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 April, 2021

Commission File No. 001-39224

TFI INTERNATIONAL INC.

(Translation of registrant’s name into English)

8801 Trans-Canada Highway, Suite 500

Saint-Laurent, Québec

H4S 1Z6 Canada

(Address of principal executive office)  

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

Form 20-F  ☐            Form 40-F  ☒

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

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

EXHIBIT INDEX

SIGNATURES

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

Earnings Press Release

Exhibit 99.1

For Immediate Release

TFI International Announces 2021 First Quarter Results

Montreal, Quebec, April 27, 2021 – TFI International Inc. (NYSE and TSX: TFII), a North American leader in the transportation and logistics industry, today announced its results for the first quarter ended March 31, 2021. All amounts are shown in U.S. dollars.

“During a quarter that marked the one-year anniversary of both our listing on the New York Stock exchange and the pandemic outbreak across North America, TFI International produced strong year-over-year results, including a 17% increase in operating income and a 26% increase in adjusted diluted EPS,” said Alain Bédard, Chairman, President and Chief Executive Officer.  “Our growth across these measures along with our expansion of cash flow, is all the more remarkable considering DSU and transactional expenses incurred, reflecting the tireless efforts of our team and our strategic moves to preserve growth opportunities during an unprecedented year.  As we gain perspective on the events of 2020, it is increasingly clear that TFI International has emerged even stronger, through our relentless focus on the fundamentals, now combined with our transformative upcoming acquisition of UPS Freight.  As a company, we are exceptionally well positioned to capitalize on the ongoing economic recovery to generate strong cash flow that we can put toward strategically expanding our business in our quest to create further shareholder value.”

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Earnings Press Release

FIRST QUARTER RESULTS

Total revenue of $1.15 billion was up 24% and, net of fuel surcharge, revenue of $1.06 billion was up 28% compared to the prior year period.

Operating income from continuing operations grew 17% to $101.7 million from $87.3 million the prior year period, primarily driven by business acquisitions, strong execution across the organization, increased quality of revenue, an asset-right approach, cost efficiencies, and Canadian Emergency Wage Subsidy contributions of $6.5 million. This growth was achieved despite a $8.4 million loss recognized on the mark-to-market of the deferred share units (“DSUs”), as compared to a $3.8 million gain in Q1 2020, and a bargain purchase gain of $4.0 million in Q1 2020 recorded in the Logistics segment.

Net income from continuing operations grew 20% to $66.9 million from $55.8 million the prior year period, and net income from continuing operations of $0.70 per diluted share was up relative to $0.65 the prior year period.  Adjusted net income, a non-IFRS measure, was $73.6 million, or $0.77 per diluted share, up 40% from $52.6 million, or $0.61 per diluted share, the prior year period.

Total revenue grew 23% for Package and Courier, 5% for Truckload and 87% for Logistics, and declined 3% for Less-Than-Truckload, relative to the prior year period.  Operating income was higher across all segments in Q1 in comparison to the prior year.

Corporate operating loss of $17.8 million increased from $2.9 million in Q1 2020.Corporate costs included an $8.4 million loss ($0.07 per share) related to the mark-to-market of the Company’s cash settled DSUs, as the Company’s stock price increased from $51.58 to $74.74 in the quarter, as compared to a $3.8 million gain ($0.03 per share) in Q1 2020, as well as approximately $1.0 million in transaction expenses related to the upcoming acquisition of UPS Freight.

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Earnings Press Release

CASH FLOW

Net cash from continuing operating activities was $155.2 million during Q1 compared to $137.2 million the prior year period. The 13% 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 $31.5 million driven by an increase in 2020 operating results. The Company returned $67.4 million to shareholders during the quarter, of which $21.3 million was through dividends and $46.1 million was through share repurchases.

On March 15, 2021, the Board of Directors of TFI International declared a quarterly dividend of $0.23 per outstanding common share payable on April 15, 2021, representing an increase over the $0.19 quarterly dividend declared in Q1 2020.

