6-K - TFII - Equibles

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 July, 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

EXHIBIT<br><br><br>NUMBER	EXHIBIT DESCRIPTION
99.1	News Release
99.2	Management Discussion & Analysis for period ended June 30, 2021
99.3	Interim Financial Statements for period ended June 30, 2021
99.4	CEO Certification
99.5	CFO Certification
99.6	Material Change Report

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.

		TFI International Inc.
Date: July 26, 2021	By:	/s/ Josiane M. Langlois
		Name: Josiane M. Langlois
		Title: Vice-President, Legal Affairs & Corporate Secretary

tfii-ex991_11.htm

Earnings Press Release

Exhibit 99.1

For Immediate Release

TFI International Announces 2021 Second Quarter Results

– Record results and strong profitability driven by all four business segments –

– Operational focus on “freight that fits” drives record margins –

– Acquisition of UPS Freight makes stronger-than-anticipated immediate positive impact –

•	Second quarter operating income from continuing operations of $310.3 million increased 226% from $95.1 million in the same quarter year, including a $122.9 million bargain purchase gain on the acquisition of UPS Freight
•	Second quarter net income from continuing operations of $251.1 million increased 398% compared to $50.5 million in Q2 2020, while adjusted net income^1^^^of $137.2 million increased 104% compared to $67.2 million in Q2 2020
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•	Second quarter diluted earnings per share (diluted “EPS”) from continuing operations of $2.63 increased 361% compared to $0.57 in Q2 2020, while adjusted diluted EPS^1^ of $1.44 increased 89% compared to $0.76 in Q2 2020
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•	Second quarter net cash from continuing operating activities of $298.6 million increased 78% compared to $168.1 million in Q2 2020
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Montreal, Quebec, July 26, 2021 – TFI International Inc. (NYSE and TSX: TFII), a North American leader in the transportation and logistics industry, today announced its results for the second quarter ended June 30, 2021. All amounts are shown in U.S. dollars.

“The second quarter was historically significant for TFI International, with the closing of our UPS Freight acquisition and record performance across the board,” stated Alain Bédard, Chairman, President and Chief Executive Officer. “With all four of our business segments reaching new heights, it is increasingly clear that our strategy to navigate the unprecedented events of the past year has created a platform for growth and profitability that is the strongest in our company’s history, benefitting from our continued sharp focus on ‘freight that fits’ to capitalize on favorable pricing and volume trends. Particularly gratifying is the performance of TForce Freight which has exceeded our operating ratio targets far ahead of schedule, and we have only just begun our work. I wish to thank our entire team for their hard work and remarkable efforts, and officially welcome aboard our new TForce Freight colleagues who have seamlessly come under the TFI umbrella and are already making stronger-than-expected contributions. As we move into the second half of the year, we remain dedicated to strong execution and the generation of robust cash flow to further enhance shareholder value.”

Financial highlights				Six months ended June 30
(in millions of U.S. dollars, except per share data)		2020*		2021		2020*
Total revenue	1,836.7		798.5		2,985.5		1,723.0
Revenue before fuel surcharge	1,651.0		740.1		2,710.1		1,569.2
Adjusted EBITDA1	285.4		167.6		461.6		316.7
Operating income from continuing operations	310.3		95.1		412.0		182.4
Net cash from continuing operating activities	298.6		168.1		453.8		305.3
Adjusted net income1	137.2		67.2		210.9		119.8
Adjusted EPS - diluted1 ()	1.44		0.76		2.21		1.37
Net income from continuing operations	251.1		50.5		318.0		106.2
EPS from continuing operations - diluted ()	2.63		0.57		3.33		1.21
Weighted average number of shares ('000s)	93,192		87,411		93,287		86,063
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.
* Recasted for change in presentation currency from Canadian dollar to U.S. dollar

All values are in US Dollars.

SECOND QUARTER RESULTS

Total revenue of $1.84 billion was up 130% and, net of fuel surcharge, revenue of $1.65 billion was up 123% compared to the prior year period.

Operating income from continuing operations grew 226% to $310.3 million from $95.1 million the prior year period, primarily driven by business acquisitions, a bargain purchase gain of $122.9 million, strong execution across the organization, increased quality of revenue, an asset-right approach, cost efficiencies and Canadian Emergency Wage Subsidy contributions of $5.0 million. This growth was achieved despite a $5.9 million loss recognized on the mark-to-market of the deferred share units (“DSUs”) and $7.0 million of transaction related costs incurred in the acquisition of UPS Freight in the quarter.

Net income from continuing operations grew 398% to $251.1 million from $50.5 million the prior year period, and net income from continuing operations of $2.63 per diluted share was up relative to $0.57 the prior year period. Adjusted net income, a non-IFRS measure, was $137.2 million, or $1.44 per diluted share, up 104% from $67.2 million, or $0.76 per diluted share, the prior year period.

SIX-MONTH RESULTS

For the first six months of 2021, total revenue of $2.99 billion was up 73% and, net of fuel surcharge, revenue of $2.71 billion was up 73% compared to the prior year period.

Net income from continuing operations was $318.0 million, or $3.33 per diluted share, compared to $106.2 million, or $1.21 per diluted share a year ago. Adjusted net income was $210.9 compared to $119.8 million.

During the first half of 2021, revenue grew 35% for Package and Courier, 204% for Less-Than-Truckload, 23% for Truckload and 101% for Logistics, relative to the prior year period. Operating income was higher across all segments in Q2 in comparison to the prior year.

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Earnings Press Release

SEGMENTED RESULTS
(in million of U.S. dollars)										Six months ended June 30
					2020*					2021					2020*

Revenue1
Package and Courier
Less-Than-Truckload
Truckload
Logistics
Eliminations	)					)					)					)

		% of Rev.^1^					% of Rev.^1^					% of Rev.^1^					% of Rev.^1^
Operating income (loss)
Package and Courier			20.3	%				16.3	%				17.3	%				13.6	%
Less-Than-Truckload2			32.4	%				21.1	%				29.7	%				15.0	%
Truckload			13.0	%				14.8	%				12.4	%				13.1	%
Logistics			8.7	%				8.6	%				8.2	%				9.1	%
Corporate	)					)					)					)
			18.8	%				12.8	%				15.2	%				11.6	%
Note: due to rounding, totals may differ slightly from the sum.
1 Revenue before fuel surcharge.<br>2 Three and six months ended June 30, 2021 include a 122.9 million bargain purchase gain.
* Recasted for change in presentation currency from Canadian dollar to U.S. dollar

All values are in US Dollars.

CASH FLOW

Net cash from continuing operating activities was $298.6 million during Q2 compared to $168.1 million the prior year period. The 78% increase was due to stronger operating performance, favorable contributions from working capital of recently acquired companies, and contributions from business acquisitions net of an unfavorable contribution from additional tax payments of $48.3 million driven by an increase in 2021 operating results. The Company returned $58.4 million to shareholders during the quarter, of which $21.4 million was through dividends and $37.0 million was through share repurchases.

Cash used for the purchase of property and equipment was $60.5 million during Q2 2021 versus $20.8 million the prior year quarter, resulfing from a suspension of capital expenditures in Q2 2020.

On June 15, 2021, the Board of Directors of TFI International declared a quarterly dividend of $0.23 per outstanding common share payable on July 15, 2021, representing a 21% increase over the $0.19 quarterly dividend declared in Q2 2020.

CORRECTION OF PREVIOUSLY ISSUED PRESS RELEASE

The press release issued by the Company on July 13, 2021 included a reference to adjusted operating ratio, a non-IFRS measure, without reference to a directly comparable IFRS measure. The Company wishes to withdraw the press release issued on July 13, 2021 and to replace it with the following.

The operating income from the US LTL operating segment, which is comprised almost exclusively of the TForce Freight operations, was $170.8 million, which included a bargain purchase gain of $122.9 million. The adjusted operating ratio, a non-IFRS measure, was 90.1% compared to an expected adjusted operating ratio of 96-97% for the US LTL operating segment. Adjusted operating ratio does not have a directly comparable measure under IFRS. Although adjusted operating ratio is not a recognized financial measure, it is a widely recognized measure in the transportation industry, which TFI International believes provides a comparable benchmark for evaluating its performance.

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Earnings Press Release

TFI International calculates adjusted operating ratio as operating expenses from continuing operations before gain on sale of business, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale, and intangible assets, net of fuel surcharge revenue, divided by revenue before fuel surcharge.

The reconciliation for the adjusted operating ratio for the three months ended June 30, 2021 is as follows:

(in millions of U.S. dollars)	Three months ended
	June 30 2021
U.S. based LTL
Operating expenses*		378.5
Gain (loss) on sale of land and buildings and assets held for sale		-
Bargain purchase gain		122.9
Adjusted operating expenses		501.4
Fuel surcharge revenue		(67.6	)
Adjusted operating expenses, net of fuel surcharge		433.8
Revenue before fuel surcharge		481.7
Adjusted operating ratio		90.1	%
* Operating expenses exclude intra LTL eliminations.

CONFERENCE CALL

TFI International will host a conference call on Monday, July 26, 2021 at 6:00 p.m. Eastern Time to discuss these results.

Interested parties can join the call by dialing 1-877-223-4471. A recording of the call will be available until midnight, August 9, 2021, by dialing 1-800-585-8367 or 416-621-4642 and entering passcode 6087055.

ABOUT TFI INTERNATIONAL

TFI International Inc. 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 segments:

•	Package and Courier;
•	Less-Than-Truckload;
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•	Truckload;
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•	Logistics.
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TFI International Inc. is publicly traded on the New York Stock Exchange and the Toronto Stock Exchange under symbol TFII. For more information, visit www.tfiintl.com.

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.

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Earnings Press Release

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 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 the 2021 Q2 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.

NON-IFRS FINANCIAL MEASURES

This press release includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of the non-IFRS measures used in this press release and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided below.

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Earnings Press Release

Adjusted EBITDA:

Adjusted EBITDA is calculated as net income before finance income and costs, income tax expense, depreciation, amortization, bargain purchase gain, and gain or loss on sale of land and buildings and assets held for sale. 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.

Adjusted EBITDA	Three months ended June 30						Six months ended June 30
(unaudited, in millions of U.S. dollars)	2021			2020*			2021			2020*
Net income from continuing operations		251.1			50.5			318.0			106.2
Net finance costs		16.6			12.7			31.0			27.0
Income tax expense		42.5			32.0			63.0			49.2
Depreciation of property and equipment		56.2			41.9			97.4			84.4
Depreciation of right-of-use assets		28.2			19.7			51.0			38.8
Amortization of intangible assets		13.7			11.1			28.0			22.8
Bargain purchase gain		(122.9	)		-			(122.9	)		(4.0	)
Loss on sale of land and buildings		0.0			-			0.0			0.0
Gain on sale of assets held for sale		0.0			(0.1	)		(3.9	)		(7.7	)
Adjusted EBITDA		285.4			167.6			461.6			316.7
Note: due to rounding, totals may differ slightly from the sum.
* Recasted for change in presentation currency from Canadian dollar to U.S. dollar

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Earnings Press Release

Adjusted net income and adjusted earnings per share (adjusted “EPS”), basic or diluted

Adjusted net income is calculated as net income 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, bargain purchase gain, and gain or loss on sale of land and buildings and assets held for sale,. Adjusted earnings per share, basic or diluted, is calculated as adjusted net income divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income and adjusted earnings per share to measure its performance from one period to the next, without the variation caused by the impact of the items described above. 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.

Adjusted net income	Three months ended June 30						Six months ended June 30
(unaudited, in millions of U.S. dollars, except per share data)	2021			2020*			2021			2020*
Net income for the period		251.1			50.5			318.0			106.2
Amortization of intangible assets related to business acquisitions, net of tax		9.5			8.3			19.4			16.2
Net change in fair value and accretion expense of contingent considerations, net of tax		(0.1	)		0.0			0.1			0.1
Net change in fair value of derivatives, net of tax		-			(0.2	)		-			0.2
Net foreign exchange gain, net of tax		(0.5	)		0.0			(0.5	)		(0.9	)
Bargain purchase gain		(122.9	)		-			(122.9	)		(4.0	)
Gain on sale of land and buildings and assets held for sale, net of tax		0.1			(0.1	)		(3.2	)		(6.8	)
Adjusted net income		137.2			67.2			210.9			119.8
Adjusted earnings per share - basic		1.47			0.77			2.26			1.39
Adjusted earnings per share - diluted		1.44			0.76			2.21			1.37
Note: due to rounding, totals may differ slightly from the sum.
* Recasted for change in presentation currency from Canadian dollar to U.S. dollar
Note to readers:	Unaudited condensed consolidated interim financial statements and Management’s Discussion & Analysis are available on TFI International’s website at www.tfiintl.com.
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For further information:

Alain Bédard

Chairman, President and CEO

TFI International Inc.

647-729-4079

abedard@tfiintl.com

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tfii-ex992_73.htm

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the second quarter ended

June 30, 2021

CONTENTS

GENERAL INFORMATION	2
FORWARD-LOOKING STATEMENTS	2
SELECTED FINANCIAL DATA AND HIGHLIGHTS	3
ABOUT TFI INTERNATIONAL	4
CONSOLIDATED RESULTS	5
SEGMENTED RESULTS	8
LIQUIDITY AND CAPITAL RESOURCES	15
OUTLOOK	19
SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS	19
NON-IFRS FINANCIAL MEASURES	20
RISKS AND UNCERTAINTIES	27
CRITICAL ACCOUNTING POLICIES AND ESTIMATES	40
CHANGES IN ACCOUNTING POLICIES	41
CONTROLS AND PROCEDURES	41

Management’s Discussion and Analysis

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., and shall include its independent operating subsidiaries. This MD&A provides a comparison of the Company’s performance for its three- and six-month periods ended June 30, 2021 with the corresponding three- and six-month periods ended June 30, 2020 and it reviews the Company’s financial position as of June 30, 2021. It also includes a discussion of the Company’s affairs up to July 26, 2021, which is the date of this MD&A. The MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements as of June 30, 2021 and 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. 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 unaudited consolidated condenses interim financial statements have been approved by its Board of Directors (“Board”) upon recommendation of its audit committee on July 26, 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.

FORWARD-LOOKING STATEMENTS

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.

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Management’s Discussion and Analysis

SELECTED FINANCIAL DATA AND HIGHLIGHTS

(unaudited)<br><br><br>(in thousands of U.S. dollars, except per share data)	Three months ended<br><br><br>June 30									Six months ended<br><br><br>June 30
	2021			2020*			2019*			2021			2020*			2019*
Revenue before fuel surcharge		1,650,970			740,106			885,186			2,710,104			1,569,205			1,710,717
Fuel surcharge		185,738			58,389			115,064			275,411			153,799			215,387
Total revenue		1,836,708			798,495			1,000,250			2,985,515			1,723,004			1,926,104
Adjusted EBITDA^1^		285,379			167,631			176,679			461,576			316,690			317,752
Operating income from continuing operations		310,254			95,078			111,298			411,999			182,406			191,160
Net income		251,098			50,458			65,557			317,985			106,246			114,451
Net income from continuing operations		251,098			50,458			74,803			317,985			106,246			123,697
Adjusted net income^1^		137,221			67,231			76,306			210,858			119,794			126,723
Net cash from continuing operating activities		298,611			168,108			94,758			453,806			305,285			215,225
Free cash flow from continuing operations^1^		267,888			158,625			64,982			411,359			287,760			172,158
Per share data
EPS – diluted		2.63			0.57			0.76			3.33			1.21			1.32
EPS from continuing operations – diluted		2.63			0.57			0.87			3.33			1.21			1.43
Adjusted EPS – diluted^1^		1.44			0.76			0.88			2.21			1.37			1.46
Dividends		0.23			0.19			0.18			0.46			0.38			0.36
As a percentage of revenue before fuel surcharge
Adjusted EBITDA margin^1^		17.3	%		22.6	%		20.0	%		17.0	%		20.2	%		18.6	%
Depreciation of property and equipment		3.4	%		5.7	%		4.7	%		3.6	%		5.4	%		4.7	%
Depreciation of right-of-use assets		1.7	%		2.7	%		2.2	%		1.9	%		2.5	%		2.2	%
Amortization of intangible assets		0.8	%		1.5	%		1.4	%		1.0	%		1.5	%		1.4	%
Operating margin from continuing operations^1^		18.8	%		12.8	%		12.6	%		15.2	%		11.6	%		11.1	%
Adjusted operating ratio^1^		88.7	%		87.2	%		88.3	%		89.5	%		89.1	%		89.8	%
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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Q2 Highlights

•	Second quarter operating income from continuing operations of $310.3 million increased 226% from $95.1 million the same quarter last year benfitting from a $122.9 million bargain purchase gain on the acquisition of UPS Freight, and on the rebound in transportation demand following the prior year’s pandemic-related trough, contributions from acquisitions, cost reductions enacted in response to the pandemic, strong execution across the organization, and an asset-light approach.
•	Net income from continuing operations of $251.1 million increased 398% compared to $50.5 million in Q2 2020.
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•	Diluted earnings per share (diluted “EPS”) from continuing operations of $2.63 increased 361% compared to $0.57 in Q2 2020.
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•	Adjusted net income^1^, a non-IFRS measure, of $137.2 million increased 104% compared to $67.2 million in Q2 2020.
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•	Adjusted diluted EPS^1^, a non-IFRS measure, of $1.44 increased 89% compared to $0.76 in Q2 2020.
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•	Net cash from continuing operating activities of $298.6 million increased 78% compared to $168.1 million in Q2 2020.
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•	Free cash flow from continuing operations^1^, a non-IFRS measure, of $267.9 million increased 68.9% compared to $158.6 million in Q2 2020.
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•	The Company’s reportable segments performed as follows:
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o	Package and Courier operating income increased 80% to $29.5 million;
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o	Less-Than-Truckload operating income increased 739% to $202.6 million, which includes a $122.9 million bargain purchase gain;
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o	Truckload operating income increased 24% to $62.6 million; and
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o	Logistics operating income increased 117% to $35.6 million.
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•	Corporate operating loss of $20.1 million included $7.0 million of transaction expenses ($0.06 per share) related to the acquisition of UPS Freight, and a mark-to-market loss on DSUs of $5.9 million ($0.05 per share) as the share price increased from $74.74 per share to $91.19, as compared to a $12.2 million loss in Q2 2020.
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•	On June 15, 2021, the Board of Directors of TFI declared a quarterly dividend of $0.23, compared to the $0.19 (CAD $0.26) dividend declared in Q2 2020.
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•	During the quarter, TFI International acquired UPS Freight from United Parcel Service, Inc. (NYSE: UPS) and Procam International, and subsequent to the quarter completed the acquisition of Driving Force Decks.
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Refer to the section “Non-IFRS financial measures”.

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Management’s Discussion and Analysis

ABOUT TFI INTERNATIONAL

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:

•	Package and Courier;
•	Less-Than-Truckload;
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•	Truckload (“TL”);
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•	Logistics.
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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 June 30, 2021 the Company had 29,812 employees in TFI International’s various business segments across North America. This compares to 16,564 employees as at June 30, 2020. The year-over-year increase of 13,248 is attributable to business acquisitions that added 14,758 employees offset by rationalizations affecting 1,510 employees mainly in the Truckload 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 believes it has the largest trucking fleet in Canada and a significant presence in the U.S. market. As at June 30, 2021, the Company had 13,545 tractors, 48,853 trailers and 10,248 independent contractors. This compares to 7,477 tractors, 24,867 trailers and 10,460 independent contractors as at June 30, 2020

Facilities

TFI International’s head office is in Montréal, Québec and its executive office is in Etobicoke, Ontario. As at June 30, 2021, the Company had 562 facilities, as compared to 365 facilities as at June 30, 2020. Of these, 232 are located in Canada, including 151 and 81 in Eastern and Western Canada, respectively. The Company also had 318 facilities in the United States and 12 facilities in Mexico. In the last twelve months, 221 facilities were added from business acquisitions, and terminal consolidation decreased the total number of facilities by 24, mainly in the TL segment. In Q2 2021, the Company closed 6 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.

Revenue by Top Customers' Industry<br><br><br>(47% of total revenue)
Retail	29%
Manufactured Goods	17%
Food & Beverage	8%
Services	8%
Automotive	7%
Building Materials	7%
Metals & Mining	7%
Chemicals & Explosives	5%
Energy	3%
Forest Products	3%
Waste Management	1%
Others	5%

(For the six-months ended June 30, 2021)

│4

Management’s Discussion and Analysis

CONSOLIDATED RESULTS

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

2021 business acquisitions

In line with its growth strategy, the Company acquired Fleetway Transport Inc. (“Fleetway”) on February 1, 2021. Based out of Brantford, Ontario, Fleetway is a full service provider of truckload and heavy-haul transportation solutions and logistics services.

