TFI International Company Overview
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
TFI International
Company Overview
February 2020
1
Legal Disclaimer
Forward-Looking Statements
This presentation contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “may”, “might”, “expect”, “intend”, “estimate”,
“anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”, “forecast”, “goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue”, and, in each case, their negative or other various or comparable
terminology. All statements other than statements of historical facts contained in this presentation, including statements regarding the Company’s strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of
management and expected market growth are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause the Company’s actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements reflect the Company’s views with respect to future events as of the date of this presentation and are based
on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent the Company’s estimates and assumptions only as of the
date of this presentation and, except as required by law, the Company undertakes no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this presentation. The
Company anticipates that subsequent events and developments will cause its views to change. You should read this presentation with the understanding that the Company’s actual future results may be materially different from what we expect as a result of
various factors. The Company’s forward-looking statements do not reflect the potential impact of any future acquisitions, merger, dispositions, joint ventures, investments or other strategic transactions the Company may undertake. The Company qualifies all of its
forward-looking statements by these cautionary statements.
Non-IFRS Financial Measures
This presentation also contains references to non-IFRS financial measures, including Adjusted Operating Ratio, Adjusted Net Income, Adjusted Earnings Per Share - Basic, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA, Adjusted EBITDA Margin, Free
Cash Flow, Free Cash Flow Conversion, and Operating Margin. For the purposes of this presentation, although not indicated elsewhere, the following non-IFRS financial measures are all resulting, and should be interpreted as being, from continuing operations:
Adjusted Operating Ratio, Adjusted Net Income, Adjusted Earnings Per Share - Basic, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Conversion and Operating Margin. Management
believes the use of non-IFRS measures assists investors and securities analysts in understanding the ongoing operating performance of the Company’s business by allowing more effective comparison between periods. The non-IFRS information provided in this
presentation is used by management and may not be comparable to similar measures disclosed by other companies, because of differing methods used by other companies or that we apply to other companies in calculating Adjusted Operating Ratio, Adjusted
Net Income, Adjusted Earnings Per Share - Basic, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Conversion, Operating Margin and Operating Ratio. Our presentation of Free Cash Flow
Conversion for our industry is based upon EBITDA less Net Capital Expenditures, over EBITDA and derived from publicly available information. The non-IFRS measures used in this presentation have limitations as analytical tools, and you should not consider
them in isolation or as substitutes for analysis of the Company’s results as reported under IFRS. Management compensates for these limitations by relying primarily on IFRS results and using non-IFRS financial measures on a supplemental basis. This
information has been prepared by the Company’s management for illustrative purposes only and is not necessarily indicative of the consolidated financial position or results of operations that would have bene realized, nor is it meant to be indicative of any future
consolidated financial position or future results of operations. Refer to the Appendix section for definitions of Adjusted Operating Ratio, Adjusted Net Income, Adjusted Earnings Per Share - Basic, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA,
Adjusted EBITDA Margin, Free Cash Flow, Free Cash Conversion, and Operating Margin and reconciliations of those measures to the most directly comparable IFRS measures.
Market and Industry Data
This presentation includes market and industry data that the Company obtained from industry publications, surveys, public filings and internal company sources. As noted in this presentation, Bloomberg, Bureau of Labor Statistics, Capital IQ, Cass Freight Index,
Conference Board, Euromonitor, The World Bank and Transport Topics, were the primary sources for third-party industry data and forecasts. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained
from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. The Company has not independently verified any of the data from third-party sources, nor has it ascertained the underlying economic
assumptions relied upon therein. The Company does not make any representation as to the accuracy of such information. Statements as to the Company’s market position and ranking are based on market data currently available to the Company, management’s
estimates and assumptions the Company has made regarding the size of its markets within its industry.
Currency Fluctuations
The amounts in this presentation are reported in Canadian dollars unless otherwise noted. The Company’s financial results are reported in Canadian dollars and a significant portion of the Company’s revenue and operating costs are realized in currencies other
than the Canadian dollar, primarily the U.S. dollar. Significant fluctuations in relative currency values against the Canadian dollar could have a significant impact on the Company’s future profitability. The exchange rates between these currencies and the
Canadian dollar have fluctuated in recent years and will likely continue to do so in the future. It is not possible to mitigate all exposure to fluctuations in foreign currency exchange rates. The results of operations are therefore affected by movements of these
currencies against the Canadian dollar.
Comparables
This presentation outlines certain financial information and statistics of other selected companies, which are considered to be an appropriate basis for comparison with us as they either operate in the same industry or they are generally present in the markets in
which we operate. Such information has been obtained or derived from public sources, and we have relied upon and have not attempted to independently verify the completeness, accuracy and fair presentation of such information. In addition, such information
involves a variety of known and unknown risks, uncertainties and other factors which are subject to change, as well as other risks, uncertainties and factors relating to, among other things, variations in operations, size, market and accounting principles and
practices, which can significantly vary among us and the comparables. Certain information contained in this presentation is public information provided by other companies which may not be comparable across companies and therefore comparisons may not be
exact.
