2024 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2024
Management’s Discussion and Analysis
2024 Annual Report │1
GENERAL INFORMATION
The following is TFI International Inc.’s management discussion and analysis (“MD&A”). Throughout this MD&A, the terms “Company”, “TFI International”
and “TFI” shall mean TFI International Inc., including its operating subsidiaries. This MD&A provides a comparison of the Company’s performance for its
three-month period and year ended December 31, 2024 with the corresponding three-month period and year ended December 31, 2023 and it reviews
the Company’s financial position as of December 31, 2024. It also includes a discussion of the Company’s affairs up to February 19, 2024, which is the
date of this MD&A. The MD&A should be read in conjunction with the audited consolidated financial statements and accompanying notes as at and for the
year ended December 31, 2024.
In this document, all financial data are prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) unless otherwise noted. All amounts are in United States dollars (U.S. dollars), and the term “dollar”, as well as the
symbol “$”, designate U.S. dollars unless otherwise indicated. Variances may exist as numbers have been rounded. This MD&A also uses non-IFRS
financial measures. Refer to the section of this report entitled “Non-IFRS Financial Measures” for a complete description of these measures.
The Company’s audited consolidated financial statements have been approved by its Board of Directors (“Board”) upon recommendation of its audit
committee on February 19, 2025. Prospective data, comments and analysis are also provided wherever appropriate to assist existing and new investors
to see the business from a corporate management point of view. Such disclosure is subject to reasonable constraints for maintaining the confidentiality of
certain information that, if published, would probably have an adverse impact on the competitive position of the Company.
Additional information relating to the Company can be found on its website at www.tfiintl.com. The Company’s continuous disclosure materials, including
its annual and quarterly MD&A, annual and quarterly consolidated financial statements, annual report, annual information form, management proxy circular
and the various press releases issued by the Company are also available on its website, or directly through the SEDAR system at www.sedar.com, or
through the EDGAR system at www.sec.gov/edgar.shtml.
FORWARD-LOOKING STATEMENTS
The Company may make statements in this report that reflect its current expectations regarding future results of operations, performance and
achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to
management. Words such as “may”, “might”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”,
“forecast”, “goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue” and words and expressions of similar
import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical results and those presently anticipated or projected.
The Company wishes to caution readers not to place undue reliance on any forward-looking statements which reference issues only as of the date made.
The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking
statement: the highly competitive market conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the
Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes
in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in
interest rates, cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers, credit market
liquidity, and the Company’s ability to identify, negotiate, consummate and successfully integrate business acquisitions.
The foregoing list should not be construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made
forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers should also refer to
the section “Risks and Uncertainties” at the end of this MD&A for additional information on risk factors and other events that are not within the Company’s
control. The Company’s future financial and operating results may fluctuate as a result of these and other risk factors.
Management’s Discussion and Analysis
2024 Annual Report │2
SELECTED FINANCIAL DATA AND HIGHLIGHTS
(unaudited)
(in thousands of U.S. dollars, except per share data)
Three months ended
December 31
Years ended
December 31
2024
2023
2022
2024
2023
2022
Revenue before fuel surcharge
1,826,675
1,674,114
1,616,495
7,304,626
6,416,886
7,357,064
Fuel surcharge
250,212
294,564
340,199
1,092,204
1,104,281
1,455,427
Total revenue
2,076,887
1,968,678
1,956,694
8,396,830
7,521,167
8,812,491
Adjusted EBITDA1
315,319
320,938
304,956
1,320,971
1,187,940
1,425,024
Operating income
160,233
198,257
216,860
718,962
757,635
1,146,038
Net income
88,115
131,386
153,494
422,484
504,877
823,232
Adjusted net income1
101,835
147,020
151,759
489,523
538,333
731,668
Net cash from operating activities
262,364
302,580
248,348
1,062,651
1,013,839
971,645
Free cash flow1
207,521
243,788
188,273
768,625
775,895
880,892
Per share data
EPS – diluted
1.03
1.53
1.74
4.96
5.80
9.02
Adjusted EPS – diluted1
1.19
1.71
1.72
5.75
6.18
8.02
Dividends
0.45
0.40
0.35
1.65
1.45
1.16
As a percentage of revenue before fuel surcharge
Adjusted EBITDA margin1
17.3%
19.2%
18.9%
18.1%
18.5%
19.4%
Depreciation of property and equipment
5.0%
3.8%
3.5%
4.6%
3.9%
3.4%
Depreciation of right-of-use assets
2.4%
2.1%
2.0%
2.3%
2.1%
1.7%
Amortization of intangible assets
1.1%
1.0%
0.8%
1.1%
0.9%
0.8%
Operating margin1
8.8%
11.8%
13.4%
9.8%
11.8%
15.6%
Adjusted operating ratio1
91.2%
87.7%
87.4%
89.9%
88.4%
86.5%
Q4 Highlights
Fourth quarter operating income of $160.2 million compared to $198.3 million the same quarter last year.
Net income of $88.1 million compared to $131.4 million in Q4 2023, and diluted earnings per share (diluted “EPS”) of $1.03 compares to $1.53 in
Q4 2023.
Adjusted net income1, a non-IFRS measure, of $101.8 million compared to $147.0 million in Q4 2023.
Adjusted diluted EPS1, a non-IFRS measure, of $1.19 compared to $1.71 in Q4 2023.
Net cash from operating activities of $266.6 million compared to $302.6 million in Q4 2023.
Free cash flow1, a non-IFRS measure, of $211.8 million compared to $243.8 million in Q4 2023.
The Company’s reportable segments performed as follows:
o
Less-Than-Truckload operating income of $70.3 million compared to $106.2 million in the year-earlier period due to weak market conditions
in the U.S., and accident-related expenses of approximately $8.0 million more than in the prior year period;
o
Truckload operating income increased 18% to $59.7 million from $50.7 million in the year-earlier period reflecting the April 2024 acquisition of
Daseke, Inc.; and
o
Logistics operating income of $42.9 million compares to $54.7 million in the year-earlier period.
On December 16, 2024, the Board of Directors of TFI declared a quarterly dividend of $0.45 per share paid on January 15, 2025, a 13% increase
over the quarterly dividend of $0.40 per share declared in Q4 2023. The annualized dividend1 represents 19.8% of the trailing twelve-month free
cash flow.
During the quarter, TFI International completed the acquisition of Keystone Western Inc. for consideration of $15.1 million, and, subsequent to
quarter end, has agreed to acquire Hearn Industrial Services, which will add to the Company's Logistics segment.
During the fourth quarter, the Company returned $75.6 million of capital to shareholders through $33.1 million in quarterly dividends and $42.4 million
of share repurchases, as the Company repurchased and cancelled 295,305 shares. The Company also reduced its debt by $156.2 million.
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS financial measures” section below.
Management’s Discussion and Analysis
2024 Annual Report │3
ABOUT TFI INTERNATIONAL
Services
TFI International is a North American leader in the transportation and logistics industry, operating in the United States and Canada. TFI International
creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the
TFI International umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TFI
International companies service the following reportable segments:
Less-Than-Truckload (“LTL”);
Truckload (“TL”);
Logistics.
Seasonality of operations
The activities conducted by the Company are subject to general demand for freight transportation. Historically, demand has been relatively stable with the
weakest generally occurring during the first quarter. Furthermore, during the harsh winter months, fuel consumption and maintenance costs tend to rise.
Human resources
As at December 31, 2024, the Company had 27,205 employees throughout TFI International’s various business segments across North America. This
compares to 25,123 employees as at December 31, 2023. The year-over-year increase of 2,082 employees is attributable to business acquisitions that
added 5,010 employees offset by rationalizations affecting 2,928 employees mainly in the LTL segment. The Company believes that it has a relatively low
turnover rate among its employees in Canada, and a normal turnover rate in the U.S. comparable to other U.S. carriers, and that its employee relations
are very good.
Equipment
The Company is a significant transportation provider throughout North America. As at December 31, 2024, the Company had 14,243 trucks, 45,453 trailers
and 7,592 independent contractors. This compares to 11,455 trucks, 34,599 trailers and 7,504 independent contractors as at December 31, 2023.
Facilities
TFI International’s head office is in Montréal, Québec and its executive office is in Etobicoke, Ontario. As at December 31, 2024, the Company had 658
facilities, as compared to 598 facilities as at December 31, 2023. Of these 658 facilities, 388 are located in the United States and 270 are located in
Canada. In the last twelve months, 121 facilities were added from business acquisitions and terminal consolidation decreased the total number of facilities
by 61, mainly in the LTL and TL segments.
Customers
The Company has a diverse customer base across a broad cross-section of industries with no single client accounting for more than 5% of consolidated
revenue. Because of its customer diversity, as well as the wide geographic scope of the Company’s service offerings and the range of segments in which
it operates, a downturn in the activities of an individual customer or customers in a particular industry would not be expected to have a material adverse
impact on operations. The Company has forged strategic partnerships with other transport companies in order to extend its service offerings to customers
across North America.
Revenue by Top Customers' Industry
(58% of total revenue in the year ended December 31, 2024)
Retail
19%
Manufactured Goods
17%
Building Materials
13%
Automotive
10%
Metals & Mining
10%
Food & Beverage
8%
Services
7%
Chemicals & Explosives
6%
Energy
3%
Waste Management
3%
Forest Products
2%
Maritime Containers
1%
Others
1%
Management’s Discussion and Analysis
2024 Annual Report │4
CONSOLIDATED RESULTS
This section provides general comments on the consolidated results of operations. A more detailed analysis is provided in the “Segmented Results”
section.
2024 business acquisitions
In line with its growth strategy, the Company acquired eleven businesses during 2024.
On January 16, 2024, TFI International acquired Sharp Trucking Services Ltd. (“Sharp”). Based in Alberta, Canada, Sharp offers bulk transportation and
specialized equipment hauling with an emphasis on serving the Canadian mining sector, and is reported in the Truckload segment.
On March 11, 2024, TFI International acquired Hercules Forwarding, Inc. (“Hercules”). Hercules focuses on direct shipper customers across diverse end
markets with an emphasis on intra-US and US-to-Canada cross-border transportation, and is reported in the Less-Than-Truckload segment.
On April 1, 2024, TFI International completed the previously announced acquisition of Daseke, Inc. ("Daseke"). Daseke provides flatbed and specialized
transportation and logistics services across North America, and is reported in the Truckload segment.
Of the additional eight tuck-in acquisitions, LJW Tank Lines was acquired during the first quarter, CRE Transportation, Transport M.J. Lavoie, Entreposage
Marco Inc. and selected assets of Challenger Motor Freight Inc. were acquired during the second quarter, C.R.S. Express Inc, and C.M.W. Express Inc.
were acquired in the third quarter, and Keystone Western Inc was acquired in the fourth quarter.
Revenue
For the three months ended December 31, 2024, revenue before fuel surcharge was $1,826.7 million, up from $1,674.1 million in Q4 2023. The increase
was mainly attributable to contributions from business acquisitions of $330.0 million partially offset by a weakened market which resulted in weaker
volumes.
For the year ended December 31, 2024, revenue before fuel surcharge was $7.30 billion, up from $6.42 billion in Q4 2023. The increase was mainly
attributable to contributions from business acquisitions of $1.54 billion partially offset by a weakened market which resulted in weaker volumes.
Operating expenses
For the three months ended December 31, 2024, the Company’s operating expenses increased by $146.2 million, to $1,916.7 million, from $1,770.4 million
in Q4 2023. This increase was due to an increase from business acquisitions of $359.4 million offset partially by a decrease in operating expenses from
existing operations of $213.2 million, as revenues decreased.
For the three months ended December 31, 2024, materials and services expenses, net of fuel surcharge, increased by $70.7 million, to $782.1 million
from $711.3 million in the same period last year due primarily to an increase from business acquisitions of $158.0 million, partially offset by a decrease in
revenues.
For the three months ended December 31, 2024, personnel expense increased 16% to $619.1 million from $534.2 million in Q4 2023. The increase is
attributable primarily to an increase in business acquisitions of $106.5 million offset by reduced personnel expenses in response to the decline in revenues.
Other operating expenses, which are primarily comprised of costs related to office and terminal rent, taxes, heating, telecommunications, maintenance
and security and other general administrative expenses, decreased by $0.7 million for the three months ended December 31, 2024, as compared to the
same period last year as increased costs from business acquisitions were offset by a reduction of spending due to a decline in revenues.
For the year ended December 31, 2024, the Company’s operating expenses increased by $914.3 million from $6.76 billion in 2023 to $7.68 billion in 2024.
The increase is mainly attributable an increase in operating expenses from business acquisitions of $1,634.1 million, offset by decreases in expenses from
existing operations of $558.6 million from materials and services expenses, $106.9 million in personnel expenses and $62.0 million in other operating
expenses mainly attributable to the decrease in volumes.
Operating income
For the three months ended December 31, 2024, the Company’s operating income was $160.2 million compared to $198.3 million during the same quarter
in 2023. The decrease is primarily attributable to the decline in revenues as a result of weaker market demand in the quarter.
For the year ended December 31, 2024, the Company’s operating income of $719.0 million compared to $757.6 million in 2023.
Management’s Discussion and Analysis
2024 Annual Report │5
Finance income and costs
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
Finance costs (income)
2024
2023
2024
2023
Interest expense on long-term debt
32,255
20,757
127,062
59,432
Interest expense on lease liabilities
6,979
4,431
24,904
16,042
Interest income
(772)
(3,838)
(7,723)
(8,121)
Net change in fair value and accretion expense of contingent considerations
15
31
(6,037)
165
Net foreign exchange loss
716
(1,620)
3,786
(491)
Others
4,296
3,502
16,247
13,844
Net finance costs
43,489
23,263
158,239
80,871
Interest expense on long-term debt
Interest expense on long-term debt for the three-month period ended December 31, 2024 increased by $11.5 million as compared to the same quarter
last year as the average level of debt rose from $1.81 billion to $2.50 billion due to debt related to the acquisition of Daseke, and the rate also increased
from 4.60% to 5.17%.
The interest expense on long-term debt for the year ended December 31, 2024, increased by $67.6 million as compared to the same period last year as
the average level of debt rose from $1.50 billion to $2.45 billion due to the private placements from the second half of 2023 and debt related to the
acquisition of Daseke, and the average rate also increased from 3.95% to 5.19%.
Net foreign exchange gain or loss and net investment hedge
The Company designates as a hedge a portion of its U.S. dollar denominated debt held against its net investments in U.S. operations. This accounting
treatment allows the Company to offset the designated portion of foreign exchange gain (or loss) of its debt against the foreign exchange loss (or gain) of
its net investments in U.S. operations and present them in other comprehensive income. Net foreign exchange gains or losses recorded in income or loss
are attributable to the translation of the U.S. dollar portion of the Company’s credit facilities not designated as a hedge and to the translation of other
financial assets and liabilities denominated in currencies other than the functional currency. For the three-month period ended December 31, 2024, a loss
of $103.6 million of foreign exchange variations (a loss of $104.1 million net of tax) was recorded to other comprehensive income as it relates to the
translation of the debt in the net investment hedge. For the three-month period ended December 31, 2023, a gain of $41.3 million of foreign exchange
variations (a gain of $41.2 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment
hedge.
For the year ended December 31, 2023, a loss of $136.1 million of foreign exchange variations (a loss of $135.1 million net of tax) was recorded to other
comprehensive income as it relates to the translation of the debt in the net investment hedge. For the year ended December 31, 2023, a gain of $37.9
million of foreign exchange variations (a gain of $39.7 million net of tax) was recorded to other comprehensive income as it relates to the translation of the
debt in the net investment hedge.
Income tax expense
For the three months ended December 31, 2024, the Company’s effective tax rate was 24.5%. The income tax expense of $28.6 million reflects a $2.3
million favorable variance versus an anticipated income tax expense of $30.9 million based on the Company’s statutory tax rate of 26.5%. The favorable
variance is due to a favorable variation from tax deductions and tax-exempt income of $6.2 million and partially offset by an unfavorable variation from non
deductible expenses of $1.5 million.
For the year ended December 31, 2024, the Company’s effective tax rate was 24.7%. The income tax expense of $138.2 million reflects a $10.4 million
favorable variance versus an anticipated income tax expense of $148.6 million based on the Company’s statutory tax rate of 26.5%. The favorable variance
is mainly due to favorable variations from tax deductions and tax-exempt income of $17.0 million.
Management’s Discussion and Analysis
2024 Annual Report │6
Net income and adjusted net income
(unaudited)
(in thousands of U.S. dollars, except per share data)
Three months ended
December 31
Years ended
December 31
2024
2023
2022
2024
2023
2022
Net income
88,115
131,386
153,494
422,484
504,877
823,232
Amortization of intangible assets related to business
acquisitions
18,908
15,598
13,969
73,682
56,160
52,003
Net change in fair value and accretion expense of contingent
considerations
15
31
90
(6,037)
165
216
Net foreign exchange loss
716
(1,620)
(564)
3,786
(491)
556
(Gain) loss on sale of business and direct attributable costs
—
—
2,069
—
3,011
(69,753)
(Gain) loss, net of impairment, on sale of land and buildings and
assets held for sale
529
7,026
(15,941)
192
(14,721)
(77,870)
Restructuring from business acquisitions
—
—
—
19,748
—
—
Tax impact of adjustments
(6,448)
(5,401)
(1,358)
(24,332)
(10,668)
3,284
Adjusted net income1
101,835
147,020
151,759
489,523
538,333
731,668
Adjusted EPS – basic1
1.20
1.73
1.75
5.79
6.27
8.19
Adjusted EPS – diluted1
1.19
1.71
1.72
5.75
6.18
8.02
For the three months ended December 31, 2024, TFI International’s net income was $88.1 million as compared to $131.4 million in Q4 2023. The
Company’s adjusted net income1, a non-IFRS measure, which excludes items listed in the above table, was $101.8 million as compared to $147.0 million
in Q4 2023, a decrease of 31%. Adjusted EPS1, fully diluted, of $1.19 compared to $1.71 in Q4 2023.
1 This is a non-IFRS. For the reconciliation, refer to the “Non-IFRS financial measures” section below.
Management’s Discussion and Analysis
2024 Annual Report │7
SEGMENTED RESULTS
To facilitate the comparison of business level activity and operating costs between periods, the Company compares the revenue before fuel surcharge
(“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses. Note that “Total revenue” is not
affected by this reallocation.
Selected segmented financial information
(unaudited)
(in thousands of U.S. dollars)
Less-
Than-
Truckload*
Truckload
Logistics
Corporate
Eliminations*
Total
Three months ended December 31, 2024
Revenue before fuel surcharge1
737,291
693,240
410,198
—
(14,054)
1,826,675
% of total revenue2
42%
38%
21%
100%
Adjusted EBITDA3
123,595
147,426
58,121
(13,823)
—
315,319
Adjusted EBITDA margin3,4
16.8%
21.3%
14.2%
17.3%
Operating income (loss)
70,326
59,652
42,896
(12,641)
—
160,233
Operating margin3,4
9.5%
8.6%
10.5%
8.8%
Total assets less intangible assets3
2,222,181
1,882,637
363,881
54,194
—
4,522,893
Net capital expenditures3
14,651
15,766
1,629
126
—
32,172
Three months ended December 31, 2023
Revenue before fuel surcharge1
817,282
399,277
471,638
—
(14,083)
1,674,114
% of total revenue2
50%
24%
25%
99%
Adjusted EBITDA3
166,003
98,770
69,230
(13,065)
—
320,938
Adjusted EBITDA margin3,4
20.3%
24.7%
14.7%
19.2%
Operating income (loss)
106,158
50,657
54,654
(13,212)
—
198,257
Operating margin3,4
13.0%
12.7%
11.6%
11.8%
Total assets less intangible assets3
2,310,231
1,146,497
357,251
450,340
4,264,319
Net capital expenditures3
46,952
4,725
1,792
129
—
53,598
Year ended December 31, 2024
Revenue before fuel surcharge1
3,085,727
2,551,540
1,720,976
—
(53,617)
7,304,626
% of total revenue2
44%
35%
22%
101%
Adjusted EBITDA3
577,308
557,358
242,746
(56,441)
—
1,320,971
Adjusted EBITDA margin3,4
18.7%
21.8%
14.1%
18.1%
Operating income (loss)
361,235
252,435
182,363
(77,071)
—
718,962
Operating margin3,4
11.7%
9.9%
10.6%
9.8%
Total assets less intangible assets3
2,222,181
1,882,637
363,881
54,194
—
4,522,893
Net capital expenditures3
124,401
125,240
5,561
730
—
255,932
Year ended December 31, 2023
Revenue before fuel surcharge1
3,236,268
1,625,592
1,604,878
—
(49,852)
6,416,886
% of total revenue2
52%
26%
22%
100%
Adjusted EBITDA3
613,039
428,203
207,800
(61,102)
—
1,187,940
Adjusted EBITDA margin3,4
18.9%
26.3%
12.9%
18.5%
Operating income
424,789
237,393
160,112
(64,659)
—
757,635
Operating margin3,4
13.1%
14.6%
10.0%
11.8%
Total assets less intangible assets3
2,310,231
1,146,497
357,251
450,340
—
4,264,319
Net capital expenditures3
174,767
29,098
3,725
238
—
207,828
1 Includes intersegment revenue.
2 Segment revenue including fuel surcharge and intersegment revenue to consolidated revenue including fuel surcharge and intersegment revenue.
3 This is a non-IFRS measures. For a reconciliation, refer to the “Non-IFRS financial measures” section below.
4 As a percentage of revenue before fuel surcharge.
*In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and U.S.
Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable segment has
been recast to be consistent with current reportable segments.
Management’s Discussion and Analysis
2024 Annual Report │8
Less-Than-Truckload
(unaudited)
Three months ended December 31
Years ended December 31
(in thousands of U.S. dollars)
2024
%
2023*
%
2024
%
2023*
%
Total revenue
876,140
1,001,882
3,702,934
3,948,657
Fuel surcharge
(138,849)
(184,600)
(617,207)
(712,389)
Revenue
737,291
100.0%
817,282
100.0%
3,085,727
100.0%
3,236,268
100.0%
Materials and services expenses (net of fuel
surcharge)
228,316
31.0%
254,006
31.1%
924,269
30.0%
988,522
30.5%
Personnel expenses
330,121
44.8%
333,488
40.8%
1,360,982
44.1%
1,377,596
42.6%
Other operating expenses
55,080
7.5%
64,580
7.9%
222,619
7.2%
259,603
8.0%
Depreciation of property and equipment
36,896
5.0%
38,181
4.7%
150,665
4.9%
143,816
4.4%
Depreciation of right-of-use assets
12,349
1.7%
11,831
1.4%
50,328
1.6%
45,428
1.4%
Amortization of intangible assets
3,001
0.4%
2,588
0.3%
12,531
0.4%
9,510
0.3%
(Gain) loss on sale of rolling stock and equipment
197
0.0%
(793)
-0.1%
513
0.0%
(1,548)
-0.0%
(Gain) loss on derecognition of right-of-use assets
(18)
-0.0%
(2)
-0.0%
36
0.0%
(944)
-0.0%
(Gain) loss, net of impairment, on sale of land and
buildings and assets held for sale
1,023
0.1%
7,245
0.9%
2,549
0.1%
(10,504)
-0.3%
Operating income
70,326
9.5%
106,158
13.0%
361,235
11.7%
424,789
13.1%
Adjusted EBITDA1
123,595
16.8%
166,003
20.3%
577,308
18.7%
613,039
18.9%
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and U.S.
Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable segment has
been recast to be consistent with current reportable segments.
1 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS financial measures” section below.
Management’s Discussion and Analysis
2024 Annual Report │9
Operational data
(unaudited)
Three months ended December 31
Years ended December 31
(Revenue in U.S. dollars)
2024
2023*
Variance
%
2024
2023*
Variance
%
LTL
Adjusted Operating Ratio2
90.3%
86.1%
88.2%
87.2%
Return on invested capital2
16.3%
18.9%
U.S. LTL
Revenue (in thousands of dollars)
449,722
481,102
(31,380)
-6.5%
1,905,732
1,912,623
(6,891)
-0.4%
GFP Revenue (in thousands of dollars)
34,312
81,563
(47,251)
-57.9%
208,065
350,365
(142,300)
-40.6%
FSC Revenue (in thousands of dollars)
80,170
112,079
(31,909)
-28.5%
375,768
447,820
(72,052)
-16.1%
Adjusted Operating Ratio2
97.3%
91.0%
93.1%
92.2%
Revenue per hundredweight (excluding fuel)1
$27.73
$28.81
$(1.08)
-3.7%
$27.80
$28.61
$(0.81)
-2.8%
Revenue per shipment (excluding fuel)1
$340.18
$342.18
$(2.00)
-0.6%
$339.16
$322.26
$16.90
5.2%
Revenue per hundredweight (including fuel)1
$32.67
$35.52
$(2.85)
-8.0%
$33.28
$35.31
$(2.03)
-5.7%
Revenue per shipment (including fuel)1
$400.83
$421.89
$(21.06)
-5.0%
$406.03
$397.72
$8.31
2.1%
Tonnage (in thousands of tons)1
811
835
(24)
-2.9%
3,428
3,342
86
2.6%
Shipments (in thousands)1
1,322
1,406
(84)
-6.0%
5,619
5,935
(316)
-5.3%
Average weight per shipment (in lbs)1
1,227
1,188
39
3.3%
1,220
1,126
94
8.3%
Average length of haul (in miles)1
1,194
1,132
62
5.5%
1,170
1,111
59
5.3%
Cargo claims (% revenue)
0.9%
0.5%
0.7%
0.5%
Vehicle count, average3
4,515
3,974
541
13.6%
4,151
4,097
54
1.3%
Truck age4
4.2
4.7
(0.5)
-10.6%
4.4
4.8
(0.4)
-8.3%
Business days
62
62
—
—
254
254
—
—
Return on invested capital2
12.8%
15.1%
Canadian LTL
Revenue (in thousands of dollars)
134,653
138,241
(3,588)
-2.6%
551,440
531,784
19,656
3.7%
FSC Revenue (in thousands of dollars)
30,119
39,388
(9,269)
-23.5%
136,387
147,247
(10,860)
-7.4%
Adjusted Operating Ratio2
81.0%
79.9%
78.4%
76.6%
Revenue per hundredweight (excluding fuel)
$11.06
$10.82
$0.24
2.2%
$11.08
$10.83
$0.25
2.3%
Revenue per shipment (excluding fuel)
$230.18
$237.12
$(6.94)
-2.9%
$228.62
$235.20
$(6.58)
-2.8%
Revenue per hundredweight (including fuel)1
$13.53
$13.90
$(0.37)
-2.7%
$13.82
$13.82
$—
0.0%
Revenue per shipment (including fuel)1
$281.66
$304.68
$(23.02)
-7.6%
$285.17
$300.32
$(15.15)
-5.0%
Tonnage (in thousands of tons)
609
639
(30)
-4.7%
2,489
2,456
33
1.3%
Shipments (in thousands)
585
583
2
0.3%
2,412
2,261
151
6.7%
Average weight per shipment (in lbs)
2,092
2,192
(100)
-4.6%
2,064
2,172
(108)
-5.0%
Average length of haul (in miles)
842
856
(14)
-1.6%
791
852
(61)
-7.2%
Cargo claims (% revenue)
0.3%
0.1%
0.3%
0.2%
Vehicle count, average
920
777
143
18.4%
923
788
135
17.1%
Truck age
4.4
4.8
(0.4)
-8.3%
4.4
4.8
(0.4)
-8.3%
Business days
63
62
1
1.6%
252
250
2.0
—
Return on invested capital2
18.5%
20.1%
Package and Courier
Revenue (in thousands of dollars)
125,033
122,033
3,000
2.5%
445,409
461,930
(16,521)
-3.6%
FSC Revenue (in thousands of dollars)
29,421
34,164
(4,743)
-13.9%
109,037
121,268
(12,231)
-10.1%
Adjusted Operating Ratio2
73.9%
71.6%
77.9%
75.2%
Revenue per pound (including fuel)
$0.44
$0.48
$(0.04)
-8.3%
$0.44
$0.47
$(0.03)
-6.4%
Revenue per pound (excluding fuel)
$0.36
$0.37
$(0.01)
-2.7%
$0.36
$0.37
$(0.01)
-2.7%
Revenue per package (including fuel)
$6.85
$7.03
$(0.18)
-2.6%
$6.93
$7.27
$(0.34)
-4.7%
Revenue per package (excluding fuel)
$5.55
$5.49
$0.06
1.1%
$5.57
$5.76
$(0.19)
-3.3%
Tonnage (in thousands of metric tons)
159
148
11
7.4%
569
563
6
1.1%
Packages (in thousands)
22,542
22,230
312
1.4%
80,030
80,245
(215)
-0.3%
Average weight per package (in lbs)
15.55
14.67
0.88
6.0%
15.67
15.46
0.21
1.4%
Vehicle count, average
926
995
(69)
-6.9%
940
990
(50)
-5.1%
Weekly revenue per vehicle (incl. fuel, in thousands of U.S.
dollars)
$12.83
$12.08
$0.75
6.2%
$11.34
$11.33
$0.01
0.1%
Business days
63
62
1
1.6%
252
250
2
0.8%
Return on invested capital2
23.5%
26.9%
1 Operational statistics exclude figures from Ground Freight Pricing (“GFP”).
2 This is a non-IFRS measure. For a reconciliation please refer to the “Non-IFRS and Other Financial Measures” section below.
3 As at December 31, 2024 the active vehicle count was 3,468 (December 31, 2023 - 3,364)
4 The truck age for U.S. LTL operations has been presented for active trucks.
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and U.S. Less-Than-Truckload
operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable segment has been recast to be consistent with current reportable
segments.
Management’s Discussion and Analysis
2024 Annual Report │10
Revenue
For the three months ended December 31, 2024, revenue decreased by $80.0 million to $737.3 million. This decrease is due to a $98.7 million reduction
in existing U.S. LTL operations including Ground with Freight pricing (GFP), combined with a $7.4 million decrease in existing Canadian LTL contributions,
but partially offset by a $3.0 million increase in existing P&C operations combined with $23.9 million coming from business acquisitions.
The reduction in U.S. LTL revenue is explained by both the LTL and Ground with Freight pricing (GFP) operations. LTL tonnage decreased 2.9% and LTL
revenue per hundredweight (excluding fuel surcharge revenue) was down 3.7%. The reduction in tonnage is explained by a 6.0% reduction in shipments
partially offset by a 3.3% increase in weight per shipment. The reduction in GFP revenue is mostly explained by a 65.3% reduction in volume. Canadian
LTL revenue reduction, including acquisitions, was driven by a 4.7% decrease in tonnage partially offset by a 2.2% increase in revenue per hundredweight
(excluding fuel surcharge revenue). The decrease in tonnage is mostly from a 5.0% decrease in weight per shipment. In P&C, our operations benefited
from a Canada Post strike during the quarter. This led to a 7.4% increase in tonnage, mostly explained by a 6% increase in weight per package, combined
with a 1.4% increase in packages count.
For the year ended December 31, 2024, revenue decreased $150.5 million, or 5%, to $3,085.7 million. The decrease is mostly due to a reduction in
revenues from existing operations of $269.2 million which is partially offset by $118.7 million in contributions from acquisitions.
Operating expenses
For the three months ended December 31, 2024, materials and services expenses, net of fuel surcharge revenue, decreased $25.7 million, or 10%,
attributable mostly to a $60.8 million reduction in sub-contractor costs, a $11.2 million reduction in fuel costs, and a $3.7 million reduction in rolling stock
lease costs, partly offset by a $45.7 million decrease in fuel surcharge revenue and an $8.0 million increase in accident cost. Personnel expenses
decreased $3.4 million, or 1%, mostly from a reduction in direct labor. Other operating expenses decreased $9.5 million or 14.7%, mostly from an $8.0
million reduction in bad debt and recovery charges. As of December 31, 2024, the LTL segment’s terminals had 12,937 doors, of which 10,218 are owned.
For the year ended December 31, 2023, materials and services expenses, net of fuel surcharge revenue, decreased $64.3 million, or 6.5%, attributable
mostly to a $163.8 million reduction in sub-contractor costs and a $16.0 million reduction in fuel costs, partially offset by a $95.2 million reduction in fuel
surcharge revenue and a $14.5 million increase in insurance and accident expense. Personnel expenses decreased $16.6 million, or 1.2%, from a
reduction of $7.9 million in direct labor combined with a reduction of $9.0 million is severance expense. Other operating expenses decreased $37.0 million,
or 14.2%, mostly from an $18.8 million decrease in IT service charges, combined with a reduction of $15.4 million in bad debt and recovery charge and
an $8.4 million decrease in real-estate costs. Depreciation of property and equipment increased 4.8%, or $6.8 million.
Operating income
Operating income for the three months ended December 31, 2024, decreased $35.8 million to $70.3 million. Adjusted operating ratio, a non-IFRS measure,
of the LTL operations was 90.3% in the fourth quarter of 2024 as compared to 86.1% in the same prior year period. The $8.0 million increased accident
provision expense negatively impacted US LTL adjusted operating ratio by 170 basis points.
For the year ended December 31, 2024, operating income decreased $63.6 million, or 15%, to $361.2 million. Adjusted operating ratio of the LTL segment
for the year ended December 31, 2024, was 88.2%, representing a 100 basis-point increase when compared to the previous year.
Return on invested capital, a non-IFRS measure, of the LTL segment was 16.3% for the 12 months ended December 31, 2024, as compared to 18.9% in
the same prior year period.
