6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2023

Commission File No. 001-39224

TFI INTERNATIONAL INC.

(Translation of registrant’s name into English)

8801 Trans-Canada Highway, Suite 500

Saint-Laurent, Québec

H4S 1Z6 Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXHIBIT INDEX

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
99.1	News Release
99.2	Management Discussion & Analysis for period ended June 30, 2023
99.3	Interim Financial Statements for period ended June 30, 2023
99.4	CEO Certification
99.5	CFO Certification

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		TFI International Inc.
Date: July 31, 2023	By:	/s/ Josiane M. Langlois
		Name: Josiane M. Langlois
		Title: Vice-President, Legal Affairs & Corporate Secretary

EX-99.1

Earnings Press Release

Exhibit 99.1

 

For Immediate Release

TFI International Announces 2023 Second Quarter Results

•Second quarter operating income of $192.4 million compares to $391.0 million the same quarter last year, reflecting reduced freight volumes and non-recurring costs, including $60.6 million reduction in gains on sale of real estate, $5.8 million of IT systems and related transition expenses in U.S. LTL, $5.3 million unfavorable variance in the MTM of DSUs, $6.1 million unfavorable currency translation impact1 relative to the same period last year and $23.0 million from the divestiture of CFI.

•Second quarter net income of $128.2 million compared to $276.8 million in Q2 2022, while adjusted net income1 of $138.9 million compared to $241.1 million as a result of the items described above.

•Second quarter diluted earnings per share (diluted “EPS”) of $1.47 compared to $3.00 in Q2 2022, while adjusted diluted EPS1 of $1.59 compared to $2.61.

•Second quarter net cash from operating activities of $200.4 million compares to $247.8 million in Q2 2022 and free cash flow1 of $138.1 million compares to $309.6 million in Q2 2022.

•The Board of Directors approved a $0.35 quarterly dividend, an increase of 30%

Montreal, Quebec, July 31, 2023 – TFI International Inc. (NYSE and TSX: TFII), a North American leader in the transportation and logistics industry, today announced its results for the second quarter ended June 30, 2023. All amounts are shown in U.S. dollars.

“Despite a difficult freight market and reduced volumes industrywide, our results reflect the quality of our operations and our team’s skill in responding to rapidly changing market conditions. We produced solid operating ratios across all our business segments while again generating more than $200 million in net cash from operating activities” said Alain Bédard, Chairman, President and Chief Executive Officer. “During challenging times for our industry, TFI International’s relentless focus on our longstanding operating principles, our business line diversity and niche positioning, and our ongoing progress on multiple self-help initiatives are what differentiates our performance and future potential. TFI’s strong financial foundation and focus on profitability and cash flow is allowing us to remain strategic in our allocation of capital, remaining active in M&A including seven completed acquisitions year to date, while also returning capital to shareholders through both our dividend, with our Board approving a 30% increase over the past year, and our opportunistic share repurchases. I wish to thank the talented men and women of TFI for their hard work in our continual quest to create shareholder value.”

│ 1

Earnings Press Release

SECOND QUARTER RESULTS

Financial highlights		Three months ended June 30				Six months ended June 30
(in millions of U.S. dollars, except per share data)		2023		2022		2023		2022
Total revenue			1,791.3		2,422.3		3,641.4		4,613.8
Revenue before fuel surcharge			1,549.5		1,989.5		3,109.9		3,883.3
Adjusted EBITDA1			300.3		441.9		564.5		771.9
Operating income			192.4		391.0		358.8		610.7
Net cash from operating activities			200.4		247.8		432.5		385.5
Net income			128.2		276.8		240.2		424.5
EPS-diluted($)			1.47		3.00		2.74		4.56
Adjusted net income1			138.9		241.1		255.4		398.7
Adjusted EPS - diluted1	($)		1.59		2.61		2.92		4.28
Weighted average number of shares ('000s)			86,135		90,647		86,357		91,304
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.

Total revenue of $1.79 billion compared to $2.42 billion in the prior year period and revenue before fuel surcharge of $1.55 billion compared to $1.99 billion in the prior year period. The decline is primarily due to a reduction in volumes driven by weaker end market demand, and the sale of CFI’s Truckload, Temp Control and Mexican non-asset logistics business ("CFI") in August 2022, which had sales of $162.2 million in Q2 2022.

Operating income of $192.4 million compares to $391.0 million from the prior year period. The decrease in the operating income can be attributed to overall lower revenues and volumes associated with freight as well as the divestiture of CFI of $23.0 million, $60.6 million reduction in the gain on sale of real estate assets held for sale, $5.8 million of IT system and transition expenses in U.S. LTL, $5.3 million variance in the MTM of DSUs, and a $6.1 million unfavorable currency translation impact1 relative to the same prior year period.

Net income of $128.2 million compared to $276.8 million in the prior year period, and net income of $1.47 per diluted share compared to $3.00 in the prior year period. Adjusted net income, a non-IFRS measure, was $138.9 million, or $1.59 per diluted share, compared to $241.1 million, or $2.61 per diluted share, the prior year period. The net income was burdened by the items described in the operating income.

Total revenue declined for all segments relative to the prior year period with decreases of 15% for Package and Courier, 27% for Less-Than-Truckload, 32% for Truckload, which is due in part to a $153.5 million decrease from the divestiture of CFI, and 20% for Logistics. Operating income decreased by 26% for Package and Courier, 57% for Less-Than-Truckload, 48% for Truckload and 22% for Logistics in the second quarter in comparison to the prior-year. Truckload operating income in the prior year period included a $22.8 million contribution from CFI in the quarter. Less-Than-Truckload operating income, more specifically U.S. LTL, included $53.7 million more of gains on sale of land and buildings and assets held for sale in the prior year period.

SIX-MONTH RESULTS

Total revenue of $3.64 billion compared to $4.61 billion in the prior year period and revenue before fuel surcharge of $3.11 billion compared to $3.88 billion in the prior year period. The decline is primarily due to a reduction in volumes driven by weaker end market demand, and the sale of CFI in August 2022, which had sales of $307.6 million for the six-month period in 2022.

Operating income of $358.8 million compares to $610.7 million from the prior year period. The decrease in the operating income can be attributed to overall lower revenues and volumes associated with freight as well as the divestiture of CFI of $40.5 million, a $54.3 million reduction in the gain on sale of assets held for sale, $13.7 million of IT system and transition expenses in U.S. LTL, $12.4 million variance in the MTM of DSUs, and a $13.7 million unfavorable currency translation impact1 relative to the same prior year period.

Net income of $240.2 million compared to $424.5 million in the prior year period, and net income of $2.74 per diluted share was compared to $4.56 in the prior year period. Adjusted net income, a non-IFRS measure, was $255.4 million, or $2.92 per diluted share, compared to $398.7 million, or $4.28 per diluted share, the prior year period. The net income was burdened by the items described in the operating income.

│ 2

Earnings Press Release

Total revenue declined for all segments relative to the prior year period with decreases of 10% for Package and Courier, 21% for Less-Than-Truckload, 25% for Truckload, which is due to a $291.2 million decrease from the divestiture of CFI, and 19% for Logistics. Operating income decreased by 13% for Package and Courier, 51% for Less-Than-Truckload, 31% for Truckload and 16% for Logistics as compared to the prior-year period. Truckload operating income in the prior year period included a $40.1 million contribution from CFI.

SEGMENTED RESULTS
(in million of U.S. dollars)	Three months ended June 30												Six months ended June 30
	2023						2022						2023						2022
	$						$						$						$
Revenue1
Package and Courier		115.6						125.1						228.1						249.7
Less-Than-Truckload		672.8						870.2						1,363.7						1,705.6
Truckload		410.7						556.9						824.8						1,072.8
Logistics		361.8						453.7						717.0						889.1
Eliminations		(11.4	)					(16.4	)					(23.8	)					(33.8	)
		1,549.5						1,989.5						3,109.9						3,883.3
	$			% of Rev.1			$			% of Rev.1			$			% of Rev.1			$			% of Rev.1
Operating income (loss)
Package and Courier		27.1			23.4	%		36.8			29.4	%		54.4			23.9	%		62.9			25.2	%
Less-Than-Truckload		80.7			12.0	%		187.3			21.5	%		138.6			10.2	%		282.1			16.5	%
Truckload		66.2			16.1	%		127.4			22.9	%		136.7			16.6	%		198.4			18.5	%
Logistics		32.9			9.1	%		42.4			9.3	%		64.6			9.0	%		77.3			8.7	%
Corporate		(14.4	)					(2.9	)					(35.5	)					(9.9	)
		192.4			12.4	%		391.0			19.7	%		358.8			11.5	%		610.7			15.7	%
Note: due to rounding, totals may differ slightly from the sum.
1 Revenue before fuel surcharge.

CASH FLOW

Net cash flow from operating activities was $200.4 million during Q2 compared to $247.8 million the prior year. The decrease is attributable to a decrease in net income and is offset by a favorable non-cash working capital variance.