CONFERENCE CALL

TFI International will host a conference call on Wednesday, April 28, 2021 at 8:30 a.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, May 12, 2021, by dialing 1-800-585-8367 or 416-621-4642 and entering passcode 4780937.

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:

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 Q1 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.

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.

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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, gain or loss on sale of land and buildings and assets held for sale, and loss from discontinued operations. 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.

For further information:

Alain Bédard

Chairman, President and CEO

TFI International Inc.

647-729-4079

abedard@tfiintl.com

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Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the first quarter ended

March 31, 2021

CONTENTS

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-month period ended March 31, 2021 with the corresponding three-month period ended March 31, 2020 and it reviews the Company’s financial position as of March 31, 2021. It also includes a discussion of the Company’s affairs up to April 27, 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 March 31, 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 April 27, 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 Company may make statements in this report that reflect its current expectations regarding future results of operations, performance and achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to management. Words such as “may”, “might”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”, “forecast”, “goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue” and words and expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements which reference issues only as of the date made. The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: the highly competitive market conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in interest rates, cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers, credit market liquidity, and the Company’s ability to identify, negotiate, consummate and successfully integrate business acquisitions.

The foregoing list should not be construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers should also refer to the section “Risks and Uncertainties” at the end of this MD&A for additional information on risk factors and other events that are not within the Company’s control. The Company’s future financial and operating results may fluctuate as a result of these and other risk factors.

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Management’s Discussion and Analysis

SELECTED FINANCIAL DATA AND HIGHLIGHTS

Q1 Highlights

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

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Management’s Discussion and Analysis

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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.

Q1 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.     

Revenue

For the three months ended March 31, 2021, total revenue was $1,148.8 million, up 24%, or $224.3 million, from Q1 2020. The increase was mainly attributable to the contribution from business acquisitions of $214.0 million and from an increase in revenue before fuel surcharge of $20.2 million from existing operations, partially offset by a decrease in fuel surcharge revenue of $9.9 million. The average exchange rate used to convert TFI International’s revenue generated in CAD dollars increased this quarter (US$0.7899) compared to the same quarter last year (US$0.7455) resulting in a positive currency impact of $30.9 million.

Operating expenses from continuing operations

For the three months ended March 31, 2021, the Company’s operating expenses from continuing operations increased by $209.9 million, to $1,047.1 million from $837.2 million in Q1 2020. The increase is attributable to business acquisitions of $203.4 million and to an increase of $6.5 million in existing operating expenses corresponding to the increase in total revenues before business acquisitions.

For the three months ended March 31, 2021, material and services expenses, net of fuel surcharge, increased by 5.0 percentage points of revenue before fuel surcharge compared to the same period last year due mainly to business acquisitions which accounted for 4.6 percentage points of the increase.

For the three months ended March 31, 2021, personnel expense increased 9% to $257.3 million from $236.8 million in Q1 2020. The increase can be attributed to the impact from business acquisitions of $18.5 million and a mark-to-market loss on DSUs of $8.4 million as the share price increased from $51.58 per share to $74.74, net of a reduction in personnel expenses from existing operations and a contribution of $6.5 million from the Canadian Emergency Wage Subsidy program.

Other operating expenses, which are primarily composed of costs related to office and terminal rent, taxes, heating, telecommunications, maintenance and security and other general administrative expenses, increased by $16.9 million for the three months ended March 31, 2021 as compared to the same period last year, attributable entirely to the impact from business acquisitions of $18.5 million.

For the three-month period ended March 31, 2021, the gain on sale of assets held for sale was $3.9 million, compared to $7.6 million in Q1 2020. One property was sold for proceeds of $6.1 million.

Operating income from continuing operations

For the three months ended March 31, 2021, TFI International’s operating income from continuing operations rose by $14.4 million to $101.7 million as compared to $87.3 million in the same quarter in 2020. The operating margin from continuing operations as a percentage of revenue before fuel surcharge of 9.6% compared to 10.5% in Q1 2020. This decrease is due primarily to the acquisition of DLS (now “TFWW”) in Q4 2020, which is included in the logistics segment, with TFWW having a lower margin profile than the Company’s existing operations and to the mark-to-market loss on the DSUs of $8.4 million. All reportable segments reported margin increases except for the Logistics segment, which benefitted in Q1 2020 from a $4.0 million bargain purchase gain. Notably, the Less-Than-Truckload segment reported a margin increase of 7.1 percentage points.

