TFI International
Revitalising a transportation legacy 70 years in the making
Fuelled by red-hot demand, high private sector employment, and rising corporate profitability, Canada’s economy-wide output expanded for seven consecutive months following April this year and has risen 4.0% since August 2021, according to Statistics Canada. Bolstered by the country’s standout performance on the world stage, Canadian businesses have taken the opportunity to increase their capital expenditure, with Deloitte projecting a 10.2% increase in business investment spending on structures, machinery, and equipment by the end of 2022.
Canada’s trucking industry forms the backbone of its economy and plays an essential role in unlocking the country’s wealth of natural resources and leveraging its USD 2.6B daily trade in goods and services with the USA – as part of the world’s most comprehensive trading relationship. In 2018, the industry generated an annual revenue of CAD 39.55B from 66.5M shipments, according to Statista, and supported a record-high total goods trade of USD 1.2T. The industry employs around 1.5% of Canada’s total population, with more than 300,000 truck drivers working across 88,000 for-hire carriers.
Founded in 1957, TFI International is a leading publicly traded North American transportation and logistics company and the largest Canadian for-hire carrier by revenue, serving customers in the USA and Canada with its package & courier, lessthan-truckload (LTL), truckload and logistics operations. TFI has an extensive network of 550 facilities and a vast e-commerce network spanning more than 80 North American cities.
TFI’S CEO & Chairman, Alain Bédard, joined the company in 1996 armed with a strategic plan to restore its reputation, expand its geographical network, and diversify its operating activities. Within just five years, Bédard had overseen a massive expansion from Quebec up to British Columbia – rescuing TFI from near bankruptcy – and today the company is worth CAD 10B. According to Bédard, TFI’S sensational growth story is mainly the result of a bold M&A strategy. “TFI has become an M&A growth machine, and we have no intention of changing that. We’re certainly not afraid of profitable growth,” he says.
TFI launched its new strategy with the acquisitions of Papineau International and Transport JCG –between 1998-2000. But it was not until 2002 that the company began investing heavily – up to USD 2-400M annually – in M&A, with its first strategic acquisition coming in 2004, followed by a further 111 since 2008. Looking to match shifting demand in an ever-changing landscape, TFI acquired the Usa-based last-mile carrier Dynamex in 2011 and the Usa-based truckload company CFI in 2016, increasing its active presence in the USA.
Most notably, TFI’S largest acquisition came last year when the company acquired UPS Freight – now Tforce Freight, one of North America’s largest LTL carriers – for USD 800M. The acquisition positioned TFI amongst the USA’S top LTL carriers and embodies Bédard’s emphasis on investment capital as the path to scale-up success. “In the next 5 years, you’ll see more of the same that you’ve seen over the last 25; we will continue growing,” says Bédard.
By favourably increasing its exposure to large industrial end markets, TFI is already reaping the rewards of its strategic M&A activity. The company demonstrated an unmatched resiliency to the industrywide challenges caused by the Covid-19 pandemic, generating a 69% year-over-year increase in adjusted operating income and a 73% increase in free cash flow for 2022. In Q3 2022 alone, TFI’S operating earnings increased by 28% across its Canadian packaging division – a figure unheard of amongst the likes of UPS and Fedex – whilst its net income increased by 86% to CAD 254.2M, compared to CAD 131.6M in Q3 2021.
For Bédard, TFI’S success is as much a result of its business line diversity as the company’s philosophy. “We want to do more with less – that’s our drive. Our working goals are defined by the question: what measures can we put in place today to exponentially benefit our customers, shareholders, and the environment tomorrow?” Ultimately, TFI does far more than increase its customers’ revenue per mile or overall cost efficiency. “We’re here to provide solutions, not to price-match our competitors,” says Bédard.
TFI is listed on the Toronto Stock Exchange (TSX) and, as of 2020, the New York Stock Exchange (NYSE), and the company’s recent track record speaks for itself. Over the past 25 years, TFI’S stock increased by a staggering 42,300% – from approximately USD 0.25 in 1996 to USD 108 as at the end of November 2022. Aligning with TFI as a customer, shareholder, or investor is a winwin scenario, and the company is keen to share its success. To this end, in Q3 2022, TFI’S Board of Directors approved a CAD 0.35 dividend for Q4 2022, an increase of 30%.
Proudly based in Canada, Bédard is open about how influential his country’s businessfriendly environment has been in TFI’S journey. “Canada’s rules and regulations are firmly pro-business. Transparency and trust comprise the overriding sentiment here,” he says. As a country built through immigration and open to diversification, Canada is the ideal partner for international investors.