Net cash from investing activities remained relatively consistent with the same prior year period as a result of favorable variances from a $40.9 million reduction in the purchase of investments and a $81.2 million favorable variance from the proceeds on the sale of investments as the Company sold its level 1 investments, and a reduction of proceeds from the sale of property and equipment and assets held for sale of $114.2 million.

The Company returned $143.5 million to shareholders during the quarter, of which $30.6 million was through dividends and $112.8 million was through share repurchases.

On June 15, 2023, the Board of Directors of TFI International declared a quarterly dividend of $0.35 per outstanding common share paid on July 17, 2023, representing a 30% increase over the $0.27 quarterly dividend declared in Q2 2022. The annualized dividend represents 14.8% of the trailing twelve month free cash flow1.

1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.

│ 3

Earnings Press Release

CONFERENCE CALL

TFI International will host a conference call on Tuesday, August 1, 2023 at 8:30 a.m. Eastern Time to discuss these results.

Interested parties can join the call by dialing 1-877-704-4453 or 1-201-389-0920. A recording of the call will be available until 11:59 p.m Eastern Time, Tuesday, August 15, 2023 by dialing 1-844-512-2921 or 1-412-317-6671 and entering passcode 13739002.

ABOUT TFI INTERNATIONAL

TFI International Inc. is a North American leader in the transportation and logistics industry, operating across the United States and Canada through its subsidiaries. TFI International creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TFI International umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TFI International companies service the following segments:

•Package and Courier;

•Less-Than-Truckload;

•Truckload;

•Logistics.

TFI International Inc. is publicly traded on the New York Stock Exchange and the Toronto Stock Exchange under symbol TFII. For more information, visit www.tfiintl.com.

FORWARD-LOOKING STATEMENTS

The Company may make statements in this report that reflect its current expectations regarding future results of operations, performance and achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to management. Words such as “may”, “might”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”, “forecast”, “goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue” and words and expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements which reference issues only as of the date made. The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: the highly competitive market conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in interest rates, cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers, credit market liquidity,and the Company’s ability to identify, negotiate, consummate, and successfully integrate acquisitions. In addition, any material weaknesses in internal control over financial reporting that are identified, and the cost of remediation of any such material weakness and any other control deficiencies, may have adverse effects on the Company and impact future results.

The foregoing list should not be construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers should also refer to the section “Risks and Uncertainties” at the end of the 2023 Q2 MD&A for additional information on risk factors and other events that are not within the Company’s control. The Company’s future financial and operating results may fluctuate as a result of these and other risk factors.

│ 4

Earnings Press Release

NON-IFRS FINANCIAL MEASURES

This press release includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by International Financial Reporting Standards as issued by the international Accounting Standards Board (IASB) and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of the non-IFRS measures used in this press release and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided in the exhibits.

Adjusted EBITDA:

Adjusted EBITDA is calculated as net income before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale, sale of business, and gain or loss on disposal of intangible assets. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to assist in determining the ability of the Company to assess its performance.

Adjusted EBITDA	Three months ended June 30						Six months ended June 30
(unaudited, in millions of U.S. dollars)	2023			2022			2023			2022
Net income		128.2			276.8			240.2			424.5
Net finance costs		18.7			21.5			35.9			41.7
Income tax expense		45.5			92.6			82.8			144.5
Depreciation of property and equipment		62.3			66.4			121.4			130.8
Depreciation of right-of-use assets		32.0			31.3			63.4			62.8
Amortization of intangible assets		13.9			14.1			27.4			28.4
Gain on sale of assets held for sale		(0.3	)		(60.9	)		(6.6	)		(60.9	)
Adjusted EBITDA		300.3			441.9			564.5			771.9
Note: due to rounding, totals may differ slightly from the sum.

Adjusted net income and adjusted earnings per share (adjusted “EPS”), basic or diluted

Adjusted net income is calculated as net income excluding amortization of intangible assets related to business acquisitions, net change in the fair value and accretion expense of contingent considerations, net change in the fair value of derivatives, net foreign exchange gain or loss, bargain purchase gain, gain or loss on sale of land and buildings and assets held for sale, gain on sale of business and directly attributable expenses due to the disposal of the business. Adjusted earnings per share, basic or diluted, is calculated as adjusted net income divided by the weighted average number of common shares, basic or diluted. The Company uses adjusted net income and adjusted earnings per share to measure its performance from one period to the next, without the variation caused by the impact of the items described above. The Company excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding these items does not imply they are necessarily non-recurring.

Adjusted net income	Three months ended June 30						Six months ended June 30
(unaudited, in millions of U.S. dollars, except per share data)	2023			2022			2023			2022
Net income		128.2			276.8			240.2			424.5
Amortization of intangible assets related to business acquisitions		14.8			13.0			27.4			26.1
Net change in fair value and accretion expense of contingent considerations		0.4			0.1			0.4			0.0
Net foreign exchange loss (gain)		(0.4	)		(0.1	)		(0.8	)		0.2
Gain on sale of land and buildings and assets held for sale		(0.3	)		(60.9	)		(6.5	)		(60.9	)
Tax impact of adjustments		(3.7	)		12.2			(5.3	)		8.8
Adjusted net income		138.9			241.1			255.4			398.7
Adjusted earnings per share - basic		1.61			2.66			2.96			4.37
Adjusted earnings per share - diluted		1.59			2.61			2.92			4.28
Note: due to rounding, totals may differ slightly from the sum.

│ 5

Earnings Press Release

Free cash flow:

Net cash from operating activities less additions to property and equipment plus proceeds from sale of property and equipment and assets held for sale. Management believes that this measure provides a benchmark to evaluate the performance of the Company in regard to its ability to meet capital requirements.

Free cash flow	Three months ended June 30						Six months ended June 30
(unaudited, in millions of U.S. dollars)	2023			2022			2023			2022
Net cash from operating activities		200.4			247.8			432.5			385.5
Additions to property and equipment		(84.2	)		(74.2	)		(160.4	)		(164.1	)
Proceeds from sale of property and equipment		19.5			44.1			44.2			88.0
Proceeds from sale of assets held for sale		2.4			91.9			17.5			91.9
Free cash flow		138.1			309.6			333.8			401.4

Note to readers: Unaudited condensed consolidated interim financial statements and Management’s Discussion & Analysis are
available on TFI International’s website at www.tfiintl.com.

For further information:

Alain Bédard

Chairman, President and CEO

TFI International Inc.

647-729-4079

abedard@tfiintl.com

│ 6

EX-99.2

Exhibit 99.2

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the second quarter ended

June 30, 2023

CONTENTS

GENERAL INFORMATION	2
FORWARD-LOOKING STATEMENTS	2
SELECTED FINANCIAL DATA AND HIGHLIGHTS	3
ABOUT TFI INTERNATIONAL	4
CONSOLIDATED RESULTS	5
SEGMENTED RESULTS	8
LIQUIDITY AND CAPITAL RESOURCES	14
OUTLOOK	18
SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS	18
NON-IFRS FINANCIAL MEASURES	18
RISKS AND UNCERTAINTIES	28
CRITICAL ACCOUNTING POLICIES AND ESTIMATES	42
CHANGES IN ACCOUNTING POLICIES	43
CONTROLS AND PROCEDURES	43

Management’s Discussion and Analysis

GENERAL INFORMATION

The following is TFI International Inc.’s management discussion and analysis (“MD&A”). Throughout this MD&A, the terms “Company”, “TFI International” and “TFI” shall mean TFI International Inc., including its operating subsidiaries. This MD&A provides a comparison of the Company’s performance for its three- and six-month periods ended June 30, 2023 with the corresponding three and six-month period ended June 30, 2022 and it reviews the Company’s financial position as of June 30, 2023. It also includes a discussion of the Company’s affairs up to July 31, 2023, which is the date of this MD&A. The MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements as of June 30, 2023 and the audited consolidated financial statements and accompanying notes as at and for the year ended December 31, 2022.

In this document, all financial data are prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) unless otherwise noted. All amounts are in United States dollars (U.S. dollars), and the term “dollar”, as well as the symbol “$”, designate U.S. dollars unless otherwise indicated. Variances may exist as numbers have been rounded. This MD&A also uses non-IFRS financial measures. Refer to the section of this report entitled “Non-IFRS Financial Measures” for a complete description of these measures.

The Company’s unaudited consolidated condensed interim financial statements have been approved by its Board of Directors (“Board”) upon recommendation of its audit committee on July 31, 2023. Prospective data, comments and analysis are also provided wherever appropriate to assist existing and new investors to see the business from a corporate management point of view. Such disclosure is subject to reasonable constraints for maintaining the confidentiality of certain information that, if published, would probably have an adverse impact on the competitive position of the Company.

Additional information relating to the Company can be found on its website at www.tfiintl.com. The Company’s continuous disclosure materials, including its annual and quarterly MD&A, annual and quarterly consolidated financial statements, annual report, annual information form, management proxy circular and the various press releases issued by the Company are also available on its website, or directly through the SEDAR system at www.sedar.com, or through the EDGAR system at www.sec.gov/edgar.shtml.

