TFI International Profits Increase in Fourth Quarter
TFI International Inc., formerly known as TransForce Inc., reported net income rose 3.9% in the fourth quarter of 2016, although the gains were slightly lower than the consensus forecast from industry analysts.
The Montreal-based company earned C$45.3 million in profits for the final three months of 2016, or 48 cents per share. In the prior year, the figure was C$43.6 million, or 44 cents. Revenue, including fuel surcharges, was $1.14 billion in the fourth quarter, up 11% from the same period in 2015. The trucking company reports earnings in Canadian dollars.
“2016 was a transformational year for the company. We made an important acquisition that bolstered our presence in the North American truckload market, including the growing U.S.-Mexico cross-border corridor,” said chairman and CEO Alain Bédard. “Going forward, almost half our total revenue will be derived in the U.S.”
Within the company, truckload business generated $457.9 million in revenue; package and courier $349.8 million; less-than-truckload revenue $177.1 million and logistics $65.6 million. The LTL division was the only one with lower revenue in the quarter on a year-over-year basis.
Operating income, or the amount left over after expenses were deducted from revenue, decreased in the truckload unit but increased in the other three divisions on a year-over-year basis. Truckload operating income was $28.4 million; package and courier $33.5 million; LTL $15.1 million and logistics $7.1 million.
For the full year, TFI’s revenue was essentially flat at $4.03 billion, less than 0.1% lower than 2015. Adjusted net income rose 5.1% to $195 million, or $2.04 per share. The figure was adjusted to exclude $490.8 million when TFI sold the waste management division in February 2016.
During a extensive question and answer session, Bédard discussed 2016 results, the U.S. truckload market outlook in 2017, U.S. President Trump’s economic and trade policies, and whether TFI will continue last year’s rapid pace of acquisitions.
“If you look at the results in 2016, in the U.S., you got great companies like Heartland, Knight, and those guys were down 20%, 30%, 40% year-over-year in 2016,” he said. “If you look at TFI for 2016, you’d say, Alain, you’re flat. Yeah. Sure, we’re flat because we’re behind about C$25 million, C$28 million in truckload, but we’ve compensated that with our [package and courier services] and a little bit through our LTL.”
Bédard echoed the message from other U.S. truckload carriers that the first two quarters will be difficult, but the second half of 2017 and 2018 will be better because of the electronic logging mandate and renewed optimism about the economy and pro-business policies in Washington.
“A lot of the shippers are starting to get nervous because, if Mr. Trump’s economy starts to pick up and if he’s able to grow by 3% the GDP of the U.S., for sure, I mean, that will put pressure on truckers, and that will be a changing of the environment on the U.S. truckload market,” he said.
Meanwhile, Bill Carter was appointed vice president of logistics at CFI, and Shepard Dunn as vice president of sales. Dunn, former president and CEO with Bestway Express Inc., is a vice-president at-large and executive committee chairman for American Trucking Associations. He’s also a former chairman at the Truckload Carriers Association.
TFI bought the former Con-way Truckload from XPO Logistics on Oct. 27, 2016, and renamed it CFI, a nod to its original name: Contract Freighters Inc.
“CFI is a diamond of a name, I want to use that,” Bédard said. “Bringing back the CFI name is helping us because it was a quality name.”
As far as additional mergers and acquisitions, Bédard told analysts that he’s working on a few deals that could be announced in the next six to 12 months.
“We believe that you buy on bad news and you sell on good news. We’ve done that many times, and there’s lots of bad news right now in the U.S. There’s lots of unknown. There’s lot of instability for now. So that maybe is the right time to make a move,” he said. “We’re in discussion with a lot of people, and it’s just the matter of finding the right fit, the right culture. It’s the people. We’re not really looking too much at fixer-upper guys.”
TFI ranks No. 10 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
