TFI International Inc.
TSX : TFII
OTCQX : TFIFF

TFI International Inc.

October 26, 2017 17:00 ET

TFI International Announces 2017 Third Quarter Results

MONTREAL, QUEBEC--(Marketwired - Oct. 26, 2017) - TFI International Inc. (TSX:TFII)(OTCQX:TFIFF)

  • Revenue before fuel surcharge from continuing operations up 17%, to $1.05 billion
  • Adjusted EBITDA from continuing operations* up 13%, to $128.2 million
  • Gain on the sale of property of $70.1 million
  • Net income from continuing operations of $98.8 million, or $1.07 per diluted share
  • Adjusted net income from continuing operations* of $48.8 million, or $0.53 per diluted share
  • Solid cash flow generation used to reimburse $175 million in long-term debt

* This is a non-IFRS measure. For a reconciliation, please refer to the "Non-IFRS Financial Measures" section below.

TFI International Inc. (TSX:TFII)(OTCQX:TFIFF), a North American leader in the transportation and logistics industry, today announced its results for the third quarter ended September 30, 2017.

"We constantly strive to create and unlock shareholder value at TFI International. During the third quarter, we remained focused on operational efficiencies, executed the sale and leaseback of select real estate assets and produced strong cash flow," said Alain Bédard, Chairman, President and Chief Executive Officer. "We are encouraged by recent improvements in the U.S. truckload market, which should allow us to increase contract renewal rates as we move through 2018."

"In the Package and Courier segment, our focus on business mix and cost reduction yielded a slightly higher margin despite a volume decline. Our Logistics activities generated positive revenue growth and stable margins, and while Less-Than-Truckload activities in Eastern Canada saw lower volumes from the U.S., we are proactively adapting supply to demand," Mr. Bédard continued. "By utilizing a portion of our strong cash flow to reduce debt, we further improved our financial position which in turn allows us to invest in high-return activities, while the renewal of our normal course issuer bid permits us to return excess cash to shareholders."

Financial highlights Quarters ended
Sept. 30
Nine months
ended Sept. 30
(in millions of dollars, except per share data) 2017 2016 2017 2016
Total revenue from continuing operations 1,154.4 975.5 3,558.5 2,887.5
Revenue before fuel surcharge from continuing operations 1,048.2 897.4 3,222.8 2,668.0
Adjusted EBITDA from continuing operations1 128.2 113.8 383.5 314.4
Operating income from continuing operations 60.5 69.3 177.0 179.5
Net cash from operating activities from continuing operations 128.9 88.3 256.5 228.1
Adjusted net income from continuing operations1 48.8 53.5 137.9 136.8
Per share - diluted1 ($) 0.53 0.57 1.50 1.42
Net income from continuing operations 98.8 51.1 37.8 110.7
Per share - diluted ($) 1.07 0.54 0.41 1.15
Net income2 98.8 51.5 37.8 594.2
Per share - diluted ($) 1.07 0.55 0.41 6.18
Weighted average number of shares ('000s) 89,876 92,218 90,830 94,470
1 This is a non-IFRS measure. For a reconciliation, please refer to the "Non-IFRS Financial Measures" section below.
2 Includes net income from discontinued operations, of which a $490.8 million after-tax gain on the sale of the Waste Management segment was recorded in the first quarter of 2016.

THIRD-QUARTER RESULTS

Total revenue from continuing operations reached $1.15 billion, up 18% from last year. Net of fuel surcharge, revenue from continuing operations rose 17% to $1.05 billion. The increase reflects the contribution from business acquisitions, mainly CFI, completed on October 27, 2016, partially offset by slightly lower business volume for existing operations and unfavourable currency variations.

Operating income from continuing operations was $60.5 million, or 5.8% of revenue before fuel surcharge, versus $69.3 million a year ago, or 7.7% of revenue. The decrease mainly reflects difficult conditions in the U.S. domestic TL market, partially offset by efficiency gains in other segments. TFI International also incurred one-time costs of $3.2 million related to the integration of CFI, mainly in regards to fleet rebranding and renewal programs.

