Exhibit 99.3
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the first quarter ended
March 31, 2021
CONTENTS
│1
(UNAUDITED)
(in thousands of U.S. dollars) |
|
|
| As at |
|
| As at |
| ||
|
| Note |
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Assets |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
| 401,968 |
|
|
| 4,297 |
|
Trade and other receivables |
|
|
|
| 590,201 |
|
|
| 597,873 |
|
Inventoried supplies |
|
|
|
| 8,972 |
|
|
| 8,761 |
|
Current taxes recoverable |
|
|
|
| 4,212 |
|
|
| 7,606 |
|
Prepaid expenses |
|
|
|
| 26,523 |
|
|
| 29,904 |
|
Assets held for sale |
|
|
|
| 1,848 |
|
|
| 4,331 |
|
Current assets |
|
|
|
| 1,033,724 |
|
|
| 652,772 |
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment |
| 7 |
|
| 1,083,232 |
|
|
| 1,074,428 |
|
Right-of-use assets |
| 8 |
|
| 321,995 |
|
|
| 337,285 |
|
Intangible assets |
| 9 |
|
| 1,755,255 |
|
|
| 1,749,773 |
|
Other assets |
| 10 |
|
| 24,258 |
|
|
| 23,899 |
|
Deferred tax assets |
|
|
|
| 12,676 |
|
|
| 11,207 |
|
Non-current assets |
|
|
|
| 3,197,416 |
|
|
| 3,196,592 |
|
Total assets |
|
|
|
| 4,231,140 |
|
|
| 3,849,364 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
| 491,766 |
|
|
| 468,238 |
|
Current taxes payable |
|
|
|
| 13,412 |
|
|
| 33,220 |
|
Provisions |
| 13 |
|
| 14,250 |
|
|
| 17,452 |
|
Other financial liabilities |
|
|
|
| 12,358 |
|
|
| 4,031 |
|
Long-term debt |
| 11 |
|
| 37,026 |
|
|
| 42,997 |
|
Lease liabilities |
| 12 |
|
| 88,927 |
|
|
| 88,522 |
|
Current liabilities |
|
|
|
| 657,739 |
|
|
| 654,460 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
| 11 |
|
| 1,205,813 |
|
|
| 829,547 |
|
Lease liabilities |
| 12 |
|
| 265,955 |
|
|
| 267,464 |
|
Employee benefits |
|
|
|
| 15,889 |
|
|
| 15,502 |
|
Provisions |
| 13 |
|
| 32,768 |
|
|
| 36,803 |
|
Other financial liabilities |
|
|
|
| 17,798 |
|
|
| 22,699 |
|
Deferred tax liabilities |
|
|
|
| 234,580 |
|
|
| 232,712 |
|
Non-current liabilities |
|
|
|
| 1,772,803 |
|
|
| 1,404,727 |
|
Total liabilities |
|
|
|
| 2,430,542 |
|
|
| 2,059,187 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
Share capital |
| 14 |
|
| 1,125,243 |
|
|
| 1,120,049 |
|
Contributed surplus |
| 14, 16 |
|
| 20,606 |
|
|
| 19,783 |
|
Accumulated other comprehensive income |
|
|
|
| (156,567 | ) |
|
| (154,723 | ) |
Retained earnings |
|
|
|
| 811,316 |
|
|
| 805,068 |
|
Equity attributable to owners of the Company |
|
|
|
| 1,800,598 |
|
|
| 1,790,177 |
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies, letters of credit and other commitments |
| 22 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
|
|
| 4,231,140 |
|
|
| 3,849,364 |
|
The notes on pages 7 to 25 are an integral part of these condensed consolidated interim financial statements.
│2
(UNAUDITED)
(In thousands of U.S. dollars, except per share amounts) |
| Note |
| Three months ended March 31, 2021 |
|
| Three months ended March 31, 2020* |
| ||
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
| 1,059,134 |
|
|
| 829,099 |
|
Fuel surcharge |
|
|
|
| 89,673 |
|
|
| 95,410 |
|
Total revenue |
|
|
|
| 1,148,807 |
|
|
| 924,509 |
|
|
|
|
|
|
|
|
|
|
|
|
Materials and services expenses |
| 17 |
|
| 665,920 |
|
|
| 505,335 |
|
Personnel expenses |
| 18 |
|
| 257,272 |
|
|
| 236,773 |
|
Other operating expenses |
|
|
|
| 53,427 |
|
|
| 36,482 |
|
Depreciation of property and equipment |
| 7 |
|
| 41,220 |
|
|
| 42,569 |
|
Depreciation of right-of-use assets |
| 8 |
|
| 22,799 |
|
|
| 19,160 |
|
Amortization of intangible assets |
| 9 |
|
| 14,371 |
|
|
| 11,655 |
|
Bargain purchase gain |
|
|
|
| - |
|
|
| (4,008 | ) |
Gain on sale of rolling stock and equipment |
|
|
|
| (3,605 | ) |
|
| (2,525 | ) |
Gain on derecognition of right-of-use assets |
|
|
|
| (404 | ) |
|
| (615 | ) |
Loss on sale of land and buildings |
|
|
|
| - |
|
|
| 1 |
|
Gain on sale of assets held for sale |
|
|
|
| (3,938 | ) |
|
| (7,646 | ) |
Total operating expenses |
|
|
|
| 1,047,062 |
|
|
| 837,181 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
| 101,745 |
|
|
| 87,328 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance (income) costs |
|
|
|
|
|
|
|
|
|
|
Finance income |
| 19 |
|
| (607 | ) |
|
| (1,701 | ) |
Finance costs |
| 19 |
|
| 15,042 |
|
|
| 16,043 |
|
Net finance costs |
|
|
|
| 14,435 |
|
|
| 14,342 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax |
|
|
|
| 87,310 |
|
|
| 72,986 |
|
Income tax expense |
| 20 |
|
| 20,423 |
|
|
| 17,198 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period attributable to owners of the Company |
|
|
|
| 66,887 |
|
|
| 55,788 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to owners of the Company |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
| 15 |
|
| 0.72 |
|
|
| 0.66 |
|
Diluted earnings per share |
| 15 |
|
| 0.70 |
|
|
| 0.65 |
|
* Recasted for change in presentation currency (see note 2d))
The notes on pages 7 to 25 are an integral part of these condensed consolidated interim financial statements.