2
SECTION 1
Introduction
3
Introduction to TFI International
We are a leading asset-right transportation and logistics company
TFI at a Glance
Founded in 1957; Headquartered in Montreal, QC
Broad portfolio of premier Truckload, Logistics, Less-Than-Truckload and Package & Courier services
Largest trucking fleet in Canada and one of the leading carriers in the U.S.
Asset-Right business mix drives 77% 2019 FCF conversion(1)
Extensive network throughout North America: 380 facilities, 17,598 tractors, 25,505 trailers and 17,150 employees
Asset Right Power Capacity – 7,772 Company Units & 9,826 Independent Contractors
Committed To Safety & Electronic Logging Device Compliant
2019 Revenue (Excl. Fuel Surcharge) of $4.6Bn
2019 Adjusted EBITDA (2) of $865MM
2019 FCF(3) of $463MM
Strong balance sheet and access to capital provides flexibility to pursue organic and inorganic growth initiatives
Long history of successful acquisitions, leveraging strong platform to acquire 80 companies since 2008
4,800%+ total cumulative return on investment (4) over the last 20 years
Notes:
1. FCF conversion calculated as (2019 Adj. EBITDA – Adj. Net Capex) / 2019 Adj. EBITDA; Adjusted Net Capex includes non-cash acquisitions; please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
2. Adjusted EBITDA defined as net income from continuing operations before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buil dings,
assets held for sale and intangible assets; please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
3. FCF defined as net cash from continuing operating activities less Net Capex; Net Capex is defined as additions to property and equipment less proceeds from sale of property and equipment and assets held for sale; please refer to Non-IFRS Financial
Measures on slide 2 and Appendix for further information
4. Represents the total earned on an investment in our Common Shares made on 30-Dec-99 up to 31-Dec-19 per Capital IQ
INTRODUCTION 4How We’ve Gotten Here
TFI has a deep rooted history demonstrating a culture that is built to last and has generated
Total Cumulative Return on Investment of over 4,800% over the last 20 years (1)
LTL
TL
P&C
Logistics
Key Alain Bedard Cavalier, TForce
Entreprises de Transport North American TL
becomes TForce Logistics, Critical, TForce GBT, Brasseur, TTL, BTC East,
Acquisitions / Chairman, CEO
Transport J.C.G., Canpar
Loomis
America, Contrans Operations of XPO
Premier Normandin BeavEx
Events Groupe Papineau Group (CFI)
and President Distribution
1996 1998 2002 2011 2014 2016 2017 2018 2019
Note:
1. Represents the total earned on an investment in our Common Shares made on 30-Dec-99 up to 31-Dec-19 per Capital IQ
INTRODUCTION 5Diversification Across Multiple Dimensions
TFI has built a robust, well-diversified revenue Less-
Package &
base, with a strong focus on value-added asset- Truckload Logistics Than-
Courier
light services/operations Truckload
• Truckload: 1/3 of the Canadian Truckload segment is Owner-
Operator and Brokerage
Canada ✔ ✔ ✔ ✔
• U.S. Truckload ongoing strategy to becoming more
United
asset-light
States ✔ ✔ ✔
• Less-Than-Truckload: 1/3 of segment is asset-light intermodal
• Logistics: virtually no capex Mexico (1) ✔ ✔ ✔
• P&C: limited asset ownership; US and Mexico coverage
through alliances
Highly Diversified Product Platform(2) Revenue By Geography(2) Revenue By Top Customers' Industry(2)
P&C Mexico 2% 1%
3% Retail
14% 0.4%
4% Manufactured Goods
4% 25%
Building Materials
Conventional 5% Automotive
14%
Logistics Logistics 26%
United
Metals & Mining
7%
20% Same-Day Parcel TL States Canada
7% Food & Beverage
45% 55% Forest Products
Delivery 13% 48%
Specialized Chemicals & Explosives
22% 7%
12% Energy
6%
Over-the-road 16%
Services
8% Waste Management
Intermodal
LTL Maritime Containers
9% 9%
18% Others
Notes:
1. Truckload and LTL in Mexico provided by CFI Logistics
2. Based on 2019 total revenue
INTRODUCTION 6Strong Record of Profitable Growth Across All Business Segments
Management’s recent initiatives are driving record results across the enterprise
Operating Margin(1) FY2019 YoY
FY18 FY19 Change
Segment FY2018 FY2019 Improvement
Revenue
10.1% 11.6% ↑ 150 basis points before fuel
Truckload
• United States 94.6% 91.5% Adjusted surcharge
4,508 4,614 ↑ 2.3%
• Canada 87.0% 85.6% Operating ($MM)
• Specialized 87.9% 88.3% Ratio
(2)
Adjusted
EBITDA
($MM)(3)(4)
686 865 ↑ 26.0%
Logistics 5.7% 7.7% ↑ 200 basis points
Operating
Income
($MM)(4)
431 512 ↑ 18.8%
Package & Courier 17.9% 17.4% ↓ (50) basis points
Operating
Margin (1)
9.5% 11.1% ↑ 160 bps
Net cash from
Less-Than-Truckload 9.4% 13.1% ↑ 370 basis points continuing
operating
activities
544 665 ↑ 22.4%
($MM)
9.5% 11.1% ↑ 160 basis points Adjusted EPS –
diluted ($)(5)
3.54 3.94 ↑ 11.3%
Notes:
1. Operating margin calculated as operating income from continuing operations as a percentage of revenue ex-fuel surcharge. Please refer to the Non-IFRS Financial Measures on slide 2.
