Category: Canada

Rick Spinrad, Ph.D.

Feb 20, 2025

TFI International’s announcement within its Q4 earnings report that it will redomicile to the U.S. won’t have a significant impact on the company’s operations, its CEO and chairman Alain Bedard told analysts this morning.

He confirmed Canada’s largest trucking firm will relocate its headquarters to the U.S., “to better align with our shareholder base and commercial presence.”

The announcement drew quick condemnation from Quebec pension fund, the Caisse de Depot et Placement du Quebec. It told Bloomberg on Feb. 19, “The company has not informed us of its intentions, and we will express our dissatisfaction. Quebec’s interests are always at the heart of our priorities as a shareholder.”

The pension fund took a 4% ownership position in TFI International last year, Bloomberg reported.

But Bedard said this morning the move won’t result in the closure of existing corporate offices in Canada, and marks part of the evolution of the company, which listed on the NYSE in 2020. It did so at the time using an instrument dubbed the multi-jurisdictional disclosure system (MJDS), an exemption that effectively fast-tracks a foreign-owned company’s ability to list on a U.S. exchange by accepting Canadian filings and meeting other conditions.

The MJDS provision has a ceiling on U.S. ownership which, once exceeded, requires more onerous reporting requirements if the company continues to be domiciled outside the U.S., Bedard explained. As of last summer, 49.9% of TFI International shareholders were American.

“This exception disappears the minute our shares owned by U.S. shareholders go above 50%. Then this is not going to work,” he said of the MJDS procedure.

Bedard noted the company has corporate offices in Montreal, Toronto, Calgary, Chicago, Minneapolis and elsewhere as it continues to evolve and grow its U.S. operations.

“To me, it’s like an evolution,” Bedard said. “Our business today is about 70% U.S. domestic, 25% Canadian domestic and 3-4% transborder.”

About 80% of its revenue now comes from U.S. operations. “We are not moving people from Toronto to Chicago,” Bedard insisted. “Every member of the TFI head office is staying where they are.”

Bedard also confirmed the company won’t delist its stock from the Toronto Stock Exchange. Still, the move requires shareholder approval. Further motivating the move, TFI International last year acquired flatdecker Daseke in a $1 billion-plus acquisition. That company came with U.S. military contracts that are easier to renew as a U.S.-domiciled business.

And, he added, being U.S.-domiciled opens the company up for inclusion in various stock indices it otherwise wouldn’t qualify for. Bedard also reiterated most of its future growth by acquisition will come in the U.S.

“The U.S. is the best place to be in the world in terms of business,” he said. “I feel really good about the U.S. economy. To me, it’s time to invest in the U.S.”

Muted outlook for freight markets

Even so, Bedard isn’t expecting a quick turnaround to freight markets, which remain mired in recession.

“It’s still a very difficult environment,” Bedard told analysts, noting further work must be done to reduce costs. “What we see in Q1 is, we’re still in a very deep freight recession. Volumes are not there, so it’s going to be a difficult 2025, I think…We don’t see anything changing over the course of 2025.”

Financial results

TFI’s Q4 earnings reflected a tough market, one which Bedard referred to as “a disaster.” Revenue climbed from $1.97 billion to $2.08 (all figures USD) thanks to the Daseke acquisition, but reduced overall volumes and weak demand drove net income down from $131.4 million to $88.1 million year over year.

For the full year, revenue was $8.4 billion, up from $7.52 billion the year before. But net income slid from $504.9 million to $422.5 million.

Canada’s primary stock index fell on Thursday, dragged by concerns that U.S. President Donald Trump’s fresh tariff threats could stoke a global trade war.

At 10:03 a.m. ET (1503 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 0.6% at 25,489.09 points.

The technology sector was the worst performer, dragged by a 4.3% drop in Blackberry.

Trump announced plans to unveil fresh tariffs within the next month or sooner, targeting lumber and forest products in addition to previously announced duties on imported cars, semiconductors, and pharmaceuticals.

This announcement is particularly significant for Canada, one of the world’s leading producers and exporters of softwood lumber. A lion’s share of these exports is destined for the United States.

