MONTREAL, Que. – TFI International shook off the effects of the Covid-19 pandemic, posting a strong third quarter and restoring its workforce.
TFI reported net income of $110.7 million, up 34% year-over-year, while revenue declined 4% totaling $1.25 billion. Logistics revenue was up 7%, package-and-courier climbed 1%, truckload dropped 6% and LTL was down 17% year-over-year.
TFI acquired four companies in the third quarter, and two following the quarter. However, it terminated a previously announced deal to buy APPS Transport.
“We tried to buy APPS, but finally there were certain closing conditions that were not met and we had to say, we’ll look at something else,” TFI International chairman and CEO Alain Bedard told analysts on a conference call to discuss results.
Bedard also alluded to increasing difficulties in completing sizeable Canadian acquisitions, due to Competition Bureau scrutiny.
“Our future for significant transactions – we’ve said it may times – is going to be south of the border,” Bedard said. “It can’t be in Canada. We are such a dominant company in Canada, anything with revenue of more than $90 million, we have to sit down with the Competition Bureau in Ottawa. It’s a long, long process and it takes an awful cost with lawyers and things like that.”
APPS was expected to contribute about $100 million in annual revenues to TFI. Today’s Trucking reached out to APPS for comment, but did not receive a response. A TFI International spokesman said there would be no further comment from the company on the matter, apart from anything said during the company’s call with analyst. We also contacted the Competition Bureau to see if they had a part in disrupting the deal.
A spokesperson responded by email, saying only “The Competition Bureau is aware that TFI International has announced that it terminated its agreement to acquire APPS Transport. However, as the Bureau is obligated by law to conduct its work in private, I am unable to comment further.”
TFI International spends about $200 million a year on acquisitions, and has spent about $115 million so far this year, focusing on smaller tuck-in acquisitions.
“Our pipeline is always very full,” Bedard said. “In Canada, if someone wants to sell their company their first call is always to TFI.”
TFI International brought back 176 furloughed employees in the quarter and reinstated full five-day workweeks for 486 others, reversing cost-cutting measures taken as Covid-19 crushed truck freight in the second quarter.
The company has focused on converting B2B freight to B2C, in light of shifting buying habits accelerated by the pandemic.
“E-commerce is eating a lot of the lunch of the brick and mortar guys,” Bedard said. “It may be a permanent impairment to some of our B2B business…We have a very solid plan to replace B2B that is gone.”
Contract pricing has risen about 5-8%, and spot rates are also on the rise, giving Bedard confidence it will be able to grow U.S. truckload revenue in 2021. Freight is abundant.
“Six months ago, a year ago, guys were saying we have drivers, we don’t have freight. Now we have more freight than we have drivers,” said Bedard.
It is also remaining focused on cost controls, and is in the process of deploying a new TMS platform.
“Our guys are doing a fantastic job today with tools of the 80s in terms of IT,” said Bedard. The new TMS will be rolled out in 2021.
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