Tfi International Inc ((TSE:TFII)) has held its Q4 earnings call. Read on for the main highlights of the call.
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TFI International’s recent earnings call painted a picture of resilience amidst ongoing challenges. The company demonstrated robust free cash flow and revenue growth, particularly in the LTL segment, despite significant declines in operating income and net income. However, there remains a cautious outlook due to persistent market uncertainties.
Strong Free Cash Flow
TFI International reported a strong free cash flow of more than $200 million for the quarter, bringing the total to over $750 million for the year. This marks the third consecutive year the company has achieved such figures, showcasing its ability to navigate industry challenges effectively.
Revenue Growth
The company’s total revenue before fuel surcharge increased by 9% year-over-year, reaching $1.8 billion. This growth was largely attributed to the acquisition of Daseke, which has helped bolster TFI’s financial performance.
LTL Segment Performance
The LTL segment showed resilience with a 10% increase in revenue before fuel surcharge, totaling $737 million. Despite higher accident-related costs, the operating income in this segment rose by 34%, highlighting the company’s strength in this area.
Debt Reduction
TFI International made significant progress in reducing its debt, cutting it by $156 million during the quarter. This effort has led to a funded debt-to-EBITDA ratio of 2.1 by the end of the year.
Increased Dividend and Share Repurchase
The Board declared a 13% increase in the quarterly dividend to $0.45 per share. Additionally, the company repurchased $42.4 million worth of shares, reflecting its commitment to returning value to shareholders.
Decline in Operating Income
Operating income fell from $198 million to $160 million year-over-year, with the operating margin decreasing from 11.8% to 8.8%. This decline indicates some of the financial pressures the company is currently facing.
Reduced Adjusted Net Income
Adjusted net income saw a decline, dropping to $102 million from $148 million in the previous year. The adjusted EPS also fell from $1.71 to $1.19, suggesting challenges in maintaining profitability.
Challenges in U.S. LTL Segment
The U.S. LTL segment faced significant challenges, with high accident-related expenses and a decrease in shipment volumes impacting its profitability.
Logistics Revenue Decline
The logistics segment experienced a revenue decline, falling to $410 million from $472 million. Operating income in this segment also decreased, reflecting broader industry challenges.
Ongoing Freight Volume Slump
The industry-wide slump in freight volumes continued to affect TFI International’s overall performance and outlook, contributing to a cautious future perspective.
Forward-Looking Guidance
Looking ahead, TFI International expressed a cautious outlook for 2025 due to ongoing freight recession challenges. Although no formal guidance was provided, the company anticipates another difficult year with expected EPS similar to 2024, ranging between $5.75 and $6.00.
In summary, TFI International continues to demonstrate resilience with strong free cash flow and revenue growth despite industry challenges. However, the decline in operating income and net income, coupled with ongoing U.S. LTL segment issues and logistics revenue decline, underscore the cautious outlook. The company’s strategic initiatives and cost management will be crucial in navigating the uncertain market conditions.