│3
(UNAUDITED)
(In thousands of U.S. dollars) |
| Three months ended March 31, 2021 |
|
| Three months ended March 31, 2020* |
| ||
|
|
|
|
|
|
|
|
|
Net income for the period attributable to owners of the Company |
|
| 66,887 |
|
|
| 55,788 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
Items that may be reclassified to income or loss in future years: |
|
|
|
|
|
|
|
|
Foreign currency translation differences |
|
| (4,337 | ) |
|
| (32,285 | ) |
Net investment hedge, net of tax |
|
| 2,493 |
|
|
| (24,377 | ) |
Changes in fair value of cash flow hedge, net of tax |
|
| - |
|
|
| (2,690 | ) |
Other comprehensive income for the period, net of tax |
|
| (1,844 | ) |
|
| (59,352 | ) |
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period attributable to owners of the Company |
|
| 65,043 |
|
|
| (3,564 | ) |
* Recasted for change in presentation currency (see note 2d))
The notes on pages 7 to 25 are an integral part of these condensed consolidated interim financial statements.
│4
TFI International Inc. | |
| PERIODS ENDED MARCH 31, 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 |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 66,887 |
|
|
| 66,887 |
|
Other comprehensive income (loss) for the period, net of tax |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,844 | ) |
|
| - |
|
|
| (1,844 | ) |
Total comprehensive income (loss) for the period |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,844 | ) |
|
| 66,887 |
|
|
| 65,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions |
| 16 |
|
| - |
|
|
| 2,511 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,511 |
|
Stock options exercised |
| 14, 16 |
|
| 12,088 |
|
|
| (1,681 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,407 |
|
Dividends to owners of the Company |
| 14 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21,443 | ) |
|
| (21,443 | ) |
Repurchase of own shares |
| 14 |
|
| (6,897 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (39,190 | ) |
|
| (46,087 | ) |
Net settlement of restricted share units |
| 14, 16 |
|
| 3 |
|
|
| (7 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6 | ) |
|
| (10 | ) |
Total transactions with owners, recorded directly in equity |
|
|
|
| 5,194 |
|
|
| 823 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (60,639 | ) |
|
| (54,622 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2021 |
|
|
|
| 1,125,243 |
|
|
| 20,606 |
|
|
| (379 | ) |
|
| - |
|
|
| (156,188 | ) |
|
| 811,316 |
|
|
| 1,800,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at December 31, 2019* |
|
|
|
| 678,915 |
|
|
| 19,549 |
|
|
| (369 | ) |
|
| 487 |
|
|
| (173,516 | ) |
|
| 634,226 |
|
|
| 1,159,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 55,788 |
|
|
| 55,788 |
|
Other comprehensive income (loss) for the period, net of tax |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,690 | ) |
|
| (56,662 | ) |
|
| - |
|
|
| (59,352 | ) |
Total comprehensive income (loss) for the year |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,690 | ) |
|
| (56,662 | ) |
|
| 55,788 |
|
|
| (3,564 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions |
| 16 |
|
| - |
|
|
| 1,640 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,640 |
|
Stock options exercised |
| 14, 16 |
|
| 999 |
|
|
| (185 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 814 |
|
Issuance of shares |
| 14 |
|
| 217,552 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 217,552 |
|
Dividends to owners of the Company |
| 14 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16,165 | ) |
|
| (16,165 | ) |
Repurchase of own shares |
| 14 |
|
| (10,089 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21,530 | ) |
|
| (31,619 | ) |
Total transactions with owners, recorded directly in equity |
|
|
|
| 208,462 |
|
|
| 1,455 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (37,695 | ) |
|
| 172,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2020* |
|
|
|
| 887,377 |
|
|
| 21,004 |
|
|
| (369 | ) |
|
| (2,203 | ) |
|
| (230,178 | ) |
|
| 652,319 |
|
|
| 1,327,950 |
|
* Recasted for change in presentation currency (see note 2d))
The notes on pages 7 to 25 are an integral part of these condensed consolidated interim financial statements.
│5
(In thousands of U.S. dollars) |
| Note |
|
| Three months ended March 31, 2021 |
|
| Three months ended March 31, 2020* |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
|
|
|
|
| 66,887 |
|
|
| 55,788 |
|
Adjustments for |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
| 7 |
|
|
| 41,220 |
|
|
| 42,569 |
|
Depreciation of right-of-use assets |
|
| 8 |
|
|
| 22,799 |
|
|
| 19,160 |
|
Amortization of intangible assets |
|
| 9 |
|
|
| 14,371 |
|
|
| 11,655 |
|
Share-based payment transactions |
|
| 16 |
|
|
| 2,511 |
|
|
| 1,640 |
|
Net finance costs |
|
| 19 |
|
|
| 14,435 |
|
|
| 14,342 |
|
Income tax expense |
|
| 20 |
|
|
| 20,423 |
|
|
| 17,198 |
|
Bargain purchase gain |
|
|
|
|
|
| - |
|
|
| (4,008 | ) |
Gain on sale of property and equipment |
|
|
|
|
|
| (3,605 | ) |
|
| (2,524 | ) |
Gain on derecognition of right-of-use assets |
|
|
|
|
|
| (404 | ) |
|
| (615 | ) |
Gain on sale of assets held for sale |
|
|
|
|
|
| (3,938 | ) |
|
| (7,646 | ) |
Provisions and employee benefits |
|
|
|
|
|
| (6,911 | ) |
|
| 1,248 |
|
|
|
|
|
|
|
| 167,788 |
|
|
| 148,807 |
|
Net change in non-cash operating working capital |
|
| 6 |
|
|
| 39,129 |
|
|
| 11,347 |
|
Cash generated from operating activities before the following |
|
|
|
|
|
| 206,917 |
|
|
| 160,154 |
|
Interest paid |
|
|
|
|
|
| (11,850 | ) |
|
| (14,631 | ) |
Income tax paid |
|
|
|
|
|
| (39,872 | ) |
|
| (8,346 | ) |
Net cash from operating activities |
|
|
|
|
|
| 155,195 |
|
|
| 137,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| 7 |
|
|
| (37,369 | ) |
|
| (24,619 | ) |
Proceeds from sale of property and equipment |
|
|
|
|
|
| 17,000 |
|
|
| 8,053 |
|
Proceeds from sale of assets held for sale |
|
|
|
|
|
| 6,491 |
|
|
| 10,668 |
|
Purchases of intangible assets |
|
| 9 |
|
|
| (964 | ) |
|
| (553 | ) |
Business combinations, net of cash acquired |
|
| 5 |
|
|
| (19,019 | ) |
|
| (10,966 | ) |
Others |
|
|
|
|
|
| (115 | ) |
|
| 19,237 |
|
Net cash (used in) from investing activities |
|
|
|
|
|
| (33,976 | ) |
|
| 1,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used in) financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in bank indebtedness |
|
|
|
|
|
| (3,828 | ) |
|
| (3,270 | ) |
Proceeds from long-term debt |
|
| 11 |
|
|
| 505,320 |
|
|
| 6,142 |
|
Repayment of long-term debt |
|
| 11 |
|
|
| (10,781 | ) |
|
| (8,834 | ) |
Net decrease in revolving facilities |
|
| 11 |
|
|
| (132,950 | ) |
|
| (190,734 | ) |
Repayment of lease liabilities |
|
| 12 |
|
|
| (24,161 | ) |
|
| (19,566 | ) |
Decrease in other financial liabilities |
|
|
|
|
|
| (185 | ) |
|
| (159 | ) |
Dividends paid |
|
|
|
|
|
| (21,273 | ) |
|
| (16,092 | ) |
Repurchase of own shares |
|
| 14 |
|
|
| (46,087 | ) |
|
| (31,619 | ) |
Proceeds from the issuance of common shares, net of expenses |
|
| 14 |
|
|
| - |
|
|
| 217,552 |
|
Proceeds from exercise of stock options |
|
| 14 |
|
|
| 10,407 |
|
|
| 814 |
|
Repurchase of own shares for restricted share unit settlement |
|
| 14 |
|
|
| (10 | ) |
|
| - |
|
Net cash from (used in) financing activities |
|
|
|
|
|
| 276,452 |
|
|
| (45,766 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
|
|
|
| 397,671 |
|
|
| 93,231 |
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
| 4,297 |
|
|
| - |
|
Cash and cash equivalents, end of period |
|
|
|
|
|
| 401,968 |
|
|
| 93,231 |
|
* Recasted for change in presentation currency (see note 2d))
The notes on pages 7 to 25 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 MARCH 31, 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 months ended March 31, 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 April 27, 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 MARCH 31, 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.