Management’s Discussion and Analysis
2024 Annual Report │11
Truckload
(unaudited)
Three months ended December 31
Years ended December 31
(in thousands of U.S. dollars)
2024
%
2023
%
2024
%
2023
%
Total revenue
786,338
479,596
2,937,305
1,936,038
Fuel surcharge
(93,098)
(80,319)
(385,765)
(310,446)
Revenue
693,240
100.0%
399,277
100.0%
2,551,540
100.0%
1,625,592
100.0%
Materials and services expenses (net of fuel
surcharge)
309,798
44.7%
166,850
41.8%
1,125,653
44.1%
682,342
42.0%
Personnel expenses
209,941
30.3%
121,120
30.3%
783,894
30.7%
473,948
29.2%
Other operating expenses
25,787
3.7%
14,540
3.6%
94,835
3.7%
55,420
3.4%
Depreciation of property and equipment
53,071
7.7%
23,863
6.0%
173,489
6.8%
101,508
6.2%
Depreciation of right-of-use assets
26,233
3.8%
18,341
4.6%
100,221
3.9%
70,084
4.3%
Amortization of intangible assets
8,964
1.3%
5,902
1.5%
33,534
1.3%
23,169
1.4%
(Gain) loss on sale of rolling stock and equipment
242
0.0%
(1,768)
-0.4%
(10,281)
-0.4%
(13,828)
-0.9%
(Gain) loss on derecognition of right-of-use assets
46
0.0%
(235)
-0.1%
81
0.0%
(493)
-0.0%
(Gain) loss on sale of land and buildings and assets
held for sale
(494)
-0.1%
7
0.0%
(2,321)
-0.1%
(3,951)
-0.2%
Operating income
59,652
8.6%
50,657
12.7%
252,435
9.9%
237,393
14.6%
Adjusted EBITDA1
147,426
21.3%
98,770
24.7%
557,358
21.8%
428,203
26.3%
Operational data
Three months ended December 31
Years ended December 31
(unaudited)
2024
2023
Variance
%
2024
2023
Variance
%
Truckload
Adjusted operating ratio1
91.5%
87.3%
90.2%
85.6%
Revenue per truck per week (excluding fuel)
$4,135
$3,894
$241
6.2%
$4,212
$4,013
$199
5.0%
Revenue per truck per week (including fuel)
$4,803
$4,828
$(25)
-0.5%
$4,979
$4,937
$42
0.9%
Return on invested capital1
8.4%
10.7%
Specialized TL
Revenue (in thousands of U.S. dollars)
531,890
283,383
248,507
87.7%
1,930,164
1,141,027
789,137
69.2%
Brokerage revenue (in thousands of U.S. dollars)
87,164
40,569
46,595
114.9%
322,535
182,056
140,479
77.2%
FSC (in thousands of U.S. dollars)
81,814
65,366
16,448
25.2%
334,698
253,545
81,153
32.0%
Adjusted operating ratio1
91.6%
87.0%
90.2%
85.8%
Revenue per truck per week (excluding fuel)
$4,298
$4,133
$165
4.0%
$4,396
$4,232
$164
3.9%
Revenue per truck per week (including fuel)
$4,959
$5,086
$(127)
-2.5%
$5,158
$5,174
$(16)
-0.3%
Truck count, average
6,888
4,051
2,837
70.0%
6,109
3,977
2,132
53.6%
Trailer count, average
20,392
10,402
9,990
96.0%
17,819
10,460
7,359
70.4%
Truck age
3.2
3.4
(0.2)
-5.9%
3.2
3.4
(0.2)
-5.9%
Trailer age
11.2
12.7
(1.5)
-11.8%
11.2
12.7
(1.5)
-11.8%
Number of owner operators, average
2,632
1,223
1,409
115.2%
2,335
1,208
1,127
93.3%
Return on invested capital1
8.5%
10.3%
Canadian based Conventional TL
Revenue (in thousands of U.S. dollars)
46,511
53,838
(7,327)
-13.6%
195,256
216,487
(21,231)
-9.8%
Brokerage revenue (in thousands of U.S. dollars)
29,771
23,976
5,795
24.2%
112,702
95,351
17,351
18.2%
FSC (in thousands of U.S. dollars)
11,473
15,287
(3,814)
-24.9%
52,122
57,447
(5,325)
-9.3%
Adjusted operating ratio1
90.3%
89.0%
90.2%
85.6%
Total mileage (in thousands)
23,185
25,917
(2,732)
-10.5%
97,243
102,559
(5,316)
-5.2%
Revenue per mile (excluding fuel)2
$2.01
$2.08
$(0.07)
-3.4%
$2.01
$2.11
$(0.10)
-4.7%
Revenue per mile (including fuel)2
$2.50
$2.67
$(0.17)
-6.4%
$2.54
$2.67
$(0.13)
-4.9%
Revenue per truck per week (excluding fuel)
$2,981
$3,094
$(113)
-3.7%
$3,078
$3,266
$(188)
-5.8%
Revenue per truck per week (including fuel)
$3,716
$3,973
$(257)
-6.5%
$3,899
$4,133
$(234)
-5.7%
Truck count, average
977
1,072
(95)
-8.9%
986
1,024
(38)
-3.7%
Trailer count, average
3,463
3,861
(398)
-10.3%
3,566
3,923
(357)
-9.1%
Truck age
2.8
3.3
(0.5)
-15.2%
2.8
3.3
(0.5)
-15.2%
Trailer age
7.4
7.9
(0.5)
-6.3%
7.4
7.9
(0.5)
-6.3%
Number of owner operators, average
223
267
(44)
-16.5%
234
250
(16)
-6.4%
Return on invested capital1
8.1%
12.6%
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.
2 The revenue per mile calculation excludes brokerage revenues
During Q4 2024, Keystone was acquired and incorporated into the TL segment.
Revenue
For the three months ended December 31, 2024, revenue increased by $294.0 million, or 74%, from $399.3 million in Q4 2023 to $693.2 million in Q4
2024. This increase was primarily due to contributions from business acquisitions of $309.1 million, partially offset by a decrease in revenue from existing
operations of $15.2 million. Specialized TL revenue increased by $295.1 million, or 91%, compared to the prior year period, mainly due to contributions
from business acquisitions of $304.4 million, including revenue from the Daseke acquisition of $289.9 million, partially offset by an organic decline of $9.3
million. For Canadian based conventional TL operations, revenue decreased by $1.5 million, or 2%, compared to the same prior year period, made up of
a $6.3 million decline in revenue from existing operations, partially offset by contributions from business acquisitions of $4.8 million. Revenue per truck,
excluding fuel surcharge for Canadian based conventional TL operations, declined 3.7% in Q4 2024 compared to Q4 2023, made up of a 3.4% decline in
revenue per mile and a 0.3% decrease in miles per truck.
Management’s Discussion and Analysis
2024 Annual Report │12
For the year ended December 31, 2024, TL revenue increased by $925.9 million, or 57%, from $1,625.6 million in 2023 to $2,551.5 million in 2024. This
increase was mainly due to contributions from business acquisitions of $1,061.3 million, partially offset by a decline in revenue from existing operations of
$135.4 million, primarily the result of pricing and lower volumes.
Operating expenses
For the three months ended December 31, 2024, operating expenses, net of fuel surcharge, increased by $285.0 million, or 82%, from $348.6 million in
Q4 2023 to $633.6 million in Q4 2024. This is mainly due to an increase of $306.2 million in operating expenses, net of fuel surcharge, from business
acquisitions, including operating expenses, net of fuel surcharge, of $288.7 million from the Daseke acquisition, and partially offset by a decrease in
operating expenses, net of fuel surcharge, from existing truckload operations of $21.2 million.
For the year ended December 31, 2024, TL operating expenses, net of fuel surcharge, increased by $910.9 million, or 66%, from $1,388.2 million in 2023
to $2,299.1 million in 2024. This is mainly due to an increase of $1,003.3 million from business acquisitions, partially offset by a decrease of $92.4 million
from existing operations.
Operating income
Operating income for the TL segment was $59.7 million for the three months ended December 31, 2024, up 18% from $50.7 million in the fourth quarter
of 2023. This is mainly due to an increase in operating income from existing TL operations of $6.1 million and contributions from business acquisitions of
$2.9 million.
For the year ended December 31, 2024, operating income in the TL segment increased by $15.0 million, or 6%, from $237.4 million in 2023 to $252.4
million in 2024. The increase was due to a $58.1 million increase from business acquisitions, partially offset by a $43.0 million decrease from existing
operations.
Return on invested capital, a non-IFRS measure, of the TL segment was 8.0% for the 12 months ended on December 31, 2024, as compared to 10.7% in
the same prior year period.
Logistics
(unaudited)
Three months ended December 31
Years ended December 31
(in thousands of U.S. dollars)
2024
%
2023
%
2024
%
2023
%
Total revenue
431,401
504,493
1,821,711
1,697,016
Fuel surcharge
(21,203)
(32,855)
(100,735)
(92,138)
Revenue
410,198
100.0%
471,638
100.0%
1,720,976
100.0%
1,604,878
100.0%
Materials and services expenses (net of fuel
surcharge)
266,408
64.9%
309,079
65.5%
1,115,292
64.8%
1,102,396
68.7%
Personnel expenses
62,832
15.3%
67,034
14.2%
267,569
15.5%
191,146
11.9%
Other operating expenses
22,874
5.6%
26,323
5.6%
95,438
5.5%
103,715
6.5%
Depreciation of property and equipment
2,058
0.5%
1,905
0.4%
7,995
0.5%
4,094
0.3%
Depreciation of right-of-use assets
4,750
1.2%
4,712
1.0%
18,595
1.1%
16,583
1.0%
Amortization of intangible assets
8,417
2.1%
8,185
1.7%
33,829
2.0%
27,237
1.7%
Gain on sale of rolling stock and equipment
(37)
-0.0%
(24)
-0.0%
(57)
-0.0%
(134)
-0.0%
Gain on derecognition of right-of-use assets
-
-
(4)
-0.0%
(12)
-0.0%
(45)
-0.0%
Gain on sale of land and building
—
—
(226)
-0.0%
(36)
-0.0%
(226)
-0.0%
Operating income
42,896
10.5%
54,654
11.6%
182,363
10.6%
160,112
10.0%
Adjusted EBITDA1
58,121
14.2%
69,230
14.7%
242,746
14.1%
207,800
12.9%
Return on invested capital1
17.6%
18.8%
1 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS financial measures” section below.
Revenue
For the three months ended December 31, 2024, revenue decreased by $61.4 million, or 13%, from $471.6 million in 2023 to $410.2 million in 2024. The
decrease is mostly due to the truck moving business decline of $24.6 million and the 3PL operations decline of $23.5 million with the remainder coming
from the last mile business.
For the year ended December 31, 2024, revenue increased by $116.1 million, or 7%, from $1,604.9 million in 2023 to $1,721.0 million in 2024. The
increase is from business acquisitions of $355.4 million and is partially offset by a decrease from existing operations of $239.3 million, of which $167.5
million is attributable to the 3PL operations.
Approximately 83% (2023 – 81%) of the Logistics segment’s revenues in the quarter were generated from operations in the U.S. and approximately 17%
(2023 – 19%) were generated from operations in Canada.
Management’s Discussion and Analysis
2024 Annual Report │13
Operating expenses
For the three months ended December 31, 2024, total operating expenses, net of fuel surcharge, increased by $49.7 million, or 12% relative to the same
prior year period, from $417.0 million to $367.3 million. The decrease in materials and services expenses resulted from volume reductions in all of business
lines within the logistics segment. Personnel expenses decreased $4.2 million, or 6%, mostly explained by the direct labor cost decrease related to volumes
decreases.
For the year ended December 31, 2024, total operating expenses, net of fuel surcharge, increased by $93.8 million, or 6%, from $1,444.8 million to
$1,538.6 million. The increase in total operating expenses, net of fuel surcharge, was from business acquisitions of $304.3 million partially offset by a
decrease in existing operations of $210.5 million. Materials and services expenses increased by $12.8 million of which $194.1 million comes from business
acquisitions offset by a $181.2 million reduction related to the 3PL volume. Personnel expenses increased $76.4 million, mainly due to business
acquisitions of $91.8 million.
Operating income
Operating income for the three months ended December 31, 2024, decreased by $11.8 million, or 22%, from $54.7 million to $42.9 million. The decrease
was mostly explained by lower volume in the 3PL and last mile operations.
For the year ended December 31, 2024, operating income increased by $22.3 million, or 14% as a result of contributions from business acquisitions of
$51.0 million, partially offset by a decrease of $28.8 million from existing operations.
The return on invested capital of 17.6% compared to 18.5% in the same prior year period.
LIQUIDITY AND CAPITAL RESOURCES
Sources and uses of cash
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Sources of cash:
Net cash from operating activities
262,364
302,580
1,062,651
1,013,839
Proceeds from sale of property and equipment
15,914
11,708
65,389
73,339
Proceeds from sale of assets held for sale
1,990
10,143
33,404
50,280
Net variance in cash and bank indebtedness
63,425
—
353,180
—
Net proceeds from long-term debt
—
269,082
225,083
558,871
Others
1,913
24,096
32,591
126,567
Total sources
345,606
617,609
1,772,298
1,822,896
Uses of cash:
Purchases of property and equipment
72,747
80,643
392,819
361,563
Business combinations, net of cash acquired
12,781
10,114
957,963
628,701
Net variance in cash and bank indebtedness
—
256,100
—
194,776
Net repayment of long-term debt
138,644
—
—
—
Repayment of lease liabilities
42,088
33,576
165,350
128,107
Dividends paid
33,145
29,983
133,928
121,095
Repurchase of own shares
42,437
169,189
76,616
288,024
Others
3,764
38,004
45,622
100,630
Total usage
345,606
617,609
1,772,298
1,822,896
Cash flow from operating activities
For the year ended December 31, 2024, net cash from operating activities increased by 5% to $1,062.7 million from $1,013.8 million in 2023. This increase
in net cash from operating activities is primarily due to an $82.8 million decrease in payments for income taxes as there were significant payments made
in Q1 2023 for the 2022 income taxes and an increase in provisions net of payments of $49.3 million. These were partially offset by a decrease in non-
cash working capital of $95.1 million, resulting primarily from a rise in sales from business acquisitions which increased the accounts receivable balance.
Management’s Discussion and Analysis
2024 Annual Report │14
Cash flow used in investing activities
Property and equipment
The following table presents the additions of property and equipment by category for the three-month periods and years ended December 31, 2024 and
2023.
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Additions to property and equipment:
Purchases as stated on cash flow statements
72,747
80,643
392,819
361,563
Non-cash adjustments
482
—
482
(1,316)
73,229
80,643
393,301
360,247
Additions by category:
Land and buildings
24,059
13,622
68,580
77,516
Rolling stock
43,896
60,355
295,452
265,687
Equipment
5,274
6,666
29,269
17,044
73,229
80,643
393,301
360,247
The Company invests in new equipment to maintain its quality of service while minimizing maintenance costs. Its capital expenditures reflect the level of
reinvestment required to keep its equipment in good order and to maintain a strategic allocation of its capital resources.
In the normal course of activities, the Company constantly renews its rolling stock equipment generating regular proceeds and gain or loss on disposition.
The following table indicates the proceeds and gains or losses from sale of property and equipment and assets held for sale by category for the three-
month periods and years ended December 31, 2024 and 2023.
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Proceeds by category:
Land and buildings
906
8,428
30,004
48,716
Rolling stock
16,998
13,423
68,774
74,762
Equipment
—
—
15
141
17,904
21,851
98,793
123,619
Gains (losses) by category:
Land and buildings
(344)
4,257
11,117
25,910
Rolling stock
(587)
(2,582)
5,477
10,372
Equipment
—
(3)
2,016
22
(931)
1,672
18,610
36,304
Business acquisitions
For the year ended December 31, 2024, cash used in business acquisitions, net of cash acquired, totaled $958.0 million to acquire eleven businesses.
Daseke was acquired for $770.7 million, net of cash and cash equivalents and the assumption of $314.7 million of debt. Refer to the section of this report
entitled “2024 business acquisitions". Further information can be found in note 5 of the December 31, 2024 audited consolidated financial statements.
Purchase and sale of investments
For the year ended December 31, 2024, proceeds of $19.1 million were received from the sale of investments as compared to $89.2 million received in
2023. These investments were previously elected to be measured at fair value through OCI.
Cash flow used in financing activities
Debt
On March 22, 2024, the Group amended its revolving credit facility, including the addition of a $500.0 million term loan and an extension. Under the new
amendment, the revolving credit facility was extended to March 22, 2027. The new agreement also provides the Company with a non-revolving term loan
for $500.0 million maturing in 1 to 3 years, $100.0 million each in year one and year two, and $300.0 million in year three. Based on certain ratios, the
interest rate on the term loan is the sum of SOFR, plus an applicable margin, which can vary between 128 basis points and 190 basis points. The applicable
margin on the credit facility is currently 1.5%. Deferred financing fees of $1.3 million were recognized on the increase. As at the end of the quarter the
Company had repaid $300.0 million of this loan, including the entire first and second tranches.
Management’s Discussion and Analysis
2024 Annual Report │15
NCIB on common shares
Pursuant to the renewal of the normal course issuer bid (“NCIB”), which began on November 2, 2024, and ends on November 1, 2025, the Company is
authorized to repurchase for cancellation up to a maximum of 7,918,102 of its common shares under certain conditions. As at December 31, 2024, and
since the inception of this NCIB, the Company has repurchased and cancelled 295,205 common shares.
For the year ended December 31, 2024, the Company repurchased 545,305 common shares (as compared to 2,609,900 during the same period in 2023)
at a weighted average price of $140.50 (as compared to $110.36 in the prior year period) for a total purchase price of $76.6 million (as compared to $288.0
million the prior year period).
Free cash flow1
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2022
2024
2023
2022
Net cash from operating activities
262,364
302,580
248,348
1,062,651
1,013,839
971,645
Additions to property and equipment
(72,747 )
(80,643 )
(111,716 )
(392,819 )
(361,563 )
(350,824 )
Proceeds from sale of property and equipment
15,914
11,708
17,685
65,389
73,339
128,821
Proceeds from sale of assets held for sale
1,990
10,143
33,956
33,404
50,280
131,250
Free cash flow
207,521
243,788
188,273
768,625
775,895
880,892
1 This is a non-IFRS measure. For a reconciliation refer to the “Non-IFRS financial measures” section below.
The Company's objectives when managing its cash flow from operations is to ensure proper capital investment in order to provide stability and
competitiveness for its operations, to ensure sufficient liquidity to pursue its growth strategy, and to undertake selective business acquisitions within a
sound capital structure and solid financial position.
For the year ended December 31, 2024, the Company generated free cash flow of $768.6 million, compared to $775.9 million in 2023, which represents
a year-over-year decrease of $7.3 million, or 1%. The decrease is due to reductions in cash flow from an increase in additions to property and equipment
of $31.3 million, mostly related to additions for Daseke, as well as reductions in proceeds from the sale of property and equipment and assets held for sale
of $24.8 million. The decrease in proceeds from the sale of property and equipment was due to a reduction in sales of equipment primarily attributable to
a softer equipment resale market. This was offset by an increase in net cash from operating activities of $48.8 million primarily due to $82.8 million less in
payments for income taxes as there were significant payments made in Q1 2023 for the 2022 income taxes and an increase in provisions net of payments
of $49.3 million. These were partially offset by a decrease in non-cash working capital of $95.1 million, resulting primarily from a rise in sales which
increased the accounts receivable balance.
Free cash flow conversion1, which measures the amount of capital employed to generate earnings, for the year ended December 31, 2024, of 80.6%
compares to 82.5% in the same prior year period.
Based on the December 31, 2024, closing share price of $135.09, free cash flow1 generated by the Company in the preceding twelve months ($768.6
million, or $9.11 per share) represented a yield of 6.7%. Based on the December 31, 2023, closing share price of $133.70, free cash flow1 generated by
the Company in the preceding twelve months ($775.9 million, or $9.19 per share outstanding) represented a yield of 6.9%.
Financial position
(unaudited)
(in thousands of U.S. dollars)
As at
December 31, 2024
As at
December 31, 2023
Intangible assets
2,622,951
2,019,301
Total assets, less intangible assets1
4,522,893
4,264,319
Long-term debt
2,402,881
1,884,182
Lease liabilities
573,662
460,158
Shareholders' equity
2,673,275
2,591,410
1 This is a non-IFRS measure. For a reconciliation refer to the “Non-IFRS financial measures” section below.
As compared to December 31, 2023, the Company’s financial position has been impacted primarily by $500.0 million of new debt and corresponding
assets and liabilities obtained in the subsequent business acquisition of Daseke and from the fluctuations in exchange rates.
Management’s Discussion and Analysis
2024 Annual Report │16
Contractual obligations, commitments, contingencies and off-balance sheet arrangements
The following table indicates the Company’s contractual obligations, excluding purchase commitments, with their respective maturity dates at December
31, 2024, including future interest payments.
(unaudited)
(in thousands of U.S. dollars)
Total
Less than
1 year
1 to 3
years
3 to 5
years
After
5 years
Unsecured revolving facility – March 2027
276,040
—
276,040
—
—
Unsecured term loan – March 2025-2027
200,000
—
200,000
—
—
Unsecured senior notes – December 2026 to October 2043
1,655,000
—
150,000
515,000
990,000
Conditional sales contracts
271,140
93,087
141,240
34,087
2,726
Lease liabilities
573,661
151,553
218,550
92,000
111,558
Other long-term debt
4,336
366
3,970
—
—
Interest on debt and lease liabilities
811,932
125,279
202,057
138,331
346,265
Total contractual obligations
3,792,109
370,285
1,191,857
779,418
1,450,549
On March 22, 2024, the Company amended its revolving credit facility, including the addition of a $500.0 million term loan and an extension. Under the
new amendment, the revolving credit facility was extended to March 22, 2027. The new amendment also provides the Company with a non-revolving term
loan for $500.0 million maturing in 1 to 3 years, $100.0 million each in year one and year two, and $300.0 million in year three. Based on certain ratios,
the interest rate on the term loan is the sum of SOFR, plus an applicable margin, which can vary between 128 basis points and 190 basis points. The
applicable margin on the credit facility is currently 1.65%. Deferred financing fees of $1.3 million were recognized on the increase. As at the end of the
quarter, the Company had repaid $300.0 million of this loan, including the entire first and second tranches.
The following table indicates the Company’s financial covenants to be maintained under its credit facility. These covenants are measured on a consolidated
rolling twelve-month basis and are calculated as prescribed by the credit agreement which, among other things, requires the exclusion of the impact of
IFRS 16 Leases:
(unaudited)
Covenants
Requirements
As at
December 31,
2024
Funded debt-to- EBITDA ratio [ratio of total debt, net of cash, plus letters of credit and some other long-
term liabilities to earnings before interest, income tax, depreciation and amortization (“EBITDA”), including
last twelve months adjusted EBITDA from business acquisitions]
< 3.50
2.11
EBITDAR Coverage Ratio [ratio of EBITDAR (EBITDA before rent and including last twelve months
adjusted EBITDAR from business acquisitions) to interest and net rent expenses]
> 1.75
4.34
As at December 31, 2024, the Company had $129.8 million of outstanding letters of credit ($106.2 million on December 31, 2023).
As at December 31, 2024, the Company had $35.6 million of purchase commitments and $26.7 million of purchase orders that the Company intends to
enter into a lease (December 31, 2023 – $62.3 million and $44.4 million, respectively).
Dividends and outstanding share data
Dividends
The Company declared $38.0 million in dividends, or $0.45 per common share, in the fourth quarter of 2024. On February 19, 2025, the Board of Directors
approved a quarterly dividend of $0.45 per outstanding common share of the Company’s capital, for an expected aggregate payment of $37.9 million to
be paid on April 15, 2025, to shareholders of record at the close of business on March 31, 2025.
Outstanding shares and share-based awards
A total of 84,408,437 common shares were outstanding as at December 31, 2024 (December 31, 2023 – 84,441,733). There was no material change in
the Company’s outstanding share capital between December 31, 2024 and February 19, 2025. The average diluted shares for the three months ended
December 31, 2024, were 85,151,136 shares as compared to 86,074,702 shares in the same prior year period. The average diluted shares for the year
ended December 31, 2024, were 85,243,084 shares as compared to 87,054,769 shares in the same prior year period. This reduction is due to the share
repurchases and cancellations.
As at December 31, 2024, the number of outstanding options to acquire common shares issued under the Company’s stock option plan was 277,889
(December 31, 2023 – 789,898) of which 277,889 were exercisable (December 31, 2023 – 789,898). Each stock option entitles the holder to purchase
one common share of the Company at an exercise price based on the volume-weighted average trading price of the Company’s shares for the last five
trading days immediately preceding the effective date of the grant.
As at December 31, 2024, the number of restricted share units (‘’RSUs’’) granted under the Company’s equity incentive plan to its senior employees was
156,234 (December 31, 2023 – 191,469). On February 8, 2024, the Board of Directors approved the grant of 45,850 RSUs under the Company’s equity
Management’s Discussion and Analysis
2024 Annual Report │17
incentive plan. The RSUs will vest in February of the third year following the grant date. Upon satisfaction of the required service period, the plan provides
for settlement of the award through shares. The fair value of the RSUs is determined to be the share price fair value at the date of the grant and is
recognized as a share-based compensation expense, through contributed surplus, over the vesting period. The fair value of the RSUs granted was $135.00
per unit.
As at December 31, 2024, the number of performance share units (‘’PSUs’’) granted under the Company’s equity incentive plan to its senior employees
was 154,620 (December 31, 2023 – 183,792). On February 8, 2024, the Board of Directors approved the grant of 45,850 PSUs under the Company’s
equity incentive plan. The PSUs will vest in February of the third year following the grant date. Upon satisfaction of the required service period, the plan
provides for settlement of the award through shares. The fair value of the PSUs granted was $156.17 per unit.
During the fourth quarter, a scheduled $2.9 million payment was made to certain directors for the deferred share unit plan for board members which was
settled in December 2023 for a cumulative amount of $30.5 million. $27.6 million of this settlement was paid in Q4 2023.
Legal proceedings
The Company is involved in litigation arising from the ordinary course of business primarily involving claims for bodily injury and property damage. It is not
feasible to predict or determine the outcome of these or similar proceedings. However, the Company believes the ultimate recovery or liability, if any,
resulting from such litigation individually or in total, would not materially adversely nor positively affect the Company’s financial condition or performance
and, if necessary, has been provided for in the financial statements.
OUTLOOK
The North American economic growth forecast from leading economists calls for modest growth, and uncertainty persists related to inflation, interest rates,
heightened geopolitical conflicts such as the ongoing conflict in the Middle East and war in Ukraine, global supply chain challenges, labor shortages,
potential new tariffs and slower growth in many international markets. While not immune to continued weak freight volumes industrywide, TFI International’s
diversity across industrial and consumer end markets and multiple modes of transportation, along with the Company’s disciplined approach to operations
and strategic acquisitions, helped support results during the fourth quarter. Should the freight cycle improve, management believes that its operational
focus and well-timed investments should help drive stronger results over the long term.
TFI International remains vigilant in monitoring for new potential risks that could cause further economic disruption, resulting in additional rounds of
declining freight volumes and higher costs that could adversely affect TFI’s operating companies and the markets they serve. In addition to the
aforementioned macro factors, additional uncertainties include but are not limited to changes in diesel prices, labor market conditions and related changes
in consumer sentiment that can affect end market demand, environmental mandates and changes to the tax code in any jurisdiction in which TFI
International operates.
While North American economic uncertainty is likely to continue weighing on freight demand dynamics, management believes the Company is well
positioned to navigate these operating conditions, benefiting from its solid financial foundation and strong cash flow, and its lean cost structure that stems
from a longstanding focus on profitability, efficiency, network density, customer service, optimal pricing, revenue per shipment, driver retention and capacity
rationalization. TFI is also pursuing operating improvements related to recent acquisitions, and has opportunities to enhance performance within most of
its other operations. Longer term, TFI’s diverse industrial exposure through its specialized TL and LTL segments should benefit from a gradual shift toward
domestic manufacturing potentially spurred by tariff policy, while its Logistics segment should benefit from the expansion of e-commerce and domestic
truck production.
Regardless of the operating environment, management’s goal is to build shareholder value through consistent adherence to its operating principles,
including customer focus that ultimately drives higher volumes and stronger pricing, an asset-light approach, and continual efforts to enhance efficiencies.
In addition, TFI International values strong free cash flow generation and ample liquidity with a conservative balance sheet that features primarily fixed
Management’s Discussion and Analysis
2024 Annual Report │18
rate debt and limited near-term debt maturities. This strong financial footing allows the Company to strategically invest and pursue select, accretive
acquisitions even during times of market weakness, while returning excess capital to shareholders when possible.
SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS
(in millions of U.S. dollars, except per share data)
Q4’24
Q3’24*
Q2’24*
Q1’24
Q4’23
Q3’23
Q2’23
Q1’23
Total revenue
1,826.7
2,184.6
2,264.5
1,870.8
1,968.7
1,911.0
1,791.3
1,850.2
Adjusted EBITDA1
315.3
357.2
380.1
268.4
320.9
302.5
300.3
264.2
Operating income
160.2
201.2
206.0
151.6
198.3
200.6
192.4
166.4
Net income
88.1
125.9
115.7
92.8
131.4
133.3
128.2
111.9
EPS – basic
1.04
1.49
1.37
1.10
1.54
1.55
1.49
1.29
EPS – diluted
1.03
1.48
1.36
1.09
1.53
1.54
1.47
1.27
Adjusted net income1
101.8
136.6
145.6
105.5
147.0
136.0
138.9
116.5
Adjusted EPS -
diluted1
1.19
1.60
1.71
1.24
1.71
1.57
1.59
1.33
1 This is a non-IFRS measure. For a reconciliation refer to the “Non-IFRS financial measures” section below.
* Recasted for PPA adjustment to the Daseke acquisition.
The differences between the quarters are mainly the result of seasonality (softer in Q1) and business acquisitions.
NON-IFRS FINANCIAL MEASURES
Financial data have been prepared in conformity with IFRS, including the following measures:
Operating expenses: Operating expenses include: a) materials and services expenses, which are primarily costs related to independent contractors and
vehicle operation; vehicle operation expenses, which primarily include fuel, repairs and maintenance, vehicle leasing costs, insurance, permits and
operating supplies; b) personnel expenses; c) other operating expenses, which are primarily composed of costs related to offices’ and terminals’ rent,
taxes, heating, telecommunications, maintenance and security and other general administrative expenses; d) depreciation of property and equipment,
depreciation of right-of-use assets, amortization of intangible assets and gain or loss on the sale of rolling stock and equipment, on derecognition of right-
of use assets, on sale of business and on sale of land and buildings and assets held for sale; e) bargain purchase gain; and f) impairment of intangible
assets.
Operating income (loss): Net income or loss before finance income and costs and income tax expense, as stated in the consolidated financial statements.
This MD&A includes references to certain non-IFRS financial measures as described below. These non-IFRS financial measures are not standardized
financial measures under IFRS used to prepare the financial statements of the Company to which the measures relate and might not be comparable to
similar financial measures disclosed by other issuers. Accordingly, they should not be considered in isolation, in addition to, nor as a substitute for or
superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of non-IFRS measures used in this MD&A
and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided below.
Adjusted net income: Net income or loss excluding amortization of intangible assets related to business acquisitions, net change in the fair value and
accretion expense of contingent considerations, net change in the fair value of derivatives, net foreign exchange gain or loss, impairment of intangible
assets, bargain purchase gain, gain or loss on sale of land and buildings and assets held for sale, impairment on assets held for sale, gain or loss on the
sale of business and directly attributable expense due to the disposal and restructuring from business acquisitions. In presenting an adjusted net income
and adjusted EPS, the Company’s intent is to help provide an understanding of what would have been the net income and earnings per share in a context
of significant business combinations and excluding specific impacts and to reflect earnings from a strictly operating perspective. The amortization of
intangible assets related to business acquisitions comprises amortization expense of customer relationships, trademarks and non-compete agreements
accounted for in business combinations and the income tax effects related to this amortization. Management also believes, that in excluding amortization
of intangible assets related to business acquisitions, it provides more information on the amortization of intangible asset expense portion, net of tax, that
will not have to be replaced to preserve the Company’s ability to generate similar future cash flows. The Company excludes these items because they
affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding these items does
not imply they are necessarily non-recurring. See reconciliation on page 7.
Adjusted earnings per share (adjusted “EPS”) - basic: Adjusted net income divided by the weighted average number of common shares.
Adjusted EPS - diluted: Adjusted net income divided by the weighted average number of diluted common shares.
Adjusted EBITDA: Net income before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain
purchase gain, and gain or loss on sale of land and buildings, assets held for sale, sale of business, and gain or loss on disposal of intangible assets and
Management’s Discussion and Analysis
2024 Annual Report │19
restructuring from business acquisitions. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to
assist in determining the ability of the Company to assess its performance.
Segmented adjusted EBITDA refers to operating income (loss) before depreciation, amortization, impairment of intangible assets, bargain purchase gain,
gain or loss on sale of business, land and buildings, and assets held for sale and gain or loss on disposal of intangible assets and restructuring from
business acquisitions. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to assist in determining
the ability of the Company to assess its performance.
Consolidated adjusted EBITDA reconciliation:
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2022
2024
2023
2022
Net income
88,115
131,386
153,494
422,484
504,877
823,232
Net finance costs
43,489
23,263
16,963
158,239
80,871
80,397
Income tax expense
28,629
43,608
46,403
138,239
171,887
242,409
Depreciation of property and equipment
90,641
64,053
56,587
332,580
249,835
248,638
Depreciation of right-of-use assets
43,515
34,901
32,150
169,505
132,112
126,276
Amortization of intangible assets
20,401
16,701
13,262
79,984
60,028
55,679
(Gain) loss on sale of business
—
—
2,069
—
3,011
(73,653)
Restructuring from business acquisition
—
—
—
19,748
—
—
(Gain) loss on sale of land and buildings
—
—
—
—
40
(43)
(Gain) loss, net of impairment, on sale of assets held for sale
529
7,026
(15,972)
192
(14,721)
(77,911)
Adjusted EBITDA
315,319
320,938
304,956
1,320,971
1,187,940
1,425,024
Segmented adjusted EBITDA reconciliation:
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Less-Than-Truckload*
Operating income
70,326
106,158
361,235
424,789
Depreciation and amortization
52,246
52,600
213,524
198,754
(Gain) loss on sale of land and buildings
—
(1)
—
35
(Gain) loss, net of impairment, on sale of assets held for sale
1,023
7,246
2,549
(10,539)
Adjusted EBITDA
123,595
166,003
577,308
613,039
Truckload
Operating income
59,652
50,657
252,435
237,393
Depreciation and amortization
88,268
48,106
307,244
194,761
Loss on sale of land and buildings
—
1
—
5
(Gain) loss on sale of assets held for sale
(494)
6
(2,321)
(3,956)
Adjusted EBITDA
147,426
98,770
557,358
428,203
Logistics
Operating income
42,896
54,654
182,363
160,112
Depreciation and amortization
15,225
14,802
60,419
47,914
Gain on sale of assets held for sale
—
(226)
(36)
(226)
Adjusted EBITDA
58,121
69,230
242,746
207,800
Corporate
Operating loss
(12,641)
(13,212)
(77,071)
(64,659)
Depreciation and amortization
(1,182)
147
882
546
Loss on sale of business
—
—
—
3,011
Restructuring from business acquisitions
—
—
19,748
—
Adjusted EBITDA
(13,823)
(13,065)
(56,441)
(61,102)
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and
U.S. Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable segment
has been recast to be consistent with current reportable segments.
Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue before fuel surcharge.
Annualized dividend is calculated by annualizing the cash outflow of the most recent dividend issued and dividing by the trailing twelve month free cash
flow. Management believes that this measure provides insight on the amount of free cash to be used fund the dividend, and consequently what can be
used for other purposes. The annualized dividend as at December 31, 2023 was 17.4%.
Management’s Discussion and Analysis
2024 Annual Report │20
Free cash flow: Net cash from operating activities less additions to property and equipment plus proceeds from sale of property and equipment and
assets held for sale. Management believes that this measure provides a benchmark to evaluate the performance of the Company in regard to its ability to
meet capital requirements. See reconciliation on page 16.
Free cash flow conversion: Adjusted EBITDA less net capital expenditures, divided by the adjusted EBITDA. Management believes that this measure
provides a benchmark to evaluate the performance of the Company in regard to its ability to convert its operating profit into free cash flow.
Free cash flow conversion reconciliation:
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Net income
88,115
131,386
422,484
504,877
Net finance costs
43,489
23,263
158,239
80,871
Income tax expense
28,629
43,608
138,239
171,887
Depreciation of property and equipment
90,641
64,053
332,580
249,835
Depreciation of right-of-use assets
43,515
34,901
169,505
132,112
Amortization of intangible assets
20,401
16,701
79,984
60,028
Loss on the sale of business
—
—
—
3,011
Restructuring from business acquisition
—
—
19,748
—
Loss on sale of land and buildings
—
—
—
40
(Gain) loss, net of impairment, on sale assets held for sale
529
7,026
192
(14,721)
Adjusted EBITDA
315,319
320,938
1,320,971
1,187,940
Net capital expenditures
(32,172)
(53,598)
(255,932)
(207,828)
Adjusted EBITDA less net capital expenditures
283,147
267,340
1,065,039
980,112
Free cash flow conversion
89.8%
83.3%
80.6%
82.5%
Total assets less intangible assets: Management believes that this presents a more useful basis to evaluate the return on the productive assets. The
excluded intangibles relate primarily to intangibles assets acquired through business acquisitions.
(unaudited)
(in thousands of U.S. dollars)
Less-
Than-
Truckload*
Truckload
Logistics
Corporate
Eliminations
Total
As at December 31, 2024
Total assets
2,618,714
3,374,010
1,098,617
54,503
-
7,145,844
Intangible assets
396,533
1,491,373
734,736
309
-
2,622,951
Total assets less intangible assets
2,222,181
1,882,637
363,881
54,194
-
4,522,893
As at December 31, 2023
Total assets
2,688,854
2,004,163
1,140,174
450,429
-
6,283,620
Intangible assets
378,623
857,666
782,923
89
-
2,019,301
Total assets less intangible assets
2,310,231
1,146,497
357,251
450,340
-
4,264,319
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and
U.S. Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable
segment has been recast to be consistent with current reportable segments.
Management’s Discussion and Analysis
2024 Annual Report │21
Net capital expenditures: Additions to rolling stock and equipment, net of proceeds from the sale of rolling stock and equipment and assets held for
sale excluding property. Management believes that this measure illustrates the recurring net capital expenditures which are required for the respective
period.
(unaudited)
(in thousands of U.S. dollars)
Less-
Than-
Truckload*
Truckload
Logistics
Corporate
Eliminations
Total
Three months ended December 31, 2024
Additions to rolling stock
14,405
27,779
1,712
-
43,896
Additions to equipment
3,104
2,025
19
126
5,274
Proceeds from the sale of rolling stock
(2,859 )
(14,037 )
(102 )
-
(16,998 )
Proceeds from the sale of equipment
-
-
-
-
-
Net capital expenditures
14,650
15,767
1,629
126
32,172
Three months ended December 31, 2023
Additions to rolling stock
46,910
11,821
1,624
-
60,355
Additions to equipment
4,369
1,887
281
129
6,666
Proceeds from the sale of rolling stock
(4,327 )
(8,983 )
(113 )
-
(13,423 )
Proceeds from the sale of equipment
-
-
-
-
-
Net capital expenditures
46,952
4,725
1,792
129
53,598
Year ended December 31, 2024
Additions to rolling stock
122,125
168,166
5,161
-
295,452
Additions to equipment
21,509
6,441
589
730
29,269
Proceeds from the sale of rolling stock
(19,234 )
(48,745 )
(189 )
(606 )
(68,774 )
Proceeds from the sale of equipment
-
(15 )
-
-
(15 )
Net capital expenditures
124,400
125,847
5,561
124
255,932
Year ended December 31, 2023
Additions to rolling stock
190,958
72,000
2,729
-
265,687
Additions to equipment
9,386
6,078
1,342
238
17,044
Proceeds from the sale of rolling stock
(25,466 )
(48,962 )
(334 )
-
(74,762 )
Proceeds from the sale of equipment
(111 )
(18 )
(12 )
-
(141 )
Net capital expenditures
174,767
29,098
3,725
238
207,828
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and
U.S. Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable
segment has been recast to be consistent with current reportable segments.
Operating margin is calculated as operating income (loss) as a percentage of revenue before fuel surcharge.
Adjusted operating ratio: Operating expenses before gain on sale of business, bargain purchase gain, and gain or loss on sale of land and buildings
and assets held for sale, gain or loss on disposal of intangible assets, and restructuring from business acquisitions (“Adjusted operating expenses”), net
of fuel surcharge revenue, divided by revenue before fuel surcharge. Although the adjusted operating ratio is not a recognized financial measure defined
by IFRS, it is a widely recognized measure in the transportation industry, which the Company believes provides a comparable benchmark for evaluating
the Company’s performance. Also, to facilitate the comparison of business level activity and operating costs between periods, the Company compares the
revenue before fuel surcharge (“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses.
Consolidated adjusted operating ratio reconciliation:
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2022
2024
2023
2022
Operating expenses
1,916,654
1,770,421
1,739,834
7,677,868
6,763,532
7,666,453
Gain (loss) on sale of business
—
—
(2,069)
—
(3,011)
73,653
Gain (loss) on sale of land and building
—
—
—
—
(40)
43
Gain (loss), net of impairment, on sale of assets held for sale
(529)
(7,026)
15,972
(192)
14,721
77,911
Restructuring from business acquisition
—
—
—
(19,748)
—
—
Adjusted operating expenses
1,916,125
1,763,395
1,753,737
7,657,928
6,775,202
7,818,060
Fuel surcharge revenue
(250,212)
(294,564)
(340,199)
(1,092,204)
(1,104,281)
(1,455,427)
Adjusted operating expenses, net of fuel surcharge revenue
1,665,913
1,468,831
1,413,538
6,565,724
5,670,921
6,362,633
Revenue before fuel surcharge
1,826,675
1,674,114
1,616,495
7,304,626
6,416,886
7,357,064
Adjusted operating ratio
91.2%
87.7%
87.4%
89.9%
88.4%
86.5%
Management’s Discussion and Analysis
2024 Annual Report │22
Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments
reconciliations:
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023*
2024
2023*
Less-Than-Truckload
Total revenue
876,140
1,001,882
3,702,934
3,948,657
Total operating expenses
805,814
895,724
3,341,699
3,523,868
Operating income
70,326
106,158
361,235
424,789
Operating expenses
805,814
895,724
3,341,699
3,523,868
Gain (loss) on sale of land and buildings
—
1
—
(35)
Gain (loss), net of impairment, on sale of assets held for sale
(1,023)
(7,246)
(2,549)
10,539
Adjusted operating expenses
804,791
888,479
3,339,150
3,534,372
Fuel surcharge revenue
(138,849)
(184,600)
(617,207)
(712,389)
Adjusted operating expenses, net of fuel surcharge revenue
665,942
703,879
2,721,943
2,821,983
Revenue before fuel surcharge
737,291
817,282
3,085,727
3,236,268
Adjusted operating ratio
90.3%
86.1%
88.2%
87.2%
Less-Than-Truckload - Revenue before fuel surcharge
U.S. based LTL
484,034
562,666
2,113,797
2,262,987
Canadian based LTL
134,653
138,241
551,440
531,784
Package and Courier
125,033
122,033
445,409
461,930
Eliminations
(6,429)
(5,658)
(24,919)
(20,433)
737,291
817,282
3,085,727
3,236,268
Less-Than-Truckload - Fuel surcharge revenue
U.S. based LTL
80,170
112,079
375,768
447,820
Canadian based LTL
30,119
39,388
136,387
147,247
Package and Courier
29,421
34,165
109,037
121,268
Eliminations
(861)
(1,032)
(3,985)
(3,946)
138,849
184,600
617,207
712,389
Less-Than-Truckload - Operating income (loss)
U.S. based LTL
12,150
43,627
143,683
186,231
Canadian based LTL
25,570
27,820
119,117
124,198
Package and Courier
32,606
34,711
98,435
114,360
70,326
106,158
361,235
424,789
U.S. based LTL
Operating expenses**
552,054
631,118
2,345,882
2,524,576
Gain (loss) on sale of land and buildings
-
1
-
(35)
Gain (loss), net of impairment, on sale of assets held for sale
(1,023)
(7,247)
(2,549)
10,549
Adjusted operating expenses
551,031
623,872
2,343,333
2,535,090
Fuel surcharge revenue
(80,170)
(112,079)
(375,768)
(447,820)
Adjusted operating expenses, net of fuel surcharge
470,861
511,793
1,967,565
2,087,270
Revenue before fuel surcharge
484,034
562,666
2,113,797
2,262,987
Adjusted operating ratio
97.3%
91.0%
93.1%
92.2%
Canadian based LTL
Operating expenses**
139,202
149,809
568,710
554,833
Gain (loss) on sale land and building and assets held for sale
-
1
-
(3)
Adjusted operating expenses
139,202
149,810
568,710
554,830
Fuel surcharge revenue
(30,119)
(39,388)
(136,387)
(147,247)
Adjusted operating expenses, net of fuel surcharge
109,083
110,422
432,323
407,583
Revenue before fuel surcharge
134,653
138,241
551,440
531,784
Adjusted operating ratio
81.0%
79.9%
78.4%
76.6%
Package and Courier
Operating expenses**
121,848
121,487
456,011
468,838
Loss on sale of assets held for sale
-
-
-
(7)
Adjusted operating expenses
121,848
121,487
456,011
468,831
Fuel surcharge revenue
(29,421)
(34,164)
(109,037)
(121,268)
Adjusted operating expenses, net of fuel surcharge
92,427
87,323
346,974
347,563
Revenue before fuel surcharge
125,033
122,034
445,409
461,930
Adjusted operating ratio
73.9%
71.6%
77.9%
75.2%
* In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the Canadian Less-Than-Truckload and
U.S. Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable segment. Comparative information for Less-Than-Truckload reportable segment
has been recast to be consistent with current reportable segments.
* Operating expenses excluding intra LTL eliminations
Management’s Discussion and Analysis
2024 Annual Report │23
Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments
reconciliations (continued):
(unaudited)
(in thousands of U.S. dollars)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
Truckload
Total revenue
786,338
479,596
2,937,305
1,936,038
Total operating expenses
726,686
428,939
2,684,870
1,698,645
Operating income
59,652
50,657
252,435
237,393
Operating expenses
726,686
428,939
2,684,870
1,698,645
Loss on sale of land and buildings
—
(1 )
—
(5 )
Gain (loss) on sale of assets held for sale
494
(6 )
2,321
3,956
Adjusted operating expenses
727,180
428,932
2,687,191
1,702,596
Fuel surcharge revenue
(93,098 )
(80,319 )
(385,765 )
(310,446 )
Adjusted operating expenses, net of fuel surcharge revenue
634,082
348,613
2,301,426
1,392,150
Revenue before fuel surcharge
693,240
399,277
2,551,540
1,625,592
Adjusted operating ratio
91.5 %
87.3 %
90.2 %
85.6 %
Truckload - Revenue before fuel surcharge
Canadian based Conventional TL
76,282
77,815
307,958
311,838
Specialized TL
619,054
323,952
2,252,699
1,323,083
Eliminations
(2,096 )
(2,490 )
(9,117 )
(9,329 )
693,240
399,277
2,551,540
1,625,592
Truckload - Fuel surcharge revenue
Canadian based Conventional TL
11,473
15,287
52,122
57,447
Specialized TL
81,814
65,366
334,698
254,161
Eliminations
(189 )
(334 )
(1,055 )
(1,162 )
93,098
80,319
385,765
310,446
Truckload - Operating income
Canadian based Conventional TL
7,408
8,584
30,287
45,004
Specialized TL
52,244
42,073
222,148
192,389
59,652
50,657
252,435
237,393
Canadian based Conventional TL
Operating expenses*
80,347
84,518
329,793
324,281
Fuel surcharge revenue
(11,473 )
(15,287 )
(52,122 )
(57,447 )
Adjusted operating expenses, net of fuel surcharge revenue
68,874
69,231
277,671
266,834
Revenue before fuel surcharge
76,282
77,815
307,958
311,838
Adjusted operating ratio
90.3 %
89.0 %
90.2 %
85.6 %
Specialized TL
Operating expenses*
648,624
347,245
2,365,249
1,384,855
Loss on sale of land and buildings
—
(1 )
—
(5 )
Gain (loss) on sale of assets held for sale
494
(6 )
2,321
3,956
Adjusted operating expenses
649,118
347,238
2,367,570
1,388,806
Fuel surcharge revenue
(81,814 )
(65,366 )
(334,698 )
(254,161 )
Adjusted operating expenses, net of fuel surcharge revenue
567,304
281,872
2,032,872
1,134,645
Revenue before fuel surcharge
619,054
323,952
2,252,699
1,323,083
Adjusted operating ratio
91.6 %
87.0 %
90.2 %
85.8 %
* Operating expenses excluding intra TL eliminations
Management’s Discussion and Analysis
2024 Annual Report │24
Return on invested capital (“ROIC”): Management believes ROIC at the segment level is a useful measure in the efficiency in the use of capital funds.
The Company calculates ROIC as segment operating income net of exclusions, after tax, divided by the segment average invested capital. Operating
income net of exclusions, after tax, is calculated as the trailing twelve months of operating income before bargain purchase gain, gain or loss on the sale
of land and buildings and assets held for sale, and amortization of intangible assets, after tax using the statutory tax rate of the Company. Average invested
capital is calculated as total assets excluding intangibles, net of trade and other payables, current taxes payable and provisions averaged between the
beginning and ending balance over a twelve-month period.
Return on invested capital segment reconciliation:
(unaudited)
(in thousands of U.S. dollars)
As at
December 31
2024
2023
Less-Than-Truckload
Operating income
361,235
424,789
Loss on sale of land and buildings
—
35
(Gain) loss, net of impairment, on sale of assets held for sale
2,549
(10,539 )
Amortization of intangible assets
12,531
9,511
Operating income, net of exclusions
376,315
423,796
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
276,592
311,490
Intangible assets
396,532
378,623
Total assets, excluding intangible assets
1,950,589
2,038,638
less: Trade and other payables, income taxes payable and provisions
(658,208 )
(703,722 )
Total invested capital, current year
1,688,913
1,713,539
Intangible assets, prior year
378,623
347,917
Total assets, excluding intangible assets, prior year
2,038,638
2,018,842
less: Trade and other payables, income taxes payable and provisions, prior year
(703,722 )
(782,207 )
Total invested capital, prior year
1,713,539
1,584,552
Average invested capital
1,701,226
1,649,046
Return on invested capital
16.3 %
18.9 %
Less-Than-Truckload - Package and Courier
Operating income
98,435
114,360
Loss on sale of assets held for sale
—
7
Amortization of intangible assets
595
627
Operating income, net of exclusions
99,030
114,994
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
72,787
84,521
Intangible assets
168,280
183,841
Total assets, excluding intangible assets
203,719
175,336
less: Trade and other payables, income taxes payable and provisions
(57,530 )
(53,870 )
Total invested capital, current year
314,469
305,307
Intangible assets, prior year
183,841
180,119
Total assets, excluding intangible assets, prior year
175,336
182,605
less: Trade and other payables, income taxes payable and provisions, prior year
(53,870 )
(67,428 )
Total invested capital, prior year
305,307
295,296
Average invested capital
309,888
300,302
Return on invested capital
23.5 %
28.1 %
Less-Than-Truckload - Canadian based LTL
Operating income
119,117
124,198
Loss on sale of assets held for sale
—
3
Amortization of intangible assets
7,071
7,531
Operating income, net of exclusions
126,188
131,732
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
92,748
96,823
Intangible assets
158,936
184,025
Total assets, excluding intangible assets
386,814
418,217
less: Trade and other payables, income taxes payable and provisions
(68,546 )
(78,384 )
Total invested capital, current year
477,204
523,858
Intangible assets, prior year
184,025
162,397
Total assets, excluding intangible assets, prior year
418,217
352,949
less: Trade and other payables, income taxes payable and provisions, prior year
(78,384 )
(77,439 )
Total invested capital, prior year
523,858
437,907
Average invested capital
500,531
480,883
Return on invested capital
18.5 %
20.1 %
Management’s Discussion and Analysis
2024 Annual Report │25
Return on invested capital segment reconciliation (continued):
(unaudited)
(in thousands of U.S. dollars)
As at
December 31
2024
2023
Truckload
Operating income
252,435
237,393
Loss on sale of land and buildings
—
5
Gain on sale of assets held for sale
(2,321 )
(3,956 )
Amortization of intangible assets
33,532
23,169
Operating income, net of exclusions
283,646
256,611
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
208,480
188,609
Intangible assets
1,491,373
857,666
Total assets, excluding intangible assets
1,882,636
1,146,497
less: Trade and other payables, income taxes payable and provisions
(288,609 )
(151,404 )
Total invested capital, current year
3,085,400
1,852,759
Intangible assets, prior year
857,666
775,463
Total assets, excluding intangible assets, prior year
1,146,497
1,092,304
less: Trade and other payables, income taxes payable and provisions, prior year
(151,404 )
(191,768 )
Total invested capital, prior year
1,852,759
1,675,999
Average invested capital
2,469,080
1,764,380
Return on invested capital
8.4 %
10.7 %
Truckload - Canadian based Conventional TL
Operating income
30,287
45,004
Amortization of intangible assets
2,286
2,133
Operating income, net of exclusions
32,573
47,137
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
23,941
34,646
Intangible assets
114,181
121,871
Total assets, excluding intangible assets
202,560
210,872
less: Trade and other payables, income taxes payable and provisions
(29,470 )
(26,866 )
Total invested capital, current year
287,271
305,877
Intangible assets, prior year
121,871
96,941
Total assets, excluding intangible assets, prior year
210,872
185,740
less: Trade and other payables, income taxes payable and provisions, prior year
(26,866 )
(40,671 )
Total invested capital, prior year
305,877
242,010
Average invested capital
296,574
273,944
Return on invested capital
8.1 %
12.6 %
Truckload - Specialized TL
Operating income
222,148
192,389
Loss on sale of land and buildings
—
5
Gain on sale of assets held for sale
(2,321 )
(3,956 )
Amortization of intangible assets
31,246
21,036
Operating income, net of exclusions
251,073
209,474
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
184,539
153,963
Intangible assets
1,377,192
735,795
Total assets, excluding intangible assets
1,680,076
935,625
less: Trade and other payables, income taxes payable and provisions
(259,139 )
(124,538 )
Total invested capital, current year
2,798,129
1,546,882
Intangible assets, prior year
735,795
678,522
Total assets, excluding intangible assets, prior year
935,625
906,564
less: Trade and other payables, income taxes payable and provisions, prior year
(124,538 )
(151,097 )
Total invested capital, prior year
1,546,882
1,433,989
Average invested capital
2,172,506
1,490,436
Return on invested capital
8.5 %
10.3 %
Management’s Discussion and Analysis
2024 Annual Report │26
Return on invested capital segment reconciliation (continued):
(unaudited)
(in thousands of U.S. dollars)
As at
December 31
2024
2023
Logistics
Operating income
182,363
160,112
Gain on sale of assets held for sale
(36 )
(226 )
Amortization of intangible assets
33,829
27,237
Operating income, net of exclusions
216,156
187,123
Income tax
26.5 %
26.5 %
Operating income net of exclusions, after tax
158,875
137,535
Intangible assets
734,736
782,923
Total assets, excluding intangible assets
363,880
357,251
less: Trade and other payables, income taxes payable and provisions
(213,747 )
(220,328 )
Total invested capital, current year
884,869
919,846
Intangible assets, prior year
782,923
468,547
Total assets, excluding intangible assets, prior year
357,251
263,550
less: Trade and other payables, income taxes payable and provisions, prior year
(220,328 )
(186,557 )
Total invested capital, prior year
919,846
545,540
Average invested capital
902,358
732,693
Return on invested capital
17.6 %
18.8 %
Return on invested capital for US LTL: Management believes ROIC at the segment level is a useful measure in the efficiency in the use of capital funds.
The return on invested capital of the U.S. based LTL has been modified to remove the impacts of the bargain purchase gain from the operating income
net of exclusions as well as from the average invested capital to align the capital with the acquisition price.
(unaudited)
(in thousands of U.S. dollars)
As at December 31
2024
2023
Less-Than-Truckload - U.S. based LTL
Operating income
143,683
186,231
Loss on sale of land and buildings
—
35
(Gain) loss, net of impairment, on sale of assets held for sale
2,549
(10,549)
Amortization of intangible assets
4,865
1,353
Operating income, net of exclusions
151,097
177,070
Income tax
26.5%
26.5%
Operating income net of exclusions, after tax
111,056
130,146
Intangible assets
69,316
10,757
Total assets, excluding intangible assets
1,360,056
1,445,085
less: Total liabilities
(532,132)
(571,468)
Total invested capital, current year
897,240
884,374
Total invested capital, acquisition price
838,910
838,910
Average invested capital
868,075
861,642
Return on invested capital
12.8%
15.1%
2024 Annual Report │27
RISKS AND UNCERTAINTIES
The Company’s future results may be affected by a number of factors over many of which the Company has little or no control. The
following discussion of risk factors contains forward-looking statements. The following issues, uncertainties and risks, among others,
should be considered in evaluating the Company’s business, prospects, financial condition, results of operations and cash flows.
Competition. The Company faces growing competition from other transporters in Canada, the United States and Mexico. These factors,
including the following, could impair the Company’s ability to maintain or improve its profitability and could have a material adverse effect
on the Company’s results of operations:
the Company competes with many other transportation companies of varying sizes, including Canadian, U.S. and Mexican
transportation companies;
the Company’s competitors may periodically reduce their freight rates to gain business, which may limit the Company’s ability to
maintain or increase freight rates or maintain growth in the Company’s business;
some of the Company’s customers are other transportation companies or companies that also operate their own private trucking
fleets, and they may decide to transport more of their own freight or bundle transportation with other services;
some of the Company’s customers may reduce the number of carriers they use by selecting so-called “core carriers” as approved
service providers or by engaging dedicated providers, and in some instances the Company may not be selected;
many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates
or result in the loss of some of the Company’s business to competitors;
the market for qualified drivers is highly competitive, particularly in the Company’s growing U.S. operations, and the Company’s
inability to attract and retain drivers could reduce its equipment utilization and cause the Company to increase compensation, both
of which would adversely affect the Company’s profitability;
economies of scale that may be passed on to smaller carriers by procurement aggregation providers may improve their ability to
compete with the Company;
some of the Company’s smaller competitors may not yet be fully compliant with recently-enacted regulations which may allow such
competitors to take advantage of additional driver productivity;
advances in technology, such as advanced safety systems, automated package sorting, handling and delivery, vehicle platooning,
alternative fuel vehicles, autonomous vehicle technology and digitization of freight services, may require the Company to increase
investments in order to remain competitive, and the Company’s customers may not be willing to accept higher freight rates to cover
the cost of these investments;
the Company’s competitors may have better safety records than the Company or a perception of better safety records, which could
impair the Company’s ability to compete;
some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and
utilizing independent contractors for deliveries, which could in turn reduce the Company’s revenues and market share;
the Company’s brand names may be subject to adverse publicity (whether or not justified) and lose significant value, which could
result in reduced demand for the Company’s services;
competition from freight brokerage companies may materially adversely affect the Company’s customer relationships and freight
rates; and
higher fuel prices and, in turn, higher fuel surcharges to the Company’s customers may cause some of the Company’s customers to
consider freight transportation alternatives, including rail transportation.
Regulation. In Canada, carriers must obtain licenses issued by provincial transport boards in order to carry goods inter-provincially or to
transport goods within any province. Licensing from U.S. and Mexican regulatory authorities is also required for the transportation of
goods in Canada, the United States, and Mexico. Any change in or violation of existing or future regulations could have an adverse impact
on the scope of the Company’s activities. Future laws and regulations may be more stringent, require changes in the Company’s operating
practices, influence the demand for transportation services or require the Company to incur significant additional costs. Higher costs
incurred by the Company, or by the Company’s suppliers who pass the costs onto the Company through higher supplies and materials
pricing, could adversely affect the Company’s results of operations.
In addition to the regulatory regime applicable to operations in Canada, the Company is increasing its operations in the United States, and
is therefore increasingly subject to rules and regulations related to the U.S. transportation industry, including regulation from various
federal, state and local agencies, including the Department of Transportation (“DOT”) (in part through the Federal Motor Carrier Safety
Administration (“FMCSA”)), the Environmental Protection Agency (“EPA”) and the Department of Homeland Security. Drivers must, both
2024 Annual Report │28
in Canada and the United States, comply with safety and fitness regulations, including those relating to drug and alcohol testing, driver
safety performance and hours of service. Weight and dimensions, exhaust emissions and fuel efficiency are also subject to government
regulation. The Company may also become subject to new or more restrictive regulations relating to fuel efficiency, exhaust emissions,
hours of service, drug and alcohol testing, ergonomics, on-board reporting of operations, collective bargaining, security at ports, speed
limitations, driver training and other matters affecting safety or operating methods.
In the United States, there are currently two methods of evaluating the safety and fitness of carriers: the Compliance, Safety, Accountability
(“CSA”) program, which evaluates and ranks fleets on certain safety-related standards by analyzing data from recent safety events and
investigation results, and the DOT safety rating, which is based on an on-site investigation and affects a carrier’s ability to operate in
interstate commerce. Additionally, the FMCSA has proposed rules in the past that would change the methodologies used to determine
carrier safety and fitness.
Under the CSA program, carriers are evaluated and ranked against their peers based on seven categories of safety-related data. The
seven categories of safety-related data currently include Unsafe Driving, Hours-of-Service Compliance, Driver Fitness, Controlled
Substances/Alcohol, Vehicle Maintenance, Hazardous Materials Compliance and Crash Indicator (such categories known as “BASICs”).
Carriers are grouped by category with other carriers that have a similar number of safety events (i.e. crashes, inspections, or violations)
and carriers are ranked and assigned a rating percentile or score. If the Company were subject to any such interventions, this could have
an adverse effect on the Company’s business, financial condition and results of operations. As a result, the Company’s fleet could be
ranked poorly as compared to peer carriers. There is no guarantee that the Company will be able to maintain its current safety ratings or
that it will not be subject to interventions in the future. The Company recruits first-time drivers to be part of its fleet, and these drivers may
have a higher likelihood of creating adverse safety events under CSA. The occurrence of future deficiencies could affect driver recruitment
in the United States by causing high-quality drivers to seek employment with other carriers or limit the pool of available drivers or could
cause the Company’s customers to direct their business away from the Company and to carriers with higher fleet safety rankings, either
of which would materially adversely affect the Company’s business, financial condition and results of operations. In addition, future
deficiencies could increase the Company’s insurance expenses. Additionally, competition for drivers with favorable safety backgrounds
may increase, which could necessitate increases in driver-related compensation costs. Further, the Company may incur greater than
expected expenses in its attempts to improve unfavorable scores.
In December 2016, the FMCSA issued a final rule establishing a national clearinghouse for drug and alcohol testing results and requiring
motor carriers and medical review officers to provide records of violations by commercial drivers of FMCSA drug and alcohol testing
requirements. Motor carriers in the United States will be required to query the clearinghouse to ensure drivers and driver applicants do
not have violations of federal drug and alcohol testing regulations that prohibit them from operating commercial motor vehicles. The final
rule became effective on January 4, 2017, with a compliance date of January 6, 2020. In December 2019, however, the FMCSA announced
a final rule extending by three years the date for state driver’s licensing agencies to comply with certain requirements. The December
2016 commercial driver’s license rule required states to request information from the clearinghouse about individuals prior to issuing,
renewing, upgrading or transferring a commercial driver’s license. This new action will allow states’ compliance with the requirement,
which was set to begin January 2020, to be delayed until January 2023. The compliance date of January 2020 remained in place for all
other requirements set forth in the clearinghouse final rule, however. Upon implementation, the rule may reduce the number of available
drivers in an already constrained driver market. Pursuant to a new rule finalized by the FMCSA, effective November 2021, states are
required to query the clearinghouse when issuing, renewing, transferring, or upgrading a commercial drivers license and must revoke a
driver’s commercial driving privileges if such driver is prohibited from driving a motor vehicle for one or more drug or alcohol violations.
In addition, other rules have been proposed or made final by the FMCSA, including (i) a rule requiring the use of speed-limiting devices
on heavy-duty tractors to restrict maximum speeds, which was proposed in 2016, and (ii) a rule setting out minimum driver training
standards for new drivers applying for commercial driver’s licenses for the first time and to experienced drivers upgrading their licenses or
seeking a hazardous materials endorsement, which was made final in December 2016 with a compliance date in February 2020 (FMCSA
officials delayed implementation of the final rule by two years). In July 2017, the DOT announced that it would no longer pursue a speed
limiter rule, but left open the possibility that it could resume such a pursuit in the future. In May 2021, however, a bill was reintroduced in
the U.S. House of Representatives that would require commercial motor vehicles with gross weight exceeding 26,000 pounds to be
equipped with a speed limiting device, prohibiting speeds greater than 65 miles per hour. Whether the bill will become law is uncertain.
The effect of these rules, to the extent they become effective, could result in a decrease in fleet production and/or driver availability, either
of which could materially adversely affect the Company’s business, financial condition and results of operations.
2024 Annual Report │29
The Company’s subsidiaries with U.S. operating authority currently have a satisfactory DOT rating, which is the highest available rating
under the current safety rating scale. If the Company’s subsidiaries with U.S. operating authority were to receive a conditional or
unsatisfactory DOT safety rating, it could materially adversely affect the Company’s business, financial condition and results of operations
as customer contracts may require a satisfactory DOT safety rating, and a conditional or unsatisfactory rating could materially adversely
affect or restrict the Company’s operations and increase the Company’s insurance costs.
The FMCSA has proposed regulations that would modify the existing rating system and the safety labels assigned to motor carriers
evaluated by the DOT. Under regulations that were proposed in 2016, the methodology for determining a carrier’s DOT safety rating would
be expanded to include the on-road safety performance of the carrier’s drivers and equipment, as well as results obtained from
investigations. Exceeding certain thresholds based on such performance or results would cause a carrier to receive an unfit safety rating.
The proposed regulations were withdrawn in March 2017, but the FMCSA noted that a similar process may be initiated in the future. If
similar regulations were enacted and the Company were to receive an unfit or other negative safety rating, the Company’s business would
be materially adversely affected in the same manner as if it received a conditional or unsatisfactory safety rating under the current
regulations. In addition, poor safety performance could lead to increased risk of liability, increased insurance, maintenance and equipment
costs and potential loss of customers, which could materially adversely affect the Company’s business, financial condition and results of
operations. The FMCSA has also indicated that it is in the early phases of a new study on the causation of large truck crashes. Although
it remains unclear whether such a study will ultimately be completed, the results of such study could spur further proposed and/or final
rules regarding safety and fitness in the United States.
From time to time, the FMCSA proposes and implements changes to regulations impacting hours-of-service. Such changes can negatively
impact the Company’s productivity and affect its operations and profitability by reducing the number of hours per day or week the
Company’s U.S. drivers and independent contractors may operate and/or disrupt the Company’s network. However, in August 2019, the
FMCSA issued a proposal to make changes to its hours-of-service rules that would allow U.S. truck drivers more flexibility with their 30-
minute rest break and with dividing their time in the sleeper berth. It also would extend by two hours the duty time for U.S. drivers
encountering adverse weather, and extend the shorthaul exemption by lengthening the drivers’ maximum on-duty period from 12 hours
to 14 hours. In June 2020, the FMCSA adopted a final rule substantially as proposed, which became effective in September 2020. Certain
industry groups have challenged these rules in U.S. courts, and it remains unclear what, if anything, will come from such challenges. Any
future changes to U.S. hours-of-service regulations could materially and adversely affect the Company’s operations and profitability.
The U.S. National Highway Traffic Safety Administration, the EPA and certain U.S. states, including California, have adopted regulations
that are aimed at reducing truck emissions and/or increasing fuel economy of the equipment the Company uses. Certain of these
regulations are currently effective, with stricter emission and fuel economy standards becoming effective over the next several years.
Other regulations have been proposed in the United States that would similarly increase these standards. U.S. federal and state lawmakers
and regulators have also adopted or are considering a variety of other climate-change legal requirements related to carbon emissions and
greenhouse gas emissions. These legal requirements could potentially limit carbon emissions within certain states and municipalities in
the United States. Certain of these legal requirements restrict the location and amount of time that diesel-powered trucks (like the
Company’s) may idle, which may force the Company to purchase on-board power units that do not require the engine to idle or to alter
the Company’s drivers’ behavior, which might result in a decrease in productivity and/or an increase in driver turnover. All of these
regulations have increased, and may continue to increase, the cost of new trucks and trailers and may require the Company to retrofit
certain of its trucks and trailers, may increase its maintenance costs, and could impair equipment productivity and increase the Company’s
operating costs, particularly if such costs are not offset by potential fuel savings. The occurrence of any of these adverse effects, combined
with the uncertainty as to the reliability of the newly-designed diesel engines and the residual values of the Company’s equipment, could
materially adversely affect the Company’s business, financial condition and results of operations. Furthermore, any future regulations that
impose restrictions, caps, taxes or other controls on emissions of greenhouse gases could adversely affect the Company’s operations
and financial results. The Company cannot predict the extent to which its operations and productivity will be impacted by any future
regulations. The Company will continue monitoring its compliance with U.S. federal and state environmental regulations.