On April 30, 2021, TFI International completed the acquisition of UPS Freight, the less-than-truckload (LTL) and dedicated truckload (TL) divisions of United Parcel Service, Inc. (NYSE: UPS). The LTL business representing approximately 90% of the acquired business operates independently under the new name of “TForce Freight”.

On June 1, 2021, TFI International acquired Procam International (“Procam”). Based in Quebec, Procam provides bulk transportation services primarily in north eastern region.

Revenue

For the three months ended June 30, 2021, total revenue was $1,836.7 million, up 130%, or $1,038.2 million, from Q2 2020. The increase was mainly attributable to the contribution from business acquisitions of $823.1 million and from an increase in revenue before fuel surcharge of $164.4 million from existing operations and an increase in fuel surcharge revenue of $50.7 million. The average exchange rate used to convert TFI International’s revenue generated in CAD dollars increased this quarter (US$0.8019) compared to the same quarter last year (US$0.7325) resulting in a positive currency impact of $60.5 million.

Operating expenses from continuing operations

For the three months ended June 30, 2021, the Company’s operating expenses from continuing operations increased by $823.0 million, to $1,526.5 million from $703,4 million in Q2 2020. The increase is attributable to $649.6 million from business acquisitions and to an increase of $183.1 million in existing operating expenses corresponding to the increase in total revenues before business acquisitions.

For the three months ended June 30, 2021, material and services expenses, net of fuel surcharge, decreased by 0.9 percentage points of revenue before fuel surcharge compared to the same period last year due mainly to business acquisitions.

For the three months ended June 30, 2021, personnel expense increased 165% to $500.2 million from $188.8 million in Q2 2020. The increase can be attributed to the impact from business acquisitions of $258.2 million, a reduction in the contribution from the Canadian Emergency Wage Subsidy Program of $22.6 million, a mark-to-market loss on director share units (”DSUs”) of $5.9 million as the share price increased from USD $74.74 per share to USD $91.19, and an increase due to increased volumes in Q2 2021 as compared to the same prior year period.

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, increased by $63.3 million for the three months ended June 30, 2021 as compared to the same period last year, attributable primarily to the impact from business acquisitions of $57.3 million. In addition, transaction fees of $7.0 million were recognized in relation to the acquisition of UPS Freight.

For the six-month period ended June 30, 2021, the Company’s operating expenses from continuing operations increased by $1,032.9 million from $1.54 billion in 2020 to $2.57 billion in 2021. The increase is mainly attributable to $853.0 million from business acquisitions. Excluding the acquisitions the operating expenses as a percentage of total revenue decreased from 89.1% to 88.8%. The decrease is due to operating improvements, better fleet utilization and lower material and service expenses in the Company’s existing operations despite a mark-to-market loss on DSUs of $14.3 million, a reduction in the contribution from the Canadian Emergency Wage Subsidy Program of $16.2 million, and transaction costs of $8.0 million.

Operating income from continuing operations

For the three months ended June 30, 2021, TFI International’s operating income from continuing operations rose by $215.2 million to $310.3 million as compared to $95.1 million in the same quarter in 2020. The operating income includes a positive impact from a bargain purchase gain of $122.9 million. The operating margin from continuing operations as a percentage of revenue before fuel surcharge of 18.8% compared to 12.8% in Q2 2020. This increase is due primarily to the bargain purchase gain on the acquisition of UPS Freight, organic growth from operating improvements and through acquisitions, and is partially offset by mark-to-market loss on the DSUs of $5.9 million, acquisition related transaction costs of $7.0 million, and a reduction in the contribution from the Canadian Emergency Wage Subsidy Program of $22.6 million. All reportable segments reported margin increases except for the Truckload segment. Notably, the Less-Than-Truckload segment reported a margin increase of 9.7 percentage points.

For the six months ended June 30, 2021, TFI International’s operating income from continuing operations rose by $229.6 million to $412.0 million as compared to $182.4 million in the same period in 2020. The operating margin from continuing operations as a percentage of revenue before fuel surcharge of 15.2% compared to 11.6% in the same prior year period.

Management’s Discussion and Analysis

Finance income and costs

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six month ended<br><br><br>June 30
Finance costs (income)	2021	2020*	2021	2020*
Interest expense on long-term debt	11,608	8,660	21,480	20,238
Interest expense on lease liabilities	3,514	3,051	6,516	6,230
Interest income and accretion on promissory note	(14)	(183)	(583)	(635)
Net change in fair value and accretion expense of contingent considerations	(96)	29	163	80
Net foreign exchange (gain) loss	(695)	4	(733)	(1,245)
Net change in fair value of interest rate derivatives	—	(245)	—	234
Net impact of early repayment of contingent consideration	(1,469)	—	(1,469)	—
Others	3,764	1,338	5,673	2,094
Net finance costs	16,612	12,654	31,047	26,996
*	Recasted for changes in presentation currency from Canadian dollar to U.S. dollar.
---	---

Interest expense on long-term debt

Interest expense on long-term debt for the three-month period ended June 30, 2021 was $2.9 million higher than the same quarter last year. The increase is mainly attributable to a higher average debt level of $1.46 billion for Q2 2021 compared to an average debt level of $1.04 billion in Q2 2020. This was offset slightly by a decrease in the average interest rate of 3.18% for the three months ended June 30, 2021 as compared to 3.32% the same period in the prior year.

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 June 30, 2021, a gain of $5.1 million of foreign exchange variations (a gain of $4.4 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 June 30, 2020, a gain of $9.9 million of foreign exchange variations (a gain of $8.6 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 six-month period ended June 30, 2021, a gain of $8.0 million of foreign exchange variations (a gain of $6.9 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 six-month period ended June 30, 2020, a loss of $18.1 million of foreign exchange variations (a loss of $15.7 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge.

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 previously designated 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 was recognized in other comprehensive income. For the three- and six-month period ended June 30, 2021, the Company did not have any cash flow hedge positions. For the three-month period ended June, 2021, a gain of $0.3 million on change in fair value of interest rate derivatives was recognized, of which $0.1 million was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge (a gain of $0.0 million net of tax).

For the six-month period ended June, 2021, a cumulatve loss of $3.8 million on change in fair value of interest rate derivatives was recognized, of which $3.5 million was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge (a loss of $2.7 million net of tax).

Income tax expense

For the three months ended June 30, 2021, the Company’s effective tax rate was 14.5%. The income tax expense of $42.5 million reflects a $35.3 million favorable variance versus an anticipated income tax expense of $77.8 million based on the Company’s statutory tax rate of 26.5%. The favorable variance is mainly due to the tax exempt bargain purchase gain recorded on the acquisition of UPS Freight which resulted in a favorable variance of $32.9 million. The remaining favorable variance of $2.4 million is mainly due to favorable variations from tax deductions and tax exempt income of $4.4 million partially offset by a negative variation of $2.5 million for non deductible expenses.

Management’s Discussion and Analysis

For the six months ended June 30, 2021, the Company’s effective tax rate was 16.5%. The income tax expense of $63.0 million reflects a $38.0 million favorable variance versus an anticipated income tax expense of $101.0 million based on the Company’s statutory tax rate of 26.5%. The favorable variance is mainly due to the tax exempt bargain purchase gain recorded on the acquisition of UPS Freight which resulted in a favorable variance of $32.9 million. The remaining favorable variance of $5.1 million is mainly due to favorable variations from tax deductions and tax exempt income of $8.7 million partially offset by a negative variation of $3.6 million for non deductible expenses.

Net income and adjusted net income

(unaudited)<br><br><br>(in thousands of U.S. dollars, except per share data)	Three months ended<br><br><br>June 30		Six month ended<br><br><br>June 30
	2021	2020*	2021	2020*
Net income	251,098	50,458	317,985	106,246
Amortization of intangible assets related to business acquisitions, net of<br><br><br>tax	9,541	8,306	19,447	16,243
Net change in fair value and accretion expense of contingent<br><br><br>considerations, net of tax	(71)	22	120	59
Net change in fair value of derivatives, net of tax	—	(180)	—	172
Net foreign exchange (gain) loss, net of tax	(512)	3	(540)	(915)
Bargain purchase gain	(122,926)	—	(122,926)	(4,008)
Loss (gain) on sale of land and buildings and assets held for sale, net of tax	87	(145)	(3,232)	(6,770)
Loss on sale of intangible assets, net of tax	4	—	4	—
U.S. Tax Reform	—	8,767	—	8,767
Adjusted net income^1^	137,221	67,231	210,858	119,794
Adjusted EPS – basic^1^	1.47	0.77	2.26	1.39
Adjusted EPS – diluted^1^	1.44	0.76	2.21	1.37

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

For the three months ended June 30, 2021, TFI International’s net income was $251.1 million as compared to $50.5 million in Q2 2020. The Company’s adjusted net income^1^, a non-IFRS measure, which excludes items listed in the above table, was $137.2 million as compared to $67.2 million in Q2 2020, an increase of 104% or $70.0 million. Adjusted EPS, fully diluted, increased by $0.68 to $1.44 from $0.76 in Q2 2020.

For the six months ended June 30, 2021, TFI International’s net income was $318.0 million as compared to $106.2 million in Q2 2020. The Company’s adjusted net income^1^, a non-IFRS measure, which excludes items listed in the above table, was $210.9 million as compared to $119.8 million in Q2 2020, an increase of 76% or $91.1 million. Adjusted EPS, fully diluted, increased by $0.84 to $2.21 from $1.37 in Q2 2020.

^1^ Refer to the section “Non-IFRS financial measures”.

Management’s Discussion and Analysis

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)<br><br><br>(in thousands of U.S. dollars)	Package<br><br><br>and<br><br><br>Courier	Less-<br><br><br>Than-Truckload	Truckload	Logistics	Corporate	Eliminations	Total
Three months ended June 30, 2021
Revenue before fuel surcharge^1^	145,235	625,265	481,541	406,902	—	(7,973)	1,650,970
% of total revenue^2^	9%	39%	30%	22%			100%
Adjusted EBITDA^3^	36,138	108,824	115,152	44,872	(19,607)	—	285,379
Adjusted EBITDA margin^4^	24.9%	17.4%	23.9%	11.0%			17.3%
Operating income (loss)	29,543	202,628	62,626	35,566	(20,109)	—	310,254
Operating margin^4^	20.3%	32.4%	13.0%	8.7%			18.8%
Total assets less intangible assets	183,208	1,869,863	1,285,791	261,320	138,531	—	3,738,713
Net capital expenditures^5^	1,041	576	23,449	113	85	—	25,264
Three months ended June 30, 2020*
Revenue before fuel surcharge^1^	100,829	114,338	340,181	191,100	—	(6,342)	740,106
% of total revenue^2^	14%	16%	46%	24%			100%
Adjusted EBITDA^3^	22,560	36,913	95,251	24,838	(11,931)	—	167,631
Adjusted EBITDA margin^4^	22.4%	32.3%	28.0%	13.0%			22.6%
Operating income (loss)	16,393	24,148	50,303	16,388	(12,154)	—	95,078
Operating margin^4^	16.3%	21.1%	14.8%	8.6%			12.8%
Total assets less intangible assets	175,173	379,352	1,139,432	154,677	31,314		1,879,948
Net capital expenditures^5^	3,468	(120)	6,236	90	25	—	9,699
Six months ended June 30, 2021
Revenue before fuel surcharge^1^	276,758	756,891	906,108	785,294	—	(14,947)	2,710,104
% of total revenue^2^	10%	29%	34%	27%			100%
Adjusted EBITDA^3^	61,001	143,463	209,769	84,249	(36,906)	—	461,576
Adjusted EBITDA margin^4^	22.0%	19.0%	23.2%	10.7%			17.0%
Operating income (loss)	47,867	224,764	112,632	64,626	(37,890)	—	411,999
Operating margin^4^	17.3%	29.7%	12.4%	8.2%			15.2%
Total assets less intangible assets	183,208	1,869,863	1,285,791	261,320	138,531	—	3,738,713
Net capital expenditures^5^	2,085	3,672	29,157	117	105	—	35,136
Six months ended June 30, 2020*
Revenue before fuel surcharge^1^	204,957	248,648	737,707	391,163	—	(13,270)	1,569,205
% of total revenue^2^	13%	16%	47%	24%			100%
Adjusted EBITDA^3^	40,368	62,699	180,424	47,725	(14,526)	—	316,690
Adjusted EBITDA margin^4^	19.7%	25.2%	24.5%	12.2%			20.2%
Operating income (loss)	27,960	37,237	96,695	35,562	(15,048)	—	182,406
Operating margin^4^	13.6%	15.0%	13.1%	9.1%			11.6%
Total assets less intangible assets	175,173	379,352	1,139,432	154,677	31,314	—	1,879,948
Net capital expenditures^5^	12,130	4,555	9,832	192	54	—	26,763
*	Recasted for changes in presentation currency from Canadian dollar to U.S. dollar.
---	---

^1^^^Includes intersegment revenue.

^2^Segment revenue including fuel surcharge and intersegment revenue to consolidated revenue including fuel surcharge and intersegment revenue.

^3^^^Refer to the section “Non-IFRS financial measures”

^4^As a percentage of revenue before fuel surcharge.

^5^Additions of rolling stock and equipment, net of proceeds from the sale of rolling stock and equipment and assets held for sale excluding property.

Management’s Discussion and Analysis

Package and Courier

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2021	%	2020*	%	2021	%	2020*	%
Total revenue	164,834		109,403		310,799		228,374
Fuel surcharge	(19,599)		(8,574)		(34,041)		(23,417)
Revenue	145,235	100.0%	100,829	100.0%	276,758	100.0%	204,957	100.0%
Materials and services expenses (net of fuel<br><br><br>surcharge)	62,630	43.1%	45,306	44.9%	123,687	44.7%	91,355	44.6%
Personnel expenses	39,952	27.5%	27,678	27.5%	78,332	28.3%	61,677	30.1%
Other operating expenses	6,522	4.5%	5,252	5.2%	13,767	5.0%	11,545	5.6%
Depreciation of property and equipment	3,039	2.1%	2,831	2.8%	6,077	2.2%	5,490	2.7%
Depreciation of right-of-use assets	3,304	2.3%	3,107	3.1%	6,549	2.4%	6,452	3.1%
Amortization of intangible assets	252	0.2%	229	0.2%	508	0.2%	464	0.2%
(Gain) loss on sale of rolling stock and equipment	(7)	-0.0%	36	0.0%	(24)	(0.0)%	18	0.0%
Gain on derecognition of right-of-use assets	-	-	(3)	-0.0%	(5)	-0.0%	(6)	-0.0%
Loss on sale of land and buildings and assets<br><br><br>held for sale	-	-	—	0.0%	—	0.0%	2	0.0%
Operating income	29,543	20.3%	16,393	16.3%	47,867	17.3%	27,960	13.6%
Adjusted EBITDA^1^	36,138	24.9%	22,560	22.4%	61,001	22.0%	40,368	19.7%
Return on invested capital^1^		23.0%		16.9%

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

^1^ Refer to the section “Non-IFRS financial measures”.

Operational data
(unaudited)	Three months ended June 30				Six months ended June 30
(Revenue in U.S. dollars)	2021	2020*	Variance	%	2021	2020*	Variance	%
Revenue per pound (including fuel)	$0.46	$0.35	$0.11	31.4%	$0.46	$0.36	$0.10	27.8%
Revenue per pound (excluding fuel)	$0.41	$0.33	$0.08	24.2%	$0.41	$0.32	$0.09	28.1%
Revenue per shipment (including fuel)	$7.27	$6.12	$1.15	18.8%	$7.01	$6.20	$0.81	13.1%
Revenue per shipment (excluding fuel)	$6.41	$5.64	$0.77	13.7%	$6.24	$5.56	$0.68	12.2%
Tonnage (in thousands of metric tons)	161	140	21	15.0%	306	287	19	6.6%
Shipments (in thousands)	22,662	17,890	4,772	26.7%	44,363	36,864	7,499	20.3%
Average weight per shipment (in lbs.)	15.66	17.25	(1.59)	-9.2%	15.20	17.16	(1.96)	-11.4%
Vehicle count, average	1,033	1,068	(35)	(3.3)%	1,036	1,027	9	0.9%
Weekly revenue per vehicle (incl. fuel, in thousands of U.S. dollars)	$12.27	$7.88	$4.39	55.7%	$11.54	$8.55	$2.99	35.0%

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

Revenue

For the three months ended June 30, 2021, revenue increased by $44.4 million or 44%, from $100.8 million in 2020 to $145.2 million in 2021. This increase in revenue is attributable to a 13.7% increase in revenue per package (excluding fuel surcharge) combined with a 26.7% increase in packages. Increase in revenue per package is attributable to a 24.2% increase in revenue per pound (excluding fuel surcharge) partly offset by a 9.2% decrease in average weight per package. The increase in packages is mostly attributable to lower volumes in the first half of the quarter ended in June 2020 due to the COVID-19 pandemic and the associated shutdowns. The decrease in weight per package is mainly attributable to the decrease in retail volume brought upon by the COVID-19 pandemic restrictions specifically in the beginning of the quarter as there was a slight shift back to higher retail volume towards the end of the quarter. Despite the reopening of markets in the back half of the second quarter, market capacities continue to be tight, resulting in increased pricing and an ongoing shift towards higher quality freight, leading to strong yield improvement as reflected by the increase in revenue per pound and revenue per package.

For the six-months ended June 30, 2021, revenue increased by $71.8 million or 35%, from $205.0 million in 2020 to $276.8 million in 2021. This increase is mostly related to higher e-commerce volume that remains strong since the beginning of the COVID-19 situation.

Operating expenses

For the three months ended June 30, 2021, materials and services expenses, net of fuel surcharge revenue, increased $17.3 million or 38%, partly due to a $22.6 million increase in subcontractor costs and a $2.2 million increase in external labor and partially offset by higher fuel surcharge revenue. Increase in external labor was mostly required to manage higher volume in our Quebec and Ontario sorting facilities. Personnel expenses increased $12.3 million or 44%, partly from administrative salaries that increased $2.7 million year over year, primarily caused by a workforce reduction in the second quarter of 2020 along with a reduction of $3.2 million in Canada Emergency Wage Subsidy when compared to the second quarter of 2020. Express operations were also impacted by a $5.5 million increase in direct labor cost, mostly from a $2.3 million increase in pickup & deliveries cost combined with a $2.6 million increase in sorting costs, required to handle the additional volume. Other operating expenses increased $1.3 million or 24%, primarily due to higher real estate and IT costs.

Management’s Discussion and Analysis

For the six-months ended June 30, 2021, materials and services expenses, net of fuel surcharge revenue, increased $32.3 million due to a $34.0 million increase in sub-contractor costs required to handle additional volume. Personnel expenses, as a percentage of revenue decreased 180 basis points, from 30.1% in 2020 to 28.3% in 2021. Other operating expenses increased $2.2 million in the first six months of 2021, mainly due to a $1.3 million increase in real estate cost combined with a $0.8 million increase in IT and telecommunication cost.

Operating income

Operating income for the three months ended June 30, 2021, increased by $13.2 million or 80% compared to the second quarter of 2020 and the operating margin was 20.3% in the second quarter of 2021, a strong improvement when compared to 16.3% for the same period in 2020. This year-over-year increase in the second quarter operating income was driven primarily by strong organic revenue growth, combined with our constant focus on improving the quality of freight, which resulted in operating leverage. The impact of business reopenings and shift in customer composition is being closely monitored to focus on driving yield and margin in preparation of the next peak season.

The return on invested capital^1^ increased an 610 basis points, from 16.9% in the trailing twelve months ended in June 30, 2020, to 23.0% in the trailing twelve months ended June 30, 2021. This is primarily due to the increase in operating income over the same period.

For the six-month period ended June 30, 2021, Operating income increased by $19.9 million to $47.9 million driven by organic growth and a constant focus on improving the quality of freight.

