TFI International Announces 2022 Fourth Quarter and Full-Year Results

TFI International Inc.

• Fourth quarter operating income of $216.9 million increased 1% over the prior year quarter

• Fourth quarter net income of $153.5 million increased 6% compared to Q4 2021, while adjusted net income¹ of $151.8 million increased 2%

• Fourth quarter diluted earnings per share (diluted “EPS”) of $1.74 increased 14% compared to Q4 2021, while adjusted diluted EPS¹ of $1.72 increased 10%

• Fourth quarter net cash from operating activities grew to $248.3 million, up 30% over the prior year period and free cash flow¹ grew to $188.3 million, up 56% over the prior year period

• Full year diluted EPS of $9.02 increased from $7.91 in 2021, while adjusted diluted EPS¹ of $8.02 increased from $5.23

• The Board of Directors approved a $0.35 quarterly dividend, an increase of 30%

MONTREAL, Feb. 06, 2023 (GLOBE NEWSWIRE) -- TFI International Inc. (NYSE and TSX: TFII), a North American leader in the transportation and logistics industry, today announced its results for the fourth quarter and full year ended December 31, 2022. All amounts are shown in U.S. dollars.

“TFI International successfully capped 2022 with strong fourth quarter results, generating slightly higher operating income on significantly improved operating margins, a 53% increase in the full-year adjusted diluted EPS and a 26% increase in the full-year free cash flow, despite macro volatility, fuel-related working capital outlays, and the sale of CFI assets last summer that served to strengthen our overall business mix and returns,” said Alain Bédard, Chairman, President and Chief Executive Officer.  “As laid out at our recent Investor Day, our unique positioning includes business line diversity, exposure to attractive niche markets and numerous self-help initiatives that are producing remarkable success during turbulent economic times. Most importantly, our relative stability, margin expansion and free cash flow reflect the tireless efforts of our people, who are diligently adhering to our longstanding operating principles regardless of external factors. Capitalizing on this attractive competitive positioning and our sharp focus on the fundamentals, we continue to strategically allocate capital toward attractive acquisitions, with our acquisition pipeline remarkably strong and the majority of these closings expected in the first half of the year.  During the quarter, our Board of Directors approved a 30% increase to our quarterly dividend and we continued to repurchase shares, both reflecting our favorable outlook.  We enter 2023 in the best position in TFI International’s history and are eager to create additional shareholder value in the year ahead.”

SELECTED FINANCIAL DATA AND HIGHLIGHTS (UNAUDITED)

Financial highlights	Quarters ended December 31		Years ended December 31
(in millions of U.S. dollars, except per share data)	2022	2021*	2022	2021*
Total revenue	1,956.7	2,140.9	8,812.5	7,220.4
Revenue before fuel surcharge	1,616.5	1,888.4	7,357.1	6,468.8
Adjusted EBITDA1	305.0	318.5	1,425.0	1,076.5
Operating income	216.9	215.0	1,146.0	979.2
Net cash from operating activities	248.3	190.3	971.6	855.4
Net income	153.5	144.1	823.2	754.4
EPS - diluted ($)	1.74	1.52	9.02	7.91
Adjusted net income1	151.8	148.6	731.7	498.3
Adjusted EPS - diluted1 ($)	1.72	1.57	8.02	5.23
Weighted average number of shares ('000s)	86,670	92,669	89,360	93,054
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.
* Recasted for adjustments to provisional amounts of UPS Freight prior year business combination.

FOURTH QUARTER RESULTS
Total revenue of $1.96 billion compared to $2.14 billion in the prior year period and revenue before fuel surcharge of $1.62 billion compared to $1.89 billion in the prior year period. The decline is primarily due to the sale of CFI’s Truckload, Temp Control and Mexican non-asset logistics business ("CFI") in August 2022, which had sales of $139.2 million in Q4 2021, as well as to reduced volumes in US LTL operations driven by a combination of weaker end market demand as well as the Company's intentional elimination of unprofitable freight.

Operating income grew 1% to $216.9 million from $215.0 million the prior year period with a 200 basis point operating margin¹ improvement, despite $12.4 million of operating income included in the fourth quarter of 2021 from CFI.

