TFI International released its fourth-quarter earnings report, showing some signs of improvement in its U.S. LTL division despite continued weakness in other areas. The company's focus on improving its U.S. LTL operations has been a key goal for management. However, the results also indicate that the freight market remains a significant challenge.
The U.S. LTL operations are primarily comprised of the UPS Freight operations acquired by TFI in 2021. On the positive side, the adjusted operating ratio (OR) improved year-over-year to 95.3% from 97.3%, indicating some progress in reducing costs. Additionally, the average weight per shipment rose to 1,284 pounds from 1,227, a gain of 4.6%. This improvement may be attributed to efforts by CEO Alain Bedard to target specific areas for enhancement.
However, the company's Canadian LTL operations posted an adjusted OR of 81.7% for the quarter, which was a deterioration of 170 basis points compared to the U.S. segment. Furthermore, the average length of haul declined to 1,122 miles from 1,194 miles, a 6% drop. These results suggest that routing remains an area where TFI can improve its operations.
The freight market continues to pose challenges for the company's overall numbers. Revenue per hundredweight excluding fuel dropped 5.8% to $26.13 from $27.73, while total tonnage declined 6.8% to 756. Despite this decline, the improvement in the adjusted operating ratio alongside the drop in tonnage might be seen as a positive by TFI.
The company's lack of transparency regarding adjusted EBITDA for its U.S. and Canadian LTL segments makes it difficult to assess the full impact of these results. However, the adjusted EBITDA for total LTL operations fell to $115.1 million from $123.5 million, resulting in a 7.1% drop in operating income. This decline is largely attributed to the reduction in revenue and tonnage.
The struggles of the freight market are evident in the bottom line numbers. GAAP earnings per share fell to 87 cents per share from $1.03 a year ago, while adjusted non-GAAP EPS of $1.09 was better than consensus forecasts by 24 cents/share. Revenue of $1.91 billion was just $10 million short of consensus.
The adjusted operating ratio for the entire company deteriorated to 92.3% from 91.2% a year earlier, while the truckload segment's OR declined to 93.2% from 91.5%. These results indicate that the challenges faced by TFI in the freight market are not limited to its LTL operations.
TFI's earnings call with analysts will take place on Wednesday at 8:30 a.m. EST, providing an opportunity for further insights into the company's performance and strategies moving forward.
The mixed results of TFI International's Q4 LTL division highlight the ongoing difficulties in the freight market, which continues to impact the company's financial performance. As the industry navigates these challenges, it will be essential to monitor TFI's progress in addressing these issues and improving its overall operations.
The mixed results for TFI's U.S. LTL division highlight the ongoing challenges in the freight market, which continues to impact the company's bottom line.