Less-Than-Truckload

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2021	%	2020*	%	2021	%	2020*	%
Total revenue	716,027		127,528		866,549		282,860
Fuel surcharge	(90,762)		(13,190)		(109,658)		(34,212)
Revenue	625,265	100.0%	114,338	100.0%	756,891	100.0%	248,648	100.0%
Materials and services expenses (net of fuel<br><br><br>surcharge)	217,798	34.8%	54,769	47.9%	278,041	36.7%	121,250	48.8%
Personnel expenses	262,183	41.9%	19,574	17.1%	294,569	38.9%	56,071	22.6%
Other operating expenses	36,720	5.9%	3,367	2.9%	41,174	5.4%	9,052	3.6%
Depreciation of property and equipment	18,296	2.9%	4,963	4.3%	22,848	3.0%	9,788	3.9%
Depreciation of right-of-use assets	8,340	1.3%	5,748	5.0%	14,063	1.9%	11,541	4.6%
Amortization of intangible assets	2,480	0.4%	2,022	1.8%	4,717	0.6%	4,101	1.6%
Bargain Purchase Gain	(122,926)	-19.7%	—	0.0%	(122,926)	-16.2%	—	0.0%
Gain on sale of rolling stock and equipment	(195)	-0.0%	(179)	-0.2%	(258)	-0.0%	(311)	-0.1%
Gain on derecognition of right-of-use assets	(65)	-0.0%	(106)	-0.1%	(98)	-0.0%	(113)	-0.0%
Gain on sale of land and buildings and assets<br><br><br>held for sale	6	0.0%	32	0.0%	(3)	(0.0)%	32	0.0%
Operating income	202,628	32.4%	24,148	21.1%	224,764	29.7%	37,237	15.0%
Adjusted EBITDA^1^	108,824	17.4%	36,913	32.3%	143,463	19.0%	62,699	25.2%

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

^1^ Refer to the section “Non-IFRS financial measures”.

Management’s Discussion and Analysis

Operational data
(unaudited)	Three months ended June 30			Six months ended June 30
(Revenue in U.S. dollars)	2021	2020*	Variance	2021	2020*	Variance
U.S. LTL
Revenue (in thousands of dollars)	481,726	690	481,036	482,363	1,416	480,947
Adjusted Operating Ratio	90.1%	88.6%		90.1%	88.5%
Revenue per hundredweight (excluding fuel)^1^	$27.22	-	27.22	$27.26	-	27.26
Revenue per shipment (excluding fuel)^1^	$338.29	-	338.29	$338.74	-	338.74
Tonnage (in thousands of tons)^1^	740	-	740	740	-	740
Shipments (in thousands)^1^	1,424	-	1,424	1,424	-	1,424
Average weight per shipment (in lbs)^1^	1,039	-	1,039	1,039	-	1,039
Average length of haul (in miles)^1^	1,065	-	1,065	1,065	-	1,065
Vehicle count, average	5,062	8	5,054	2,535	8	2,527
Return on invested capital^2^^^	-	-
Canadian LTL
Revenue (in thousands of dollars)	144,211	114,327	29,884	275,838	248,638	27,200
Adjusted Operating Ratio	77.9%	78.9%		80.5%	85.1%
Revenue per hundredweight (excluding fuel)	$10.84	$9.21	1.63	$10.58	$9.56	1.02
Revenue per shipment (excluding fuel)	$226.04	$213.30	12.74	$224.62	$213.79	10.83
Tonnage (in thousands of tons)	665	621	44	1,303	1,300	3
Shipments (in thousands)	638	536	102	1,228	1,163	65
Average weight per shipment (in lbs)	2,085	2,317	(232)	2,122	2,236	(114)
Average length of haul (in miles)	765	830	(65)	761	818	(57)
Vehicle count, average	835	901	(66)	854	935	(81)
Return on invested capital^3^	16.3%	12.4%

All values are in US Dollars.

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

^1^ Operational statistics exclude figures from GFP.

^2^ The Return on invested capital for the U.S. LTL is not disclosed as complete annual information is not yet available.

^3^ Refer to the section “Non-IFRS financial measures”.

Revenue

For the three months ended June 30, 2021, LTL revenue excluding fuel surcharge increased by $510.9 million to $625.3 million. This increase is mainly due to the acquisition of UPS Freight. In two months since the closing of this acquisition, TForce Freight LTL operations generated $481.1 million of revenue excluding fuel surcharge. The Company has identified hundreds of low yield accounts and has already implemented actions on selected accounts to increase the quality of freight, with a focus on freight that fits the network and the Company can serve efficiently. Revenue excluding fuel surcharge for the rest of the LTL segment revenue increased $27.3 million or 24%. This increase in revenue before business acquisition is due to a 16.5% increase in shipments combined with a 6.3% increase in revenue per shipment (excluding fuel). The year-over-year increase in shipments is mostly attributable to materially lower volumes in the first half of the quarter ended in June 2020 due to the COVID-19 pandemic. The increase in revenue per shipment is the result of a 19.5% increase in revenue per hundredweight partially offset by a 11.0% decrease in average weight per shipment. Continuous improvement to shipment profile and focus on improving the quality of freight is what explains the yield improvement versus 2020.

For the six-month period ended June 30, 2021, revenue increased $508.2 million to $756.9 million. Before business acquisitions contributions of $486.0 million, revenue increased $22.2 million or 9% compared to six-month period ended June 30, 2020.

Operating expenses

For the three months ended June 30, 2021, materials and services expenses, net of fuel surcharge revenue, increased $163.0 million, with $157.7 attributable to business acquisitions and $5.3 million, or 10%, mostly due to an $13.7 million increase in sub-contractor and fuel costs, attributable to higher volume, and partially offset by a $9.8 million increase in fuel surcharge revenue. Personnel expenses increased $242.6 million from a $227.7 million expense from business acquisitions and $15.3 million, or 78%, when compared to the same quarter in 2020 and this is atlributable mostly to a $9.7 million reduction in credits received from the Canada Emergency Wage Subsidy combined with higher direct labor required to handle the additional volume. Other operating expenses increased $33.4 million due primarly due business acquisitions.

For the six-month period ended June 30, 2021, materials and services expenses, net of fuel surcharge revenue, increased by $156.8 million, with $158.9 attributable to business acquisitions and a decrease $2.1 million, or 2%, mostly due to a $7.5 million increase in fuel surcharge revenue, partially offset by a $3.0 million increase in sub-contractor costs and a $1.8 million increase in fuel cost. Personnel expenses increased $238.5 million from a $227.9 million expense from business acquisitions and an increase of $10.6 million, or 19%, attributable to a $7.0 million reduction in credits received from the Canada Emergency Wage Subsidy combined with a $4.2 million increase in direct labor cost required to handle the additional volume. Other operating expenses

Management’s Discussion and Analysis

increased $32.1 million when compared to the same period in 2020, with $33.6 million relating to business acquisitions and a decrease $1.4 million mainly due to a $1.2 million reduction in real estate costs.

Operating income

Operating income for the three months ended June 30, 2021 increased $178.5 million to 202.6 million. The increase includes a $122.9 million bargain purchase gain from the acquisition of TForce Freight, a $47.8 million contribution from acquisitions and $7.3 million organically coming from the consolidation of two of our over-the-road divisions in the second quarter of 2020. Adjusted operating ratio of the Canadian LTL operations slightly improved, from 78.9% in the second quarter of 2020 to 77.9% in the second quarter of 2021, despite a reduction of $9.7 million in Canada Emergency Wage Subsidy credits and on significantly higher revenues. With the focus on improving freight profile by identifying shipments that fits our network, our US LTL operations, mostly represented by the TForce Freight acquisition, achieved a 90.1% adjusted operating ratio in the second quarter of 2021 as a result of rapid moves to improve the quality of freight, as well as improve operational efficiency and cost structure.

The return on invested capital^1^ of our Canadian based LTL segment was 16.3% in the second quarter of 2021, a 3.9% increase from 12.4% in the second quarter of 2020. That increase is entirely related to higher operating income.

For the six-month period ended June 30, 2021, operating income increased $187.5 million from a contribution of $171.5 million from business acquisitions and increased $16.0 million, or 43%, from existing operating. Even with a negative impact coming from a $7.0 million reduction in credits received under the Canada Emergency Wage Subsidy, the LTL operations were able to increase operating income by improving quality of revenue while maintaining the focus on cost control and routes optimization.

Truckload

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2021	%	2020*	%	2021	%	2020*	%
Total revenue	547,964		372,425		1,022,570		823,835
Fuel surcharge	(66,423)		(32,244)		(116,462)		(86,128)
Revenue	481,541	100.0%	340,181	100.0%	906,108	100.0%	737,707	100.0%
Materials and services expenses (net of fuel<br><br><br>surcharge)	204,240	42.4%	130,205	38.3%	385,574	42.6%	296,131	40.1%
Personnel expenses	151,825	31.5%	106,490	31.3%	289,450	31.9%	241,866	32.8%
Other operating expenses	15,955	3.3%	10,761	3.2%	30,569	3.4%	24,212	3.3%
Depreciation of property and equipment	34,344	7.1%	33,432	9.8%	67,445	7.4%	67,806	9.2%
Depreciation of right-of-use assets	12,952	2.7%	7,052	2.1%	23,276	2.6%	14,053	1.9%
Amortization of intangible assets	5,201	1.1%	4,590	1.3%	10,316	1.1%	9,643	1.3%
Gain on sale of rolling stock and equipment	(5,579)	-1.2%	(2,273)	-0.7%	(9,106)	-1.0%	(4,652)	-0.6%
Gain on derecognition of right-of-use assets	(52)	-0.0%	(253)	-0.1%	(148)	-0.0%	(274)	-0.0%
(Gain) loss on sale of land and buildings and assets held for<br><br><br>sale	24	0.0%	(126)	-0.0%	(3,905)	-0.4%	(7,773)	-1.1%
Operating income	62,631	13.0%	50,303	14.8%	112,637	12.4%	96,695	13.1%
Adjusted EBITDA^1^	115,152	23.9%	95,251	28.0%	209,769	23.2%	180,424	24.5%
* Recasted for change in presentation currency from Canadian dollar to U.S. dollar.<br><br><br>^1^ Refer to the section “Non-IFRS financial measures”.

Management’s Discussion and Analysis

Operational data	Three months ended June 30				Six months ended June 30
(unaudited)	2021	2020*	Variance	%	2021	2020*	Variance	%
U.S. based Conventional TL
Revenue (in thousands of U.S. dollars)	189,515	147,459	42,056	28.5%	345,133	304,702	40,431	13.3%
Adjusted operating ratio	92.7%	91.8%			93.0%	92.6%
Total mileage (in thousands)	92,603	83,849	8,754	10.4%	173,890	171,479	2,411	1.4%
Tractor count, average	3,334	2,897	437	15.1%	3,094	2,918	176	6.0%
Trailer count, average	11,902	10,675	1,227	11.5%	11,379	10,727	652	6.1%
Tractor age	2.9	2.1	0.8	36.7%	2.9	2.1	0.8	36.7%
Trailer age	7.4	6.7	0.7	11.2%	7.4	6.7	0.7	11.2%
Number of owner operators, average	499	462	37	8.0%	516	450	66	14.7%
Return on invested capital^1^	5.5%	5.3%
Canadian based Conventional TL
Revenue (in thousands of U.S. dollars)	61,493	43,941	17,552	39.9%	117,285	96,332	20,953	21.8%
Adjusted operating ratio	86.5%	86.5%			87.3%	87.2%
Total mileage (in thousands)	22,779	20,852	1,927	9.2%	44,930	44,247	683	1.5%
Tractor count, average	614	572	42	7.3%	619	606	13	2.1%
Trailer count, average	2,710	2,778	(68)	-2.4%	2,729	2,806	(77)	-2.7%
Tractor age	2.7	2.2	0.5	20.9%	2.7	2.2	0.5	20.9%
Trailer age	5.3	5.2	0.1	2.8%	5.3	5.2	0.1	2.8%
Number of owner operators, average	302	286	16	5.6%	305	297	8	2.7%
Return on invested capital^1^	12.5%	12.2%
Specialized TL
Revenue (in thousands of U.S. dollars)	232,243	149,581	82,662	55.3%	446,480	338,408	108,072	31.9%
Adjusted operating ratio	82.6%	78.6%			84.4%	83.9%
Tractor count, average	2,313	1,786	527	29.5%	2,310	1,926	384	19.9%
Trailer count, average	6,619	5,779	840	14.5%	6,631	5,895	736	12.5%
Tractor age	3.8	3.9	(0.1)	-2.5%	3.8	3.9	(0.1)	-2.5%
Trailer age	12.8	12.3	0.5	4.1%	12.8	12.3	0.5	4.1%
Number of owner operators, average	1,064	1,068	(4)	-0.4%	1,058	1,111	(53)	-4.8%
Return on invested capital^1^	11.2%	9.3%

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

^1^ Refer to the section “Non-IFRS financial measures”.

During Q2 2021, Procam was acquired and incorporated in the Truckload segment and the TL business of the UPS Freight acquisition is included in the Truckload segment.

Revenue

For the three months ended June 30, 2021, TL revenue excluding fuel surcharge increased by $141.4 million or 42%, from $340.2 million in 2020 to $481.5 million in 2021. This increase is mainly due to business acquisitions’ contribution of $75.0 million and an increase in revenue from existing operations of $66.3 million. For conventional TL operations in the U.S., revenue increased by $42.1 million or 28.5% compared to prior year period, and this includes $30.6 million in revenue contributed by TForce Freight’s TL division. The strong pricing and tight capacity in the U.S. market, led to a 14.4% improvement year over year in revenue per mile. Miles per tractor declined by 3.2%, which is attributable to unseated tractors resulting from limited driver availability. For the three months ended June 30, 2021, excluding business acquisition impact, average unseated tractors percentage in the U.S. TL segment increased by 411bps, despite a reduction of 10% in the tractor fleet, from 9.4% in the second quarter of 2020 to 13.5% in 2021. For conventional TL operations in Canada, revenue increased by $17.6 million, or 39.9% compared to the prior year period. The increase was due to a 21.8% improvement in revenue per tractor, driven by a 19.0% improvement in revenue per mile and a 2.3% increase in miles per tractor. For Specialized TL, revenue increased by $82.7 million, or 55.3%, compared to the prior year period, as the industrial economy revived.

For the six months ended June 30, 2021, TL revenue increased by $168.4 million or 23%, from $737.7 million in 2020 to $906.1 million in 2021. This increase is mainly due to recent business acquisitions’ contribution of $113.5 million and an increase in revenue from existing operations of $54.9 million.

Operating expenses

For the three months ended June 30, 2021, operating expenses, net of fuel surcharge, increased by $129.0 million or 45%, from $289.9 million in 2020 to $418.9 million in 2021. Material and services expenses, net of fuel surcharge, increased by 57% compared to the second quarter of 2020. Personnel expenses and other operating expenses increased by 43% and 48%, respectively, in the second quarter year over year. Included in the personnel expense variance is a $9.9 million, or 83%, decrease in the Canadian Emergency Wage Subsidy, down from $11.9 million in the second quarter of 2020.

For the six months ended June 30, 2021, TL operating expenses, net of fuel surcharge, increased by $152.5 million or 24%, from $641.0 million in 2020 to $793.5 million in 2021. The Company continues to improve its cost structure and increase the efficiency and profitability of its existing fleet and network of independent contractors.

Management’s Discussion and Analysis

Operating income

The TL segment’s operating ratio was 87.0% for the three months ended June 30, 2021 as compared to 85.2% in 2020, and the segment delivered a $12.3 million, or 25%, increase in operating income. Operating income in the TL segment was $62.6 million for the three months ended June 30, 2021, up from $50.3 million from the same prior year period. The operating income in the second quarter of 2021 includes a $2.0 million operating loss generated by TForce Freight’s TL division.

For the six months ended June 30, 2021, the TL segment increased its operating income by $15.9 million or 16%, from $96.7 million in 2020 to $112.6 million in 2021. The increase is due primarily to the contribution from acquisitions and to increased efficiency in the existing operations.

The return on invested capital^1^ for the U.S. based and Canadian Based Conventional TL was 5.5% and 12.5%, respectively compared to 5.3% and 12.2%, respectively for the same prior year period. The slightly decreases were due primarily to lower income on the same similar levels of assets deployed. The return on invested capital^1^ for the Specialized TL segment increased to 11.2% as compared to 9.3% in the same prior year period due primarily to an increase in operating income.

Logistics

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2021	%	2020*	%	2021	%	2020*	%
Total revenue	416,828		195,999		802,206		402,446
Fuel surcharge	(9,926)		(4,899)		(16,912)		(11,283)
Revenue	406,902	100.0%	191,100	100.0%	785,294	100.0%	391,163	100.0%
Materials and services expenses (net of fuel<br><br><br>surcharge)	306,585	75.3%	135,728	71.0%	593,023	75.5%	278,492	71.2%
Personnel expenses	28,913	7.1%	21,016	11.0%	57,762	7.4%	47,385	12.1%
Other operating expenses	26,529	6.5%	9,488	5.0%	50,514	6.4%	18,111	4.6%
Depreciation of property and equipment	400	0.1%	567	0.3%	812	0.1%	1,188	0.3%
Depreciation of right-of-use assets	3,544	0.9%	3,802	2.0%	7,039	0.9%	6,817	1.7%
Amortization of intangible assets	5,362	1.3%	4,081	2.1%	11,772	1.5%	8,166	2.1%
Bargain purchase gain	—	—	—	—	—	—	(4,008)	-1.0%
Loss on sale of rolling stock and equipment	4	0.0%	10	0.0%	6	0.0%	15	0.0%
(Gain) loss on derecognition of right-of-use assets	(1)	-0.0%	20	0.0%	(260)	-0.0%	(565)	-0.1%
Operating income	35,566	8.7%	16,388	8.6%	64,626	8.2%	35,562	9.1%
Adjusted EBITDA^1^	44,872	11.0%	24,838	13.0%	84,249	10.7%	47,725	12.2%
Return on invested capital^1^		22.4%		15.6%

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

^1^ Refer to the section “Non-IFRS financial measures”.

Revenue

For the three months ended June 30, 2021, revenue increased by $215.8 million, or 113%, from $191.1 million in 2020 to $406.9 million in 2021. This increase is mainly due to the business acquisitions contributions of $187.8 million, primarily from the acquisition of DLS Worldwide during the fourth quarter of 2020., and to an increase of $28.0 million, or 15% compared to the same prior year period, mainly coming from the 3PL volume improvement and the continuation of the strong performance of e-commerce activities in Canada.

For the six-month period ended June 30, 2021, revenue increased by 394.1 million, or 101%, from $391.2 million in 2020 to $785.3 million. The increase is attributable to the contribution from business acquisitions of $356.8 million and $37.3 million, or 10%, from existing operations.

Approximately 76% (2020 – 65%) of the Logistics segment’s revenues in the quarter were generated from operations in the U.S. and approximately 24% (2020 – 35%) were generated from operations in Canada and Mexico.

Operating expenses

For the three months ended June 30, 2021, total operating expenses, net of fuel surcharge increased by $196.6 million, or 113%, from $174.7 million to $371.3 million. Business acquisitions accounted for $180.7 million and total operating expenses, net of fuel surcharge increased by $15.9 million for existing operations. For the existing operations, materials and services expenses (net of fuel surcharge) increased by $18.5 million related to revenue growth. This was partially offset by a $1.1 million reduction in professional fees and $0.6 million in reduced real estate cost from synergies and integration of the 2020 acquisitions.

For the six-month period ended June 30, 2021, total operating expenses, net of fuel surcharge increased by $365.1 million, or 103%, from $355.6 million to $720.7 million. Business acquisitions accounted for $344.6 million and total operating expenses, net of fuel surcharge increased by $20.5 million for existing operations. For the existing operations, materials and services expenses (net of fuel surcharge) increased by $23.5 million related to revenue growth. This was partially offset by a $1.7 million reduction in professional fees and $1.1 million in reduced real estate cost.

Management’s Discussion and Analysis

Operating income

Operating income for the three months ended June 30, 2021 increased by $19.2 million, or 117%, from $16.4 million to $35.6 million. The increase is from contributions from business acquisitions of $7.1 million and $12.1 million from existing operations, mainly as a result of better quality revenue, increased e-commerce volume and cost efficiency measures from our last mile operations.

For the six-month period ended June 30, 2021, operating income increased by $29.1 million, or 82%. The increase attributable to contributions of $12.3 million from business acquisitions and $16.8 million, or a 47% increase, in existing operations.

The return on invested capital^1^ increased to 22.4% from 15.6% in the same prior year period. This increase is due primarily to organic growth and operating margin expansion in existing operations.