2. This is a non-IFRS measure. Please refer to the Non-IFRS Financial Measures on slide 2 and to tables included in the Appendix of the presentation for a reconciliation of this non-IFRS measure
3. Adjusted EBITDA defined as net income from continuing operations before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings,
assets held for sale and intangible assets; please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
4. 2019 Adjusted EBITDA and operating income from continuing operations figures under IFRS 16; 2018 Adjusted EBITDA and operating income from continuing operations figures prior to the implementation of IFRS 16
5. Adjusted diluted EPS defined as Adjusted net income from continuing operations divided by the weighted average number of diluted common shares; please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
INTRODUCTION 7Why TFI International?
The Company’s asset-right model provides resilience throughout business cycles
Proven history of acquiring best-in-class assets driving near-term and long-term value creation
– Management will continue its acquisition strategy to complement its current service offering
Unmatched free cash flow generation allowing for prudent capital allocation that results in
significant growth opportunities
Best-in-class capital return program that has driven substantial value for shareholders
Supportive macroeconomic tailwinds
Well-positioned to take advantage of E-Commerce growth trends
Robust balance sheet with significant flexibility and access to capital to drive substantial
future growth
Management team with extensive industry experience leading to a strong corporate culture
that is relentlessly focused on operational excellence
The Company’s strong record of growth provides a great foundation for the Company’s future success
INTRODUCTION 8SECTION 2
Overview and Investment Highlights
91 Leading Asset-Right Transportation Carrier
Leading, Multi-Sided
Highly Diversified
Transportation
Product Logistics Platform(1)
& Platform Asset-Right Business Model
Top 10
North American Transportation & Logistics
Company • The leading asset-right transportation provider in Canada and one of
the largest in the U.S., offering its customers a full suite of product
Top 5 North American Truckload Carrier
offerings
Top 5 North American Package & Courier Player • Significant Canadian brokerage and independent contractor platform
alongside large intermodal presence drive asset-right model
Top 15 North American LTL Carrier
• Unique product mix allows TFI to offer capacity assurance and high
Highly Diversified Product Platform(2)
value-added services
P&C
14%
• Acquisitions have successfully repositioned the business to include
Conventional
Logistics Logistics
14%
26%
20% 7% value-additive services, which allow TFI to experience substantial
Same-Day Parcel TL
Delivery 13% 48%
Specialized
22% growth
12%
6%
Over-the-road
Intermodal
LTL
18%
Top 10 North American transportation and logistics player with significant exposure to both U.S. and Canada and scaled
positions across all segments
Notes:
1.Statistics based on Transport Topics 2018 rankings
2. Based on 2019 total revenue
OVERVIEW AND INVESTMENT HIGHLIGHTS 101 Positive Trajectory Relative to Broader Peer Set
TFI vs. Peers YoY Q4 Earnings Results (1)
Adjusted EBITDA(2): Q4-19 vs. Q4-18
YoY % Change
Consolidated Segment-Level
34%
28%
20% 20%
6%
(4%)
(19%) (16%) (22%)
(25%)
Full Peer TL LTL Logistics P&C
Set Peers Peers Peers Peers
TL LTL Logistics P&C
Operating Income: Q4-19 vs. Q4-18
YoY % Change
Consolidated Segment-Level
558% (3)
20%
17% 9%
(13%) (14%)
(38%) (31%)
(32%)
(61%)
Full Peer TL LTL Logistics P&C
Set Peers Peers Peers Peers
TL LTL Logistics P&C
While Peers Experienced Meaningful Declines in Their Businesses YoY, TFI Continues to Outperform
Source: Company filings
Notes:
1. TL peers include Heartland, Knight-Swift, Schneider and Werner; LTL peers include Old Dominion, SAIA, ArcBest and YRC Worldwide; Logistics peers include CH Robinson, Echo, Landstar and Forward Air; P&C peers include Fedex and UPS; Please see
“Comparables” section on page 2 for further information
2. Please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
3. Q4-18 TFI International Logistics Segment Operating Income adjusted for ~$CAD12.6MM one time impairment of intangible assets
OVERVIEW AND INVESTMENT HIGHLIGHTS 112 Proven Acquisition Strategy to Enhance TFI Platform
Multiple Standards for Businesses Under Consideration
Value-accretive in
Increase Complement Improve Strong
short- and long-
geographic reach service offering market penetration management team
term
Investing Prudently to Maximize Shareholder Value