Finance income and costs

Interest expense on long-term debt

Interest expense on long-term debt for the three-month period ended March 31, 2021 was $1.7 million lower than the same quarter last year. The decrease is mainly attributable to a lower average interest rate of 3.43% for the three months ended March 31, 2021 as compared to 3.79% the same period in the prior year, as the average debt for the period was similar to the prior year.

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Management’s Discussion and Analysis

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 March 31, 2021, a gain of $2.9 million of foreign exchange variations (a gain of $2.5 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge. For the three-month period ended March 31, 2020, a loss of $28.1 million of foreign exchange variations (a loss of $24.4 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge.

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-month period ended March 31, 2021, the Company did not have any cash flow hedge positions. For the three-month period ended March 31, 2020, a cumulative loss of $4.1 million on change in fair value of interest rate derivatives was recognized, of which $3.6 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 March 31, 2021, the Company’s effective tax rate was 23.4%. The income tax expense of $20.4 million reflects a $2.7 million favorable variance versus an anticipated income tax expense of $23.1 million based on the Company’s statutory tax rate of 26.5%. The favorable variance is mainly due to favorable variations from tax deductions and tax exempt income of $4.2 million partially offset by a negative variation of $1.0 million for non deductible expenses.

Net income and adjusted net income

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

For the three months ended March 31, 2021, TFI International’s net income was $66.9 million as compared to $55.8 million in Q1 2020. The Company’s adjusted net income¹, a non-IFRS measure, which excludes items listed in the above table, was $73.6 million as compared to $52.6 million in Q1 2020, an increase of 40% or $21.1 million. Adjusted EPS, fully diluted, increased by $0.16 to $0.77 from $0.61 in Q1 2020.

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

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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

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.

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Management’s Discussion and Analysis

Package and Courier

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

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

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

Revenue

For the three months ended March 31, 2021, revenue increased by $27.4 million or 26%, from $104.1 million in Q1 2020 to $131.5 million in Q1 2021. This increase is attributable to a 28.1% increase in revenue per pound (excluding fuel surcharge) slightly offset by a 1.4% decrease in tonnage. The decrease in tonnage was the result of a 14.4% increase in shipments, partially attributable to softer revenues in the last two weeks of Q1 2020 due to the COVID-19 pandemic, offset by a 13.8% decrease in average weight per shipment. Decrease in weight per shipment is entirely attributable to pieces per shipment that continue to decrease as e-commerce residential deliveries continue to increase since the beginning of the COVID-19 pandemic.  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 shipment.  

Operating expenses

For the three months ended March 31, 2021, materials and services expenses, net of fuel surcharge revenue, increased $15.0 million or 33%, partly due to an $11.4 million increase in subcontractor costs and a $1.6 million increase in external labor, mostly required to manage higher volume in Quebec and Ontario sorting facilities.  Personnel expenses increased $4.4 million, or 13%, stemming mostly from Express operations that were negatively impacted by a $2.6 million increase in pickup and delivery costs combined with a $2.3 million increase in sorting costs, also required to handle the additional volume. This increase in direct labor was slightly offset by $0.8 million of credits received under Canada Emergency Wage Subsidy.  Other operating expenses increased $1.0 million or 15%, primarily due to higher real estate and IT costs.

Operating income

Operating income for the three months ended March 31, 2021 increased by 58% or $6.8 million compared to the first quarter of 2020 and the operating margin was 13.9% in the first quarter of 2021 compared to 11.1% for the same period in 2020.  This year-over-year increase in 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 return on invested capital of 20.4% increased from 18.8% in the first quarter of 2020, due primarily to the increase in operating income.