LIQUIDITY AND CAPITAL RESOURCES

Sources and uses of cash

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30				Six months ended<br><br><br>June 30
	2021		2020*		2021		2020*
Sources of cash:
Net cash from continuing operating activities		298,611		168,108		453,806		305,285
Proceeds from sale of property and equipment		29,608		10,014		46,608		18,067
Proceeds from sale of assets held for sale		210		1,351		6,701		12,019
Net variance in cash and bank indebtedness		283,261		83,606		—		—
Net proceeds from long-term debt		404,576		—		766,165		—
Proceeds from the issuance of common shares		—		—		—		217,552
Others		8,758		15,118		19,050		35,010
Total sources		1,025,024		278,197		1,292,330		587,933
Uses of cash:
Purchases of property and equipment		60,887		19,644		98,256		44,263
Business combinations, net of cash acquired		870,907		44,057		889,926		55,023
Net variance in cash and bank indebtedness		—		—		118,238		12,895
Net repayment of long-term debt		—		171,898		—		365,324
Repayment of lease liabilities		27,342		19,428		51,503		38,994
Dividends paid		21,447		16,225		42,720		32,317
Repurchase of own shares		37,024		6,402		83,111		38,021
Others		7,417		543		8,576		1,096
Total usage		1,025,024		278,197		1,292,330		587,933
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
---	---

Cash flow from continuing operating activities

For the six-month period ended June 30, 2021, net cash from continuing operating activities increased by 49% to $453.8 million from $305.3 million in 2020. This $148.5 million increase is attributable to an increase in net income of $202.1 million, $57.3 million from improvements in net change in working capital primarily attributable to working capital improvements in recently acquired businesses, net of an increase in income taxes paid of $79.8 million. The increases in the taxes paid is attributable primarily to exceeding estimated performance in 2020, and greater tax installments made in 2021 than 2020 due to higher expected profits.

Refer to the section “Non-IFRS financial measures”.

Management’s Discussion and Analysis

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 ended June 30, 2021 and 2020.

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30					Six months ended<br><br><br>June 30
	2021			2020*		2021			2020*
Additions to property and equipment:
Purchases as stated on cash flow statements		60,887			19,644		98,256			44,263
Non-cash adjustments		(346	)		1,204		(2,500	)		3,348
		60,541			20,848		95,756			47,611
Additions by category:
Land and buildings		5,367			974		13,347			2,501
Rolling stock		52,574			18,145		76,999			38,548
Equipment		2,600			1,729		5,410			6,562
		60,541			20,848		95,756			47,611
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
---	---

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. The increase in additions in 2021 compared to 2020 is due to the reduction of capital expenditures in the beginning of the pandemic.The procurement of equipment remains difficult in 2021 as manufacturing challenges have resulted in delays in receiving equipment.

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-and six-month periods ended June 30, 2021 and 2020.

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30						Six months ended<br><br><br>June 30
	2021			2020*			2021			2020*
Proceeds by category:
Land and buildings		(92	)		1,190			6,036			11,739
Rolling stock		29,870			10,105			47,233			18,260
Equipment		40			70			40			87
		29,818			11,365			53,309			30,086
Gains (losses) by category:
Land and buildings		(100	)		165			3,723			7,801
Rolling stock		5,908			2,351			9,689			4,889
Equipment		(60	)		(17	)		(121	)		(21	)
		5,748			2,499			13,291			12,669
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
---	---

Business acquisitions

For the six-month period ended June 30, 2021, cash used in business acquisitions, net of cash acquired, totalled $889.9 million to acquire two businesses. Refer to the section of this report entitled “2021 business acquisitions” and further information can be found in note 5 of the June 30, 2021 unaudited condensed consolidated interim financial statements.

Cash flow used in financing activities

Debt

On January 13, 2021, the Company received $500 million in proceeds from the issuance and sale of an aggregate amount of $500 million of unsecured senior notes consisting of four tranches maturing between January 2029 and January 2036 and bearing interest between 3.15% and 3.50%.

Common shares

On February 13, 2020, the Company issued 6,900,000 common shares in the United States and Canada as part of its initial public offering in the United States raising net proceeds of $217.6 million.

NCIB on common shares

Pursuant to the renewal of the normal course issuer bid (“NCIB”), which began on October 14, 2020 and expires on October 13, 2021, the Company is authorized to repurchase for cancellation up to a maximum of 7,000,000 of its common shares under certain conditions. As at June 30, 2021, and since the inception of this NCIB, the Company has repurchased and cancelled 1,067,062 common shares.

Management’s Discussion and Analysis

For the six-month period ended June 30, 2021, the Company repurchased 1,067,062 common shares (as compared to 1,542,155 during the same period in 2020) at a weighted average price of $77.89 per share (as compared to $24.64 in the prior year period) for a total purchase price of $83.1 million (as compared to $38.0 million the prior year period).

Free cash flow from continuing operations

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30						Six months ended<br><br><br>June 30
	2021			2020*			2021			2020*
Net cash from continuing operating activities		298,611			168,108			453,806			305,285
Additions to property and equipment		(60,541	)		(20,848	)		(95,756	)		(47,611	)
Proceeds from sale of property and equipment		29,608			10,014			46,608			18,067
Proceeds from sale of assets held for sale		210			1,351			6,701			12,019
Free cash flow from continuing operations		267,888			158,625			411,359			287,760
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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The Company's objectives when managing its cash flow from operations are 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 a solid financial position.

For the six-month period ended June 30, 2021, TFI International generated free cash flow from continuing operations of $411.4 million, compared to $287.8 million in 2020, which represents a year-over-year increase of $123.6 million, or 43%. The $148.5 million increase in net cash from continuing operating activites is attributable to an increase in net income of $202.1 million, $57.3 million from improvements in net change in working capital primarily attributable to working capital improvements in recently acquired businesses, net of an increase in income taxes paid of $79.8 million. The additions to property and equipment increased by $48.1 million as compared to the same prior year period as a result of realizing delayed capital expenditures from 2020. The proceeds from the sale of property and equipment increased by $28.5 million as compared to the same prior year period, due to the replenishment of the fleet.

Free cash flow conversion^1^, which measures the level of capital employed to generate earnings, improved for the six months ended June 30, 2021 to 92.4% from 91.5%, due to stronger operating results driven by organic growth and acquisitions.

Based on the June 30, 2021 closing share price of $91.19, the free cash flow generated by the Company in the preceeding twelve months ($668.2 million) represented a yield of 7.9%.

Financial position

(unaudited)<br><br><br>(in thousands of U.S. dollars)	As at<br><br><br>June 30, 2021
Intangible assets		1,782,262	1,749,773	1,505,160
Total assets, less intangible assets		3,738,713	2,099,591	2,003,660
Long-term debt		1,655,981	872,544	1,343,307
Lease liabilities		449,165	355,986	355,591
Shareholders' equity		2,020,563	1,790,177	1,159,292
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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Compared to December 31, 2020, the Company’s total assets, lease liabilities and long-term debt increased, as a result of the acquisition of TForce Freight and the new debt of $500 million issued during the first quarter. The proceeds of the new debt were partially used to repay existing revolver debt and the remaining amount was being held as cash and used to finance the acquisition of TForce Freight.

Management’s Discussion and Analysis

Contractual obligations, commitments, contingencies and off-balance sheet arrangements

The following table indicates the Company’s contractual obligations with their respective maturity dates at June 30, 2021, excluding future interest payments.

(unaudited)<br><br><br>(in thousands of U.S. dollars)
Unsecured revolving facility – June 2023	405,360	—	405,360	—	—
Unsecured revolving facility – November 2021	—	—	—	—	—
Unsecured term loan – June 2022	333,550	333,550	—	—	—
Unsecured debenture – December 2024	162,707	—	—	162,707	—
Unsecured senior notes – December 2026 to 2036	650,000	—	—	—	650,000
Conditional sales contracts	107,786	38,262	55,825	13,526	173
Lease liabilities	449,165	116,110	169,161	79,541	84,353
Total contractual obligations	2,108,568	487,922	630,346	255,774	734,526

On January 13, 2021, the Company received $500 million in proceeds from new debt taking the form of unsecured senior notes consisting of four tranches maturing between January 2029 and January 2036 and bearing interest between 3.15% and 3.50%.

On April 30, 2021, the Company acquired UPS Freight, recording $100.9 million of lease liabilities.

Subsequent to the end of the quarter, the Company entered into a private placement with New York Life for $100 million and Prudential for $30 million equally divided with terms of 8 and 12 years, and bearing interest between 2.87% and 3.37%.

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 the new standard IFRS 16 Leases:

Covenants	Requirements	As at<br><br><br>June 30, 2021
Funded debt-to- EBITDA ratio [ratio of total debt 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		1.84
EBITDAR-to-interest and rent 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		5.48

^1^^^Refer to the section “Non-IFRS financial measures”

As at June 30, 2021, the Company had $29.8 million of outstanding letters of credit ($29.5 million on December 31, 2020).

As at June 30, 2021, the Company had $89.5million of purchase commitments and $24.6 million of purchase orders that the Company intends to enter into a lease that is expected to materialize within a year (December 31, 2020 – $117.1 million and $44.1 million, respectively).

Dividends and outstanding share data

Dividends

The Company declared $21.4 million in dividends, or $0.23 per common share, in the second quarter of 2021. The Board of Directors approved a quarterly dividend of $0.23 per outstanding common share of the Company’s capital, for an expected aggregate payment of $21.4 million to be paid on October 15, 2021 to shareholders of record at the close of business on September 30, 2021.

Outstanding shares and share-based awards

A total of 93,018,868 common shares were outstanding as at June 30, 2021 (December 31, 2020 – 93,397,985). There was no material change in the Company’s outstanding share capital between June 30, 2021 and July 26, 2021.

As at June 30, 2021, the number of outstanding options to acquire common shares issued under the Company’s stock option plan was 2,285,785 (December 31, 2020 – 2,982,514) of which 1,896,947 were exercisable (December 31, 2020 – 2,111,364). 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 June 30, 2021, the number of restricted share units (‘’RSUs’’) granted under the Company’s equity incentive plan to its senior employees was 391, 603 (December 31, 2020 – 299,075). On February 8, 2021, the Board of Directors approved the grant of 78,122 RSUs under the Company’s equity incentive plan. In addition, on April 27, 2021 the Company granted 12,924 RSUs to the Board of Directors in accordance with the changes made to director compensation.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.

Management’s Discussion and Analysis

As at June 30, 2021, the number of performance share units (‘’PSUs’’) granted under the Company’s equity incentive plan to its senior employees was 225,618 (December 31, 2020 –147,121). On February 8, 2021, the Board of Directors approved the grant of 78,122 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.

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 economy has rapidly recovered following the Coronavirus (COVID-19) pandemic. While the many end markets served by TFI International rebounded at various rates, by the second quarter of 2021 most had fully recovered and many achieved or surpassed pre-pandemic strength. Most economists forecast continued healthy GDP growth for the remainder of 2021. However, macro uncertainty remains, Canadian markets have generally lagged the U.S. in their recovery, and specific North American geographies are currently experiencing renewed COVID-19 outbreaks.

TFI International successfully navigated the challenges presented by the pandemic, and management remains vigilant in its monitoring for new potential risks. These include potential additional waves of economic disruption caused by new Coronavirus variants that could result in renewed social distancing mandates and lockdowns, adversely impacting end markets served by TFI’s operating companies and resulting in another round of declines in freight volumes. Additional uncertainties include driver availability, especially for U.S. Truckload operations, computer chip shortages that are affecting a growing number of industries, and potential policy changes surrounding international trade, environmental mandates, tax and other matters.

Management believes the Company is poised for continued strong performance in 2021 due to its focus on efficiency and its lean cost structure, partially reflecting cost reduction measures enacted in 2020 in response to the pandemic, as well as a longstanding focus on profitability, efficiency, and the rationalization of assets to avoid internal overcapacity. The company also has material opportunities for growth and cost synergies related to its recent acquisition of UPS Freight, some of which have already materialized. TFI is particularly well positioned to benefit from the expansion of e-commerce, which provides both growth and margin expansion opportunities for its P&C and Logistics business segments, and from the emerging rebound in the industrial economy which benefits its Specialized TL and LTL businesses.

TFI’s current positioning, now enhanced by the acquisition of UPS Freight, should enable the Company to produce even stronger results than in past years under normalized economic conditions. Longer term, regardless of the operating environment, management’s goal is to build shareholder value through consistent adherence to its operating principles, including the intense customer focus exhibited by its many dedicated professionals, its asset-light approach to the business, continual efforts to enhance efficiencies including a focus on freight quality, and maintaining strong liquidity and a conservative balance sheet.

SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS

(unaudited) - (in millions of U.S. dollars, except per share data)
	Q2’21		Q1’21		Q4’20		Q3’20*		Q2’20*		Q1’20*		Q4’19*		Q3’19*
Total revenue		1,836.7		1,148.8		1,122.0		936.1		798.5		924.5		989.0		988.4
Adjusted EBITDA^1^		285.4		176.2		193.5		189.4		167.6		149.1		163.4		167.9
Operating income from<br><br><br>continuing operations		310.3		101.7		117.1		117.0		95.1		87.3		94.1		99.9
Net income		251.1		66.9		86.3		83.1		50.5		55.8		56.7		62.5
EPS – basic		2.69		0.72		0.92		0.91		0.58		0.66		0.70		0.75
EPS – diluted		2.63		0.70		0.91		0.90		0.57		0.65		0.68		0.74
Net income from<br><br><br>continuing operations		251.1		66.9		86.3		83.1		50.5		55.8		58.0		62.5
EPS from continuing<br><br><br>operations – basic		2.69		0.72		0.92		0.91		0.58		0.66		0.71		0.76
EPS from continuing<br><br><br>operations – diluted		2.63		0.70		0.91		0.90		0.57		0.65		0.70		0.74
Adjusted net income^1^		137.2		73.6		93.4		87.5		67.2		52.6		60.1		66.8
Adjusted EPS -<br><br><br>diluted^1^		1.44		0.77		0.98		0.94		0.76		0.61		0.72		0.79
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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^1^ Refer to the section “Non-IFRS financial measures”.

The differences between the quarters are mainly the result of seasonality (softer in Q1) and business acquisitions. The decline in Q2 2020 is due to COVID-19 related business interruptions.

Management’s Discussion and Analysis

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) from continuing operations: Net income or loss from continuing operations before finance income and costs and income tax expense, as stated in the consolidated interim financial statements.

This MD&A includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of IFRS and 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, bargain purchase gain, gain or loss on sale of land and buildings, assets held for sale and intangible assets and U.S. Tax Reform. 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, 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 from continuing operations before finance income and costs, income tax expense, depreciation, amortization, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale and intangible assets.

Segmented adjusted EBITDA refers to operating income (loss) from continuing operations before depreciation, amortization, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale and intangible assets. 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)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six months ended<br><br><br>June 30
	2021	2020*	2021	2020*
Net income from continuing operations	251,098	50,458	317,985	106,246
Net finance costs	16,612	12,654	31,047	26,996
Income tax expense	42,544	31,966	62,967	49,164
Depreciation of property and equipment	56,205	41,874	97,425	84,443
Depreciation of right-of-use assets	28,153	19,659	50,952	38,819
Amortization of intangible assets	13,658	11,114	28,029	22,769
Bargain purchase gain	(122,926)	—	(122,926)	(4,008)
Loss on sale of land and buildings	3	—	3	1
(Gain) loss on sale of assets held for sale	27	(94)	(3,911)	(7,740)
Gain on sale of intangible assets	5	—	5	—
Adjusted EBITDA	285,379	167,631	461,576	316,690
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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Management’s Discussion and Analysis

Segmented adjusted EBITDA reconciliation:

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six months ended<br><br><br>June 30
	2021	2020*	2021	2020*
Package and Courier
Operating income	29,543	16,393	47,867	27,960
Depreciation and amortization	6,595	6,167	13,134	12,406
Loss on sale of land and buildings	—	—	—	1
Loss on sale of assets held for sale	—	—	—	1
Adjusted EBITDA	36,138	22,560	61,001	40,368
Less-Than-Truckload
Operating income	202,628	24,148	224,764	37,237
Depreciation and amortization	29,116	12,733	41,628	25,430
Bargain purchase gain	(122,926)	—	(122,926)	—
Loss on sale of land and buildings	3	—	3	—
(Gain) loss on sale of assets held for sale	3	32	(6)	32
Adjusted EBITDA	108,824	36,913	143,463	62,699
Truckload
Operating income	62,626	50,303	112,632	96,695
Depreciation and amortization	52,497	45,074	101,037	91,502
(Gain) loss on sale of assets held for sale	24	(126)	(3,905)	(7,773)
Loss on sale of intangible assets	5	—	5	—
Adjusted EBITDA	115,152	95,251	209,769	180,424
Logistics
Operating income	35,566	16,388	64,626	35,562
Depreciation and amortization	9,306	8,450	19,623	16,171
Bargain purchase gain	—	—	—	(4,008)
Adjusted EBITDA	44,872	24,838	84,249	47,725
Corporate
Operating loss	(20,109)	(12,154)	(37,890)	(15,048)
Depreciation and amortization	502	223	984	522
Adjusted EBITDA	(19,607)	(11,931)	(36,906)	(14,526)
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue before fuel surcharge.

Free cash flow: Net cash from continuing 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 17.

Free cash flow conversion: Adjusted EBITDA less net capital expenditures (excluding property), divided by the adjusted EBITDA.

Free cash flow conversion reconciliation:

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six months ended<br><br><br>June 30
	2021	2020*	2021	2020*
Net income from continuing operations	251,098	50,458	317,985	106,246
Net finance costs	16,612	12,654	31,047	26,996
Income tax expense	42,544	31,966	62,967	49,164
Depreciation of property and equipment	56,205	41,874	97,425	84,443
Depreciation of right-of-use assets	28,153	19,659	50,952	38,819
Amortization of intangible assets	13,658	11,114	28,029	22,769
Bargain purchase gain	(122,926)	—	(122,926)	(4,008)
Loss on sale of land and buildings	3	—	3	1
(Gain) loss on sale of assets held for sale	27	(94)	(3,911)	(7,740)
Loss on sale of intangible assets	5	—	5	—
Adjusted EBITDA	285,379	167,631	461,576	316,690
Additions to rolling stock and equipment	(55,174)	(19,874)	(82,409)	(45,110)
Proceeds from sale of rolling stock and equipment	29,910	10,175	47,273	18,347
Adjusted EBITDA net of net rolling stock and equipment	260,115	157,932	426,440	289,927
Free cash flow conversion	91.1%	94.2%	92.4%	91.5%
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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Management’s Discussion and Analysis

Operating margin from continuing operations is calculated as operating income (loss) from continuing operations as a percentage of revenue before fuel surcharge.

Adjusted operating ratio: Operating expenses from continuing operations before gain on sale of business, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale, and intangible assets (“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)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six months ended<br><br><br>June 30
	2021	2020*	2021	2020*
Operating expenses	1,526,454	703,417	2,573,516	1,540,598
Bargain purchase gain	122,926	—	122,926	4,008
Loss on sale of land and building	(3)	—	(3)	(1)
Gain (loss) on sale of assets held for sale	(27)	94	3,911	7,740
Loss on sale of intangible assets	(5)	—	(5)	—
Adjusted operating expenses	1,649,345	703,511	2,700,345	1,552,345
Fuel surcharge revenue	(185,738)	(58,389)	(275,411)	(153,799)
Adjusted operating expenses, net of fuel surcharge revenue	1,463,607	645,122	2,424,934	1,398,546
Revenue before fuel surcharge	1,650,970	740,106	2,710,104	1,569,205
Adjusted operating ratio	88.7%	87.2%	89.5%	89.1%
*Recasted for change in presentation currency from Canadian dollar to U.S. dollar.

