TFI earnings fell in Q1, but market conditions creating M&A opportunities


TFI Worldwide suffered declines in income and web earnings within the first quarter, however feels optimistic circumstances are ripe for a significant acquisition later this yr.

The corporate posted Q1 earnings of $166.4 million (all figures U.S.), down from $219.8 million the identical quarter final yr on decrease freight volumes and non-recurring prices, together with $9.5 million in severance and early buyouts. On a convention name with analysts, chairman Alain Bedard mentioned the corporate has about 800-900 folks on layoff and has been providing early retirement packages as a bounce in cargo volumes isn’t anticipated this yr.

TFI truck
(Picture: TFI Worldwide)

First quarter web earnings of $111.9 million was down from $147.7 million a yr in the past. Earnings have been additionally affected by unfavorable international trade fluctuations and the lack of income ensuing from the sale of U.S. truckload division CFI final yr. The corporate lowered its steerage from about $8 per share to $7, as optimism wanes concerning the second half of this yr.

Bedard informed analysts the preliminary perception earlier this yr was that there’d be a strengthening in market circumstances within the second half.

“After we speak to prospects an increasing number of, stock remains to be excessive,” he mentioned, noting client spending is shifting again from items to journey. The main target within the meantime continues to be on price management, the place Bedard mentioned there’s nonetheless room for enchancment. This consists of optimizing the TForce Freight fleet for pure LTL operations.

UPS Freight modifications

“UPS Freight was run like a package deal firm hauling LTL,” he mentioned. “We’re altering that now.”

This implies changing small trailers with longer ones, dealing with bigger shipments, and decreasing the quantity of drive time between deliveries by means of community optimization. The corporate has completed altering over IT techniques so administration has higher visibility of prices and might enhance choice making, Bedard famous.

Whereas robust market circumstances put stress on revenues, Bedard mentioned additionally they create alternatives for M&A. And he teased an enormous deal in Canada that will probably be introduced later this yr.

“Purchase on unhealthy information, promote on excellent news,” Bedard mentioned. “There’s numerous unhealthy information proper now in transportation.”

The corporate is actively pursuing offers on either side of the border. The corporate has, in the meantime, bought about 50,000 of its shares in U.S. rival Arcbest, however Bedard mentioned that was achieved to remain below the 5% possession threshold that will require further reporting.

Canadian volumes for TFI Worldwide have been down about 9% within the quarter, whereas U.S. LTL shipments fell about 20%. “I’d say about half of that’s the market, the opposite half is all of the cleanup we’ve been doing since we purchased [UPS Freight],” Bedard mentioned of the U.S. decline.

The corporate has earmarked about $300 million for acquisitions and share buybacks this yr.

“We don’t wish to miss the boat, as a result of we like to purchase on unhealthy information,” Bedard reiterated. “Dangerous information is all the time good for TFI.”


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