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Management’s Discussion and Analysis

Less-Than-Truckload

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

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

Revenue

For the three months ended March 31, 2021, the LTL segment’s revenue was $131.6 million, a $2.7 million, or 2%, decrease when compared to the same period in 2020. The decrease in revenue was due to a 5.9% decrease in tonnage partially offset by a 4.1% increase in revenue per hundredweight (excluding fuel).  Revenue per hundredweight (excluding fuel) increased for a third consecutive quarter after hitting a low point in the second quarter of 2020. The decrease in tonnage is the result of a 5.7% decrease in shipments combined with a 0.2% decrease in average weight per shipment. Improvement in quality of shipments following the consolidation of two of our over-the-road divisions in the second quarter of 2020 is responsible for a major part of the decrease in shipment count. Slower volume from certain retail customers and the closure of malls in Ontario also drove a portion of the reduction of shipment count.  Excluding the impact from business acquisitions, revenue was down $5.1 million, or 4%, when compared to the same period in 2020.

Operating expenses

For the three months ended March 31, 2021, materials and services expenses, net of fuel surcharge revenue, decreased $6.2 million, or 9%, mostly due to a $7.5 million decrease in sub-contractor cost attributable to a decrease in tonnage, partially offset by a $2.1 million reduction in fuel surcharge revenue. Personnel expenses decreased 11% year-over-year, attributable mostly to credits from the Canada Emergency Wage Subsidy of $2.7 million combined with a $1.2 million reduction in administrative salaries. Other operating expenses decreased $1.2 million in the first quarter of 2021, mainly due to a $0.7 million reduction in real estate cost, mostly related to the consolidation in our over-the-road operations.

Operating income

Operating income for the three months ended March 31, 2021 increased $9.0 million, or 69%, when compared to the same period in 2020. Almost half of the improvement in operating income, before business acquisition, relates to the consolidation in the over-the-road operations.  As a percentage of revenue, operating income was 16.8% during the first quarter of 2021, versus 9.7% for the same period in 2020.

The return on invested capital of 15.4% increased from 11.9% in the first quarter of 2020, due primarily to the increase in operating income.

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Management’s Discussion and Analysis

Truckload

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

During Q1 2021, Fleetway was acquired and incorporated in the Truckload segment.

Revenue

For the three months ended March 31, 2021, TL revenue excluding fuel surcharge increased by $27.0 million or 7%, from $397.5 million in 2020 to $424.6 million in 2021. This increase is mainly due to business acquisitions’ contribution of $38.4 million, offset by a decline in revenue from existing operations of $11.4 million. For conventional TL operations in the U.S., revenue declined by $1.6 million, or 1.0% compared to prior year period, mainly caused by the severe winter weather that impacted much of the U.S. in February. Revenue per mile improved by 6.8%, following the strong pricing and tight capacity in the U.S. market, and miles per tractor declined by 7.5%, attributable to unseated tractors resulting from limited driver availability. For conventional TL operations in Canada, revenues increased by $3.4 million, or 6.5% compared to the prior year period. The increase was due to a 4.5% improvement in revenue per tractor, due to revenue per mile improving by 8.4%, offset by a 3.6% decline in miles per tractor. For Specialized TL, revenue increased by $25.4 million, or 13.5%, compared to the prior year period.

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Management’s Discussion and Analysis

Operating expenses

For the three months ended March 31, 2021, operating expenses, including business acquisition impact and net of fuel surcharge, increased by $23.4 million or 7%, from $351.1 million in 2020 to $374.6 million in 2021. Material and services expenses, net of fuel surcharge, increased by 9% compared to the first quarter of 2020. Personnel expenses and other operating expenses increased by 2% and 9% respectively in the first quarter year over year. Included in the personnel expense was $2.7 million from the Canadian Emergency Wage Subsidy, of which $2.1 million is accounted for in Specialized TL.

Gain on sale of property

For the three months ended March 31, 2021, a $3.8 million gain on sale of assets held for sale was recorded in the Truckload segment following the sale of one property for total consideration of $6.1 million (a gain of $7.6 million and proceeds of $10.6 million in 2020). This disposal is a result of management’s continued efforts to improve efficiencies and benefit from economies of scale through the consolidation of operating locations.

