UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2021

Commission File No. 001-39224

TFI INTERNATIONAL INC.

(Translation of registrant’s name into English)

8801 Trans-Canada Highway, Suite 500

Saint-Laurent, Québec

H4S 1Z6 Canada

(Address of principal executive office)  

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☐            Form 40-F  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

EXHIBIT INDEX

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EXHIBIT 99-1

2020 ANNUAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2020

MANAGEMENT’S DISCUSSION AND ANALYSIS          1

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., and shall include its independent operating subsidiaries. This MD&A provides a comparison of the Company’s performance for its three-month period and year ended December 31, 2020 with the corresponding three-month period and year ended December 31, 2019 and it reviews the Company’s financial position as of December 31, 2020. It also includes a discussion of the Company’s affairs up to February 18, 2021, 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, 2020.

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. The presentation currency of the Company was changed from Canadian dollars to United States dollars (U.S. dollars) effective December 31, 2020, as such all amounts are in 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 18, 2021. 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.

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.

2020 Annual Report

* Recasted for change in presentation currency from Canadian dollar to U.S. dollar.

Q4 Highlights

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          3

Services

TFI International is a North American leader in the transportation and logistics industry, operating across the United States, Canada and Mexico through its subsidiaries. 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:

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 first quarter generally the weakest. Furthermore, during the harsh winter months, fuel consumption and maintenance costs tend to rise.

Human resources

As at December 31, 2020 the Company had 16,753 employees in TFI International’s various business segments across North America. This compares to 17,150 employees as at December 31, 2019. The year-over-year decrease of 397 is attributable to business acquisitions that added 1,329 employees offset by rationalizations affecting 1,726 employees mainly in the Less-Than-Truckload (“LTL”) and Truckload segments. 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

2020 Annual Report

Equipment

The Company believes it has the largest trucking fleet in Canada and a significant presence in the U.S. market. As at December 31, 2020, the Company had 7,867 tractors, 25,520 trailers and 9,901 independent contractors. This compares to 7,772 tractors, 25,505 trailers and 9,826 independent contractors as at December 31, 2019.

Facilities

TFI International’s head office is in Montréal, Québec and its executive office is in Etobicoke, Ontario. As at December 31, 2020, the Company had 366 facilities, as compared to 380 facilities as at December 31, 2019. Of these, 235 are located in Canada, including 151 and 84 in Eastern and Western Canada, respectively. The Company also had 119 facilities in the United States and 12 facilities in Mexico. In the last twelve months, 45 facilities were added from business acquisitions, and terminal consolidation decreased the total number of facilities by 59, mainly in the Logistics segment. In Q4 2020, the Company closed 11 sites.

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.

(For the year ended December 31, 2020)

This section provides general comments on the consolidated results of operations. A more detailed analysis is provided in the “Segmented results” section.

2020 business acquisitions

In line with its growth strategy, the Company has acquired thirteen businesses during 2020: the Courier Service business from R.R. Donnelley & Sons Company (“CSB”), Gusgo Transport (“Gusgo”), select assets of CT Transportation, LLC (“CT”), select assets of MCT Transportation, LLC (“MCT”), DSN Chemical Transportation (“DSN”), Keith Hall & Sons (“KHS”), substantially all the assets of CCC Transportation (“CCC”), selected assets of TBM Logistics Ltd. (“TBM”), selected assets of Desrosiers Transport (“Desrosiers”), the dry bulk business of Grammer Logistics (“Grammer”), FreightLine Carrier Systems (“FreightLine”), DLS Worldwide (“DLS”) renamed “TForce Worldwide”, and Excel Transportation (“Excel”).

On March 2, 2020, TFI International completed the acquisition of CSB. CSB operates primarily in the Midwest and Southeast U.S. serving the pharmaceutical, healthcare, retail, financial and transportation industries.

On June 18, 2020, TFI International completed the acquisition of Gusgo. Based in Ontario, Gusgo operates as a customs-bonded carrier of dry and temperature-controlled commodities in an approximately 500-mile radius around the Greater Toronto Area.

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          5

On June 26, 2020, TFI International completed the acquisition of CT. Based in Georgia, CT specializes in flatbed transportation for major building product manufacturers and home improvement distributors throughout the Southeast and Mid-Atlantic regions of the United States.