Net income grew 6% to $153.5 million from $144.1 million in the prior year period, and net income of $1.74 per diluted share was up relative to $1.52 in the prior year period.  Adjusted net income, a non-IFRS measure, was $151.8 million, or $1.72 per diluted share, up from $148.6 million, or $1.57 per diluted share, the prior year period.

Total revenue declined for all segments relative to the prior year period with decreases of 3% for Package and Courier, 6% for Less-Than-Truckload, 14% for Truckload and 11% for Logistics. In contrast, operating income was higher for Package and Courier by 2%, for Truckload by 16% and for Logistics by 4%, and lower for Less-Than-Truckload by 15% in the fourth quarter in comparison to the prior-year. Truckload operating income in the prior year period included a $12.4 million contribution from CFI which was partially offset by an increased contribution of $9.7 million from the sale of real estate in the quarter. Operating income in the Less-Than-Truckload segment, more specifically U.S. LTL, decreased due to the lower freight volumes as well as to non-recurring costs related to exiting the transition service agreement with UPS. On February 1, 2023, the financial system supporting the U.S. LTL operations was migrated from UPS to a standalone system managed by TFI.

FULL-YEAR RESULTS
Total revenue was $8.81 billion for 2022 versus $7.22 billion in 2021.  Revenue before fuel surcharge of $7.36 billion was up 14% compared to the prior year.

Operating income totaled $1,146.0 million, or 16% of revenue before fuel surcharge, an increase of 17% compared to $979.2 million and 15% of revenue before fuel surcharge in the prior year. The increase is mainly attributable to the contributions from acquisitions, including a gain on sale of business of $73.7 million.

Net income was $823.2 million, or $9.02 per diluted share, compared to $754.4 million, or $7.91 per diluted share a year earlier.  Adjusted net income and Adjusted diluted EPS, non-IFRS measures, were $731.7 million, or $8.02 per diluted share, compared to $498.3 million, or $5.23 per diluted share the prior year.

During 2022, total revenue grew 1% for Package and Courier, 43% for Less-Than-Truckload, 13% for Truckload and 6% for Logistics relative to the prior year.  Operating income was up 24% for Package and Courier, 59% for Truckload, down 18% for Less-Than-Truckload, mainly due to the inclusion of the bargain purchase gain in 2021, and down 2% for Logistics.

¹ _{This is a non-IFRS measure. For a reconciliation, refer to the "Non-IFRS and Other Financial Measures" section below.}

SEGMENTED RESULTS

^{To facilitate the comparison of business level activity and operating costs between periods, the Company compares the revenue before fuel surcharge (“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses. Note that “Total revenue” is not affected by this reallocation.}