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.
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 MARCH 31, 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 MARCH 31, 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: | 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.
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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
|
| Package |
|
| Less- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| and |
|
| Than- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| Courier |
|
| Truckload |
|
| Truckload |
|
| Logistics |
|
| Corporate |
|
| Eliminations |
|
| Total |
| |||||||
Three months ended March 31, 2021 |
| |||||||||||||||||||||||||||
External revenue |
|
| 131,277 |
|
|
| 129,699 |
|
|
| 420,745 |
|
|
| 377,413 |
|
|
| - |
|
|
| - |
|
|
| 1,059,134 |
|
External fuel surcharge |
|
| 14,416 |
|
|
| 18,828 |
|
|
| 49,463 |
|
|
| 6,966 |
|
|
| - |
|
|
| - |
|
|
| 89,673 |
|
Inter-segment revenue and fuel surcharge |
|
| 272 |
|
|
| 1,995 |
|
|
| 4,398 |
|
|
| 999 |
|
|
| - |
|
|
| (7,664 | ) |
|
| - |
|
Total revenue |
|
| 145,965 |
|
|
| 150,522 |
|
|
| 474,606 |
|
|
| 385,378 |
|
|
| - |
|
|
| (7,664 | ) |
|
| 1,148,807 |
|
Operating income (loss) |
|
| 18,324 |
|
|
| 22,136 |
|
|
| 50,006 |
|
|
| 29,060 |
|
|
| (17,781 | ) |
|
| - |
|
|
| 101,745 |
|
Selected items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization |
|
| 6,539 |
|
|
| 12,512 |
|
|
| 48,540 |
|
|
| 10,317 |
|
|
| 482 |
|
|
| - |
|
|
| 78,390 |
|
Gain on sale of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets held for sale |
|
| - |
|
|
| 9 |
|
|
| 3,929 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,938 |
|
Intangible assets |
|
| 195,326 |
|
|
| 189,601 |
|
|
| 912,339 |
|
|
| 455,572 |
|
|
| 2,417 |
|
|
| - |
|
|
| 1,755,255 |
|
Total assets |
|
| 377,603 |
|
|
| 592,110 |
|
|
| 2,106,801 |
|
|
| 713,374 |
|
|
| 441,252 |
|
|
| - |
|
|
| 4,231,140 |
|
Total liabilities |
|
| 111,531 |
|
|
| 211,235 |
|
|
| 470,151 |
|
|
| 212,249 |
|
|
| 1,425,510 |
|
|
| (134 | ) |
|
| 2,430,542 |
|
Additions to property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and equipment |
|
| 2,832 |
|
|
| 4,361 |
|
|
| 27,910 |
|
|
| 92 |
|
|
| 20 |
|
|
| - |
|
|
| 35,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2020* |
| |||||||||||||||||||||||||||
External revenue |
|
| 103,267 |
|
|
| 132,840 |
|
|
| 393,971 |
|
|
| 199,021 |
|
|
| - |
|
|
| - |
|
|
| 829,099 |
|
External fuel surcharge |
|
| 14,735 |
|
|
| 20,947 |
|
|
| 53,358 |
|
|
| 6,370 |
|
|
| - |
|
|
| - |
|
|
| 95,410 |
|
Inter-segment revenue and fuel surcharge |
|
| 969 |
|
|
| 1,545 |
|
|
| 4,081 |
|
|
| 1,056 |
|
|
| - |
|
|
| (7,651 | ) |
|
| - |
|
Total revenue |
|
| 118,971 |
|
|
| 155,332 |
|
|
| 451,410 |
|
|
| 206,447 |
|
|
| - |
|
|
| (7,651 | ) |
|
| 924,509 |
|
Operating income (loss) |
|
| 11,567 |
|
|
| 13,089 |
|
|
| 46,392 |
|
|
| 19,174 |
|
|
| (2,894 | ) |
|
| - |
|
|
| 87,328 |
|
Selected items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization |
|
| 6,239 |
|
|
| 12,697 |
|
|
| 46,428 |
|
|
| 7,721 |
|
|
| 299 |
|
|
| - |
|
|
| 73,384 |
|
Loss on sale of land |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and buildings |
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1 | ) |
Gain (loss) on sale of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets held for sale |
|
| (1 | ) |
|
| - |
|
|
| 7,647 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,646 |
|
Bargain purchase gain |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,008 |
|
|
| - |
|
|
| - |
|
|
| 4,008 |
|
Intangible assets |
|
| 175,419 |
|
|
| 172,187 |
|
|
| 817,939 |
|
|
| 252,039 |
|
|
| 3,181 |
|
|
| - |
|
|
| 1,420,765 |
|
Total assets |
|
| 339,534 |
|
|
| 545,199 |
|
|
| 1,941,552 |
|
|
| 423,577 |
|
|
| 115,645 |
|
|
| - |
|
|
| 3,365,507 |
|
Total liabilities |
|
| 103,215 |
|
|
| 206,940 |
|
|
| 398,178 |
|
|
| 120,789 |
|
|
| 1,208,446 |
|
|
| - |
|
|
| 2,037,568 |
|
Additions to property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and equipment |
|
| 8,972 |
|
|
| 5,863 |
|
|
| 11,599 |
|
|
| 251 |
|
|
| 78 |
|
|
| - |
|
|
| 26,763 |
|
* Recasted for changes in presentation
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 March 31, 2021 |
| |||||||||||||||||||||||
Canada |
|
| 145,965 |
|
|
| 133,134 |
|
|
| 202,348 |
|
|
| 67,230 |
|
|
| (6,440 | ) |
|
| 542,237 |
|
United States |
|
| - |
|
|
| 17,388 |
|
|
| 272,258 |
|
|
| 312,404 |
|
|
| (1,224 | ) |
|
| 600,826 |
|
Mexico |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,744 |
|
|
| - |
|
|
| 5,744 |
|
Total |
|
| 145,965 |
|
|
| 150,522 |
|
|
| 474,606 |
|
|
| 385,378 |
|
|
| (7,664 | ) |
|
| 1,148,807 |
|
Three months ended March 31, 2020 |
| |||||||||||||||||||||||
Canada |
|
| 118,971 |
|
|
| 136,019 |
|
|
| 190,002 |
|
|
| 57,119 |
|
|
| (6,574 | ) |
|
| 495,537 |
|
United States |
|
| - |
|
|
| 19,313 |
|
|
| 261,408 |
|
|
| 145,630 |
|
|
| (1,077 | ) |
|
| 425,274 |
|
Mexico |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,698 |
|
|
| - |
|
|
| 3,698 |
|
Total |
|
| 118,971 |
|
|
| 155,332 |
|
|
| 451,410 |
|
|
| 206,447 |
|
|
| (7,651 | ) |
|
| 924,509 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
Segment assets are based on the geographical location of the assets.
