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.
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