First look: Most metrics at TFI are down from 2Q 2024 but Bedard touts higher margin

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4 days ago

The earnings report at diversified carrier TFI International (NYSE: TFII) beat Wall Street estimates on the bottom line, but virtually every operational metric in its key LTL division, including the U.S. operations that house the former UPS Freight acquisition, was lower compared to the second quarter of 2024.
But in the first moments of the company's earning call with analysts, CEO Alain Bedard noted 'strong' free cash flow figures and 'solid margin performance.' He also cited sequential improvement in operating ratio at the LTL operations. And Wall Street liked what it heard, with post-close trading boosting TFI stock by about 6.25%.
The operating ratio (OR) at U.S. LTL in the second quarter ballooned to 94% from 90.8% in the corresponding quarter of 2024. Revenue per hundredweight excluding fuel fell just under 2% to $331.18.
In a prepared statement released with the earnings, TFI noted the one bright spot in the U.S. LTL operations, an increase in weight per shipment of just over 5%. But the rest of the countdown of various measures was all negative: a 10.1% drop in the number of shipments and a 5.5% decline in the total level of shipments as measured in tons.
Canadian LTL, which has been the example that TFI management has said it wants to emulate in the U.S., suffered a worse decline in its OR, dropping 500 bps to 80.6%. Revenue per hundredweight excluding fuel was down 3.56%.
The truckload operations at TFI suffered the same sort of weak quarter that has been showing up in other earnings reports from truckload carriers. Revenue before fuel was down about 3.4%, adjusted EBITDA was down a little more, but revenue per truck per week excluding fuel was down only a small amount. The adjusted OR in truckload declined 110 bps to 90.1%.
TFI's overall adjusted net income of $1.34 per share was down from $1.71 in the corresponding quarter a year earlier. However, according to SeekingAlpha, it was still 11 cents better than forecasts.
Total revenue of $1.8 billion was down 9.4% from a year earlier. It was also $20 million less than the Wall Street consensus, according to SeekingAlpha.
By the close of trading Monday, TFI stock was down about 41.3% in the last 12 months before the post-market increase.
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