2008 – 09 2011 – 12 2014 – 15 2016 – 17 2018-19
# of
1.4 19 10 10 17 17
Acquisitions
M&A Spend $160MM $455MM $860MM $915MM $355MM
1.2
GBT TTL
1.0
Brasseur BTC East
Quik X
Transportation Contrans Transport CFI Normandin BeavEx
Clarke America TForce Premier
0.8 AC Logistics Distribution
Winalta TForce Vitran
Cavalier
LaCrete Integrated
Solutions TForce Critical
0.6
Jan 06 May 07 Oct 08 Mar 10 Jul 11 Dec 12 May 14 Sep 15 Feb 17 Jul 18 Dec 19
Cass Freight Index – Shipments
Acquisitions are pursued opportunistically
Source: Company Filings, Transport Topics, Cass Freight Index
OVERVIEW AND INVESTMENT HIGHLIGHTS 122 Proven Acquisition Strategy to Enhance TFI Platform
(Cont’d)
TFI has transitioned to an Asset-Right Model Via Organic and Inorganic Growth with over 177 acquisitions since 1996
1999(1) 2009 2019
Specialized Services Package &
6% Package & Courier Courier
15% 14%
TL
32% TL
34% Logistics
Specialized
20%
Services
23%
TL
48%
LTL
62% LTL
LTL
18%
28%
(2) 2009 Net Capex / 2009 Total Cumulative Return on 2019 Net Capex / 2019 Total Cumulative Return on
1999 Net Capex / 1999 Revenue
Revenue(2) Investment (3) Revenue(2) Investment (3)
11.4% 2.1% 600%+ 4.3% 4,800%+
Through its deliberate and thoughtful acquisition and operating strategy,
TFI has successfully grown its Asset-Right platform
Notes:
1. For the fiscal year ended April 24, 1999
2. 1999 net capex includes purchases and sales of property and revenue includes fuel surcharge; 2009 and 2019 net capex excludes purchases and sales of property and includes non-cash acquisitions and revenue is ex-fuel surcharge
3. Represents the total earned on an investment in our Common Shares, including dividends and stock appreciation, made on 30-Dec-99 up to 31-Dec-09 and 31-Dec-19 per Capital IQ
OVERVIEW AND INVESTMENT HIGHLIGHTS 133 Track Record of Profitable Growth and Strong Free Cash
Flow Through Business Cycles
Revenue Before Fuel Surcharge Adjusted EBITDA (1)
$CAD, MM $CAD, MM
$4,614 $865 (2)
4,800 900
3,600
600
2,400
300
1,200
0 0
1997 2019 1997 2019
Diluted Adjusted EPS (1)(4) Free Cash Flow (1)(5)
$CAD $CAD, MM
$3.94
4.00 500 $463 (2)
400
300
2.00
200
100
0.00 0
Notes:
1997 2019 1997 2019
1. These are non-IFRS measures. Please refer to the Non-IFRS Financial Measures on slide 2 and to tables included in the Appendix of the presentation for a reconciliation of non-IFRS measures
2. 2019 Adjusted EBITDA adjusted for $121.1MM depreciation on right-of-use assets and interest on lease liabilities from IFRS 16, represented by the dotted box; 2019 FCF adjusted for $99.6MM impact on cash from operating activities from IFRS 16,
represented by the dotted box; please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
3. Diluted EPS and FCF CAGRs from 1998 and 2000, the first year of positive EPS and FCF, respectively
4. Tax adjusted for 2002-2008 when TFI was an income trust
5. 2017 FCF includes 3Q17 sale leaseback proceeds of $135.7MM, related to certain real estate assets, including two facilities in each of Montreal and Toronto, represented by the blue striped bar
OVERVIEW AND INVESTMENT HIGHLIGHTS 144 Superior Ability to Return Capital...
TFI targets paying out 15-30% of the Company’s FCF to shareholders as a dividend
TFI Has Returned a Greater Proportion of Bottom Line than that of Peers…
Payout Ratio (1)(4)
%
Average: 12.0 Average: 11.5 Average: 5.4 Average: 19.0 Average: 41.7
75
63.0
50 41.8
24.9 24.0 24.2
25 23.1 20.4
14.6 10.6 8.0 13.5
8.2 11.1
N.M. N.M. N.M. N.M. N.M.
0
(3)
…And TFI Has Repurchased More Stock than Peers
Common Stock Repurchases as a Percent of 2019 Market Cap (2)(4)
%
294 1,898 290 166 70 0 0 0 292 19 1 3 38 200 72 355 858 992
32
Average: 14.5
Average: 1.4 Average: 1.5 Average: 4.8 Average: 1.6
24 26.2
16
9.5
6.5
8 2.9 5.1 4.5
3.8 3.3 2.1 0.8 0.2 3.1 2.0 1.2
2.9 0.0 0.0 0.0
0
Asset-Right Truckload Less-Than-Truckload Logistics Package and Courier Represents $ amount of TTM
Source: Company filings and Capital IQ. $
buybacks
Notes:
1. Payout ratio defined as TTM total dividends paid / TTM net income as of Q3-2019 for peers and as of 2019YE for TFI; not comparable because of differences between IFRS and U.S. GAAP
2. TTM common stock repurchases as a percentage of each Company’s market cap as of January 1, 2019
3. FedEx TTM Net Income inclusive of ~$3.3Bn add back of other retirement plans expense
4. Please see “Comparables” section on page 2 for further information
OVERVIEW AND INVESTMENT HIGHLIGHTS 154 …And Industry-Leading Total Cumulative Return on Investment
TFI’s share price performance coupled with the Company’s return of capital strategy have
generated MEANINGFUL outperformance
20-year Total Cumulative Return on Investment (1), TFI International vs.