Including the previously announced $70.1 million gain ($59.7 million, net of tax) on the sale of property, net income from continuing operations was $98.8 million, or $1.07 per diluted share, versus $51.1 million, or $0.54 per diluted share, a year ago. Adjusted net income from continuing operations, which excludes amortization of intangible assets related to business acquisitions, net changes in the fair value of derivatives, net foreign exchange gain or loss, gain or loss on sale of property and impairment of intangible assets, net of tax, amounted to $48.8 million, or $0.53 per diluted share, compared with $53.5 million last year, or $0.57 per diluted share. Net income reached $98.8 million, or $1.07 per diluted share, versus $51.5 million, or $0.55 per diluted share last year.

NINE-MONTH RESULTS

For the first nine months of 2017, total revenue from continuing operations reached $3.6 billion, versus $2.9 billion in the first nine months of 2016. Net of fuel surcharge, revenue from continuing operations reached $3.2 billion, up from $2.7 billion last year. Operating income from continuing operations totalled $177.0 million, or 5.5% of revenue before fuel surcharge, compared with $179.5 million and 6.7% last year.

Net income from continuing operations was $37.8 million, or $0.41 per diluted share, versus $110.7 million, or $1.15 per diluted share last year. In addition to the aforementioned gain on sale of property, this year's net income also includes impairment charges totalling $143.0 million (138.4 million, net of tax) recorded in the first half of the year. Adjusted net income from continuing operations stood at $137.9 million, or $1.50 per diluted share, up from $136.8 million, or $1.42 per diluted share last year. Net income was $37.8 million, or $0.41 per diluted share, versus net income of $594.2 million, or $6.18 per diluted share last year. Last year's net income included a $490.8 million after-tax gain on the sale of the Waste Management segment.

SEGMENTED RESULTS FROM CONTINUING OPERATIONS

(in millions of dollars) Quarters ended Sept. 30 Nine months ended Sept. 30
2017 2016 2017 2016
$ $ $ $
Revenue1
Package and Courier 305.5 321.2 950.0 949.3
Less-Than-Truckload 198.7 185.4 604.4 550.8
Truckload 483.2 346.3 1,485.3 1,039.9
Logistics 72.9 58.1 220.5 171.0
Eliminations (12.1 ) (13.5 ) (37.4 ) (42.9 )
Total 1,048.2 897.4 3,222.8 2,668.0
$ % of Rev.1 $ % of Rev.1 $ % of Rev.1 $ % of Rev.1
Operating Income (Loss)
Package and Courier 31.4 10.3 % 32.8 10.2 % 88.6 9.3 % 80.8 8.5 %
Less-Than-Truckload 13.4 6.8 % 14.7 8.0 % 38.1 6.3 % 34.6 6.3 %
Truckload 16.6 3.4 % 24.7 7.1 % 54.7 3.7 % 73.5 7.1 %
Logistics 6.3 8.7 % 5.0 8.7 % 19.3 8.8 % 14.6 8.6 %
Corporate (7.2 ) (8.0 ) (23.7 ) (23.9 )
Total 60.5 5.8 % 69.3 7.7 % 177.0 5.5 % 179.5 6.7 %
Note: due to rounding, totals may differ slightly from the sum.
1 Revenue before fuel surcharge.

CASH FLOW AND FINANCIAL POSITION

During the third quarter, TFI International generated net cash flow from operating activities from continuing operations of $128.9 million, versus $88.3 million last year. The Company used this cash flow, combined with a portion of the proceeds from the sale of real estate, to reimburse $175.4 million in long-term debt, while returning additional funds to shareholders through the payment of dividends amounting to $17.1 million and the repurchase of common shares for consideration of $8.5 million.

TFI International's long-term debt to equity ratio stood at 1.11 as at September 30, 2017, down from 1.29 three months earlier.

In the first nine months of 2017, the net cash flow from operating activities from continuing operations amounted to $256.5 million, versus $228.1 million last year.