Selected segmented financial information

(unaudited) (in thousands of U.S. dollars)	Package  and  Courier		Less- Than-Truckload*		Truckload		Logistics		Corporate		Eliminations		Total
Three months ended December 31, 2022
Revenue before fuel surcharge1	129,074		720,783		403,351		375,968		—		(12,681	)	1,616,495
% of total revenue2	9	%	46	%	25	%	20	%					100	%
Adjusted EBITDA3	43,935		126,307		104,007		43,473		(12,766	)	—		304,956
Adjusted EBITDA margin3,4	34.0	%	17.5	%	25.8	%	11.6	%					18.9	%
Operating income (loss)	37,563		88,240		71,842		34,204		(14,989	)	—		216,860
Operating margin3,4	29.1	%	12.2	%	17.8	%	9.1	%					13.4	%
Total assets less intangible assets3	182,605		2,107,874		1,085,629		263,017		274,595		—		3,913,720
Net capital expenditures3	6,045		57,273		14,248		131		58		—		77,755
Three months ended December 31, 2021
Revenue before fuel surcharge1	150,074		822,911		506,432		427,561		—		(18,555	)	1,888,423
% of total revenue2	8	%	44	%	27	%	20	%					100	%
Adjusted EBITDA3	43,496		141,189		111,848		42,465		(20,532	)	—		318,466
Adjusted EBITDA margin3,4	29.0	%	17.2	%	22.1	%	9.9	%					16.9	%
Operating income (loss)	36,713		103,449		61,803		32,869		(19,855	)	—		214,979
Operating margin3,4	24.5	%	12.6	%	12.2	%	7.7	%					11.4	%
Total assets less intangible assets3	186,116		2,162,534		1,362,007		292,026		88,059				4,090,742
Net capital expenditures3	5,926		46,986		15,113		192		20		—		68,237
YTD December 31, 2022
Revenue before fuel surcharge1	498,972		3,243,557		1,986,331		1,689,122		—		(60,918	)	7,357,064
% of total revenue2	7	%	45	%	28	%	20	%					100	%
Adjusted EBITDA3	160,838		567,759		557,058		178,690		(39,321	)	—		1,425,024
Adjusted EBITDA margin3,4	32.2	%	17.5	%	28.0	%	10.6	%					19.4	%
Operating income (loss)	134,306		470,807		366,868		140,446		33,611		—		1,146,038
Operating margin3,4	26.9	%	14.5	%	18.5	%	8.3	%					15.6	%
Total assets less intangible assets3	182,605		2,107,874		1,085,629		263,017		274,595		—		3,913,720
Net capital expenditures3	10,636		132,814		31,658		676		170		—		175,954
YTD December 31, 2021
Revenue before fuel surcharge1	560,147		2,440,640		1,901,157		1,620,926		—		(54,085	)	6,468,785
% of total revenue2	9	%	39	%	30	%	23	%					100	%
Adjusted EBITDA3	134,845		415,641		431,181		169,005		(74,193	)	—		1,076,479
Adjusted EBITDA margin3,4	24.1	%	17.0	%	22.7	%	10.4	%					16.6	%
Operating income (loss)	108,440		572,798		230,189		142,794		(74,992	)	—		979,229
Operating margin3,4	19.4	%	23.5	%	12.1	%	8.8	%					15.1	%
Total assets less intangible assets3	186,116		2,162,534		1,362,007		292,026		88,059		—		4,090,742
Net capital expenditures3	14,445		52,703		69,177		316		141		—		136,782
1 Includes intersegment revenue. 2 Segment revenue including fuel and intersegment revenue to consolidated revenue including fuel and intersegment revenue. 3 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS and Other Financial Measures” section below. 4 As a percentage of revenue before fuel surcharge. * Recasted for adjustments to provisional amounts of UPS Freight prior year business combination.

CASH FLOW
Net cash flow from operating activities was $971.6 million during 2022 compared to $855.4 million the prior year. The 14% increase was due to stronger operating performance and contributions from acquisitions. The Company returned $665.3 million to shareholders during the year, of which $97.3 million was through dividends and $568.0 million was through share repurchases.

On December 15, 2022, the Board of Directors of TFI International declared a quarterly dividend of $0.35 per outstanding common share paid on January 16, 2023, representing a 30% increase over the $0.27 quarterly dividend declared in Q4 2021.

CONFERENCE CALL
TFI International will host a conference call on Monday, February 6, 2023 at 5:00 p.m. Eastern Time to discuss these results. Interested parties can join the call by dialing 1-855-327-6837 or 1-631-891-4304. A recording of the call will be available until 11:59 p.m Eastern, Monday February 20, 2023 by dialing 1-844-512-2921 or 1-412-317-6671.

ABOUT TFI INTERNATIONAL
TFI International Inc. is a North American leader in the transportation and logistics industry, operating across the United States and Canada through its subsidiaries. TFI International creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TFI International umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TFI International companies service the following segments:

• Package and Courier;

• Less-Than-Truckload;

• Truckload;

• Logistics.

TFI International Inc. is publicly traded on the New York Stock Exchange and the Toronto Stock Exchange under symbol TFII. For more information, visit www.tfiintl.com.

FORWARD-LOOKING STATEMENTS
The Company may make statements in this report that reflect its current expectations regarding future results of operations, performance and achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to management. Words such as “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 words and expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements which reference issues only as of the date made. The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: the highly competitive market conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in interest rates, cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers, credit market liquidity, and the Company’s ability to identify, negotiate, consummate, and successfully integrate acquisitions. In addition, any material weaknesses in internal control over financial reporting that are identified, and the cost of remediation of any such material weakness and any other control deficiencies, may have adverse effects on the Company and impact future results.