Fears of a global trade war pushed investors towards gold, with prices of the safe-haven metal soaring to unprecedented heights.

“The tariff talk is really the main thing right now. The uncertainty is keeping the market very choppy at best,” Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.

“Not only will our exporters be hurt because of potential tariffs on lumber, it will also affect the United States quite significantly.”

U.S. data showed weekly jobless claims for the week ended February 15 stood at 219,000, compared with an estimate of 215,000, as per economists polled by Reuters.

Remarks from at least four Federal Reserve officials, including Chicago Fed President Austan Goolsbee are due later in the day.

Sector-wise, healthcare emerged as the top performer, boosted by a 7.4% jump in Bausch Health after it reported its fourth-quarter results and announced 2025 forecasts.

Cenovus Energy lost 5.3% after the Canadian oil and gas giant reported a decline in fourth-quarter profits.

Nutrien gained 3.6% after the top potash producer reported its fourth-quarter results.

Manulife Financial gained 6% after the company saw a 6% increase in quarterly profit.

TFI International slumped 11.6% after the Canadian transportation and logistics service provider reported its fourth-quarter results.

MONTREAL — The head of TFI International Inc. says its latest quarter was a “disaster” marked by low cargo volumes amid a trucking sector slump, with the first half of 2025 “foggy” at best.

“Q4 was a disaster for us,” said chairman and CEO Alain Bédard on Thursday.

“We are still in a very deep freight recession. The volumes are not there … There’s a fight for freight.”

The country’s largest trucking firm reported Wednesday that fourth-quarter profits dropped by a third year-over-year to $88.1 million due to intense competition and weaker demand from businesses.

On Thursday, shares slid more than 15 per cent to $153.58 in mid-morning trading on the Toronto Stock Exchange.

On a conference call with analysts, Bédard said high costs and inefficient operations at two big companies TFI acquired over the past four years have been a drag on earnings.

He called out subsidiary TForce Freight, which TFI bought from UPS for US$800 million in 2021. The Virginia-based carrier focuses on “less-than-truckload” deliveries — multiple drops of cargo for different clients on a single run.

“TForce is a big rock in my shoe,” Bédard said, citing a poor operating ratio, a key metric that refers to operating expenses as a percentage of revenue. “That’s the reason I’m up at night.”

Last April, TFI acquired Texas-based flatbed truck operator Daseke for US$1.1 billion. The company has some 400 excess trucks due to deals signed by the previous management, Bédard said. “This is killing us on depreciation expenses.”

Meanwhile, a higher number of accident claims and a weak Canadian dollar further dented income last quarter.

“We just throw money out the door,” he said of the claims, calling them “unacceptable.”

The chief executive also said the first half of the year will be “more difficult” than the first six months of 2024.

In a bid to boost American investment, Bédard said TFI will relocate its legal headquarters to the United States, already home to 70 per cent of its business.

He said there will be no change in the location of its head office or management teams.

“We’re not moving people from, say, Toronto to Chicago. Every member of the head office is staying where they’re at.”

TFI first listed on the New York Stock Exchange in 2020. But as a foreign company, it cannot take on more investment from American shareholders, who currently hold 49.9 per cent of its stock, Bédard said.

Its foreign status also “creates a little bit of issues” around its contracts with the U.S. Department of Defense, he added.

This report by The Canadian Press was first published Feb. 20, 2025.

Companies in this story: (TSX:TFII)

Christopher Reynolds, The Canadian Press

Loblaw Companies Ltd. is seeing more participation in its popular PC Optimum loyalty program — and more points being redeemed at checkout.

Customers redeemed more than a billion dollars’ worth of Optimum points in 2024, according to Loblaw’s annual report. There are more than 17 million active Optimum users.

The strength of the program caused the grocery retailer to take a non-cash charge of $129 million in its fourth quarter that drove profits lower year over year, as the company re-evaluated the program’s liability for outstanding Optimum points to reflect the higher use.

