First Quarter Ended March 31, 2017

Transcription

1 First Quarter Ended March 31,

2 Forward-Looking Statements In the interest of providing shareholders and potential investors with information regarding TFI International, including management s assessment of future plans and operations, certain statements in this presentation are forward-looking statements subject to risks, uncertainties and other important factors that could cause the Company s actual performance to differ materially from those expressed in or implied by such statements. Such factors are further discussed under Risks and Uncertainties in the Company s Annual Information Form and MD&A, but readers are cautioned that the list of factors that may affect future growth, results and performance is not exhaustive, and undue reliance should not be placed on forward-looking statements. Although the Company believes that the expectations conveyed by the forward-looking statements are based on information available to it on the date such statements were made, there can be no assurance that such expectations will prove to be correct. All subsequent forward-looking statements, whether written or orally attributable to the Company or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. Unless otherwise required by applicable securities laws, the Company expressly disclaims any intention, and assumes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 Why Invest in TFI International Profitable earnings growth company Proven acquisition strategy Superior record of shareholder value creation Portfolio of value added solutions and services Financial discipline Market leader in key transportation and logistics segments Diversification by industry sectors and geography 3

4 Creating Shareholder Value Solidifying our position as a leader in the North American transportation and logistics industry Delivering profitable earnings growth both organic and through our proven acquisition strategy Disciplined, strategic, and profitable acquisitions and partnerships Focus on operations, integration, and realization of synergies Maintaining a strong balance sheet and access to capital Leveraging our team of dedicated professionals to provide value-added services and solutions across each of our business segments 4

5 Consistent, Profitable Growth Revenue Before Fuel Surcharge* (millions of CA$) Adjusted EBITDA* and Diluted Adj. EPS* 5,000 3,897 4,000 3,000 2,000 1, TTM TTM Adj. EBITDA (millions of CA$) Diluted Adj. EPS (CA$) 12.5% Revenue BFS CAGR (2012-TTM) 13.5% Adj. EBITDA CAGR (2012-TTM) 15.3% Diluted Adj. EPS CAGR (2012-TTM) * From continuing operations. These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 5

6 Commitment to Generating Free Cash Flow 350 Free Cash Flow (FCF)* (millions of CA$) 800 Cumulative Cash Returned to Shareholders (millions of CA$) TTM Q1' % FCF CAGR (2012-TTM) 88.5% FCF CONVERSION (TTM) * Defined as Net cash from continuing operations less additions to property and equipment plus proceeds from sale of property and equipment and assets held for sale. 6

7 Delivering Shareholder Value 300% 5-year total return* 250% 200% 150% 100% 187% TSX Total Return 147% 50% 0% Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 * Total return performance includes dividends 7

8 Review of TFI International 8

9 Overview of TFI International Package & Courier Less-Than- Truckload Truckload Logistics Same-Day/Last Mile Delivery Next-Day Delivery Over-the-road Intermodal Conventional Specialized TFI International is a full service transportation and logistics company serving customers across the United States, Canada, and Mexico 404 terminals (89 owned, 315 leased) o 103 USA o 289 Canada o 12 Mexico 17,897 employees, of which 8,429 are drivers 17,891 tractors o 7,836 owned or leased o 10,055 independent contractors 24,715 trailers Our operating companies are wholly-owned subsidiaries but tend to operate under their own brands TFI International is publicly listed on the Toronto Stock Exchange under the ticker TFII 9

10 TFI Services by Geography Package & Courier LTL Truckload Logistics Canada United States Mexico* * LTL and Truckload in Mexico provided by CFI Logistica 10

11 Diversification by Service Type Diversified across four core business segments Focus on growing asset-light and value-added operations and lower capital intensity Segment s Total Revenue Contribution (before inter-segment eliminations) Q Package and Courier (P&C) 29% 34% Less-Than-Truckload (LTL) 19% 20% Truckload (TL) 46% 40% Logistics 6% 6% 11

12 Diversification by Industry and Geography TFI has built a robust and well-diversified revenue base No single client accounts for > 5% of consolidated revenue By Top Customers' Industry (Q4-2016) By Geography (Q1-2017) 3% 3% 2% 3% E-Commerce Retail Manufactured Goods 0.8% 4% 5% 5% 6% 7% 21% 21% Automotive Services Food & Beverage Forest Products Energy Building Materials Metals & Mining 46.5% 52.7% Canada United States Mexico 8% 12% Chemicals & Explosives Maritime Containers Others 12