|
| As at |
|
| As at |
| ||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Property and equipment, right-of-use assets and intangible assets |
|
|
|
|
|
|
|
|
Canada |
|
| 1,836,967 |
|
|
| 1,802,417 |
|
United States |
|
| 1,308,014 |
|
|
| 1,342,720 |
|
Mexico |
|
| 15,501 |
|
|
| 16,349 |
|
|
|
| 3,160,482 |
|
|
| 3,161,486 |
|
5. | Business combinations |
| a) | Business combinations |
In line with the Group’s growth strategy, the Group acquired one business during 2021, which was not considered to be material. This transaction was concluded in order to add density in the Group’s current network and further expand value-added services.
During the three months ended March 31, 2021, the business contributed revenue and net income of $3.2 million and $0.01 million respectively since the acquisition.
Had the Group acquired this business on January 1, 2021, as per management’s best estimates, the revenue and net income for this entity would have been $4.9 million and $0.1 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 three months ended March 31, 2021, transaction costs of nil have been expensed in other operating expenses in the consolidated statements of income in relation to the above-mentioned business acquisition.
As of the reporting date, the Group had not completed the purchase price allocation over the identifiable net assets and goodwill of the 2021 acquisition. Information to confirm fair value of certain assets and liabilities is still to be obtained for this acquisition. 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 |
| Note |
|
| March 31, 2021* |
| ||
Cash and cash equivalents |
|
|
|
|
|
| 916 |
|
Trade and other receivables |
|
|
|
|
|
| 2,936 |
|
Inventoried supplies and prepaid expenses |
|
|
|
|
|
| 174 |
|
Property and equipment |
|
| 7 |
|
|
| 9,895 |
|
Right-of-use assets |
|
| 8 |
|
|
| 2,705 |
|
Intangible assets |
|
| 9 |
|
|
| 5,715 |
|
Trade and other payables |
|
|
|
|
|
| (865 | ) |
Income tax payable |
|
|
|
|
|
| 180 |
|
Other non-current liabilities |
|
|
|
|
|
| (6 | ) |
Long-term debt |
|
| 11 |
|
|
| (1,541 | ) |
Lease liabilities |
|
| 12 |
|
|
| (2,705 | ) |
Deferred tax liabilities |
|
|
|
|
|
| (2,969 | ) |
Total identifiable net assets |
|
|
|
|
|
| 14,435 |
|
Total consideration transferred |
|
|
|
|
|
| 23,391 |
|
Goodwill |
|
| 9 |
|
|
| 8,956 |
|
Cash |
|
|
|
|
|
| 19,935 |
|
Contingent consideration |
|
|
|
|
|
| 3,456 |
|
Total consideration transferred |
|
|
|
|
|
| 23,391 |
|
* Includes non-material adjustments to prior year's acquisitions |
|
The trade receivables comprise gross amounts due of $2.7 million, of which $0.3 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.
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
| 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.
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 |
| March 31, 2021* |
| |
Specialized Truckload | Truckload |
|
| 10,402 |
|
Logistics | Logistics |
|
| (1,446 | ) |
|
|
|
| 8,956 |
|
* Includes non-material adjustments to prior year's acquisitions for which purchase price allocations were completed.
| c) | Contingent consideration |
The contingent consideration relates to a non-material business acquisition and is recorded in the original purchase price allocation. The fair value was determined using expected cash flows based on probability weighted scenario discounted at a rate of 6%. This consideration is contingent on achieving specified earning levels in the future periods. The maximum amount payable is $4.0 million in two years. At March 31, 2021, the fair value of the contingent arrangement is estimated at $3.5 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.
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
6. | Additional cash flow information |
Net change in non-cash operating working capital
|
| Three months ended March 31, 2021 |
|
| Three months ended March 31, 2020 |
| ||
Trade and other receivables |
|
| 11,098 |
|
|
| 12,573 |
|
Inventoried supplies |
|
| (191 | ) |
|
| 1,374 |
|
Prepaid expenses |
|
| 3,549 |
|
|
| 419 |
|
Trade and other payables |
|
| 24,673 |
|
|
| (3,019 | ) |
|
|
| 39,129 |
|
|
| 11,347 |
|
7. | Property and equipment |
|
|
|
|
|
| Land and |
|
| Rolling |
|
|
|
|
|
|
|
|
| ||
|
| Note |
|
| buildings |
|
| stock |
|
| Equipment |
|
| Total |
| |||||
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
|
| 314,804 |
|
|
| 1,267,617 |
|
|
| 134,234 |
|
|
| 1,716,655 |
|
Additions through business combinations |
|
| 5 |
|
|
| - |
|
|
| 9,832 |
|
|
| 63 |
|
|
| 9,895 |
|
Other additions |
|
|
|
|
|
| 7,980 |
|
|
| 24,425 |
|
|
| 2,810 |
|
|
| 35,215 |
|
Disposals |
|
|
|
|
|
| (17 | ) |
|
| (28,517 | ) |
|
| (700 | ) |
|
| (29,234 | ) |
Transfer from right-of-use assets |
|
|
|
|
|
| - |
|
|
| 21,412 |
|
|
| - |
|
|
| 21,412 |
|
Reclassification to assets held for sale |
|
|
|
|
|
| - |
|
|
| (632 | ) |
|
| - |
|
|
| (632 | ) |
Effect of movements in exchange rates |
|
|
|
|
|
| 2,707 |
|
|
| 1,906 |
|
|
| 1,539 |
|
|
| 6,152 |
|
Balance at March 31, 2021 |
|
|
|
|
|
| 325,474 |
|
|
| 1,296,043 |
|
|
| 137,946 |
|
|
| 1,759,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
|
| 59,817 |
|
|
| 494,322 |
|
|
| 88,088 |
|
|
| 642,227 |
|
Depreciation for the period |
|
|
|
|
|
| 2,016 |
|
|
| 36,368 |
|
|
| 2,836 |
|
|
| 41,220 |
|
Disposals |
|
|
|
|
|
| (15 | ) |
|
| (15,186 | ) |
|
| (638 | ) |
|
| (15,839 | ) |
Transfer from right-of-use assets |
|
|
|
|
|
| - |
|
|
| 5,746 |
|
|
| - |
|
|
| 5,746 |
|
Reclassification to assets held for sale |
|
|
|
|
|
| - |
|
|
| (579 | ) |
|
| - |
|
|
| (579 | ) |
Effect of movements in exchange rates |
|
|
|
|
|
| 526 |
|
|
| 1,813 |
|
|
| 1,117 |
|
|
| 3,456 |
|
Balance at March 31, 2021 |
|
|
|
|
|
| 62,344 |
|
|
| 522,484 |
|
|
| 91,403 |
|
|
| 676,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2020 |
|
|
|
|
|
| 254,987 |
|
|
| 773,295 |
|
|
| 46,146 |
|
|
| 1,074,428 |
|
At March 31, 2021 |
|
|
|
|
|
| 263,130 |
|
|
| 773,559 |
|
|
| 46,543 |
|
|
| 1,083,232 |
|
As at March 31, 2021, $0.3 million is included in trade and other payables for the purchases of property and equipment (December 31, 2020 – $2.5 million).
