Mixed picture for TFI: Net income down, OR in key segments up

Canada’s TFI International posted a decline in most key financial metrics in the second quarter of this year, though its truckload (TL) and less-than-truckload (LTL) divisions posted gains in their operating ratio.

Overall, the company’s net income of C$69.7 million (US$52.27 million) was down from C$100.2 million in the second quarter of 2020. Total revenue during that period dropped to C$1.1 billion from $1.33 billion, and operating income for the company as a whole declined to C$131.5 million from C$149 million.

The company’s non-GAAP earnings per share of C$1.04 beat consensus forecasts by C$0.49, according to SeekingAlpha. The GAAP EPS of C$0.79 beat consensus forecasts by C$0.30. 

The company today is different than it was just at the end of the first quarter. During the second quarter, TFI acquired Gusco, a customs-bonded carrier of dry and temperature-controlled commodities that operates in the greater Toronto area. It also is capitalizing on the bankruptcy of Comcar by having acquired CT Transportation and some of the assets of MCT Transportation, both of which were owned by Comcar. It acquired the courier division of RR Donnelly in the first quarter.

Despite the drop in revenue, operating income at the two biggest segments at TFI saw increases. TL operating income was up 3% from the second quarter of 2019, to $69.5 million, while the LTL segment’s operating income was up 10% to $33.4 million.

Conventional U.S. truckload operations are the biggest part of TFI’s truckload segments, recording about 83.85 million miles. The OR in that segment weakened to 91.8% from 90.2%. But the other two parts of the TL business performed better. OR at the Canadian-based conventional operations improved to 86.5% from 87.1%, even though mileage for the quarter slid to 20.85 million miles from 26.15 million miles. The LTL’s segment-adjusted operating ratio took a big jump, up to 78.9% from 86.2% a year ago. The LTL’s segment-adjusted operating ratio took a big jump, up to 78.9% from 86.2% a year ago.

Truckload operating income was up 3% from the second quarter of 2019, coming in at C$69.5 million. That operating income figure is more than twice the size of the next biggest segment, LTL, which saw its operating income rise 10% to C$33.4 million.  

In its prepared statement accompanying the earnings release, TFI said the roughly 12% decline in company operating income to C$131.5 million was caused by a COVID-19-related drop in volumes as well as a one-time revenue gain a year ago. That was offset in part, the company said, by “strong execution across the organization, an asset-light approach and cost efficiencies,” which would show up in the improved OR despite the drop in miles driven and revenue.

Truckload revenue net of fuel declined to C$471.2 million from C$570.3 million, a drop of about 17%. But the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin in that business rose to 28% from 22.4% a year ago as adjusted EBITDA rose to C$131.9 million from C$127.9 million.

TFI’s logistics segment saw its revenue before fuel surcharge rise to C$264.9 million from $244.9 million last year. Adjusted EBITDA in that business climbed to C$34.4 million from C$29.4 million. 

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