FORWARD-LOOKING STATEMENTS

The Company may make statements in this report that reflect its current expectations regarding future results of operations, performance and achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to management. Words such as “may”, “might”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”, “forecast”, “goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue” and words and expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements which reference issues only as of the date made. The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: the highly competitive market conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in interest rates, cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers, credit market liquidity, and the Company’s ability to identify, negotiate, consummate and successfully integrate business acquisitions.

The foregoing list should not be construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers should also refer to the section “Risks and Uncertainties” at the end of this MD&A for additional information on risk factors and other events that are not within the Company’s control. The Company’s future financial and operating results may fluctuate as a result of these and other risk factors.

│2

Management’s Discussion and Analysis

SELECTED FINANCIAL DATA AND HIGHLIGHTS

(unaudited) (in thousands of U.S. dollars, except per share data)	Three months ended June 30									Six months ended June 30
	2023			2022			2021			2023			2022			2021
Revenue before fuel surcharge		1,549,451			1,989,450			1,650,970			3,109,878			3,883,298			2,710,104
Fuel surcharge		241,815			432,867			185,738			531,565			730,538			275,411
Total revenue		1,791,266			2,422,317			1,836,708			3,641,443			4,613,836			2,985,515
Adjusted EBITDA1		300,291			441,900			285,379			564,497			771,854			461,576
Operating income		192,417			390,970			470,921			358,819			610,736			572,666
Net income		128,234			276,825			411,765			240,152			424,548			478,652
Adjusted net income1		138,915			241,149			137,221			255,398			398,724			210,858
Net cash from operating activities		200,386			247,825			298,655			432,520			385,516			453,850
Free cash flow1		138,079			309,587			267,932			333,786			401,358			411,403
Per share data
EPS – diluted		1.47			3.00			4.32			2.74			4.56			5.01
Adjusted EPS – diluted1		1.59			2.61			1.44			2.92			4.28			2.21
Dividends		0.35			0.27			0.23			0.70			0.54			0.46
As a percentage of revenue before fuel surcharge
Adjusted EBITDA margin1		19.4	%		22.2	%		17.3	%		18.2	%		19.9	%		17.0	%
Depreciation of property and equipment		4.0	%		3.3	%		3.4	%		3.9	%		3.4	%		3.6	%
Depreciation of right-of-use assets		2.1	%		1.6	%		1.7	%		2.0	%		1.6	%		1.9	%
Amortization of intangible assets		0.9	%		0.7	%		0.8	%		0.9	%		0.7	%		1.0	%
Operating margin1		12.4	%		19.7	%		28.5	%		11.5	%		15.7	%		21.1	%
Adjusted operating ratio1		87.6	%		83.4	%		88.7	%		88.7	%		85.8	%		89.5	%

Q2 Highlights

•Second quarter operating income of $192.4 million compares to $391.0 million the same quarter last year, primarily reflecting reduced freight volumes, $60.6 million reduction in gains on sale of real estate assets held for sale, $5.8 million of IT systems and related transition expenses in U.S. LTL, $5.3 million unfavorable variance in the MTM of DSUs, $6.1 million unfavorable currency translation impact1 relative to the same period last year and $23.0 million from the divestiture of CFI.

•Net income of $128.2 million compares to $276.8 million in Q2 2022. Diluted earnings per share (diluted “EPS”) of $1.47 compares to $3.00 in Q2 2022, due in part to the elements discussed above.

•Adjusted net income1, a non-IFRS measure, of $138.9 million compares to $241.1 million in Q2 2022, due in part to the elements discussed above.

•Adjusted diluted EPS1, a non-IFRS measure, of $1.59 compares to $2.61 in Q2 2022, due in part to the elements discussed above.

•Net cash from operating activities of $200.4 million compares to $247.8 million in Q2 2022.

•Free cash flow1, a non-IFRS measure, of $138.1 million compares to $309.6 million in Q2 2022, with the decrease primarily driven by lower freight volumes and $89.5 million in sales of real estate in the prior year period.

•The Company’s reportable segments performed as follows:

oPackage and Courier operating income decreased 26% to $27.1 million;

oLess-Than-Truckload operating income decreased 57% to $80.7 million, driven primarily by weaker volume and a $54.6 million gain on real estate in the prior year quarter;

oTruckload operating income decreased 48% to $66.2 million, driven partially by the divested CFI operations that had contributed $22.8 million in the prior year quarter, as well as a gain on sale of real estate of $6.2 million in the prior year quarter; and

oLogistics operating income decreased 22% to $32.9 million.

•On June 15, 2023, the Board of Directors of TFI declared a quarterly dividend of $0.35 per share paid on July 17, 2023, a 30% increase over the quarterly dividend of $0.27 per share declared in Q2 2022. The annualized dividend represents 14.8% of the trailing twelve-month free cash flow1.

•During the quarter, TFI International acquired SM Freight which will operate in the TL segment, Launch Logistics which will operate in the Logistics segment and Placements Jonadagi which will operate in the TL segment. Subsequent to quarter end TFI International completed the acquisition of Siemens Transportation Group which will operate in the LTL segment.

1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS financial measures” section below.

│3

Management’s Discussion and Analysis

ABOUT TFI INTERNATIONAL

Services

TFI International is a North American leader in the transportation and logistics industry, operating in the United States and Canada. TFI International creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TFI International umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TFI International companies service the following reportable segments:

•Package and Courier ("P&C");

•Less-Than-Truckload (“LTL”);

•Truckload (“TL”);

•Logistics.

Seasonality of operations

The activities conducted by the Company are subject to general demand for freight transportation. Historically, demand has been relatively stable with the weakest generally occurring during the first quarter. Furthermore, during the harsh winter months, fuel consumption and maintenance costs tend to rise.

Human resources

As at June 30, 2023, the Company had 24,055 employees throughout TFI International’s various business segments across North America. This compares to 28,286 employees as at June 30, 2022. The year-over-year decrease of 4,231 employees is attributable to business acquisitions that added 995 employees offset by the decrease of 2,865 employees due to the sale of CFI and by rationalizations affecting 2,361 employees mainly in the LTL segment. The Company believes that it has a relatively low turnover rate among its employees in Canada, and a normal turnover rate in the U.S. comparable to other U.S. carriers, and that its employee relations are very good.

Equipment

The Company believes it has the largest trucking fleet in Canada and a significant presence in the U.S. market. As at June 30, 2023, the Company had 11,754 trucks, 34,018 trailers and 7,298 independent contractors. This compares to 13,206 trucks, 48,817 trailers and 6,845 independent contractors as at June 30, 2022.

Facilities

TFI International’s head office is in Montréal, Québec and its executive office is in Etobicoke, Ontario. As at June 30, 2023, the Company had 548 facilities, as compared to 567 facilities as at June 30, 2022. Of these 548 facilities, 247 are located in Canada, including 164 and 83 in Eastern and Western Canada, respectively. The Company also had 301 facilities in the United States. In the last twelve months, 23 facilities were added from business acquisitions, 23 were removed through the disposition of business and terminal consolidation decreased the total number of facilities by 19, mainly in the LTL and Package and Courier segments.

Customers

The Company has a diverse customer base across a broad cross-section of industries with no single client accounting for more than 5% of consolidated revenue. Because of its customer diversity, as well as the wide geographic scope of the Company’s service offerings and the range of segments in which it operates, a downturn in the activities of an individual customer or customers in a particular industry would not be expected to have a material adverse impact on operations. The Company has forged strategic partnerships with other transport companies in order to extend its service offerings to customers across North America.

Revenue by Top Customers' Industry (54% of total revenue)
Retail	22%
Manufactured Goods	17%
Automotive	13%
Building Materials	10%
Metals & Mining	7%
Food & Beverage	7%
Services	6%
Chemicals & Explosives	5%
Forest Products	3%
Energy	3%
Maritime Containers	1%
Waste Management	1%
Others	4%
(For the six-months ended June 30, 2023)

│4

Management’s Discussion and Analysis

CONSOLIDATED RESULTS

This section provides general comments on the consolidated results of operations. A more detailed analysis is provided in the “Segmented Results” section.

2023 business acquisitions

In line with its growth strategy, the Company acquired seven businesses during 2023 through the end of the second quarter.

On January 9, 2023, TFI International acquired selected assets of Stallion Express, LLC (“Stallion”). Stallion services the long-term care pharmacy of the medical logistics market in the eastern United States and will be reported in the Logistics segment.

On February 5, 2023, TFI International acquired D.M. Breton Inc. (“D.M. Breton”). Based out of Quebec, D.M. Breton transports freight, lumber and paper products between Canada and the United States and will be reported in the Truckload segment.

On February 17, 2023, TFI International acquired Axsun Inc. and its subsidiaries ("Axsun"). Based out of Montreal, Quebec, but operated from multiple locations, Axsun is a provider of intermodal and freight brokerage services across Canada and the United States. Axsun will be reported in the Logistics segment.

On March 20, 2023, TFI International acquired Hot-Line Freight Systems, Inc. and Hot-Line Logistics, LLC (collectively referred to as "Hot-Line"). Hot-Line is a Wisconsin-based LTL provider servicing the Midwestern USA and will be reported in the LTL segment.