│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 MARCH 31, 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 |
|
|
|
|
|
| - |
|
|
| (21,412 | ) |
|
| - |
|
|
| (21,412 | ) |
Other additions |
|
|
|
|
|
| 11,591 |
|
|
| 7,221 |
|
|
| 26 |
|
|
| 18,838 |
|
Additions through business combinations |
|
| 5 |
|
|
| 2,565 |
|
|
| 140 |
|
|
| - |
|
|
| 2,705 |
|
Derecognition* |
|
|
|
|
|
| (7,963 | ) |
|
| (28 | ) |
|
| (109 | ) |
|
| (8,100 | ) |
Effect of movements in exchange rates |
|
|
|
|
|
| 3,694 |
|
|
| 1,351 |
|
|
| 142 |
|
|
| 5,187 |
|
Balance at March 31, 2021 |
|
|
|
|
|
| 461,993 |
|
|
| 178,436 |
|
|
| 2,349 |
|
|
| 642,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
|
| 232,541 |
|
|
| 74,503 |
|
|
| 1,231 |
|
|
| 308,275 |
|
Transfer to property and equipment |
|
|
|
|
|
| - |
|
|
| (5,746 | ) |
|
| - |
|
|
| (5,746 | ) |
Depreciation |
|
|
|
|
|
| 12,818 |
|
|
| 9,825 |
|
|
| 156 |
|
|
| 22,799 |
|
Derecognition* |
|
|
|
|
|
| (7,081 | ) |
|
| (152 | ) |
|
| (56 | ) |
|
| (7,289 | ) |
Effect of movements in exchange rates |
|
|
|
|
|
| 1,954 |
|
|
| 607 |
|
|
| 183 |
|
|
| 2,744 |
|
Balance at March 31, 2021 |
|
|
|
|
|
| 240,232 |
|
|
| 79,037 |
|
|
| 1,514 |
|
|
| 320,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2020 |
|
|
|
|
|
| 219,565 |
|
|
| 116,661 |
|
|
| 1,059 |
|
|
| 337,285 |
|
At March 31, 2021 |
|
|
|
|
|
| 221,761 |
|
|
| 99,399 |
|
|
| 835 |
|
|
| 321,995 |
|
* 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 |
|
| 8,956 |
|
|
| 3,144 |
|
|
| 528 |
|
|
| 2,043 |
|
|
| - |
|
|
| 14,671 |
|
Other additions |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 964 |
|
|
| 964 |
|
Extinguishments |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7 | ) |
|
| (7 | ) |
Effect of movements in exchange rates |
|
|
|
|
| 3,782 |
|
|
| 568 |
|
|
| (40 | ) |
|
| 135 |
|
|
| 151 |
|
|
| 4,596 |
|
Balance at March 31, 2021 |
|
|
|
|
| 1,536,364 |
|
|
| 578,654 |
|
|
| 86,890 |
|
|
| 16,866 |
|
|
| 26,856 |
|
|
| 2,245,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
| 148,016 |
|
|
| 261,599 |
|
|
| 43,636 |
|
|
| 5,304 |
|
|
| 17,078 |
|
|
| 475,633 |
|
Amortization for the year |
|
|
|
|
| - |
|
|
| 11,536 |
|
|
| 870 |
|
|
| 787 |
|
|
| 1,178 |
|
|
| 14,371 |
|
Extinguishments |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7 | ) |
|
| (7 | ) |
Effect of movements in exchange rates |
|
|
|
|
| (310 | ) |
|
| 437 |
|
|
| 72 |
|
|
| 41 |
|
|
| 138 |
|
|
| 378 |
|
Balance at March 31, 2021 |
|
|
|
|
| 147,706 |
|
|
| 273,572 |
|
|
| 44,578 |
|
|
| 6,132 |
|
|
| 18,387 |
|
|
| 490,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2020 |
|
|
|
|
| 1,375,610 |
|
|
| 313,343 |
|
|
| 42,766 |
|
|
| 9,384 |
|
|
| 8,670 |
|
|
| 1,749,773 |
|
At March 31, 2021 |
|
|
|
|
| 1,388,658 |
|
|
| 305,082 |
|
|
| 42,312 |
|
|
| 10,734 |
|
|
| 8,469 |
|
|
| 1,755,255 |
|
* Includes non-material adjustments to prior year's acquisitions
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
10. | Other assets |
|
| As at |
|
| As at |
| ||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Security deposits |
|
| 3,222 |
|
|
| 3,143 |
|
Investments in equity securities |
|
| 9,841 |
|
|
| 9,727 |
|
Indemnification asset |
|
| 4,802 |
|
|
| 4,736 |
|
Other |
|
| 6,393 |
|
|
| 6,293 |
|
|
|
| 24,258 |
|
|
| 23,899 |
|
Presented as : |
|
|
|
|
|
|
|
|
Non-current other assets |
|
| 24,258 |
|
|
| 23,899 |
|
11. | Long-term debt |
|
| As at |
|
| As at |
| ||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Non-current liabilities |
|
|
|
|
|
|
|
|
Unsecured revolving facilities |
|
| - |
|
|
| 123,666 |
|
Unsecured term loan |
|
| 324,032 |
|
|
| 321,852 |
|
Unsecured debenture |
|
| 158,364 |
|
|
| 156,479 |
|
Unsecured senior notes |
|
| 648,888 |
|
|
| 150,000 |
|
Conditional sales contracts |
|
| 74,529 |
|
|
| 77,550 |
|
|
|
| 1,205,813 |
|
|
| 829,547 |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Current portion of unsecured revolving facilities |
|
| - |
|
|
| 7,461 |
|
Current portion of conditional sales contracts |
|
| 37,026 |
|
|
| 35,536 |
|
|
|
| 37,026 |
|
|
| 42,997 |
|
The table below summarizes changes to the long-term debt:
|
|
|
|
|
| Three months ended |
|
| Three months ended |
| ||
|
| Note |
|
| March 31, 2021 |
|
| March 31, 2020 |
| |||
Balance at beginning of period |
|
|
|
|
|
| 872,544 |
|
|
| 1,343,307 |
|
Proceeds from long-term debt |
|
|
|
|
|
| 505,320 |
|
|
| 6,142 |
|
Business combinations |
|
| 5 |
|
|
| 1,541 |
|
|
| - |
|
Repayment of long-term debt |
|
|
|
|
|
| (10,781 | ) |
|
| (8,834 | ) |
Net decrease in revolving facilities |
|
|
|
|
|
| (132,950 | ) |
|
| (190,734 | ) |
Accretion of deferred financing fees |
|
|
|
|
|
| 312 |
|
|
| 274 |
|
Effect of movements in exchange rates |
|
|
|
|
|
| 9,727 |
|
|
| (88,852 | ) |
Effect of movements in exchange rates - OCI hedge |
|
|
|
|
|
| (2,874 | ) |
|
| 28,086 |
|
Balance at end of period |
|
|
|
|
|
| 1,242,839 |
|
|
| 1,089,389 |
|
The Group’s revolving facilities have $970.6 million availability at March 31, 2021 (December 31, 2020 –$824.6 million) and an additional $199.8 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 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.