On June 26, 2020, TFI International completed the acquisition of MCT. Based in South Dakota, MCT provides transportation for major companies in the packaged food, agriculture, medical and automotive industries, primarily throughout the Southeast and Mid-West regions of the United States.

On July 16, 2020, TFI International completed the acquisition of DSN. Based in Ontario, DSN provides 3PL transborder services for chemical transportation and warehousing for major companies.

On July 31, 2020, TFI International completed the acquisition of KHS. Based in Ontario, KHS provides food grade transporting services, hauling liquid, dry foods, and general freight across North America.

On September 9, 2020, TFI International completed the acquisition of CCC. Based in Florida, CCC operates as a truckload carrier offering cement hauling services primarily in the Southeast region of the United States.

On September 18, 2020, TFI International completed the acquisition of TBM. Based in Alberta, TBM provides bulk transportation in Western Canada and the Pacific Northwest region of the United States.

On October 1, 2020, TFI International completed the acquisition Desrosiers. Based in Ontario, Desrosiers provides bulk transportation across lower Ontario.

On October 5, 2020, TFI International completed the acquisition of Grammer. Based in North Carolina, Grammer focuses on the transportation of commodities including cement and cementitious materials, sand, fly ash, salt, and lime throughout the southeast United States.

On October 31, 2020, TFI International completed the acquisition of FreightLine. Based in Ontario, FreightLine provides cross border logistics services.

On November 2, 2020, TFI International completed the acquisition of DLS. Based in Illinois, DLS provides logistics services through a third-party logistics (“3PL”) network of internal sales personnel, commissioned sales agents, and agent-stations.

On November 29, 2020, TFI International completed the acquisition of Excel. Based in Ontario, Excel provides Less-Than-Truckload services across Canada.

Revenue

For the three months ended December 31, 2020, total revenue was $1,122.0 million, up 13%, or $133.0 million, from Q4 2019. The contribution from business acquisitions of $147.8 million and from an increase in revenue before fuel surcharge of $19.4 million in existing operations was offset by a decrease in fuel surcharge revenue of $34.3 million. The average exchange rate used to convert TFI International’s revenue generated in CAD dollars increased this quarter (US$0.7667) compared to the same quarter last year (US$0.7576) resulting in a negative currency impact of $7.0 million.

For the year ended December 31, 2020, total revenue was $3.8 billion, down 3%, or $122.4 million, as compared to $3.9 billion in 2019 mainly due to the decreases in fuel surcharge revenue of $138.6 million and revenue before fuel surcharge of $283.3 million, both in existing operations, offset by a contribution from business acquisitions of $299.5 million and positive currency impact of $25.1 million.

Operating expenses from continuing operations

For the three months ended December 31, 2020, the Company’s operating expenses from continuing operations increased by $108.7 million, to $1,004.9 million from $896.2 million in Q4 2019. The increase attributable to business acquisitions of $141.2 million was partially offset by a net decrease of $32.6 million, or 4%, in existing operating expenses. Operating improvements, better fleet utilization, lower material and services expenses and lower personnel expenses contributed to maintaining the operating expenses in the Company’s existing operations below the Q4 2019 level as a percentage of total revenue.

For the three months ended December 31, 2020, material and services expenses, net of fuel surcharge, increased by 4.0 percentage points of revenue before fuel surcharge compared to the same period last year due mainly due to business acquisitions which accounted for 2.9 percentage points of the increase.

2020 Annual Report

For the three months ended December 31, 2020, personnel expense increased 1% to $245.4 million from $244.2 million in Q4 2019. The increase includes a mark-to-market loss on DSUs of $3.2 million net of Canadian Emergency Wage Subsidy of $6.3 million.

Other operating expenses, which are primarily composed of costs related to office and terminal rent, taxes, heating, telecommunications, maintenance and security and other general administrative expenses, decreased 0.2 percentage points of revenue before fuel surcharge compared to the same period last year.

For the three-month period ended December 31, 2020, the gain on sale of assets held for sale was $2.2 million, compared to $6.4 million in Q4 2019. Seven properties were disposed of for a cash consideration of $6.1 million.

For the year ended December 31, 2020, the Company’s operating expenses from continuing operations decreased by $156.1 million from $3.5 billion in 2019 to $3.4 billion in 2020. The decrease is mainly attributable to a decrease of $291.9 million of materials and service expense and $134.1 million of personnel expenses, both from existing operations, mainly driven by the reduced volumes in Q2 and Q3 attributable to COVID-19. Further contributing to the decrease in operating expenses is the Canadian Emergency Wage Subsidy of $52.3 million. This is offset by an increase from business acquisitions of $279.5 million.

