This trucking company has been in the acquisition mode and has a current dividend yield of 1.89%, paid quarterly.
TFI International Inc. (TFII)
From Internet Wealth Builder
This company is a North American leader in the transportation and logistics industry. It operates across Canada, the United States, and Mexico offering package and courier service, truckload and less than truckload haulage, logistics, and other services.
After falling to the $23 range in March, the stock has rallied strongly and is now on the plus side year-to-date and trading close to its all-time high of $52.10.
TFI’s first-quarter results were very impressive. The Montreal-based company reported record first-quarter income of $118.5 million, an increase of 13% over the same period in 2019. Net cash from operating activities was $191.7 million, up from $160.7 million the year before.
Adjusted net income was $71.3 million ($0.83 a share) compared to $67.1 million ($0.77 a share) in the year-ago period.
The company benefitted from increased demand for its trucking and delivery services as the coronavirus pandemic gripped the economy. The bottom line also benefitted from the deferral of certain tax payments because of stimulus measures.
TFI has been actively expanding its business through acquisitions. On June 12, the company announced that it is acquiring privately held Gusgo Transport, a container transport and storage company operating out of Vaughan, Ontario. With its four company trucks and 48 owner operators, Gusgo delivers both dry and temperature-controlled commodities in approximately a five-hundred-mile radius around the Greater Toronto Area, including delivery points throughout Ontario, Quebec, New York, Pennsylvania, Ohio, and Michigan. Gusgo operates over 250 container chassis and has capacity for storing 6,000 containers at its Vaughan location. The purchase price was not disclosed.
On June 29, TFI announced the acquisition of substantially all the assets of CT Transportation. The company was originally the flatbed subsidiary of Comcar Industries, Inc., which along with its other subsidiaries filed Chapter 11 petitions in the U.S. Bankruptcy Court on May 17. TFI paid US$15 million.
Headquartered in Savannah, GA, CT Transportation operates more than 270 tractors and 560 trailers, with 11 terminals from Maryland to Florida, and generated revenue before fuel surcharge of approximately US$50 million in 2019. Its approximately 250 drivers transport drywall, lumber, tiles, cement board, and other materials to major building product manufacturers and home improvement distributors throughout the Southeast and Mid-Atlantic regions of the U.S.
The board of directors approved an 8% increase in the quarterly dividend, to $0.26 per share ($1.04 annually), effective with the April payment.
During the quarter, the company spent $43.8 million on share repurchases.
TFI is the right business for the times. We should continue to see strong results.
Action now: Buy.
Gordon Pape, Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, July 20, 2020