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
12. | Lease liabilities |
|
| As at |
|
| As at |
| ||
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Current portion of lease liabilities |
|
| 88,927 |
|
|
| 88,522 |
|
Long-term portion of lease liabilities |
|
| 265,955 |
|
|
| 267,464 |
|
|
|
| 354,882 |
|
|
| 355,986 |
|
The table below summarizes changes to the lease liabilities:
|
|
|
|
|
| Three months ended |
|
| Three months ended |
| ||
|
| Note |
|
| March 31, 2021 |
|
| March 31, 2020 |
| |||
Balance at beginning of period |
|
|
|
|
|
| 355,986 |
|
|
| 355,591 |
|
Business combinations |
|
| 5 |
|
|
| 2,705 |
|
|
| 4,019 |
|
Additions |
|
|
|
|
|
| 18,838 |
|
|
| 9,902 |
|
Derecognition* |
|
|
|
|
|
| (1,215 | ) |
|
| (3,192 | ) |
Repayment |
|
|
|
|
|
| (24,161 | ) |
|
| (19,566 | ) |
Effect of movements in exchange rates |
|
|
|
|
|
| 2,729 |
|
|
| (22,801 | ) |
Balance at end of period |
|
|
|
|
|
| 354,882 |
|
|
| 323,953 |
|
* 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 $14.8 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 $399.1 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 |
| |
|
| March 31, 2021 |
| |
Less than 1 year |
|
| 99,570 |
|
Between 1 and 5 years |
|
| 222,140 |
|
More than 5 years |
|
| 75,510 |
|
|
|
| 397,220 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
13. | Provisions |
|
|
|
| Self insurance |
|
| Other |
|
| Total |
| |||
As at March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current provisions |
|
|
|
| 10,821 |
|
|
| 3,429 |
|
|
| 14,250 |
|
Non-current provisions |
|
|
|
| 29,627 |
|
|
| 3,141 |
|
|
| 32,768 |
|
|
|
|
|
| 40,448 |
|
|
| 6,570 |
|
|
| 47,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
14. | Share capital and other components of equity |
The Company is authorized to issue an unlimited number of common shares and preferred shares, issuable in series. Both common and preferred shares are without par value. All issued shares are fully paid.
The common shares entitle the holders thereof to one vote per share. The holders of the common shares are entitled to receive dividends as declared from time to time. Subject to the rights, privileges, restrictions and conditions attached to any other class of shares of the Company, the holders of the common shares are entitled to receive the remaining property of the Company upon its dissolution, liquidation or winding-up.
The preferred shares may be issued in one or more series, with such rights and conditions as may be determined by resolution of the Directors who shall determine the designation, rights, privileges, conditions and restrictions to be attached to the preferred shares of such series. There are no voting rights attached to the preferred shares except as prescribed by law. In the event of the liquidation, dissolution or winding-up of the Company, or any other distribution of assets of the Company among its shareholders, the holders of the preferred shares of each series are entitled to receive, with priority over the common shares and any other shares ranking junior to the preferred shares of the Company, an amount equal to the redemption price for such shares, plus an amount equal to any dividends declared thereon but unpaid and not more. The preferred shares for each series are also entitled to such other preferences over the common shares and any other shares ranking junior to the preferred shares as may be determined as to their respective series authorized to be issued. The preferred shares of each series shall be on a parity basis with the preferred shares of every other series with respect to payment of dividends and return of capital. There are no preferred shares currently issued and outstanding.
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) |
| Note |
|
| Three months ended |
|
| Three months ended |
| |||
|
|
|
|
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Balance, beginning of period |
|
|
|
|
|
| 93,397,985 |
|
|
| 81,450,326 |
|
Repurchase and cancellation of own shares |
|
|
|
|
|
| (642,200 | ) |
|
| (1,297,065 | ) |
Issuance of shares |
|
|
|
|
|
| - |
|
|
| 6,900,000 |
|
Stock options exercised |
|
| 16 |
|
|
| 479,715 |
|
|
| 72,623 |
|
Balance, end of period |
|
|
|
|
|
| 93,235,500 |
|
|
| 87,125,884 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
The following table summarizes the share capital issued and fully paid:
|
| Three months ended |
|
| Three months ended |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Balance, beginning of period |
|
| 1,120,049 |
|
|
| 678,915 |
|
Issuance of shares, net of expenses |
|
| - |
|
|
| 217,552 |
|
Repurchase and cancellation of own shares |
|
| (6,897 | ) |
|
| (10,089 | ) |
Cash consideration of stock options exercised |
|
| 10,407 |
|
|
| 814 |
|
Ascribed value credited to share capital on stock options exercised |
|
| 1,681 |
|
|
| 185 |
|
Issuance of shares on settlement of RSUs |
|
| 3 |
|
|
| - |
|
Balance, end of period |
|
| 1,125,243 |
|
|
| 887,377 |
|
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 March 31, 2021, and since the inception of this NCIB, the Company has repurchased and cancelled 642,200 shares.