Operating income from continuing operations

For the three months ended December 31, 2020, TFI International’s operating income from continuing operations rose by $24.3 million to $117.1 million compared to $92.8 million in the same quarter in 2019. The operating margin from continuing operations as a percentage of revenue before fuel surcharge improved, from 10.5% in Q4 2019 to 11.2% in Q4 2020. All reportable segments reported margin increases. Notably, the Less-Than-Truckload segment reported a margin increase of 4.6 percentage points.

For the year ended December 31, 2020, operating income from continuing operations increased by $33.7 million, or 9%, to $416.6 million compared to $382.9 million in 2019, driven by operating improvements, business acquisitions and the wage subsidy of $52.3 million offset by reduced contributions from the gain on sale of assets held for sale of $9.7 million, a bargain purchase gain of $4.0 million, and gain on sale of rolling stock and equipment of $7.5 million.

Finance income and costs

Interest expense on long-term debt

Interest expense on long-term debt for the three-month period ended December 31, 2020 was $4.1 million less compared to the same quarter last year. The decrease is mainly attributable to a lower average debt level of $0.94 billion for the three months ended December 31, 2020 as compared to $1.35 billion the same period in the prior year, and a decrease in the average interest rate in 2020 as compared to the prior year. For the year ended December 31, 2020, interest expense decreased by $9.0 million due to lower average borrowings of $1.05 billion as compared to $1.31 billion in 2019.

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.

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          7

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 facility 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, 2020, a gain of $8.6 million of foreign exchange variations (a gain of $7.5 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, 2019, a gain of $5.8 million of foreign exchange variations (a gain of $5.0 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, 2020, a loss of $2.3 million of foreign exchange variations (a loss of $2.0 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, 2019, a gain of $14.0 million of foreign exchange variations (a gain of $12.2 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge.

Net change in fair value of derivatives and cash flow hedge

The fair values of the Company’s derivative financial instruments, which are used to mitigate foreign exchange and interest rate risks, are subject to market price fluctuations in foreign exchange and interest rates.

The Company designates the interest rate derivatives as a hedge of the variable interest rate instruments. Therefore, the effective portion of changes in fair value of the derivatives is recognized in other comprehensive income. For the three-month period ended December 31, 2020, the loss of $2.6 million on change in fair value of interest rate derivatives (a loss of $1.9 million net of tax) was entirely designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge. For the three-month period ended December 31, 2019, a $0.2 million loss on change in fair value of interest rate derivatives (a loss of $0.2 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge.

For year ended December 31, 2020, a $0.5 million loss on change in fair value of interest rate derivatives (a loss of $0.5 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge. For year ended December 31, 2019, a $10.0 million loss on change in fair value of interest rate derivatives (a loss of $7.4 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge.

As at December 31, 2020, the Company no longer had any cash flow hedge positions.

Income tax expense

For the three months ended December 31, 2020, the Company’s effective tax rate was 15.1%. The income tax expense of $15.4 million reflects a $11.6 million favourable variance versus an anticipated income tax expense of $27.0 million based on the Company’s statutory tax rate of 26.5%. The favourable variance is mainly due to favourable variations from an adjustment for prior years of $8.3 million, tax deductions and tax exempt income of 4.6 million and a favourable impact from Treasury Regulations, interpretive guidance clarifying the U.S. Tax Reform Bill of $1.0 million. The positive adjustment for the prior years was mainly due to adjustment to future tax rates used in deferred income taxes.

For the year ended December 31, 2020, the Company’s effective tax rate was 24.0%. The income tax expense of $87.0 million reflects a $9.1 million favourable variance versus an anticipated income tax expense of $96.1 million based on the Company’s statutory tax rate of 26.5%. The favourable variance is mainly due to positive variations for the tax deductions and tax exempt income of $10.2 million, adjustment from prior years of $8.6 million and from lower effective rates in other jurisdictions of $4.5 million offset by negative variances from non-deductible expenses of $8.7 million and interpretive guidance clarifying the U.S. Tax Reform Bill of $4.5 million.

