Flatdeck and tanker is in, when it comes to TFI International’s U.S. truckload operations. Van and reefer is out. Speaking on a Q4 earnings call with analysts, TFI International chairman and CEO Alain Bedard said the timing of the sale of its U.S. truckload van division, CFI, was “opportunistic” and allowed the company to pivot into a more desirable specialized truckload segment with its billion-dollar acquisition of Daseke.
“We’re big fans of tanks, big fans of flatbed and dump operations,” Bedard said. “That is really our focus. Daseke is a perfect fit for us.”
TFI International held off offering guidance for 2024 as it integrates the flatdeck mega-fleet, which will likely not contribute to profits this year but could add 50 cents a share in 2025.
The company also expanded on its plan to spin out its U.S. truckload division into a separate publicly traded entity, and Bedard said it may invite other players to participate in that spinout.
“This project may not just be for TFI,” Bedard said. “Maybe some other speciality truckload may join this project to create size. We are open to discussions with other parties late in 2024 to be ready to do something in 2025.”
Despite the size of the Daseke acquisition, Bedard said it will be easy to integrate relative to UPS Freight.
“UPS was a carve-out, it was not making money, it had an OR (operating ratio) of 110,” he said. “Daseke is a different story, it will be a sub-90 OR in six to 12 months in my mind. The operation groups there are very, very, very good. In general, it’s an easy transaction for us compared to UPS Freight, which was very complex.”
TFI closed 2023 with Q4 net income of $131.4 million (all figures U.S.), down from $153.5 million the same quarter in 2022. Total revenue for the quarter was $1.97 billion, down from $1.96 billion the same period a year earlier.
“We generated robust free cash flow during the quarter, bringing our full-year total to more than $9 per share and wrapping up 2023 on a favorable note as our team continues to strive for day-to-day efficiencies while delivering superior service,” Bedard said in an earnings release.
“We’re entering 2024 in an attractive position across all four business segments, with logistics outperforming the market boosted by our recent successful acquisition of JHT, with truckload standing to significantly benefit from our Daseke acquisition expected to close in the second quarter, and with the ongoing turnaround at LTL a top priority. This involves a renewed focus on LTL growth and quality of revenue through improved service, as evidenced by our latest cargo claims ratio of only 0.5% for U.S. LTL, down from 1.5% a year earlier, and our second-to-none Canadian LTL cargo claims ratio of 0.1%.”
For the full year 2023, TFI International reported total revenue of $7.52 billion compared to $8.81 billion in 2022. That included a profit of $504.9 million compared to $823.2 million the prior year.
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