During the three months ended March 31, 2021, the Company repurchased 642,200 common shares at a weighted average price of $71.76 per share for a total purchase price of $46.1 million relating to the NCIB. During the three months ended March 31, 2020, the Company repurchased 1,297,065 common shares at a weighted average price of $24.36 per share for a total purchase price of $31.6 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 $39.2 million (2020 – $21.5 million) was charged to retained earnings as share repurchase premium.
15. | 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 ended |
|
| Three months ended |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Net income attributable to owners of the Company |
|
| 66,887 |
|
|
| 55,788 |
|
Issued common shares, beginning of period |
|
| 93,397,985 |
|
|
| 81,450,326 |
|
Effect of stock options exercised |
|
| 189,117 |
|
|
| 10,413 |
|
Effect of repurchase of own shares |
|
| (204,709 | ) |
|
| (252,840 | ) |
Effect of share issuance |
|
| - |
|
|
| 3,450,000 |
|
Weighted average number of common shares |
|
| 93,382,393 |
|
|
| 84,657,899 |
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic (in dollars) |
|
| 0.72 |
|
|
| 0.66 |
|
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 ended |
|
| Three months ended |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Net income attributable to owners of the Company |
|
| 66,887 |
|
|
| 55,788 |
|
Weighted average number of common shares |
|
| 93,382,393 |
|
|
| 84,657,899 |
|
Dilutive effect: |
|
|
|
|
|
|
|
|
Stock options and restricted share units |
|
| 2,121,110 |
|
|
| 1,598,477 |
|
Weighted average number of diluted common shares |
|
| 95,503,503 |
|
|
| 86,256,376 |
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted (in dollars) |
|
| 0.70 |
|
|
| 0.65 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
As at March 31, 2021, 78,122 stock options were excluded from the calculation of diluted earnings per share (March 31, 2020 – 871,596) 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.
16. | 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 ended |
|
| Three months ended |
| ||||||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||||||||||
|
|
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
| ||
|
| Number |
|
| average |
|
| Number |
|
| average |
| ||||
|
| of |
|
| exercise |
|
| of |
|
| exercise |
| ||||
|
| options |
|
| price |
|
| options |
|
| price |
| ||||
Balance, beginning of period |
|
| 2,982 |
|
|
| 24.65 |
|
|
| 4,422 |
|
|
| 21.56 |
|
Exercised |
|
| (480 | ) |
|
| 22.19 |
|
|
| (73 | ) |
|
| 13.60 |
|
Forfeited |
|
| (8 | ) |
|
| 23.70 |
|
|
| (3 | ) |
|
| 30.71 |
|
Balance, end of period |
|
| 2,494 |
|
|
| 25.13 |
|
|
| 4,346 |
|
|
| 21.68 |
|
Options exercisable, end of period |
|
| 2,105 |
|
|
| 23.64 |
|
|
| 3,571 |
|
|
| 20.11 |
|
The following table summarizes information about stock options outstanding and exercisable at March 31, 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 |
| ||||
| 23.40 |
|
|
| 111 |
|
|
| 0.3 |
|
|
| 111 |
|
| 19.12 |
|
|
| 379 |
|
|
| 1.3 |
|
|
| 379 |
|
| 18.83 |
|
|
| 495 |
|
|
| 2.3 |
|
|
| 495 |
|
| 26.82 |
|
|
| 207 |
|
|
| 2.9 |
|
|
| 207 |
|
| 23.70 |
|
|
| 427 |
|
|
| 3.9 |
|
|
| 427 |
|
| 30.71 |
|
|
| 776 |
|
|
| 4.9 |
|
|
| 486 |
|
| 40.41 |
|
|
| 99 |
|
|
| 6.3 |
|
|
| - |
|
|
|
|
|
| 2,494 |
|
|
| 3.4 |
|
|
| 2,105 |
|
Of the options outstanding at March 31, 2021, a total of 2,110,825 (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 three months ended March 31, 2021 was $75.94 (March 31, 2020 – $24.99).
During the three months ended March 31, 2021, the Group recognized a compensation expense of $0.4 million (2020 - $0.5 million) with a corresponding increase to contributed surplus.
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
No stock options were granted during the three months ended March 31, 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 |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Balance, beginning of period |
|
| 373,926 |
|
|
| 348,031 |
|
Board members compensation |
|
| - |
|
|
| 11,721 |
|
Dividends paid in units |
|
| 1,573 |
|
|
| 2,039 |
|
Balance, end of period |
|
| 375,499 |
|
|
| 361,791 |
|
For the three months ended March 31, 2021, the Group recognized, as a result of DSUs, a compensation expense of nil (March 31, 2020 - $0.3 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 $8.4 million (March 31, 2020 – gain of $3.8 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 months ended March 31, 2021, the Group recognized, as a result of the director compensation plan, a compensation expense of $0.3 million.
As at March 31, 2021, the total carrying amount of liabilities for cash-settled arrangements recorded in trade and other payables amounted to $28.1 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
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
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.
The table below summarizes changes to the outstanding RSUs:
(in thousands of RSUs and in dollars) |
| Three months ended |
|
| Three months ended |
| ||||||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||||||||||
|
|
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
| ||
|
| Number |
|
| average |
|
| Number |
|
| average |
| ||||
|
| of |
|
| grant date |
|
| of |
|
| grant date |
| ||||
|
| RSUs |
|
| fair value |
|
| RSUs |
|
| fair value |
| ||||
Balance, beginning of period |
|
| 299 |
|
|
| 31.54 |
|
|
| 239 |
|
|
| 28.08 |
|
Granted |
|
| 78 |
|
|
| 70.59 |
|
|
| 145 |
|
|
| 32.41 |
|
Reinvested |
|
| 1 |
|
|
| 31.54 |
|
|
| 1 |
|
|
| 28.08 |
|
Forfeited |
|
| (1 | ) |
|
| 32.41 |
|
|
| - |
|
|
| - |
|
Balance, end of period |
|
| 377 |
|
|
| 39.62 |
|
|
| 385 |
|
|
| 29.71 |
|
The following table summarizes information about RSUs outstanding and exercisable as at March 31, 2021:
(in thousands of RSUs and in dollars) |
|
| RSUs outstanding |
| ||||
|
|
|
|
|
| Remaining |
| |
|
|
|
| Number of |
| contractual life |
| |
Grant date fair value |
|
| RSUs |
| (in years) |
| ||
| 30.70 |
|
| 152 |
|
| 0.8 |
|
| 32.41 |
|
| 147 |
|
| 1.9 |
|
| 70.59 |
|
| 78 |
|
| 2.9 |
|
|
|
|
| 377 |
|
| 1.7 |
|
For the three months ended March 31, 2021, the Group recognized, as a result of RSUs, a compensation expense of $1.3 million (March 31, 2020 - $0.8 million) with a corresponding increase to contributed surplus.