The U.S. Tax Reform introduces important changes to U.S. corporate income tax laws that may significantly affect the Group in future years including the creation of a new Base Erosion Anti-abuse Tax (BEAT) that subjects certain payments from U.S. corporations to foreign related parties to additional taxes, and limitations to the deduction for net interest expense incurred by U.S. corporations. On April 7, 2020, the U.S. Treasury Department issued Treasury Regulations, interpretive guidance clarifying the U.S. Tax Reform Bill. As anticipated, a tax benefit relating to 2019 and Q1 2020 was disallowed, resulting in a one-time tax expense of $7.3 million in Q2 2020. On July 23, 2020, the U.S. Treasury Department issued final regulations on changes made to the U.S. Tax Reform Bill. It introduces a High-Tax Exception under the Global Intangible Low-taxed Income (GILTI) provisions. A tax benefit relating to 2018 and 2019 was recorded, resulting in a one-time tax recovery of $2.0 million in 2020. For the year ended December 31, 2020, the total impact from these new regulations was $4.5 million following positive adjustments recorded in Q4 2020.

In addition to the above, significant 2020 lower addition to property and equipment from the company’s US operations ($69.7 million in 2020 compared to $145.9 million in 2019) resulted in a higher 2020 current tax expense as a percentage of income before income tax as the Company is taking full depreciation on these capital expenditures.

2020 Annual Report

Net loss from discontinued operations

During the year ended December 31, 2019, the Company recognized a net loss on an accident claim of $10.5 million, or $12.4 million net of $1.9 million of tax recovery. This claim originated from an operating entity within the discontinued rig moving operations, which were closed in 2015.

Net income and adjusted net income

For the three months ended December 31, 2020, TFI International’s net income was $86.3 million compared to $56.7 million in Q4 2019. The Company’s adjusted net income¹, a non-IFRS measure, which excludes items listed in the above table, was $93.4 million compared to $60.1 million in Q4 2019, up 55% or $33.3 million. Adjusted EPS, fully diluted, increased by $0.26 to $0.98 from $0.72 in Q4 2019.

For the year ended December 31, 2020, TFI International’s net income was $275.7 million compared to $233.7 million in 2019. The increase of $42.0 million is mainly attributable to the contribution from business acquisitions of $13.9 million, improved operating results of existing operations, and the loss from discontinued operations of $10.5 million reflected in the 2019 comparative amount. The Company’s adjusted net income was $299.8 million in 2020 compared to $253.6 million in 2019, up 18% or $46.2 million. Adjusted EPS, fully diluted, increased by 11%, to $3.30.

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          9

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

*   Recasted for changes in presentation currency from Canadian dollar to U.S. dollar and mark-to-market gain (loss) on deferred share units presentation in personnel expenses from finance (income) costs.

2020 Annual Report

Package and Courier

*  Recasted for change in presentation currency from Canadian dollar to U.S. dollar.

Operational data

*  Recasted for change in presentation currency from Canadian dollar to U.S. dollar.

Revenue

For the three months ended December 31, 2020, revenue increased by $26.8 million or 21%, from $127.3 million in 2019 to $154.1 million in 2020. This increase in revenue is attributable to a 16.1% increase in revenue per pound (excluding fuel surcharge) combined with a 3.8% increase in tonnage. Increase in tonnage was the result of a 17.7% increase in shipments offset by a 11.8% decrease in average weight per shipment. This combination is the result from increased B2C deliveries.

For the year ended December 31, 2020, revenue increased by $7.8 million or 2%, from $473.7 million in 2019 to $481.5 million in 2020. The increase is related to B2C volumes partially offset by disruptions in the early months of the pandemic. Also, during the year ended December 31, 2020, the Package and Courier segment experienced an IT security breach that had a negative impact on the segment’s revenue estimated at $6 million.

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          11

Operating expenses

For the three months ended December 31, 2020, materials and services expenses, net of fuel surcharge revenue, increased $16.4 million or 29%, partly due to a $9.4 million increase in subcontractor costs and a $1.5 million increase in external personnel to manage higher volume at sorting facilities. Personnel expenses, as a percentage of revenue, decreased from 27.7% in 2019 to 25.8% in 2020 attributed to reduced weight of administrative salaries in percentage of revenue.