13 TFI Package & Courier Division Geographic Footprint Division Overview Same-day and last mile in the US and Canada Next-day in Canada and globally through partnership with DHL Cutting edge technology Specialized supply chain services Package & Courier Operating Companies SAME-DAY / LAST MILE (53%) NEXT-DAY DELIVERY (47%) All Canadian Courier TForce Final Mile U.S. Canpar Courier Muskoka Delivery Services TForce Critical TForce Logistics ICS Courier TForce Integrated Solutions TForce Final Mile Canada Loomis Express 13

14 TFI Less-Than-Truckload Division Geographic Footprint* Division Overview Over-the-road and intermodal LTL services Solid track record for safety and on-time delivery Focus on customer facing technology Asset light intermodal Less-Than-Truckload Operating Companies OVER-THE-ROAD (63%) INTERMODAL (37%) Canadian Freightways Cavalier Concord Kingsway La Crete Transport McMurray Serv-U Expediting Quik X Transportation Total Transfer Tripar Transportation TST Overland Express Clarke Quiktrax Intermodal National Fast Freight Vitran * LTL in US provided by partners and in Mexico provided by CFI Logistica 14

15 TFI Truckload Division Geographic Footprint* Division Overview Dry van full truckload Flatbed, tanks, dumps, oversized and other specialized services Modern fleet We own our assets and have long established partner carrier relationships Truckload Operating Companies CONVENTIONAL (48%) SPECIALIZED (52%) A&M Intl. Besner CFI** Clarke Road Couture Ganeca Grégoire Highland Laidlaw Papineau Intl. Roadfast Transport America** Transport J.C. Germain TST Truckload Bergeron Charbonneau Contrans Durocher Intl. ECL Carriers E.L. Farmer** GHL Transport Glen Tay Golden Intl. Highland Intermodal JAF Kingsway Laidlaw McArthur Express Mirabel Logistics Nordique Peter Hodge P&W Intermodal Rebel Transport TF Dedicated** TF Truckload Trans2D Logistics Trans4 Dedicated Tri-Line Carriers TST Expedited Villeneuve Tank Lines Westfreight Systems Winalta * Truckload in Mexico provided by CFI Logistica ** US based 15

16 TFI Logistics Division Geographic Footprint Division Overview Full service logistics and transportation management Provides a complete one-stop experience for TFI customers, completing TFI s portfolio of assets Logistics Operating Companies Cavalier Logistics CFI Logistica CFI Logistics CK Logistics Clarke North America Cornerstone Logistics E&L Logistics Hyphen Kobelt Transportation Landry Optimal Freight Patriot Freight Services Quik X Logistics St-Lambert Stream Logistics TLS Trailer Leasing Services Velocity Supply Chain Solutions 16

17 Growth Opportunities 17

18 Growth Through Acquisitions - Strategy Strategic, disciplined, and accretive acquisitions Proven track record of executing acquisition strategy Completed over 80 acquisitions in the past 10 years Strong focus on integration, operations and realization of synergies Other recent significant acquisitions: CFI cemented TFI s presence continent-wide and positioned us as one of the foremost TL carriers in the U.S., with increased access to Mexico and the flow of cross-border trading World Courier Ground, renamed TForce Critical, strengthening our asset light P&C business in the U.S. and diversifying TFI into medical last mile National Fast Freight, a non-asset LTL intermodal business providing TFI with additional density in the Canadian LTL intermodal segment Cavalier Transportation Services, a cross-border LTL and TL business with value added services such as brokerage and warehousing 18

19 Growth in E-Commerce TFI services e-commerce from 80 North American cities E-commerce TTM revenue of CA$433.1 million Further opportunities for the Package and Courier segment, both through acquisitions and organic growth Increasing facility utilization with addition of same-day service 19

20 TFI in E-Commerce Throughout the Portfolio TTM E-Commerce Revenue by Segment (millions of $CA) P&C TL LTL Logistics Total Canada United States Total