On April 2, 2023, TFI international acquired SM Freight Inc. ("SM Freight"). SM Freight is based in Southern Ontario and specializes in refrigerated services to and from the U.S., and also provides warehousing services.

On April 30, 2023, TFI International acquired Launch Logistix Inc. ("Launch"). Launch is an existing independent agent of TFWW, an operating division of TFI, based in Minnesota providing logistics services.

On May 21, 2023, TFI International acquired Les Placements Jonadagi Inc. ("Jonadagi"). Jonadagi is a truckload company based in Vaudreuil, Quebec, and provides truckload services to eastern Canada.

Revenue

For the three months ended June 30, 2023, total revenue was $1,791.3 million, compared to $2,422.3 million in Q2 2022. The decrease was attributable to the sale of CFI's Truckload, Temp Control and Mexican non-asset logistics business (collectively referred to as "CFI") which had revenue of $162.2 million in 2022, weaker volumes contributing a decrease in revenue of $518.0 million and unfavorable currency translation impact1 of Canadian revenues of $36.5 million as a result of the decline in the Canadian dollar compared to the U.S. dollar. This decrease was offset by contributions from business acquisitions of $85.6 million.

For the six months ended June 30, 2023, total revenue was $3,641.4 million compared to $4,613.8 million, from Q2 2022. The decrease was attributable to the sale of CFI which had revenue of $307.6 million in 2022, volumes contributing a decrease in revenue of $733.8 million and unfavorable currency translation impact1 of Canadian revenues of $86.8 million as a result of the decline in the Canadian dollar compared to the U.S. dollar. This decrease was offset by contributions from business acquisitions of $155.8 million.

Operating expenses

For the three months ended June 30, 2023, the Company’s operating expenses decreased by $432.5 million, to $1,598.8 million, from $2,031.3 million in Q2 2022. The decrease due to a decrease in operating expenses from existing operations was $357.1 million as revenues decreased and $153.9 million related to the sale of CFI. This decline was partially offset by an increase of $78.5 million from business acquisitions.

For the three months ended June 30, 2023, materials and services expenses, net of fuel surcharge, decreased by $170.4 million, to $655.9 million from $826.3 million in the same period last year due primarily to the decrease in revenues offset by an increase from business acquisitions of $36.3 million.

For the three months ended June 30, 2023, personnel expense decreased 20% to $492.4 million from $618.8 million in Q2 2022. The decrease is attributable primarily to the decline in revenues and the ability of the Company to quickly adjust to demand levels. This decrease is offset by an increase of $21.1 million from business acquisitions.

Other operating expenses, which are primarily comprised of costs related to office and terminal rent, taxes, heating, telecommunications, maintenance and security and other general administrative expenses, decreased by $22.1 million, or 17%, for the three months ended June 30, 2023, as compared to the same period last year.

5

Management’s Discussion and Analysis

The gains on the sale of rolling stock and equipment and assets held for sale decreased $81.3 million from $85.2 million in Q2 2022 to $3.9 million. The decrease is primarily due to $14.7 million of gains on sale of rolling stock and equipment from CFI in 2022 and to $60.5 million less of gains from assets held for sale as a significant site was sold in the second quarter of 2022.

For the six months ended June 30, 2023, the Company’s operating expenses decreased by $720.5 million from $4.00 billion in 2022 to $3.28 billion in 2022. The decrease is mainly attributable to a reduction in existing operations of $564.4 million, driven from a decrease in revenues, and the sale of CFI which incurred $295.1 million of operating expenses in the comparative period. This is partially offset by an increase in operating expense from business acquisition of $139.1 million.

Operating income

For the three months ended June 30, 2023, the Company’s operating income of $192.4 million compared to $391.0 million during the same quarter in 2022. The decrease is primarily attributable to the decline in revenues as a result of weaker market demand in the quarter and also includes $60.6 million reduction in gains on sale of real estate assets held for sale, $6.4 million of IT systems and related transition expenses in U.S. LTL, $5.3 million unfavorable variance in the MTM of DSUs, $6.1 million unfavorable currency translation impact1 relative to the same period last year and $23.0 million from the divestiture of CFI. The operating margin as a percentage of revenue before fuel surcharge of 12.4% compared to 19.7% in Q2 2022.

For the six months ended June 30, 2023, the Company’s operating income of $358.8 million compared to $610.7 million in the same period in 2022.

Finance income and costs

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30		Six months ended June 30
Finance costs (income)	2023	2022	2023	2022
Interest expense on long-term debt	12,511	14,146	24,415	26,277
Interest expense on lease liabilities	3,796	3,262	7,584	6,623
Interest income and accretion on promissory note	(1,219)	(60)	(2,581)	(83)
Net change in fair value and accretion expense of contingent considerations	384	72	434	29
Net foreign exchange (gain) loss	(429)	(105)	(777)	202
Others	3,687	4,222	6,784	8,678
Net finance costs	18,730	21,537	35,859	41,726

Interest expense on long-term debt

Interest expense on long-term debt for the three-month period ended June 30, 2023, decreased by $1.6 million as compared to the same quarter last year as the reduction of the average level of debt from $1.71 billion to $1.35 billion was offset by an increase in the interest rate.

The interest expense on long-term debt for the six-month period ended June 30, 2023, decreased by $1.9 million as compared to the same period last year mainly due to a decrease in the average level of debt which was $1.34 billion in 2023 compared to $1.67 billion in 2022.

Net foreign exchange gain or loss and net investment hedge

The Company designates as a hedge a portion of its U.S. dollar denominated debt held against its net investments in U.S. operations. This accounting treatment allows the Company to offset the designated portion of foreign exchange gain (or loss) of its debt against the foreign exchange loss (or gain) of its net investments in U.S. operations and present them in other comprehensive income. Net foreign exchange gains or losses recorded in income or loss are attributable to the translation of the U.S. dollar portion of the Company’s credit facilities not designated as a hedge and to the translation of other financial assets and liabilities denominated in currencies other than the functional currency. For the three-month period ended June 30, 2023, a gain of $20.9 million of foreign exchange variations (a gain of $23.8 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge. For the three-month period ended June 30, 2022, a loss of $32.0 million of foreign exchange variations (a loss of $27.8 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge.

For the six-month period ended June 30, 2023, a gain of $24.0 million of foreign exchange variations (a gain of $26.9 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge. For the six-month period ended June 30, 2022, a loss of $23.2 million of foreign exchange variations (a loss of $20.2 million net of tax) was recorded to other comprehensive income as it relates to the translation of the debt in the net investment hedge.

1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS financial measures” section below.

6

Management’s Discussion and Analysis

Income tax expense

For the three months ended June 30, 2023, the Company’s effective tax rate was 26.2%. The income tax expense of $45.5 million reflects a $0.6 million favorable variance versus an anticipated income tax expense of $46.0 million based on the Company’s statutory tax rate of 26.5%. The favorable variance is due to a favorable variation from tax deductions and tax-exempt income of $3.6 million offset by a unfavorable variation from multi-jurisdiction tax of $2.8 million.

For the six months ended June 30, 2023, the Company’s effective tax rate was 25.6%. The income tax expense of $82.8 million reflects a $2.8 million favorable variance versus an anticipated income tax expense of $85.6 million based on the Company’s statutory tax rate of 26.5%. The favorable variance is mainly due to favorable variations from tax deductions and tax-exempt income of $7.3 million which is partially offset by an unfavorable variance of $3.0 million for multi-jurisdiction tax.

Net income and adjusted net income

(unaudited) (in thousands of U.S. dollars, except per share data)	Three months ended June 30			Six months ended June 30
	2023	2022	2021	2023	2022	2021
Net income	128,234	276,825	411,765	240,152	424,548	478,652
Amortization of intangible assets related to business acquisitions	14,756	12,972	12,822	27,448	26,069	26,127
Net change in fair value and accretion expense of contingent    considerations	384	72	(96)	434	29	163
Net foreign exchange (gain) loss	(429)	(105)	(695)	(777)	202	(733)
Bargain purchase gain	—	—	(283,593)	—	—	(283,593)
(Gain) loss on sale of land and buildings and assets held for sale	(295)	(60,850)	100	(6,525)	(60,894)	(3,723)
Loss on disposal of intangible assets	—	—	5	—	—	5
Tax impact of adjustments	(3,735)	12,235	(3,087)	(5,334)	8,770	(6,040)
Adjusted net income1	138,915	241,149	137,221	255,398	398,724	210,858
Adjusted EPS – basic1	1.61	2.66	1.47	2.96	4.37	2.26
Adjusted EPS – diluted1	1.59	2.61	1.44	2.92	4.28	2.21

For the three months ended June 30, 2023, TFI International’s net income was $128.2 million as compared to $276.8 million in Q2 2022. The Company’s adjusted net income1, a non-IFRS measure, which excludes items listed in the above table, was $138.9 million as compared to $241.1 million in Q2 2022, a decrease of 42% or $102.2 million. Adjusted EPS1, fully diluted, of $1.59 compared to $2.61 in Q2 2022.