For the year ended December 31, 2020, materials and services expenses, net of fuel surcharge revenue, increased $17.3 million or 9%. Personnel expenses, excluding credits received under Canada Emergency Wage Subsidy of $5.7 million, as a percentage of revenue slightly decreased from 29.2% in 2019 to 28.9% in 2020 mainly due to lower administrative salaries partially offset by increase in direct salaries from higher B2C deliveries. Other operating expenses decreased $2.8 million, or 11% in 2020 mainly coming from reduction in IT charges, travel and office expenses, and external personal. Depreciation of property and equipment increased $1.5 million, or 15%, when compared to 2019, mostly due to investment in conveyors put into operation.

Operating income

Operating income for the three months ended December 31, 2020 increased by 30% or $6.7 million compared to the fourth quarter of 2019 and the operating margin was 19.1% in the fourth quarter of 2020 compared to 17.8% for the same period in 2019. This year-over-year increase in operating income was driven primarily by strong organic revenue growth combined with margin expansion.

For the year ended December 31, 2020, operating income decreased by $3.5 million to $78.8 million. This decrease is a combination of lower operating income in the first half of the year because of the COVID-19 pandemic and higher B2C volumes generating slightly lower margins.

Less-Than-Truckload

2020 Annual Report

Operational data

During 2020 and in the fourth quarter, one business has been acquired in the Less-Than-Truckload segment.

Revenue

For the three months ended December 31, 2020, the LTL segment’s revenue was $141.1 million, a $10.2 million, or 7%, decrease when compared to the same period in 2019. The decrease in revenue is due to an 8.2% decrease in tonnage partially offset by a 1.6% increase in revenue per hundredweight (excluding fuel). The decrease in tonnage is the result of a 5.5% decrease in shipments combined with a 2.9% decrease in average weight per shipment. Despite the 7% decline in revenues for the three months ended December 31, 2020, the revenues have improved from the second and third quarters, which were heavily impacted by the COVID-19 pandemic, where revenues decreased respectively 30% and 14% as compared to the same periods in 2019. Excluding business acquisitions, revenue was down $11.0 million, or 7%, when compared to the same period in 2019.

For the year ended December 31st, 2020, revenue decreased $104.4 million or 16.6% to $522.9 million.

Operating expenses

For the three months ended December 31, 2020, materials and services expenses, net of fuel surcharge revenue, decreased $7.9 million, or 10.5%, mostly due to a $10.8 million decrease in sub-contractor cost attributable to decrease in tonnage and partially offset by a reduction in fuel surcharge revenue. Following the same trend, personnel expenses decreased 12.7% year-over-year, attributable to the decrease in tonnage, a reduction in administrative salaries and credits from the Canada Emergency Wage Subsidy of $2.2 million. Other operating expenses decreased $4.2 million in the fourth quarter of 2020, mainly due to a $1.8 million reduction in real estate cost combined with $0.4 million reduction in external personnel and a $0.6 million reduction in travel and bad debt expense. The cost reductions, specifically the reduction of administrative salaries and real estate costs, were driven by efficiencies from the merger of two operating divisions into a single operation.

For the year ended December 31, 2020, materials and services expenses, net of fuel surcharge, decreased $63.3 million, or 20.1%, mainly due to a $71.4 million reduction in subcontractor cost. Personnel expenses as a percentage of revenue before fuel surcharge decreased from 25.5% in 2019 to 22.2% in 2020, mostly due to credits of $20.3 million from the Canada Emergency Wage Subsidy partially offset by a $2.4 million increase in severance cost. Other operating expenses decreased $10.1 million when compared to the same period in 2019, mainly due to a $4.1 million decrease in real estate cost combined with $1.5 million reduction in external personnel and a $2.2 million reduction in travel, bad debt and IT cost.

Operating income

Operating income for the three months ended December 31, 2020 increased $5.2 million, or 27%, when compared to the same period in 2019. As a percentage of revenue, operating income was 17.3% during the fourth quarter of 2020, versus 12.8% for the same period in 2019.

For the year ended December 31, 2020, operating income increased $5.7 million to $88.0 million. This increase was impacted by gains on sale of assets held for sale of $7.0 million in the first quarter of 2019 and $1.5 million in the fourth quarter of 2019. Excluding this $8.5 million gain on assets held for sale, operating income of the LTL segment for the twelve-month ended December 31, 2020, increased $14.3 million, or 19%, when compared to the same period in 2019.

TFI International

MANAGEMENT’S DISCUSSION AND ANALYSIS          13

Truckload

2020 Annual Report

Operational data