21 Evolution of E-Commerce Fulfillment The evolution of E-Commerce fulfillment has created numerous opportunities for TFI International companies Shipper - Warehouse Business Next-Day Services Delivery Pickup Sorting Facility Sorting Facility Linehaul Customer Region A Region B Shipper - Warehouse Same-Day Services Business Direct Delivery Customer 21

22 Growth in TFI E-Commerce Revenue E-Commerce Revenue (millions of CA$) TTM 25.4% E-Commerce Revenue CAGR (2012-TTM) 22

23 TFI s E-Commerce Customers Deliver Outsized Growth E-Commerce Revenue with Customer A 120 (millions of CA$) TTM 99.1% Revenue CAGR (2012-TTM) 26% Evolution of B2B/B2C Split 31% 32% 34% 41% 41% E-Commerce Revenue with Customer B (millions of CA$) 19.8% Revenue CAGR (2012-TTM) TTM 74% 69% 68% 66% 59% 59% TTM B2B B2C 23

24 Financial Highlights (From continuing operations) 24

25 Five-Year Financial Highlights Revenue before Fuel Surcharge (billions of CA$) TTM Adjusted EBITDA* (millions of CA$) TTM Free Cash Flow* (millions of CA$) TTM $ / share Adjusted Operating Income* (millions of CA$) TTM 7.3% 7.7% 7.6% 7.0% 6.7% Margin as a % of revenue before fuel surcharge * These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 25

26 Five-Year Financial Highlights Cash Flow Usage Net maintenance Capex Proceeds from excess assets (25.7) (58.8) (45.4) (21.3) (17.7) Business acquisitions Net long-term debt repayment 71.2 (579.4) (750.4) (proceeds) Cash return to shareholders Dividend paid Repurchase of shares Others 24.5 (38.6) (2.7) Net cash (from) used in discontinued operations Net Cash Flow from Continuing Operations (in millions of CA$) (68.6) (66.8) (78.2) (769.6) 37.6 TOTAL TTM 26

27 Five-Year Financial Highlights Rolling Stock Capex and Depreciation are very low when compared to the industry due to asset-light model, which reduces capital intensity 4.0% Rolling Stock Capex (% of Total Revenue) 4.0% Rolling Stock Depreciation (% of Total Revenue) 3.5% 3.0% 3.5% 3.0% 3.1% 2.5% 2.4% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% TTM 1.0% TTM 27

28 Segmented Financial Highlights Q (in millions of $) Package and Courier Less-Than- Truckload Truckload Logistics Total (*) Q Q Q Q Q Q Q Q Q Q Revenue before fuel surcharge , Adjusted EBITDAR** Adjusted EBITDAR Margin (%)** 14.4% 12.5% 11.7% 9.3% 15.9% 18.4% 12.8% 12.2% 13.8% 13.7% Adjusted EBITDA** Adjusted EBITDA Margin (%)** Adjusted Operating income** Adjusted Operating margin (%)** 9.8% 8.2% 8.4% 7.2% 13.1% 14.3% 10.2% 9.4% 10.3% 9.9% % 5.4% 4.4% 3.0% 3.0% 6.0% 8.3% 7.7% 4.0% 4.6% Total Assets ,456 1, ,061 3,035 Total Hard Assets , ,070 1,511 Adjusted Net Income** Free Cash Flow** * Including inter-segment revenue eliminations and corporate expenses and assets. ** These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 28

29 Balance Sheet Leverage metrics Disciplined acquisition strategy with focus on preserving balance sheet strength and attractive cost of capital Debt as at March 31, 2017: $1,645 million Total Debt / Adjusted EBITDA Total Debt (millions of CA$) 4.6x 1,618 1,615 1,585 1, x 3.6x 3.5x 3.5x TTM TTM 5.2% 4.0% 3.7% 3.6% 3.7% Weighted average cost 29

30 Balance Sheet Debt structure $1.2 billion unsecured banking credit facility Matures in June 2020 and can be extended annually Provides favourable terms and conditions and capital management flexibility $125 million unsecured debentures Interest rate between 3% and 3.45% and matures in December 2020 Can be repaid, without penalty, after December 18, 2019 $75 million unsecured term loan 3.95% interest rate and matures in August 2019 Can be repaid, without penalty, after August 18, 2018 $500 million acquisition credit Two tranches, $200 million maturing in October 2018 and $300 million maturing in October 2019 Same pricing, covenants and conditions as the revolving banking credit facility 30