In March 2014, the U.S. Ninth Circuit Court of Appeals (the “Ninth Circuit”) held that the application of California state wage and hour laws
to interstate truck drivers is not pre-empted by U.S. federal law. The case was appealed to the U.S. Supreme Court, which denied certiorari
in May 2015, and accordingly, the Ninth Circuit decision stood. However, in December 2018, the FMCSA granted a petition filed by the
American Trucking Associations determining that federal law pre-empts California’s wage and hour laws, and interstate truck drivers are
not subject to such laws. The FMCSA’s decision was appealed by labor groups and multiple lawsuits were filed in U.S. courts seeking to
overturn the decision. I January 2021, however, the Ninth Circuit upheld the FMCSA’s determination that U.S. federal law does pre-empt
2024 Annual Report │30
California’s meal and rest break laws, as applied to drivers of property-carrying commercial motor vehicles. Other current and future U.S.
state and local wage and hour laws, including laws related to employee meal breaks and rest periods, may vary significantly from U.S.
federal law. Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state
minimum wage laws. As a result, the Company, along with other companies in the industry, is subject to an uneven patchwork of wage
and hour laws throughout the United States. In addition, the uncertainty with respect to the practical application of wage and hour laws
are, and in the future may be, resulting in additional costs for the Company and the industry as a whole, and a negative outcome with
respect to any of the above-mentioned lawsuits could materially affect the Company. If U.S. federal legislation is not passed pre-empting
state and local wage and hour laws, the Company will either need to continue complying with the most restrictive state and local laws
across its entire fleet in the United States, or revise its management systems to comply with varying state and local laws. Either solution
could result in increased compliance and labor costs, driver turnover, decreased efficiency and increased risk of non-compliance. In April
2016, the Food and Drug Administration (“FDA”) published a final rule establishing requirements for shippers, loaders, carriers by motor
vehicle and rail vehicle, and receivers engaged in the transportation of food, to use sanitary transportation practices to ensure the safety
of the food they transport as part of the FSMA. This rule sets forth requirements related to (i) the design and maintenance of equipment
used to transport food, (ii) the measures taken during food transportation to ensure food safety, (iii) the training of carrier personnel in
sanitary food transportation practices, and (iv) maintenance and retention of records of written procedures, agreements, and training
related to the foregoing items. These requirements took effect for larger carriers in April 2017 and apply to the Company when it acts as
a carrier or as a broker. If the Company is found to be in violation of applicable laws or regulations related to the FSMA or if the Company
transports food or goods that are contaminated or are found to cause illness and/or death, the Company could be subject to substantial
fines, lawsuits, penalties and/or criminal and civil liability, any of which could have a material adverse effect on the Company’s business,
financial condition, and results of operations.
Changes in existing regulations and implementation of new regulations, such as those related to trailer size limits, emissions and fuel
economy, hours of service, mandating ELDs and drug and alcohol testing in Canada, the United States and Mexico, could increase
capacity in the industry or improve the position of certain competitors, either of which could negatively impact pricing and volumes or
require additional investments by the Company. The short-term and long-term impacts of changes in legislation or regulations are difficult
to predict and could materially adversely affect the Company’s results of operations.
The right to continue to hold applicable licenses and permits is generally subject to maintaining satisfactory compliance with regulatory
and safety guidelines, policies and laws. Although the Company is committed to compliance with laws and safety, there is no assurance
that it will be in full compliance with them at all times. Consequently, at some future time, the Company could be required to incur significant
costs to maintain or improve its compliance record.
United States and Mexican operations. A significant portion of the Company’s revenue is derived from operations in the United States
and transportation to and from Mexico. The Company’s international operations are subject to a variety of risks, including fluctuations in
foreign currencies, changes in the economic strength or greater volatility in the economies of foreign countries in which the Company does
business, difficulties in enforcing contractual rights and intellectual property rights, compliance burdens associated with export and import
laws, theft or vandalism, and social, political and economic instability. The Company’s international operations could be adversely affected
by restrictions on travel. Additional risks associated with the Company’s international operations include restrictive trade policies,
imposition of duties, changes to trade agreements and other treaties, taxes or government royalties by foreign governments, adverse
changes in the regulatory environments, including in tax laws and regulations, of the foreign countries in which the Company does
business, compliance with anti-corruption and anti-bribery laws, restrictions on the withdrawal of foreign investments, the ability to identify
and retain qualified local managers and the challenge of managing a culturally and geographically diverse operation. The Company cannot
guarantee compliance with all applicable laws, and violations could result in substantial fines, sanctions, civil or criminal penalties,
competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect the Company’s results
of operations.
On February 1, 2025, the U.S. administration signed executive orders imposing , effective February 4, 2025, a 25% tariff on imports from
Canada and Mexico, a 10% tariff on energy products from Canada, and an additional 10% tariff on goods imported from China. In
response, Canada announced, on February 1, 2025, that it would retaliate by imposing a 25% tariff on specified U.S. products, to come
in effect in February 2025, and would also consider additional non-tariff measures. While a 30 day delay on tariffs against Canada and
Mexico was subsequently announced on on February 3, 2025, with corresponding delays in announced retaliatory measures by Canada
and Mexico, there was no similar delay announced by the U.S. administration for the tariffs against China. China subsequently announce
retaliatory tariffs on selected U.S. imports and other non-tariff measures. Although the services provided by the Company would not be
2024 Annual Report │31
subject to tariffs, any future actions taken by the U.S. and other countries in response, including the further escalation or implementation
of tariffs or quotas or changes to certain trade agreements could, among other things, have a negative impact on the markets in which the
Company operates, increase the costs of the materials used by the Company’s suppliers to produce new revenue equipment or increase
the price of fuel. Such cost increases for the Company’s revenue equipment suppliers would likely be passed on to the Company, and to
the extent fuel prices increase, the Company may not be able to fully recover such increases through rate increases or the Company’s
fuel surcharge program, either of which could have a material adverse effect on the Company’s business.
The United States-Mexico-Canada Agreement (“USMCA”) entered into effect in July 2020. The USMCA is designed to modernize food
and agriculture trade, advance rules of origin for automobiles and trucks, and enhance intellectual property protections, among other
matters, according to the Office of the U.S. Trade Representative. It is difficult to predict at this stage what could be the impact of the
USMCA on the economy, including the transportation industry. However, given the amount of North American trade that moves by truck
it could have a significant impact on supply and demand in the transportation industry, and could adversely impact the amount, movement
and patterns of freight transported by the Company.
The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how
the Company will apply the law and impact the Company’s results of operations in future periods. The timing and scope of such regulations
and interpretative guidance are uncertain. In addition, there is a risk that states within the United States or foreign jurisdictions may amend
their tax laws in response to these tax reforms, which could have a material adverse effect on the Company’s results.
In addition, if the Company is unable to maintain its Free and Secure Trade (“FAST”) and U.S. Customs Trade Partnership Against
Terrorism (“C-TPAT”) certification statuses, it may have significant border delays, which could cause its cross-border operations to be less
efficient than those of competitor carriers that obtain or continue to maintain FAST and C-TPAT certifications.
Operating Environment and Seasonality. The Company is exposed to the following factors, among others, affecting its operating
environment:
the Company’s future insurance and claims expense, including the cost of its liability insurance premiums and the number and dollar
amount of claims, may exceed historical levels, which would require the Company to incur additional costs and could reduce the
Company’s earnings;
a decline in the demand for used revenue equipment could result in decreased equipment sales, lower resale values and lower gains
(or recording losses) on sales of assets;
truck and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic
downturns or shortages of component parts, including the current shortage of semiconductors and other components and supplies,
such as steel, which may materially adversely affect the Company’s ability to purchase a quantity of new revenue equipment that is
sufficient to sustain its desired growth rate and negatively impact the Company’s financial results if it incurs higher costs to purchase
trucks and trailers; and
increased prices for new revenue equipment, design changes of new engines, reduced equipment efficiency resulting from new
engines designed to reduce emissions, or decreased availability of new revenue equipment.
The Company’s truck productivity decreases during the winter season because inclement weather impedes operations and some shippers
reduce their shipments after the winter holiday season. Revenue may also be adversely affected by inclement weather and holidays, since
revenue is directly related to available working days of shippers. At the same time, operating expenses increase and fuel efficiency declines
because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair
expenditures. The Company may also suffer from weather-related or other unforeseen events such as tornadoes, hurricanes, blizzards,
ice storms, floods, and fires, which may increase in frequency and severity due to climate change, as well as other man-made disasters.
These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, damage or
destroy the Company’s assets or adversely affect the business or financial condition of the Company’s customers, any of which could
materially adversely affect the Company’s results of operations or make the Company’s results of operations more volatile.
General Economic, Credit, and Business Conditions. The Company’s business is subject to general economic, credit, business and
regulatory factors that are largely beyond the Company’s control, and which could have a material adverse effect on the Company’s
operating results.
The Company’s industry is subject to cyclical pressures, and the Company’s business is dependent on a number of factors that may have
a material adverse effect on its results of operations, many of which are beyond the Company’s control. The Company believes that some
of the most significant of these factors include (i) excess truck and trailer capacity in the transportation industry in comparison with shipping
2024 Annual Report │32
demand; (ii) declines in the resale value of used equipment; (iii) limited supply and increased cost of new and used equipment; (iv)
recruiting and retaining qualified drivers; (v) strikes, work stoppages or work slowdowns at the Company’s facilities or at customer, port,
border crossing or other shipping-related facilities; (vi) compliance with ongoing regulatory requirements; (vii) increases in interest rates,
fuel taxes, tolls and license and registration fees; and (vii) rising healthcare and insurance and claims costs in the United States; and (ix)
the impact of the COVID-19 pandemic.
The Company is also affected by (i) recessionary economic cycles, which tend to be characterized by weak demand and downward
pressure on rates; (ii) changes in customers’ inventory levels and in the availability of funding for their working capital; (iii) changes in the
way in which the Company’s customers choose to source or utilize the Company’s services; and (iv) downturns in customers’ business
cycles, such as retail and manufacturing, where the Company has significant customer concentration. Economic conditions may adversely
affect customers and their demand for and ability to pay for the Company’s services. Customers encountering adverse economic
conditions represent a greater potential for loss and the Company may be required to increase its allowance for doubtful accounts.
Economic conditions that decrease shipping demand and increase the supply of available trucks and trailers can exert downward pressure
on rates and equipment utilization, thereby decreasing asset productivity. The risks associated with these factors are heightened when
the economy is weakened. Some of the principal risks during such times include:
the Company may experience a reduction in overall freight levels, which may impair the Company’s asset utilization;
freight patterns may change as supply chains are redesigned, resulting in an imbalance between the Company’s capacity and assets
and customers’ freight demand;
the Company may be forced to accept more loads from freight brokers, where freight rates are typically lower, or may be forced to
incur more non-revenue generating miles to obtain loads;
the Company may increase the size of its fleet during periods of high freight demand during which its competitors also increase their
capacity, and the Company may experience losses in greater amounts than such competitors during subsequent cycles of softened
freight demand if the Company is required to dispose of assets at a loss to match reduced freight demand;
customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates in an attempt to
lower their costs, and the Company may be forced to lower its rates or lose freight; and
lack of access to current sources of credit or lack of lender access to capital, leading to an inability to secure credit financing on
satisfactory terms, or at all.
The Company is subject to cost increases that are outside the Company’s control that could materially reduce the Company’s profitability
if it is unable to increase its rates sufficiently. Such cost increases include, but are not limited to, increases in fuel and energy prices, driver
and office employee wages, purchased transportation costs, taxes, interest rates, tolls, license and registration fees, insurance premiums
and claims, revenue equipment and related maintenance, and tires and other components. Strikes or other work stoppages at the
Company’s service centers or at customer, port, border or other shipping locations, deterioration of Canadian, U.S. or Mexican
transportation infrastructure and reduced investment in such infrastructure, or actual or threatened armed conflicts or terrorist attacks,
efforts to combat terrorism, military action against a foreign state or group located in a foreign state or heightened security requirements
could lead to wear, tear and damage to the Company’s equipment, driver dissatisfaction, reduced economic demand, reduced availability
of credit, increased prices for fuel or temporary closing of the shipping locations or borders between Canada, the United States and
Mexico. Further, the Company may not be able to appropriately adjust its costs and staffing levels to meet changing market demands. In
periods of rapid change, it is more difficult to match the Company’s staffing level to its business needs.
The Company’s operations, with the exception of its brokerage operations, are capital intensive and asset heavy. If anticipated demand
differs materially from actual usage, the Company may have too many or too few assets. During periods of decreased customer demand,
the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open market or turn in equipment under certain
equipment leases in order to right size its fleet. This could cause the Company to incur losses on such sales or require payments in
connection with equipment the Company turns in, particularly during times of a softer used equipment market, either of which could have
a material adverse effect on the Company’s profitability.
Although the Company’s business volume is not highly concentrated, its customers’ financial failures or loss of customer business may
materially adversely affect the Company. If the Company were unable to generate sufficient cash from operations, it would need to seek
alternative sources of capital, including financing, to meet its capital requirements. In the event that the Company were unable to generate
sufficient cash from operations or obtain financing on favorable terms in the future, it may have to limit its fleet size, enter into less favorable
financing arrangements or operate its revenue equipment for longer periods, any of which could have a materially adverse effect on its
profitability.
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Public Health Crises. Any outbreaks of contagious diseases or other adverse public health developments, could have a materially
adverse effect on the Company’s financial condition, liquidity, results of operations, and cash flows. The outbreak of COVID-19 resulted
in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines,
shelter in place orders, increased border and port controls and closures, and shutdowns. Any outbreaks would create considerable
uncertainty regarding such measures including vaccine, testing and masks mandates, all of which could limit the Company’s ability to
meet customer demand, as well as reduce customer demand. Furthermore, government vaccine, testing, and mask mandates may
increase the Company’s turnover and make recruiting more difficult, particularly among the Company’s driver personnel.
Certain of the Company’s office personnel may be required to work remotely, which could disrupt to a certain extent the Company’s
management, business, finance, and financial reporting teams. The Company may experience an increase in absences or terminations
among its driver and non-driver personnel due to public heath crises, which could have a materially adverse effect on the Company’s
operating results.
Risks related to a slowdown or recession are described in the Company’s risk factor titled “General Economic, Credit and Business
Conditions”.
Short-term and long-term developments related to public health crises are unpredictable and the extent to which further developments
could impact the Company’s operations, financial condition, access to credit, liquidity, results of operations, and cash flows is highly
uncertain. Such developments may include the geographic spread and duration of the virus, the distribution and availability of vaccines,
vaccine hesitancy, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties
in response to the public health crises.
The effect of any border requirements, in addition to any other vaccine, testing, or mask mandates that go into effect may, amongst other
things, (i) cause the Company’s employees to go to smaller employers, especially if any future mandates are only subject to larger
employers, or leave the trucking industry altogether, (ii) result in logistical issues, increased expenses, and operational issues resulting
from ensuring compliance with such mandates, such as the costs of arranging for testing for the Company’s unvaccinated employees,
especially for the Company’s unvaccinated drivers, (iii) result in increased costs relating to recruiting and training of drivers, and (iv) result
in decreased revenue and other operational issues if we are unable to recruit and retain drivers. Any such vaccine, testing, or mask
mandate that is interpreted as to apply to commercial drivers would significantly reduce the pool of drivers available to us and the industry
as a whole, exacerbating the current driver shortage even further. Accordingly, any vaccine, testing, or mask mandate, to the extent that
it goes into effect, may have a material adverse effect on the Company’s business, the Company’s operations, and the Company’s financial
condition and position.
Interest Rate Fluctuations. Future cash flows related to variable-rate financial liabilities could be impacted by changes in benchmark
rates such as Bankers’ Acceptance or secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”). In
addition, the Company is exposed to gains and losses arising from changes in interest rates through its derivative financial instruments
carried at fair value.
Currency Fluctuations. The Company’s financial results are reported in U.S. dollars and a large portion of the Company’s revenue and
operating costs are realized in currencies other than the U.S. dollar, primarily the Canadian dollar. The exchange rates between these
currencies and the U.S. dollar have fluctuated in recent years and will likely continue to do so in the future. It is not possible to mitigate all
exposure to fluctuations in foreign currency exchange rates. The results of operations are therefore affected by movements of these
currencies against the U.S. dollar.
Price and Availability of Fuel. Fuel is one of the Company’s largest operating expenses. Diesel fuel prices fluctuate greatly due to factors
beyond the Company’s control, such as political events, commodity futures trading, currency fluctuations, natural and man-made disasters,
terrorist activities and armed conflicts, any of which may lead to an increase in the cost of fuel. Fuel prices are also affected by the rising
demand for fuel in developing countries and could be materially adversely affected by the use of crude oil and oil reserves for purposes
other than fuel production and by diminished drilling activity. Such events may lead not only to increases in fuel prices, but also to fuel
shortages and disruptions in the fuel supply chain. Because the Company’s operations are dependent upon diesel fuel, significant diesel
fuel cost increases, shortages or supply disruptions could have a material adverse effect on the Company’s business, financial condition
and results of operations.
While the Company has fuel surcharge programs in place with a majority of the Company’s customers, which historically have helped the
Company offset the majority of the negative impact of rising fuel prices, the Company also incurs fuel costs that cannot be recovered even
2024 Annual Report │34
with respect to customers with which the Company maintains fuel surcharge programs, such as those associated with non-revenue
generating miles or time when the Company’s engines are idling. Moreover, the terms of each customer’s fuel surcharge program vary
from one division to another, and the recoverability for fuel price increases varies as well. In addition, because the Company’s fuel
surcharge recovery lags behind changes in fuel prices, the Company’s fuel surcharge recovery may not capture the increased costs the
Company pays for fuel, especially when prices are rising. This could lead to fluctuations in the Company’s levels of reimbursement, such
as has occurred in the past. There can be no assurance that such fuel surcharges can be maintained indefinitely or that they will be fully
effective.
Insurance. The Company’s operations are subject to risks inherent in the transportation sector, including personal injury, property
damage, workers’ compensation and employment and other issues. The Company’s future insurance and claims expenses may exceed
historical levels, which could reduce the Company’s earnings. The Company subscribes for insurance in amounts it considers appropriate
in the circumstances and having regard to industry norms. Like many in the industry, the Company self-insures a significant portion of the
claims exposure related to cargo loss, bodily injury, workers’ compensation and property damages. Due to the Company’s significant self-
insured amounts, the Company has exposure to fluctuations in the number or severity of claims and the risk of being required to accrue
or pay additional amounts if the Company’s estimates are revised or claims ultimately prove to be in excess of the amounts originally
assessed. Further, the Company’s self-insured retention levels could change and result in more volatility than in recent years.
The Company holds a fully-fronted policy of CAD $10 million limit per occurrence for automobile bodily injury, property damage and
commercial general liability for its Canadian Insurance Program, subject to certain exceptions. The Company holds fully fronted policies
of US $10 million limit per occurrence and various risk transfer programs with self insured retentions from US $1 million to US $5 million
for certain US subsidiaries for automobile liability. The Company holds fully fronted policies of US $10 million limit per occurrence and
various risk transfer programs with self insured retentions from US $1 million to US $3 million for certain US subsidiaries for commercial
general liability. The Company retains deductibles of US $1 million and US $5 million per occurrence for workers' compensation claims
for a limited number of U.S. subsidiaries. The Company’s liability coverage has a total limit of US $90 million per occurrence for both its
Canadian and U.S. divisions, where the Company retains a US $20 million self insured retention in the US $80 million excess of US $10
million, subject to certain exceptions.
Although the Company believes its aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that
the amount of one or more claims could exceed the Company’s aggregate coverage limits or that the Company will chose not to obtain
insurance in respect of such claims. If any claim were to exceed the Company’s coverage, the Company would bear the excess, in addition
to the Company’s other self-insured amounts. The Company’s results of operations and financial condition could be materially and
adversely affected if (i) cost per claim or the number of claims significantly exceeds the Company’s coverage limits or retention amounts;
(ii) the Company experiences a claim in excess of its coverage limits; (iii) the Company’s insurance carriers fail to pay on the Company’s
insurance claims; (iv) the Company experiences a significant increase in premiums; or (v) the Company experiences a claim for which
coverage is not provided, either because the Company chose not to obtain insurance as a result of high premiums or because the claim
is not covered by insurance which the Company has in place.
The Company accrues the costs of the uninsured portion of pending claims based on estimates derived from the Company’s evaluation
of the nature and severity of individual claims and an estimate of future claims development based upon historical claims development
trends. Actual settlement of the Company’s retained claim liabilities could differ from its estimates due to a number of uncertainties,
including evaluation of severity, legal costs and claims that have been incurred but not reported. Due to the Company’s high retained
amounts, it has significant exposure to fluctuations in the number and severity of claims. If the Company were required to accrue or pay
additional amounts because its estimates are revised or the claims ultimately prove to be more severe than originally assessed, its financial
condition and results of operations may be materially adversely affected.
Employee Relations. With the acquisition of UPS Freight and prior Canadian acquisitions, the Company has a substantial number of
unionized employees in the U.S. and Canada. Although the Company believes that its relations with its employees are satisfactory, no
assurance can be given that the Company will be able to successfully extend or renegotiate the Company’s current collective agreements
as they expire from time to time or that additional employees will not attempt to unionize.
The unionization of the Company’s employees in additional business units, adverse changes in terms under collective bargaining
agreements, or actual or threatened strikes, work stoppages or slow downs, could have a material adverse effect on the Company’s
business, customer retention, results of operations, financial condition and liquidity, and could cause significant disruption of, or
inefficiencies in, its operations, because:
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restrictive work rules could hamper the Company’s ability to improve or sustain operating efficiency or could impair the Company’s
service reputation and limit its ability to provide certain services;
a strike or work stoppage could negatively impact the Company’s profitability and could damage customer and employee
relationships;
shippers may limit their use of unionized trucking companies because of the threat of strikes and other work stoppages;
the Company could fail to extend or renegotiate its collective agreements or experience material increases in wages or benefits;
disputes with the Company’s unions could arise; and
an election and bargaining process could divert management’s time and attention from the Company’s overall objectives and
impose significant expenses.
The Company’s collective agreements have a variety of expiration dates, to the last of which is in December 2029. In a small number of
cases, the expiration date of the collective agreement has passed; in such cases, the Corporation is generally in the process of
renegotiating the agreement. The Company cannot predict the effect which any new collective agreements or the failure to enter into such
agreements upon the expiry of the current agreements may have on its operations.
The Company has experience managing its heavily unionized workforce in Canada, having fostered good labor relations with the various
unions representing its workforce through several mature collective agreements. For the U.S., union relationships are less mature, but
have proven to be harmonious thus far. On July 13, 2023, the Company reached an agreement with the US International Brotherhood of
Teamster Union for the renewal of its most populous collective agreement, and in 2024 reached a 5-year agreement with the International
Association of Machinists. The Company's unionized operations have not appeared to impact its non-unionized operations, but this
remains a risk.
Drivers. Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a material adverse effect on
the Company’s profitability and the ability to maintain or grow the Company’s fleet.
Like many in the transportation sector, the Company experiences substantial difficulty in attracting and retaining sufficient numbers of
qualified drivers. The trucking industry periodically experiences a shortage of qualified drivers. The Company believes the shortage of
qualified drivers and intense competition for drivers from other transportation companies will create difficulties in maintaining or increasing
the number of drivers and may negatively impact the Company’s ability to engage a sufficient number of drivers, and the Company’s
inability to do so may negatively impact its operations. Further, the compensation the Company offers its drivers and independent
contractor expenses are subject to market conditions, and the Company may find it necessary to increase driver and independent
contractor compensation in future periods.
Driver shortages are exacerbated during periods of economic expansion, in which alternative employment opportunities, including in the
construction and manufacturing industries, which may offer better compensation and/or more time at home, are more plentiful and freight
demand increases, or during periods of economic downturns, in which unemployment benefits might be extended and financing is limited
for independent contractors who seek to purchase equipment, or the scarcity or growth of loans for students who seek financial aid for
driving school. In addition, enrollment at driving schools may be further limited by social distancing requirements, vaccine, testing, and
mask mandates, and other regulatory requirements that reduces the number of eligible drivers. The lack of adequate truck parking along
some U.S. highways and congestion caused by inadequate highway funding may make it more difficult for drivers to comply with hours of
service regulations and cause added stress for drivers, further reducing the pool of eligible drivers. The Company’s use of team-driven
trucks for expedited shipments requires two drivers per truck, which further increases the number of drivers the Company must recruit and
retain in comparison to operations that require one driver per truck. The Company also employs driver hiring standards, which could further
reduce the pool of available drivers from which the Company would hire. If the Company is unable to continue to attract and retain a
sufficient number of drivers, the Company could be forced to, among other things, adjust the Company’s compensation packages, increase
the number of the Company’s trucks without drivers or operate with fewer trucks and face difficulty meeting shipper demands, any of which
could adversely affect the Company’s growth and profitability.
Independent Contractors. The Company’s contracts with U.S. independent contractors are governed by U.S. federal leasing regulations,
which impose specific requirements on the Company and the independent contractors. If more stringent state or U.S. federal leasing
regulations are adopted, U.S. independent contractors could be deterred from becoming independent contractor drivers, which could
materially adversely affect the Company’s goal of maintaining its current fleet levels of independent contractors.
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The Company provides financing to certain qualified Canadian independent contractors and financial guarantees to a small number of
U.S. independent contractors. If the Company were unable to provide such financing or guarantees in the future, due to liquidity constraints
or other restrictions, it may experience a decrease in the number of independent contractors it is able to engage. Further, if independent
contractors the Company engages default under or otherwise terminate the financing arrangements and the Company is unable to find
replacement independent contractors or seat the trucks with its drivers, the Company may incur losses on amounts owed to it with respect
to such trucks.
Pursuant to the Company’s fuel surcharge program with independent contractors, the Company pays independent contractors with which
it contracts a fuel surcharge that increases with the increase in fuel prices. A significant increase or rapid fluctuation in fuel prices could
cause the Company’s costs under this program to be higher than the revenue the Company receives under its customer fuel surcharge
programs.
U.S. tax and other regulatory authorities, as well as U.S. independent contractors themselves, have increasingly asserted that U.S.
independent contractor drivers in the trucking industry are employees rather than independent contractors, and the Company’s
classification of independent contractors has been the subject of audits by such authorities from time to time. U.S. federal and state
legislation has been introduced in the past that would make it easier for tax and other authorities to reclassify independent contractors as
employees, including legislation to increase the recordkeeping requirements for those that engage independent contractor drivers and to
increase the penalties for companies who misclassify their employees and are found to have violated employees’ overtime and/or wage
requirements. The most recent example being the Protecting the Rights to Organize (“PRO”) Act, which was passed by the U.S. House
of Representatives and received by the U.S. Senate in March 2021 and remains with the U.S. Senate’s Committee on Health, Education,
Labor, and Pensions. The PRO Act proposes to apply the “ABC Test” (described below) for classifying workers under Federal Fair Labor
Standards Act claims. It is unknown whether any of the proposed legislation will become law or whether any industry-based exemptions
from any resulting law will be granted. Additionally, U.S. federal legislators have sought to abolish the current safe harbor allowing
taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice,
to extend the U.S. Fair Labor Standards Act to independent contractors and to impose notice requirements based on employment or
independent contractor status and fines for failure to comply. Some U.S. states have put initiatives in place to increase their revenue from
items such as unemployment, workers’ compensation and income taxes, and a reclassification of independent contractors as employees
would help states with this initiative. Further, courts in certain U.S. states have issued decisions that could result in a greater likelihood
that independent contractors would be judicially classified as employees in such states.
In September 2019, California enacted a new law, A.B. 5 (“AB5”), that made it more difficult for workers to be classified as independent
contractors (as opposed to employees). AB5 provides that the three-pronged “ABC Test” must be used to determine worker classifications
in wage order claims. Under the ABC Test, a worker is presumed to be an employee and the burden to demonstrate their independent
contractor status is on the hiring company through satisfying all three of the following criteria: (a) the worker is free from control and
direction in the performance of services; (b) the worker is performing work outside the usual course of the business of the hiring company;
and (c) the worker is customarily engaged in an independently established trade, occupation, or business. How AB5 will be enforced is
still to be determined. In January 2021, however, the California Supreme Court ruled that the ABC Test could apply retroactively to all
cases not yet final as of the date the original decision was rendered, April 2018. While it was set to enter into effect in January 2020, a
U.S. federal judge in California issued a preliminary injunction barring the enforcement of AB5 on the trucking industry while the California
Trucking Association (“CTA”) moves forward with its suit seeking to invalidate AB5. The Ninth Circuit rejected the reasoning behind the
injunction in April 2021, ruling that AB5 is not pre-empted by U.S. federal law, but granted a stay of the AB5 mandate in June 2021
(preventing its application and temporarily continuing the injunction) while the CTA petitioned the United States Supreme Court (the
“Supreme Court”) to review the decision. In November 2021, the Supreme Court requested that the U.S. solicitor general weigh in on the
case. The injunction will remain in place until the Supreme Court makes a decision on whether to proceed in hearing the case. While the
stay of the AB5 mandate provides temporary relief to the enforcement of AB5, it remains unclear how long such relief will last, and whether
the CTA will ultimately be successful in invalidating the law. It is also possible AB5 will spur similar legislation in states other than California,
which could adversely affect the Company’s results of operations and profitability.
U.S. class action lawsuits and other lawsuits have been filed against certain members of the Company’s industry seeking to reclassify
independent contractors as employees for a variety of purposes, including workers’ compensation and health care coverage. In addition,
companies that use lease purchase independent contractor programs, such as the Company, have been more susceptible to
reclassification lawsuits, and several recent decisions have been made in favor of those seeking to classify independent contractor truck
drivers as employees. U.S. taxing and other regulatory authorities and courts apply a variety of standards in their determination of
2024 Annual Report │37
independent contractor status. If the independent contractors with whom the Company contracts are determined to be employees, the
Company would incur additional exposure under U.S. federal and state tax, workers’ compensation, unemployment benefits, labor,
employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings, and the
Company’s business, financial condition and results of operations could be materially adversely affected. The Company has settled certain
class action cases in Massachusetts and California in the past with independent contractors who alleged they were misclassified.
Acquisitions and Integration Risks. Historically, acquisitions have been a part of the Company’s growth strategy. The Company may
not be able to successfully integrate acquisitions into the Company’s business, or may incur significant unexpected costs in doing so.
Further, the process of integrating acquired businesses may be disruptive to the Company’s existing business and may cause an
interruption or reduction of the Company’s business as a result of the following factors, among others:
loss of drivers, key employees, customers or contracts;
possible inconsistencies in or conflicts between standards, controls, procedures and policies among the combined companies and
the need to implement company-wide financial, accounting, information technology and other systems;
failure to maintain or improve the safety or quality of services that have historically been provided;
inability to retain, integrate, hire or recruit qualified employees;
unanticipated environmental or other liabilities;
risks of entering new markets or business offerings in which we have had no or only limited prior experience;
failure to coordinate geographically dispersed organizations; and
the diversion of management’s attention from the Company’s day-to-day business as a result of the need to manage any disruptions
and difficulties and the need to add management resources to do so.
Anticipated cost savings, synergies, revenue enhancements or other benefits from any acquisitions that the Company undertakes may
not materialize in the expected timeframe or at all. The Company’s estimated cost savings, synergies, revenue enhancements and other
benefits from acquisitions are subject to a number of assumptions about the timing, execution and costs associated with realizing such
synergies. Such assumptions are inherently uncertain and are subject to a wide variety of significant business, economic and competition
risks. There can be no assurance that such assumptions will turn out to be correct and, as a result, the amount of cost savings, synergies,
revenue enhancements and other benefits the Company actually realizes and/or the timing of such realization may differ significantly (and
may be significantly lower) from the ones the Company estimated, and the Company may incur significant costs in reaching the estimated
cost savings, synergies, revenue enhancements or other benefits. Further, management of acquired operations through a decentralized
approach may create inefficiencies or inconsistencies.
Many of the Company’s recent acquisitions have involved the purchase of stock of existing companies. These acquisitions, as well as
acquisitions of substantially all of the assets of a company, may expose the Company to liability for actions taken by an acquired business
and its management before the Company’s acquisition. The due diligence the Company conducts in connection with an acquisition and
any contractual guarantees or indemnities that the Company receives from the sellers of acquired companies may not be sufficient to
protect the Company from, or compensate the Company for, actual liabilities. The representations made by the sellers expire at varying
periods after the closing. A material liability associated with an acquisition, especially where there is no right to indemnification, could
adversely affect the Company’s results of operations, financial condition and liquidity.
The Company continues to review acquisition and investment opportunities in order to acquire companies and assets that meet the
Company’s investment criteria, some of which may be significant. Depending on the number of acquisitions and investments and funding
requirements, the Company may need to raise substantial additional capital and increase the Company’s indebtedness. Instability or
disruptions in the capital markets, including credit markets, or the deterioration of the Company’s financial condition due to internal or
external factors, could restrict or prohibit access to the capital markets and could also increase the Company’s cost of capital. To the
extent the Company raises additional capital through the sale of equity, equity-linked or convertible debt securities, the issuance of such
securities could result in dilution to the Company’s existing shareholders. If the Company raises additional funds through the issuance of
debt securities, the terms of such debt could impose additional restrictions and costs on the Company’s operations. Additional capital, if
required, may not be available on acceptable terms or at all. If the Company is unable to obtain additional capital at a reasonable cost,
the Company may be required to forego potential acquisitions, which could impair the execution of the Company’s growth strategy.
The Company routinely evaluates its operations and considers opportunities to divest certain of its assets. In addition, the Company faces
competition for acquisition opportunities. This external competition may hinder the Company’s ability to identify and/or consummate future
acquisitions successfully. There is also a risk of impairment of acquired goodwill and intangible assets. This risk of impairment to goodwill
2024 Annual Report │38
and intangible assets exists because the assumptions used in the initial valuation, such as interest rates or forecasted cash flows, may
change when testing for impairment is required.
There is no assurance that the Company will be successful in identifying, negotiating, consummating or integrating any future acquisitions.
If the Company does not make any future acquisitions, or divests certain of its operations, the Company’s growth rate could be materially
and adversely affected. Any future acquisitions the Company does undertake could involve the dilutive issuance of equity securities or the
incurring of additional indebtedness.
Growth. There is no assurance that in the future, the Company’s business will grow substantially or without volatility, nor is there any
assurance that the Company will be able to effectively adapt its management, administrative and operational systems to respond to any
future growth. Furthermore, there is no assurance that the Company’s operating margins will not be adversely affected by future changes
in and expansion of its business or by changes in economic conditions or that it will be able to sustain or improve its profitability in the
future.
