TFI International (TFII) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 26, 2023 8:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Callers will be limited to one question and a follow-up. Again, that's one question and a follow-up, so that we can get to as many callers as possible. Further instruction for entering the queue will be provided at that time.

Please be advised that this conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. Also, I would like to remind everyone that this conference call is being recorded on Wednesday, April 26, 2023.

I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

Alain Bedard

Well, thank you for the introduction, operator, and welcome everyone to this morning’s call. Yesterday after the market close we release our first quarter 2023 results. Many times over the years, including last year, you've heard me mention that profitability and cash flow are most important to us as they allow us to be nimble especially during uncertain times when we can capitalize on market turbulence. This means that the ability to steadily invest in the business opportunistically pursue acquisition and return excess capital to shareholders whenever possible.

During the first quarter, we generated a 69% increase in net cash from operating activity to $232 million and our free cash flow more than double up 113% to nearly $200 million. While our strong cash flow performance benefited from working capital fluctuation, it also comes despite reduce freight volumes despite the unfavorable FX impact and despite our sales last August of CFI.

Our operating income during the first quarter was $166 million with an operating margin of 10.7% versus the year earlier period of $220 million with an operating margin that was 90 basis points higher at 11.6%.In addition, our adjusted net income of $117 million was down from $158 million the prior year and our adjusted diluted EPS was $1.33 was down from $1.68.

Important the year-over-year change in these items reflects not only the reduced rate volumes and the sale of CFI, but also the fact that our earnings are fully burdened by several items for which we did not adjust. These include severance package related to early retirement offers, costs associated with transitioning IT system from UPS, the mark-to-market on DSU and provide an unfavorable variance to our reported earnings this quarter and again foreign exchange fluctuation.