Of the RSUs outstanding at March 31, 2021, a total of 248,497 (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 ended |
|
| Three months ended |
| ||||||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||||||||||
|
|
|
|
|
| Weighted |
|
|
|
|
|
| Weighted |
| ||
|
| Number |
|
| average |
|
| Number |
|
| average |
| ||||
|
| of |
|
| grant date |
|
| of |
|
| grant date |
| ||||
|
| PSUs |
|
| fair value |
|
| PSUs |
|
| fair value |
| ||||
Balance, beginning of period |
|
| 147 |
|
|
| 32.41 |
|
|
| - |
|
|
| - |
|
Granted |
|
| 78 |
|
|
| 89.64 |
|
|
| 145 |
|
|
| 32.41 |
|
Reinvested |
|
| 1 |
|
|
| 32.41 |
|
|
| - |
|
|
| - |
|
Forfeited |
|
| (1 | ) |
|
| 32.41 |
|
|
| - |
|
|
| - |
|
Balance, end of period |
|
| 225 |
|
|
| 52.25 |
|
|
| 145 |
|
|
| 32.41 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
The following table summarizes information about PSUs outstanding and exercisable as at March 31, 2021:
(in thousands of PSUs and in dollars) |
|
| PSUs outstanding |
| ||||
|
|
|
|
|
| Remaining |
| |
|
|
|
| Number of |
| contractual life |
| |
Grant date fair value |
|
| PSUs |
| (in years) |
| ||
| 32.41 |
|
| 147 |
|
| 1.9 |
|
| 89.64 |
|
| 78 |
|
| 2.9 |
|
|
|
|
| 225 |
|
| 2.2 |
|
For the three months ended March 31, 2021, the Group recognized, as a result of PSUs, a compensation expense of $0.8 million (March 31, 2020 – $0.3 million) with a corresponding increase to contributed surplus.
Of the PSUs outstanding at March 31, 2021, a total of 148,720 (December 31, 2020 - 96,984) are held by key management personnel.
17. | 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 ended |
|
| Three months ended |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Independent contractors |
|
| 520,953 |
|
|
| 365,669 |
|
Vehicle operation expenses |
|
| 144,967 |
|
|
| 139,666 |
|
|
|
| 665,920 |
|
|
| 505,335 |
|
18. | 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 June 5, 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, 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.
During the three months ended March 31, 2021, certain legal entities within the Company qualified for the CEWS resulting in a $6.5 million subsidy (March 31, 2020 – nil) that is recorded and offset against personnel expenses, presented in short-term employee benefits, in the condensed consolidated interim statement of income.
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
19. | Finance income and finance costs |
Recognized in income or loss:
Costs (income) |
| Three months ended |
|
| Three months ended |
| ||
| March 31, 2021 |
|
| March 31, 2020 |
| |||
Interest expense on long-term debt and accretion of |
|
|
|
|
|
|
|
|
deferred financing fees |
|
| 9,872 |
|
|
| 11,578 |
|
Interest expense on lease liabilities |
|
| 3,002 |
|
|
| 3,179 |
|
Interest income and accretion on promissory note |
|
| (569 | ) |
|
| (452 | ) |
Net change in fair value and accretion expense |
|
|
|
|
|
|
|
|
of contingent considerations |
|
| 259 |
|
|
| 51 |
|
Net foreign exchange gain |
|
| (38 | ) |
|
| (1,249 | ) |
Net change in fair value of interest rate derivatives |
|
| - |
|
|
| 479 |
|
Other financial expenses |
|
| 1,909 |
|
|
| 756 |
|
Net finance costs |
|
| 14,435 |
|
|
| 14,342 |
|
Presented as: |
|
|
|
|
|
|
|
|
Finance income |
|
| (607 | ) |
|
| (1,701 | ) |
Finance costs |
|
| 15,042 |
|
|
| 16,043 |
|
20. | Income tax expense |
Income tax recognized in income or loss:
|
| Three months ended |
|
| Three months ended |
| ||
|
| March 31, 2021 |
|
| March 31, 2020 |
| ||
Current tax expense |
|
|
|
|
|
|
|
|
Current period |
|
| 26,384 |
|
|
| 18,365 |
|
Adjustment for prior periods |
|
| (3,245 | ) |
|
| 281 |
|
|
|
| 23,139 |
|
|
| 18,646 |
|
Deferred tax expense (recovery) |
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
| (6,015 | ) |
|
| (816 | ) |
Variation in tax rate |
|
| (51 | ) |
|
| (72 | ) |
Adjustment for prior periods |
|
| 3,350 |
|
|
| (560 | ) |
|
|
| (2,716 | ) |
|
| (1,448 | ) |
Income tax expense |
|
| 20,423 |
|
|
| 17,198 |
|
Reconciliation of effective tax rate:
|
|
|
|
| Three months ended |
|
|
|
|
| Three months ended |
| ||
|
|
|
|
| March 31, 2021 |
|
|
|
|
| March 31, 2020 |
| ||
Income before income tax |
|
|
|
|
| 87,310 |
|
|
|
|
|
| 72,986 |
|
Income tax using the Company’s statutory tax rate |
|
| 26.5 | % |
| 23,137 |
|
|
| 26.5 | % |
| 19,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate differential between jurisdictions |
|
| 0.1 | % |
| 87 |
|
|
| -3.3 | % |
| (2,429 | ) |
Variation in tax rate |
|
| -0.1 | % |
| (51 | ) |
|
| -0.1 | % |
| (72 | ) |
Non deductible expenses |
|
| 1.2 | % |
| 1,048 |
|
|
| 1.7 | % |
| 1,241 |
|
Tax deductions and tax exempt income |
|
| -4.8 | % |
| (4,191 | ) |
|
| -3.0 | % |
| (2,212 | ) |
Adjustment for prior periods |
|
| 0.1 | % |
| 105 |
|
|
| -0.4 | % |
| (279 | ) |
Multi-jurisdiction tax |
|
| 0.3 | % |
| 288 |
|
|
| 2.2 | % |
| 1,608 |
|
|
|
| 23.4 | % |
| 20,423 |
|
|
| 23.6 | % |
| 17,198 |
|
│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 MARCH 31, 2021 AND 2020 – (UNAUDITED) |
21. | Financial instruments and financial risk management |
At March 31, 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 March 31, 2021 (December 31, 2020 – nil).
22. | 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 March 31, 2021, the Group had $28.1 million of outstanding letters of credit (December 31, 2020 - $29.5 million).
| c) | Other commitments |
As at March 31, 2021, the Group had $124.5 million of purchase commitments (December 31, 2020 – $117.1 million) and $45.5 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).
In addition, the Group has signed a definitive agreement to acquire UPS Freight, the Less-Than-Truckload and dedicated truckload divisions of United Parcel Service, Inc. for $800 million on a cash-free, debt-free basis before working capital and other adjustments, which is expected to close in the second quarter of 2021 subject to customary closing conditions including regulatory approvals.
│25