CONFERENCE CALL

TFI International will hold a conference call on Friday, October 27, 2017 at 9:00 a.m. Eastern Time, to discuss these results. Business media are also invited to listen to the call. Interested parties can join the call by dialling 1-877-223-4471. A recording of the call will be available until midnight, November 10, 2017, by dialling 1-800-585-8367 or 416-621-4642 and entering passcode 94510353.

ABOUT TFI INTERNATIONAL

TFI International Inc. is a North American leader in the transportation and logistics industry, operating across the United States, Canada and Mexico through its subsidiaries. TFI International creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TFI International umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TFI International companies service the following segments:

  • Package and Courier;
  • Less-Than-Truckload;
  • Truckload;
  • Logistics.

TFI International Inc. is publicly traded on the Toronto Stock Exchange (TSX:TFII) and the OTCQX marketplace in the U.S. (OTCQX:TFIFF). For more information, visit http://www.tfiintl.com.

FORWARD-LOOKING STATEMENTS

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of TFI International. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for TFI International's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

NON-IFRS FINANCIAL MEASURES

This press release includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by International Financial Reporting Standards (IFRS) and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of the non-IFRS measures used in this press release and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided below.

Adjusted EBITDA from continuing operations

Adjusted EBITDA from continuing operations is calculated as net income or loss from continuing operations before finance income and costs, income tax expense, depreciation, amortization, gain or loss on sale of land and buildings and assets held for sale and impairment of intangible assets. Management believes adjusted EBITDA from continuing operations to be a useful supplemental measure. Adjusted EBITDA from continuing operations is provided to assist in determining the ability of the Company to generate cash from its operations.

Adjusted EBITDA from continuing operations Quarters ended Sept. 30 Nine months ended Sept. 30
(unaudited, in thousands of dollars) 2017 2016 2017 2016
Net income from continuing operations 98,774 51,069 37,796 110,672
Net finance costs 16,626 6,681 47,578 43,616
Income tax expense 15,245 14,674 26,971 31,826
Depreciation of property and equipment 52,079 31,862 161,259 96,446
Amortization of intangible assets 15,567 12,672 45,251 38,414
(Gain) loss on sale of land and buildings 17 (3,167 ) 162 (6,566 )
Gain on sale of assets held for sale (70,115 ) - (78,534 ) -
Impairment of intangible assets - - 142,981 -
Adjusted EBITDA from continuing operations 128,193 113,791 383,464 314,408

Adjusted net income from continuing operations and adjusted earnings per share from continuing operations, basic or diluted

Adjusted net income from continuing operations is calculated as net income or loss excluding amortization of intangible assets related to business acquisitions, net changes in the fair value of derivatives, net foreign exchange gain or loss, gain or loss on sale of land and buildings and assets held for sale, impairment of intangible assets, and income or loss from discontinued operations, net of tax. Adjusted earnings per share from continuing operations, basic or diluted, is calculated as adjusted net income from continuing operations divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income from continuing operations and adjusted earnings per share from continuing operations to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. The Company excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding these items does not imply they are necessarily non-recurring.

Adjusted net income from continuing operations Quarters ended Sept. 30 Nine months ended Sept. 30
(unaudited, in thousands of dollars, except per share data) 2017 2016 2017 2016
Net income 98,774 51,503 37,796 594,240
Amortization of intangible assets related to business acquisitions, net of tax 9,870 7,701 28,224 23,510
Net change in fair value of derivatives, net of tax (494 ) (2,790 ) (1,231 ) 5,614
Net foreign exchange loss, net of tax 428 230 1,833 2,430
Gain on sale of land and buildings and assets held for sale, net of tax (59,735 ) (2,727 ) (67,134 ) (5,444 )
Impairment of intangible assets, net of tax - - 138,438 -
Net income from discontinued operations - (434 ) - (483,568 )
Adjusted net income from continuing operations 48,843 53,483 137,926 136,782
Adjusted earnings per share from continuing operations - basic 0.54 0.58 1.52 1.45
Adjusted earnings per share from continuing operations - diluted 0.53 0.57 1.50 1.42

Note to readers: Unaudited condensed consolidated interim financial statements and Management's Discussion & Analysis are available on TFI International's website at http://www.tfiintl.com.

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