Management’s Discussion and Analysis

Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments reconciliations:

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30		Six months ended<br><br><br>June 30
	2021	2020*	2021	2020*
Less-Than-Truckload
Total revenue	716,027	127,528	866,549	282,860
Total operating expenses	513,399	103,380	641,785	245,623
Operating income	202,628	24,148	224,764	37,237
Operating expenses	513,399	103,380	641,785	245,623
Gain on sale of land and buildings and assets held for sale	(6)	(32)	3	(32)
Bargain purchase gain	122,926	—	122,926	—
Adjusted operating expenses	636,319	103,348	764,714	245,591
Fuel surcharge revenue	(90,762)	(13,190)	(109,658)	(34,212)
Adjusted operating expenses, net of fuel surcharge revenue	545,557	90,158	655,056	211,379
Revenue before fuel surcharge	625,265	114,338	756,891	248,648
Adjusted operating ratio	87.3%	78.9%	86.5%	85.0%
Less-Than-Truckload - Revenue before fuel surcharge
U.S. based LTL	481,726	690	482,363	1,416
Canadian based LTL	144,211	114,327	275,838	248,638
Eliminations	(672)	(679)	(1,310)	(1,406)
	625,265	114,338	756,891	248,648
Less-Than-Truckload - Fuel surcharge revenue
U.S. based LTL	67,568	-	67,568	-
Canadian based LTL	23,192	13,190	42,089	34,212
Eliminations	2	-	1	-
	90,762	13,190	109,658	34,212
Less-Than-Truckload - Operating income (loss)
U.S. based LTL	170,818	79	170,883	163
Canadian based LTL	31,810	24,069	53,881	37,074
	202,628	24,148	224,764	37,237
U.S. based LTL
Operating expenses**	378,476	611	379,048	1,253
Gain (loss) on sale of land and buildings and assets held for sale	(3)	-	(3)	-
Bargain purchase gain	122,926	-	122,926	-
Adjusted operating expenses	501,399	611	501,971	1,253
Fuel surcharge revenue	(67,568)	-	(67,568)	-
Adjusted operating expenses, net of fuel surcharge	433,831	611	434,403	1,253
Revenue before fuel surcharge	481,726	690	482,363	1,416
Adjusted operating ratio	90.1%	88.6%	90.1%	88.5%
Canadian based LTL
Operating expenses**	135,593	103,448	264,046	245,776
Gain (loss) on sale of land and buildings and assets held for sale	(3)	(32)	6	(32)
Adjusted operating expenses	135,590	103,416	264,052	245,744
Fuel surcharge revenue	(23,193)	(13,190)	(42,090)	(34,212)
Adjusted operating expenses, net of fuel surcharge	112,397	90,226	221,962	211,532
Revenue before fuel surcharge	144,211	114,327	275,838	248,638
Adjusted operating ratio	77.9%	78.9%	80.5%	85.1%
** Operating expenses excluding intra LTL eliminations
*	Recasted for change in presentation currency from Canadian dollar to U.S. dollar.
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**	Operating expenses excluding intra TL eliminations
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Management’s Discussion and Analysis

Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments reconciliations (continued):

(unaudited)<br><br><br>(in thousands of U.S. dollars)	Three months ended<br><br><br>June 30						Six months ended<br><br><br>June 30
	2021			2020*			2021			2020*
Truckload
Total revenue		547,964			372,425			1,022,570			823,835
Total operating expenses		485,338			322,122			909,938			727,140
Operating income		62,626			50,303			112,632			96,695
Operating expenses		485,338			322,122			909,938			727,140
Gain on sale of land and buildings and assets held for sale		(24	)		126			3,905			7,773
Adjusted operating expenses		485,314			322,248			913,843			734,913
Fuel surcharge revenue		(66,423	)		(32,244	)		(116,462	)		(86,128	)
Adjusted operating expenses, net of fuel surcharge revenue		418,891			290,004			797,381			648,785
Revenue before fuel surcharge		481,541			340,181			906,108			737,707
Adjusted operating ratio		87.0	%		85.2	%		88.0	%		87.9	%
Truckload - Revenue before fuel surcharge
U.S. based Conventional TL		189,515			147,459			345,133			304,702
Canadian based Conventional TL		61,493			43,941			117,285			96,332
Specialized TL		232,243			149,581			446,480			338,408
Eliminations		(1,710	)		(800	)		(2,790	)		(1,735	)
		481,541			340,181			906,108			737,707
Truckload - Fuel surcharge revenue
U.S. based Conventional TL		31,494			16,975			54,922			42,768
Canadian based Conventional TL		7,019			3,627			12,863			10,184
Specialized TL		28,047			11,683			48,869			33,257
Eliminations		(137	)		(41	)		(192	)		(81	)
		66,423			32,244			116,462			86,128
Truckload - Operating income
U.S. based Conventional TL		13,849			12,116			24,108			22,433
Canadian based Conventional TL		8,318			5,952			14,940			12,293
Specialized TL		40,459			32,235			73,584			61,969
		62,626			50,303			112,632			96,695
U.S. based Conventional TL
Operating expenses**		207,160			152,318			375,947			325,037
Fuel surcharge revenue		(31,494	)		(16,975	)		(54,922	)		(42,768	)
Adjusted operating expenses, net of fuel surcharge revenue		175,666			135,343			321,025			282,269
Revenue before fuel surcharge		189,515			147,459			345,133			304,702
Adjusted operating ratio		92.7	%		91.8	%		93.0	%		92.6	%
Canadian based Conventional TL
Operating expenses**		60,194			41,616			115,208			94,223
Gain on sale of land and buildings and assets held for sale		17			—			17			—
Adjusted operating expenses		60,211			41,616			115,225			94,223
Fuel surcharge revenue		(7,019	)		(3,627	)		(12,863	)		(10,184	)
Adjusted operating expenses, net of fuel surcharge revenue		53,192			37,989			102,362			84,039
Revenue before fuel surcharge		61,493			43,941			117,285			96,332
Adjusted operating ratio		86.5	%		86.5	%		87.3	%		87.2	%
Specialized TL
Operating expenses**		219,831			129,029			421,765			309,696
Gain on sale of assets held for sale		(41	)		126			3,888			7,773
Adjusted operating expenses		219,790			129,155			425,653			317,469
Fuel surcharge revenue		(28,047	)		(11,683	)		(48,869	)		(33,257	)
Adjusted operating expenses, net of fuel surcharge revenue		191,743			117,472			376,784			284,212
Revenue before fuel surcharge		232,243			149,581			446,480			338,408
Adjusted operating ratio		82.6	%		78.5	%		84.4	%		84.0	%

Management’s Discussion and Analysis

Return on invested capital (“ROIC”) : Management believes ROIC is a useful measure in the efficiency in the use of capital funds. The Company calculates ROIC as operating income net of exclusions, after tax, divided by the average invested capital. Operating income net of exclusions, after tax, is calculated as the trailing twelve months of operating income from continuing operations before bargain purchase gain, gain or loss on the sale of land and buildings and assets held for sale, and amortization, after tax using the statutory tax rate of the Company. Average invested capital is calculated as total assets 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)<br><br><br>(in thousands of U.S. dollars)	As at<br><br><br>June 30
	2021			2020
Package and Courier
Operating income		98,660			72,024
(Gain) loss on sale of land and buildings		(1	)		1
Gain on sale of assets held for sale		(92	)		(842	)
Amortization of intangible assets		991			932
Operating income, net of exclusions		99,558			72,115
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		73,175			53,005
Intangible assets		199,603			181,484
Total assets, excluding intangible assets		183,208			175,173
less: Trade and other payables, income taxes payable and provisions		(52,753	)		(49,175	)
Total invested capital, current year		330,058			307,482
Intangible assets, prior year		181,484			189,080
Total assets, excluding intangible assets, prior year		175,173			172,720
less: Trade and other payables, income taxes payable and provisions, prior year		(49,175	)		(43,182	)
Total invested capital, prior year		307,482			318,618
Average invested capital		318,770			313,050
Return on invested capital		23.0	%		16.9	%
Less-Than-Truckload - Canadian based LTL
Operating income		104,497			75,884
(Gain) loss on sale of assets held for sale		(19	)		1,446
Amortization of intangible assets		8,830			8,334
Operating income, net of exclusions		113,308			85,664
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		83,281			62,963
Intangible assets		198,122			176,609
Total assets, excluding intangible assets		395,880			378,630
less: Trade and other payables, income taxes payable and provisions		(62,258	)		(65,008	)
Total invested capital, current year		531,744			490,231
Intangible assets, prior year		176,609			191,061
Total assets, excluding intangible assets, prior year		378,630			408,651
less: Trade and other payables, income taxes payable and provisions, prior year		(65,008	)		(70,316	)
Total invested capital, prior year		490,231			529,396
Average invested capital		510,988			509,814
Return on invested capital		16.3	%		12.4	%
Truckload - U.S. based Conventional TL
Operating income		53,532			49,064
Gain on sale of assets held for sale		(1,103	)		—
Amortization of intangible assets		6,815			8,735
Operating income, net of exclusions		59,244			57,799
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		43,544			42,482
Intangible assets		311,081			321,910
Total assets, excluding intangible assets		604,054			543,167
less: Trade and other payables, income taxes payable and provisions		(109,419	)		(74,589	)
Total invested capital, current year		805,716			790,488
Intangible assets, prior year		321,910			325,286
Total assets, excluding intangible assets, prior year		543,167			558,681
less: Trade and other payables, income taxes payable and provisions, prior year		(74,589	)		(78,255	)
Total invested capital, prior year		790,488			805,712
Average invested capital		798,102			798,100
Return on invested capital		5.5	%		5.3	%

Management’s Discussion and Analysis

Return on invested capital segment reconciliation (continued):
(unaudited)<br><br><br>(in thousands of U.S. dollars)	As at<br><br><br>June 30
	2021			2020
Truckload - Canadian based Conventional TL
Operating income		30,984			29,397
Gain on sale of land and buildings		—			(8	)
Gain on sale of assets held for sale		(17	)		—
Amortization of intangible assets		2,095			2,194
Operating income, net of exclusions		33,062			31,583
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		24,301			23,214
Intangible assets		101,228			91,702
Total assets, excluding intangible assets		126,070			111,808
less: Trade and other payables, income taxes payable and provisions		(24,328	)		(18,487	)
Total invested capital, current year		202,970			185,023
Intangible assets, prior year		91,702			101,228
Total assets, excluding intangible assets, prior year		111,808			116,786
less: Trade and other payables, income taxes payable and provisions, prior year		(18,487	)		(23,055	)
Total invested capital, prior year		185,023			194,959
Average invested capital		193,997			189,991
Return on invested capital		12.5	%		12.2	%
Truckload - Specialized TL
Operating income		137,767			121,987
Gain on sale of land and buildings		—			(1	)
Gain on sale of assets held for sale		(6,878	)		(19,537	)
Amortization of intangible assets		11,654			10,194
Operating income, net of exclusions		142,543			112,643
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		104,769			82,793
Intangible assets		515,946			455,301
Total assets, excluding intangible assets		555,667			459,221
less: Trade and other payables, income taxes payable and provisions		(64,984	)		(53,985	)
Total invested capital, current year		1,006,629			860,537
Intangible assets, prior year		455,301			449,981
Total assets, excluding intangible assets, prior year		459,221			529,805
less: Trade and other payables, income taxes payable and provisions, prior year		(53,985	)		(59,427	)
Total invested capital, prior year		860,537			920,359
Average invested capital		933,583			890,448
Return on invested capital		11.2	%		9.3	%
Logistics
Operating income		113,523			60,226
Loss on sale of land and buildings		5			—
Amortization of intangible assets		21,495			17,157
Bargain Purchase gain		—			(4,008	)
Operating income, net of exclusions		135,023			73,375
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		99,242			53,931
Intangible assets		454,157			252,451
Total assets, excluding intangible assets		261,320			154,677
less: Trade and other payables, income taxes payable and provisions		(165,334	)		(70,923	)
Total invested capital, current year		550,143			336,205
Intangible assets, prior year		252,451			251,540
Total assets, excluding intangible assets, prior year		154,677			155,848
less: Trade and other payables, income taxes payable and provisions, prior year		(70,923	)		(54,179	)
Total invested capital, prior year		336,205			353,209
Average invested capital		443,174			344,707
Return on invested capital		22.4	%		15.6	%

Management’s Discussion and Analysis

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;
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•	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;
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•	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;
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•	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;
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•	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;
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•	economies of scale that may be passed on to smaller carriers by procurement aggregation providers may improve their ability to compete with the Company;
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•	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;
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•	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;
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•	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;
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•	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;
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•	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;
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•	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.
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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 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

Management’s Discussion and Analysis

(“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 we will be able to maintain our current safety ratings or that we 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 2015, the U.S. Congress passed a new highway funding bill called Fixing America’s Surface Transportation Act (the “FAST Act”), which calls for significant CSA reform. The FAST Act directs the FMCSA to conduct studies of the scoring system used to generate CSA rankings to determine if it is effective in identifying high-risk carriers and predicting future crash risk. This study was conducted and delivered to the FMCSA in June 2017 with several recommendations to make the CSA program more fair, accurate and reliable. In June 2018, the FMCSA provided a report to the U.S. Congress outlining the changes it may make to the CSA program in response to the study. Such changes include the testing and possible adoption of a revised risk modeling theory, potential collection and dissemination of additional carrier data and revised measures for intervention thresholds. The adoption of such changes is contingent on the results of the new modeling theory and additional public feedback. Thus, it is unclear if, when and to what extent such changes to the CSA program will occur. The FAST Act is set to expire in September 2021, and the U.S. Congress has noted its intent to consider a multiyear highway measure that would update the FAST Act, which could lead to further changes to the CSA program. Any changes that increase the likelihood of the Company receiving unfavorable scores could materially adversely affect the Company’s results of operations and profitability.

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 pursuant to which the compliance date for state driver’s licensing agencies for certain Drug and Alcohol Clearinghouse requirements were extended for three years. The December 2016 commercial driver’s license rule initially 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 to delay compliance with the requirement until January 2023.

In addition, other rules have been recently 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 recently 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 2019 U.S. Congressional representatives proposed a similar rule related to speed limiting devices. 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.

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.

Management’s Discussion and Analysis

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 also is in the early phases of planning 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 a 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. 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 would also extend by two hours the duty time for drivers encountering adverse weather, and extend the short haul 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. Any future changes to 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 tractor 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 tractors (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 tractors and trailers and may require the Company to retrofit certain of its tractors 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 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 Court of Appeals decision stands. 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 has been appealed by labor groups and multiple lawsuits have been filed in U.S. federal courts seeking to overturn the decision, and thus it is uncertain whether it will stand. 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, 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. There is proposed federal legislation to solidify the pre-emption of state and local wage and hour laws applied to interstate truck drivers; however, passage of such legislation is uncertain. If U.S. federal legislation is not passed, 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

Management’s Discussion and Analysis

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 growing 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.

The United States has imposed tariffs on certain imported steel and aluminum. The implementation of these tariffs, as well as the imposition of additional tariffs or quotas or changes to certain trade agreements, including tariffs applied to goods traded between the United States and China, could, among other things, 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, if the USMCA enters into effect, 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.

Management’s Discussion and Analysis

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;
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•	tractor and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts, 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 tractors and trailers; and
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•	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.
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The Company’s tractor 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, fires, earthquakes and explosions. 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 tractor and trailer capacity in the transportation industry in comparison with shipping demand; (ii) declines in the resale value of used equipment; (iii) recruiting and retaining qualified drivers; (iv) strikes, work stoppages or work slowdowns at the Company’s facilities or at customer, port, border crossing or other shipping-related facilities; (v) compliance with ongoing regulatory requirements; (vi) 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.

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 tractors 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;
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•	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;
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•	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;
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•	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
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•	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.
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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

Management’s Discussion and Analysis

premiums and claims, revenue equipment and related maintenance, and tires and other components. Strikes or other work stoppages at the Company’s service centres 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.

Coronavirus and its variants (“COVID-19”) outbreak or other similar outbreaks. The recent outbreak of COVID-19, and any other 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 has 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. There is considerable uncertainty regarding such measures and potential future measures, all of which could limit our ability to meet customer demand, as well as reduce customer demand.

Certain of the Company’s office personnel have been working 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 the outbreak of COVID-19, which could have a materially adverse effect on the Company’s operating results. Further, the Company’s operations, particularly in areas of increased COVID-19 infections, could be disrupted resulting in a negative impact on the Company’s operations and results.

The outbreak of COVID-19 has significantly increased economic and demand uncertainty. It is likely that the current outbreak or continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. Risks related to a slowdown or recession are described in our risk factor titled “General Economic, Credit and Business Conditions”.

The extent to which COVID-19 or similar outbreaks could impact the Company’s operations, financial condition, liquidity, results of operations, and cash flows is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak.

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 London Interbank Offered Rate (Libor). 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

Management’s Discussion and Analysis

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 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 retains a deductible of US $2.25 million for certain U.S. subsidiaries on their primary US $5 million limit policies for automobile bodily injury and property damage, also subject to certain exceptions, and a 50% quota share deductible for the US $5 million limit in excess of US $5 million. The Company retains a deductible of US $1 million on its primary US $5 million limit policy for certain U.S. subsidiaries for commercial general liability. The Company retains deductibles of up to US $1 million per occurrence for workers’ compensation claims. The Company’s liability coverage has a total limit of US $100 million per occurrence for both its Canadian and U.S. divisions.

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:

•	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;
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Management’s Discussion and Analysis

•	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;
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•	disputes with the Company’s unions could arise; and
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•	an election and bargaining process could divert management’s time and attention from our overall objectives and impose significant expenses.
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The Company’s collective agreements have a variety of expiration dates, to the last of which is in September 2024. 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 limited experience with unionized employees in the U.S. There may be additional risks related to the increased number of unionized U.S. employees from the acquisition of UPS Freight. The impact the Company’s unionized operations could have on non-unionized operations is uncertain.

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.

In addition, the Company and many other trucking companies suffer from a high turnover rate of drivers in the U.S. TL market. This high turnover rate requires the Company to continually recruit a substantial number of new drivers in order to operate existing revenue equipment. 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. The lack of adequate tractor 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 tractors for expedited shipments requires two drivers per tractor, which further increases the number of drivers the Company must recruit and retain in comparison to operations that require one driver per tractor. 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 tractors 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.

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 tractors with its drivers, the Company may incur losses on amounts owed to it with respect to such tractors.

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

Management’s Discussion and Analysis

penalties for companies who misclassify their employees and are found to have violated employees’ overtime and/or wage requirements. 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 recently 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. While it was set to enter into effect in January 2020, a suit by the California Trucking Association (“CTA”) has held up its application and enforcement. Unless the U.S. Supreme Court takes the CTA’s case and decides to overturn the U.S. Court of Appeals for the Ninth Circuit’s decision that AB5 is not pre-empted by U.S. Federal law, the existing injunction preventing AB5’s application will be dissolved and the AB5 mandate will apply. It remains unclear whether other U.S. states will adopt similar laws to AB5.

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 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;
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•	failure to maintain or improve the safety or quality of services that have historically been provided;
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•	inability to retain, integrate, hire or recruit qualified employees;
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•	unanticipated environmental or other liabilities;
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•	risks of entering new markets or business offerings in which we have had no or only limited prior experience;
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•	failure to coordinate geographically dispersed organizations; and
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•	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.
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Given the nature and size of UPS Freight, as well as the structure of the acquisition as a carveout from UPS, the acquisition of UPS Freight presents the following risks, in addition to risks noted elsewhere in these risk factors:

•	a large portion of the business of UPS Freight prior to the acquisition was with affiliates of UPS. While there are transportation service agreements in effect with such affiliates of UPS, such affiliates may decide to reduce or eliminate business with the Company in the future and we have limited contractual protections to prevent the loss of such business;
•	some of the information and operating systems of UPS Freight were integrated with UPS prior to the acquisition. The Company is in the process of transitioning such systems and could experience disruptions during the transition or difficulty or delay in building its systems and personnel to operate them;
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•	the Company had limited experience in the U.S. LTL market prior to the acquisition and we may be unsuccessful in integrating UPS Freight and operating it profitably;
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•	given the size and complexity of the acquired U.S. LTL operations of UPS Freight, management’s attention may be diverted from other areas of the Company; and
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Management’s Discussion and Analysis

•	the Company acquired a substantial number of unionized U.S. employees in the acquisition and unionized employees present significant risks.

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 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

Management’s Discussion and Analysis

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 personal 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 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

Management’s Discussion and Analysis

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 2021 to 2036. 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.

Increased prices for new revenue equipment, design changes of new engines, decreased availability of new revenue equipment and future use of autonomous tractors could have a material adverse effect on the Company’s business, financial condition, operations, and profitability.

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 tractors in recent years, and the resale value of the tractors 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 tractors, 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 tractors 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 tractors could increase the price of new tractors and decrease the value of used non-autonomous tractors. The Company’s business could be harmed if it is unable to continue to obtain an adequate supply of new tractors 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.

Tractor and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts. A decrease in vendor output may have a materially adverse effect on the Company’s ability to purchase a quantity of new revenue equipment that is sufficient to sustain its desired growth rate and to maintain a late model fleet. Moreover, an inability to obtain an adequate supply of new tractors or trailers could have a material adverse effect on the Company’s business, financial condition, and results of operation.