TSX vs. S&P 500
Indexed Total Return
5,500
4,852%
4,400
3,300
2,200
1,100
TSX: 337%
S&P 500: 324%
0
Dec-99 Dec-04 Dec-09 Dec-14 Dec-19
TFI S&P 500 TSX
Source: Capital IQ
Notes:
1. Represents the total earned on an investment in our Common Shares made on 30-Dec-99 up to 31-Dec-19 per Capital IQ; Past performance is not indicative of future performance
OVERVIEW AND INVESTMENT HIGHLIGHTS 165 Supportive Industry Landscape for TFI International
We Believe Robust Macro Indicators… …Coupled with Freight Markets at an Inflection Point…
(2)
• Consumer Sentiment Near Highest in • Unemployment Near 18-Year Lows • Cass Freight Shipment Index (Monthly YoY Change)
Over a Decade (1)
University of Michigan Consumer Sentiment % U.S. Unemployment 13%
110 12
99.1
0%
90 9
70 6
(13%)
3.4
Nov-15 Jun-16 Jan-16 Aug-17 Mar-18 Oct-18 May-19 Dec-19
50 3
'06 '09 '12 '15 '18
• … Indicative of Positive Demand Momentum • …TFI positioned to benefit from Trucking Industry Tailwinds
1 4
Stable driver base and less turnover
North American E-Commerce Evolving customer supply chain
North American Retail Demand in Canada driven by Company
4% 16% Demand Y-o-Y Growth Expected management
Y-o-Y Growth Expected for 2020 culture and competitive pay
for 2020
2 Expected growth in freight demand 5
and reduced capacity in the U.S. Continued economic expansion
should support higher pricing
Robust Consumer Confidence
Continued U.S. GDP Growth
1.8% Expected for 2020 126.5 Index for December 2019 Well- 3 6
Above Trailing 5-Year Average Technology advances to favor
Growing reliance on E-Commerce
larger trucking companies
Source: Bloomberg, Bureau of Labor Statistics, The World Bank, Conference Board, Euromonitor Source: Cass Information Systems, Inc.
Notes:
1. As of January 2020
2. As of December 2019
OVERVIEW AND INVESTMENT HIGHLIGHTS 176 Leading E-Commerce Network Across North America…
TFI International serves a vast E-Commerce network
2019 E-Commerce Revenue by Segment
($CAD, MM)
$207.8
$46.8
$116.9
$13.9
$160.9 $76.5
$103.0
$0.8
• TFI services E-Commerce from approximately 80 North Logistics TL P&C LTL
American cities
United States Canada
• TFI provides all legs of E-Commerce services (first mile,
middle mile and last mile) and same-day & next day • Total Canadian E-Commerce revenue: $138.0 MM
coverage
• Total U.S. E-Commerce revenue: $264.0 MM
• Increasing facility utilization with addition of same-day
service
OVERVIEW AND INVESTMENT HIGHLIGHTS 186 …With Significant Upside Potential
E-Commerce is a powerful secular force, driving new shipping demands including greater
emphasis on last-mile logistics
TFI E-Commerce Revenue TFI Evolution of B2B/B2C Split
$CAD, MM
500 100%
26% 31% 32%
13.6% 402 34% 41% 41% 39%
42%
400 CAGR 75%
300 50%
74% 69% 68% 66% 59% 58% 59% 61%
200 165 25%
100 0%
2012 2013 2014 2015 2016 2017 2018 2019
0 B2B B2C
2012 2019
Growth Potential From E-Commerce Sales Potential for Further Retail Penetration
$Bn E-Commerce % of Retail Sales
6,000 5,084 China 29.7%
4,774
4,495
5,000 4,244 U.K. 20.7%
843
4,057
3,861 731
632 U.S. 9.7%
1,000 546
473
407
France 8.6%
500 4,241
3,698 3,863 4,043
3,454 3,584 Canada 8.6%
0
2017A 2018A 2019A 2020E 2021E 2022E Germany 8.4%
N. American Retail Sales, Excl. E-Commerce
N. American E-Commerce Sales
Source: Euromonitor
OVERVIEW AND INVESTMENT HIGHLIGHTS 198 Experienced and Entrepreneurial Management Team
• Decentralized,
Entrepreneurial
Alain Bédard, FCPA, FCA
1 Management Approach
Chairman, President & CEO
45+ Years of Experience
Corporate Team Executive Team Operating Team
Jean-
Daniel Steven A. Eric Kristen Wayne Michael Scott
David Saperstein Daniel Chevalier Patrick Croteau Kal Atwal Louis Gagnon Rick Hashie Claude
• Unique Company Culture
Auger Brookshaw Anson Fess Gruszka Hover Leveridge
Germain
Chief Financial
Vice-
President,
Vice-
President,
Finance,
Vice-
President, Finance
Executive Vice- Executive Vice- Executive Vice- Executive Vice-
President,
Transport
Vice-
President,
Contrans
President,
J.C.
