TFI International Inc. (TFII) Income Statement

The reported revenue trajectory is highly erratic, with quarterly growth rates ranging from -10.9% to +28.4% over the past year. This volatility appears to be driven by the timing of acquisitions (TForce Freight, Daseke) and the company's deliberate shedding of low-margin freight. Excluding acquisition effects, organic growth may be flat to slightly negative, consistent with the soft North American freight environment. Investors should monitor tonnage and yield trends to separate organic pricing power from inorganic contributions.

The gross margin deterioration in 2026Q1 is notable, as it occurred despite management's stated focus on yield over volume. This may indicate that fuel surcharge lags or mix shifts toward lower-margin truckload business are pressuring profitability. Compared to peers, TFII's gross margin is structurally lower than LTL pure-plays like ODFL (32.2%) and SAIA (16.0%), reflecting its asset-heavy, less-differentiated truckload exposure. The ability to expand margins hinges on the successful integration and OR improvement of TForce Freight, which remains a key swing factor.

The sequential drop in operating income far outpaced the revenue decline, indicating that TFII's cost structure is not as variable as its asset-light model might suggest. SG&A, though not fully disclosed in all quarters, appears to have remained relatively sticky, with 2025Q4 SG&A of $140.3M representing 5.2% of revenue. This suggests that during demand downturns, the company cannot quickly adjust overhead, leading to margin compression. Conversely, in strong quarters like 2026Q2, operating leverage works favorably, but the recent volatility highlights the cyclicality of the business.

The cost structure is heavily weighted toward variable costs, which provides some downside protection in downturns but limits margin expansion potential. SG&A, when reported, has been relatively stable around $100-140M per quarter, suggesting management is controlling overhead. However, the recent gross margin compression indicates that input costs are rising faster than pricing, possibly due to driver wage pressures or fuel surcharge lags. The company's reliance on independent contractors (9,428) mitigates some labor costs but introduces regulatory risk that could force a shift to a more expensive employee model.

The sharp deterioration in 2026Q1 appears to be a critical inflection point, as it broke the pattern of relatively stable margins seen in 2024-2025. This may reflect the full impact of softening LTL demand and the costs of integrating Daseke, which could have temporarily depressed profitability. If this is a cyclical trough, the subsequent quarters should show sequential improvement as management's price-over-volume strategy takes effect. However, if the margin compression is structural, it could signal that TFII's acquisition-driven growth is not translating into sustainable profitability, warranting close monitoring of OR trends in the US LTL segment.