TFI International Q4 Earnings Call Highlights

Key Points

• TFI generated more than $10 per share of free cash flow in 2025, totaling $832 million, with Q4 free cash flow of $259 million (+25% YoY); the company raised its dividend and repurchased over $225 million of common shares.
• Fourth‑quarter revenue before fuel surcharge fell to $1.7 billion from $1.8 billion a year earlier and operating income was $127 million (7.6% margin), with mixed segment results—LTL down 10% to $661 million, truckload and logistics also showing revenue and operating‑income declines and varying margins.
• Management issued a cautious Q1 2026 adjusted EPS guide of $0.50–$0.60, cited a prolonged freight downturn and expected about 250 bps of sequential U.S. LTL margin deterioration (plus roughly $5–$6M of winter disruption costs), plans $225–$250 million of net capex for 2026, and aims to lower leverage from 2.5x funded debt/EBITDA while targeting $200–$300 million of tuck‑in M&A if larger deals don’t materialize.

TFI International NYSE: TFII used its fourth-quarter 2025 earnings call to highlight strong free cash flow generation, discuss uneven conditions across its transportation segments, and outline a cautious near-term earnings outlook amid what management described as a prolonged freight recession.

Free cash flow and capital returns remained key themes

Chairman, President, and CEO Alain Bédard said the company generated more than $10 per share of free cash flow in 2025, totaling $832 million for the year. Fourth-quarter free cash flow was $259 million, up 25% year over year, supported by what he called “international initiatives” and continued focus on “controlling the controllables” during a soft market.

Bédard emphasized TFI’s approach to capital allocation, saying the company invests for the long term while returning excess capital to shareholders when possible. He noted the board raised the dividend during the fourth quarter and that the company repurchased more than $225 million of common shares during 2025.

Quarterly results: revenue declined, margins varied by segment

For the fourth quarter, TFI reported total revenue before fuel surcharge of $1.7 billion, down from $1.8 billion a year earlier. Operating income was $127 million, representing a 7.6% margin. Net cash from operating activities improved to $282 million, up 8% from the prior-year quarter.

By segment, management described mixed performance:

• LTL (39% of segmented revenue before fuel surcharge): Revenue of $661 million was down 10% year over year. Adjusted operating ratio improved to 89.9 from 90.3. Operating income was $62 million versus $70 million a year earlier, and return on invested capital was 12.2%.
• Truckload (40%): Revenue of $674 million compared with $693 million last year. Operating income was $48 million versus $60 million, while operating ratio worsened to 93.2% from 91.5%. Return on invested capital was 5.8%.
• Logistics (21%): Revenue of $358 million compared with $410 million in the prior-year quarter. Operating income was $31 million versus $43 million, with margin of 8.7% compared with 10.5%. Management noted logistics margin expanded by 30 basis points sequentially versus the third quarter despite slightly lower revenue. Return on invested capital was 11.8%.

2026 outlook: cautious Q1 EPS range, capex expectations

Management provided an adjusted diluted EPS outlook for the first quarter of 2026 of $0.50 to $0.60. Bédard said the guide reflects a year-over-year decline due to continued “transition” conditions and a freight downturn that has persisted since 2023.

For 2026 capital spending, the company expects net capex (excluding real estate) of $225 million to $250 million. Bédard said the outlook assumes no significant change, positive or negative, in the operating environment.

During Q&A, CFO David Saperstein offered margin and seasonality context behind the first-quarter guidance. He said the company expects about 250 basis points of sequential margin deterioration in U.S. LTL, noting the first quarter is “very back-end weighted to March,” making early-quarter trend assessment difficult. He also said the company estimated at least 100 basis points of impact tied to weather-related overtime and disruptions, later quantifying the cost at roughly $5 million to $6 million above what the company would consider normal winter conditions because disruptions hit major markets.

Demand, pricing, and operational initiatives across the network

Management described early signs of improvement in truckload, tied in part to potential supply tightening. Bédard referenced changes in the U.S. around commercial driver licensing and permits, as well as Canadian compliance changes affecting “Driver Inc.” arrangements, which he said could cause some operators to exit. Still, he characterized the signals as “very early days.”

On pricing, Bédard said spot rates in van were moving up, which also affects TFI’s LTL linehaul costs where third parties are used. However, he said contract pricing tends to lag spot pricing and that longer-term rate improvement would take time, given the current supply-demand balance and shipper behavior.

On the LTL side, Bédard said the market remains difficult and suggested softness could persist through 2026. He contrasted Canadian LTL performance with the U.S. business, citing cost control and an especially low claims ratio in Canada during the fourth quarter, while saying U.S. claims (which he cited at 0.9% of revenue) remain an area to improve in 2026.

Executives also discussed tools and initiatives aimed at improving U.S. LTL performance, including terminal-level financial visibility and software deployments (Optym) for linehaul and delivery, with additional implementation planned for pickup optimization. Management pointed to service metrics improving year over year in the fourth quarter, including missed pickups and reschedules, while on-time performance remained around 91%.

In truckload, Bédard reiterated focus on industrial end markets and said the company is prioritizing opportunities tied to energy infrastructure, wind, solar, and data centers. He described a strategy of working closely with builders and noted potential activity in northern U.S. states tied to projects reportedly awarded for Meta and Google, while emphasizing that execution depends on winning bids. Saperstein added that TFI’s U.S. flatbed operation generates over $1 billion in revenue and that the company is going to market as a consolidated group for large customers needing nationwide service.

Balance sheet, M&A approach, and board update

TFI ended 2025 with a 2.5x funded debt-to-EBITDA ratio. Bédard said management would prefer to bring leverage closer to 2x over time. He also discussed ongoing interest in acquisitions, but said larger transactions require patience and added that uncertainty around a future U.S.-Canada-Mexico agreement makes major deals harder to evaluate. As a result, he suggested 2026 could be focused more on smaller transactions, including potential regional LTL additions. He said the company could pursue roughly $200 million to $300 million in tuck-in M&A in 2026 if it does not do a larger deal.

Saperstein also noted that the company’s leverage calculation under banking covenants includes letters of credit and the book value of earnouts, which he said can make covenant leverage appear higher than “economic leverage.”

Separately, Bédard addressed a board change disclosed in a press release, thanking André Bérard for more than two decades of service and congratulating Diane Giard on her nomination as lead director.

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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