1This is a non-IFRS. For the reconciliation, refer to the “Non-IFRS financial measures” section below.

7

Management’s Discussion and Analysis

SEGMENTED RESULTS

To facilitate the comparison of business level activity and operating costs between periods, the Company compares the revenue before fuel surcharge (“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses. Note that “Total revenue” is not affected by this reallocation.

Selected segmented financial information

(unaudited) (in thousands of U.S. dollars)	Package  and  Courier	Less- Than-Truckload	Truckload	Logistics	Corporate	Eliminations	Total
Three months ended June 30, 2023
Revenue before fuel surcharge1	115,588	672,827	410,680	361,767	—	(11,411)	1,549,451
% of total revenue2	8%	45%	27%	21%			100%
Adjusted EBITDA3	33,405	123,056	114,890	43,245	(14,305)	—	300,291
Adjusted EBITDA margin3,4	28.9%	18.3%	28.0%	12.0%			19.4%
Operating income (loss)	27,104	80,672	66,183	32,893	(14,435)	—	192,417
Operating margin3,4	23.4%	12.0%	16.1%	9.1%			12.4%
Total assets less intangible assets3	166,464	2,087,795	1,047,821	253,424	260,525	—	3,816,029
Net capital expenditures3	1,795	33,553	15,191	244	23	—	50,806
Three months ended June 30, 2022
Revenue before fuel surcharge1	125,082	870,176	556,894	453,701	—	(16,403)	1,989,450
% of total revenue2	7%	45%	29%	19%			100%
Adjusted EBITDA3	43,576	171,821	176,899	52,254	(2,650)	—	441,900
Adjusted EBITDA margin3,4	34.8%	19.7%	31.8%	11.5%			22.2%
Operating income (loss)	36,800	187,284	127,370	42,368	(2,852)	—	390,970
Operating margin3,4	29.4%	21.5%	22.9%	9.3%			19.7%
Total assets less intangible assets3	188,106	2,239,109	1,419,984	300,297	131,039		4,278,535
Net capital expenditures3	301	17,939	2,087	28	(35)	—	20,320
Six months ended June 30, 2023
Revenue before fuel surcharge1	228,148	1,363,689	824,805	717,018	—	(23,782)	3,109,878
% of total revenue2	8%	45%	27%	20%			100%
Adjusted EBITDA3	67,130	218,004	229,859	84,738	(35,234)	—	564,497
Adjusted EBITDA margin3,4	29.4%	16.0%	27.9%	11.8%			18.2%
Operating income (loss)	54,427	138,612	136,679	64,603	(35,502)	—	358,819
Operating margin3,4	23.9%	10.2%	16.6%	9.0%			11.5%
Total assets less intangible assets3	166,464	2,087,795	1,047,821	253,424	260,525	—	3,816,029
Net capital expenditures3	4,419	73,610	8,980	345	75	—	87,429
Six months ended June 30, 2022
Revenue before fuel surcharge1	249,662	1,705,575	1,072,819	889,079	—	(33,837)	3,883,298
% of total revenue2	7%	45%	28%	20%			100%
Adjusted EBITDA3	76,515	304,093	304,111	96,579	(9,444)	—	771,854
Adjusted EBITDA margin3,4	30.6%	17.8%	28.3%	10.9%			19.9%
Operating income (loss)	62,885	282,054	198,398	77,250	(9,851)	—	610,736
Operating margin3,4	25.2%	16.5%	18.5%	8.7%			15.7%
Total assets less intangible assets3	188,106	2,239,109	1,419,984	300,297	131,039	—	4,278,535
Net capital expenditures3	3,447	63,216	(3,819)	535	46	—	63,425

1 Includes intersegment revenue.

2 Segment revenue including fuel surcharge and intersegment revenue to consolidated revenue including fuel surcharge and intersegment revenue.

3 This is a non-IFRS measures. For a reconciliation, refer to the “Non-IFRS financial measures” section below.

4 As a percentage of revenue before fuel surcharge.

8

Management’s Discussion and Analysis

Package and Courier

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2023	%	2022	%	2023	%	2022	%
Total revenue	142,239		166,465		287,443		319,300
Fuel surcharge	(26,651)		(41,383)		(59,295)		(69,638)
Revenue	115,588	100.0%	125,082	100.0%	228,148	100.0%	249,662	100.0%
Materials and services expenses (net of fuel    surcharge)	42,477	36.7%	38,393	30.7%	81,125	35.6%	85,259	34.1%
Personnel expenses	33,421	28.9%	36,967	29.6%	67,479	29.6%	74,812	30.0%
Other operating expenses	6,662	5.8%	6,657	5.3%	13,583	6.0%	13,778	5.5%
Depreciation of property and equipment	2,929	2.5%	3,286	2.6%	5,974	2.6%	6,627	2.7%
Depreciation of right-of-use assets	3,215	2.8%	3,326	2.7%	6,414	2.8%	6,675	2.7%
Amortization of intangible assets	157	0.1%	164	0.1%	315	0.1%	328	0.1%
Gain on sale of rolling stock and equipment	(205)	-0.2%	(513)	-0.4%	(338)	-0.1%	(704)	-0.3%
(Gain) loss on derecognition of right-of-use assets	(172)	-0.1%	2	0.0%	(831)	-0.4%	2	0.0%
Operating income	27,104	23.4%	36,800	29.4%	54,427	23.9%	62,885	25.2%
Adjusted EBITDA1	33,405	28.9%	43,576	34.8%	67,130	29.4%	76,515	30.6%
Return on invested capital1		28.8%		27.6%

1 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS financial measures” section below.

Operational data
(unaudited)	Three months ended June 30				Six months ended June 30
(Revenue in U.S. dollars)	2023	2022	Variance	%	2023	2022	Variance	%
Revenue per pound (including fuel)	$0.47	$0.51	$(0.04)	-7.8%	$0.48	$0.49	$(0.01)	-2.0%
Revenue per pound (excluding fuel)	$0.38	$0.38	$—	—	$0.38	$0.38	$—	—
Revenue per package (excluding fuel)	$6.01	$6.07	$(0.06)	-1.0%	$5.90	$6.07	$(0.17)	-2.8%
Tonnage (in thousands of metric tons)	138	149	(11)	-7.4%	273	295	(22)	-7.5%
Packages (in thousands)	19,240	20,613	(1,373)	-6.7%	38,674	41,121	(2,447)	-6.0%
Average weight per package (in lbs.)	15.81	15.93	(0.12)	-0.8%	15.56	15.81	(0.15)	-1.6%
Vehicle count, average	972	1,049	(77)	-7.3%	990	1,073	(82)	-7.6%
Weekly revenue per vehicle (incl. fuel, in thousands of U.S. dollars)	$11.26	$12.21	$(0.95)	-7.8%	$11.17	$11.45	$(0.29)	-2.5%

Revenue

For the three months ended June 30, 2023, revenue decreased by $9.5 million, or 8%, from $125.1 million in 2022 to $115.6 million. This decrease is mostly attributable to a 6.7% decrease in packages combined with a 1.0% decrease in revenue per package (excluding fuel surcharge). The decrease in revenue per package is mostly attributable to a 0.8% decrease in average weight per package. The decrease in packages is attributable to softness in the market, primarily in the business-to-consumer deliveries.

For the six-months ended June 30, 2023, revenue decreased by $21.5 million, or 9%, from $249.7 million in 2022 to $228.1 million. This decrease is attributable to a 2.8% decrease in revenue per package (excluding fuel surcharge) combined with a 6.0% decrease in packages related primarily to softness in the business-to-consumer market.

Operating expenses

For the three months ended June 30, 2023, materials and services expenses, net of fuel surcharge revenue, increased $4.1 million or 11%, mostly due to a decrease of $14.7 million in fuel surcharge revenue but partially offset by a $8.8 million reduction in external labor and sub-contractor costs and a $1.1 million reduction in fuel cost. Personnel expenses decreased $3.5 million, or 10%, due to lower volume with a reduction in direct labor of $1.5 million, and severance costs and administrative salaries with a combined decrease of $2.0 million.

For the six-months ended June 30, 2023, materials and services expenses, net of fuel surcharge revenue, decreased $4.1 million, or 5%, mostly due to a $11.0 million reduction in external labor and sub-contractor cost combined with a $1.8 million decrease in fuel cost and a $0.8 million reduction of maintenance and repair expense. This was partially offset by a $10.3 million decrease in fuel surcharge revenue. Personnel expenses decreased $7.3 million, or 10%, primarily from a $3.7 million reduction of direct labor combined with a reduction of $2.8 million in administrative salaries and a reduction of $0.9 million in severance cost. The decrease in direct labor is primarily attributable to the decrease in overall volume.

Operating income

Operating income for the three months ended June 30, 2023, decreased by $9.7 million, or 26.3%. The operating margin was 23.4% in the second quarter of 2023, a 600 basis points decrease when compared to 29.4% for the same period in 2022. This reduction in operating income is mostly due to lower volume and headwinds related to the lower fuel surcharge revenue.