Operating income

The TL segment’s operating ratio was 88.2% for the three months ended March 31, 2021 as compared to 88.3% in 2020, and the segment delivered a $3.6 million, or 8%, increase in operating income. Operating income in the TL segment was $50.0 million for the three months ended March 31, 2021, up from $46.4 million in the same prior year period. The operating income in the first quarter of 2021 includes gains from the sale of assets held for sale of $3.9 million and gains on the sale of rolling stock and equipment of $3.5 million, as compared to $7.6 million and $2.4 million in the same prior year period, respectively, resulting in a negative variation in operating income of $2.5 million.

The return on invested capital for the U.S. based and Canadian Based Conventional TL was 5.5% and 11.8%, respectively compared to 5.7% and 13.4%, 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 for the Specialized TL segment increased to 10.9% as compared to 9.6% in the same prior year period due primarily to an increase in operating income.

Logistics

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

Revenue

For the three months ended March 31, 2021, revenue increased by $178.3 million, or 89%, from $200.1 million in 2020 to $378.4 million in 2021. This increase is mainly due to the acquisition of DLS Worldwide during the fourth quarter of 2020. Excluding business acquisitions, revenue increased by $9.3 million, or 5% due to the strong performance of e-commerce activities in Canada and organic growth in existing U.S. operations.

Approximately 75% (2020 – 63%) of the Logistics segment’s revenues in the quarter were generated from operations in the U.S. and approximately 25% (2020 – 37%) were generated from operations in Canada and Mexico.

Operating expenses

For the three months ended March 31, 2021, total operating expenses, net of fuel surcharge increased by $168.4 million, or 93%, from $180.9 million to $349.3 million. Excluding business acquisitions, total operating expenses, net of fuel surcharge, increased by $4.6 million or 2.5%. The U.S. last mile operations reduced personnel expenses by $2.4 million, equally from operating and administrative salary. The other operating expenses decreased by $1.5 million, of which $0.5 million was from a reduction in travel expenses and $0.6 million was from a reduction in professional fees.

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Management’s Discussion and Analysis

Operating income

Operating income for the three months ended March 31, 2021 increased by $9.9 million, or 52%, from $19.2 million in the prior year period to $29.1 million. Excluding business acquisitions, organic operating margin increased by 180 basis point from 9.6% in 2020 to 11.4% in 2021, mainly as a result of better quality revenue, increased e-commerce volume and cost efficiency measures within last mile operations.

The return on invested capital increased to 18.6% from 12.6% 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

Cash flow from continuing operating activities

For the three-month period ended March 31, 2021, net cash from continuing operating activities increased by 13% to $155.2 million from $137.2 million in 2020. This $18.0 million increase is attributable to an increase in net income of $11.1 million, $27.8 million from improvements in net change in working capital primarily attributable to working capital improvements in recently acquired businesses, net of an increase income taxes paid of $31.5 million. The increases in the taxes paid is attributable primarily to exceeding estimated performance in 2020, and greater tax installments made in for 2021 than 2020 due to higher expected profits.

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 March 31, 2021 and 2020.

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.

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Management’s Discussion and Analysis

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-month periods ended March 31, 2021 and 2020.

Business acquisitions

For the three-month period ended March 31, 2021, cash used in business acquisitions totalled $19.0 million to acquire one business. Refer to the section of this report entitled “2021 business acquisitions” and further information can be found in note 5 of the March 31, 2021 unaudited condensed consolidated interim financial statements.

Cash flow used in financing activities

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.

Free cash flow from continuing operations

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 three-month period ended March 31, 2021, TFI International generated free cash flow from continuing operations of $143.5 million, compared to $129.1 million in 2020, which represents a year-over-year increase of $14.3 million, or 11%. This increase is mainly due to more net cash from continuing operating activities of $18.0 million, largely stemming from an increase in net income of $11.1 million, $27.8 million from improvements in net change in working capital, net of an increase income taxes paid of $31.5 million. The capital expenditures on rolling stock increased by $8.1 million as compared to the prior year quarter as a result of realizing delayed capital expenditures from 2020.

