Initial glimpse: The majority of indicators at TFI have declined from 2Q 2024, yet Bedard emphasizes a higher profit margin.
TFI International Faces Challenges but Shows Signs of Recovery in Q2 2025
In the second quarter of 2025, TFI International, a leading North American transportation and logistics company, reported a mixed set of results. The company's Less-Than-Truckload (LTL) division experienced a 13% revenue decline to $703.7 million, while the truckload segment saw a 6% decrease in revenue to $712.3 million.
The LTL division's operating ratio (OR) worsened from 86.2% to 89.5%, indicating a decline in cost efficiency. The U.S. LTL unit, in particular, saw an OR rise from 90.8% to 94.0%, a 10.1% drop in shipment volume, and a 5.5% decline in total shipment tons. However, there was a sequential improvement in the LTL OR from 98.9% in Q1 2025 to 94.0% in Q2, showing some operational recovery.
The truckload segment posted a slightly worsened OR of 90.1 compared to 89.0 a year prior. The specialty truckload operations saw an OR increase from 88.7 to 90.3. Despite these challenges, the Canadian conventional truckload unit improved its OR from 89.3 to 88.3. Adjusted EBITDA margins for truckload improved sequentially from 19% in Q1 to 22.4% in Q2, indicating better profitability despite lower revenues.
Key factors contributing to these performance trends include tariff-related challenges, declines in volume and shipments, particularly in U.S. LTL markets, cost management and efficiency initiatives, strong free cash flow generation, and improved margin management on a sequential basis. TFI International remains cost-sensitive and focused on internal improvements to restore margin performance ahead of any cyclical recovery in demand.
TFI International's CEO, Alain Bedard, cited the sequential improvement in operating ratio at the LTL operations during the company's earnings call with analysts. The call also highlighted strong free cash flow figures and solid margin performance. Post-close trading boosted TFI stock by about 6.25%, offering some relief to a 41.3% decline in the last 12 months before the post-market increase.
In Canadian LTL operations, the OR dropped 500 bps to 80.6%, and revenue per hundredweight excluding fuel fell just under 2% to $331.18 in U.S. LTL operations. Despite these challenges, TFI International's earnings report beat Wall Street estimates on the bottom line, with an overall adjusted net income of $1.34 per share, 11 cents better than forecasts. However, the total revenue of $1.8 billion was $20 million less than the Wall Street consensus, according to SeekingAlpha.
In summary, TFI International's LTL and truckload operations have faced pressure from tariffs and volume declines, resulting in falling revenues and higher operating ratios year-over-year. However, ongoing cost controls, technology implementation, and margin improvements sequentially point toward stabilization efforts. The Canadian truckload segment’s better OR performance also highlights some pockets of strength amid broader challenges.
- In the financial sector, TFI International's CEO, Alain Bedard, announced during an earnings call with analysts that the company's operational ratio in the LTL operations showed sequential improvement.
- Despite challenges in various sectors such as transportation and business due to tariff-related issues and declines in volume, TFI International's improved margin management and strong free cash flow generation indicate a strategic focus on stabilization and recovery in the industry.