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.

Management’s Discussion and Analysis

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, 2020. 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.

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 system is 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 and man-made disasters and other events beyond the Company’s control, including cybersecurity breaches and threats, such as hackers, malware and viruses, fire, earthquake, 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. For example, during the year ended December 31, 2019, the Company recognized a net loss on an accident claim of CAD $14.2

Management’s Discussion and Analysis

million (CAD $16.6 million net of CAD $2.4 million of tax recovery). 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.

Internal Control. Effective internal controls over financial reporting are necessary for the Company to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause the Company to fail to meet its reporting obligations. In addition and when required, any testing by the Company conducted in connection with section 404 of the U.S. Sarbanes-Oxley Act, or the subsequent testing by the Company’s independent registered public accounting firm, may reveal deficiencies in the Company’s internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to the Company’s consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in the Company’s reported financial information, which could have a negative effect on the trading price of the Common Shares.

Material Transactions. The Company has acquired numerous companies pursuant to its acquisition strategy and, in addition, has sold business units, including the sale in February 2016 of its then-Waste Management segment for CAD $800 million. 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 four reportable segments, that is, TL, Logistics, LTL, and Package and Courier. 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 rumours 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 rumours 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.

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, 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 related to business combinations

•	Projected future cashflows
•	Acquisition specific discount rate
---	---
•	Attrition rate established from historical trends
---	---

Impairment tests for goodwill

•	Discount rates
•	Forecasted revenue growth, operating margin, EBITDA margin as well as capital expenditures
---	---
•	Comparable public company EBITDA multiples
---	---

Self-Insurance and litigations

•	Historical claim experience, severity factors affecting the amounts ultimately paid, and current and expected levels of cost per claims
•	Third party evaluations
---	---

Management’s Discussion and Analysis

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 for interim periods beginning on or after January 1, 2021 and have been applied in preparing the unaudited condensed consolidated interim financial statements:

Interest Rate Benchmark Reform – Phase 2

(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

These new standards did not have a material impact on the Company’s unaudited condensed consolidated interim 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, 2021, and have not been applied in preparing the unaudited condensed consolidated interim financial statements:

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

Onerous Contracts – Cost of fulfilling a Contract (Amendments to IAS 37)

Definition of Accounting Estimates (Amendments to IAS 8)

Further information can be found in note 3 of the June 30, 2021 unaudited condensed consolidated interim financial statements.

CONTROLS AND PROCEDURES

In compliance with the provisions of Canadian Securities Administrators’ National Instrument 52-109 and as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) 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.
---	---

Disclosure controls and procedures (“DC&P”)

The President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), have designed DC&P, 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, particularly during the period in which the interim and annual filings are being prepared; and
•	information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.
---	---

Internal controls over financial reporting (“ICFR”)

The CEO and CFO have also designed ICFR, 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.

The control framework used to design the Company’s IFCR 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).

Changes in internal controls over financial reporting

No changes were made to the Company’s ICFR during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.

Limitation on scope of design

The Company has limited the scope of its DC&P and ICFR to exclude controls, policies and procedures of UPS Freight as it was acquired not more than 365 days before the end of the financial period to which the CEO and CFO certificates relate. The Company elected to exclude UPS Freight from the scope of certification as allowed by Canadian Securities Administrators’ National Instrument 52-109. The Company intends to include UPS Freight in its DC&P and ICFR within one year of the acquisition.

tfii-ex993_12.htm

Exhibit 99.3

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the second quarter ended

June 30, 2021

CONTENTS

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	7

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TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

(in thousands of U.S. dollars)		As at			As at
	Note	June 30,<br><br><br>2021			December 31,<br><br><br>2020
Assets
Cash and cash equivalents			111,508			4,297
Trade and other receivables			968,615			597,873
Inventoried supplies			25,403			8,761
Current taxes recoverable			5,028			7,606
Prepaid expenses			50,115			29,904
Assets held for sale			1,640			4,331
Current assets			1,162,309			652,772
Property and equipment	7		2,130,806			1,074,428
Right-of-use assets	8		414,907			337,285
Intangible assets	9		1,782,262			1,749,773
Other assets	10		15,331			23,899
Deferred tax assets			15,360			11,207
Non-current assets			4,358,666			3,196,592
Total assets			5,520,975			3,849,364
Liabilities
Trade and other payables			792,904			468,238
Current taxes payable			20,308			33,220
Provisions	14		30,717			17,452
Other financial liabilities			9,301			4,031
Long-term debt	11		371,820			42,997
Lease liabilities	12		116,110			88,522
Current liabilities			1,341,160			654,460
Long-term debt	11		1,284,161			829,547
Lease liabilities	12		333,055			267,464
Employee benefits	13		102,074			15,502
Provisions	14		80,706			36,803
Other financial liabilities			11,857			22,699
Deferred tax liabilities			347,399			232,712
Non-current liabilities			2,159,252			1,404,727
Total liabilities			3,500,412			2,059,187
Equity
Share capital	15		1,126,352			1,120,049
Contributed surplus	15, 17		22,551			19,783
Accumulated other comprehensive income			(137,072	)		(154,723	)
Retained earnings			1,008,732			805,068
Equity attributable to owners of the Company			2,020,563			1,790,177
Contingencies, letters of credit and other commitments	23
Subsequent events	24
Total liabilities and equity			5,520,975			3,849,364

The notes on pages 7 to 27 are an integral part of these condensed consolidated interim financial statements.

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TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands of U.S. dollars, except per share amounts)	Note
Revenue		1,650,970		740,106		2,710,104		1,569,205
Fuel surcharge		185,738		58,389		275,411		153,799
Total revenue		1,836,708		798,495		2,985,515		1,723,004
Materials and services expenses	18	962,525		413,622		1,628,445		918,957
Personnel expenses	19	500,154		188,795		757,426		425,568
Other operating expenses		94,546		31,215		147,973		67,697
Depreciation of property and equipment	7	56,205		41,874		97,425		84,443
Depreciation of right-of-use assets	8	28,153		19,659		50,952		38,819
Amortization of intangible assets	9	13,658		11,114		28,029		22,769
Bargain purchase gain	5	(122,926	)	-		(122,926	)	(4,008	)
Gain on sale of rolling stock and equipment		(5,778	)	(2,405	)	(9,383	)	(4,930	)
Gain on derecognition of right-of-use assets		(118	)	(363	)	(522	)	(978	)
Loss on sale of land and buildings		3		-		3		1
Loss (gain) on sale of assets held for sale		27		(94	)	(3,911	)	(7,740	)
Loss on sale of intangible assets		5		-		5		-
Total operating expenses		1,526,454		703,417		2,573,516		1,540,598
Operating income		310,254		95,078		411,999		182,406
Finance (income) costs
Finance income	20	(2,274	)	(428	)	(2,785	)	(1,880	)
Finance costs	20	18,886		13,082		33,832		28,876
Net finance costs		16,612		12,654		31,047		26,996
Income before income tax		293,642		82,424		380,952		155,410
Income tax expense	21	42,544		31,966		62,967		49,164
Net income for the period attributable
to owners of the Company		251,098		50,458		317,985		106,246
Earnings per share attributable to owners of the Company
Basic earnings per share	16	2.69		0.58		3.41		1.23
Diluted earnings per share	16	2.63		0.57		3.33		1.21

* Recasted for change in presentation currency (see note 2d))

The notes on pages 7 to 27 are an integral part of these condensed consolidated interim financial statements.

│3

TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands of U.S. dollars)
Net income for the period attributable to
owners of the Company	251,098	50,458	317,985	106,246
Other comprehensive income (loss)
Items that may be reclassified to income or loss in future periods:
Foreign currency translation differences	15,073	19,373	10,736	(12,912	)
Net investment hedge, net of tax	4,422	8,644	6,915	(15,733	)
Changes in fair value of cash flow hedge, net of tax	-	24	-	(2,666	)
Other comprehensive income for the period, net of tax	19,495	28,041	17,651	(31,311	)
Total comprehensive income for the period
attributable to owners of the Company	270,593	78,499	335,636	74,935

* Recasted for change in presentation currency (see note 2d))

The notes on pages 7 to 27 are an integral part of these condensed consolidated interim financial statements.

│4

TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
	PERIODS ENDED JUNE 30, 2021 AND 2020 - (UNAUDITED)
(In thousands of U.S. dollars)														Accumulated
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
								Accumulated						foreign
								unrealized						currency						Total equity
								loss on			Accumulated			translation						attributable
								employee			cash flow			differences						to owners
		Share			Contributed			benefit			hedge			& net invest-			Retained			of the
	Note	capital			surplus			plans			gain (loss)			ment hedge			earnings			Company
Balance as at December 31, 2020			1,120,049			19,783			(379	)		-			(154,344	)		805,068			1,790,177
Net income for the period			-			-			-			-			-			317,985			317,985
Other comprehensive income (loss) for the period, net of tax			-			-			-			-			17,651			-			17,651
Total comprehensive income (loss) for the period			-			-			-			-			17,651			317,985			335,636
Share-based payment transactions	17		-			5,319			-			-			-			-			5,319
Stock options exercised	15, 17		17,935			(2,544	)		-			-			-			-			15,391
Dividends to owners of the Company	15		-			-			-			-			-			(42,839	)		(42,839	)
Repurchase of own shares	15		(11,635	)		-			-			-			-			(71,476	)		(83,111	)
Net settlement of restricted share units	15, 17		3			(7	)		-			-			-			(6	)		(10	)
Total transactions with owners, recorded directly in equity			6,303			2,768			-			-			-			(114,321	)		(105,250	)
Balance as at June 30, 2021			1,126,352			22,551			(379	)		-			(136,693	)		1,008,732			2,020,563
Balance as at December 31, 2019*			678,915			19,549			(369	)		487			(173,516	)		634,226			1,159,292
Net income for the period			-			-			-			-			-			106,246			106,246
Other comprehensive income (loss) for the period, net of tax			-			-			-			(2,666	)		(28,645	)		-			(31,311	)
Total comprehensive income (loss) for the year			-			-			-			(2,666	)		(28,645	)		106,246			74,935
Share-based payment transactions	17		-			3,300			-			-			-			-			3,300
Stock options exercised	15, 17		15,981			(3,021	)		-			-			-			-			12,960
Issuance of shares	15		217,552			-			-			-			-			-			217,552
Dividends to owners of the Company	15		-			-			-			-			-			(33,000	)		(33,000	)
Repurchase of own shares	15		(12,025	)		-			-			-			-			(25,996	)		(38,021	)
Total transactions with owners, recorded directly in equity			221,508			279			-			-			-			(58,996	)		162,791
Balance as at June 30, 2020*			900,423			19,828			(369	)		(2,179	)		(202,161	)		681,476			1,397,018

* Recasted for change in presentation currency (see note 2d))

The notes on pages 7 to 27 are an integral part of these condensed consolidated interim financial statements.

│5

TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(UNAUDITED)
(In thousands of U.S. dollars)	Note		Three months ended<br><br><br>June 30, 2021			Three months ended<br><br><br>June 30, 2020*			Six months ended<br><br><br>June 30, 2021			Six months ended<br><br><br>June 30, 2020*
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Cash flows from operating activities
Net income for the period				251,098			50,458			317,985			106,246
Adjustments for
Depreciation of property and equipment		7		56,205			41,874			97,425			84,443
Depreciation of right-of-use assets		8		28,153			19,659			50,952			38,819
Amortization of intangible assets		9		13,658			11,114			28,029			22,769
Share-based payment transactions		17		2,808			1,660			5,319			3,300
Net finance costs		20		16,612			12,654			31,047			26,996
Income tax expense		21		42,544			31,966			62,967			49,164
Bargain purchase gain				(122,926	)		-			(122,926	)		(4,008	)
Gain on sale of property and equipment				(5,775	)		(2,405	)		(9,380	)		(4,929	)
Gain on derecognition of right-of-use assets				(118	)		(363	)		(522	)		(978	)
Loss (gain) on sale of assets held for sale				27			(94	)		(3,911	)		(7,740	)
Loss on sale of intangible assets				5			-			5			-
Employee benefits				17,514			(101	)		17,667			(133	)
Provisions net of payments				18,827			(2,354	)		11,763			(1,074	)
				318,632			164,068			486,420			312,875
Net change in non-cash operating working capital		6		44,680			15,198			83,809			26,545
Cash generated from operating activities before the following				363,312			179,266			570,229			339,420
Interest paid				(16,628	)		(11,406	)		(28,478	)		(26,037	)
Income tax paid				(48,073	)		248			(87,945	)		(8,098	)
Net cash from operating activities				298,611			168,108			453,806			305,285
Cash flows (used in) from investing activities
Purchases of property and equipment		7		(60,887	)		(19,644	)		(98,256	)		(44,263	)
Proceeds from sale of property and equipment				29,608			10,014			46,608			18,067
Proceeds from sale of assets held for sale				210			1,351			6,701			12,019
Purchases of intangible assets		9		(1,608	)		(543	)		(2,572	)		(1,096	)
Business combinations, net of cash acquired		5		(870,907	)		(44,057	)		(889,926	)		(55,023	)
Others				3,774			2,557			3,659			21,794
Net cash (used in) from investing activities				(899,810	)		(50,322	)		(933,786	)		(48,502	)
Cash flows from (used in) financing activities
Decrease in bank indebtedness				(7,199	)		(694	)		(11,027	)		(3,964	)
Proceeds from long-term debt		11		3,202			6,677			508,522			12,819
Repayment of long-term debt		11		(10,734	)		(8,058	)		(21,515	)		(16,892	)
Net increase (decrease) in revolving facilities		11		412,108			(170,517	)		279,158			(361,251	)
Repayment of lease liabilities		12		(27,342	)		(19,428	)		(51,503	)		(38,994	)
(Decrease) increase in other financial liabilities				(5,809	)		415			(5,994	)		256
Dividends paid				(21,447	)		(16,225	)		(42,720	)		(32,317	)
Repurchase of own shares		15		(37,024	)		(6,402	)		(83,111	)		(38,021	)
Proceeds from the issuance of common shares,
net of expenses		15		-			-			-			217,552
Proceeds from exercise of stock options		15		4,984			12,146			15,391			12,960
Repurchase of own shares for restricted
share unit settlement		15		-			-			(10	)		-
Net cash from (used in) financing activities				310,739			(202,086	)		587,191			(247,852	)
Net change in cash and cash equivalents				(290,460	)		(84,300	)		107,211			8,931
Cash and cash equivalents, beginning of period				401,968			93,231			4,297			-
Cash and cash equivalents, end of period				111,508			8,931			111,508			8,931

* Recasted for change in presentation currency (see note 2d))

The notes on pages 7 to 27 are an integral part of these condensed consolidated interim financial statements.

│6

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
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 condensed consolidated interim financial statements of the Company as at and for the three and six months ended June 30, 2021 and 2020 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 condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the most recent annual consolidated financial statements of the Group.

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on July 26, 2021.

b)	Basis of measurement

These condensed consolidated interim 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 condensed consolidated interim financial statements are expressed in U.S. dollars, except where otherwise indicated.

c)Seasonality of interim operations

The activities conducted by the Group are subject to general demand for freight transportation. Historically, demand has been relatively stable with the first quarter being generally the weakest in terms of demand. Furthermore, during the harsh winter months, fuel consumption and maintenance costs tend to rise. Consequently, the results of operations for the interim period are not necessarily indicative of the results of operations for the full year.

d)	Functional and presentation currency

The Company elected to change its presentation currency from Canadian dollars (“CAD” or “CDN$”) to United States dollars (“U.S. dollars” or “USD”) effective December 31, 2020. Management is of the view that financial reporting in USD provides a more relevant presentation of the group’s financial position in comparison to its peers. The change in presentation currency is a voluntary change which is accounted for retrospectively. For comparative purposes, the historical condensed consolidated financial statements have been recast to U.S. dollars using the procedures outlined below:

•	Condensed Consolidated Interim Statements of Income, Comprehensive Income, and Cash Flows have been translated into U.S. dollars using average foreign currency rates prevailing for the relevant periods.
•	Assets and liabilities in the Condensed Consolidated Interim Statement of Financial Position have been translated into U.S. dollars at the closing foreign currency rates on the relevant balance sheet dates.
---	---

│7

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
•	Equity in the Condensed Consolidated Interim Statement of Financial Position and Condensed Consolidated Interim Statement of Changes in Equity, including foreign currency translation reserve and net investment hedge, retained earnings, share capital, contributed surplus and other reserves, have been translated into U.S. dollars using historical rates.
---	---
•	Condensed Consolidated Interim Earnings per share and dividend disclosures have also been translated to U.S. dollars to reflect the change in presentation currency.
---	---

All information in these condensed consolidated interim financial statements is presented in USD unless otherwise specified.

The Company’s functional currency remains Canadian dollar. 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 cumulative foreign currency translation adjustment.

All financial information presented in U.S. dollars has been rounded to the nearest thousand.

e)	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 and the self-insurance and other provisions and contingencies. These estimates and assumptions are based on management’s best estimates and judgments.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management applying the Group’s accounting policies and the key sources of estimation uncertainty are the same as those applied and described in the Group’s 2020 annual consolidated financial statements.

3.	Significant accounting policies

The accounting policies described in the Group’s 2020 annual consolidated financial statements have been applied consistently to all periods presented in these condensed consolidated interim financial statements, unless otherwise indicated in note 3. The accounting policies have been applied consistently by Group entities.

New standards and interpretations adopted during the period

The following new standards, and amendments to standards and interpretations, are effective for the first time for interim periods beginning on or after January 1, 2021 and have been applied in preparing these condensed consolidated interim financial statements.

Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16): On August 27, 2020, the IASB finalized its response to the ongoing reform of inter-bank offered rates and other interest rate benchmarks by issuing a package of amendments to IFRS Standards. The amendments are effective for annual periods beginning on or after January 1, 2021.

│8

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

The amendments complement those issued in 2019 as part of Phase 1 amendments and mainly relate to:

•	changes to contractual cash flows—a company does not have to derecognise the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
•	hedge accounting—a company does not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
---	---
•	disclosures—a company is required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.
---	---

The adoption of the amendments did not have a material impact on the Group’s condensed consolidated interim financial statements.

New standards and interpretations not yet adopted

The following new standards are not yet effective, and have not been applied in preparing these condensed consolidated interim 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, to clarify the classification of liabilities as current or non-current. The amendments are effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. 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 have substance and exist at the end of the reporting period. The adoption of the amendments is not expected to have a material impact.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)

On May 14, 2020, the IASB issued Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37). The amendments are effective for annual periods beginning on or after January 1, 2022 and apply to contracts existing at the date when the amendments are first applied. Early adoption is permitted. IAS 37 does not specify which costs are included as a cost of fulfilling a contract when determining whether a contract is onerous. The IASB’s amendments address this issue by clarifying that the “costs of fulfilling a contract” comprise both:

•	the incremental costs – e.g. direct labour and materials; and
•	an allocation of other direct costs – e.g. an allocation of the depreciation charge for an item of property and equipment used in fulfilling the contract.
---	---

The adoption of the amendments is not expected to have a material impact.

Definition of Accounting Estimates (Amendments to IAS 8)

On February 12, 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendments are effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. The amendments introduce a new definition for accounting estimates, clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy. The extent of the impact of adoption of the amendments has not yet been determined.

│9

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
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. The following summary describes the operations in each of the Group’s reportable segments:

Package and Courier:	Pickup, transport and delivery of items across North America.
Less-Than-Truckload ^(b)^:	Pickup, consolidation, transport and delivery of smaller loads.
Truckload ^(a)^:	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 Truckload reporting segment represents the aggregation of the Canadian Conventional Truckload, U.S. 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 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)Beginning in the second quarter of fiscal 2021, due to the acquisition of UPS Freight, the Less-Than-Truckload reporting segment now represents the aggregation of the Canadian Less-Than-Truckload and U.S. Less-Than-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 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 (loss)” 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.

