TFI International Q2 Earnings Call Highlights

Key Points

• TFI International exceeded expectations in Q2: Adjusted EPS rose 38% year over year to CAD 1.85, while revenue before fuel surcharge increased 6% to CAD 1.9 billion and operating income climbed nearly 30% to CAD 220 million.
• Truckload led segment performance, with operating income up 50% and the adjusted operating ratio improving to 86.1%, supported by tighter capacity, stronger pricing and growth in specialized freight. LTL also grew profitably, but management plans to cut low-priced 3PL volume and prioritize pricing discipline.
• TFI forecast third-quarter adjusted EPS of CAD 1.70–CAD 1.80 but withheld full-year earnings guidance pending greater confidence in the LTL recovery. The company remains positioned for acquisitions and is beginning an autonomous-trucking pilot for U.S. LTL line-haul operations.

TFI International NYSE: TFII reported second-quarter results that Chairman, President and Chief Executive Officer Alain Bédard said exceeded the company’s expectations, led by double-digit operating-income growth across its less-than-truckload, truckload and logistics segments.

Adjusted diluted earnings per share reached CAD 1.85, above the company’s previously cited CAD 1.50-to-CAD 1.60 range and 38% higher than a year earlier. Revenue before fuel surcharge increased 6% year over year to CAD 1.9 billion, while operating income rose nearly 30% to CAD 220 million. The company’s operating margin expanded to 11.6% from 9.5% in the prior-year quarter.

Bédard said investments made during the recent freight-market slowdown, including internal operational work and acquisitions, are beginning to benefit results. TFI generated more than CAD 200 million in free cash flow during the quarter, ended June with funded debt to EBITDA of 2.4 times, down from 2.5 times at the start of the year, and paid nearly CAD 40 million in quarterly dividends.

Truckload Results Lead Segment Gains

Truckload was the strongest-performing segment in the quarter. Revenue before fuel surcharge rose 7% year over year to CAD 761 million, representing 40% of segmented revenue. Revenue per truck per week, excluding fuel surcharge, increased 13%, while brokerage revenue climbed 34%.

Truckload operating income rose 50% to CAD 106 million, and the adjusted operating ratio improved by 400 basis points to 86.1%. Bédard attributed the improvement to tighter supply in the truckload market, reduced capital intensity, equipment rationalization and a more favorable mix of specialized operations.

Chief Financial Officer David Saperstein said truckload pricing and revenue per tractor accelerated through the quarter. Revenue per truck per week was up 11.1% in April, 13.3% in May and 14.4% in June, with July tracking at roughly the June pace through the date of the call.

The company said approximately 25% of its U.S. flatbed business is exposed to the spot market, while highly specialized operations and its Canadian specialized business have limited spot exposure. Management said it has also been renegotiating with customers where contracted rates lag market conditions.

Bédard pointed to demand in wind energy, data centers, aerospace and steel-related freight as areas of strength for specialized flatbed operations. He said some other areas, including drywall, remain weaker amid subdued housing construction. Canadian truckload operations are also facing softer conditions in steel and forest products, while aluminum-related freight has been strong.

LTL Pricing Actions Take Priority

TFI’s LTL segment generated CAD 725 million in revenue before fuel surcharge, up 3% year over year. Operating income increased 17% to CAD 86 million, and the adjusted operating ratio was 88.5%.

However, management said the LTL business has been handling too much low-priced volume, particularly in blanket pricing arrangements with third-party logistics providers. Shipment count increased 7.5% during the quarter, while revenue per shipment before fuel surcharge declined 2%.

“We have too much volume and not enough price,” Saperstein said, adding that the company is working to raise rates and reduce unprofitable shipments. Bédard said the issue is concentrated in blanket 3PL business rather than small- and medium-sized business or corporate accounts.

Management expects LTL volume to decline somewhat as pricing is brought closer to market levels. The company said it was operating at capacity after the rapid volume increase created overtime costs and required the use of third-party carriers. TFI is replacing legacy UPS Freight pricing tools, implementing pricing software used by peers and using data analytics and artificial intelligence to identify problematic lanes, terminals, freight and customers.

TFI said third-party logistics providers account for more than one-third of its LTL business, a level management considers too high. Within that mix, customer-specific pricing represents about 45%, while blanket pricing accounts for about 55%.

Logistics Growth and Updated Outlook

Logistics revenue before fuel surcharge rose 10% to CAD 432 million, while operating income grew 32% to CAD 50 million. The segment’s operating margin reached 11.5%, nearly two percentage points above the year-earlier level.

Management said its truck-moving business is expected to be busier in the second half of 2026 and into 2027 after a comparatively weak first half. The company said activity began improving late in the second quarter and is evident in the third quarter.

For the third quarter, TFI forecast adjusted EPS of CAD 1.70 to CAD 1.80. It expects truckload adjusted operating ratio improvement of 500 to 600 basis points year over year, logistics improvement of 250 to 350 basis points, and a comparable operating ratio in LTL. The company maintained its full-year net capital expenditure forecast, excluding real estate, of CAD 225 million to CAD 250 million.

Management did not restore full-year earnings guidance, saying it wants more confidence in the LTL recovery. Still, Bédard said the supply-driven truckload cycle appears more durable than previous demand-led cycles, citing regulatory and safety-related changes affecting trucking capacity.

Capital Allocation, M&A and Autonomous Trucking

Bédard said TFI remains interested in acquisitions, particularly specialty truckload businesses, smaller non-union LTL operations that could help build its U.S. network, and profitable asset-light logistics companies. He said the company’s free cash flow and leverage position provide flexibility, while noting that repurchasing TFI shares and reducing leverage are also capital-allocation alternatives.

TFI also said it is beginning to work with a major autonomous-truck technology provider for U.S. LTL line-haul operations. Initially, TFI expects to broker freight to the provider, which will operate the autonomous vehicles. Saperstein said the company could begin purchasing the technology for new trucks next year if the initial program performs as expected.

Management cited potential benefits including around-the-clock utilization, reduced idling and braking, lower accident exposure and improved reliability, but did not provide a timeline for broader deployment.

About TFI International (NYSE:TFII)

TFI International Inc NYSE: TFII is a leading North American transport and logistics company headquartered in Montreal, Quebec. The company operates through a network of subsidiaries that provide truckload, less-than-truckload (LTL), specialized freight, package and courier, and logistics services. By integrating these operations, TFI delivers comprehensive end-to-end solutions, including long-haul and regional transportation, expedited delivery, warehousing, and cross-border freight movement.

Originally founded in 1957 as a regional trucking outfit in Cabano, Quebec, TFI International has expanded significantly through a disciplined acquisition strategy.

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