Free cash flow conversion, which measures the level of capital employed to generate earnings, improved for the three months ended March 31, 2021 to 94.4% from 88.6%, due to improved operating results compared to 2020 and lower net capital expenditures.

Based on the March 31, 2021 closing share price of $74.74, the free cash flow generated by the Company in the last twelve months ($559.6 million) represented a yield of 8.0%.

13

Management’s Discussion and Analysis

Financial position

Compared to December 31, 2020, the Company’s total assets and long-term debt increased, mainly as a result of the new debt of $500 million issued during the quarter. The proceeds of the new debt were partially used to repay existing revolver debt and the remaining amount is currently being held as cash.  

As at March 31, 2021, the Company’s working capital (accounts receivable, inventory and prepaids less accounts payable) was $133.9 million compared to $168.3 million as at December 31, 2020. The decrease in working capital is primarily attributable to improvements in working capital for recently acquired business acquisition.

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

The following table indicates the Company’s contractual obligations with their respective maturity dates at March 31, 2021, excluding future interest payments.

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%.

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:

As at March 31, 2021, the Company had $28.1 million of outstanding letters of credit ($29.5 million on December 31, 2020).

As at March 31, 2021, the Company had $124.5 million of purchase commitments and $45.5 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 first 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 July 15, 2021 to shareholders of record at the close of business on June 30, 2021.

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 March 31, 2021, and since the inception of this NCIB, the Company has repurchased and cancelled 642,200 common shares.  

14

Management’s Discussion and Analysis

For the three-month period ended March 31, 2021, the Company repurchased 642,200 common shares (as compared to 1,297,065 in the first quarter of 2020) at a weighted average price of $71.76 per share (as compared to $24.36 in the prior year period) for a total purchase price of $46.1 million (as compared to $31.6 million the prior year period).

Outstanding shares and share-based awards

A total of 93,235,500 common shares were outstanding as at March 31, 2021 (December 31, 2020 – 93,397,985). There was no material change in the Company’s outstanding share capital between March 31, 2021 and April 27, 2021.

As at March 31, 2021, the number of outstanding options to acquire common shares issued under the Company’s stock option plan was 2,494,015 (December 31, 2020 – 2,982,514) of which 2,105,177 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 March 31, 2021, the number of restricted share units (‘’RSUs’’) granted under the Company’s equity incentive plan to its senior employees was 377,519 (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. 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.

As at March 31, 2021, the number of performance share units (‘’PSUs’’) granted under the Company’s equity incentive plan to its senior employees was 224,927 (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 continued its gradual recovery since the height of the Coronavirus (COVID-19) pandemic.  As the economic rebound has broadened, the end markets that remained relatively strong last year or that quickly recovered, such as the transport of essential household goods, medical products and e-commerce, have since been joined by others such as business-to-business and transportation for the apparel and automotive industries.  While there remains a degree of macro uncertainty and specific North American geographies are experiencing renewed COVID-19 outbreaks, broadening vaccine distribution and pent-up consumer and business spending have led most economists to project healthy GDP growth for 2021.

Although TFI International remained fully operational with uninterrupted service throughout the pandemic, 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, computer chip shortages affecting the automotive industry, and policy changes enacted by the new US presidential administration surrounding international trade, environmental mandates, tax and other matters.

Management believes the Company is well prepared to navigate changes in the economic landscape 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.  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 potential growth and cost synergies related to its pending acquisition of UPS Freight, expected to close during the second quarter of 2021. In addition, the Company continues to have strong liquidity and a conservative balance sheet.

Management believes its decisions over the past year facilitated the rapid return to strong year-over-year growth, and that TFI’s current positioning, which will be further enhanced by the pending acquisition of UPS Freight, should enable the Company to emerge even stronger when conditions normalize.  Longer term, regardless of the operating environment, management’s goal is to build shareholder value through consistent adherence to its operating

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Management’s Discussion and Analysis

principles, including the intense customer focus exhibited by its many dedicated professionals, its asset-light approach to the business, continual efforts to enhance efficiencies, and an effective strategy around industry consolidation.

SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS