TFI International (NYSE:TFII) reported third-quarter adjusted diluted earnings per share of $1.67, up nearly 40% from $1.20 a year earlier, as strong truckload and logistics results offset continued challenges in its U.S. less-than-truckload business.
Chairman, President and Chief Executive Officer Alain Bédard said consolidated operating income increased 17% to $180 million despite an office-related real estate impairment charge. Revenue before fuel surcharge rose 8% year over year to $1.9 billion, while operating margin improved 80 basis points to 9.7%.
The company generated $116 million in free cash flow during the quarter, bringing its year-to-date total to more than $440 million. TFI ended September with an adjusted funded debt-to-EBITDA ratio of 2.1 times under an updated measure that excludes letters of credit and contingent consideration.
Truckload and Logistics Drive Results
Truckload was the company’s strongest business in the quarter, accounting for 40% of segment revenue before fuel surcharge. Revenue in the segment increased 10% to $753 million, while revenue per truck per week, excluding fuel surcharge, rose 13%.
Truckload operating income nearly doubled to $100 million from $53 million in the prior-year quarter. Its adjusted operating ratio improved by 560 basis points to 86.7%, and return on invested capital increased to 8% from 6% a year earlier.
Bédard attributed the performance to tighter industry capacity, exposure to specialized freight and industrial end markets, better fleet productivity and lower capital intensity. He said the company has continued to refine acquired operations by concentrating individual carriers on their most profitable niches while shifting less profitable operations elsewhere in the network.
Chief Financial Officer David Saperstein said the truckload business is increasingly operating as a hybrid model, using its assets for higher-return customers and end markets while relying more on brokerage and independent contractors for other freight. Brokerage revenue in truckload increased 49% year over year, he said.
Logistics revenue before fuel surcharge climbed 19% to $437 million, representing 23% of segmented revenue. Operating income rose 59% to $49 million, producing an 11.3% margin compared with 8.4% a year earlier. The segment’s return on invested capital was 14.9%.
Management said logistics benefited from its work with original equipment manufacturers, growth related to data centers and battery-storage projects, and solid performance in U.S. last-mile operations. Bédard noted that a Canadian bank-related business is declining as technology changes, but said the company sees other organic-growth opportunities across logistics.
U.S. LTL Remains a Focus
LTL revenue before fuel surcharge was roughly flat from a year earlier at $678 million, or 36% of segmented revenue. The segment reported an adjusted operating ratio of 91.3% and operating income of $44 million, including a non-cash impairment charge. Return on invested capital was 11.1%.
Management described the U.S. LTL operation, TForce Freight, as a major source of concern. Bédard said the U.S. operation was operating near a 97% operating ratio, while its Canadian LTL operations were below a 75% operating ratio. He said the company’s U.S. network suffers from poor density, higher fuel-related costs and linehaul expenses that rose when freight volumes increased and TFI had to rely on the spot market for capacity.
The company’s attempt to grow U.S. LTL volumes earlier in 2026 created operational pressure, according to Bédard. Shipments rose to about 22,000 per day during the second quarter, which required more spot-market linehaul capacity and contributed to weaker service and lower revenue per shipment. TFI has since returned to a more stable range of roughly 19,000 to 20,000 daily shipments.
Saperstein said higher blanket pricing on third-party logistics freight helped reduce the pace of shipment growth, with LTL shipments rising 4% year over year in the third quarter compared with 7.5% in the second quarter. Some costs remained in the network during the quarter, but he said the volume-cost balance had improved by October.
TFI is making changes to improve TForce Freight’s performance, including reducing terminal capacity in certain markets, pursuing more dense freight lanes, improving service and seeking a greater mix of industrial freight. Bédard said management is also adding experienced leadership from outside the former UPS Freight organization.
The company’s six-year partnership with UPS related to GFP, a reseller of UPS services, will end in early 2027. Saperstein said GFP generated a little more than $4 million in operating income during the third quarter. Bédard said the change will not directly affect TForce Freight’s operations because GFP functions as a brokerage operation using UPS services.
TFI also plans to gradually develop a separate, non-union, asset-light U.S. LTL network. It currently handles about 1,000 daily shipments through its Hercules operation. Bédard said the company would manage docks while relying on third parties for pickup-and-delivery and linehaul work. He emphasized that the company does not intend to sell its U.S. LTL business.
Outlook and Capital Allocation
For the fourth quarter, TFI forecast adjusted diluted EPS of $1.30 to $1.40. At the high end, that would represent a 28% year-over-year increase.
- Truckload operating ratio is expected to improve by 400 to 500 basis points year over year.
- Logistics operating ratio is expected to improve by 100 to 200 basis points.
- LTL operating ratio is expected to decline by zero to 100 basis points.
- Net capital expenditures, excluding real estate, are expected to total $225 million to $250 million for the year.
Looking toward 2027, Bédard said truckload demand may remain soft but industry capacity constraints could continue to support pricing. He said the company could potentially reach an approximately 85% truckload operating ratio next year if market conditions remain similar and internal improvements continue.
On capital allocation, Bédard said TFI repurchased about 400,000 shares in October and will weigh additional buybacks against merger and acquisition opportunities. He said the company could generate $700 million to $800 million of cash in 2027 without a large acquisition, even if the freight environment remains soft.
About TFI International (NYSE:TFII)
TFI International Inc is a North American transportation and logistics company headquartered in Saint-Laurent, Quebec. The company provides a broad range of freight and supply chain services through a network of operating companies in Canada and the United States.
Its business activities include package and courier delivery, less-than-truckload and truckload transportation, freight brokerage, logistics, warehousing, and specialized services. TFI International also serves niche transportation markets, including waste management, environmental services, and other specialized freight requirements.
The company traces its origins to 1957 and has expanded through organic growth and acquisitions.
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