9

Management’s Discussion and Analysis

For the six-month period ended June 30, 2023, operating income decreased by $8.5 million, or 13.4%. The operating margin of 23.9% for the second quarter of 2023 compared to 25.2% for the same prior year period.

Return on invested capital increased 120 basis points, from 27.6% in the trailing twelve months ended June 30, 2022, to 28.8% in the twelve months ended June 30, 2023. This improvement is mainly due to a reduction in invested capital.

Less-Than-Truckload

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2023	%	2022	%	2023	%	2022*	%
Total revenue	803,364		1,097,977		1,652,102		2,098,087
Fuel surcharge	(130,537)		(227,801)		(288,413)		(392,512)
Revenue	672,827	100.0%	870,176	100.0%	1,363,689	100.0%	1,705,575	100.0%
Materials and services expenses (net of fuel    surcharge)	201,569	30.0%	260,113	29.9%	402,825	29.5%	527,193	30.9%
Personnel expenses	293,894	43.7%	376,659	43.3%	629,215	46.1%	755,555	44.3%
Other operating expenses	54,169	8.1%	62,511	7.2%	115,379	8.5%	119,885	7.0%
Depreciation of property and equipment	32,818	4.9%	27,295	3.1%	62,855	4.6%	52,850	3.1%
Depreciation of right-of-use assets	7,759	1.2%	9,603	1.1%	15,517	1.1%	19,250	1.1%
Amortization of intangible assets	2,079	0.3%	2,278	0.3%	4,166	0.3%	4,578	0.3%
(Gain) loss on sale of rolling stock and equipment	171	0.0%	(919)	-0.1%	(1,626)	-0.1%	(1,220)	-0.1%
(Gain) loss on derecognition of right-of-use assets	(32)	-0.0%	(9)	-0.0%	(108)	-0.0%	69	0.0%
Gain on sale of land and buildings and assets
held for sale	(272)	-0.0%	(54,639)	-6.3%	(3,146)	-0.2%	(54,639)	-3.2%
Operating income	80,672	12.0%	187,284	21.5%	138,612	10.2%	282,054	16.5%
Adjusted EBITDA1	123,056	18.3%	171,821	19.7%	218,004	16.0%	304,093	17.8%

1 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS financial measures” section below.

Operational data
(unaudited)	Three months ended June 30				Six months ended June 30
(Revenue in U.S. dollars)	2023	2022	Variance	%	2023	2022	Variance	%
U.S. LTL
Revenue (in thousands of dollars)1	467,903	585,539	(117,636)	-20.1%	928,246	1,166,961	(238,715)	-20.5%
Adjusted Operating Ratio2	91.5%	88.0%			93.6%	89.3%
Revenue per hundredweight (excluding fuel)1	$28.46	$29.84	$(1.38)	-4.6%	$28.94	$29.42	$(0.48)	-1.6%
Revenue per shipment (excluding fuel)1	$313.61	$322.08	$(8.47)	-2.6%	$313.49	$318.75	$(5.26)	-1.7%
Revenue per hundredweight (including fuel)1	$34.50	$39.00	$(4.50)	-11.5%	$35.80	$37.28	$(1.48)	-4.0%
Revenue per shipment (including fuel)1	$380.17	$420.90	$(40.73)	-9.7%	$387.84	$403.84	$(16.00)	-4.0%
Tonnage (in thousands of tons)1	822	981	(159)	-16.2%	1,604	1,983	(379)	-19.1%
Shipments (in thousands)1	1,492	1,818	(326)	-17.9%	2,961	3,661	(700)	-19.1%
Average weight per shipment (in lbs)1	1,102	1,079	23	2.1%	1,083	1,083	0	0.0%
Average length of haul (in miles)1	1,106	1,097	9	0.8%	1,097	1,101	(4)	-0.4%
Vehicle count, average4	4,136	4,908	(772)	-15.7%	4,221	4,705	(484)	-10.3%
Return on invested capital2	16.0%	24.5%
Canadian LTL
Revenue (in thousands of dollars)	127,936	148,685	(20,749)	-14.0%	252,748	291,182	(38,434)	-13.2%
Adjusted Operating Ratio2	73.7%	69.1%			74.6%	74.0%
Revenue per hundredweight (excluding fuel)	$10.84	$11.63	$(0.79)	-6.8%	$10.69	$11.57	$(0.88)	-7.6%
Revenue per shipment (excluding fuel)	$231.77	$249.89	$(18.12)	-7.3%	$233.16	$246.76	$(13.60)	-5.5%
Revenue per hundredweight (including fuel)1	$13.56	$15.45	$(1.89)	-12.2%	$13.66	$14.83	$(1.17)	-7.9%
Revenue per shipment (including fuel)1	$289.84	$331.78	$(41.94)	-12.6%	$297.99	$316.15	$(18.16)	-5.7%
Tonnage (in thousands of tons)	590	639	(49)	-7.7%	1,182	1,258	(76)	-6.0%
Shipments (in thousands)	552	595	(43)	-7.2%	1,084	1,180	(96)	-8.1%
Average weight per shipment (in lbs)	2,138	2,148	(10)	-0.5%	2,181	2,132	49	2.3%
Average length of haul (in miles)	862	741	121	16.3%	844	758	86	11.3%
Vehicle count, average	782	792	(10)	-1.3%	792	795	(3)	-0.4%
Return on invested capital2	21.1%	20.4%
1  Operational statistics exclude figures from Ground Freight Pricing (“GFP”).
2  This is a non-IFRS measure. For a reconciliation please refer to the “Non-IFRS and Other Financial Measures” section below.
3 The Return on invested capital for the U.S. LTL is not disclosed as the trailing twelve-month information is not available for fiscal 2021, as it was acquired on April 30, 2021.
4  As at June 30, 2023 the active vehicle count was 3,206.

10

Management’s Discussion and Analysis

Revenue

For the three months ended June 30, 2023, revenue decreased by $197.3 million to $672.8 million. This decrease is a combination of a 20%, or $117.6 million reduction in the U.S. LTL operation, a 42%, or $57.9 million, reduction in Ground with Freight Pricing (GFP) and a 14%, or $20.7 million, reduction in the Canadian LTL operation. The reduction in U.S. LTL revenue was the result of a 16.2% decrease in tonnage combined with a 4.6% decrease in revenue per hundredweight (excluding fuel) when compared to the second quarter of 2022. The reduction in U.S. LTL tonnage is due to a 17.9% reduction of shipment count that is partially offset by a 2.1% increase in average weight per shipment. The decrease in U.S. LTL volume was primarily driven by softer volumes due to a weaker end market combined with the Company's intentional elimination of unprofitable freight in the second half of last year. The reduction in GFP revenue is the consequence of 50.2% lower volume when compared to prior year. The Canadian LTL revenue reduction was caused by a 7.7% decrease in tonnage, combined with an 6.8% decrease in revenue per hundredweight (excluding fuel). The decrease in tonnage is the consequence of a 7.2% decrease in shipment count combined with a 0.5% decrease in average weight per shipment. The reduction of Canadian LTL volume is also the direct results of weaker freight activities and is spread evenly between the Company's LTL over-the-road and intermodal operations.

For the six-month period ended June 30, 2023, revenue decreased $341.9 million to $1,363.7 million. Before business acquisitions, revenue decreased $349.5 million, or 20%, compared to the same prior year period.

Operating expenses

For the three months ended June 30, 2023, materials and services expenses, net of fuel surcharge revenue, decreased $58.5 million, or 23%, attributable mostly to a $124.2 million reduction in sub-contractor costs related to lower volume, combined with a $23.2 million reduction in fuel expense that was partially offset by a $97.3 million reduction in fuel surcharge revenue. Personnel expenses decreased $82.8 million or 22%, mostly from a reduction in U.S. direct and administrative salaries caused by the reduction of volume in the quarter and lower pension service cost. Other operating expenses decreased $8.3 million, or 13%, mostly from a reduction in external personnel, real-estate and legal settlement costs, partially offset by a $3.4 million one-time IT cost related to the Oracle implementation combined with a $2.4 million supplemental TSA cost. Depreciation of property and equipment increased 20%, or $5.5 million, with $6.9 million coming from higher equipment and rolling stock depreciation in the U.S. LTL operations partially offset by $1.2 million reduction in building depreciation.

For the six months ended June 30, 2023, materials and services expenses, net of fuel surcharge revenue, decreased $124.4 million, or 24%, attributable mostly to a $177.7 million reduction in sub-contractor costs combined with a $30.1 million reduction in fuel expense, and partially offset by a $104.1 million reduction in fuel surcharge revenue, all related to lower volume. Personnel expenses decreased $126.3 million or 17%, mostly from a reduction in U.S. direct and administrative salaries caused by the reduction of volume and lower pension service cost. Other operating expenses decreased $4.5 million, mostly from a decrease in external personnel, real estate and legal settlement costs, but are partially offset by $13.7 million of expenses related to the TSA transition and implementation of new accounting and human resources management systems as the Company continues the process of exiting the TSA with UPS. Depreciation of property and equipment increased 19%, or $10.0 million, most of it from higher equipment and rolling stock depreciation in the U.S. LTL operations.

