- Revenue before fuel surcharge from continuing operations up 17%, to $1.05 billion
- Adjusted EBITDA from continuing operations* up 13%, to $128.2 million
- Gain on the sale of property of $70.1 million
- Net income from continuing operations of $98.8 million, or $1.07 per diluted share
- Adjusted net income from continuing operations* of $48.8 million, or $0.53 per diluted share
- Solid cash flow generation used to reimburse $175 million in long-term debt
* This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Measures” section below.
Montreal, Quebec, October 26, 2017 – TFI International Inc. (TSX: TFII; OTCQX: TFIFF), a North American leader in the transportation and logistics industry, today announced its results for the third quarter ended September 30, 2017.
“We constantly strive to create and unlock shareholder value at TFI International. During the third quarter, we remained focused on operational efficiencies, executed the sale and leaseback of select real estate assets and produced strong cash flow,” said Alain Bédard, Chairman, President and Chief Executive Officer. “We are encouraged by recent improvements in the U.S. truckload market, which should allow us to increase contract renewal rates as we move through 2018.”
“In the Package and Courier segment, our focus on business mix and cost reduction yielded a slightly higher margin despite a volume decline. Our Logistics activities generated positive revenue growth and stable margins, and while Less-Than-Truckload activities in Eastern Canada saw lower volumes from the U.S., we are proactively adapting supply to demand,” Mr. Bédard continued. “By utilizing a portion of our strong cash flow to reduce debt, we further improved our financial position which in turn allows us to invest in high-return activities, while the renewal of our normal course issuer bid permits us to return excess cash to shareholders.”
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
|QUARTERS ENDED SEPT. 30||NINE MONTHS ENDED SEPT. 30|
|Total revenue from continuing operations||1,154.4||975.5||3,558.5||2,887.5|
|Revenue before fuel surcharge from continuing operations||1,048.2||897.4||3,222.8||2,668.0|
|Adjusted EBITDA from continuing operations1||128.2||113.8||383.5||314.4|
|Operating income from continuing operations||60.5||69.3||177.0||179.5|
|Net cash from operating activities from continuing operations||128.9||88.3||256.5||228.1|
|Adjusted net income from continuing operations1||48.8||53.5||137.9||136.8|
|Per share – diluted1 ($)||0.53||0.57||1.50||1.42|
|Net income from continuing operations||98.8||51.1||37.8||110.7|
|Per share – diluted ($)||1.07||0.54||0.41||1.15|
|Per share – diluted ($)||1.07||0.55||0.41||6.18|
|Weighted average number of shares (‘000s)||89,876||92,218||90,830||94,470|
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.
2 Includes net income from discontinued operations, of which a $490.8 million after-tax gain on the sale of the Waste Management segment was recorded in the first quarter of 2016.
Total revenue from continuing operations reached $1.15 billion, up 18% from last year. Net of fuel surcharge, revenue from continuing operations rose 17% to $1.05 billion. The increase reflects the contribution from business acquisitions, mainly CFI, completed on October 27, 2016, partially offset by slightly lower business volume for existing operations and unfavourable currency variations.
Operating income from continuing operations was $60.5 million, or 5.8% of revenue before fuel surcharge, versus $69.3 million a year ago, or 7.7% of revenue. The decrease mainly reflects difficult conditions in the U.S. domestic TL market, partially offset by efficiency gains in other segments. TFI International also incurred one-time costs of $3.2 million related to the integration of CFI, mainly in regards to fleet rebranding and renewal programs.
Including the previously announced $70.1 million gain ($59.7 million, net of tax) on the sale of property, net income from continuing operations was $98.8 million, or $1.07 per diluted share, versus $51.1 million, or $0.54 per diluted share, a year ago. Adjusted net income from continuing operations, which excludes amortization of intangible assets related to business acquisitions, net changes in the fair value of derivatives, net foreign exchange gain or loss, gain or loss on sale of property and impairment of intangible assets, net of tax, amounted to $48.8 million, or $0.53 per diluted share, compared with $53.5 million last year, or $0.57 per diluted share. Net income reached $98.8 million, or $1.07 per diluted share, versus $51.5 million, or $0.55 per diluted share last year.
For the first nine months of 2017, total revenue from continuing operations reached $3.6 billion, versus $2.9 billion in the first nine months of 2016. Net of fuel surcharge, revenue from continuing operations reached $3.2 billion, up from $2.7 billion last year. Operating income from continuing operations totalled $177.0 million, or 5.5% of revenue before fuel surcharge, compared with $179.5 million and 6.7% last year.
Net income from continuing operations was $37.8 million, or $0.41 per diluted share, versus $110.7 million, or $1.15 per diluted share last year. In addition to the aforementioned gain on sale of property, this year’s net income also includes impairment charges totalling $143.0 million (138.4 million, net of tax) recorded in the first half of the year. Adjusted net income from continuing operations stood at $137.9 million, or $1.50 per diluted share, up from $136.8 million, or $1.42 per diluted share last year. Net income was $37.8 million, or $0.41 per diluted share, versus net income of $594.2 million, or $6.18 per diluted share last year. Last year’s net income included a $490.8 million after-tax gain on the sale of the Waste Management segment.
