UPS Freight Acquisition Fuels TFI’s Q4 Growth
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TFI International reported gains in fourth-quarter and annual net income and revenue, helped by its acquisition of the UPS Freight operation.
The Montreal-based transportation and logistics company said fourth-quarter net income rose 67% to $144.1 million, or $1.52 diluted earnings per share, from $86.3 million, 91 cents, in the same period a year earlier. (Operating income rose 83.6% to $215 million from $117.1 million.)
Revenue rose 90.8% to $2.1 billion from $1.1 billion.
Although based in Canada, TFI reports financial results in U.S. currency.
“TFI International completed a very strong year, and it will be remembered as pivotal in our history with the successful acquisition of UPS Freight,” Alain Bédard, TFI’s CEO, said in a conference call Feb. 9 with industry analysts and investors.
“Our strong fourth-quarter results demonstrated the sound rationale behind this transformational event, which drove much of our performance,” he said.
All four of TFI’s business segments showed at least double-digit growth for the year, with some doubling revenue or better.
“During the quarter, we continued to strategically price in order to capitalize on rebounding freight volume across B2B and e-commerce,” Bédard said.
For the year, net income increased 141.0% to $664.4 million, $6.97, from $275.5 million, $3.03, in 2020. (Operating income rose 113.4% to $889.2 million from $416.6 million.)
Revenue jumped 89.5% to $7.2 billion from $3.8 billion.
At TFI’s less-than-truckload segment, fourth-quarter revenue jumped 508.8% to $959.6 million from $157.6 million in the same period a year earlier. Much of the increase came from TFI’s U.S. freight operations, which grew from the UPS acquisition. TFI now calls it TForce Freight.
Bédard said the UPS Ground Freight acquisition has “significant upside potential” as TFI works to optimize the integration with its legacy operations. TFI wants to increase the density of the TForce freight network this year, including making more shipments per stop.
“If you have to travel 70 miles to deliver two shipments, it doesn’t make sense,” Bédard said. “Density is the name of the game in this business.”
He said TForce Freight needs to get more shipments out of existing customers rather than get more customers.
TFI also needs to replace older tractors, but that has been hard with delivery delays from truck manufacturers, he said.
The LTL segment’s operating profit rose 322.0% to $103.4 million from $24.5 million in the same period a year earlier.
Strong freight demand fueled a 22.4% gain in truckload segment revenue to $584 million from $477.3 million. The segment’s operating profit rose by 15.3% to $61.8 million from $53.6 million.
TFI’s logistics segment revenue was up 34.6% to $441 million compared with $327.7 million. The segment’s operating profit increased 24.2% to $32.9 million from $26.5 million.
Same-day package delivery services in both the U.S. and Canada helped grow the segment, the company said.
Package and courier business segment revenue rose 5.8% to $177.4 million compared with $167.6 million. Operating income grew 24.8% to $36.7 million from $29.4 million.
Growth came from both business accounts and e-commerce, the company said.
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Bédard said the UPS Freight acquisition and other operational gains during the year have placed TFI “in the strongest position in its history.”
The company plans to continue to “selectively optimize acquisition opportunities,” he said.
But the company can’t make any sizable acquisition before the end of this year as it absorbs prior deals, he said.
However, “the next big acquisition for TFI is already in the plan right now. We know what we will be doing in the next 12 to 18 months,” Bédard said.
TFI’s goal for this year includes increasing the density of its network, improving its service level, optimizing pricing and increasing driver retention, he said.
The company also issued financial guidance for this year, cautioning that it assumes economic conditions remain relatively stable. It expects annual earnings per share to range from $6.25 to $6.50. It plans to spend $325 million to $350 million on capital expenditures, and that free cash flow will exceed $700 million.
TFI ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.