The foregoing list should not be construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers should also refer to the section “Risks and Uncertainties” at the end of the 2022 Q3 MD&A for additional information on risk factors and other events that are not within the Company’s control. The Company’s future financial and operating results may fluctuate as a result of these and other risk factors.

NON-IFRS FINANCIAL MEASURES

This press release includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by International Financial Reporting Standards as issued by the international Accounting Standards Board (IASB) and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of the non-IFRS measures used in this press release and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided in the exhibits.

For further information:
Alain Bédard
Chairman, President and CEO
TFI International Inc.
647-729-4079
abedard@tfiintl.com

TFI International Inc.	UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
	DECEMBER 31, 2022 AND 2021

(in thousands of U.S. dollars)	As at		As at
	December 31, 2022		December 31, 2021*
Assets
Cash and cash equivalents	147,117		19,292
Trade and other receivables	1,030,726		1,056,023
Inventoried supplies	24,181		24,402
Current taxes recoverable	12,788		6,080
Prepaid expenses	38,501		54,518
Assets held for sale	10,250		1,943
Current assets	1,263,563		1,162,258
Property and equipment	2,131,955		2,455,141
Right-of-use assets	381,640		398,533
Intangible assets	1,592,110		1,792,921
Investments1	85,964		31,391
Employee benefits	4,359		-
Other assets	19,192		13,724
Deferred tax assets	27,047		29,695
Non-current assets	4,242,267		4,721,405
Total assets	5,505,830		5,883,663
Liabilities
Trade and other payables	708,768		861,908
Current taxes payable	41,714		16,552
Provisions	43,903		39,012
Other financial liabilities	19,275		10,566
Long-term debt	37,087		363,586
Lease liabilities	115,934		115,344
Current liabilities	966,681		1,406,968
Long-term debt	1,278,670		1,244,508
Lease liabilities	297,105		313,862
Employee benefits	-		68,037
Provisions	131,736		108,145
Other financial liabilities	382		8,033
Deferred tax liabilities	368,186		423,755
Non-current liabilities	2,076,079		2,166,340
Total liabilities	3,042,760		3,573,308
Equity
Share capital	1,089,229		1,133,181
Contributed surplus	41,491		39,150
Accumulated other comprehensive income	(233,321	)	(144,665	)
Retained earnings	1,565,671		1,282,689
Total equity	2,463,070		2,310,355
Contingencies, letters of credit and other commitments
Subsequent events
Total liabilities and equity	5,505,830		5,883,663
* Recasted for adjustments to provisional amounts of UPS Freight prior year’s business combination. ** The Company's financial reporting framework is IFRS as issued by the IASB. 1 The investments were previously presented as Other assets and have been recast due to the increase in value of the investments. The investments include both level 1 and level 3 investments. The level 1 investments are 1,027,696 shares of ArcBest Corporation (NYSE: ARCB).

TFI International Inc.	UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
	YEARS ENDED DECEMBER 31, 2022 AND 2021

(In thousands of U.S. dollars, except per share amounts)
	2022		2021*
Revenue	7,357,064		6,468,785
Fuel surcharge	1,455,427		751,644
Total revenue	8,812,491		7,220,429
Materials and services expenses	4,592,191		3,815,453
Personnel expenses	2,362,856		1,974,081
Other operating expenses	492,291		380,342
Depreciation of property and equipment	248,638		225,007
Depreciation of right-of-use assets	126,276		112,782
Amortization of intangible assets	55,679		55,243
Gain on sale of business	(73,653	)	-
Bargain purchase gain	-		(283,593	)
Gain on sale of rolling stock and equipment	(59,661	)	(24,644	)
Gain on derecognition of right-of-use assets	(210	)	(1,282	)
(Gain) loss on sale of land and buildings	(43	)	19
Gain on sale of assets held for sale	(77,911	)	(12,209	)
Loss on disposal of intangible assets	-		1
Total operating expenses	7,666,453		6,241,200
Operating income	1,146,038		979,229
Finance (income) costs
Finance income	(1,750	)	(5,127	)
Finance costs	82,147		78,145
Net finance costs	80,397		73,018
Income before income tax	1,065,641		906,211
Income tax expense	242,409		151,806
Net income	823,232		754,405
Earnings per share
Basic earnings per share	9.21		8.11
Diluted earnings per share	9.02		7.91
* Recasted for adjustments to provisional amounts of UPS Freight prior year’s business combination.