Germain
President,
TST
Overland
Vice-
President
and
General
President,
TForce
2 Dedicated to Excellence
Officer Information President President President President Express Manager, Logistics
Operational & Control America Flatbed group of
Technology and TST TForce U.S.
Reporting Group companies
Expedited Integrated
Solutions
21 Years 14 Years 19 Years 14 Years 12 Years 30 Years 32 Years 30 Years 14 Years 32 Years 35 Years 31 Years 25 Years 36 Years
of of of of of of of Of of of of of of of
Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience
Johanne Sylvain Josiane-M. Chantal Martin Ken Lori James Justin Daniel Scott Christopher
Brian Kohut Bob McGonigal Greg Orr
Dean Desaulniers Langlois Martel Quesnel Tourangeau McCreight McKay Paul Roberts Talbot Traikos
Vice-
President
Vice-
Vice- and
Vice-President, Vice- President, President, Vice- Senior Vice-
President, Vice- President, General
Marketing & President, Legal Executive Vice- Executive Vice- Executive Vice- Executive Vice- Quik X President, President President,
• Focus on End Consumer
Insurance President, Loomis Manager,
Communica - Human Affairs & President President President President Transpor- Contrans Bulk Vitran
and Finance Express TF Energy
tions Resources Corporate tation Tank Group Operations
3
Compliance Solutions
Secretary
group of
companies
Satisfaction
33 Years 20 Years 20 Years 27 Years 32 Years 34 Years 23 Years 24 Years 28 Years 27 Years 23 Years 18 Years 24 Years 35 Years 21 Years
of of of of Of of of of of of of of of of of
Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience Experience
Experienced Team - Each with 10+ Years of Relevant Experience
OVERVIEW AND INVESTMENT HIGHLIGHTS 20SECTION 3
Financial Performance
21Continued Success Driving Record Results
Significant free cash flow generation, low capital intensity and recent strong performance provide TFI
with a compelling financial profile and above-market growth opportunities
+17%,
Revenue,
Adj. EBITDA (1)
+19%, 77%
2019 FCF
Adj. Diluted
EPS(1)
+17% Conversion (3)
(20-Year CAGRs)(2)
15% Q4’19 Operating
+ 180 Bps
FCF (1) Margin
(20-Year CAGR)(2) Improvement
YoY
Notes:
1. These are non-IFRS measures. Please refer to the tables included in the Appendix of the presentation for a reconciliation of non-IFRS measures. Please refer to Non-IFRS Financial Measures on slide 2 for further information
2. CAGRs calculated from 1999 through 2019. Please refer to Non-IFRS Financial Measures on slide 2 for further information
3. FCF conversion calculated as (2019 Adj. EBITDA – Net Capex) / 2019 Adj. EBITDA; Net Capex includes non-cash acquisitions; Please refer to Non-IFRS Financial Measures on slide 2 for further information
FINANCIAL PERFORMANCE 22Strong Profitable Trajectory
Truckload Q4 2019 Highlights
$CAD, MM $CAD, MM Q4 Highlights
7%
• Best in class Canadian conventional TL adjusted operating ratio (1) of 85.9%
2,065 2,200 and 89.3% in Specialized
2,160 255 300
208 • Operating income from continuing operations reaches $61.3MM , up from
1,620 200 $52.3MM in Q4 2018 largely driven by higher quality of freight, lower costs,
and a more efficient truckload network
1,080
• Continued asset-light strategy as brokerage revenue up 8% to
100
540 $CAD75.2MM compared to the same quarter last year
0 0 Objectives
2018 2019 2018 2019
• Focused on improving cost structure and reducing capital intensity
Revenue ex-FSC Operating Income
Less-Than-Truckload Q4 2019 Highlights
$CAD, MM (8%) $CAD, MM Q4 Highlights
902 109 • Adjusted operating ratio(1) improvement of 180 basis points from 90.0% in
960 832 Q42018 to 88.2% in Q42019
85 96
720 • Tight asset management, cost optimization, improved route density and a
better yield and quality of revenue leads to strong quarter
480 64
• Best-in-class low capex platform, due to asset-light intermodal operations
240 32 Objectives
• Remain disciplined in adapting supply to demand
0 0
2018 2019 2018 2019 • Continue to emphasize major cities, cross-border and high-density regions
Revenue ex-FSC Operating Income • Leverage asset-light intermodal capabilities
