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TFI Expects 'Shot In The Arm' From BeavEX Deal

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TFI Expects 'Shot In The Arm' From BeavEX Deal

 

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TFI International's acquisition assets of the bankrupt courier BeavEX will "be like a shot in the arm" to its last-mile business in the U.S., CEO Alain Bédard told analysts.

"This is going to be highly accretive to U.S. last-mile operations. It will drive up density and get rid of a nuisance (in the market)," Bédard said on April 24, while discussing TFI's record first-quarter results, which saw profits increase by 33 percent.

TFI estimated that BeavEX assets will add about US$100 million in revenue, though it has yet to revise its earnings estimates.

"Give us a quarter to probably be in a position to revise guidance," Bédard said.

TFI's last-mile and logistics businesses stand to benefit following the weak performance in an otherwise strong quarter for TFI. Logistics and last-mile revenue decreased by 5 percent, to C$224 million during the first quarter of 2019, while operating income was essentially flat at C$15.1 million.  

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Bédard said market conditions remained stable in the United States and Canada, and noted that TFI had increased truckload rates 3 to 6 percent in the U.S.

Truckload, TFI's largest business, had a significant bump in net income during the first quarter of 2019, helped in part by improved margins. It generated $C50.7 million of net income on revenues of $C527.1 million, compared to C$36.3 million on $C490 million in the first quarter.

Bédard said he wants to get TFI's U.S. trucking operations, which include CFI and Transport America, at an operating ratio (OR) below 90 in the next 18 months, from the current 92.4. By comparison, TFI's Canadian truckload business had an 86.2 percent OR during the last quarter.

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"The focus is to bring down those ORs," Bédard said. "The tiger is the last one to survive in the jungle."

Bédard predicted that TFI will remain relatively quiet on the mergers and acquisitions front during the next six months.

Image sourced from Pixabay

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Posted-In: Freight Freightwaves Logistics Supply Chain TFINews Markets General

 

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