Operating income

Operating income for the three months ended June 30, 2023, decreased $106.6 million to $80.7 million. The majority of the decrease, $93.7 million, is from U.S. LTL operations which includes a $53.7 million reduction in gain on sale of land and buildings and assets held for sale. Adjusted operating ratio, a non-IFRS measure, of the Canadian LTL operations increased to 73.7% in the second quarter of 2023 as compared to 69.1% for the same period in 2022. Adjusted operating ratio of the U.S. LTL operations increased to 91.5% in the second quarter of 2023 as compared to 88.0% for the same period in 2022, largely attributable to lower volume in the US and headwinds related to the decrease in fuel surcharge revenue in Canada.

For the six-month period ended June 30, 2023, operating income of $138.6 million compared to $282.1 million in the same prior year period. Adjusted operating ratio, a non-IFRS measure, of the Canadian LTL operations increased to 74.6% in the second quarter of 2023 as compared to 74.0% for the same period in 2022. Adjusted operating ratio of the U.S. LTL operations increased to 93.6% in the second quarter of 2023 as compared to 89.3% for the same period in 2022.

Return on invested capital, a non-IFRS measure, of the Canadian based LTL operations was 21.1% for the trailing twelve month period ended June 30, 2023, a 70-basis point increase from 20.4% in the previous 12 months period. This increase is mostly related to lower invested capital in US dollars because of the change in currency rate conversion. Return on invested capital of U.S. LTL operations was 16.0% for the 12 month period ended June 30, 2023, as compared to 24.5% the prior year, primarily driven by lower earnings.

11

Management’s Discussion and Analysis

Truckload

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2023	%	2022	%	2023	%	2022	%
Total revenue	479,779		703,234		979,874		1,312,908
Fuel surcharge	(69,099)		(146,340)		(155,069)		(240,089)
Revenue	410,680	100.0%	556,894	100.0%	824,805	100.0%	1,072,819	100.0%
Materials and services expenses (net of fuel    surcharge)	169,299	41.2%	222,493	40.0%	345,187	41.9%	447,986	41.8%
Personnel expenses	117,098	28.5%	159,371	28.6%	232,018	28.1%	322,531	30.1%
Other operating expenses	12,901	3.1%	20,959	3.8%	27,597	3.3%	40,480	3.8%
Depreciation of property and equipment	25,946	6.3%	35,284	6.3%	51,419	6.2%	70,341	6.6%
Depreciation of right-of-use assets	17,091	4.2%	14,567	2.6%	33,746	4.1%	29,423	2.7%
Amortization of intangible assets	5,698	1.4%	5,914	1.1%	11,420	1.4%	12,229	1.1%
Gain on sale of rolling stock and equipment	(3,454)	-0.8%	(22,880)	-4.1%	(9,730)	-1.2%	(42,214)	-3.9%
(Gain) loss on derecognition of right-of-use assets	(54)	-0.0%	52	0.0%	(126)	-0.0%	(75)	-0.0%
Gain on sale of land and buildings and assets
held for sale	(28)	-0.0%	(6,236)	-1.1%	(3,405)	-0.4%	(6,280)	-0.6%
Operating income	66,183	16.1%	127,370	22.9%	136,679	16.6%	198,398	18.5%
Adjusted EBITDA1	114,890	28.0%	176,899	31.8%	229,859	27.9%	304,111	28.3%

Operational data	Three months ended June 30				Six months ended June 30
(unaudited)	2023	2022	Variance	%	2023	2022	Variance	%
Specialized TL2
Revenue (in thousands of U.S. dollars)	335,450	353,146	(17,696)	-5.0%	673,747	681,466	(7,719)	-1.1%
Adjusted operating ratio1	83.9%	78.8%			84.2%	82.8%
Truck count, average	3,914	3,535	379	10.7%	3,327	3,533	(206)	-5.8%
Trailer count, average	10,404	10,525	(121)	-1.1%	10,544	10,699	(155)	-1.4%
Truck age	3.4	3.9	(0.5)	-12.8%	3.4	3.9	(0.5)	-12.8%
Trailer age	12.2	12.6	(0.4)	-3.2%	12.2	12.6	(0.4)	-3.2%
Number of owner operators, average	1,199	1,086	113	10.4%	1,184	1,090	95	8.7%
Return on invested capital1	12.7%	11.2%
Canadian based Conventional TL
Revenue (in thousands of U.S. dollars)	77,389	88,072	(10,684)	(12.1)%	154,989	164,379	(9,390)	-5.7%
Adjusted operating ratio1	84.3%	73.4%			82.7%	79.0%
Total mileage (in thousands)	25,618	23,560	2,058	8.7%	50,589	46,719	3,870	8.3%
Truck count, average	995	690	306	44.3%	931	692	239	34.5%
Trailer count, average	3,957	3,337	620	18.6%	3,848	3,424	424	12.4%
Truck age	3.3	3.1	0.2	6.5%	3.3	3.1	0.2	6.5%
Trailer age	7.5	6.6	0.9	13.6%	7.5	6.6	0.9	13.6%
Number of owner operators, average	247	277	(30)	-10.8%	243	283	(40)	-14.0%
Return on invested capital1	17.0%	16.7%
1 This is a non-IFRS measure. For a reconciliation, please refer to the “Non-IFRS Financial Measures” section below.
2 Recasted comparative figures for change in operating segments of the dedicated operations from US Conventional Truckload as a result of the sale of business of CFI.

During Q2 2023, SM Freight and Jonadagi were acquired and incorporated into the TL segment.

Revenue

For the three months ended June 30, 2023, revenue decreased by $146.2 million, or 26%, from $556.9 million in Q2 2022 to $410.7 million in Q2 2023. This decrease was primarily due to the impact on revenue from the sale of CFI of $118.2 million and a decrease in revenue from existing operations of $81.5 million, partially offset by contributions from business acquisitions of $53.5 million. For Specialized TL, revenue decreased by $17.7 million, or 5%, compared to the prior year period, primarily due to an organic decline of $58.6 million, partially offset by contributions from business acquisitions of $40.9 million. For Canadian based conventional TL operations, revenue decreased by $10.7 million, or 12%, compared to the same prior year period. The decrease was mainly due to a decrease in revenue from existing operations of $23.3 million, partially offset by contribution from business acquisitions of $12.6 million. A 25.8% decline in revenue per truck was experienced in Q2 2023 compared to Q2 2022, driven by a 12.3% decline in revenue per mile combined with a 15.4% decline in miles per truck.

For the six months ended June 30, 2023, TL revenue decreased by $248.0 million, or 23%, from $1,072.8 million in 2022 to $824.8 million in 2023. This decrease is mainly due to the impact on revenue from the sale of CFI of $231.5 million combined with the contributions from business acquisitions of $94.4 million and partially offset by a decrease in revenue from existing operations of $77.9 million.

Operating expenses

For the three months ended June 30, 2023, operating expenses, net of fuel surcharge, decreased by $85.0 million, or 20%, from $429.5 million in Q2 2022 to $344.5 million in Q2 2023. This is mainly due to a decrease in operating expenses, net of fuel surcharge, of $110.1 million from the sale of CFI, combined with a decrease in operating expenses, net of fuel surcharge, from existing truckload operations of $20.9 million, and partially offset by an increase of $46.0 million in operating expenses, net of fuel surcharge, from business acquisitions.

12

Management’s Discussion and Analysis

For the six months ended June 30, 2023, TL operating expenses, net of fuel surcharge, decreased by $186.3 million, or 21%, from $874.4 million in 2022 to $688.1 million in 2023. This is mainly due to a decrease in operating expenses, net of fuel surcharge, of $219.3 million following the sale of CFI, combined with a decrease of $43.9 million from existing operations, and partially offset by an increase of $76.9 million from business acquisitions.

Operating income

Operating income for the TL segment was $66.2 million for the three months ended June 30, 2023, down 48% from $127.4 million in the second quarter of 2022. Contributions to operating income from business acquisitions were $7.5 million and excluded the contributions from CFI of $22.8 million and gain on the sale of assets held for sale of $6.2 million from Q2 2022. The remaining reduction in operating income is mostly the consequence of lower volume and yield coming from a softer market as well as headwinds related to a decrease in fuel revenue.

For the six months ended June 30, 2023, operating income in the TL segment decreased by $61.7 million, or 31%, from $198.4 million in 2022 to $136.7 million in 2023. The decrease is due to the sale of CFI which contributed $40.1 million combined with a $37.2 million decrease from existing operations, partially offset by $15.5 million from business acquisitions.

Return on invested capital, a non-IFRS measure, for the Specialized TL segment increased to 12.7% as compared to 11.2% in the same prior year period due primarily to an increase in operating income, slightly reduced by higher invested capital. The return on invested capital, a non-IFRS measure, for Canadian based Conventional TL was 17.0%, slightly up from 16.7% for the same prior year period.