│10

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
	Package		Less-
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	and		Than-
	Courier		Truckload			Truckload			Logistics		Corporate			Eliminations			Total
Three months ended June 30, 2021
External revenue		144,961		622,967			476,996			406,046		-			-			1,650,970
External fuel surcharge		19,566		90,627			65,647			9,898		-			-			185,738
Inter-segment revenue and fuel surcharge		307		2,433			5,321			884		-			(8,945	)		-
Total revenue		164,834		716,027			547,964			416,828		-			(8,945	)		1,836,708
Operating income (loss)		29,543		202,628			62,626			35,566		(20,109	)		-			310,254
Selected items:
Depreciation and
amortization		6,595		29,116			52,497			9,306		502			-			98,016
Loss on sale of land
and buildings		-		(3	)		-			-		-			-			(3	)
Loss on sale of
assets held for sale		-		(3	)		(24	)		-		-			-			(27	)
Bargain purchase gain		-		122,926			-			-		-			-			122,926
Intangible assets		199,603		198,122			928,255			454,157		2,125			-			1,782,262
Total assets		382,811		2,067,985			2,214,046			715,477		140,656			-			5,520,975
Total liabilities		105,803		781,589			515,779			221,823		1,875,555			(137	)		3,500,412
Additions to property
and equipment		1,174		3,141			55,876			265		85			-			60,541
Three months ended June 30, 2020
External revenue		100,140		112,853			336,913			190,200		-			-			740,106
External fuel surcharge		8,519		13,117			31,865			4,888		-			-			58,389
Inter-segment revenue and fuel surcharge		744		1,558			3,647			911		-			(6,860	)		-
Total revenue		109,403		127,528			372,425			195,999		-			(6,860	)		798,495
Operating income (loss)		16,393		24,148			50,303			16,388		(12,154	)		-			95,078
Selected items:
Depreciation and
amortization		6,167		12,733			45,074			8,450		223			-			72,647
Gain (loss) on sale of
assets held for sale		-		(32	)		126			-		-			-			94
Intangible assets		181,484		176,609			868,913			252,451		3,125			-			1,482,582
Total assets		356,657		555,961			2,008,345			407,128		34,439			-			3,362,530
Total liabilities		105,498		206,584			428,419			117,498		1,107,542			-			1,965,541
Additions to property
and equipment		3,628		1,388			15,584			221		49			-			20,870

│11

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
	Package			Less-
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	and			Than-
	Courier			Truckload			Truckload		Logistics		Corporate			Eliminations			Total
Six months ended June 30, 2021
External revenue		276,238			752,666			897,741		783,459		-			-			2,710,104
External fuel surcharge		33,982			109,455			115,110		16,864		-			-			275,411
Inter-segment revenue and fuel surcharge		579			4,428			9,719		1,883		-			(16,609	)		-
Total revenue		310,799			866,549			1,022,570		802,206		-			(16,609	)		2,985,515
Operating income (loss)		47,867			224,764			112,632		64,626		(37,890	)		-			411,999
Selected items:
Depreciation and
amortization		13,134			41,628			101,037		19,623		984			-			176,406
Loss on sale of land
and buildings		-			(3	)		-		-		-			-			(3	)
Gain on sale of
assets held for sale		-			6			3,905		-		-			-			3,911
Bargain purchase gain		-			122,926			-		-		-			-			122,926
Intangible assets		199,603			198,122			928,255		454,157		2,125			-			1,782,262
Total assets		382,811			2,067,985			2,214,046		715,477		140,656			-			5,520,975
Total liabilities		105,803			781,589			515,779		221,823		1,875,555			(137	)		3,500,412
Additions to property
and equipment		4,006			7,502			83,786		357		105			-			95,756
Six months ended June 30, 2020
External revenue		203,407			245,693			730,884		389,221		-			-			1,569,205
External fuel surcharge		23,254			34,064			85,223		11,258		-			-			153,799
Inter-segment revenue and fuel surcharge		1,713			3,103			7,728		1,967		-			(14,511	)		-
Total revenue		228,374			282,860			823,835		402,446		-			(14,511	)		1,723,004
Operating income (loss)		27,960			37,237			96,695		35,562		(15,048	)		-			182,406
Selected items:
Depreciation and
amortization		12,406			25,430			91,502		16,171		522			-			146,031
Loss on sale of land
and buildings		(1	)		-			-		-		-			-			(1	)
Gain (loss) on sale of
assets held for sale		(1	)		(32	)		7,773		-		-			-			7,740
Bargain purchase gain		-			-			-		4,008		-			-			4,008
Intangible assets		181,484			176,609			868,913		252,451		3,125			-			1,482,582
Total assets		356,657			555,961			2,008,345		407,128		34,439			-			3,362,530
Total liabilities		105,498			206,584			428,419		117,498		1,107,542			-			1,965,541
Additions to property
and equipment		12,600			7,251			27,183		472		127			-			47,633

│12

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

Geographical information

Revenue is attributed to geographical locations based on the origin of service’s location.

	Package		Less-
	and		Than-
	Courier		Truckload		Truckload		Logistics		Eliminations			Total
Three months ended June 30, 2021
Canada		164,834		150,362		230,952		67,042		(6,144	)		607,046
United States		-		565,665		317,012		343,571		(2,801	)		1,223,447
Mexico		-		-		-		6,215		-			6,215
Total		164,834		716,027		547,964		416,828		(8,945	)		1,836,708
Three months ended June 30, 2020
Canada		109,403		112,011		152,864		54,182		(5,895	)		422,565
United States		-		15,517		219,561		138,567		(965	)		372,680
Mexico		-		-		-		3,250		-			3,250
Total		109,403		127,528		372,425		195,999		(6,860	)		798,495
Six months ended June 30, 2021
Canada		310,799		286,659		433,338		134,174		(12,561	)		1,152,409
United States		-		579,890		589,232		656,090		(4,048	)		1,821,164
Mexico		-		-		-		11,942		-			11,942
Total		310,799		866,549		1,022,570		802,206		(16,609	)		2,985,515
Six months ended June 30, 2020
Canada		228,374		248,442		338,148		110,698		(12,470	)		913,192
United States		-		34,418		485,687		284,856		(2,041	)		802,920
Mexico		-		-		-		6,892		-			6,892
Total		228,374		282,860		823,835		402,446		(14,511	)		1,723,004

Segment assets are based on the geographical location of the assets.

	As at		As at
	June 30, 2021		December 31, 2020
Property and equipment, right-of-use assets and intangible assets
Canada		1,864,208		1,802,417
United States		2,447,852		1,342,720
Mexico		15,915		16,349
		4,327,975		3,161,486
5.	Business combinations
---	---
a)	Business combinations
---	---

In line with the Group’s growth strategy, the Group acquired three businesses during 2021, of which UPS Freight, which was renamed TForce Freight in April 2021, 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 30, 2021, the Group completed the acquisition of UPS Freight, the Less-Than-Truckload and dedicated truckload divisions of United Parcel Service, Inc. The purchase price for this business acquisition totalled for $866.1 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. The estimated fair value of the identifiable net assets acquired, including the fair value of the customer relationships acquired, exceeded the purchase price, resulting in an estimated preliminary bargain purchase gain of $122.9 million in the Less-Than-Truckload segment. The preliminary bargain purchase gain resulted mainly from the measurement of the fair value related to the company’s tangible assets. During the six months ended June 30, 2021, the business contributed revenue and net income of $587.4 million and $29.0 million (excluding the bargain purchase gain of $122.9 million), respectively since the acquisition.

Had the Group acquired UPS Freight on January 1, 2021, as per management’s best estimates, the revenue and net income for this entity would have been $1,691.3 million and $52.4 million (excluding the bargain purchase gain of $122.9 million), respectively.

│13

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

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, 2021 and adjusted for interest and income tax expenses.

During the six months ended June 30, 2021, the non-material businesses contributed revenue and net income of $6.6 million and $0.2 million respectively since the acquisition.

Had the Group acquired these non-material businesses on January 1, 2021, as per management’s best estimates, the revenue and net income for these entities would have been $12.8 million and $0.6 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, 2021.

During the six months ended June 30, 2021, transaction costs of $7.9 million have been expensed in other operating expenses in the consolidated statements of income in relation to the above-mentioned business acquisitions.

As of the reporting date, the Group had not completed the purchase price allocation over the identifiable net assets and goodwill of the 2021 acquisitions. Information to confirm fair value of certain assets and liabilities is still to be obtained for the acquisitions. As the Group obtains more information, the allocation will be completed.

The table below presents the purchase price allocation based on the best information available to the Group to date.

Identifiable assets acquired and liabilities assumed
Cash and cash equivalents		6		1,156		1,162
Trade and other receivables		349,742		4,163		353,905
Inventoried supplies and prepaid expenses		30,660		361		31,021
Property and equipment	7	1,052,816		10,161		1,062,977
Right-of-use assets	8	100,971		2,705		103,676
Intangible assets	9	6,856		8,161		15,017
Other assets		860		-		860
Trade and other payables		(217,539	)	(2,315	)	(219,854	)
Income tax payable		302		(1,856	)	(1,554	)
Employee benefits	13	(67,828	)	-		(67,828	)
Provisions	14	(50,352	)	-		(50,352	)
Other non-current liabilities		(56	)	(6	)	(62	)
Long-term debt	11	-		(2,730	)	(2,730	)
Lease liabilities	12	(100,971	)	(2,705	)	(103,676	)
Deferred tax liabilities		(116,449	)	(3,432	)	(119,881	)
Total identifiable net assets		989,018		13,663		1,002,681
Total consideration transferred		866,092		29,236		895,328
Goodwill	9	-		15,573		15,573
Bargain purchase gain		(122,926	)	-		(122,926	)
Cash		866,092		24,996		891,088
Contingent consideration		-		4,240		4,240
Total consideration transferred		866,092		29,236		895,328
* Includes non-material adjustments to prior year's acquisitions

The information that was available to the Group regarding UPS Freight was affected by the proximity of the acquisition to its quarter-end. The fair values measured on the amounts above are on a provisional basis and will be revised as more information is obtained about the facts and circumstances that existed at the date of acquisition.

The trade receivables comprise gross amounts due of $344.5 million, of which $9.4 million was expected to be uncollectible at the acquisition date.

Of the goodwill and intangible assets acquired through business combinations in 2021, nil is deductible for tax purposes.

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.

│14

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

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
Canadian Less-Than-Truckload	Less-Than-Truckload	(449	)
Specialized Truckload	Truckload	16,047
Logistics	Logistics	(25	)
		15,573

* Includes non-material adjustments to prior year's acquisitions for which purchase price allocations were completed.

c)	Contingent consideration

The contingent consideration relates to non-material business acquisitions and is recorded in the original purchase price allocation. The fair value was determined using expected cash flows discounted at rates between 4% and 6%. The considerations are contingent on achieving specified earning levels in the future periods. The maximum amount payable is $0.4 million in one year and $4.3 million in two years. At June 30, 2021, the fair value of the contingent arrangement is estimated at approximately $4.0 million and is currently presented in other financial liabilities on the consolidated statements of financial position.

d)	Adjustment to the provisional amounts of prior year’s business combinations

The 2020 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 DLS and various other non-material 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 DLS and the other non-material acquisitions in fiscal 2020 have been adjusted in 2021. No material adjustments were required to the provisional fair values for these prior period’s business combinations and have been included with the acquisitions of 2021.

│15

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
6.	Additional cash flow information
---	---

Net change in non-cash operating working capital

	Three months ended			Three months ended			Six months ended			Six months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Trade and other receivables		(26,118	)		18,963			(15,020	)		31,536
Inventoried supplies		(632	)		937			(823	)		2,311
Prepaid expenses		(8,131	)		(2,579	)		(4,582	)		(2,160	)
Trade and other payables		79,561			(2,123	)		104,234			(5,142	)
		44,680			15,198			83,809			26,545
7.	Property and equipment
---	---
			Land and			Rolling
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2020				314,804			1,267,616			134,235			1,716,655
Additions through business combinations		5		600,327			403,601			59,049			1,062,977
Other additions				13,347			76,999			5,410			95,756
Disposals				(226	)		(106,534	)		(2,160	)		(108,920	)
Transfer from right-of-use assets				-			21,474			-			21,474
Reclassification to assets held for sale				-			(571	)		-			(571	)
Effect of movements in exchange rates				9,080			16,543			4,662			30,285
Balance at June 30, 2021				937,332			1,679,128			201,196			2,817,656
Depreciation
Balance at December 31, 2020				59,817			494,322			88,088			642,227
Depreciation for the period				5,562			83,820			8,043			97,425
Disposals				(217	)		(69,477	)		(1,993	)		(71,687	)
Transfer from right-of-use assets				-			5,746			-			5,746
Reclassification to assets held for sale				-			(520	)		-			(520	)
Effect of movements in exchange rates				1,750			8,615			3,294			13,659
Balance at June 30, 2021				66,912			522,506			97,432			686,850
Net carrying amounts
At December 31, 2020				254,987			773,294			46,147			1,074,428
At June 30, 2021				870,420			1,156,622			103,764			2,130,806

As at June 30, 2021, nil is included in trade and other payables for the purchases of property and equipment (December 31, 2020 – $2.5 million).

│16

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
8.	Right-of-use assets
---	---
			Land and			Rolling
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2020				452,106			191,164			2,290			645,560
Transfer to property and equipment				-			(21,474	)		-			(21,474	)
Other additions				17,389			16,709			532			34,630
Additions through business combinations		5		54,075			48,392			1,209			103,676
Derecognition*				(18,142	)		(5,327	)		(132	)		(23,601	)
Effect of movements in exchange rates				12,746			4,565			37			17,348
Balance at June 30, 2021				518,174			234,029			3,936			756,139
Depreciation
Balance at December 31, 2020				232,541			74,503			1,231			308,275
Transfer to property and equipment				-			(5,746	)		-			(5,746	)
Depreciation				27,909			22,613			430			50,952
Derecognition*				(16,432	)		(4,531	)		(72	)		(21,035	)
Effect of movements in exchange rates				6,711			2,051			24			8,786
Balance at June 30, 2021				250,729			88,890			1,613			341,232
Net carrying amounts
At December 31, 2020				219,565			116,661			1,059			337,285
At June 30, 2021				267,445			145,139			2,323			414,907

* 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.

9.	Intangible assets
					Other intangible assets
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
											Non-
					Customer						compete			Information
	Note		Goodwill		relationships			Trademarks			agreements			technology			Total
Cost
Balance at December 31, 2020				1,523,626		574,942			86,402			14,688			25,748			2,225,406
Additions through business combinations*		5		15,573		4,983			803			2,211			7,020			30,590
Other additions				-		541			-			-			2,031			2,572
Extinguishments				-		(2,675	)		(152	)		(468	)		(88	)		(3,383	)
Effect of movements in exchange rates				24,027		7,470			789			377			590			33,253
Balance at June 30, 2021				1,563,226		585,261			87,842			16,808			35,301			2,288,438
Amortization and impairment losses
Balance at December 31, 2020				148,016		261,599			43,636			5,304			17,078			475,633
Amortization for the period				-		22,367			1,505			1,622			2,535			28,029
Extinguishments				-		(2,675	)		(152	)		(468	)		(83	)		(3,378	)
Effect of movements in exchange rates				796		3,864			598			151			483			5,892
Balance at June 30, 2021				148,812		285,155			45,587			6,609			20,013			506,176
Net carrying amounts
At December 31, 2020				1,375,610		313,343			42,766			9,384			8,670			1,749,773
At June 30, 2021				1,414,414		300,106			42,255			10,199			15,288			1,782,262

* Includes non-material adjustments to prior year's acquisitions

│17

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
10.	Other assets
---	---
	As at		As at
---	---	---	---	---
	June 30, 2021		December 31, 2020
Security deposits		3,245		3,143
Investments in equity securities		10,069		9,727
Indemnification asset		-		4,736
Other		2,017		6,293
		15,331		23,899
Presented as :
Non-current other assets		15,331		23,899
11.	Long-term debt
---	---
	As at		As at
---	---	---	---	---
	June 30, 2021		December 31, 2020
Non-current liabilities
Unsecured revolving facilities		403,671		123,666
Unsecured term loan		-		321,852
Unsecured debenture		162,081		156,479
Unsecured senior notes		648,890		150,000
Conditional sales contracts		69,519		77,550
		1,284,161		829,547
Current liabilities
Current portion of unsecured revolving facilities		-		7,461
Current portion of unsecured term loan		333,550		-
Current portion of conditional sales contracts		38,270		35,536
		371,820		42,997

The table below summarizes changes to the long-term debt:

			Six months ended			Six months ended
	Note		June 30, 2021			June 30, 2020
Balance at beginning of period				872,544			1,343,307
Proceeds from long-term debt				508,522			12,819
Business combinations		5		2,730			-
Repayment of long-term debt				(21,515	)		(16,892	)
Net increase (decrease) in revolving facilities				279,158			(361,251	)
Accretion of deferred financing fees				648			564
Effect of movements in exchange rates				21,865			(52,537	)
Effect of movements in exchange rates - OCI hedge				(7,971	)		18,144
Balance at end of period				1,655,981			944,154

The Group’s revolving facilities have $586.4 million availability at June 30, 2021 (December 31, 2020 –$824.6 million) and an additional $204.3 million of credit availability (CAD $245 million and USD $5 million). The additional credit is available under certain conditions under the Group’s syndicate bank agreement.

On January 13, 2021, the Group received $500 million in proceeds from the issuance of a new debt taking the form of unsecured senior notes consisting of four tranches maturing between January 2029 and January 2036 and bearing fixed interest between 3.15% and 3.50%. These notes may be prepaid at any time prior to maturity dates, 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. The Group is subject to certain covenants regarding the maintenance of financial ratios. These are the same covenants as previously required by the Group’s revolving credit facility agreement and described in note 26(f) of the 2020 annual consolidated financial statements. Deferred financing fees of $1.1 million were recognized on the increase.

│18

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
12.	Lease liabilities
---	---
	As at		As at
---	---	---	---	---
	June 30, 2021		December 31, 2020
Current portion of lease liabilities		116,110		88,522
Long-term portion of lease liabilities		333,055		267,464
		449,165		355,986

The table below summarizes changes to the lease liabilities:

			Six months ended			Six months ended
	Note		June 30, 2021			June 30, 2020
Balance at beginning of period				355,986			355,591
Business combinations		5		103,676			37,650
Additions				34,630			18,680
Derecognition*				(3,088	)		(8,499	)
Repayment				(51,503	)		(38,994	)
Effect of movements in exchange rates				9,464			(13,084	)
Balance at end of period				449,165			351,344

* Derecognized lease liabilities include negotiated asset purchases and extinguishments resulting from accidents.

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 $15.6 million (December 31, 2020 – $21.1 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 $391.3 million (December 31, 2020 - $352.1 million).

The Group does not have a significant exposure to termination options and penalties.

Contractual cash flows

The total contractual cash flow maturities of the Group’s lease liabilities are as follows:

	As at
	June 30, 2021
Less than 1 year		127,135
Between 1 and 5 years		269,818
More than 5 years		92,005
		488,958

│19

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
13.	Employee benefits
---	---

Pursuant to the terms of the purchase agreement with UPS Freight, the Group has recognized defined benefit pension plans for certain participants of the UPS 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 Group obtained an actuarial valuation as at the date of acquisition to establish the benefit obligation at that date. The plans’ service costs are also established by the actuarial valuation. The pension plans include 9,394 active participants.

Information about the Group’s accrued benefit obligation is as follows:

	As at		As at
	June 30, 2021		December 31, 2020
TForce Freight pension plans		85,616		-
TFI International pension plans		15,234		14,452
Other severance plans		1,224		1,050
Accrued employee benefits		102,074		15,502
14.	Provisions
---	---
	Self insurance		Other		Total
---	---	---	---	---	---	---
As at June 30, 2021
Current provisions		14,888		15,829		30,717
Non-current provisions		40,723		39,983		80,706
		55,611		55,812		111,423
As at December 31, 2020
Current provisions		14,040		3,412		17,452
Non-current provisions		33,693		3,110		36,803
		47,733		6,522		54,255

Self-insurance provisions represent the uninsured portion of outstanding claims at period-end. Other provisions include mainly litigation provisions.

15.	Share capital and other components of equity

During the first quarter of fiscal 2020, the Company completed an initial public offering on the New York Stock Exchange. The Company issued a total of 6,900,000 common shares, that were issued at a price of $33.35 per share for gross proceeds to the Company of $230,115,000. The Company incurred share issuance costs of approximately $13.2 million of which $12.6 million were recorded to share capital and $0.6 million were recognized in the consolidated statement of income.

