.19 from $1.71.
• The company faced unusually high accident-related expenses, which were about $9 million higher than the prior year period.
• TFI International Inc (NYSE:TFII) experienced a decline in logistics revenue, which was down from $472 million to $410 million year-over-year.
• The company is facing challenges in its US LTL operations, with a high claims ratio and issues with cost management and density.

Q & A Highlights

Q: How much of the path to achieving $8 of normalized EPS is due to idiosyncratic actions versus waiting for the cycle recovery? A: Alain Bedard, CEO, stated that there is still significant work to be done on cost reduction, particularly at TForce Freight, where costs are too high. The company is focusing on reducing fleet costs and improving maintenance costs per mile. Despite the challenging environment, they aim to achieve $7 to $7.25 EPS in a normalized cost environment without market improvement.

Q: Did TFI International provide guidance for 2025? A: Alain Bedard mentioned that the start of the year is very difficult and foggy, making it challenging to provide guidance. The company is still in a deep freight recession, and volumes are not there, indicating a difficult 2025.

Q: What are the specific steps TFI is taking to improve US LTL margins in 2025? A: Alain Bedard explained that the company is losing small and medium-sized customers, which have the best margins, and replacing them with lower-margin accounts. TFI is focusing on improving sales to small and medium-sized accounts and reducing costs. They are also considering M&A to improve density and are implementing software to optimize P&D operations.

Q: Can you explain the dynamics and changes in the LTL segment, including the addition of trucks and the drop in length of haul? A: Alain Bedard clarified that the active fleet size remains consistent, and the addition of trucks is due to replacing older trucks. The length of haul has not changed significantly, and the focus is on managing labor costs and improving revenue per hundredweight.

Q: What are the implications of TFI International's redomicile to the US? A: Alain Bedard stated that the redomicile is an evolution of TFI, aligning with its US shareholder base and commercial presence. It will help with certain regulatory aspects, such as dealing with the US Department of Defense. The company will not be moving its head office or delisting in Canada.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.