TFI International Inc (TFII) Q2 2025 Earnings Call Highlights: Navigating Challenges with ...

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Total Revenue Before Fuel Surcharge: $1.8 billion, down from $2 billion a year earlier.
Operating Income: $170 million, representing a 9.5% margin.
Adjusted Net Income: $112 million, compared to $146 million last year.
Adjusted EPS: $1.34, down from $1.71.
Net Cash from Operating Activities: $247 million, virtually flat with the prior year.
Free Cash Flow: $182 million, up from $151 million in the second quarter of 2024.
LTL Revenue Before Fuel Surcharge: $704 million, down 11% year over year.
LTL Operating Income: $74 million, compared to $110 million in the prior year.
LTL Operating Ratio: 89.5%, compared to 86.2% in the second quarter of 2024.
Truckload Revenue Before Fuel Surcharge: $712 million, compared to $738 million a year earlier.
Truckload Operating Income: $71 million, versus $81 million in the prior year.
Truckload Operating Ratio: 90.1%, relative to 89% in the second quarter of 2024.
Logistics Revenue Before Fuel Surcharge: $393 million, down from $442 million in the prior year.
Logistics Operating Income: $38 million, compared to $51 million.
Logistics Operating Margin: 9.6%, compared to 11.4% in the prior year second quarter.
Funded Debt-to-EBITDA Ratio: 2.4 times.
Share Repurchases: $85 million worth of shares repurchased during the quarter.
Dividends Paid: $39 million, totaling $124 million of capital returned to shareholders.
Third Quarter 2025 EPS Outlook: Expected range of $1.10 to $1.25.
Net CapEx Expectation for Full Year: Approximately $200 million.
Release Date: July 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
TFI International Inc (NYSE:TFII) reported strong free cash flow of $182 million, significantly above the previous year's $151 million.
The company maintained a strong balance sheet and further strengthened it through a private placement bond offering.
TFI International Inc (NYSE:TFII) achieved a 9.5% operating margin, an improvement from the previous year's 2.5%.
The company repurchased $85 million worth of shares and paid out $39 million in dividends, returning a total of $124 million to shareholders.
TFI International Inc (NYSE:TFII) implemented technology tools like Optum to improve efficiencies and reduce costs, particularly in linehaul operations.
Negative Points
Total revenue before fuel surcharge decreased to $1.8 billion from $2 billion a year earlier.
Adjusted net income fell to $112 million from $146 million in the previous year, with adjusted EPS dropping from $1.71 to $1.34.
The LTL segment saw a decline in revenue and operating income, with an operating ratio increase from 86.2% to 89.5%.
Truckload segment revenue and operating income also decreased, with tariff-related uncertainties affecting demand.
Logistics segment revenue and operating income declined, with a decrease in operating margin from 11.4% to 9.6%.
Q & A Highlights
Q: Can you remind us what is the margin ceiling you can achieve with further internal actions before the cycle starts to help you out on the LTL side? A: Alain Bedard, CEO, explained that TFI is very cost-sensitive and has implemented tools like Optum for linehaul and P&D to reduce costs. They have reduced linehaul miles on the rail from over 30% to closer to 20% and aim to further decrease this. Improvements in claims and safety are also targeted, with new hires to enhance safety culture. AI is being explored to reduce labor intensity and costs.
Q: Can you give us a little more color on the Q3 guidance, $1.10 to $1.25, and the margin assumptions there? A: David Saperstein, CFO, stated that the guidance is based on historical seasonality, with expected sequential declines in margins across divisions. The company aims to offset some of this with idiosyncratic opportunities.
Q: Are you seeing any signs that the macro environment could start to improve in the front half of '26? A: Alain Bedard, CEO, expressed optimism that the new US budget could revive industrial investment, potentially ending the freight recession. However, concrete improvements have not yet been seen, and any recovery might be more evident in late '25 or early '26.
Q: Can you talk about the sustainability of the free cash flow? A: Alain Bedard, CEO, emphasized TFI's strong cash generation, even in difficult macro conditions. The company aims to maintain this by focusing on asset-light models, particularly in the US, and expects free cash flow to potentially reach close to $1 billion in a normal environment.
Q: Are there any plans for M&A in the LTL sector, given the improvements seen this quarter? A: Alain Bedard, CEO, stated that while M&A for LTL is not currently on the table, the company aims to prove control over TForce Freight first. If successful, they might consider larger transactions in 2026, but for now, they focus on buying back TFI shares.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.