TFI International Announces 2018 Fourth Quarter and Full-Year Results

• Record fourth quarter operating and financial results
• Fourth quarter operating income up 56% over the prior year period to $103.3 million
• Operating margin up 270 basis points over the prior year fourth quarter to 8.9%, driven by margin improvement for Package and Courier, Less-Than-Truckload and Truckload
• Diluted EPS of $0.85 compares to $1.31 in Q4 2017, while Adjusted Diluted EPS¹ increased 63% to $0.96
• Fourth quarter net cash from operating activities from continuing operations up 50% to $173.8 million
• 2018 net cash from operating activities from continuing operations up 46% to $543.5 million
• $213.7 million returned to shareholders through dividends and share repurchases in 2018

Montreal, Quebec, February 27, 2019 – TFI International Inc. (TSX: TFII; OTCQX: TFIFF), a North American leader in the transportation and logistics industry, today announced its results for the fourth quarter and full year ended December 31, 2018.

“Record fourth quarter results capped a record year for TFI International, as our singular emphasis on driving profitable growth drove strong performance across all segments,” said Alain Bédard, Chairman, President and Chief Executive Officer. “Our quarterly operating income of $103.3 million was up 56%. Each segment contributed stronger revenues and notably, Truckload saw operating income more than double. I’m most pleased that our 2018 net cash from operating activities surpassed half a billion dollars for the first time.” Mr. Bédard summarized, “These strong results reflect not only our unique and favorable positioning, but our execution of the fundamentals, cycle in and cycle out, in order to drive tangible free cash flow, enhance shareholder value, and return excess capital to shareholders whenever possible.”

_{This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.}

FOURTH QUARTER RESULTS

Total revenue of $1.32 billion was up 11%, and net of fuel surcharge, revenue of $1.16 billion was up 9%, compared to the prior year period.

Operating income grew 56% to $103.3 million from $66.1 million the prior year period, driven by strong execution across the organization, increased quality of revenue, and cost efficiencies.

Net income was $76.7 million, or $0.85 per diluted share, as compared to net income of $120.2 million, or $1.31 per diluted share, the prior year period. The year-earlier period included a $76.1 million reduction in income tax expense as a result of U.S. tax reform. Adjusted net income, which excludes amortization of intangible assets related to business acquisitions, net change in the fair value of contingent considerations and accretion expense and derivatives, net foreign exchange gain or loss, impairment of intangible assets, and gain or loss on sale of land and buildings, assets held for sale and intangible assets, net of tax, and impact from the U.S. tax reform, was $86.3 million, up 60% from $53.9 million the prior year period.

Diluted earnings per share (diluted “EPS”) of $0.85 compares to $1.31 in Q4 2017, with the decrease primarily attributable to the income tax expense reduction recorded in Q4 2017, offset by higher revenues and stronger operating margins at all segments. Adjusted diluted EPS, a non-IFRS measure, increased 63% to $0.96 from $0.59 in Q4 2017.

FULL-YEAR RESULTS

Total revenue reached $5.12 billion, up from $4.84 billion in 2017. Net of fuel surcharge, revenue reached $4.51 billion, up from $4.38 billion last year. Operating income totalled $430.5 million, or 9.5% of revenue before fuel surcharge, an increase of 141% compared to $178.4 million and 4.1% of revenue the prior year.

Net income was $292.0 million, or $3.22 per diluted share, up significantly from $158.0 million, or $1.70 per diluted share in 2017. The increase of $134.0 million is mainly attributable to stronger operating income and to the impairment of intangible assets of $138.4 million, net of tax, recorded in 2017, offset by lower gain on sale of property of $52.8 million, net of tax, recorded in 2018 compared to 2017 and to the income tax recovery of $76.1 million recorded in Q4 2017 as a result of U.S. tax reform. Adjusted net income, a non-IFRS measure, was $321.6 million, up 67% from $192.2 million in 2017.

Diluted EPS of $3.22 compares to $1.70 in 2017, with the increase primarily attributable to the increase in net income described above. Adjusted diluted EPS, a non-IFRS measure, increased 71% to $3.54 from $2.07 in 2017.

SEGMENTED RESULTS

During the fourth quarter of 2018, revenue grew across all four segments relative to the fourth quarter of 2017, including double-digit percentage growth for Less-Than-Truckload. Revenue also grew for the full-year 2018 for every segment except Logistics and Last Mile, which declined 1%.

Operating income was higher for all segments except Logistics and Last Mile for the fourth quarter 2018, as compared to the prior-year period. Logistics and Last Mile operating income decreased to $2.9 million due primarily to a $12.6 million impairment to intangible assets related to a prior year business acquisition. This impairment was offset by a $13.0 million reduction in contingent consideration for the same acquisition, which was recorded in net finance costs. Excluding the $12.6 million impairment, operating income increased 9% to $15.4 million, with the operating margin increasing 50 basis points to 6.5%.

SEGMENTED RESULTS

_{Note: due to rounding, totals may differ slightly from the sum.
¹ Revenue before fuel surcharge.}

CASH FLOW AND FINANCIAL POSITION

Net cash from operating activities from continuing operations was $543.5 million during 2018, up 46% from $372.6 million in 2017. The company returned $213.7 million to shareholders during the year, of which $74.1 million was through dividends and $139.6 million was through share repurchases. TFI International’s debt-to-adjusted EBITDA ratio, a non-IFRS measure, stood at 2.3x as of December 31, 2018, down from 2.9x as of December 31, 2017.

On December 17, 2018 the Board of Directors of TFI International declared a quarterly dividend of $0.24 per outstanding common share of its capital payable on January 15, 2019, representing a 14% increase over the $0.21 quarterly dividend declared in Q4 2017.

CONFERENCE CALL

TFI International will host a conference call on Thursday, February 28, 2019 at 8:30 a.m. Eastern Time to discuss these results. Interested parties can join the call by dialling 1-877-223-4471. A recording of the call will be available until midnight, March 14, 2019, by dialing 1-800-585-8367 or 416-621-4642 and entering passcode 8561299.

FORWARD-LOOKING STATEMENTS

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 assumptions 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.

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 (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

Adjusted EBITDA is calculated as net income before finance income and costs, income tax expense (recovery), depreciation, amortization, impairment of intangible assets, and gain or loss on sale of land and buildings, assets held for sale and intangible assets. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to assist in determining the ability of the Company to generate cash from its operations.

_{Note: due to rounding, totals may differ slightly from the sum.}

Debt-to-adjusted EBITDA ratio

Debt-to-adjusted EBITDA ratio is calculated by dividing the total long-term debt by the adjusted EBITDA.

Adjusted net income and adjusted earnings per share (adjusted “EPS”), basic or diluted

Adjusted net income is calculated as net income excluding amortization of intangible assets related to business acquisitions, net change in the fair value of contingent considerations and accretion expense and derivatives, net foreign exchange gain or loss, impairment of intangible assets, and gain or loss on sale of land and buildings, assets held for sale and intangible assets, net of tax, and impact from the U.S. tax reform. Adjusted earnings per share, basic or diluted, is calculated as adjusted net income divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income and adjusted earnings per share 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.

_{Note: due to rounding, totals may differ slightly from the sum.}

Operating margin

Operating margin is calculated as operating income (loss) as a percentage of revenue before fuel surcharge.