Actively focusing on driving profitability and streamlining the business
Note:
1. Please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
FINANCIAL PERFORMANCE 23Strong Profitable Trajectory (cont’d)
Logistics Q4 2019 Highlights
$CAD, MM $CAD, MM Q4 Highlights
1,200 76 80 • Operating income, adjusted to exclude the $12.6MM impairment charge in
954 989 67 (1)
2018, up 22% YoY
900 60
• 72% of revenue generated in the U.S. and Mexico and 28% in Canada
600 40 Objectives
• Well positioned to capture secular E-Commerce shift and demand for same
300 20 day service
0 0 • 2020 growth expected to come from strength of Canadian team that now runs
2018 2019 2018 2019 US business
Revenue ex-FSC Operating Income
Package & Courier Q4 2019 Highlights
$CAD, MM (1%) $CAD, MM Q4 Highlights
750 633 628 150 • Decrease in revenue attributed to a 3.6% decrease in tonnage and a 2.4%
113 109 decrease in revenue per pound excluding fuel related to the loss of “excess”
500 100 business generated by the Canada Post strike in 2018
Objectives
250 50 • Focus on utilizing this technology to progressively replace unprofitable
customers with more-profitable business in dense urban centers
0 0 • New investments in productivity-enhancing sortation equipment
2018 2019 2018 2019
Revenue ex-FSC Operating Income
Actively focusing on driving profitability and streamlining the business
Notes:
1. 2018 operating income adjusted for $CAD12.6MM impairment of intangible assets
2. Please refer to Non-IFRS Financial Measures on slide 2 and Appendix for further information
FINANCIAL PERFORMANCE 24SECTION 4
Growth Strategies
25Key Objectives to Achieve Operational Excellence
Organic Growth Bolt-on Acquisitions Increase Margins
Focused on optimizing current TFI TFI continues to evaluate
platform across opportunities to complement its
North America portfolio
Implement operating initiatives
aimed at reducing cost and
improving quality of revenue
• …economies of scale and
specialization Value accretive in short- and long-
term Unlock Shareholder Value
• …more efficiently allocating
resources Increase geographic reach
• …capitalizing on market Complement service offering
opportunities
Improve market penetration Fundamental focus on the
• …utilize data capabilities to drive bottom line
detailed analytics Strong management team
GROWTH STRATEGIES 26Track Record of M&A Execution and Integration
Acquired 80 companies across highly fragmented markets since 2008
Number of Acquisitions per Year
Winalta
16
LaCrete
14
14
CFI
GBT
12 National Fast
Cavalier
Freight Brasseur TTL
Contrans TForce Critical
10 Normandin BTC East
10 Clarke TForce 9 BeavEx
Vitran Premier
TForce Logistics Transport Distribution 8
8
Loomis Express America 7
TForce Integrated
Solutions 6 Total Transfer 6
6 Quik X E.L. Farmer
5 Transportation AC Logistics
Lafleche 4 4 4
4
3
2
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
GROWTH STRATEGIES 27Why TFI International?
The Company’s asset-right model provides resilience throughout business cycles
Proven history of acquiring best-in-class assets driving near-term and long-term value creation
– Management will continue its acquisition strategy to complement its current service offering
Unmatched free cash flow generation allowing for prudent capital allocation that results in
significant growth opportunities
Best-in-class capital return program that has driven substantial value for shareholders
Supportive macroeconomic tailwinds
Well-positioned to take advantage of E-Commerce growth trends
Robust balance sheet with significant flexibility and access to capital to drive substantial
future growth
Management team with extensive industry experience leading to a strong corporate culture
that is relentlessly focused on operational excellence
The Company’s strong record of growth provides a great foundation for the Company’s future success
GROWTH STRATEGIES 28Appendix
29Proven Acquisition Strategy to Enhance TFI Platform (1)
Year Company Target Segment
Entreprises de Transport J.C.G. Inc.
1998 TL
Groupe Papineau Inc.