TFI International Inc.	UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	YEARS ENDED DECEMBER 31, 2022 AND 2021

(In thousands of U.S. dollars)
	2022		2021*
Net income	823,232		754,405
Other comprehensive (loss) income
Items that may be reclassified to income or loss in future years:
Foreign currency translation differences	(10,148	)	12,960
Net investment hedge, net of tax	(72,046	)	(15,542	)
Employee benefits, net of tax	292		87
Items that may never be reclassified to income:
Defined benefit plan remeasurement, net of tax	63,508		(4,128	)
Items directly reclassified to retained earnings:
Unrealized (loss) gain on investments in equity securities
measured at fair value through OCI, net of tax	(5,495	)	24,147
Other comprehensive (loss) income, net of tax	(23,889	)	17,524
Total comprehensive income	799,343		771,929
* Recasted for adjustments to provisional amounts of UPS Freight prior year’s business combination.

TFI International Inc.	UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
	YEARS ENDED DECEMBER 31, 2022 AND 2021

(In thousands of U.S. dollars)							Accumulated
							foreign		Accumulated
					Accumulated		currency		unrealized
					unrealized		translation		gain (loss)				Total equity
					loss on		differences		on invest-				attributable
					employee		and net		ments in		Retained		to owners
	Share		Contributed		benefit		investment		equity		earnings		of the
	capital		surplus		plans		hedge		securities		(deficit)		Company
Balance as at December 31, 2021*	1,133,181		39,150		(292	)	(156,926	)	12,553		1,282,689		2,310,355
Net income	-		-		-		-		-		823,232		823,232
Other comprehensive income (loss), net of tax	-		-		292		(82,194	)	(5,495	)	63,508		(23,889	)
Realized (loss) gain on equity securities	-		-		-		-		(1,259	)	1,259		-
Total comprehensive income (loss)	-		-		292		(82,194	)	(6,754	)	887,999		799,343
Share-based payment transactions, net of tax	-		16,298		-		-		-		-		16,298
Stock options exercised, net of tax	22,800		(6,298	)	-		-		-		-		16,502
Dividends to owners of the Company	-		-		-		-		-		(102,615	)	(102,615	)
Repurchase of own shares	(68,536	)	-		-		-		-		(499,447	)	(567,983	)
Net settlement of restricted share units, net of tax	1,784		(7,659	)	-		-		-		(2,955	)	(8,830	)
Total transactions with owners, recorded directly in equity	(43,952	)	2,341		-		-		-		(605,017	)	(646,628	)
Balance as at December 31, 2022	1,089,229		41,491		-		(239,120	)	5,799		1,565,671		2,463,070
Balance as at December 31, 2020	1,120,049		19,783		(379	)	(154,344	)	-		803,503		1,788,612
Net income*	-		-		-		-		-		754,405		754,405
Other comprehensive income (loss), net of tax	-		-		87		(2,582	)	24,147		(4,128	)	17,524
Realized (loss) gain on equity securities	-		-		-		-		(11,594	)	11,594		-
Total comprehensive income (loss)	-		-		87		(2,582	)	12,553		761,871		771,929
Share-based payment transactions, net of tax	-		27,577		-		-		-		-		27,577
Stock options exercised, net of tax	26,324		(3,266	)	-		-		-		-		23,058
Issuance of shares, net of expenses	-		-		-		-		-		-		-
Dividends to owners of the Company	-		-		-		-		-		(89,121	)	(89,121	)
Repurchase of own shares	(23,449	)	-		-		-		-		(174,704	)	(198,153	)
Net settlement of restricted share units, net of tax	10,257		(4,944	)	-		-		-		(18,860	)	(13,547	)
Total transactions with owners, recorded directly in equity	13,132		19,367		-		-		-		(282,685	)	(250,186	)
Balance as at December 31, 2021*	1,133,181		39,150