TFI International (TFII)2024-02-09 22:22Financial Data and Key Metrics Changes - Adjusted net income for the fourth quarter was 152 million in the same period of 2022, with adjusted EPS at 0.01 [4] - Net cash from operating activities increased significantly to 248 million a year ago, totaling over 1 billion for the full year, up from the previous year despite market conditions [4] - Return on invested capital for the P&C segment was 28.1%, indicating solid performance despite weaker demand [5] Business Line Data and Key Metrics Changes - Truckload revenue before fuel surcharge was nearly flat at just under 400 million, down 1% year-over-year, while operating income decreased to 72 million, with an operating ratio of 87.3% compared to 86.1% [7] - Revenue before fuel surcharge for another segment climbed 24% year-over-year, with operating income jumping 60% to 78 million, with miles driven slightly up and rates increasing by about 7% [29] Market Data and Key Metrics Changes - The company noted a 4% decline in volume year-over-year in Q4, with a 13% decrease year-to-date, indicating a challenging market environment [38] - The average weight per shipment increased by 10%, although it remains below peers' averages [24] Company Strategy and Development Direction - The company is focused on profitability and cash flow, with plans to invest in the business, pursue attractive M&A opportunities, and return capital to shareholders even in weak market conditions [3] - The ongoing turnaround at US LTL emphasizes improving service quality and revenue, with a target operating ratio of 88% for 2024 [14][21] - The acquisition of Daseke is seen as a strategic move to enhance size and capabilities in the specialized truckload market [36][100] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding Q1 2024 due to poor weather conditions and a soft market, indicating that guidance for 2024 will be provided after Q1 results [10][34] - The company aims to improve service and reduce customer churn, which has been a significant issue affecting revenue growth [48][124] - Management believes that improvements in service and operational efficiency will lead to better pricing power and revenue growth in 2024 [126][128] Other Important Information - The Board of Directors raised the quarterly dividend by 14% during the fourth quarter, reflecting a strong financial position [31] - The funded debt-to-EBITDA ratio stood at 1.49, with a weighted average interest rate of 4.4% [30] Q&A Session Summary Question: Can you provide guidance for 2024? - Management stated that they are cautious about providing guidance due to the Daseke acquisition and current market conditions, preferring to wait until after Q1 [10][34] Question: What are the expectations for EPS in Q1? - Management indicated that while Q1 is expected to be tough, they believe EPS will be flat or slightly up compared to Q1 2023 [145][163] Question: How is the company addressing high customer churn? - Management acknowledged high churn rates and emphasized ongoing efforts to improve customer service and billing processes to enhance customer retention [48][124] Question: What is the target operating ratio for 2024? - The target operating ratio for 2024 is set at 88%, with a commitment to achieving this despite current challenges [14][21] Question: How does the company plan to improve service quality? - Management highlighted the importance of focusing on the right freight types and improving operational efficiency to enhance service quality [111][126]