Environmental Matters. The Company uses storage tanks at certain of its Canadian and U.S. transportation terminals. Canadian and
U.S. laws and regulations generally impose potential liability on the present and former owners or occupants or custodians of properties
on which contamination has occurred, as well as on parties who arranged for the disposal of waste at such properties. Although the
Company is not aware of any contamination which, if remediation or clean-up were required, would have a material adverse effect on it,
certain of the Company’s current or former facilities have been in operation for many years and over such time, the Company or the prior
owners, operators or custodians of the properties may have generated and disposed of wastes which are or may be considered hazardous.
Liability under certain of these laws and regulations may be imposed on a joint and several basis and without regard to whether the
Company knew of, or was responsible for, the presence or disposal of these materials or whether the activities giving rise to the
contamination was legal when it occurred. In addition, the presence of those substances, or the failure to properly dispose of or remove
those substances, may adversely affect the Company’s ability to sell or rent that property. If the Company incurs liability under these laws
and regulations and if it cannot identify other parties which it can compel to contribute to its expenses and who are financially able to do
so, it could have a material adverse effect on the Company’s financial condition and results of operations. There can be no assurance that
the Company will not be required at some future date to incur significant costs or liabilities pursuant to environmental laws, or that the
Company’s operations, business or assets will not be materially affected by current or future environmental laws.
The Company’s transportation operations and its properties are subject to extensive and frequently-changing federal, provincial, state,
municipal and local environmental laws, regulations and requirements in Canada, the United States and Mexico relating to, among other
things, air emissions, the management of contaminants, including hazardous substances and other materials (including the generation,
handling, storage, transportation and disposal thereof), discharges and the remediation of environmental impacts (such as the
contamination of soil and water, including ground water). A risk of environmental liabilities is inherent in transportation operations, historic
activities associated with such operations and the ownership, management and control of real estate.
Environmental laws may authorize, among other things, federal, provincial, state and local environmental regulatory agencies to issue
orders, bring administrative or judicial actions for violations of environmental laws and regulations or to revoke or deny the renewal of a
permit. Potential penalties for such violations may include, among other things, civil and criminal monetary penalties, imprisonment, permit
suspension or revocation and injunctive relief. These agencies may also, among other things, revoke or deny renewal of the Company’s
operating permits, franchises or licenses for violations or alleged violations of environmental laws or regulations and impose environmental
assessment, removal of contamination, follow up or control procedures.
Environmental Contamination. The Company could be subject to orders and other legal actions and procedures brought by
governmental or private parties in connection with environmental contamination, emissions or discharges. If the Company is involved in a
spill or other accident involving hazardous substances, if there are releases of hazardous substances the Company transports, if soil or
groundwater contamination is found at the Company’s current or former facilities or results from the Company’s operations, or if the
Company is found to be in violation of applicable laws or regulations, the Company could be subject to cleanup costs and liabilities,
including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on the Company’s
business and operating results.
Key Personnel. The future success of the Company will be based in large part on the quality of the Company’s management and key
personnel. The Company’s management and key personnel possess valuable knowledge about the transportation and logistics industry
and their knowledge of and relationships with the Company’s key customers and vendors would be difficult to replace. The loss of key
2024 Annual Report │39
personnel could have a negative effect on the Company. There can be no assurance that the Company will be able to retain its current
key personnel or, in the event of their departure, to develop or attract new personnel of equal quality.
Dependence on Third Parties. Certain portions of the Company’s business are dependent upon the services of third-party capacity
providers, including other transportation companies. For that portion of the Company’s business, the Company does not own or control
the transportation assets that deliver the customers’ freight, and the Company does not employ the people directly involved in delivering
the freight. This reliance could cause delays in reporting certain events, including recognizing revenue and claims. These third-party
providers seek other freight opportunities and may require increased compensation in times of improved freight demand or tight trucking
capacity. The Company’s inability to secure the services of these third parties could significantly limit the Company’s ability to serve its
customers on competitive terms. Additionally, if the Company is unable to secure sufficient equipment or other transportation services to
meet the Company’s commitments to its customers or provide the Company’s services on competitive terms, the Company’s operating
results could be materially and adversely affected. The Company’s ability to secure sufficient equipment or other transportation services
is affected by many risks beyond the Company’s control, including equipment shortages in the transportation industry, particularly among
contracted carriers, interruptions in service due to labor disputes, changes in regulations impacting transportation and changes in
transportation rates.
Loan Default. The agreements governing the Company’s indebtedness, including the Credit Facility and the Term Loan, contain certain
restrictions and other covenants relating to, among other things, funded debt, distributions, liens, investments, acquisitions and
dispositions outside the ordinary course of business and affiliate transactions. If the Company fails to comply with any of its financing
arrangement covenants, restrictions and requirements, the Company could be in default under the relevant agreement, which could cause
cross-defaults under other financing arrangements. In the event of any such default, if the Company failed to obtain replacement financing
or amendments to or waivers under the applicable financing arrangement, the Company may be unable to pay dividends to its
shareholders, and its lenders could cease making further advances, declare the Company’s debt to be immediately due and payable, fail
to renew letters of credit, impose significant restrictions and requirements on the Company’s operations, institute foreclosure procedures
against their collateral, or impose significant fees and transaction costs. If debt acceleration occurs, economic conditions may make it
difficult or expensive to refinance the accelerated debt or the Company may have to issue equity securities, which would dilute share
ownership. Even if new financing is made available to the Company, credit may not be available to the Company on acceptable terms. A
default under the Company’s financing arrangements could result in a materially adverse effect on its liquidity, financial condition and
results of operations. As at the date hereof, the Company is in compliance with all of its debt covenants and obligations.
Credit Facilities. The Company has significant ongoing capital requirements that could affect the Company’s profitability if the Company
is unable to generate sufficient cash from operations and/or obtain financing on favorable terms. The trucking industry and the Company’s
trucking operations are capital intensive, and require significant capital expenditures annually. The amount and timing of such capital
expenditures depend on various factors, including anticipated freight demand and the price and availability of assets. If anticipated
demand differs materially from actual usage, the Company’s trucking operations may have too many or too few assets. Moreover,
resource requirements vary based on customer demand, which may be subject to seasonal or general economic conditions. During
periods of decreased customer demand, the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open
market or turn in equipment under certain equipment leases in order to right size its fleet. This could cause the Company to incur losses
on such sales or require payments in connection with such turn ins, particularly during times of a softer used equipment market, either of
which could have a materially adverse effect on the Company’s profitability.
The Company’s indebtedness may increase from time to time in the future for various reasons, including fluctuations in results of
operations, capital expenditures and potential acquisitions. The agreements governing the Company’s indebtedness, including the Credit
Facility and the Term Loan, mature on various dates, ranging from 2026 to 2043. There can be no assurance that such agreements
governing the Company’s indebtedness will be renewed or refinanced, or if renewed or refinanced, that the renewal or refinancing will
occur on equally favorable terms to the Company. The Company’s ability to pay dividends to shareholders and ability to purchase new
revenue equipment may be adversely affected if the Company is not able to renew the Credit Facility or the Term Loan or arrange
refinancing of any indebtedness, or if such renewal or refinancing, as the case may be, occurs on terms materially less favorable to the
Company than at present. If the Company is unable to generate sufficient cash flow from operations and obtain financing on terms
favorable to the Company in the future, the Company may have to limit the Company’s fleet size, enter into less favorable financing
arrangements or operate the Company’s revenue equipment for longer periods, any of which may have a material adverse effect on the
Company’s operations.
2024 Annual Report │40
The Company is subject to risk with respect to higher prices for new equipment for its trucking operations. The Company has experienced
an increase in prices for new trucks in recent years, and the resale value of the trucks has not increased to the same extent. Prices have
increased and may continue to increase, due to, among other reasons, (i) increases in commodity prices; (ii) U.S. government regulations
applicable to newly-manufactured trucks, trailers and diesel engines; (iii) the pricing discretion of equipment manufacturers; and (iv)
component and supply chain issues that limit availability of new equipment and increase prices. Increased regulation has increased the
cost of the Company’s new trucks and could impair equipment productivity, in some cases, resulting in lower fuel mileage, and increasing
the Company’s operating expenses. Further regulations with stricter emissions and efficiency requirements have been proposed that
would further increase the Company’s costs and impair equipment productivity. These adverse effects, combined with the uncertainty as
to the reliability of the vehicles equipped with the newly designed diesel engines and the residual values realized from the disposition of
these vehicles could increase the Company’s costs or otherwise adversely affect the Company’s business or operations as the regulations
become effective. Over the past several years, some manufacturers have significantly increased new equipment prices, in part to meet
new engine design and operations requirements. Furthermore, future use of autonomous trucks could increase the price of new trucks
and decrease the value of used non-autonomous trucks. The Company’s business could be harmed if it is unable to continue to obtain
an adequate supply of new trucks and trailers for these or other reasons. As a result, the Company expects to continue to pay increased
prices for equipment and incur additional expenses for the foreseeable future.
Truck and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns
or shortages of component parts. This could have a material adverse effect on the Company’s business, financial condition, and results
of operations, particularly the Company’s maintenance expense and driver retention.
The Company has certain revenue equipment leases and financing arrangements with balloon payments at the end of the lease term
equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the
manufacturers. If the Company does not purchase new equipment that triggers the trade-back obligation, or the equipment manufacturers
do not pay the contracted value at the end of the lease term, the Company could be exposed to losses equal to the excess of the balloon
payment owed to the lease or finance company over the proceeds from selling the equipment on the open market.
The Company has trade-in and repurchase commitments that specify, among other things, what its primary equipment vendors will pay it
for disposal of a certain portion of the Company’s revenue equipment. The prices the Company expects to receive under these
arrangements may be higher than the prices it would receive in the open market. The Company may suffer a financial loss upon disposition
of its equipment if these vendors refuse or are unable to meet their financial obligations under these agreements, it does not enter into
definitive agreements that reflect favorable equipment replacement or trade-in terms, it fails to or is unable to enter into similar
arrangements in the future, or it does not purchase the number of new replacement units from the vendors required for such trade-ins.
Used equipment prices are subject to substantial fluctuations based on freight demand, supply of used trucks, availability of financing,
presence of buyers for export and commodity prices for scrap metal. These and any impacts of a depressed market for used equipment
could require the Company to dispose of its revenue equipment below the carrying value. This leads to losses on disposal or impairments
of revenue equipment, when not otherwise protected by residual value arrangements. Deteriorations of resale prices or trades at
depressed values could cause losses on disposal or impairment charges in future periods.
Difficulty in obtaining goods and services from the Company’s vendors and suppliers could adversely affect its business.
The Company is dependent upon its vendors and suppliers for certain products and materials. The Company believes that it has positive
vendor and supplier relationships and it is generally able to obtain acceptable pricing and other terms from such parties. If the Company
fails to maintain positive relationships with its vendors and suppliers, or if its vendors and suppliers are unable to provide the products and
materials it needs or undergo financial hardship, the Company could experience difficulty in obtaining needed goods and services because
of production interruptions, limited material availability or other reasons. As a consequence, the Company’s business and operations
could be adversely affected.
Customer and Credit Risks. The Company provides services to clients primarily in Canada, the United States and Mexico. The
concentration of credit risk to which the Company is exposed is limited due to the significant number of customers that make up its client
base and their distribution across different geographic areas. Furthermore, no client accounted for more than 5% of the Company’s total
accounts receivable for the year ended December 31, 2024. Generally, the Company does not have long-term contracts with its major
customers. Accordingly, in response to economic conditions, supply and demand factors in the industry, the Company’s performance, the
Company’s customers’ internal initiatives or other factors, the Company’s customers may reduce or eliminate their use of the Company’s
services, or may threaten to do so in order to gain pricing and other concessions from the Company.
2024 Annual Report │41
Economic conditions and capital markets may adversely affect the Company’s customers and their ability to remain solvent. The
customers’ financial difficulties can negatively impact the Company’s results of operations and financial condition, especially if those
customers were to delay or default in payment to the Company. For certain customers, the Company has entered into multi-year contracts,
and the rates the Company charges may not remain advantageous.
Availability of Capital. If the economic and/or the credit markets weaken, or the Company is unable to enter into acceptable financing
arrangements to acquire revenue equipment, make investments and fund working capital on terms favorable to it, the Company’s business,
financial results and results of operations could be materially and adversely affected. The Company may need to incur additional
indebtedness, reduce dividends or sell additional shares in order to accommodate these items. A decline in the credit or equity markets
and any increase in volatility could make it more difficult for the Company to obtain financing and may lead to an adverse impact on the
Company’s profitability and operations.
Information Systems. The Company depends heavily on the proper functioning, availability and security of the Company’s information
and communication systems, including financial reporting and operating systems, in operating the Company’s business. The Company’s
operating systems are critical to understanding customer demands, accepting and planning loads, dispatching equipment and drivers and
billing and collecting for the Company’s services. The Company’s financial reporting system is critical to producing accurate and timely
financial statements and analyzing business information to help the Company manage its business effectively. The Company receives
and transmits confidential data with and among its customers, drivers, vendors, employees and service providers in the normal course of
business.
The Company’s operations and those of its technology and communications service providers are vulnerable to interruption by natural
disasters, such as fires, storms, and floods, which may increase in frequency and severity due to climate change, as well as other events
beyond the Company’s control, including cybersecurity breaches and threats, such as hackers, malware and viruses, power loss,
telecommunications failure, terrorist attacks and Internet failures. The Company’s systems are also vulnerable to unauthorized access
and viewing, misappropriation, altering or deleting of information, including customer, driver, vendor, employee and service provider
information and its proprietary business information. If any of the Company’s critical information systems fail, are breached or become
otherwise unavailable, the Company’s ability to manage its fleet efficiently, to respond to customers’ requests effectively, to maintain billing
and other records reliably, to maintain the confidentiality of the Company’s data and to bill for services and prepare financial statements
accurately or in a timely manner would be challenged. Any significant system failure, upgrade complication, cybersecurity breach or other
system disruption could interrupt or delay the Company’s operations, damage its reputation, cause the Company to lose customers, cause
the Company to incur costs to repair its systems, pay fines or in respect of litigation or impact the Company’s ability to manage its
operations and report its financial performance, any of which could have a material adverse effect on the Company’s business.
Litigation. The Company’s business is subject to the risk of litigation by employees, customers, vendors, government agencies,
shareholders and other parties. The outcome of litigation is difficult to assess or quantify, and the magnitude of the potential loss relating
to such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may also be significant. Not all claims
are covered by the Company’s insurance, and there can be no assurance that the Company’s coverage limits will be adequate to cover
all amounts in dispute. In the United States, where the Company has growing operations, many trucking companies have been subject to
class-action lawsuits alleging violations of various federal and state wage laws regarding, among other things, employee classification,
employee meal breaks, rest periods, overtime eligibility, and failure to pay for all hours worked. A number of these lawsuits have resulted
in the payment of substantial settlements or damages by the defendants. The Company may at some future date be subject to such a
class-action lawsuit. In addition, the Company may be subject, and has been subject in the past, to litigation resulting from trucking
accidents. The number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other motorists.
To the extent the Company experiences claims that are uninsured, exceed the Company’s coverage limits, involve significant aggregate
use of the Company’s self-insured retention amounts or cause increases in future funded premiums, the resulting expenses could have a
material adverse effect on the Company’s business, results of operations, financial condition and cash flows.
Remote Work. The Company has, and will continue to have, a portion of its employees that work from home full-time or under flexible
work arrangements, which exposes the Company to additional cybersecurity risks. Employees working remotely may expose the Company
to cybersecurity risks through: (i) unauthorized access to sensitive information as a result of increased remote access, including
employees' use of Company-owned and personal devices and videoconferencing functions and applications to remotely handle, access,
discuss or transmit confidential information, (ii) increased exposure to phishing and other scams as cybercriminals may, among other
things, install malicious software on the Company's systems and equipment and access sensitive information, and (iii) violation of
international, federal, or state-specific privacy laws. The Company believes that the increased number of employees working remotely
2024 Annual Report │42
has incrementally increased the cyber risk profile of the Company, but the Company is unable to predict the extent or impacts of those
risks at this time. A significant disruption of our information technology systems, unauthorized access or a loss of confidential information,
or legal claims resulting from a privacy law could have a material adverse effect on the Company.
Internal Control. Beginning with the year ended December 31, 2021, the Company is required, pursuant to Section 404 of the U.S.
Sarbanes-Oxley Act, to furnish a report by management on the effectiveness of its internal control over financial reporting. In addition, the
Company’s independent registered public accounting firm must report on its evaluation of the Company’s internal control over financial
reporting. The Company reported material weaknesses as of December 31, 2021 which were remediated in 2022 such that the 2022
evaluation of internal controls over financial reporting were effective. If the Company fails to comply with Section 404 of the Sarbanes-
Oxley Act and does not maintain effective internal controls in the future, it could result in a material misstatement of the Company’s
financial statements, which could cause investors to lose confidence in the Company’s financial statements and cause the trading price
of the Common Shares to decline.
Material Transactions. The Company has acquired numerous companies pursuant to its acquisition strategy and, in addition, has sold
business units. The Company buys and sells business units in the normal course of its business. Accordingly, at any given time, the
Company may consider, or be in the process of negotiating, a number of potential acquisitions and dispositions, some of which may be
material in size. In connection with such potential transactions, the Company regularly enters into non-disclosure or confidentiality
agreements, indicative term sheets, non-binding letters of intent and other similar agreements with potential sellers and buyers, and
conducts extensive due diligence as applicable. These potential transactions may relate to some or all of the Company’s three reportable
segments, that is, LTL, TL, and Logistics. The Company’s active acquisition and disposition strategy requires a significant amount of
management time and resources. Although the Company complies with its disclosure obligations under applicable securities laws, the
announcement of any material transaction by the Company (or rumors thereof, even if unfounded) could result in volatility in the market
price and trading volume of the Common Shares. Further, the Company cannot predict the reaction of the market, or of the Company’s
stakeholders, customers or competitors, to the announcement of any such material transaction or to rumors thereof.
Dividends and Share Repurchases. The payment of future dividends and the amount thereof is uncertain and is at the sole discretion
of the Board of Directors of the Company and is considered each quarter. The payment of dividends is dependent upon, among other
things, operating cash flow generated by the Company, its financial requirements for operations, the execution of its growth strategy and
the satisfaction of solvency tests imposed by the Canada Business Corporations Act for the declaration and payment of dividends.
Similarly, any future repurchase of shares by the Company is at the sole discretion of the Board of Directors and is dependent on the
factors described above. Any future repurchase of shares by the Company is uncertain.
Attention on Environmental, Social and Governance (ESG) Matters. Companies are facing increasing attention from stakeholders
relating to ESG matters, including environmental stewardship, social responsibility, and diversity and inclusion. Organizations that provide
information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on
their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable
ESG ratings may lead to negative sentiment toward the Company, which could have a negative impact on the Company's stock price.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions
about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities, the disclosures
about contingent assets and liabilities, and the reported amounts of revenues and expenses. Such estimates include establishing the fair
value of intangible assets related to business combinations, determining estimates and assumptions related to impairment tests for
goodwill, determining estimates and assumptions related to the accrued benefit obligation, and determining estimates and assumptions
related to the evaluation of provisions for self-insurance and litigations. These estimates and assumptions are based on management’s
best estimates and judgments. Key drivers in critical estimates are as follows:
Fair value of intangible assets and land and building related to business combinations
Projected future cash flows
Acquisition specific discount rate
Attrition rate established from historical trends
Market capitalization rates
2024 Annual Report │43
Accrued benefit obligation
Discount rates
Salary growth
Mortality tables
Self-Insurance and litigations
Historical claim experience, severity factors affecting the amounts ultimately paid, and current and expected levels of cost per
claims
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the
current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such
estimates and assumptions when facts and circumstances dictate. Actual results could differ from these estimates. Changes in those
estimates and assumptions resulting from changes in the economic environment will be reflected in the financial statements of future
periods.
CHANGES IN ACCOUNTING POLICIES
Adopted during the period
The following new standards, and amendments to standards and interpretations, are effective for the first time beginning on or after
January 1, 2024, and have been applied in preparing the audited consolidated financial statements:
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
These new standards did not have a material impact on the Company’s audited consolidated financial statements.
To be adopted in future periods
The following new standards and amendments to standards are not yet effective for the year ended December 31, 2024, and have not
been applied in preparing the audited consolidated financial statements:
Presentation and Disclosure in Financial Statements (IFRS 18)
Further information can be found in note 3 of the December 31, 2024, audited consolidated financial statements.
CONTROLS AND PROCEDURES
In compliance with the provisions of Canadian Securities Administrators’ National Instrument 52-109 and the U.S. Securities Exchange
Act of 1934, as amended (the “Exchange Act”), the Company has filed certificates signed by the President and Chief Executive Officer
(“CEO”) and by the Chief Financial Officer (“CFO”) that, among other things, report on:
their responsibility for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for
the Company; and
the design of disclosure controls and procedures and the design of internal controls over financial reporting.
2024 Annual Report │44
Disclosure controls and procedures
The President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), have designed disclosure controls and
procedures (as defined in National Instrument 52-109 and Rule 13a-15(e) and 15d-15(e) under the Exchange Act), or have caused them
to be designed under their supervision, in order to provide reasonable assurance that:
material information relating to the Company is made known to the CEO and CFO by others; and
information required to be disclosed by the Company in its filings, under applicable securities legislation is recorded, processed,
summarized and reported within the time periods specified in securities legislation.
As at December 31, 2024, an evaluation was carried out under the supervision of the CEO and CFO, of the design and operating
effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, the CEO and CFO concluded that the
Company's disclosure controls and procedures were appropriately designed and were operating effectively as at December 31, 2024.
Management’s Annual Report on Internal Controls over Financial Reporting
The CEO and CFO have also designed internal control over financial reporting (as defined in National Instrument 52-109 and Rules 13a-
15(f) and 15d-15(f) under the Exchange Act), or have caused them to be designed under their supervision, in order to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with IFRS.
As at December 31, 2024, an evaluation was carried out, under the supervision of the CEO and the CFO, of the effectiveness of the
Company’s internal control over financial reporting. Based on this evaluation, the CEO and the CFO concluded that the Company’s internal
control over financial reporting were appropriately designed and operating effectively as at December 31, 2024. The control framework
used to design the Company’s internal controls over financial reporting is based on the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013 framework).
The Company's internal controls over financial reporting as of December 31, 2024 has been audited by KPMG LLP, the Company’s
registered public accounting firm that audited the consolidated financial statements and is included with the Company’s consolidated
financial statements. KPMG LLP has concluded the Company has maintained effective internal control over financial reporting as of
December 31, 2024.
Limitation on scope of design
As permitted under the relevant securities rules, the Company has limited the scope of its evaluation of disclosure controls and procedures
and internal control over financial reporting to exclude controls, policies and procedures of Daseke as it was not acquired more than 365
days before the end of the financial period to which the CEO and CFO certificates relate. For the year ended December 31, 2024, Daseke
constituted 16.2% of current assets, 19.6% of long term assets, 6.1% of current liabilities, 13.4% of long term liabilities, 12.5% of revenue,
and 5.2% of net income included in the consolidated financial statements of the Company as of and for the year ended December 31,
2024.
The Company is required to and will include Daseke in its disclosure controls and procedures and internal controls over financial reporting
beginning in the second quarter of 2025.
Changes in internal controls over financial reporting
No other changes were made to the Company’s internal controls over financial reporting during the quarter and year ended December 31,
2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
2024 Annual Report │45
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors TFI International Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of TFI International Inc. (the "Company") as of
December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for the years ended December 31, 2024 and 2023, and the related notes (collectively, the consolidated financial statements). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and its financial performance and its cash flows for the years ended December 31, 2024 and 2023, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated
February 19, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
2024 Annual Report │46
Provisional determination of the fair value of land and buildings and intangible assets in the acquisition of Daseke Inc.
As discussed in note 5 to the consolidated financial statements, on April 1, 2024, the Company acquired Daseke Inc. (Daseke) for total
purchase consideration of $817.0 million. As of December 31, 2024, the Company has not completed the determination of the fair value
of assets acquired and liabilities assumed for the Daseke acquisition. The provisional determination of acquisition date fair value of assets
acquired and liabilities assumed, specifically for land and buildings, and customer relationships and trademarks intangible assets require
estimates. For land and buildings, significant assumptions included market prices for comparable sites and average rebuild costs. For
customer relationships intangibles, significant assumptions included forecasted revenue and operating margin, annual attrition rate and
discount rate, and for trademarks, significant assumptions included forecasted revenue, royalty rate and discount rate.
We identified the provisional determination of the fair value of land and buildings and intangible assets acquired in the acquisition of
Daseke as a critical audit matter. The valuation included assumptions based on limited observable information which impacted the nature
and extent of audit effort. The procedures also required the use of professionals with specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the valuation process of the above assets at the date of acquisition of Daseke.
This included controls related to the determination of the assumptions and data related to land and buildings, and intangible assets. For
intangible assets, we assessed the reasonableness of the forecasted revenue and revenue growth assumptions by comparing them to
Daseke’s historical results, relevant industry trends and current market indices respectively. We also compared customer relationships
operating margins and attrition rate to Daseke’s historical results and to similar entities of the Company. We involved valuation
professionals with specialized skills and knowledge who assisted in evaluating:
for a selection of land and buildings, the market prices and capitalization rates by comparing them to external market data for
comparable items.
for intangible assets, the reasonableness of the Company’s discount rate by comparing them to a range that was independently
developed using publicly available market data for comparable entities.
for trademarks, the reasonableness of the Company’s trademarks royalty rate assumptions by comparing them to licensing
transactions for similar intellectual property.
Assessment of the self-insurance provisions
As discussed in Note 16 to the consolidated financial statements, the Company has $196.3 million of self-insurance provisions as of
December 31, 2024, including the provisions acquired in the acquisition of Daseke Inc. As discussed in Note 3 (k), self-insurance
provisions represent the uninsured portion of outstanding claims at year-end. The provision represents an accrual for estimated future
disbursements associated with the self-insured portion for claims filed at year-end and incurred but not reported related to cargo loss,
bodily injury, worker’s compensation and property damages. The estimates are based on the Company’s historical experience including
settlement patterns and payment trends.
We identified the assessment of the self-insurance provisions as a critical audit matter. Significant auditor judgment was required to
evaluate the amounts that will ultimately be paid to settle these claims. Significant assumptions that affected the estimated provisions
included the consideration of historical claim experience, severity factors affecting the amounts ultimately paid which are used to determine
the loss development patterns, and current and expected levels of cost per claims which are used to determine expected loss ratios.
Additionally, the provisions included estimates for claims that have been incurred but have not been reported, and specialized skills and
knowledge were needed to evaluate the actuarial methods and assumptions used to assess these estimates.
2024 Annual Report │47
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the reconciliation and monitoring of its self-insurance provision. For claims
for which the estimate is determined using actuarial methods, which included claims incurred but not reported, we involved actuarial
professionals with specialized skills and knowledge, who assisted in:
comparing the Company’s actuarial reserving methods with generally accepted actuarial standards.
evaluating assumptions used in determining the provisions, including the loss development pattern and the expected loss
ratios.
developing an expected range of the provisions, including for claims incurred but not reported, by applying actuarial methods
and assumptions to the Company’s data and comparing to the Company’s estimated provisions.
For claims for which the estimate is not determined using actuarial methods, for a selection of claims, we confirmed with the Company’s
external counsel regarding the Company’s evaluation of claims and any excluded claims.
We have served as the Company’s auditor since 2003.
Montréal, Canada
February 19, 2025
2024 Annual Report │48
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of TFI International Inc.
Opinion on Internal Control Over Financial Reporting
We have audited TFI International Inc.’s (the "Company") internal control over financial reporting as of December 31, 2024, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated statements of financial position of the Company as of December 31, 2024 and 2023, the related consolidated
statements of income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2024 and 2023,
and the related notes (collectively, the consolidated financial statements), and our report dated February 19, 2025 expressed an
unqualified opinion on those consolidated financial statements.
The Company acquired Daseke Inc. (Daseke) during 2024, and management excluded from its assessment of the effectiveness of
the Company’s internal control over financial reporting as of December 31, 2024, Daseke’s internal control over financial reporting
associated with 16.2% of current assets, 19.6% of long-term assets, 6.1% of current liabilities, 13.4% of long- term liabilities, 12.5%
of total revenue, and 5.2% of net income included in the consolidated financial statements of the Company as of and for the year
ended December 31, 2024. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the
internal control over financial reporting of Daseke.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Controls over
Financial Reporting section in the Company’s Management’s Discussion and Analysis. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
2024 Annual Report │49
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Montreal, Canada
February 19, 2025
2024 Annual Report │50
TFI International Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2024 AND 2023
(in thousands of U.S. dollars)
As at
As at
Note
December 31,
2024
December 31,
2023
Assets
Cash and cash equivalents
-
335,556
Trade and other receivables
6
927,654
894,771
Inventoried supplies
17,962
23,964
Current taxes recoverable
11,996
23,637
Prepaid expenses
65,810
56,269
Assets held for sale
13,627
1,802
Current assets
1,037,049
1,335,999
Property and equipment
8
2,891,087
2,415,472
Right-of-use assets
9
536,748
425,630
Intangible assets
10
2,622,951
2,019,301
Investments
11
22,097
50,209
Other assets
22,188
16,394
Deferred tax assets
17
13,724
20,615
Non-current assets
6,108,795
4,947,621
Total assets
7,145,844
6,283,620
Liabilities
Bank indebtedness
6,777
-
Trade and other payables
12
639,190
671,936
Current taxes payable
8,989
2,442
Provisions
16
87,572
66,565
Other financial liabilities
15,220
23,420
Long-term debt
13
93,453
174,351
Lease liabilities
14
152,449
127,397
Current liabilities
1,003,650
1,066,111
Long-term debt
13
2,309,428
1,709,831
Lease liabilities
14
421,213
332,761
Employee benefits
15
70,456
53,231
Provisions
16
142,111
93,335
Other financial liabilities
4,466
3,699
Deferred tax liabilities
17
521,245
433,242
Non-current liabilities
3,468,919
2,626,099
Total liabilities
4,472,569
3,692,210
Equity
Share capital
18
1,135,500
1,107,290
Contributed surplus
18, 20
30,971
37,684
Accumulated other comprehensive loss
(331,903 )
(200,539 )
Retained earnings
1,838,707
1,646,975
Total equity
2,673,275
2,591,410
Contingencies, letters of credit and other commitments
26
Subsequent events
28
Total liabilities and equity
7,145,844
6,283,620
The notes on pages 55 to 95 are an integral part of these consolidated financial statements.
On behalf of the Board:
Director
Director
Alain Bédard
André Bérard
2024 Annual Report │51
TFI International Inc.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of U.S. dollars, except per share amounts)
Note
2024
2023
Revenue
7,304,626
6,416,886
Fuel surcharge
1,092,204
1,104,281
Total revenue
8,396,830
7,521,167
Materials and services expenses
21
4,171,135
3,805,846
Personnel expenses
22
2,496,315
2,109,622
Other operating expenses
435,486
434,751
Depreciation of property and equipment
8
332,580
249,835
Depreciation of right-of-use assets
9
169,505
132,112
Amortization of intangible assets
10
79,984
60,028
Loss on sale of business
-
3,011
Gain on sale of rolling stock and equipment
(7,434 )
(15,510 )
Loss (gain) on derecognition of right-of-use assets
105
(1,482 )
Loss on sale of land and buildings
-
40
Loss (gain), net of impairment, on sale of assets
held for sale
192
(14,721 )
Total operating expenses
7,677,868
6,763,532
Operating income
718,962
757,635
Finance (income) costs
Finance income
23
(13,760 )
(8,612 )
Finance costs
23
171,999
89,483
Net finance costs
158,239
80,871
Income before income tax
560,723
676,764
Income tax expense
24
138,239
171,887
Net income
422,484
504,877
Earnings per share
Basic earnings per share
19
5.00
5.88
Diluted earnings per share
19
4.96
5.80
The notes on pages 55 to 95 are an integral part of these consolidated financial statements.
2024 Annual Report │52
TFI International Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of U.S. dollars)
2024
2023
Net income
422,484
504,877
Other comprehensive (loss) income
Items that may be reclassified to income or loss in future years:
Foreign currency translation differences
5,675
(881 )
Net investment hedge, net of tax
(136,089 )
39,705
Items that may never be reclassified to income:
Defined benefit plan remeasurement, net of tax
16,809
2,016
Items directly reclassified to retained earnings:
Unrealized (loss) gain on investments in equity securities
measured at fair value through OCI, net of tax
(8,108 )
7,281
Other comprehensive (loss) income, net of tax
(121,713 )
48,121
Total comprehensive income
300,771
552,998
The notes on pages 55 to 95 are an integral part of these consolidated financial statements.
2024 Annual Report │53
TFI International Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of U.S. dollars)
Accumulated
Accumulated
foreign
unrealized
Total
currency
gain (loss)
equity
translation
on invest-
attributable
differences
ments in
Retained
to owners
Share
Contributed
& net invest-
equity
earnings
of the
Note
capital
surplus
ment hedge
securities
(deficit)
Company
Balance as at December 31, 2023
1,107,290
37,684
(200,296 )
(243 )
1,646,975
2,591,410
Net income
-
-
-
-
422,484
422,484
Other comprehensive loss, net of tax
-
-
(130,414 )
(8,108 )
16,809
(121,713 )
Realized gain (loss) on equity securities, net of tax
-
-
-
7,158
(7,158 )
-
Total comprehensive (loss) income
-
-
(130,414 )
(950 )
432,135
300,771
Share-based payment transactions, net of tax
20
-
13,235
-
-
-
13,235
Stock options exercised, net of tax
18, 20
16,508
(2,985 )
-
-
-
13,523
Dividends to owners of the Company
18
-
-
-
-
(139,494 )
(139,494 )
Repurchase of own shares
18
(5,929 )
-
-
-
(70,687 )
(76,616 )
Net settlement of restricted share units
and performance share units, net of tax
18, 20
17,631
(16,963 )
-
-
(30,222 )
(29,554 )
Total transactions with owners, recorded directly in equity
28,210
(6,713 )
-
-
(240,403 )
(218,906 )
Balance as at December 31, 2024
1,135,500
30,971
(330,710 )
(1,193 )
1,838,707
2,673,275
Balance as at December 31, 2022
1,089,229
41,491
(239,120 )
5,799
1,565,671
2,463,070
Net income
-
-
-
-
504,877
504,877
Other comprehensive income, net of tax
-
-
38,824
7,281
2,016
48,121
Realized (loss) gain on equity securities, net of tax
-
-
-
(13,323 )
13,323
-
Total comprehensive income (loss)
-
-
38,824
(6,042 )
520,216
552,998
Share-based payment transactions, net of tax
20
-
21,424
-
-
-
21,424
Stock options exercised, net of tax
18, 20
17,179
(4,402 )
-
-
-
12,777
Dividends to owners of the Company
18
-
-
-
-
(124,254 )
(124,254 )
Repurchase of own shares
18
(28,303 )
-
-
-
(259,721 )
(288,024 )
Net settlement of restricted share units
and performance share units, net of tax
18, 20
29,185
(20,829 )
-
-
(54,937 )
(46,581 )
Total transactions with owners, recorded directly in equity
18,061
(3,807 )
-
-
(438,912 )
(424,658 )
Balance as at December 31, 2023
1,107,290
37,684
(200,296 )
(243 )
1,646,975
2,591,410
The notes on pages 55 to 95 are an integral part of these consolidated financial statements.
2024 Annual Report │54
TFI International Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of U.S. dollars)
Note
2024
2023*
Cash flows from operating activities
Net income
422,484
504,877
Adjustments for:
Depreciation of property and equipment
8
332,580
249,835
Depreciation of right-of-use assets
9
169,505
132,112
Amortization of intangible assets
10
79,984
60,028
Share-based payment transactions
20
11,074
13,451
Net finance costs
23
158,239
80,871
Income tax expense
24
138,239
171,887
Loss on sale of business
-
3,011
Gain on sale of property and equipment
(7,434 )
(15,470 )
Loss (gain) on derecognition of right-of-use assets
105
(1,482 )
Loss (gain), net of impairment, on sale of assets held for sale
192
(14,721 )
Employee benefits
38,088
60,212
Provisions, net of payments
15,637
(33,696 )
Net change in non-cash operating working capital
7
11,566
106,631
Interest paid
(157,062 )
(70,354 )
Income tax paid
(150,546 )
(233,353 )
Net cash from operating activities
1,062,651
1,013,839
Cash flows used in investing activities
Purchases of property and equipment
8
(392,819 )
(361,563 )
Proceeds from sale of property and equipment
65,389
73,339
Proceeds from sale of assets held for sale
33,404
50,280
Purchases of intangible assets
10
(6,274 )
(2,758 )
Business combinations, net of cash acquired
5
(957,963 )
(628,701 )
Purchases of investments
-
(41,719 )
Proceeds from sale of investments
19,068
89,225
Others
(5,420 )
24,565
Net cash used in investing activities
(1,244,615 )
(797,332 )
Cash flows used in financing activities
Net increase in bank indebtedness
6,777
-
Proceeds from long-term debt
13
500,000
575,000
Repayment of long-term debt
13
(536,700 )
(41,371 )
Net increase in revolving facilities
13
261,783
25,242
Repayment of lease liabilities
14
(165,350 )
(128,107 )
Decrease of other financial liabilities
(4,374 )
(9,572 )
Dividends paid
(133,928 )
(121,095 )
Repurchase of own shares
18
(76,616 )
(288,024 )
Proceeds from exercise of stock options
18
13,523
12,777
Share repurchase for settlement of restricted share
units and performance share units
(29,554 )
(46,581 )
Net cash used in financing activities
(164,439 )
(21,731 )
Net change in cash and cash equivalents
(346,403 )
194,776
Cash and cash equivalents, beginning of year
335,556
147,117
Effect of movements in exchange rates on
cash and cash equivalents
10,847
(6,337 )
Cash and cash equivalents, end of year
-
335,556
* Recasted for presentation of $6,337 from Net cash used in financing activities to the Effect of movements in exchange rates on cash and cash equivalents.
The notes on pages 55 to 95 are an integral part of these consolidated financial statements.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │55
1.
Reporting entity
TFI International Inc. (the “Company”) is incorporated under the Canada Business Corporations Act, and is a company domiciled in
Canada. The address of the Company’s registered office is 8801 Trans-Canada Highway, Suite 500, Montreal, Quebec, H4S 1Z6.
The consolidated financial statements of the Company as at and for the years ended December 31, 2024 and 2023 comprise the Company
and its subsidiaries (together referred to as the “Group” and individually as “Group entities”).
The Group is involved in the provision of transportation and logistics services across the United States, Canada and Mexico.
2.
Basis of preparation
a)
Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were authorized for issue by the Board of Directors on February 19, 2025.
b)
Basis of measurement
These consolidated financial statements have been prepared on the historical cost basis except for the following material items in
the statements of financial position:
investment in equity securities, derivative financial instruments and contingent considerations are measured at fair value;
liabilities for cash-settled share-based payment arrangements are measured at fair value in accordance with IFRS 2;
the defined benefit pension plan liability is recognized as the net total of the present value of the defined benefit obligation less
the fair value of the plan assets; and
assets and liabilities acquired in business combinations are measured at fair value at acquisition date.
These consolidated financial statements are expressed in U.S. dollars, except where otherwise indicated.
c)
Functional and presentation currency
The Company’s consolidated financial statements are presented in U.S. dollars (“U.S. dollars” or “USD”). All information in these
consolidated financial statements is presented in USD unless otherwise specified.
The Company’s functional currency is the Canadian dollar (“CAD” or “CDN$”). Translation gains and losses from the application of
the U.S. dollar as the presentation currency while the Canadian dollar is the functional currency are included as part of the
accumulated foreign currency translation differences and net investment hedge.
All financial information presented in U.S. dollars has been rounded to the nearest thousand.
d)
Use of estimates and judgments
The preparation of the accompanying financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of
assets and liabilities, the disclosures about contingent assets and liabilities, and the reported amounts of revenues and expenses.
Such estimates include the valuation of goodwill and intangible assets, the measurement of identified assets and liabilities acquired
in business combinations, income tax provisions, defined benefit obligation and the self-insurance and other provisions and
contingencies. These estimates and assumptions are based on management’s best estimates and judgments.
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including
the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts
such estimates and assumptions when facts and circumstances dictate. Actual results could differ from these estimates. Changes
in those estimates and assumptions resulting from changes in the economic environment will be reflected in the financial statements
of future periods.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │56
Information about critical judgments, assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment within the next financial year is included in the following notes:
Note 5 – Establishing the fair value of intangible assets and land and buildings related to material business combinations;
Note 15 – Determining estimates and assumptions related to the evaluation of the defined benefit obligation; and
Note 16 – Determining estimates and assumptions related to the evaluation of provisions for self-insurance and litigations.
3.
Material accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements, unless otherwise indicated. The accounting policies have been applied consistently by Group entities.
a) Basis of consolidation
i)
Business combinations
The Group accounts for business combinations under the acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to the Group.
The Group measures goodwill as the fair value of the consideration transferred including the fair value of liabilities resulting
from contingent consideration arrangements, less the net recognized amount of the identifiable assets acquired and liabilities
assumed, all measured at fair value as of the acquisition date. When the excess is negative, a bargain purchase gain is
recognized immediately in income or loss. Any goodwill that arises is tested annually for impairment.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection
with a business combination, are expensed as incurred.
ii)
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has the right to, variable
returns from its involvement with the entity and has the ability to affect those through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the
date that control ceases.
iii)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
b)
Foreign currency translation
i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group’s entities at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the
functional currency at the exchange rate in effect at the reporting date. The foreign currency gain or loss on monetary items is
the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest
and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the
reporting period. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated at the rate in effect on the transaction date. Income and expense items denominated in foreign currency are
translated at the date of the transactions. Gains and losses are included in income or loss.
ii)
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on business combinations,
are translated to Canadian dollars at exchange rates in effect at the reporting date. The income and expenses of foreign
operations are translated to Canadian dollars at the average exchange rate in effect during the reporting period.
Foreign currency differences are recognized in other comprehensive income (“OCI”) in the accumulated foreign currency
translation differences account.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │57
When a foreign operation is disposed of, the relevant amount in the cumulative amount of foreign currency translation
differences is transferred to income or loss as part of the income or loss on disposal. On the partial disposal of a subsidiary
while retaining control, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other
partial disposal of a foreign operation, the relevant proportion is reclassified to income or loss.
Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement
of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the
net investment in the foreign operation, are recognized in other comprehensive income in the accumulated foreign currency
translation differences account.
Translation gains and losses from the application of U.S dollars as the presentation currency while the Canadian dollar is the
functional currency are included as part of the cumulative foreign currency translation adjustment.
c)
Financial instruments
i)
Non-derivative financial assets
The Group initially recognizes financial assets on the trade date at which the Group becomes a party to the contractual
provisions of the instrument. Financial assets are initially measured at fair value, except for trade receivables which are initially
measured at their transaction price when the trade receivables do not contain a significant financing component. If the financial
asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction
costs that are directly attributable to the asset’s acquisition or origination. On initial recognition, the Group classifies its financial
assets as subsequently measured at either amortized cost or fair value, depending on its business model for managing the
financial assets and the contractual cash flow characteristics of the financial assets and depending on the purpose for which
the financial assets were acquired.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the
Group is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount is presented in the statement of financial position when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and
settle the liability simultaneously.
Financial assets measured at amortized cost
A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment
loss, if:
The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
and
The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of
principal and/or interest.
The Group currently classifies its cash equivalents, trade and other receivables and long-term non-trade receivables included
in other non-current assets as financial assets measured at amortized cost.
The Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost. The Group
has a portfolio of trade receivables at the reporting date. The Group uses a provision matrix to determine the lifetime expected
credit losses for the portfolio.
The Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted
for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to
be greater or less than suggested by historical trends.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │58
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Losses are recognized in income or loss and reflected in an allowance account against trade and other receivables.
Financial assets measured at fair value
These assets are measured at fair value and changes therein, including any interest or dividend income, are recognized in
income or loss. However, for investments in equity instruments that are not held for trading, the Group may elect at initial
recognition to present gains and losses in other comprehensive income. For such investments measured at fair value through
other comprehensive income, gains and losses are never reclassified to profit or loss, and no impairment is recognized in profit
or loss. Dividends earned from such investments are recognized in profit or loss, unless the dividend clearly represents a
repayment of part of the cost of the investment.
Financial assets measured at fair value through other comprehensive income
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent
changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
ii)
Non-derivative financial liabilities
The Group initially recognizes debt issued and subordinated liabilities on the date that they are originated. All other financial
liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument.
A financial liability is derecognized when its contractual obligations are discharged or cancelled or expire.
Financial liabilities are classified into financial liabilities measured at amortized cost and financial liabilities measured at fair
value.
Financial liabilities measured at amortized cost
A financial liability is subsequently measured at amortized cost, using the effective interest method. The Group currently
classifies bank indebtedness, trade and other payables and long-term debt as financial liabilities measured at amortized cost.
Financial liabilities measured at fair value
Financial liabilities at fair value are initially recognized at fair value and are re-measured at each reporting date with any changes
therein recognized in net earnings. The Group currently classifies its contingent consideration liability in connection with a
business acquisition as a financial liability measured at fair value.
iii)
Share capital
Common shares
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and stock
options are recognized as a deduction to share capital, net of any tax effects.
When share capital recognized as equity is repurchased, share capital is reduced by the amount equal to weighted average
historical cost of repurchased equity. The excess amount of the consideration paid, which includes directly attributable costs,
net of any tax effects, is recognized as a deduction from retained earnings.
d)
Hedge accounting
Management’s risk strategy is focused on reducing the variability in profit or losses and cash flows associated with exposure to
market risks. Hedge accounting is used to reduce this variability to an acceptable level. The hedges employed by the Group reduce
the currency fluctuation exposures.
On the initial designation of a hedging relationship, the Group formally documents the relationship between the hedging instrument
and the hedged items, including the risk management objectives and strategy in undertaking the hedge transaction, together with
the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the
inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be effective in
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │59
offsetting the changes in the fair value or cash flows of the respective hedged items throughout the period for which the hedge is
designated.
Net investment hedge
The Group designates a portion of its U.S. dollar denominated debt as a hedging item in a net investment hedge. The Group applies
hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the Company’s
functional currency (CAD), regardless of whether the net investment is held directly or through an intermediate parent.
Foreign currency differences arising on the translation of a financial liability designated as a hedge of a net investment in foreign
operations are recognized in other comprehensive income to the extent that the hedge is effective and are presented in the currency
translation differences account within equity. To the extent that the hedge is ineffective, such differences are recognized in income
or loss. When the hedged net investment is disposed of, the relevant amount in the translation reserve is transferred to income or
loss as part of the gain or loss on disposal.
e)
Property and equipment
Property and equipment are accounted for at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and borrowing costs on qualifying assets.
When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major
components) of property and equipment.
Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with
the carrying amount of property and equipment, and are recognized in net income or loss.
Depreciation is based on the cost of an asset less its residual value and is recognized in income or loss over the estimated useful
life of each component of an item of property and equipment.
The depreciation method and useful lives are as follows:
Categories
Basis
Useful lives
Buildings
Straight-line
15 – 40 years
Rolling stock
Primarily straight-line
3 – 20 years
Equipment
Primarily straight-line
5 – 12 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted prospectively, if
appropriate.
Property and equipment are reviewed for impairment in accordance with IAS 36 Impairment of Assets when there are indicators that
the carrying value may not be recoverable.
f)
Intangible assets
i)
Goodwill
Goodwill that arises upon business combinations is included in intangible assets.
Goodwill is not amortized and is measured at cost less accumulated impairment losses.
ii)
Other intangible assets
Intangible assets consist of customer relationships, trademarks, non-compete agreements and information technology.
The Group determines the fair value of the customer relationship intangible assets using the excess earnings model and
internally developed significant assumptions including:
1.
Forecasted revenue attributable to existing customer contracts and relationships;
2.
Estimated annual attrition rate;
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │60
3.
Forecasted operating margins; and
4.
Discount rates
The internally developed assumptions are based on limited observable market information which cause measurement uncertainty,
and the fair value of the customer related intangible assets are sensitive to changes to these assumptions.
Intangible assets that are acquired by the Group and have finite lives are measured at cost less accumulated amortization and
accumulated impairment losses. The Group also has indefinite lived trademark intangible assets which are not amortized.
Intangible assets with finite lives are amortized on a straight-line basis over the following estimated useful lives:
Categories
Useful lives
Customer relationships
5 – 20 years
Trademarks
5 – 20 years
Non-compete agreements
3 – 10 years
Information technology
5 – 7 years
Useful lives are reviewed at each financial year-end and adjusted prospectively, if appropriate.
g)
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
the contract involves the use of an identified asset – this may be specific explicitly or implicitly, and should be physically distinct
or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right,
the asset is not identified;
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use;
and
the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are
most relevant to changing how and for what purpose the asset is used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract
to each lease component on the basis of their relative stand-alone prices.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred, less any lease incentives received.
The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-
line method as this most closely reflects the expected pattern consumption of the future economic benefits. The lease term includes
periods covered by an option to extend if the Group is reasonably certain to exercise that option. In addition, the right-of-use asset
is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that cannot be readily determined, the Group's incremental borrowing
rate. The incremental borrowing rate is a function of the Group’s incremental borrowing rate, the nature of the underlying asset, the
location of the asset and the length of the lease. Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in the
future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase,
extension or termination option.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │61
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use
asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12
months or leases and leases of low-value assets. The Group recognises these lease payments as an expense on a straight-line
basis over the lease term.
h) Impairment
Non-financial assets
The carrying amounts of the Group’s non-financial assets other than inventoried supplies and deferred tax assets are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For goodwill and indefinite useful life assets, the recoverable amount is estimated on December
31 of each year.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (the “cash-generating unit”, or “CGU”). For the purposes of goodwill impairment testing, goodwill acquired in a business
combination is allocated to the group of CGUs (usually a Group’s operating segment), that is expected to benefit from the synergies
of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill
is monitored for internal reporting purposes. The Company performs goodwill impairment testing annually, or more frequently if
events or circumstances indicate the carrying value of a CGU, which is a Group’s operating segment, may exceed the recoverable
amount of the CGU. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset or group of assets. The fair value
less cost to sell is based on market comparable multiples applied to forecasted earnings before financial expenses, income taxes,
depreciation and amortization ("adjusted EBITDA") for the next year, which takes into account financial forecasts approved by senior
management.
The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired,
then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.
Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the
units, if any, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a prorata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized. Impairment losses and impairment reversals are recognized
in income or loss.
i)
Assets held for sale
Non-current assets are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than
through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on
initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognized in
income or loss.
Once classified as held-for-sale, intangible assets and property and equipment are no longer amortized or depreciated.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │62
j)
Employee benefits
i)
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution pension plans are recognized as an employee benefit expense in income or loss in the periods during which
services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a
reduction in future payments is available.
ii)
Defined benefit plans
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in return for their services in the current and prior periods discounting
that amount and deducting the fair value of any plan assets. The discount rate is the yield at the reporting date on AAA, AA or
A credit-rated fixed income securities that have maturity dates approximating the terms of the Group’s obligations and that are
denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a
qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized
asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions
in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any
minimum funding requirements that apply to any plan in the Group.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other
comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for
the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to
the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit
plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service
or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the
settlement of a defined benefit plan when the settlement occurs.
iii)
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or income-sharing plans if
the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee,
and the obligation can be estimated reliably.
iv)
Share-based payment transactions
The grant date fair value of equity share-based payment awards granted to employees is recognized as a personnel expense,
with a corresponding increase in contributed surplus, net of tax, over the period that the employees unconditionally become
entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related
service conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number
of awards that do meet the related service condition at the vesting date.
The fair value of the amount payable to board members in respect of deferred share unit (“DSU”), which were to be settled in
cash, was recognized as an expense with a corresponding increase in liabilities. The liability was remeasured at each reporting
date until settlement. The Group presented mark-to-market (gain) loss on DSUs in personnel expenses.
v)
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and
when the Group recognises costs for a restructuring. If benefits are not expected to be fully settled within 12 months of the end
of the reporting period, then they are discounted.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │63
k) Provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value
of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the unwinding of
the discount is recognized as finance cost.
Self-Insurance
Self-insurance provisions represent the uninsured portion of outstanding claims at year-end. The provision represents an accrual for
estimated future disbursements associated with the self-insured portion for claims filed at year-end and incurred but not reported,
related to cargo loss, bodily injury, worker’s compensation and property damages. The estimates are based on the Group’s historical
experience including settlement patterns and payment trends. The most significant assumptions in the estimation process include
the consideration of historical claim experience, severity factors affecting the amounts ultimately paid, and current and expected
levels of cost per claims. Changes in assumptions and experience could cause these estimates to change significantly in the near
term.
l)
Revenue recognition
The Group’s normal business operations consist of the provision of transportation and logistics services. All revenue relating to
normal business operations is recognized over time in the statement of income. The stage of completion of the service is determined
using the proportion of days completed to date compared to the estimated total days of the service. Revenue is presented net of
trade discounts and volume rebates. Revenue is recognized as services are rendered, when the control of promised services is
transferred to customers in an amount that reflects the consideration the Group expects to be entitled to receive in exchange for
those services measured based on the consideration specified in a contract with the customers. The Group considers the contract
with customers to include the general transportation service agreement and the individual bill of ladings with customers.
Based on the evaluation of the control model, certain businesses, mainly in the Less-Than-Truckload segment, act as the principal
within their revenue arrangements. The affected businesses report transportation revenue gross of associated purchase
transportation costs rather than net of such amounts within the consolidated statements of income.
m) Other operating expenses
Other operating expenses consist primarily of third-party commissions, information technology support and software expenses,
building expenses (including repairs and maintenance, electricity, janitorial & security services and property taxes).
n) Finance income and finance costs
Finance income comprises interest income on funds invested, dividend income and interest. Interest income is recognized as it
accrues in income or loss, using the effective interest method.
Finance costs comprise interest expense on bank indebtedness and long-term debt, unwinding of the discount on provisions and
impairment losses recognized on financial assets (other than trade receivables).
Fair value gains or losses on derivative financial instruments and on contingent considerations, and foreign currency gains and
losses are reported on a net basis as either finance income or cost.
o) Income taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in income or loss except to
the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable income or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │64
extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable
temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the
reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable income will be available against which they can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
p) Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing
the income or loss attributable to common shareholders of the Company by the weighted average number of common shares
outstanding during the period, adjusted for own shares held, if any. Diluted EPS is determined by adjusting the income or loss
attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential common shares, which comprise convertible debentures, warrants, restricted share units
and performance share units and stock options granted to employees.
q) Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating
segments’ operating results are reviewed regularly by the Group’s chief executive officer (“CEO”) to make decisions about resources
to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group’s headquarters), head office
expenses, income tax assets, liabilities and expenses, as well as long-term debt and interest expense thereon.
Sales between the Group’s segments are measured at the exchange amount. Transactions, other than sales, are measured at
carrying value. Segment capital expenditure is the total cost incurred during the period to acquire property and equipment, and
intangible assets other than goodwill.
r) New standards and interpretations adopted during the year
The following new standards, and amendments to standards and interpretations, are effective for the first time for periods beginning
on or after January 1, 2024 and have been applied in preparing these consolidated financial statements
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial Statements (the 2020 amendments), to clarify
the classification of liabilities as current or non-current. On October 31, 2022, the IASB issued Non-current Liabilities with Covenants
(Amendments to IAS 1) (the 2022 amendments), to improve the information a company provides about long-term debt with
covenants. The 2020 amendments and the 2022 amendments (collectively “the Amendments”) are effective for annual periods
beginning on or after January 1, 2024. A company that applies the 2020 amendments early is required to also apply the 2022
amendments. For the purposes of non-current classification, the Amendments removed the requirement for a right to defer
settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must exist at the end of the
reporting period and have substance. The Amendments reconfirmed that only covenants with which a company must comply on or
before the reporting date affect the classification of a liability as current or non-current. Covenants with which a company must
comply after the reporting date do not affect a liability’s classification at that date. The Amendments also clarify how a company
classifies a liability that includes a counterparty conversion option. The Amendments state that: the settlement of a liability includes
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │65
transferring a company’s own equity instruments to the counterparty; and when classifying liabilities as current or non-current a
company can ignore only those conversion options that are recognized as equity.
The adoption of the amendments did not have a material impact on the Group’s consolidated financial statements.
Lease Liability in a Sale and Leaseback
On September 22, 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16). The amendments are
effective for annual periods beginning on or after January 1, 2024. The amendment introduces a new accounting model which
impacts how a seller-lessee accounts for variable lease payments that arise in a sale-and-leaseback transaction. The amendments
clarify that on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising from a
sale-and-leaseback transaction and after initial recognition, the seller-lessee applies the general requirements for subsequent
accounting of the lease liability such that it recognizes no gain or loss relating to the right of use it retains. The amendments need to
be applied retrospectively, which require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered
into since implementation of IFRS 16 in 2019.
The adoption of the amendments did not have a material impact on the Group’s consolidated financial statements.
International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) and Legislation
In May 2023, the International Accounting Standards Board issued International Tax Reform – Pillar Two Model Rules to amend IAS
12. The amendments provide a temporary mandatory exception from the accounting for deferred tax that arises from legislation
implementing the GloBE model rules. Entities are effectively prohibited from recognizing or disclosing information about deferred tax
assets and liabilities related to top-up tax. The Company has applied the mandatory relief from deferred tax accounting for the
impacts of the top-up tax and accounts for it as a current tax when it is incurred.
During fiscal 2024, Pillar Two legislation was enacted or substantially enacted in certain jurisdictions in which the Company operates.
The Company performed an assessment of its potential exposure to Pillar Two income taxes based on recent information available
and determined that Pillar Two effective tax rates in most of the jurisdictions in which the Company operates are above 15%.
However, there are a limited number of jurisdictions where the transitional safe harbor relief does not apply, and the Pillar Two
effective tax rate is below 15%.
The Company did not experience a material impact in fiscal 2024 and does not expect, at this time, that there would be material
Pillar Two income tax impacts in those jurisdictions in future periods.
New standards and interpretations not yet adopted
The following new standards are not yet effective for the year ended December 31, 2024, and have not been applied in preparing
these consolidated financial statements:
Presentation and Disclosure in Financial Statements – IFRS 18
On April 9, 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial
performance. IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1
unchanged. IFRS 18 applies for annual reporting periods beginning on or after January 1, 2027. Earlier application is permitted. The
new Accounting Standard introduces significant changes to the structure of a company’s income statement, more discipline and
transparency in presentation of management's own performance measures (commonly referred to as 'non-GAAP measures,') and
less aggregation of items into large, single numbers. The main impacts of the new Accounting Standard include:
introducing a newly defined ‘operating profit’ subtotal and a requirement for all income and expenses to be allocated between
three new distinct categories based on a company’s main business activities (i.e. operating, investing and financing);
requiring disclosure about management performance measures (MPMs); and
adding new principles for aggregation and disaggregation of information
The extent of the impact of adoption of the amendments has not yet been determined.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │66
4.
Segment reporting
The Group operates within the transportation and logistics industry in the United States, Canada and Mexico in different reportable
segments, as described below. The reportable segments are managed independently as they require different technology and capital
resources. For each of the operating segments, the Group’s CEO reviews internal management reports.
In the second quarter of fiscal 2024, it was determined that Package and Courier operating segment should be aggregated with the
Canadian Less-Than-Truckload and U.S. Less-Than-Truckload operating segments, forming the Less-Than-Truckload reportable
segment. Comparative information has been recast to be consistent with current reportable segments.
The following summary describes the operations in each of the Group’s reportable segments:
Less-Than-Truckload (a): Pickup, consolidation, transport and delivery of smaller loads.
Truckload (b):
Full loads carried directly from the customer to the destination using a closed van or specialized equipment to
meet customers’ specific needs. Includes expedited transportation, flatbed, tank, container and dedicated
services.
Logistics:
Asset-light logistics services, including brokerage, freight forwarding and transportation management, as well as
small package parcel delivery.
(a)
The Less-Than-Truckload reporting segment represents the aggregation of the Canadian Less-Than-Truckload, U.S. Less-Than-Truckload and
Package and Courier operating segments. The aggregation of the segment was analyzed using management’s judgment in accordance with IFRS
8. The operating segments were determined to be similar, amongst others, with respect to the nature of services offered and the methods used to
distribute their services. Additionally, they have similar economic characteristics with respect to long-term expected gross margin, levels of capital
invested and market place trends.
(b)
The Truckload reporting segment represented the aggregation of the Canadian Conventional Truckload and Specialized Truckload operating
segments. The aggregation of the segment was analyzed using management’s judgment in accordance with IFRS 8. The operating segments were
determined to be similar, amongst others, with respect to the nature of services offered and the methods used to distribute their services. Additionally,
they have similar economic characteristics with respect to long-term expected gross margin, levels of capital invested and market place trends.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment operating
income or loss. This measure is included in the internal management reports that are reviewed by the Group’s CEO and refers to
“Operating income” in the consolidated statements of income. Segment’s operating income or loss is used to measure performance as
management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that
operate within these industries.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │67
Less-
Than-
Truckload(2)
Truckload
Logistics
Corporate
Eliminations(2)
Total
2024
Revenue(1)
3,085,727
2,551,540
1,720,976
-
(53,617 )
7,304,626
Fuel surcharge(1)
617,208
385,765
100,735
-
(11,504 )
1,092,204
Total revenue(1)
3,702,935
2,937,305
1,821,711
-
(65,121 )
8,396,830
Operating income (loss)
361,235
252,434
182,364
(77,071 )
-
718,962
Selected items:
Materials and services
expenses
1,541,476
1,511,418
1,216,026
(32,665 )
(65,120 )
4,171,135
Personnel expenses
1,360,982
783,894
267,569
83,870
-
2,496,315
Other operating expenses
222,619
94,835
95,438
22,594
-
435,486
Depreciation and
amortization
213,524
307,244
60,419
882
-
582,069
(Loss) gain, net of
impairment on sale of
assets held for sale
(2,549 )
2,321
36
-
-
(192 )
Intangible assets
396,533
1,491,373
734,736
309
-
2,622,951
Total assets
2,618,714
3,374,010
1,098,617
54,503
-
7,145,844
Total liabilities
802,778
813,350
390,525
2,466,034
(118 )
4,472,569
Additions to property
and equipment
188,055
196,596
7,920
730
-
393,301
2023
Revenue(1)
3,236,267
1,625,592
1,604,878
-
(49,851 )
6,416,886
Fuel surcharge(1)
712,390
310,446
92,138
-
(10,693 )
1,104,281
Total revenue(1)
3,948,657
1,936,038
1,697,016
-
(60,544 )
7,521,167
Operating income (loss)
424,789
237,393
160,112
(64,659 )
-
757,635
Selected items:
Materials and services
expenses
1,700,911
992,788
1,194,534
(21,843 )
(60,544 )
3,805,846
Personnel expenses
1,377,596
473,948
191,146
66,932
-
2,109,622
Other operating expenses
259,603
55,420
103,715
16,013
-
434,751
Depreciation and
amortization
198,754
194,761
47,914
546
-
441,975
Loss on sale of
land and buildings
(35 )
(5 )
-
-
-
(40 )
Gain, net of
impairment on sale of
assets held for sale
10,546
3,949
226
-
-
14,721
Loss on sale of business
-
-
-
(3,011 )
-
(3,011 )
Intangible assets
378,623
857,666
782,923
89
-
2,019,301
Total assets
2,688,854
2,004,163
1,140,174
450,429
-
6,283,620
Total liabilities
878,751
462,812
336,875
2,013,900
(128 )
3,692,210
Additions to property
and equipment
239,327
115,048
5,561
311
-
360,247
(1) Includes intersegment revenue and intersegment fuel surcharge, which are eliminated in the consolidated results and are not disclosed by reportable
segment due to the non-material amounts.
(2) Recasted for changes in aggregation in the current year. Specifically, “Package and Courier” was presented separately in previous years is now aggregated
within “Less-Than-Truckload”. The remaining amounts remain the same, except for resultant changes to the Eliminations.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │68
Geographical information
Revenue is attributed to geographical locations based on the origin of service’s location.
Less-
Than-
Truckload(1)
Truckload
Logistics
Eliminations(1)
Total
2024
Canada
1,162,733
1,159,562
258,489
(37,224 )
2,543,560
United States
2,540,202
1,777,743
1,563,222
(27,897 )
5,853,270
Total
3,702,935
2,937,305
1,821,711
(65,121 )
8,396,830
2023
Canada
1,188,635
1,139,272
271,136
(31,807 )
2,567,236
United States
2,760,022
796,766
1,425,880
(28,737 )
4,953,931
Total
3,948,657
1,936,038
1,697,016
(60,544 )
7,521,167
(1) Recasted for changes in aggregation in the current year. Specifically, “Package and Courier” was presented separately in previous years is now aggregated
within “Less-Than-Truckload”. The remaining amounts remain the same, except for resultant changes to the Eliminations.
Segment assets are based on the geographical location of the assets.
As at
As at
December 31, 2024
December 31, 2023
Property and equipment, right-of-use assets and intangible assets
Canada
2,213,562
2,208,595
United States
3,837,224
2,651,808
6,050,786
4,860,403
5.
Business combinations
a)
Business combinations
In line with the Group’s growth strategy, the Group acquired eleven businesses during 2024, of which Daseke Inc. ("Daseke") was
considered material. All other acquisitions were not considered to be material. These transactions were concluded in order to add
density in the Group’s current network and further expand value-added services.
On April 1, 2024, the Group completed the acquisition of Daseke, Inc. Daseke is reported in the Truckload segment. The purchase
price for the business acquisition totaled $817.0 million, which was funded by a $500.0 million term loan obtained and the remaining
balance was drawn from cash on hand, and the Group absorbed $314.7 million of equipment financing debt in the acquisition. During
the year ended December 31, 2024, the business contributed revenue and net loss of $1,052.0 million and $20.7 million, including
severances and other restructuring costs from the business acquisition of $19.7 million recorded in the corporate segment,
respectively since the acquisition.
Had the Group acquired Daseke on January 1, 2024, as per management’s best estimates, the revenue and net loss for this entity
would have been $1,408.8 million and $19.2 million, including severances and other restructuring costs from the business acquisition
of $19.7 million, respectively. In determining these estimated amounts, management assumed that the fair value adjustments that
arose on the date of acquisition would have been the same had the acquisitions occurred on January 1, 2024 and adjusted for
interest, based on the purchase price and average borrowing rate of the Group, and income tax expense based on the effective tax
rate of the entity.
During the year ended December 31, 2024, the non-material businesses, in aggregate, contributed revenue and net loss of $148.4
million and $1.1 million respectively since the acquisitions.
Had the Group acquired these non-material businesses on January 1, 2024, as per management’s best estimates, the revenue and
net income for these entities would have been $236.9 million and $7.4 million, respectively. In determining these estimated amounts,
management assumed that the fair value adjustments that arose on the date of acquisition would have been the same had the
acquisitions occurred on January 1, 2024 and adjusted for interest, based on the purchase price and average borrowing rate of the
Group, and income tax expenses based on the effective tax rate of the entities.
During the year ended December 31, 2024, transaction costs of $0.5 million have been expensed in other operating expenses in
the consolidated statements of income in relation to the above-mentioned business acquisitions.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │69
Of the goodwill and intangible assets acquired through business combinations in 2024, $1.0 million was deductible for tax purposes.
As of the reporting date, the Group had not completed the determination of the fair value of assets acquired and liabilities assumed
of the 2024 acquisitions. Information to confirm the fair value of certain assets and liabilities is still to be obtained for these
acquisitions. As the Group obtains more information, the allocation will be completed.
The table below presents the determination of the fair value of assets acquired and liabilities assumed based on the best information
available to the Group to date :
Identifiable assets acquired and liabilities
assumed
Note
Daseke
Others
December 31,
2024
Cash and cash equivalents
46,242
33,222
79,464
Trade and other receivables
173,389
32,563
205,952
Inventoried supplies and prepaid expenses
20,997
4,844
25,841
Property and equipment
8
523,892
66,191
590,083
Right-of-use assets
9
107,676
9,161
116,837
Intangible assets
10
202,290
52,104
254,394
Other assets
3,093
-
3,093
Trade and other payables
(102,133 )
(24,872 )
(127,005 )
Income tax receivable (payable)
8,669
(824 )
7,845
Employee benefits
(194 )
-
(194 )
Provisions
16
(57,923 )
-
(57,923 )
Other non-current liabilities
(213 )
-
(213 )
Long-term debt
13
(314,670 )
-
(314,670 )
Lease liabilities
14
(107,676 )
(9,161 )
(116,837 )
Deferred tax liabilities
17
(125,796 )
(14,611 )
(140,407 )
Total identifiable net assets
377,643
148,617
526,260
Total consideration transferred
816,958
224,022
1,040,980
Goodwill
10
439,315
75,405
514,720
Cash
816,958
220,469
1,037,427
Contingent consideration
-
3,553
3,553
Total consideration transferred
816,958
224,022
1,040,980
The valuation techniques used for measuring the fair value of land and buildings ($54.0 million), customer relationships ($109.1
million) and trademarks ($92.8 million) acquired regarding Daseke were as follows:
Assets acquired
Valuation technique
Key inputs
Land and buildings
Market comparison technique and cost technique: The valuation
model considers market prices for comparable sites, when
available, and considers depreciated replacement cost, which
reflects adjustments for physical deterioration, when
appropriate.