31 Delivering Shareholder Value 17.5% Adjusted Return on Equity* ROE - % 80 Expected Amortization of Intangible Assets & Incremental EPS % 12.5% 11.4% % 7.5% % TTM Amortization (in M$) Incremental EPS (in $) * Before impairment of intangible assets in

32 Delivering Shareholder Value Quarterly dividend was at $0.19; annual dividend yield of 2.4% (on March 31, 2017 share price) Plan to distribute 20-25% of annualized free cash flow available Free Cash Flow from continuing operations of $3.18 per share for the last 12 months ended March 31, % yield Healthy Free Cash Flow conversion ratio of 88.5% for the last 12 months ended March 31, 2017 (Defined as (EBITDA Net CAPEX) / EBITDA) Average Adjusted ROE of 12.6% since 2012 Renewed NCIB to repurchase up to 6 million shares until September 29, ,578 common shares repurchased so far on this NCIB for a total of $1.1 million Benefits from evolution to an asset-light business model Higher return on assets and asset turnover 32

33 Outlook Cautiously optimistic in regards to the North American economy: low unemployment, solid consumer spending and rising oil prices should help produce a gradual recovery in freight volume and rates However, current conditions remain relatively challenging, which should limit organic growth over the short-term P&C segment: Further optimize asset utilization Capture an increasing share of the growing e-commerce delivery business LTL segment: Remain disciplined in adapting supply to demand, as overcapacity continues to affect the industry Expand capabilities in asset-light intermodal activities that generate higher returns 33

34 Outlook TL segment: Market conditions remain difficult and are not expected to significantly improve before the end of 2017 Leverage our enhanced density in the U.S. and in Mexican cross-border activities following the acquisition of CFI Logistics segment: Will continue to grow our presence in this market, as these non-asset-based activities represent a strategic complement to conventional transportation services Pursuing execution of a disciplined acquisition strategy in the fragmented North American transportation and logistics market Asset-light model further strengthens cash flow generation Used for strategic acquisitions and debt reduction Dividends and share repurchases further increase shareholder returns 34

35 Five-Year Reconciliation of Adj. EBITDA* (in millions of $) (from continuing operations) TTM Q Net income Net finance costs Income tax expense Operating income Goodwill impairment Adjusted operating income Depreciation of property and equipment Amortization of intangible assets Adjusted EBITDA * This is a non-ifrs measure. 35

36 Five-Year Reconciliation of Free Cash Flow* (in millions of $) (from continuing operations) TTM Q Net cash from operating activities Additions to property and equipment (118.0) (110.6) (157.8) (69.3) (49.2) Proceeds from sale of property and equipment and AHFS Free cash flow from continuing operations * This is a non-ifrs measure. 36

37 Five-Year Reconciliation of Adjusted EPS - diluted* (in millions of $) TTM Q Net income Amortization of intangible assets related to acquisitions, net of tax Change in fair value of derivatives, net of tax (3.1) (0.8) Net foreign exchange (gain) loss, net of tax (1.0) Impairment of intangible assets, net of tax Net (income) loss from discontinued operations 5.8 (482.5) (17.7) (11.7) 15.2 Adjusted net income Adjusted earnings per share - basic Adjusted earnings per share - diluted * This is a non-ifrs measure. 37

38 Three-Month Reconciliation of Adjusted Net Income from Continuing Operations* (in millions of $) Three months ended March Net income Amortization of intangible assets related to business acquisitions, net of tax Net change in fair value of derivatives, net of tax (0.4) 6.2 Net foreign exchange loss, net of tax Impairment of intangible assets Net income from discontinued operations - (488.3) Adjusted net income from continuing operations * This is a non-ifrs measure. 38

39 Three-Month Reconciliation of Free Cash Flow* (in millions of $) Three months ended March Net cash from continuing operations Additions to property and equipment (36.6) (29.1) Proceeds from sale of property and equipment Proceeds from sale of assets held for sale Free cash flow from continuing operations * This is a non-ifrs measure. 39

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