The following table summarizes the number of common shares issued:

(in number of shares)		Six months ended			Six months ended
		June 30, 2021			June 30, 2020
Balance, beginning of period			93,397,985			81,450,326
Repurchase and cancellation of own shares			(1,067,062	)		(1,542,155	)
Issuance of shares			-			6,900,000
Stock options exercised	17		687,945			1,072,446
Balance, end of period			93,018,868			87,880,617

│20

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

The following table summarizes the share capital issued and fully paid:

	Six months ended			Six months ended
	June 30, 2021			June 30, 2020
Balance, beginning of period		1,120,049			678,915
Issuance of shares, net of expenses		-			217,552
Repurchase and cancellation of own shares		(11,635	)		(12,025	)
Cash consideration of stock options exercised		15,391			12,960
Ascribed value credited to share capital on stock options exercised		2,544			3,021
Issuance of shares on settlement of RSUs		3			-
Balance, end of period		1,126,352			900,423

Pursuant to the normal course issuer bid (“NCIB”) which began on October 14, 2020 and ending on October 13, 2021, the Company is authorized to repurchase for cancellation up to a maximum of 7,000,000 of its common shares under certain conditions. As at June 30, 2021, and since the inception of this NCIB, the Company has repurchased and cancelled 1,067,062 shares.

During the six months ended June 30, 2021, the Company repurchased 1,067,062 common shares at a weighted average price of $77.89 per share for a total purchase price of $83.1 million relating to the NCIB. During the six months ended June 30, 2020, the Company repurchased 1,542,155 common shares at a weighted average price of $24.64 per share for a total purchase price of $38.0 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 $71.5 million (2020 – $26.0 million) was charged to retained earnings as share repurchase premium.

16.	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)	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Net income attributable to owners of the Company		251,098			50,458			317,985			106,246
Issued common shares, beginning of period		93,235,500			87,125,884			93,397,985			81,450,326
Effect of stock options exercised		109,834			443,231			390,439			266,219
Effect of repurchase of own shares		(152,969	)		(158,205	)		(501,570	)		(866,265	)
Effect of share issuance		-			-			-			5,212,500
Weighted average number of common shares		93,192,365			87,410,910			93,286,854			86,062,780
Earnings per share – basic (in dollars)		2.69			0.58			3.41			1.23

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)	Three months		Three months		Six months		Six months
	ended		ended		ended		ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net income attributable to owners of the Company		251,098		50,458		317,985		106,246
Weighted average number of common shares		93,192,365		87,410,910		93,286,854		86,062,780
Dilutive effect:
Stock options and restricted share units		2,149,574		1,227,759		2,168,720		1,428,025
Weighted average number of diluted common shares		95,341,939		88,638,669		95,455,574		87,490,805
Earnings per share - diluted (in dollars)		2.63		0.57		3.33		1.21

│21

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

As at June 30, 2021, no stock options were excluded from the calculation of diluted earnings per share (June 30, 2020 – 869,223) as these options 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.

17.	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)	Three months					Three months					Six months					Six months
				ended					ended					ended					ended
	June 30, 2021					June 30, 2020					June 30, 2021					June 30, 2020
				Weighted					Weighted					Weighted					Weighted
	Number			average		Number			average		Number			average		Number			average
	of			exercise		of			exercise		of			exercise		of			exercise
	options			price		options			price		options			price		options			price
Balance, beginning of period		2,494			25.13		4,346			21.68		2,982			24.65		4,422			21.56
Exercised		(208	)		24.73		(1,000	)		15.30		(688	)		22.96		(1,072	)		15.20
Forfeited		-			-		-			-		(8	)		23.70		(4	)		30.71
Balance, end of period		2,286			25.16		3,346			23.59		2,286			25.16		3,346			23.59
Options exercisable, end of period												1,897			23.52		2,571			21.98

The following table summarizes information about stock options outstanding and exercisable at June 30, 2021:

(in thousands of options and in dollars)		Options outstanding				Options
						exercisable
				Weighted
				average
		Number		remaining		Number
		of		contractual life		of
Exercise prices		options		(in years)		options
	19.12		371		1.1		371
	18.83		485		2.1		485
	26.82		204		2.6		204
	23.70		396		3.6		396
	30.71		731		4.7		441
	40.41		99		6.1		-
			2,286		3.2		1,897

Of the options outstanding at June 30, 2021, a total of 1,983,103 (December 31, 2020 - 2,502,339) are held by key management personnel.

The weighted average share price at the date of exercise for stock options exercised in the six months ended June 30, 2021 was $81.87 (June 30, 2020 – $28.64).

For the three and six months ended June 30, 2021, the Group recognized a compensation expense of $0.2 million and $0.6 million, respectively (2020 - $0.3 million and $0.8 million) with a corresponding increase to contributed surplus.

│22

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

No stock options were granted during 2021 under the Company’s stock option plan.

Deferred share unit plan for board members (cash-settled)

The Company offered a deferred share unit (“DSU”) plan for its board members. Under this plan, until December 31, 2020, 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)	Three months ended		Three months ended		Six months ended		Six months ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Balance, beginning of period		375,499		361,791		373,926		348,031
Board members compensation		-		5,851		-		17,572
Dividends paid in units		1,154		2,837		2,727		4,876
Balance, end of period		376,653		370,479		376,653		370,479

For the three and six months ended June 30, 2021, the Group recognized, as a result of DSUs, a compensation expense of nil (June 30, 2020 - $0.2 million and $0.5 million) with a corresponding increase to trade and other payables. In addition, in personnel expenses, the Group recognized a mark-to-market loss on DSUs of $5.9 million and $14.3 million for the three and six months ended June 30, 2021 (June 30, 2020 –$4.3 million and $0.5 million).

Effective January 1, 2021, a new director compensation program was put in place. Quarterly cash amounts will be paid to the board members on the 2nd Thursday following each quarter. In addition, an equity portion of compensation will be awarded, comprised of restricted share units granted annually effective on the date of each Annual Meeting, with a vesting period of one year. For the three and six months ended June 30, 2021, the Group recognized, as a result of the director compensation plan, a compensation expense of $0.3 million and $0.6 million respectively.

As at June 30, 2021, the total carrying amount of liabilities for cash-settled arrangements recorded in trade and other payables amounted to $34.7 million (December 31, 2020 - $19.2 million).

Performance contingent 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. In February 2020, upon the recommendation of the Human Resources and Compensation Committee, the Board approved the following changes to the long-term incentive plan (“LTIP”) policy for designated eligible participants in 2020 and future years. Each participant’s annual LTIP allocation will be 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 will only be subject to a time cliff vesting condition on the third anniversary of the award. The performance conditions attached to the PSUs will be 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.

RSUs awarded under the equity incentive plan prior to 2020 will vest in December of the second year from the grant date. Upon satisfaction of the required service period, the plan provides for settlement of the award through shares.

Restricted share units

On February 8, 2021, the Company granted a total of 78,122 RSUs under the Company’s equity incentive plan of which 51,328 were granted to key management personnel, at that date. 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 $70.59 per unit.

On April 27, 2021, the Company granted a total of 12,924 RSUs under the Company’s equity incentive plan of which 12,924 were granted to key management personnel, at that date. The fair value of the RSUs is determined to be the share price fair value at the date of the

│23

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

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 $77.32 per unit.

The table below summarizes changes to the outstanding RSUs:

(in thousands of RSUs and in dollars)	Three months				Three months				Six months					Six months
			ended				ended					ended				ended
	June 30, 2021				June 30, 2020				June 30, 2021					June 30, 2020
			Weighted				Weighted					Weighted				Weighted
	Number		average		Number		average		Number			average		Number		average
	of		grant date		of		grant date		of			grant date		of		grant date
	RSUs		fair value		RSUs		fair value		RSUs			fair value		RSUs		fair value
Balance, beginning of period		377		39.62		385		29.71		299			31.54		239		28.08
Granted		13		77.32		-		-		91			71.55		145		32.41
Reinvested		2		39.61		3		29.71		3			36.92		4		29.30
Forfeited		-		-		-		-		(1	)		32.41		-		-
Balance, end of period		392		40.87		388		29.71		392			40.87		388		29.71

The following table summarizes information about RSUs outstanding and exercisable as at June 30, 2021:

(in thousands of RSUs and in dollars)		RSUs outstanding
			Remaining
		Number of	contractual life
Grant date fair value		RSUs	(in years)
	30.70	154		0.5
	77.32	13		0.8
	32.41	147		1.6
	70.59	78		2.6
		392		1.3

For the three and six months ended June 30, 2021, the Group recognized, as a result of RSUs, a compensation expense of $1.5 million and $2.9 million (June 30, 2020 - $1.0 million and $1.8 million) with a corresponding increase to contributed surplus.

Of the RSUs outstanding at June 30, 2021, a total of 263,265 (December 31, 2020 – 196,343) are held by key management personnel.

Performance share units

On February 8, 2021, the Company granted a total of 78,122 PSUs under the Company’s equity incentive plan of which 51,328 were granted to key management personnel, at that date. The fair value of the PSUs is determined using a Monte Carlo simulation model. The share-based compensation expense is recognized, through contributed surplus, over the vesting period. The fair value of the PSUs granted was $89.64 per unit.

The table below summarizes changes to the outstanding PSUs:

(in thousands of PSUs and in dollars)	Three months				Three months				Six months					Six months
			ended				ended					ended				ended
	June 30, 2021				June 30, 2020				June 30, 2021					June 30, 2020
			Weighted				Weighted					Weighted				Weighted
	Number		average		Number		average		Number			average		Number		average
	of		grant date		of		grant date		of			grant date		of		grant date
	PSUs		fair value		PSUs		fair value		PSUs			fair value		PSUs		fair value
Balance, beginning of period		225		52.25		145		32.41		147			32.41		-		-
Granted		-		-		-		-		78			89.64		145		32.41
Reinvested		1		52.25		1		32.41		2			42.33		1		32.41
Forfeited		-		-		-		-		(1	)		32.41		-		-
Balance, end of period		226		52.25		146		32.41		226			52.25		146		32.41

│24

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)

The following table summarizes information about PSUs outstanding and exercisable as at June 30, 2021:

(in thousands of PSUs and in dollars)		PSUs outstanding
			Remaining
		Number of	contractual life
Grant date fair value		PSUs	(in years)
	32.41	148		1.6
	89.64	78		2.6
		226		1.9

For the three and six months ended June 30, 2021, the Group recognized, as a result of PSUs, a compensation expense of $1.1 million and $1.8 million, respectively (June 30, 2020 – $0.4 million and $0.7 million) with a corresponding increase to contributed surplus.

Of the PSUs outstanding at June 30, 2021, a total of 149,670 (December 31, 2020 - 96,984) are held by key management personnel.

18.	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.

	Three months		Three months		Six months		Six months
	ended		ended		ended		ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Independent contractors		736,851		310,399		1,257,804		676,068
Vehicle operation expenses		225,674		103,223		370,641		242,889
		962,525		413,622		1,628,445		918,957
19.	Personnel expenses
---	---

In 2020, the Canada Emergency Wage Subsidy (“CEWS”) was established to enable Canadian employers to re-hire workers previously laid off, help prevent further job losses, and to better position themselves to resume normal operations following the COVID-19 pandemic declaration and crisis.

The program has been separated in 4-week claim periods spanning from March 15, 2020 to September 25, 2021. The CEWS for periods prior to July 5, 2020 provided a subsidy of 75% of employee wages to a maximum of CAD $847 (approximately USD $631) per employee per week for eligible Canadian employers. The subsidy available for periods after July 5, 2020 is determined on a sliding scale that is capped at specific rates per period.

To be eligible to receive the wage subsidy, a Canadian employer needed to have sustained a 30% decrease in revenues (15% for the first claim period) as compared to the same period in the previous year or to the average monthly sales recognized in January and February 2020 for the periods prior to July 5, 2020. For the following periods, until July 4, 2021, any drop in qualifying revenues makes an employer entitled to the subsidy, in an amount determined on a sliding scale and in proportion to the decrease in the qualifying revenues. For periods after July 4, 2021, a revenue drop of over 10% is required to receive the CEWS.

During the three and six months ended June 30, 2021, certain legal entities within the Company qualified for the CEWS resulting in a $5.0 million and $11.5 million subsidy, respectively (June 30, 2020 – $29.1 million and $29.1 million) that is recorded and offset against personnel expenses, presented in short-term employee benefits, in the condensed consolidated interim statement of income.

│25

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
20.	Finance income and finance costs
---	---

Recognized in income or loss:

Costs (income)	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Interest expense on long-term debt and accretion of
deferred financing fees		11,608			8,660			21,480			20,238
Interest expense on lease liabilities		3,514			3,051			6,516			6,230
Interest income and accretion on promissory note		(14	)		(183	)		(583	)		(635	)
Net change in fair value and accretion expense
of contingent considerations		(96	)		29			163			80
Net foreign exchange (gain) loss		(695	)		4			(733	)		(1,245	)
Net change in fair value of interest rate derivatives		-			(245	)		-			234
Net impact of early repayment of contingent consideration		(1,469	)		-			(1,469	)		-
Other financial expenses		3,764			1,338			5,673			2,094
Net finance costs		16,612			12,654			31,047			26,996
Presented as:
Finance income		(2,274	)		(428	)		(2,785	)		(1,880	)
Finance costs		18,886			13,082			33,832			28,876
21.	Income tax expense
---	---

Income tax recognized in income or loss:

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Current tax expense
Current period		51,635			34,798			78,093			53,165
Adjustment for prior periods		(3	)		1			(3,321	)		280
		51,632			34,799			74,772			53,445
Deferred tax expense (recovery)
Origination and reversal of temporary differences		(9,027	)		(3,621	)		(15,133	)		(4,438	)
Variation in tax rate		106			(20	)		52			(92	)
Adjustment for prior periods		(166	)		808			3,276			249
		(9,088	)		(2,833	)		(11,805	)		(4,281	)
Income tax expense		42,544			31,966			62,967			49,164

Reconciliation of effective tax rate:

	Three months					Three months					Six months					Six months
	ended					ended					ended					ended
	June 30, 2021					June 30, 2020					June 30, 2021					June 30, 2020
Income before income tax				293,642					82,424					380,952					155,410
Income tax using the Company’s statutory tax rate		26.5	%	77,815			26.5	%	21,842			26.5	%	100,952			26.5	%	41,184
Increase (decrease) resulting from:
Rate differential between jurisdictions		-1.0	%	(3,077	)		-3.1	%	(2,551	)		-0.8	%	(2,969	)		-3.1	%	(4,851	)
Variation in tax rate		0.0	%	106			0.0	%	(20	)		0.0	%	52			-0.1	%	(92	)
Non deductible expenses		0.9	%	2,531			3.4	%	2,780			0.9	%	3,594			4.1	%	6,448
Tax deductions and tax exempt income^(1)^		-11.9	%	(34,955	)		-0.1	%	(52	)		-10.3	%	(39,219	)		-1.5	%	(2,306	)
Adjustment for prior periods		-0.1	%	(169	)		1.0	%	809			0.0	%	(45	)		0.3	%	529
Multi-jurisdiction tax		0.1	%	293			0.7	%	568			0.2	%	602			0.6	%	865
Treasury Regulations interpretive guidance
clarifying the U.S. Tax Reform Bill		0.0	%	-			10.4	%	8,590			0.0	%	-			4.8	%	7,387
		14.5	%	42,544			38.8	%	31,966			16.5	%	62,967			31.6	%	49,164
(1)	Tax deductions and tax exempt income for the three months ended June 30, 2021 is mainly due to the tax exempt bargain purchase gain recorded on the acquisition of UPS Freight.
---	---

│26

TFI International Inc.	NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	PERIODS ENDED JUNE 30, 2021 AND 2020 – (UNAUDITED)
22.	Financial instruments and financial risk management
---	---

At June 30, 2021, and December 31, 2020, there are no derivative financial instruments designated as effective cash flow hedge instruments.

a)	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 entering into interest rate swaps. There are no interest rate derivatives at June 30, 2021 (December 31, 2020 – nil).

23.	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 June 30, 2021, the Group had $29.8 million of outstanding letters of credit (December 31, 2020 - $29.5 million).

c)	Other commitments

As at June 30, 2021, the Group had $89.5 million of purchase commitments (December 31, 2020 – $117.1 million) and $24.6 million of purchase orders for leases that the Group intends to enter into and that are expected to materialize within a year (December 31, 2020 – $44.1 million).

24.	Subsequent events
Subsequent to the end of the quarter, the Group entered into a private placement with New York Life for $100.0 million and Prudential for $30.0 million equally divided with terms of 8 and 12 years and bearing interest between 2.87% and 3.37%.
---

│27

tfii-ex994_14.htm

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Alain Bédard, Chairman of the Board, President and Chief Executive Officer of TFI International Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of TFI International Inc. (the “issuer”) for the interim period ended June 30^th^, 2021.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
---	---
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
---	---
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
---	---
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
---	---
a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
---	---
i)	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
---	---
ii)	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
---	---
b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
---	---
5.1	Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the 2013 Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
---	---
5.2	ICFR – material weakness relating to design: N/A
---	---
5.3	Limitation on scope of design: The issuer has disclosed in its interim MD&A
---	---
(a)	the fact that the issuer’s other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of:
---	---
(i)	N/A;
---	---
(ii)	N/A; or
---	---
(iii)	a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
---	---
(b)	summary financial information about business that the issuer acquired that has been consolidated in the issuer’s financial statements.
---	---
6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1^st^, 2021 and ended on June 30^th^, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
---	---

July 26^th^, 2021

(signed) Alain Bédard

Alain Bédard, FCA, CMA

Chairman of the Board

President and Chief Executive Officer

tfii-ex995_15.htm

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, David Saperstein, Chief Financial Officer of TFI International Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of TFI International Inc. (the “issuer”) for the interim period ended June 30^th^, 2021.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
---	---
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
---	---
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
---	---
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
---	---
a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
---	---
i)	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
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ii)	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
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b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
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5.1	Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the 2013 Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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5.2	ICFR – material weakness relating to design: N/A
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5.3	Limitation on scope of design: The issuer has disclosed in its interim MD&A
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(a)	the fact that the issuer’s other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of:
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(i)	N/A;
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(ii)	N/A; or
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(iii)	a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
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(b)	summary financial information about business that the issuer acquired that has been consolidated in the issuer’s financial statements.
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6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1^st^, 2021 and ended on June 30^th^, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
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June 26^th^, 2021

(signed) David Saperstein

David Saperstein

Chief Financial Officer

tfii-ex996_16.htm

Exhibit 99.6

Form 51 – 102F3

Material Change Report

1.	Name and Address of Company

TFI International Inc.

8801 Trans-Canada Hwy

Suite 500

Saint-Laurent, Québec H4S 1Z6

2.	Date of Material Change

July 26, 2021.

3.	News Release

TFI International Inc. (“TFI International”) issued a news release with respect to the material change described below on July 26, 2021 via Globe Newswire.

4.	Summary of Material Change

5.	Full Description of Material Change
5.1.	Full Description of Material Change
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TFI International announced that during the second quarter of 2021, the operating income from the US LTL operating segment, which is comprised almost exclusively of the TForce Freight operations, was $170.8 million, which included a bargain purchase gain of $122.9 million. The adjusted operating ratio, a non-IFRS measure, was 90.1% compared to an expected adjusted operating ratio of 96-97% for the US LTL operating segment. Adjusted operating ratio does not have a directly comparable measure under IFRS. Although adjusted operating ratio is not a recognized financial measure, it is a widely recognized measure in the transportation industry, which TFI International believes provides a comparable benchmark for evaluating its performance. TFI International calculates adjusted operating ratio as operating expenses from continuing operations before gain on sale of business, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale, and intangible assets, net of fuel surcharge revenue, divided by revenue before fuel surcharge.

The reconciliation for the adjusted operating ratio for the three months ended June 30, 2021 is as follows:

(in millions of U.S. dollars)	Three months ended June 30
	2021
U.S. based LTL
Operating expenses*	378.5
Gain (loss) on sale of land and buildings and assets held for sale	-
Bargain purchase gain	122.9
Adjusted operating expenses	501.4
Fuel surcharge revenue	(67.6)
Adjusted operating expenses, net of fuel surcharge	433.8
Revenue before fuel surcharge	481.7
Adjusted operating ratio	90.1%

* Operating expenses exclude intra LTL eliminations.

5.2.	Disclosure for Restructuring Transactions

Not applicable.

6.	Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

7.	Omitted Information

Not applicable.

8.	Executive Officer

The executive officer who can answer questions regarding this report is Mr. Alain Bédard, Chairman, President and Chief Executive Officer of TFI International. Mr. Bédard can be reached at (647) 729 4079.

9.	Date of Report

July 26, 2021.