2000 TST Solutions LTL & Specialized TL
Canpar Transport Package & Courier
2002
Besner TL
Canadian Freightways LTL and TL
2004
Highland Transport TL
2005 Services Matrec Waste Management
Kos Corp Oilfield Transportation
2006 Hemphill Trucking Inc. Rig-Moving activites
Streeper Contracting
Location Beaudry Fleet management
2007
Information Communication Services (ICS) Inc. Package & Courier
2008 Unique Personnel Services Inc. Personnel Services
2009 ATS Retail Solutions Package & Courier
Dynamex Last Mile
2011 Loomis Express Package & Courier
Concord Transportation LTL
2012 QuikX Transportation LTL (over-the-road)
Clarke Transport LTL Intermodal (over-the-rail)
Vitran Corporation LTL
2014
Transport Corporation of America U.S. TL
Contrans Specialized TL
2015 AC Final Mile Logistics
2016 CFI (formerly Con-Way Truckload) U.S. TL
Cavalier LTL
2017 TForce Critical Last Mile
Premier Product Management Logistics
Normandin Transit Cross-border LTL and TL
2018 Transport Brasseur Specialized TL
Timeline Specialized TL
TTL Specialized TL
2019 Schilli Specialized TL
BeavEx Logistics
Source: Company filings
Note:
1. The selected acquisitions do not represent all of TFI’s acquisitions in the timeframe shown
APPENDIX 30Reconciliation of Adjusted EBITDA, Adjusted Net Income and
Adjusted EPS – Diluted
Reconciliation of Adjusted EBITDA (1)
($CAD, MM) 2019 2018
Net Income from Continuing Operations $324.5 $292.0
Net Finance Costs $85.6 $48.3
Income Tax Expense $101.5 $90.2
Depreciation of Property and Equipment $223.8 $198.5
Depreciation of Right-of-Use Assets $102.6 -
Amortization of Intangible Assets $65.9 $62.1
Impairment of Intangible Assets - $12.6
Bargain Purchase Gain ($10.8) -
Gain on Sale of Land and Buildings ($0.0) $(0.5)
Gain on Sale of Assets Held for Sale ($28.6) $(15.6)
Gain on Sale of Intangible Assets - ($1.2)
Adjusted EBITDA $864.5 $686.3
Reconciliation of Adjusted Net Income(1) and Adjusted EPS – Diluted(1)
($CAD, MM, except per share data) 2019 2018
Net Income $310.3 $292.0
Amortization of Intangible Assets Related to Business Acquisitions, Net of Tax $47.1 $44.0
Net Change in Fair Value and Accretion Expense of Contingent Considerations, Net of Tax $0.2 $(8.9)
Net Change In Fair Value of Derivatives, Net of Tax - $(0.3)
Net Foreign Exchange Loss, Net of Tax $0.2 $0.5
Gain on Sale of Land and Buildings and Assets Held for Sale, Net of Tax $(24.8) $(13.9)
Impairment of Intangible Assets, Net of Tax - $9.1
Bargain Purchase Gain ($10.8) -
Gain on Sale of Intangible Assets, Net of Tax - ($0.9)
Net Loss from Discontinued Operations $14.2 -
Adjusted Net Income from Continuing Operations $336.4 $321.6
Adjusted EPS from Continuing Operations – Basic $4.03 $3.66
Adjusted EPS from Continuing Operations – Diluted $3.94 $3.54
Note:
1. This is a non-IFRS measure
APPENDIX 31Reconciliation of Free Cash Flow and Adjusted EBITDA
Reconciliation of Free Cash Flow (1)
($CAD, MM) 2019 2018
Net Cash from Continuing Operating Activities $665.3 $543.5
Additions to Property and Equipment ($349.4) ($314.1)
Proceeds from Sale of Property and Equipment $95.2 $81.1
Proceeds from Sale of Assets Held for Sale $51.9 $29.2
Net Capex ($202.3) ($203.8)
Free Cash Flow $463.0 $339.7
Reconciliation of Adjusted EBITDA (1)
Three Months Ended December 31 Twelve Months Ended December 31
($CAD, MM) 2019 2018 2019 2018
Net Income From Continuing Operations $76.5 $76.7 $324.5 $292.0
Net Finance Costs (Income) $22.3 ($0.0) $85.6 $48.3
Income Tax Expense $25.4 $26.6 $101.5 $90.2
Depreciation of Property and Equipment $59.0 $52.4 $223.8 $198.5
Depreciation of Right-of-Use Assets $25.8 - $102.6 -
Amortization of Intangible Assets $16.8 $15,5 $65.9 $62.1
Impairment of Intangible Assets - $12.6 - $12.6
Bargain Purchase Gain - - ($10.8) -
Gain on Sale of Land and Buildings, Assets Held for Sale and Intangible Assets $(8.4) ($3.0) ($28.6) ($17.4)
Adjusted EBITDA $217.5 $180.7 $864.5 $686.3
Note:
1. This is a non-IFRS measure
APPENDIX 32Reconciliation of Adjusted Operating Ratio
Reconciliation of Adjusted Operating Ratio (1)
Three Months Ended December 31 Twelve Months Ended December 31
($CAD, MM) 2019 2018 2019 2018
Operating Expenses $1,181.2 $1,218.2 $4,667.2 $4,692.7
Impairment of Intangible Assets - ($12.6) - ($12.6)
Bargain Purchase Gain - - $10.8 -
Gain on Sale of Land and Building $0.0 $0.3 $0.0 $0.5
Gain on Sale of Assets Held for Sale $8.4 $1.5 $28.6 $15.6
Gain on Sale of Intangible Assets - $1.2 - $1.2
Adjusted Operating Expenses $1,189.6 $1,208.6 $4,706.7 $4,697.5
Fuel Surcharge Revenue ($139.0) ($159.2) ($565.2) ($615.0)
Adjusted Operating Expenses, Net of Fuel Surcharge Revenue $1,050.6 $1,049.5 $4,141.4 $4,082.5
Revenue before Fuel Surcharge $1,166.5 $1,162.3 $4,613.6 $4,508.2
Adjusted Operating Ratio 90.1% 90.3% 89.8% 90.6%
Please refer to pages 23 to 24 of the Company's management discussion and analysis for the year ended December 31, 2019 for reconciliations to the most directly comparable IFRS measures of the
Adjusted Operating Ratio of each reporting segment.
Note:
1. This is a non-IFRS measure
APPENDIX 33You can also read