“We increased this liability based on our expectation that more customers will redeem more of their … points going forward,” said chief financial officer Richard Durfresne on a conference call discussing the results.

“What it reflects is that more and more consumers are liking PC Optimum, are using it, and so from our perspective … we’re more than happy to do it because it reflects what’s happening in our stores.”

The parent company of Loblaws and Shoppers Drug Mart says its net earnings available to common shareholders amounted to $462 million or $1.52 per diluted share for the quarter ended Dec. 28.

The result was down from a profit of $541 million or $1.72 per diluted share in the fourth quarter of 2023.

Amid a looming trade war with the U.S. that could see import tariffs on both sides of the border, Loblaw has been highlighting domestic products in its stores as shoppers look to buy Canadian. It also added a “swap and shop” feature to its loyalty app to help shoppers find Canadian products more easily.

The efforts appear to be paying off.

“As we continue to expand this feature, we are already seeing a significant uplift in sales (of) products identified as prepared in Canada,” said CEO Per Bank.

Loblaw is also monitoring how tariffs could affect prices on its U.S. products. If Trump brings in tariffs and Canada retaliates, it may have to pay more for items it brings in from south of the border, which would also put upward pressure on retail prices.

Less than 10 per cent of the company’s supply comes from the U.S., said Bank, with most of it being produce. Canada is particularly reliant on produce imports in the winter.

“If tariffs are applied on produce, there’s where we will be mostly impacted,” said Bank.

The company has some plans to mitigate the effects of tariffs, but produce is the hardest thing to replace, said Bank, estimating Loblaw could mitigate the impact on about half of the U.S. produce the company buys.

“We are seeing these tariffs as a kind of tax on products that will hurt consumers on both sides,” he said.

But in other areas, the company is better positioned to offer consumers an alternative, Bank said. For example, Loblaw carriers household and cleaning products from more than 30 U.S. vendors but also has a strong array of products in that category among its private-label brands No Name and President’s Choice, he said.

“If the tariffs will be applied on household and cleaning, then of course, those products will not be competitive anymore, and all the sales will go to our control brands, and they’re all produce in Canada,” he said.

“So that’s good for Canada, it’s good for customers, and it’s good for us.”

The weakness of the Canadian dollar is adding further inflationary pressure at a time when Canada relies on the U.S. for fresh produce, added Dufresne.

“That is inflationary, and we’ve been starting to feel it quite seriously over the last few weeks.”

The loonie’s decline is also compounding the fact that Loblaw continues to see higher-than-normal price increase requests from large global suppliers, he said.

On Wednesday Loblaw announced it plans to spend $2.2 billion in 2025, opening 80 new grocery and pharmacy stores with about 50 of them being discount grocers. Bank says many will be smaller-format stores, building the company’s network of those types of grocers after launching small-format No Frills stores for the first time last May.

The investment, which is part of about $10 billion over five years, will also add 100 pharmacy care clinics to the company’s network.

The company is also planning to open the first phase of its new automated distribution centre in East Gwillimbury, Ont. The ramp-up starts with frozen products, said Bank.

Loblaw opened 52 new stores in 2024 as well as 78 new clinics.

On an adjusted basis, Loblaw says it earned $2.20 per diluted share in its latest quarter, up from an adjusted profit of $2 per diluted share a year earlier.

Revenue for the quarter totalled $14.9 billion, up from $14.5 billion, as food retail same-stores sales rose by 2.5 per cent. Excluding the favourable impact of the timing of Thanksgiving, Loblaw says food retail same-store sales were up about 1.5 per cent.

Consumers continue to favour discount stores over conventional stores, though the gap is stabilizing, said Dufresne.

Drug retail same-store sales rose 1.3 per cent, with pharmacy and health care services same-store sales up 6.3 per cent, offset in part by a 3.1 per cent drop in front store same-store sales.

Loblaw shares were down 1.6 per cent to $176.56 in late-morning trading on the Toronto Stock Exchange.

This report by The Canadian Press was first published Feb. 20, 2025.

Companies in this story: (TSX:L)

Rosa Saba, The Canadian Press