The TFI international profit call assessed a difficult quarter. (Photo: Jim Allen \ Freightwaves)
Although the theme of the TFI International’s profit call was very similar to those of the third quarter of wrestling, the American less than Truckload operations years after the acquisition of UPS Freight CEO Alain Bedard also focused on how things are going with another High -profile acquisition: Daseke.
Bedard took over the overall achievements on the call together with analysts: “Q4 was a disaster for us,” he said.
But that comment usually reflected on the American LTL operations, the core of Tforce, built from the UPS acquisition.
As far as Dasekeke is concerned, TFI (NYSE: TFII) bought the flatbed operator in April. The performance is embedded in the TFI income for special truck load. The data in those figures and the comments from Bagard make it clear that the former Daseke operations have room for improvement.
“If you look at the trend since we bought Daseke in April, the second quarter was ok,” he said. “And then we had problems with income per mile that continues to fall because the freight recession is still with us.”
Bedard said that the former Daseke operations still suffer from “a very high pressure on the rates”, although he added that the decline is “stabilized”. “But the number of kilometers has fallen and our costs are too high,” he said.
Although the turnover in the specialized Truckload group was considerably higher – no surprise in view of the fact that Daseke was not part of TFI in 2023 – other measures show how it dragged some performance tricks.
For example, the adapted company ratio of the specialized truck loading activities at TFI Ballon to 91.6% of 87% a year earlier. The return on invested capital fell to 8.5% of 10.3%.
Although the specialized TruckLoad data does not break out Daseke separately, the percentage of that company that is former Daseke can be estimated. Sales in the fourth quarter, with Daseke, was $ 531.9 million. A year earlier, without Daseke, it was $ 283.3 million, for a growth of 87.7%.
And although the operational margin can be a combined number, Bedard spoke about the implementation. He said the Legacy Daseke -Business “probably runs like a 98 or.” And he regretted the fact that the specialized Truckload segment at TFI, during his term of office, had always been a sub-90% or is now above that.
Bedard also said that the Legacy Daseke -Business suffered from “too much capital investment”.
“And why is that?” he said. “Because when we took over Daseke, they had committed themselves to buy a large number of trucks that we could not walk away.”
The end result is that “we have far too many trucks in a very difficult environment.” The process of selling part of that excess is underway, said Bedard.
But he was generally optimistic about the future of the Legacy Daseke operations. He said he believes that TFI will mainly be able to turn it over by cost -saving measures, with equipment an important part thereof. “If the market does not improve, we have a path ahead by throwing equipment, improving our costs and also improving our overhead,” he said.
The problems with the US LTL activities of the company, on the other hand, most of which came from the UPS acquisition, sound as if they are more difficult to repair.
Bedard used a description that was made famous in various iterations of “The Godfather” trilogy: “Tforce is a big rock in my shoe.” (The actual quote was’ a stone in my shoe ‘, spoken by, among others, the legendary Joey Zaza, but the Bagard statement was memorable enough that Jason Seidl van Td Cowen, in his report on the income of TFI, the title’ Tforce is’ tforce ‘tforce becomes’ tforce becoming’ tforce becomes’ tforce becoming ‘tforce becoming’ Tforce is ‘tforce’ tforce becomes a rock in the shoe of TFI “).
Bedard’s statements about Tforce Echo which he said a quarter after a quarter: “Our costs are still too high. We are also killed because our volume continues to fall. Our shipping has fallen by 6% year after year. Although our weight per shipment is about the same, it is still a very difficult environment. So we still have a lot of work to do at Tforce -freight on the fleet side to lower our costs. “
But Bagard looked ahead and said, “We are there on the right track.”
He returned to a theme that he has previously discussed: density. He said that the Canadian LTL operations entail more deliveries in a smaller area, but that is not the case with Tforce.
“The mission that we give our sales team is to try to grow organically, but also to try to improve the density,” Bornard said. Density in the Canadian operations is ‘unparalleled’, while the situation in the US is ‘really bad’.
Determining a takeover. “If you cannot get the density organically from your sales team, you have to concentrate on the road in finding a target that can help,” he said. “You improve your density.”
The winning report was not greeted warmly by investors. Around 10 am Friday, the TFI shares from around $ 122 on Wednesday had almost less than $ 98 per share.
The Bank of America Merrill Lynch research team under the leadership of Ken Hoexter has lowered his rating on TFI to find out from neutral.
Various other negative aspects of the TFI income report and calls with analysts on Tforce issues were cited by Merrill Lynch: decreasing market share in profitable small to medium business, an increase in missed pickups and a claim rate of 0.9%, which is shocking High when placed at the corresponding speed of LTL -competent Old Dominion Freight Line (Nasdaq: ODFL) of 0.1%.
Bedard summarized the disaster in the call and said that the conditions in the first quarter do not improve. “Q1 will be a very difficult quarter,” he said. “We did not do well to manage our labor costs. We had too many problems with accidents and claims. If you look at my claim ratio, I went all the way to 0.9% of the turnover, which is simply unacceptable, right? “
In his winnet announcement on Wednesday, TFI said that in the US in the US it would ‘recover’ in the US with analysts, Bornard said that the change would not be to move employees from Canada to the US
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The post TFI recognizes the American disaster ‘and difficult Daseke integration in Q4 first appeared on freight waves.