- Market prices for comparable sites
- Average rebuild cost
Customer relationships Excess earnings method: The valuation model considers the
present value of net cash flows expected to be generated by the
customer relationships, by excluding any cash flows related to
contributory assets.
- Forecasted revenue attributable to
existing customers and relationships
- Annual attrition rate
- Forecasted operating margin
- Discount rate
Trademarks
Relief from royalty method: The valuation model considers the
discounted estimated royalty payments that are expected to be
avoided as a result of the trademarks being owned.
- Forecasted revenue associated with
the trademarks
- Royalty rate
- Discount rate
The fair values measured on the amounts regarding Daseke are on a provisional basis, mainly regarding tangible assets and current
and deferred tax liabilities. This is mainly due to pending completion and review of independent valuations. If new information
obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition identifies
adjustments to the above amounts, or any additional provisions that existed at the date of acquisition, then the accounting for the
acquisition will be revised.
The trade receivables comprise gross amounts due of $208.8 million, of which $2.8 million was expected to be uncollectible at the
acquisition date.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │70
In line with the Group’s growth strategy, the Group acquired twelve businesses during 2023, of which JHT Holdings, Inc. was
considered material. All other acquisitions were not considered to be material. These transactions were concluded in order to add
density in the Group’s current network and further expand value-added services.
On August 16, 2023, the Group completed the acquisition of JHT Holdings, Inc. ("JHT"), a leading asset light logistics and
transportation provider in North America for Class 6-8 truck manufacturers, which included a joint-venture that is equity-accounted
and included in other assets. The purchase price for this business acquisition totaled $309.3 million, which was funded by a mixture
of cash on hand and the remaining balance was drawn from the currently existing unsecured revolving credit facility. During the year
ended December 31, 2023, the business contributed revenue and net income of $225.3 million and $18.0 million, respectively since
the acquisition.
Had the Group acquired JHT on January 1, 2023, as per management’s best estimates, the revenue and net income for this entity
would have been $589.5 million and $50.5 million, respectively. In determining these estimated amounts, management assumed
that the fair value adjustments that arose on the date of acquisition would have been the same had the acquisition occurred on
January 1, 2023 and adjusted for interest, based on the purchase price and average borrowing rate of the Group, and income tax
expense based on the effective tax rate of the entity.
During the year ended December 31, 2023, the non-material businesses, in aggregate, contributed revenue and net loss of $178.3
million and $6.3 million respectively since the acquisitions.
Had the Group acquired these non-material businesses on January 1, 2023, as per management’s best estimates, the revenue and
net income for these entities would have been $333.2 million and $9.1 million, respectively. In determining these estimated amounts,
management assumed that the fair value adjustments that arose on the date of acquisition would have been the same had the
acquisitions occurred on January 1, 2023 and adjusted for interest, based on the purchase price and average borrowing rate of the
Group, and income tax expenses based on the effective tax rate of the entities.
During the year ended December 31, 2023, transaction costs of $0.9 million have been expensed in other operating expenses in
the consolidated statements of income in relation to the above-mentioned business acquisitions.
The trade receivables comprise gross amounts due of $80.0 million, of which $2.1 million was expected to be uncollectible at the
acquisition date.
Of the goodwill and intangible assets acquired through business combinations in 2023, $18.9 million was deductible for tax purposes.
The table below presents the determination of the fair value of assets acquired and liabilities assumed of the 2023 acquisitions as
at December 31, 2023:
Identifiable assets acquired and liabilities
assumed
Note
JHT
Others
December 31,
2023
Cash and cash equivalents
5,709
11,873
17,582
Trade and other receivables
38,250
39,650
77,900
Inventoried supplies and prepaid
expenses
10,976
5,897
16,873
Property and equipment
8
65,489
174,850
240,339
Right-of-use assets
9
5,385
25,609
30,994
Intangible assets
10
198,659
80,807
279,466
Other assets
23,887
115
24,002
Trade and other payables
(35,221 )
(28,884 )
(64,105 )
Income tax (payable) receivable
(1,682 )
729
(953 )
Provisions
16
(19,919 )
-
(19,919 )
Other non-current liabilities
(444 )
(44 )
(488 )
Long-term debt
14
(4,808 )
-
(4,808 )
Lease liabilities
14
(5,385 )
(25,609 )
(30,994 )
Deferred tax liabilities
17
(55,367 )
(32,375 )
(87,742 )
Total identifiable net assets
225,529
252,618
478,147
Total consideration transferred
309,304
350,451
659,755
Goodwill
83,775
97,833
181,608
Cash
309,304
336,979
646,283
Contingent consideration
-
13,472
13,472
Total consideration transferred
309,304
350,451
659,755
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │71
b)
Goodwill
The goodwill is attributable mainly to the premium of an established business operation with a good reputation in the transportation
industry, and the synergies expected to be achieved from integrating the acquired entity into the Group’s existing business.
The goodwill arising in the business combinations has been allocated to operating segments as indicated in the table below, which
represents the lowest level at which goodwill is monitored internally.
Operating segment
Reportable segment
December 31, 2024
December 31, 2023
Canadian Less-Than-Truckload
Less-Than-Truckload
115
9,142
U.S. Less-Than-Truckload
Less-Than-Truckload
31,058
3,376
Canadian Truckload
Truckload
12,980
16,017
Specialized Truckload
Truckload
468,618
43,080
Logistics
Logistics
1,949
109,993
514,720
181,608
c)
Adjustment to the provisional amounts for Daseke business combination
The interim financial statements of 2024 included details of the Group’s business combinations and set out provisional fair values
relating to the consideration and net assets of Daseke. This acquisition was accounted for under the provisions of IFRS 3. As
required by IFRS 3, the provisional fair values have been reassessed in the fourth quarter in light of information obtained during the
measurement period following the acquisition. These amounts remain provisional as at December 31, 2024 for the reasons
mentioned previously. Consequently, the fair value of certain assets acquired, and liabilities assumed of Daseke have been adjusted
retrospective to the date of acquisition as follows:
Provisional
fair value included
in the interim
Measurement
Reassessed
financial statements
period adjustments
fair value
Cash and cash equivalents
46,242
-
46,242
Trade and other receivables
173,389
-
173,389
Inventoried supplies and prepaid expenses
32,611
(11,614 )
20,997
Property and equipment
577,825
(53,933 )
523,892
Right-of-use assets
113,385
(5,709 )
107,676
Intangible assets
60,233
142,057
202,290
Other assets
3,093
-
3,093
Trade and other payables
(100,716 )
(1,417 )
(102,133 )
Income tax (payable) receivable
(58 )
8,727
8,669
Employee benefits
(194 )
-
(194 )
Provisions
(54,681 )
(3,242 )
(57,923 )
Other non-current liabilities
(213 )
-
(213 )
Long-term debt
(314,671 )
1
(314,670 )
Lease liabilities
(113,385 )
5,709
(107,676 )
Deferred tax liabilities
(96,434 )
(29,362 )
(125,796 )
Total identifiable net assets
326,426
51,217
377,643
Total consideration transferred
816,958
-
816,958
Goodwill
490,532
(51,217 )
439,315
Cash
816,958
-
816,958
Total consideration transferred
816,958
-
816,958
d)
Contingent consideration
The contingent consideration for the year ended December 31, 2024 relates to non-material business acquisitions and is recorded
in the original determination of the fair value of assets acquired and liabilities assumed. These considerations are contingent on
achieving specified earning levels in future periods. The maximum amount payable is $4.5 million in less than one year, and $2.9
million in more than one year.
The contingent consideration for the year ended December 31, 2023 related to non-material business acquisitions and was recorded
in the original determination of the fair value of assets acquired and liabilities assumed. These considerations were contingent on
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │72
achieving specified earning levels in future periods. The maximum amount payable was $13.5 million in less than one year, and $0.8
million in more than one year.
The contingent consideration balance at December 31, 2024 is $7.8 million (December 31, 2023 - $13.2 million) and is presented in
other financial liabilities on the consolidated statements of financial position.
e)
Adjustment to the provisional amounts of prior year’s business combinations
The 2023 annual consolidated financial statements included details of the Group’s business combinations and set out provisional
fair values relating to the consideration paid and net assets acquired of various acquisitions. These acquisitions were accounted for
under the provisions of IFRS 3.
As required by IFRS 3, the provisional fair values have been reassessed in light of information obtained during the measurement
period following the acquisition. Consequently, the fair value of certain assets acquired, and liabilities assumed of the acquisitions
in fiscal 2023 have been adjusted and finalized in 2024. No material adjustments were required to the provisional fair values for
these prior year's business combinations.
6.
Trade and other receivables
December 31, 2024
December 31, 2023
Trade receivables, net of expected credit loss
893,659
846,681
Other receivables
33,995
48,090
927,654
894,771
The Group’s exposure to credit and currency risks related to trade and other receivables is disclosed in note 25 a) and d).
Trade receivables as at December 31, 2024 include $31.5 million of in-transit revenue balances (December 31, 2023 – $32.4 million).
Due to the short-term nature of the transportation and logistics services provided by the Group, these services are expected to be
completed within the week following the year-end.
7.
Additional cash flow information
Net change in non-cash operating working capital
2024
2023
Trade and other receivables
145,432
224,121
Inventoried supplies
8,101
6,533
Prepaid expenses
12,125
(11,648)
Trade and other payables
(154,092)
(112,375)
11,566
106,631
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │73
8.
Property and equipment
Land and
Rolling
Note
buildings
stock
Equipment
Total
Cost
Balance at December 31, 2022
1,166,990
1,501,548
204,788
2,873,326
Additions through business combinations
5
145,204
91,870
3,265
240,339
Other additions
77,516
265,687
17,044
360,247
Disposals
(398 )
(136,028 )
(529 )
(136,955 )
Reclassification to assets held for sale
(13,325 )
(19,741 )
-
(33,066 )
Reclassification between categories*
-
36,319
(36,319 )
-
Effect of movements in exchange rates
7,990
18,545
4,122
30,657
Balance at December 31, 2023
1,383,977
1,758,200
192,371
3,334,548
Additions through business combinations
5
115,405
465,400
9,278
590,083
Other additions
68,580
295,452
29,269
393,301
Disposals
(6,008 )
(162,983 )
(19,426 )
(188,417 )
Reclassification to assets held for sale
(30,974 )
(44,961 )
-
(75,935 )
Effect of movements in exchange rates
(38,902 )
(67,244 )
(14,984 )
(121,130 )
Balance at December 31, 2024
1,492,078
2,243,864
196,508
3,932,450
Accumulated Depreciation
Balance at December 31, 2022
83,140
543,272
114,959
741,371
Depreciation
21,841
210,523
17,471
249,835
Disposals
(92 )
(78,584 )
(410 )
(79,086 )
Reclassification to assets held for sale
(1,003 )
(4,947 )
-
(5,950 )
Reclassification between categories*
-
11,089
(11,089 )
-
Effect of movements in exchange rates
1,515
8,879
2,512
12,906
Balance at December 31, 2023
105,401
690,232
123,443
919,076
Depreciation
25,222
286,817
20,541
332,580
Disposals
(5,829 )
(107,464 )
(17,169 )
(130,462 )
Reclassification to assets held for sale
(2,237 )
(28,226 )
-
(30,463 )
Effect of movements in exchange rates
(5,795 )
(34,270 )
(9,303 )
(49,368 )
Balance at December 31, 2024
116,762
807,089
117,512
1,041,363
Net carrying amounts
At December 31, 2023
1,278,576
1,067,968
68,928
2,415,472
At December 31, 2024
1,375,316
1,436,775
78,996
2,891,087
* Reclassification between categories had no impact on the depreciation of the reclassified property and equipment
As at December 31, 2024, $0.5 million is included in trade and other payables for the purchases of property and equipment (December
31, 2023 – nil).
Security
As at December 31, 2024, certain rolling stock are pledged as security for conditional sales contracts, with a carrying amount of $246.1
million, including additions through business combinations (December 31, 2023 - $89.6 million) (see note 13).
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │74
9.
Right-of-use assets
Land and
Rolling
Note
buildings
stock
Equipment
Total
Cost
Balance at December 31, 2022
528,791
252,043
3,797
784,631
Other additions
74,580
79,690
948
155,218
Additions through business combinations
5
15,033
15,961
-
30,994
Derecognition*
(39,674 )
(62,276 )
(971 )
(102,921 )
Effect of movements in exchange rates
9,629
4,940
40
14,609
Balance at December 31, 2023
588,359
290,358
3,814
882,531
Other additions
116,440
90,876
712
208,028
Additions through business combinations
5
75,086
40,297
1,454
116,837
Derecognition*
(41,580 )
(66,563 )
(417 )
(108,560 )
Effect of movements in exchange rates
(37,320 )
(23,076 )
(94 )
(60,490 )
Balance at December 31, 2024
700,985
331,892
5,469
1,038,346
Depreciation
Balance at December 31, 2022
286,256
114,971
1,764
402,991
Depreciation
66,877
64,340
895
132,112
Derecognition*
(28,074 )
(56,723 )
(971 )
(85,768 )
Effect of movements in exchange rates
5,456
2,089
21
7,566
Balance at December 31, 2023
330,515
124,677
1,709
456,901
Depreciation
82,112
85,897
1,496
169,505
Derecognition*
(29,960 )
(62,520 )
(350 )
(92,830 )
Effect of movements in exchange rates
(21,506 )
(10,387 )
(85 )
(31,978 )
Balance at December 31, 2024
361,161
137,667
2,770
501,598
Net carrying amounts
At December 31, 2023
257,844
165,681
2,105
425,630
At December 31, 2024
339,824
194,225
2,699
536,748
* Derecognized right-of-use assets include negotiated asset purchases and extinguishments resulting from accidents as well as fully amortized or end of
term right-of-use assets.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │75
10.
Intangible assets
Other intangible assets
Non-
Customer
Trademarks
compete
Information
Note
Goodwill
relationships
and other
agreements
technology
Total
Cost
Balance at December 31, 2022
1,359,345
513,697
42,680
20,007
35,122
1,970,851
Additions through business
combinations
5
181,608
244,574
27,127
5,556
2,209
461,074
Other additions
-
-
-
-
2,758
2,758
Extinguishments
-
(7,203 )
(7,820 )
(2,524 )
(1,029 )
(18,576 )
Effect of movements in exchange rates
21,176
6,127
685
280
245
28,513
Balance at December 31, 2023
1,562,129
757,195
62,672
23,319
39,305
2,444,620
Additions through business
combinations
5
514,720
153,576
96,510
3,674
634
769,114
Other additions
-
-
-
-
6,274
6,274
Extinguishments
-
-
(4,432 )
(1,515 )
(3,340 )
(9,287 )
Effect of movements in
exchange rates
(80,040 )
(25,215 )
(2,364 )
(1,223 )
(1,334 )
(110,176 )
Balance at December 31, 2024
1,996,809
885,556
152,386
24,255
41,539
3,100,545
Amortization and impairment losses
Balance at December 31, 2022
78,012
244,252
27,050
10,130
19,297
378,741
Amortization
-
46,629
5,461
4,099
3,839
60,028
Extinguishments
-
(7,203 )
(7,820 )
(2,524 )
(1,029 )
(18,576 )
Effect of movements in exchange rates
1,040
3,150
428
168
340
5,126
Balance at December 31, 2023
79,052
286,828
25,119
11,873
22,447
425,319
Amortization
-
61,406
8,408
3,869
6,301
79,984
Extinguishments
-
-
(4,432 )
(1,515 )
(3,340 )
(9,287 )
Effect of movements in
exchange rates
(3,851 )
(12,100 )
(931 )
(579 )
(961 )
(18,422 )
Balance at December 31, 2024
75,201
336,134
28,164
13,648
24,447
477,594
Net carrying amounts
At December 31, 2023
1,483,077
470,367
37,553
11,446
16,858
2,019,301
At December 31, 2024
1,921,608
549,422
124,222
10,607
17,092
2,622,951
In 2024, the Group assessed the useful lives of three trademarks from the Daseke business combination as indefinite in the aggregate
amount of $45.7 million. Brand recognition as well as management's intent to keep the brands indefinitely were decisive factors leading
to this conclusion. At December 31 2023, there were no material indefinite life intangible assets.
At December 31, 2024 and 2023, the Group performed its annual goodwill impairment tests for operating segments which represent the
lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of
goodwill allocated to each unit are as follows:
Reportable segment / operating segment
December 31,
2024
December 31,
2023
Less-Than-Truckload
Package and Courier
167,264
182,120
Canadian Less-Than-Truckload
125,484
140,402
U.S. Less-Than-Truckload
34,802
3,375
Truckload
Canadian Truckload
101,727
109,593
Specialized Truckload
1,055,530
599,292
Logistics
436,801
448,295
1,921,608
1,483,077
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │76
The results as at December 31, 2024 and 2023 determined that the recoverable amounts of the Group’s operating segments exceeded
their respective carrying amounts.
The recoverable amounts of the Group’s operating segments were determined using the value in use approach. The value in use
methodology is based on discounted future cash flows. Management believes that the discounted future cash flows method is appropriate
as it allows more precise valuation of specific future cash flows.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rates as follows:
Reportable segment / operating segment
2024
2023
Less-Than-Truckload
Package and Courier
11.8 %
12.0 %
Canadian Less-Than-Truckload
11.8 %
12.0 %
U.S. Less-Than-Truckload
11.2 %
11.4 %
Truckload
Canadian Truckload
14.2 %
14.4 %
Specialized Truckload
13.0 %
13.2 %
Logistics
11.2 %
11.4 %
The discount rates were estimated based on past experience, and industry average weighted average cost of capital, which were based
on a possible range of debt leveraging of 40.0% (2023 – 40.0%) at a market interest rate of 9.4% (2023 – 10.5%).
First year cash flows were projected based on forecasted cash flows which are based on previous operating results adjusted to reflect
current economic conditions. For a further 4-year period, cash flows were extrapolated using an average growth rate of 2.5% (2023 –
2.0%) in revenues and margins were adjusted where deemed appropriate. The terminal value growth rate was 2.0% (2023 – 2.0%). The
values assigned to the key assumptions represent management’s assessment of future trends in the transportation industry and were
based on both external and internal sources (historical data).
11.
Investments
As at
As at
December 31, 2024
December 31, 2023
Level 1 investments
4,669
31,557
Level 2 investments
4,276
4,339
Level 3 investments
13,152
14,313
22,097
50,209
The Group elected to designate all of its investments as at fair value through OCI.
During the year ended December 31, 2024, the Group sold Level 1 investments for proceeds of $19.1 million resulting in a realized loss,
net of tax, of $7.2 million on equity securities transferred from OCI to retained earnings.
12.
Trade and other payables
As at
As at
December 31, 2024
December 31, 2023
Trade payables and accrued expenses
430,585
450,638
Personnel accrued expenses
170,621
187,522
Dividend payable
37,984
33,776
639,190
671,936
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 25.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │77
13.
Long-term debt
This note provides information about the contractual terms of the Group’s interest-bearing long-term debt, which is measured at amortized
cost. For more information about the Group’s exposure to interest rate, foreign exchange currency and liquidity, see note 25.
As at
As at
December 31, 2024
December 31, 2023
Non-current liabilities
Unsecured revolving facilities
275,054
22,166
Unsecured term loan
199,609
-
Unsecured senior notes
1,652,742
1,652,049
Conditional sales contracts
178,052
31,278
Other long-term debt
3,971
4,338
2,309,428
1,709,831
Current liabilities
Current portion of unsecured debenture
-
151,023
Current portion of conditional sales contracts
93,087
22,974
Current portion of other long-term debt
366
354
93,453
174,351
Terms and conditions of outstanding long-term debt are as follows:
2024
2023
Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
Unsecured revolving facility
a
CAD
CORRA + 1.50%
2026
370,000
255,812
30,400
21,239
Unsecured revolving facility
a
USD
SOFR + 1.50%
2026
19,310
19,242
1,000
927
Unsecured term loan
a
USD
6.07%
2027
200,000
199,609
-
-
Unsecured debenture
b
CAD
3.32% - 4.22%
2024
-
-
200,000
151,023
Unsecured senior notes
c
USD
2.89% - 5.64%
2026- 2038
255,000
254,631
255,000
254,376
Unsecured senior notes
c
USD
3.15% - 3.50%
2029- 2036
500,000
499,273
500,000
499,100
Unsecured senior notes
c
USD
2.87% - 3.55%
2029- 2034
200,000
199,719
200,000
199,665
Unsecured senior notes
c
USD
3.50% - 3.80%
2032- 2037
200,000
199,846
200,000
199,808
Unsecured senior notes
c
USD
6.27%- 7.11%
2028- 2043
500,000
499,273
500,000
499,100
Conditional sales contracts
d
Mainly CAD
1.45% - 7.40%
2025-2027
390,766
271,139
71,847
54,252
Other long-term debt
USD
3.04 %
2027
4,337
4,337
4,692
4,692
2,402,881
1,884,182
The table below summarizes changes to the long-term debt:
Note
2024
2023
Balance at beginning of year
1,884,182
1,315,757
Proceeds from long-term debt
500,000
575,000
Business combinations
5
314,670
4,808
Repayment of long-term debt
(536,700 )
(41,371 )
Net increase in revolving facilities
261,783
25,242
Amortization of deferred financing fees
2,170
1,337
Effect of movements in exchange rates
(159,433 )
41,322
Effect of movements in exchange rates - debt
designated as net investment hedge
136,209
(37,913 )
Balance at end of year
2,402,881
1,884,182
a)
Unsecured revolving credit facility and unsecured term loan
On March 22, 2024, the Group amended its revolving credit facility, including the addition of a $500.0 million term loan and an extension.
Under the new amendment, the revolving credit facility was extended to March 22, 2027. The new agreement also provides the Company
with a non-revolving term loan for $500.0 million maturing in 1 to 3 years, $100.0 million each in year one and year two and $300.0 million
in year three. Based on certain ratios, the interest rate on the term loan is the sum of SOFR, plus an applicable margin, which can vary
between 128 basis points and 190 basis points. The applicable margin on the credit facility is 1.65% at December 31, 2024. Deferred
financing fees of $1.3 million were recognized on the increase. The amendment also includes the adoption of the Canadian Interest Rate
Benchmark Reform, resulting in the replacement of the banker’s acceptance rate in Canada with the Canadian Overnight Repo Rate
Average (CORRA), a measure of the cost of overnight general collateral funding in Canadian Dollars using Government of Canada
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │78
treasury bills and bonds as collateral for repurchase transactions. The change did not have a material impact on the Group’s financial
statements.
During the year ended December 31, 2024, the Group repaid, without penalty, $300 million of its term loan.
The revolving credit facility is unsecured and can be extended annually. The Group’s revolving facilities have a total size of $904.9 million
(December 31, 2023 - $951.4 million). The agreement provides an additional $175.0 million of credit availability (CAD $245 million and
USD $5 million). The additional credit is available under certain conditions under the Group’s syndicated revolving credit agreement. As
of December 31, 2024, the credit facility’s interest rate on CAD denominated debt was 5.10% (2023 – 6.58%) and on USD denominated
debt was 6.83% (2023 – 6.60%).
The debt issuances described above are subject to certain covenants regarding the maintenance of financial ratios. The Group was in
compliance with these financial covenants at year-end (see note 25(f)).
b)
Unsecured debenture
The unsecured debenture has matured in December 2024 and was carrying an interest rate between 3.32% and 4.22% (2023 – 3.32%
to 4.22%) depending on certain ratios. As of December 31, 2023, the debenture’s effective rate was 3.32%.
c)
Unsecured senior notes
This loan takes the form of senior notes each carrying an interest rate and maturity date as detailed in the table above. These notes may
be prepaid at any time prior to maturity date, in part or in total, at 100% of the principal amount and the make-whole amount determined
at the prepayment date with respect to such principal amount.
On October 13, 2023, the Company received $500 million in proceeds from the issuance of new debts taking the form of unsecured senior
notes consisting of five tranches, with terms from 5 to 20 years and bearing fixed interest rates between 6.27% and 7.11%. Deferred
financing fees of $1.2 million were recognized as a result of the transaction.
On August 21, 2023, the Company received $75 million in proceeds from the issuance of new debts taking the form of unsecured senior
notes consisting of two tranches, $50 million and $25 million, maturing on August 19, 2035 and 2038, bearing fixed interest rates of 5.56%
and 5.64%, respectively. Deferred financing fees of $0.1 million were recognized as a result of the transaction.
The debt issuances described above are subject to certain covenants regarding the maintenance of financial ratios. The Group was in
compliance with these covenants at year-end (see note 25(f)).
d)
Conditional sales contracts
Conditional sales contracts are secured by certain rolling stock having a carrying value of $246.1 million (December 31, 2023 - $89.6
million,) (see note 8).
e)
Principal installments of long-term debt payable during the subsequent years are as follows:
Less than
1 to 5
More than
1 year
years
5 years
Total
Unsecured revolving facilities
-
276,040
-
276,040
Unsecured term loan
-
200,000
-
200,000
Unsecured senior notes
-
665,000
990,000
1,655,000
Conditional sales contracts
93,087
175,327
2,726
271,140
Other long-term debt
366
3,971
-
4,337
93,453
1,320,338
992,726
2,406,517
14.
Lease liabilities
As at
As at
December 31, 2024
December 31, 2023
Current portion of lease liabilities
152,449
127,397
Long-term portion of lease liabilities
421,213
332,761
573,662
460,158
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │79
The table below summarizes changes to the lease liabilities:
2024
2023
Balance at beginning of year
460,158
413,039
Business combinations
5
116,837
30,994
Additions
208,028
155,218
Derecognition*
(15,625 )
(18,635 )
Repayment
(165,350 )
(128,107 )
Effect of movements in exchange rates
(30,386 )
7,649
Balance at end of year
573,662
460,158
* Derecognized lease liabilities include negotiated asset purchases and extinguishments resulting from accidents.
The incremental borrowing rate used on average for 2024 is 5.17% (2023 – 5.44%).
Extension options
Some real estate leases contain extension options exercisable by the Group. Where practicable, the Group seeks to include extension
options in new leases to provide operational flexibility. The Group assesses at the lease commencement date whether it is reasonably
certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there are
significant events or significant changes in circumstances within its control.
The lease liabilities include future lease payments of $7.3 million (2023 – $7.9 million) related to extension options that the Group is
reasonably certain to exercise.
The Group has estimated that the potential future lease payments, should it exercise the remaining extension options, would result in an
increase in lease liabilities of $441.2 million (2023 - $375.0 million).
The Group does not have a significant exposure to termination options and penalties.
Variable lease payments
Some leases contain variable lease payments which are not included in the measurement of the lease liability. These payments include,
amongst others, common area maintenance fees, municipal taxes and vehicle maintenance fees. The expense related to variable lease
payments for the year ended December 31, 2024 was $26.2 million (2023 - $21.9 million).
Sub-leases
The Group sub-leases some of its properties. Income from sub-leasing right-of-use assets for the year ended December 31, 2024 was
$21.1 million (2023 - $15.7 million), presented in “Other operating expenses”.
Contractual cash flows
The total contractual cash flow maturities of the Group’s lease liabilities are as follows:
As at
December 31, 2024
Less than 1 year
176,039
Between 1 and 5 years
361,122
More than 5 years
117,573
654,734
For the year ended December 31, 2024, lease expenses of $41.3 million (2023 – $36.8 million) were recognized in the consolidated
statement of income for leases that either did not meet the definition of a lease under IFRS 16, or were excluded based on practical
expedients applied.
15.
Employee benefits
TFI International pension plans
The Group sponsors defined benefit pension plans for 1 of its employees (2023 – 1).
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │80
The plan is within Canada and includes one unregistered plan. The last pension benefits were paid in 2023 for all the defined benefit
pension plans but one. The defined benefit plans are no longer offered to employees. Therefore, the future obligation will only vary by
actuarial re-measurements.
The Group measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each
year. The most recent actuarial valuation of the pension plans for funding purposes was as of December 31, 2023 and the next required
valuation will be as of December 31, 2024.
TForce Freight pension plans
The pension plans have ongoing benefit accruals and new employees that are eligible to participate in the plans once they satisfy the
participation requirements. The pension plans include 6,124 active participants (2023 - 6,895).
The plans do not have recurring contributions for employees. These plans are still required to fund past service costs and are fully funded
by the Group. The Group measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at
December 31 of each year. The most recent actuarial valuation of the pension plans for funding purposes was as of December 31, 2023
and the next required valuation will be as of December 31, 2024.
Information in the tables that follow pertains to all of the Group’s defined benefit pension plans.
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
Total
plans
plans
Total
Defined benefit obligation
14,938
252,863
267,801
13,999
212,373
226,372
Fair value of plan assets
(366)
(196,979)
(197,345)
(200)
(172,941)
(173,141)
Net defined benefit liability (asset)
14,572
55,884
70,456
13,799
39,432
53,231
Plan assets comprise:
December 31, 2024
December 31, 2023
TFI International pension plans
Equity securities
0 %
14 %
Other
100 %
86 %
TForce Freight pension plans
Equity securities
95 %
95 %
Debt securities
5 %
5 %
All equity and debt securities have quoted prices in active markets. Debt securities are held through mutual funds and primarily hold
investments with ratings of AAA, AA or A, based on Moody’s ratings.
Movement in the present value of the accrued benefit obligation for defined benefit plans:
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
Total
plans
plans
Total
Defined benefit obligation,
beginning of year
13,999
212,373
226,372
20,189
144,110
164,299
Current service cost
474
55,749
56,223
382
58,155
58,537
Interest cost
638
11,007
11,645
787
7,342
8,129
Benefits paid
-
(2,749)
(2,749)
(10,139)
(3,832)
(13,971)
Remeasurement loss (gain) arising from:
- Demographic
-
3,143
3,143
-
1,017
1,017
- Financial assumptions
141
(29,522)
(29,381)
566
7,303
7,869
- Experience
839
2,865
3,704
1,849
(1,760)
89
Settlement
-
-
-
28
29
57
Effect of movements in exchange rates
(1,153)
(3)
(1,156)
337
9
346
Defined benefit obligation, end of year
14,938
252,863
267,801
13,999
212,373
226,372
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │81
Movement in the fair value of plan assets for defined benefit plans:
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
Total
plans
plans
Total
Fair value of plan assets,
beginning of year
200
172,941
173,141
10,214
158,444
168,658
Interest income
8
9,035
9,043
250
8,124
8,374
Employer contributions
(16)
20,000
19,984
37
-
37
Benefits paid
-
(2,749)
(2,749)
(10,139)
(3,832)
(13,971)
Fair value remeasurement
193
(232)
(39)
(165)
11,816
11,651
Plan administration expenses
-
(1,981)
(1,981)
(44)
(1,623)
(1,667)
Effect of movements in exchange rates
(19)
(35)
(54)
47
12
59
Fair value of plan assets, end of year
366
196,979
197,345
200
172,941
173,141
Expense recognized in income or loss:
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
Total
plans
plans
Total
Current service cost
474
55,749
56,223
382
58,155
58,537
Net interest cost
630
1,972
2,602
537
(782)
(245)
Plan administration expenses
-
1,981
1,981
44
1,623
1,667
Net settlement
-
-
-
28
29
57
Pension expense
1,104
59,702
60,806
991
59,025
60,016
Actual return on plan assets
201
8,803
9,004
85
19,940
20,025
Actuarial losses recognized in other comprehensive income:
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
Total
plans
plans
Total
Amount accumulated in retained
11,451
(80,494)
(69,043)
8,871
(75,238)
(66,367)
earnings, beginning of year
Recognized during the year
787
(23,282)
(22,495)
2,580
(5,256)
(2,676)
Amount accumulated in retained
earnings, end of year
12,238
(103,776)
(91,538)
11,451
(80,494)
(69,043)
Recognized during the year, net of tax
580
(17,389)
(16,809)
1,902
(3,918)
(2,016)
The significant actuarial assumptions used (expressed as weighted average):
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
plans
plans
Defined benefit obligation:
Discount rate at
4.7 %
5.7 %
4.8 %
5.0 %
Future salary increases
N/A
2.0 %
3.0 %
2.0 %
Employee benefit expense:
Discount rate at
5.0 %
5.7 %
5.0 %
5.0 %
Rate of return on plan assets at
5.0 %
5.7 %
5.0 %
5.0 %
Future salary increases
N/A
2.0 %
3.0 %
2.0 %
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │82
Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the value
of the liabilities in the defined benefit plans are as follows:
December 31, 2024
December 31, 2023
TFI
TForce
TFI
TForce
International
Freight
International
Freight
pension
pension
pension
pension
plans
plans
plans
plans
Longevity at age 65 for current pensioners
Males
22.4
19.9
22.3
19.1
Females
25.0
21.9
25.0
22.0
Longevity at age 65 for current members aged 45
Males
23.8
21.5
23.8
20.6
Females
26.4
23.4
26.3
23.4
At December 31, 2024 the weighted average duration of the defined benefit obligation was:
TFI International pension plans
9.5
TForce Freight pension plans
16.3
The following table presents the impact of changes of major assumptions on the defined benefit obligation for the years ended:
2024
2023
Increase
Decrease
Increase
Decrease
Discount rate (1% movement)
(38,006)
48,004
(34,520)
44,102
Historical information:
2024
2023
2022
2021
2020
Defined benefit obligation
267,801
226,372
164,299
160,780
35,529
Fair value of plan assets
(197,345)
(173,141)
(168,658)
(93,903)
(21,147)
Deficit (surplus) in the plans
70,456
53,231
(4,359)
66,877
14,382
Experience adjustments arising on plan obligations
(22,534)
8,975
(112,739)
5,823
3,220
Experience adjustments arising on plan assets
(39)
11,651
(27,473)
310
1,129
The Group expects contributions of $84.8 million to be paid to its defined benefit plans in 2025.
Contributions to multi-employer plans
Pursuant to the terms of the purchase agreement for JHT, the Group participates in, under collective bargaining agreements, three multi-
employer benefit plans named :
Central States, Southeast and Soutwest Areas Pension Plan
IAM National Pension Fund
Western Congerence of Teamsters Pension Plan
The Groups contribution under the plans were expensed as incurred and totaled $10.0 million in 2024 (2023 - $3.5 million).
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │83
16.
