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TFI International | Trucking giant shareholders worried about risk of recession



Another disappointing day on the stock market for investors in the trucking giant TFI International after the announcement of quarterly results slightly below expectations, and increased concerns about the impact of a possible recession on its next results.

For the second day in a row, Friday, the value of TFI shares fell more than 5% on the Toronto and New York stock markets. TFI ended the week at $120 per share in Toronto, down 10% over two sessions, and back to its lowest value in three months.

In its third quarter results announced at the end of the day Thursday, after the markets closed, TFI showed total revenues of 2.42 billion US dollars, including the fuel surcharge. This amount is up 7% year-on-year, but slightly lower than analysts’ and investors’ expectations. (Editor’s note: TFI records its consolidated financial statements in US dollars)

Similar scenario on the side of adjusted operating profit (adjusted EBITDA), which is one of the results most watched by analysts and investors.

In the third quarter ended September 30, TFI was able to achieve adjusted EBITDA of US$348.2 million, or 17% more than in the comparable quarter last year. But here again, this amount of adjusted EBITDA is a little below the expectations of analysts and investors following recent asset transactions by TFI, as well as the performance enhancement efforts in certain divisions promoted by its senior management.

“I expect a slightly negative market reaction given the missed target for adjusted EBITDA, weak results from the LTL trucking division in the United States (Editor’s note: after the purchase of assets of UPS), as well as comments from TFI management on the more difficult market outlook,” said analyst Benoit Poirier of Desjardins Securities in a morning note to investors.

In return, the analyst anticipated a positive reaction from investors to the announcement of a 30% increase in TFI’s quarterly dividend, which thus rose from 27 US cents to 35 US cents per share. Benoit Poirier also underlined the renewal of the program to buy back its shares on the stock market, as well as the maintenance of a “solid balance sheet” at TFI which should allow it to better weather the period of economic slowdown which is beginning.

A storm that will create opportunities

In this regard, moreover, the Chairman of the Board and Chief Executive Officer of TFI, Alain Bédard, tried to be reassuring on Friday morning during the conference call with analysts and investors to discuss the most recent quarterly results. and business prospects for the coming months.

In Mr. Bédard’s opinion, if an economic slowdown were to worsen over the next few quarters, it would in fact be a period of opportunity for TFI, particularly in terms of merger and acquisition projects. well-targeted assets or businesses.

“We are probably going to weather a storm in 2023. And we like that because our balance sheet is very strong and it could open doors for us in mergers and acquisitions (M & A), indicated Mr. Bédard.

“When it comes to M&A, it’s better to buy on bad news and sell on good news. In addition, with rising interest rates, it restricts access to investment capital among potential buyers, reducing competition for acquisitions. »

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