TFI International Inc. Q1 FY2026 earnings call

• Strong financial performance with adjusted diluted EPS of 69 cents, generated over $800 million free cash flow last year and $124 million in first quarter. - Streamlined reporting approach for segments. - Improvement in LTL shipments as weather improved, with March shipments stronger than January and February. - Growth in truckload revenue per truck per week and reduction in truck count, rapid sequential growth from data center construction. - Sequential growth in logistics with operating income up year-over-year and margin improved.

LTL: Revenue before fuel surcharge $656 million, down 3% year-over-year, adjusted operating ratio 95.3, total operating income $31 million, return invested capital $11.6 million. Truckload: Revenue before fuel surcharge $673 million, 39% of segmented revenue, grew 9% revenue per truck per week excluding fuel surcharge, reduced truck count 7%, quarterly operating income $56 million, operating ratio 92.7, return on invested capital 6%. Logistics: $388 million revenue, 23% of segmented revenue, up slightly year-over-year and 8% sequentially, operating income $34 million, margin 8.9%, return on invested capital 12.4.

Expected adjusted diluted EPS for Q2 2026 in the range of $1.50 to $1.60. Net capex excluding real estate for full year expected in the range of $225 million to $250 million, unchanged from previous expectation. Guidance for full year not provided due to market instability.

• Market instability affecting full-year guidance. - Uncertainty regarding trade agreements like USMCA. - Impact of fuel prices on free cash flow and profit and loss. - Need for continued improvement in service levels and margins in LTL to compete with peers. - Challenges in integrating acquisitions and realizing expected returns.

Q: Thoughts on TL market tightening and impacts on LTL, A: Talked about truckload offer reduction, focus on industrial freight, LTL organic growth potential.

Q: Breakout U.S. vs Canadian LTL and LTL margin outlook for Q2, A: Don't separate U.S. and Canada anymore, see organic growth in Q2, expect operating ratio improvement in segments.

Q: LTL turnaround progress and structural barriers, A: Discussed service improvement, sales team stability, culture change, need for comparable service to peers.

Q: Truckload contract rates comping year-over-year, A: U.S. flatbeds renewals in high single digits to low double digits, spot exposure rates higher, Canada renewals in low single digits.

Q: Tax rate and Q3 EPS seasonality, A: Tax rate modeled around 24%, Q3 normally better due to summer but guidance not provided due to instability.

Q: LTL pricing vs peers and service level needed, A: Still discounted, need to improve second and third day service, keep updating on progress.

Q: Canada capacity and needed actions, A: Canadian action on driver inc employment records, slower than U.S.

Q: Medium-term margin targets for segments, A: LTL aim for 80-85 operating ratio, truckload aim for under 90 operating ratio, logistics aim for 85-88 operating ratio, return on invested capital targets.

Q: GRI impact and acquisition outlook, A: Pricing actions on specific accounts, acquisition in logistics is niche with value added, expanding into adjacent areas.

Q: US LTL shipment quality and price lag, A: Shift to customer specific pricing, focus on right shipments, service improvement needed for price increase.

Q: Demand perspective with fuel and rate surge, A: Double whammy for shippers, market adjusting, focus on industrial freight.

Q: M&A focus and capital allocation, A: M&A on hold due to seller wait, focus on debt reduction, dividend growth, past M&A deployment.

Q: Transformative deal and US LTL density, A: Difficulties in getting deals, focus on integrating past acquisitions, working towards normalized operating ratio.

Q: Logistics segment other businesses, A: Truck movers, specialty acquired business, last mile operation, brokerage, positive outlook.

Q: Fuel impact on profit and loss, A: Neutral across TFI in March, slightly positive in LTL, negative in truckload.

Q: LTL division integration and data center exposure, A: No change in management, data center revenue increasing.

Q: TL productivity and truck growth, A: Focus on asset and non-asset revenue mix, need for better mix to avoid over-trucking