Provisions
Self-insurance
Other
Total
Balance at December 31, 2022
96,251
79,388
175,639
Additions through business combinations
5
16,364
3,555
19,919
Provisions made during the year
159,276
12,937
172,213
Provisions used during the year
(129,089 )
(52,637 )
(181,726 )
Provisions reversed during the year
(16,705 )
(7,080 )
(23,785 )
Unwind of discount on long-term provisions
(2,666 )
-
(2,666 )
Effect of movements in exchange rates
214
92
306
Balance at December 31, 2023
123,645
36,255
159,900
Additions through business combinations
5
51,813
6,110
57,923
Provisions made during the year
141,645
32,704
174,349
Provisions used during the year
(104,716 )
(40,188 )
(144,904 )
Provisions reversed during the year
(14,553 )
(1,370 )
(15,923 )
Unwind of discount on long-term provisions
(550 )
-
(550 )
Effect of movements in exchange rates
(938 )
(174 )
(1,112 )
Balance at December 31, 2024
196,346
33,337
229,683
As at December 31, 2024
Current provisions
71,894
15,678
87,572
Non-current provisions
124,452
17,659
142,111
196,346
33,337
229,683
As at December 31, 2023
Current provisions
46,940
19,625
66,565
Non-current provisions
76,705
16,630
93,335
123,645
36,255
159,900
Self-insurance provisions represent the uninsured portion of outstanding claims at year-end. The current portion reflects the amount
expected to be paid in the following year. Due to the long-term nature of the liability, the provision has been calculated using a discount
rate of 4.38% (2023 – 3.84%). Other provisions include mainly litigation provisions of $17.7 million (2023 - $16.6 million) and
environmental remediation liabilities of $3.5 million (2023 - $9.7 million). Litigation provisions contain various pending claims for which
management used judgement and assumptions about future events. The outcomes will depend on future claim developments.
17.
Deferred tax assets and liabilities
December 31,
2024
December 31,
2023
Property and equipment
(467,144)
(382,208)
Intangible assets
(163,616)
(127,547)
Right-of-use assets
9,414
8,600
Employee benefits
26,324
26,510
Provisions
77,814
51,458
Tax losses
8,380
10,054
Other
1,307
506
Net deferred tax liabilities
(507,521)
(412,627)
Presented as:
Deferred tax assets
13,724
20,615
Deferred tax liabilities
(521,245)
(433,242)
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │84
Movement in temporary differences during the year:
Balance
Recognized
Recognized
Acquired
Balance
December
31,
in income
directly
in business
December
31,
2023
or loss
in equity
combinations
2024
Property and equipment
(382,208 )
26,249
7,383
(118,568 )
(467,144 )
Intangible assets
(127,547 )
10,318
1,476
(47,863 )
(163,616 )
Long-term debt
8,600
1,190
(415 )
39
9,414
Employee benefits
26,510
8,591
(8,777 )
-
26,324
Provisions
51,458
(957 )
1,983
25,330
77,814
Tax losses
10,054
(1,624 )
(705 )
655
8,380
Other
506
(866 )
1,667
-
1,307
Net deferred tax liabilities
(412,627 )
42,901
2,612
(140,407 )
(507,521 )
Balance
Recognized
Recognized
Acquired
Balance
December
31,
in income
directly
in business
December
31,
2022
or loss
in equity
combinations
2023
Property and equipment
(360,111 )
8,637
(3,233 )
(27,501 )
(382,208 )
Intangible assets
(72,032 )
10,870
(798 )
(65,587 )
(127,547 )
Long-term debt
7,497
660
443
-
8,600
Employee benefits
23,111
5,119
(1,720 )
-
26,510
Provisions
53,818
(5,399 )
(2,303 )
5,342
51,458
Tax losses
5,686
2,953
1,411
4
10,054
Other
892
(396 )
10
-
506
Net deferred tax liabilities
(341,139 )
22,444
(6,190 )
(87,742 )
(412,627 )
As at December 31, 2024, the Company had $148.0 million in capital losses for which no deferred tax assets has been recognized. These
capital losses can be carried forward indefinitely but can only be used against future taxable capital gains. Additionally, as at December
31, 2024, no deferred tax liability was recognized for temporary differences arising from investments in subsidiaries because the Company
controls the decisions affecting the realization of such liabilities and it is probable that the temporary differences will not reverse in the
foreseeable future.
18.
Share capital and other components of equity
The Company is authorized to issue an unlimited number of common shares and preferred shares, issuable in series. Both common and
preferred shares are without par value. All issued shares are fully paid.
The common shares entitle the holders thereof to one vote per share. The holders of the common shares are entitled to receive dividends
as declared from time to time. Subject to the rights, privileges, restrictions and conditions attached to any other class of shares of the
Company, the holders of the common shares are entitled to receive the remaining property of the Company upon its dissolution, liquidation
or winding-up.
The following table summarizes the number of common shares issued:
(in number of shares)
Note
2024
2023
Balance, beginning of year
84,441,733
86,539,559
Repurchase and cancellation of own shares
(545,305)
(2,609,900)
Stock options exercised
20
512,009
512,074
Balance, end of period
84,408,437
84,441,733
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │85
The following table summarizes the share capital issued and fully paid:
2024
2023
Balance, beginning of year
1,107,290
1,089,229
Repurchase and cancellation of own shares
(5,929)
(28,303)
Cash consideration of stock options exercised
13,523
12,777
Ascribed value credited to share capital on stock options exercised, net of tax
2,985
4,402
Issuance of shares on settlement of RSUs and PSUs, net of tax
17,631
29,185
Balance, end of year
1,135,500
1,107,290
Pursuant to the normal course issuer bid (“NCIB”) which began on November 2, 2024 and ends on November 1, 2025, the Company is
authorized to repurchase for cancellation up to a maximum of 7,918,102 of its common shares under certain conditions. As at December
31, 2024, and since the inception of this NCIB, the Company has repurchased and cancelled 295,205 shares.
During 2024, the Company repurchased 545,305 common shares at a weighted average price of $140.50 per share for a total purchase
price of $76.6 million relating to the current and prior NCIB. During 2023, the Company repurchased 2,609,900 common shares at a
weighted average price of $110.36 per share for a total purchase price of $288.0 million relating to a previous NCIB. The excess of the
purchase price paid over the carrying value of the shares repurchased in the amount of $70.7 million (2023 – $259.7 million) was charged
to retained earnings as share repurchase premium.
Dividends
In 2024, the Company declared quarterly dividends amounting to a total of $1.65 per outstanding common share when the dividend was
declared (2023 – $1.45) for a total of $139.5 million (2023 - $124.3 million). On February 15, 2025, the Board of Directors approved a
quarterly dividend of $0.45 per outstanding common share of the Company’s capital, for an expected aggregate payment of $37.9 million
to be paid on April 15, 2025 to shareholders of record at the close of business on March 31, 2025.
19.
Earnings per share
Basic earnings per share
The basic earnings per share and the weighted average number of common shares outstanding have been calculated as follows:
(in thousands of dollars and number of shares)
2024
2023
Net income
422,484
504,877
Issued common shares, beginning of period
84,441,733
86,539,559
Effect of stock options exercised
285,606
340,802
Effect of repurchase of own shares
(175,763)
(972,615)
Weighted average number of common shares
84,551,576
85,907,746
Earnings per share – basic (in dollars)
5.00
5.88
Diluted earnings per share
The diluted earnings per share and the weighted average number of common shares outstanding after adjustment for the effects of all
dilutive common shares have been calculated as follows:
(in thousands of dollars and number of shares)
2024
2023
Net income
422,484
504,877
Weighted average number of common shares
84,551,576
85,907,746
Dilutive effect:
Stock options, restricted share units
and performance share units
691,532
1,147,023
Weighted average number of diluted common shares
85,243,108
87,054,769
Earnings per share - diluted (in dollars)
4.96
5.80
As at December 31, 2024, no stock options were excluded from the calculation of diluted earnings per share (2023 – nil) as none were
deemed to be anti-dilutive.
The average market value of the Company’s shares for purposes of calculating the dilutive effect of stock options was based on quoted
market prices for the period during which the options were outstanding.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │86
20.
Share-based payment arrangements
Stock option plan (equity-settled)
The Company offers a stock option plan for the benefit of certain of its employees. The maximum number of shares that can be issued
upon the exercise of options granted under the current 2012 stock option plan is 5,979,201. Each stock option entitles its holder to receive
one common share upon exercise. The exercise price payable for each option is determined by the Board of Directors at the date of
grant, and may not be less than the volume weighted average trading price of the Company’s shares for the last five trading days
immediately preceding the grant date. The options vest in equal installments over three years and the expense is recognized following
the accelerated method as each installment is fair valued separately and recorded over the respective vesting periods. The table below
summarizes the changes in the outstanding stock options:
(in thousands of options and in dollars)
2024
2023
Weighted
Weighted
Number
average
Number
average
of
exercise
of
exercise
options
price
options
price
Balance, beginning of year
790
29.17
1,302
27.89
Exercised
(512 )
27.93
(512 )
25.92
Balance, end of year
278
31.44
790
29.17
Options exercisable, end of year
278
31.44
790
29.17
The following table summarizes information about stock options outstanding and exercisable at December 31, 2024:
(in thousands of options and in dollars)
Options outstanding and exercisable
Weighted
average
Number
remaining
of
contractual life
Exercise prices
options
(in years)
23.70
6
0.1
30.71
246
1.2
40.41
26
2.6
278
1.3
Of the options outstanding at December 31, 2024, a total of 252,736 (2023 – 726,572) are held by key management personnel.
The weighted average share price at the date of exercise for stock options exercised in 2024 was $141.69 (2023 – $123.72).
In 2024, the Group recognized no compensation expense (2023 - $0.2 million).
No stock options were granted during 2024 and 2023 under the Company’s stock option plan.
Deferred share unit plan for board members (cash-settled)
In 2024, quarterly amounts are paid fully in cash to the board members on the 2nd Thursday following each quarter. Until December 31,
2023, in addition, an equity portion of compensation was awarded, comprised of restricted share units granted annually effective on the
date of each Annual Meeting, with a vesting period of one year.
Until December 31, 2020, the Company offered a deferred share unit (“DSU”) plan for its board members. Under this plan, board members
could elect to receive cash, DSUs or a combination of both for their compensation.
The following table provides the number of DSUs related to this plan:
(in units)
2024
2023
Balance, beginning of year
-
310,128
Paid
-
(313,312)
Forfeited
-
(170)
Dividends paid in units
-
3,354
Balance, end of year
-
-
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │87
For the year ended December 31, 2024, the Group recognized, as a result of the cash-settled director compensation plan, a compensation
expense of $2.2 million (2023 - $1.1 million).
For the year ended December 31, 2023, in personnel expenses, the Group recognized a mark-to-market gain of $4.5 million on DSUs.
As at December 31, 2023, the total carrying amount of liabilities for cash-settled arrangements recorded in trade and other payables was
$2.9 million following the settlement of all outstanding DSUs in 2023 for a total cash settlement of $35.8 million, of which $2.9 million was
paid at the end of 2024.
Restricted share unit and performance share unit plans (equity-settled)
The Company offers an equity incentive plan for the benefit of senior employees of the Group. Each participant’s annual LTIP allocation
is split in two equally weighted awards of performance share units (“PSUs”) and of restricted share units (‘’RSUs’’). The PSUs are subject
to both performance and time cliff vesting conditions on the third anniversary of the award whereas the RSUs are only subject to a time
cliff vesting condition on the third anniversary of the award. The performance conditions attached to the PSUs are equally weighted
between absolute earnings before interest and income tax and relative total shareholder return (“TSR”). For purposes of the relative TSR
portion, there are two equally weighted comparisons: the first portion is compared against the TSR of a group of transportation industry
peers and the second portion is compared against the S&P/TSX60 index.
Restricted share units
On February 8, 2024, the Company granted a total of 45,850 RSUs under the Company’s equity incentive plan of which 30,842 were
granted to key management personnel. The fair value of the RSUs is determined to be the share price fair value at the date of the grant
and is recognized as a share-based compensation expense, through contributed surplus, over the vesting period. The fair value of the
RSUs granted was $135.00 per unit.
On February 6, 2023, the Company granted a total of 55,400 RSUs under the Company’s equity incentive plan of which 38,275 were
granted to key management personnel. The fair value of the RSUs is determined to be the share price fair value at the date of the grant
and is recognized as a share-based compensation expense, through contributed surplus, over the vesting period. The fair value of the
RSUs granted was $115.51 per unit.
On April 26, 2023, the Company granted a total of 7,632 RSUs under the Company’s equity incentive plan of which 7,632 were granted
to the directors under the director compensation plan. The fair value of the RSUs is determined to be the share price fair value at the date
of the grant and is recognized as a share-based compensation expense, through contributed surplus, over the vesting period. The fair
value of the RSUs granted was $117.85 per unit.
The table below summarizes changes to the outstanding RSUs:
(in thousands of RSUs and in dollars)
2024
2023
Weighted
Weighted
Number
average
Number
average
of
grant date
of
grant date
RSUs
fair value
RSUs
fair value
Balance, beginning of year
192
93.62
272
58.33
Granted*
51
137.21
63
115.81
Reinvested
2
104.17
4
74.69
Settled
(82 )
77.79
(145 )
36.87
Forfeited
(5 )
115.83
(2 )
69.92
Balance, end of year
158
115.34
192
93.62
* Granted RSUs include the conversion of units of Daseke employees (5,182 RSUs)
The following table summarizes information about RSUs outstanding as at December 31, 2024:
(in thousands of RSUs and in dollars)
RSUs outstanding
Remaining
Number of
contractual life
Grant date fair value
RSUs
(in years)
98.27
55
0.1
157.51
2
1.0
115.51
54
1.1
157.51
1
1.2
135.00
45
2.1
158
1.0
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │88
The weighted average share price at the date of settlement of the other RSUs vested in 2024 was $134.64 (2023 – $115.13). The excess
of the purchase price paid to repurchase shares on the market over the carrying value of awarded RSUs, in the amount of $10.4 million
(2023 – $18.3 million), was charged to retained earnings as share repurchase premium.
In 2024, the Group recognized, as a result of RSUs, a compensation expense of $6.2 million (2023 - $6.0 million) with a corresponding
increase to contributed surplus.
Of the RSUs outstanding at December 31, 2024, a total of 103,872 (2023 – 116,368) are held by key management personnel.
Performance share units
On February 8, 2024, the Company granted a total of 45,850 PSUs under the Company’s equity incentive plan of which 30,842 were
granted to key management personnel. The fair value of the PSUs is determined using a Monte Carlo simulation model for the TSR
portion and using management’s estimates for the absolute earnings before interest and income tax portion. The estimates related to the
absolute earnings before interest and income tax portion are revised during the vesting period and the cumulative amount recognized at
each reporting date is based on the number of equity instruments for which service and non-market performance conditions are expected
to be satisfied. The share-based compensation expense is recognized, through contributed surplus, over the vesting period. The fair
value of the PSUs granted was $156.17 per unit as at grant date and $151.44 per unit as at December 31, 2024.
On February 6, 2023, the Company granted a total of 55,400 PSUs under the Company’s equity incentive plan of which 38,275 were
granted to key management personnel. The fair value of the PSUs is determined using a Monte Carlo simulation model for the TSR
portion and using management’s estimates for the absolute earnings before interest and income tax portion. The estimates related to the
absolute earnings before interest and income tax portion are revised during the vesting period and the cumulative amount recognized at
each reporting date is based on the number of equity instruments for which service and non-market performance conditions are expected
to be satisfied. The share-based compensation expense is recognized, through contributed surplus, over the vesting period. The fair
value of the PSUs granted was $135.15 per unit as at grant date and $124.75 per unit as at December 31, 2024.
The table below summarizes changes to the outstanding PSUs:
(in thousands of PSUs and in dollars)
2024
2023
Weighted
Weighted
Number
average
Number
average
of
grant date
of
grant date
PSUs
fair value
PSUs
fair value
Balance, beginning of year
184
106.17
261
62.87
Granted
46
156.17
55
135.15
Reinvested
1
106.72
4
84.93
Settled
(135 )
89.87
(267 )
32.70
Added due to performance conditions
64
89.87
134
32.93
Forfeited
(5 )
129.43
(3 )
109.61
Balance, end of year
155
127.72
184
106.17
The following table summarizes information about PSUs outstanding as at December 31, 2024:
(in thousands of PSUs and in dollars)
PSUs outstanding
Remaining
Number of
contractual life
Grant date fair value
PSUs
(in years)
100.43
57
0.1
135.15
53
1.1
156.17
45
2.1
155
1.0
The weighted average share price at the date of settlement of the other PSUs vested in 2024 was $133.74 (2023 – $115.13). The excess
of the purchase price paid to repurchase shares on the market over the carrying value of awarded PSUs, in the amount of $19.8 million,
was charged to retained earnings as share repurchase premium (2023 – $36.8 million).
In 2024, the Group recognized, as a result of PSUs, a compensation expense of $4.9 million (2023 - $7.3 million) with a corresponding
increase to contributed surplus.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │89
Of the PSUs outstanding at December 31, 2024, a total of 103,872 (2023 – 116,368) are held by key management personnel.
21.
Materials and services expenses
The Group’s materials and services expenses are primarily costs related to independent contractors and vehicle operation expenses.
Vehicle operation expenses consists primarily of fuel costs, repairs and maintenance, insurance, permits and operating supplies.
2024
2023
Independent contractors
2,902,226
2,805,924
Vehicle operation expenses
1,268,909
999,922
4,171,135
3,805,846
22.
Personnel expenses
Note
2024
2023
Short-term employee benefits
2,392,249
2,007,954
Contributions to defined contribution plans
9,011
8,399
Current and past service costs related to defined benefit plans
15
56,223
58,537
Termination benefits
27,758
16,743
Equity-settled share-based payment transactions
20
11,074
13,451
Cash-settled share-based payment transactions
20
-
4,538
2,496,315
2,109,622
23.
Finance income and finance costs
Recognized in income or loss:
Costs (income)
2024
2023
Interest expense on long-term debt and amortization
of deferred financing fees
127,062
59,432
Interest expense on lease liabilities
24,904
16,042
Interest income
(7,723 )
(8,121 )
Net change in fair value and accretion expense
of contingent considerations
(6,037 )
165
Net foreign exchange loss (gain)
3,786
(491 )
Other financial expenses
16,247
13,844
Net finance costs
158,239
80,871
Presented as:
Finance income
(13,760 )
(8,612 )
Finance costs
171,999
89,483
24.
Income tax expense
Income tax recognized in income or loss:
2024
2023
Current tax expense
Current period
179,142
192,388
Adjustment for prior periods
1,998
1,943
181,140
194,331
Deferred tax expense (recovery)
Origination and reversal of temporary differences
(39,578 )
(20,102 )
Variation in tax rate
(1,053 )
1,551
Adjustment for prior periods
(2,270 )
(3,893 )
(42,901 )
(22,444 )
Income tax expense
138,239
171,887
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │90
Income tax recognized in other comprehensive income:
2024
2023
Tax
Tax
Before
(benefit)
Net of
Before
(benefit)
Net of
tax
expense
tax
Tax
expense
tax
Foreign currency translation differences
5,675
-
5,675
(881 )
-
(881 )
Defined benefit plan remeasurement gains
22,495
5,686
16,809
2,676
660
2,016
Gain (loss) on net investment hedge
(135,112 )
977
(136,089 )
37,913
(1,792 )
39,705
Change in fair value of investment in equity securities
(7,962 )
146
(8,108 )
8,383
1,102
7,281
(114,904 )
6,809
(121,713 )
48,091
(30 )
48,121
Reconciliation of effective tax rate:
2024
2023
Income before income tax
560,723
676,764
Income tax using the Company’s
statutory tax rate
26.5 %
148,592
26.5 %
179,342
Increase (decrease) resulting from:
Rate differential between
jurisdictions
0.0 %
200
0.1 %
548
Variation in tax rate
-0.2 %
(1,053 )
0.2 %
1,551
Non deductible expenses
1.2 %
6,839
0.3 %
2,005
Tax deductions and tax
exempt income
-3.0 %
(17,021 )
-2.2 %
(14,909 )
Adjustment for prior periods
0.0 %
(272 )
-0.3 %
(1,950 )
Multi-jurisdiction tax
0.2 %
954
0.8 %
5,300
24.7 %
138,239
25.4 %
171,887
25.
Financial instruments and financial risk management
Risks
In the normal course of its operations and through its financial assets and liabilities, the Group is exposed to the following risks:
credit risk
liquidity risk
market risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives and processes for managing
risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial
statements.
Risk management framework
The Group’s management identifies and analyzes the risks faced by the Group, sets appropriate risk limits and controls, and monitors
risks and adherence to limits. Risk management is reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Board of Directors has overall responsibility of the Group’s risk management framework. The Board of Directors monitors the Group’s
risks through its audit committee. The audit committee reports regularly to the Board of Directors on its activities.
The Group’s audit committee oversees how management monitors and manages the Group’s risks and is assisted in its oversight role by
the Group’s internal audit. Internal audit undertakes both regular and ad hoc reviews of risk, the results of which are reported to the audit
committee.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │91
a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligation, and arises principally from the Group’s trade receivables. The Group grants credit to its customers in the ordinary course
of business. Management believes that the credit risk of trade receivables is limited due to the following reasons:
There is a broad base of customers with dispersion across different market segments;
No single customer accounts for more than 5% of the Group’s revenue;
Approximately 91.4% (2023 – 89.9%) of the Group’s trade receivables are not past due or 30 days or less past due;
Bad debt expense has been less than 0.3% of consolidated revenues for the last 2 years.
Exposure to credit risk
The Group’s maximum credit exposure corresponds to the carrying amount of the financial assets. The maximum exposure to credit risk
at the reporting date was:
December 31,
2024
December 31,
2023
Trade and other receivables
927,654
894,771
Impairment losses
The aging of trade and other receivables at the reporting date was:
Allowance for
Allowance for
expected
expected
Total
credit loss
Total
credit loss
2024
2024
2023
2023
Not past due
646,859
2,145
619,888
1,817
Past due 1 – 30 days
174,343
2,526
159,928
2,909
Past due 31 – 60 days
52,700
7,578
47,529
8,727
Past due more than 60 days
79,013
13,012
96,932
16,053
952,915
25,261
924,277
29,506
The movement in the allowance for expected credit loss in respect of trade and other receivables during the year was as follows:
2024
2023
Balance, beginning of year
29,506
29,038
Business combinations
2,837
2,100
Bad debt expenses
14,846
30,992
Amount written off and recoveries
(19,631 )
(33,302 )
Effect of movements in exchange rates
(2,297 )
678
Balance, end of year
25,261
29,506
b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations associated with its financial liabilities that are settled
by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to its reputation.
Cash inflows and cash outflows requirements from the Group’s entities are monitored closely and separately to ensure the Group
optimizes its cash return on investment. Typically, the Group ensures that it has sufficient cash to meet expected operational expenses;
this excludes the potential impact of extreme circumstances that cannot reasonably be predicted. The Group monitors its short and
medium-term liquidity needs on an ongoing basis using forecasting tools. In addition, the Group maintains revolving facilities, which have
$549.7 million availability as at December 31, 2024 (2023 - $915.3 million) and an additional $175.0 million credit available (CAD $245
million and USD $5 million) (2023 - $190.0 million, CAD $245 million and USD $5 million). The additional credit is available under certain
conditions under the Group’s syndicated bank agreement.
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │92
The following are the contractual maturities of the financial liabilities, including estimated interest payment:
Carrying
Contractual
Less than
1 to 2
2 to 5
More than
amount
cash flows
1 year
years
years
5 years
2024
Trade and other payables
639,190
639,190
639,190
-
-
-
Long-term debt
2,402,881
3,178,019
209,454
973,603
522,404
1,472,558
Other financial liability*
7,779
7,779
7,779
-
-
-
3,049,850
3,824,988
856,423
973,603
522,404
1,472,558
2023
Trade and other payables
671,939
671,939
671,939
-
-
-
Long-term debt
1,884,274
2,644,474
257,414
354,206
293,772
1,739,082
Other financial liability*
13,572
13,572
12,732
840
-
-
2,569,785
3,329,985
942,085
355,046
293,772
1,739,082
* Includes the contractual maturities for the contingent considerations presented in other financial liabilities. Other financial liabilities with no contractual
cashflows in the amount of $11.9 million (2023 - $13.5 million) are excluded from the table above.
It is not expected that the contractual cash flows could occur significantly earlier, or at significantly different amounts.
c)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or
the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure
within acceptable parameters, while optimizing the return.
The Group buys and sell derivatives, periodically, although no derivatives were in effect during 2024 and 2023, and also incurs financial
liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Group’s management and
it does not use derivatives for speculative purposes.
The Group buys investment in equity securities to hold the investments for the long term for strategic purposes. All investments are
designated as fair value through OCI.
d)
Currency risk
The Group is exposed to currency risk on financial assets and liabilities, sales and purchases that are denominated in a currency other
than the respective functional currencies of Group entities. Primarily the Canadian entities are exposed to U.S. dollars and entities having
a functional currency other than the Canadian dollars (foreign operations) are not significantly exposed to currency risk. The Group
mitigates and manages its future USD cash flow by creating offsetting positions through the use of foreign exchange contracts periodically,
although none were in effect during 2024 and 2023, and USD debt.
To mitigate its financial net liabilities exposure to foreign currency risk related to Canadian entities, the Group designated a portion of its
U.S. dollar denominated debt as a hedging item in a net investment hedge.
The Group’s financial assets and liabilities exposure to foreign currency risk related to Canadian entities was as follows based on notional
amounts:
2024
2023
Trade and other receivables
53,423
41,239
Trade and other payables
(8,984)
(7,379)
Long-term debt
(1,653,291)
(1,654,689)
Balance sheet exposure
(1,608,852)
(1,620,829)
Long-term debt designated as investment hedge
1,655,000
1,655,000
Net balance sheet exposure
46,148
34,171
The Group estimates its annual net USD denominated cash flow from operating activities at approximately $500 million (2023 - $470
million). This cash flow is earned evenly throughout the year.
The following exchange rates applied during the year:
December 31,
2024
December 31,
2023
Average USD for the year ended
1.3698
1.3497
Closing USD as at
1.4384
1.3243
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │93
Sensitivity analysis
A 1-cent increase in the U.S. dollar at the reporting date, assuming all other variables, in particular interest rates, remain constant, would
have increased (decreased) equity and income or loss by the amounts shown below. The analysis is performed on the same basis for
2023.
2024
2023
1-cent
1-cent
1-cent
1-cent
Increase
Decrease
Increase
Decrease
Balance sheet exposure
(11,185)
11,185
(12,239)
12,239
Long-term debt designated as investment hedge
11,506
(11,506)
12,497
(12,497)
Net balance sheet exposure
321
(321)
258
(258)
e)
Interest rate risk
The Group’s intention is to minimize its exposure to changes in interest rates by maintaining a significant portion of fixed-rate interest-
bearing long-term debt. This is achieved by periodically entering into interest rate swaps, although no interest rate swaps were in effect
during 2024 and 2023.
At December 31, 2024 and 2023, the interest rate profile of the Group’s carrying amount of interest-bearing financial instruments:
2024
2023
Fixed rate instruments
2,402,881
1,884,182
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial liabilities at fair value through income or loss. Therefore a change in interest rates
at the reporting date would not affect income or loss.
f)
Capital management
For the purposes of capital management, capital consists of share capital and retained earnings of the Group. The Group's objectives
when managing capital are:
To ensure proper capital investment in order to provide stability and competitiveness to its operations;
To ensure sufficient liquidity to pursue its growth strategy and undertake selective acquisitions;
To maintain an appropriate debt level so that there are no financial constraints on the use of capital; and
To maintain investors, creditors and market confidence.
The Group seeks to maintain a balance between the highest returns that might be possible with higher levels of borrowings and the
advantages and security of a sound capital position.
The Group monitors its long-term debt using the ratios below to maintain an appropriate debt level. The Group’s debt-to-equity and debt-
to-capitalization ratios are as follows:
2024
2023
Long-term debt
2,402,881
1,884,182
Shareholders' equity
2,673,275
2,591,410
Debt-to-equity ratio
0.90
0.73
Debt-to-capitalization ratio1
0.47
0.42
1 Long-term debt divided by the sum of shareholders' equity and long-term debt.
There were no changes in the Group’s approach to capital management during the year.
The Group’s credit facility and term loan agreement requires monitoring of two ratios on a quarterly basis. The first is a ratio of total debt
plus letters of credit and some other long-term liabilities less cash (unrestricted cash for the credit facility and cash up to $100 million for
the unsecured senior notes) to net income or loss before finance income and costs, income tax expense (recovery), depreciation,
amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale
and intangible assets (“Adjusted EBITDA”). The second is a ratio of adjusted earnings before interest, income taxes, depreciation and
amortization and rent expense (“EBITDAR”), including last twelve months adjusted EBITDAR from acquisitions to interest and net rent
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │94
expenses. These ratios are measured on a consolidated last twelve-month basis and are calculated as prescribed by the credit agreement
which, among other things, requires the exclusion of the impact of IFRS 16 leases. These ratios must be kept below a certain threshold
so as not to breach a covenant in the Group’s syndicated bank. At December 31, 2024 and 2023, the Group was in compliance with its
financial covenants.
Management believes that the Group has sufficient liquidity to continue both its operations as well as its acquisition strategy.
Upon maturity of the Group’s long-term debt, the Group’s management and its Board of Directors will assess if the long-term debt should
be renewed at its original value, increased or decreased based on the then required capital, credit availability and future interest rates.
g)
Accounting classification and fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statements of financial position, are as
follows:
December 31, 2024
December 31, 2023
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Financial assets
Assets carried at fair value
Investment in equity securities
22,097
22,097
50,209
50,209
Assets carried at amortized cost
Trade and other receivables
927,654
927,654
894,771
894,771
949,751
949,751
944,980
944,980
Financial liabilities
Liabilities carried at fair value
Other financial liability
19,686
19,686
27,119
27,119
Liabilities carried at amortized cost
Trade and other payables
639,190
639,190
671,936
671,936
Long-term debt
2,402,881
2,339,947
1,884,182
1,678,662
3,061,757
2,998,823
2,583,237
2,377,717
Interest rates used for determining fair value
The carrying amount of the Group’s debt does not approximate fair value. The interest rates used to discount estimated cash flows to
calculate fair value, when applicable, are based on the current interest rates for debt with similar terms, company rating and remaining
maturity.
Fair value hierarchy
The Group’s financial assets and liabilities recorded at fair value on a recurring basis are investment in equity securities discussed above.
Investment in equity securities include Level 1 investments that are marked to market with the publicly traded information as at December
31, 2024 and Level 2 investments that are marked to market using valuation techniques in which all significant inputs were based on
observable market data. The remaining investment in equity securities is measured using level-3 inputs of the fair value hierarchy.
26.
Contingencies, letters of credit and other commitments
a)
Contingencies
There are pending operational and personnel related claims against the Group. In the opinion of management, these claims are
adequately provided for in long-term provisions on the consolidated statements of financial position and settlement should not have
a significant impact on the Group’s financial position or results of operations.
b)
Letters of credit
As at December 31, 2024, the Group had $129.8 million of outstanding letters of credit (2023 - $106.2 million).
c)
Other commitments
As at December 31, 2024, the Group had $35.6 million of purchase commitments (2023 – $62.3 million) and $26.7 million of purchase
orders for leases that the Group intends to enter into and that are expected to materialize within a year (2023 – $44.4 million).
TFI International Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)
YEARS ENDED DECEMBER 31, 2024 AND 2023
2024 Annual Report │95
27. Related parties
Parent and ultimate controlling party
There is no single ultimate controlling party. Although the shares of the Company are widely held, certain institutional investors hold
meaningful positions.
Transactions with key management personnel
Board members of the Company, executive officers and top managers of major Group entities are deemed to be key management
personnel. There were no other transactions with key management personnel other than their respective compensation.
Key management personnel compensation
In addition to their salaries, the Company also provides non-cash benefits to board members and executive officers.
Executive officers also participate in the Company’s stock option and performance contingent restricted share unit and performance share
unit plans and board members are entitled to deferred share units, as described in note 20. Costs incurred for key management personnel
in relation to these plans are detailed below.
Key management personnel compensation comprised:
2024
2023
Short-term benefits
14,360
15,457
Post-employment benefits
719
619
Equity-settled share-based payment transactions
8,207
8,674
23,286
24,750
28. Subsequent events
Subsequent to year end, the Company has agreed to acquire Hearn Industrial Services. The acquisition is expected to close at the
beginning of the second quarter of 2025.
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company of Canada
100 University Avenue, 8th floor
Toronto, Ontario M5J 2Y1
Canada and the United States
Telephone: 1 800 564-6253
Fax: 1 888 453-0330
International
Telephone: 514 982-7800
Fax: 416 263-9394
Computershare Trust Company, N.A.
Co-Transfer Agent (U.S.)
FINANCIAL INSTITUTIONS
National Bank of Canada
Royal Bank of Canada
Bank of America, N.A.
JPMorgan Chase Bank, N.A.
The Toronto Dominion Bank
PNC Bank
Bank of Montreal
U.S. Bank, N.A.
Goldman Sachs
Stanley Bank, N.A.
Prudential Financial, Inc.
Guggenheim Investments
MetLife Investment Management, LLC
Barings, LLC
Voya Investment Management, LLC
New York Life Private Capital, LLC
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 23, 2025 at 1:30 p.m.
Details to be confirmed at a later date at :
www.tfiintl.com/en/news/
Si vous désirez recevoir la version française de
ce rapport, veuillez écrire au secrétaire de la
société : 8801, route Transcanadienne, bureau 500
Montréal (Québec) H4S 1Z6
CORPORATE
INFORMATION
HEAD OFFICE
8801 Trans-Canada Highway, Suite 500
Montreal, Quebec H4S 1Z6 CANADA
Telephone: 514 331-4000
Fax: 514 337-4200
Web site: www.tfiintl.com
E-mail: administration@tfiintl.com
EXECUTIVE OFFICES
96 Disco Road
Etobicoke, Ontario M9W 0A3
Telephone: 647 725-4500
14881 Quorum Dr
Suite 700
Dallas, TX
75254 USA
9954 Mayland Dr
Suite 3000
Richmond, VA
23233 USA
3835 PGA Blvd
Suite 803
Palm Beach Gardens, FL
33410 USA
AUDITORS
KPMG LLP
STOCK EXCHANGE LISTING
TFI International Inc. shares are listed on the New
York Stock Exchange and the Toronto Stock Exchange
under the symbol TFII.
www.tfiintl.com