SEGMENTED RESULTS FROM CONTINUING OPERATIONS
|(IN MILLIONS OF DOLLARS)||QUARTERS ENDED SEPT. 30||NINE MONTHS ENDED SEPT. 30|
|Package and Courier||305.5||321.2||950.0||949.3|
|$||% of Rev.1||$||% of Rev.1||$||% of Rev.1||$||% of Rev.1|
|Operating Income (Loss)|
|Package and Courier||31.4||10.3%||32.8||10.2%||88.6||9.3%||80.8||8.5%|
Note: due to rounding, totals may differ slightly from the sum.
1 Revenue before fuel surcharge.
CASH FLOW AND FINANCIAL POSITION
During the third quarter, TFI International generated net cash flow from operating activities from continuing operations of $128.9 million, versus $88.3 million last year. The Company used this cash flow, combined with a portion of the proceeds from the sale of real estate, to reimburse $175.4 million in long-term debt, while returning additional funds to shareholders through the payment of dividends amounting to $17.1 million and the repurchase of common shares for consideration of $8.5 million.
TFI International’s long-term debt to equity ratio stood at 1.11 as at September 30, 2017, down from 1.29 three months earlier.
In the first nine months of 2017, the net cash flow from operating activities from continuing operations amounted to $256.5 million, versus $228.1 million last year.
TFI International will hold a conference call on Friday, October 27, 2017 at 9:00 a.m. Eastern Time, to discuss these results. Business media are also invited to listen to the call. Interested parties can join the call by dialling 1-877-223-4471. A recording of the call will be available until midnight, November 10, 2017, by dialling 1-800-585-8367 or 416-621-4642 and entering passcode 94510353.
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of TFI International. These statements are based on suppositions and uncertainties as well as on management’s best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for TFI International’s products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
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 (IFRS) 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 below.
Adjusted EBITDA from continuing operations
Adjusted EBITDA from continuing operations is calculated as net income or loss from continuing operations before finance income and costs, income tax expense, depreciation, amortization, gain or loss on sale of land and buildings and assets held for sale and impairment of intangible assets. Management believes adjusted EBITDA from continuing operations to be a useful supplemental measure. Adjusted EBITDA from continuing operations is provided to assist in determining the ability of the Company to generate cash from its operations.
|Adjusted EBITDA from continuing operations
(unaudited, in thousands of dollars)
|QUARTERS ENDED SEPT. 30||NINE MONTHS ENDED SEPT. 30|
|Net income from continuing operations||98,774||51,069||37,796||110,672|
|Net finance costs||16,626||6,681||47,578||43,616|
|Income tax expense||15,245||14,674||26,971||31,826|
|Depreciation of property and equipment||52,079||31,862||161,259||96,446|
|Amortization of intangible assets||15,567||12,672||45,251||38,414|
|(Gain) loss on sale of land and buildings||17||(3,167)||162||(6,566)|
|Gain on sale of assets held for sale||(70,115)||–||(78,534)||–|
|Impairment of intangible assets||–||–||142,981||–|
|Adjusted EBITDA from continuing operations||128,193||113,791||383,464||314,408|
Adjusted net income from continuing operations and adjusted earnings per share from continuing operations, basic or diluted
Adjusted net income from continuing operations is calculated as net income or loss excluding amortization of intangible assets related to business acquisitions, net changes in the fair value of derivatives, net foreign exchange gain or loss, gain or loss on sale of land and buildings and assets held for sale, impairment of intangible assets, and income or loss from discontinued operations, net of tax. Adjusted earnings per share from continuing operations, basic or diluted, is calculated as adjusted net income from continuing operations divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income from continuing operations and adjusted earnings per share from continuing operations to measure its performance from one period to the next, without the variation caused by the impacts of the items described above. The Company excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding these items does not imply they are necessarily non-recurring.
|Adjusted net income from continuing operations
(unaudited, in thousands of dollars, except per share data)
|QUARTERS ENDED SEPT. 30||NINE MONTHS ENDED SEPT. 30|
|Amortization of intangible assets related to business acquisitions, net of tax||9,870||7,701||28,224||23,510|
|Net change in fair value of derivatives, net of tax||(494)||(2,790)||(1,231)||5,614|
|Net foreign exchange loss, net of tax||428||230||1,833||2,430|
|Gain on sale of land and buildings and assets held for sale, net of tax||(59,735)||(2,727)||(67,134)||(5,444)|
|Impairment of intangible assets, net of tax||–||–||138,438||–|
|Net income from discontinued operations||–||(434)||–||(483,568)|
|Adjusted net income from continuing operations||48,843||53,483||137,926||136,782|
|Adjusted earnings per share from continuing operations – basic||0.54||0.58||1.52||1.45|
|Adjusted earnings per share from continuing operations – diluted||0.53||0.57||1.50||1.42|