TFI International’s operating income grew 29% in Q2 compared to a year ago, reaching $220.4 million, according to a news release.
That profit uptick was driven by its truckload segment, which rose 50% to $105.8 million year over year. Logistics had 32% growth to $49.7 million, and LTL increased 17% to $85.8 million.
CEO Alain Bédard credited the TL improvement to “TFI’s diversified industrial end markets and our strength in specialized and flatbed, as well as our team’s success reducing capital intensity,” per the release.
A volume surge helped LTL. Shipments rose 7.5% YoY to 1.97 million for the quarter, according to the carrier’s quarterly report. The increase was also sudden, causing double-digit percentage point growth overnight, CFO David Saperstein said on an earnings call Monday.
“We had to spend money in ways that we wouldn't normally spend money,” he said, noting the business relied on overtime and third-party carriers to meet service needs.
But overall, the LTL market is still very soft, Bédard said. That’s in contrast to the TL market, which has “changed tremendously” over the last six to nine months given federal U.S. efforts that have reduced the driver supply, helping businesses such as TFI, he said.
“We believe that in Q3, year over year, we're going to see, again, another major improvement” in TFI’s TL sector, Bédard said. The company projected its adjusted operating ratio in TL to improve by 5 or 6 percentage points in Q3. Its Q2 adjusted operating ratio for the segment was 86.1%.
Meanwhile, the business is working in price increases in LTL and reconfiguring operations given the volume changes, projecting less margin improvement in the meantime.
“LTL, we don't see a lot of major improvement,” Bédard said, “versus what we can see on the truckload sector or on the logistics sector.”