Logistics

(unaudited)	Three months ended June 30				Six months ended June 30
(in thousands of U.S. dollars)	2023	%	2022	%	2023	%	2022	%
Total revenue	379,472		475,382		750,298		924,802
Fuel surcharge	(17,705)		(21,681)		(33,280)		(35,723)
Revenue	361,767	100.0%	453,701	100.0%	717,018	100.0%	889,079	100.0%
Materials and services expenses (net of fuel    surcharge)	257,510	71.2%	328,245	72.3%	510,205	71.2%	657,266	73.9%
Personnel expenses	35,482	9.8%	39,027	8.6%	70,834	9.9%	70,113	7.9%
Other operating expenses	25,626	7.1%	34,207	7.5%	51,343	7.2%	65,161	7.3%
Depreciation of property and equipment	551	0.2%	397	0.1%	939	0.1%	768	0.1%
Depreciation of right-of-use assets	3,889	1.1%	3,801	0.8%	7,712	1.1%	7,473	0.8%
Amortization of intangible assets	5,912	1.6%	5,688	1.3%	11,484	1.6%	11,088	1.2%
Gain on sale of rolling stock and equipment	(94)	-0.0%	(32)	-0.0%	(100)	-0.0%	(32)	-0.0%
Gain on derecognition of right-of-use assets	(2)	-0.0%	—	—	(2)	-0.0%	(8)	-0.0%
Operating income	32,893	9.1%	42,368	9.3%	64,603	9.0%	77,250	8.7%
Adjusted EBITDA1	43,245	12.0%	52,254	11.5%	84,738	11.8%	96,579	10.9%
Return on invested capital1	17.9%		21.1%

1 This is a non-IFRS measure. For a reconciliation, refer to the “Non-IFRS financial measures” section below.

* Recasted for adjustments to provisional amounts of UPS Freight prior year business combination.

During Q2 2023, Launch was acquired and incorporated into the Logistics segment.

Revenue

For the three months ended June 30, 2023, revenue decreased by 91.9 million, or 20%, from $453.7 million in 2022 to $361.8 million in 2023. The decrease from existing operations was $109.2 million, or 24%, with $100.2 million due to a reduction in the 3PL volume and $9.0 million related to the last mile business. For the same period, business acquisition contributed $17.2 million.

For the six-month period ended June 30, 2023, revenue decreased by 172.1 million, or 19%, from $889.1 million in 2022 to $717.0 million. The decrease from existing operations was $209.7 million, or 24%, from which $190.2 million is attributable to the 3PL existing operations. For the same period, business acquisition contributed $37.7 million.

Approximately 78% (2022 – 78%) of the Logistics segment’s revenues in the quarter were generated from operations in the U.S. and approximately 22% (2022 – 22%) were generated from operations in Canada.

Operating expenses

For the three months ended June 30, 2023, total operating expenses, net of fuel surcharge decreased by $82.5 million, or 20%, relative to the same prior year period, from $411.3 million to $328.9 million. The decrease in total operating expenses, net of fuel surcharge, from existing operations was $99.8 million and was partially offset from an increase of $17.4 million for business acquisitions. Materials and services expenses decreased by $84.0 million related to the 3PL and last mile volume decrease. Other operating expenses decreased by $8.6 million, due to a reduction in agent commissions related to the lower 3PL volume. Personnel expenses decreased $3.6 million, mainly due to headcount and commission reduction in some divisions.

13

Management’s Discussion and Analysis

For the six months ended June 30, 2023, total operating expenses, net of fuel surcharge decreased by $159.4 million, or 20%, from $811.8 million to $652.4 million. The decrease in total operating expenses, net of fuel surcharge, from existing operations was $195.6 million and was partially offset by an increase of $36.2 million for business acquisitions. This decrease was primarily from a decrease in materials and services expenses (net of fuel surcharge) of $168.4 million related to revenue and $15.0 million from reduction in agent commissions.

Operating income

Operating income for the three months ended June 30, 2023, decreased by $9.5 million, or 22%, from $42.4 million to $32.9 million, mostly explained by softer volume in the market.

For the six-month period ended June 30, 2023, operating income decreased by $12.6 million, or 16%. Excluding business acquisitions, operating income decreased by $14.1 million, or 18%.

Return on invested capital of 17.9% compared to 21.1% in the same prior year period.

LIQUIDITY AND CAPITAL RESOURCES

Sources and uses of cash

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30				Six months ended June 30
	2023		2022		2023		2022
Sources of cash:
Net cash from operating activities		200,386		247,825		432,520		385,516
Proceeds from sale of property and equipment		19,465		44,071		44,180		87,986
Proceeds from sale of assets held for sale		2,380		91,928		17,486		91,928
Net variance in cash and bank indebtedness		—		5,558		—		4,006
Net proceeds from long-term debt		27,787		29,239		14,292		115,955
Others		88,527		6,931		98,059		11,990
Total sources		338,545		425,552		606,537		697,381
Uses of cash:
Purchases of property and equipment		84,152		74,522		160,400		164,948
Business combinations, net of cash acquired		30,309		34,030		115,052		56,265
Net variance in cash and bank indebtedness		42,863		—		32,246		—
Repayment of lease liabilities		31,229		30,598		62,564		61,225
Dividends paid		30,637		24,210		60,956		49,150
Repurchase of own shares		112,839		211,697		118,835		285,726
Others		6,516		50,495		56,484		80,067
Total usage		338,545		425,552		606,537		697,381

Cash flow from operating activities

For the six-month period ended June 30, 2023, net cash from operating activities increased by 12% to $432.5 million from $385.5 million in 2022. This increase was due to an decrease in non-cash working capital of $274.2 million, resulting primarily from a decrease in sales which decreased the accounts receivable balance, and in particular the increase in fuel costs in 2022 for which payments must be made much faster than fuel surcharge revenue is received. This increase was offset by a unfavorable impact from income taxes expenses and payments of $88.7 million due to an increase in profits in 2022.

14

Management’s Discussion and Analysis

Cash flow used in investing activities

Property and equipment

The following table presents the additions of property and equipment by category for the three- and six-month periods ended June 30, 2023 and 2022.

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30					Six months ended June 30
	2023		2022			2023			2022
Additions to property and equipment:
Purchases as stated on cash flow statements		84,152		74,522			160,400			164,948
Non-cash adjustments		—		(285	)		(1,316	)		(876	)
		84,152		74,237			159,084			164,072
Additions by category:
Land and buildings		13,875		10,023			27,447			12,905
Rolling stock		65,811		61,008			122,350			142,881
Equipment		4,466		3,206			9,287			8,286
		84,152		74,237			159,084			164,072

The Company invests in new equipment to maintain its quality of service while minimizing maintenance costs. Its capital expenditures reflect the level of reinvestment required to keep its equipment in good order and to maintain a strategic allocation of its capital resources. The decrease in additions in 2023 compared to 2022 is due primarily to a decrease in capital requirements subsequent to the sale of CFI’s Truckload, Temp Control and Mexican non-asset logistics business. All operations have been receiving required capital expenditures as planned.

In the normal course of activities, the Company constantly renews its rolling stock equipment generating regular proceeds and gain or loss on disposition. The following table indicates the proceeds and gains or losses from sale of property and equipment and assets held for sale by category for the three- and six-month periods ended June 30, 2023 and 2022.

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30						Six months ended June 30
	2023			2022			2023		2022
Proceeds by category:
Land and buildings		2,374			92,105			17,458		92,172
Rolling stock		19,471			43,418			44,083		85,515
Equipment		—			476			125		2,227
		21,845			135,999			61,666		179,914
Gains (losses) by category:
Land and buildings		295			60,857			6,525		60,901
Rolling stock		3,592			24,416			11,779		42,758
Equipment		(5	)		(54	)		41		1,430
		3,882			85,219			18,345		105,089

Business acquisitions

For the six-month period ended June 30, 2023, cash used in business acquisitions, net of cash acquired, totaled $115.1 million to acquire seven businesses. Subsequent to period end, the Company acquired Siemens for $79.6 million. Refer to the section of this report entitled “2023 business acquisitions” and further information can be found in note 5 of the June 30, 2023, unaudited condensed consolidated interim financial statements.

Purchase and sale of investments

For the six-month period ended June 30, 2023, $4.3 million was used in the purchase of investments as compared to $72.8 million used in 2022. For the six-month period ended June 30, 2023, $89.2 million of proceeds were generated from the sale of investments as compared to $4.5 million in 2022. These investments had been elected to be measured at fair value through OCI.

Cash flow used in financing activities

Debt

The debt repayments for the six-month period ended June 30, 2023, of $22.5 million, were related to conditional sales contracts for the financing of equipment.

15

Management’s Discussion and Analysis

NCIB on common shares

Pursuant to the renewal of the normal course issuer bid (“NCIB”), which began on November 2, 2022, and is ending on November 1, 2023, the Company is authorized to repurchase for cancellation up to a maximum of 6,370,199 of its common shares under certain conditions. As at June 30, 2023, and since the inception of this NCIB, the Company has repurchased and cancelled 1,546,720 common shares, of which 1,050,100 were repurchased and cancelled in the second quarter.

Free cash flow1

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30									Six months ended June 30
	2023			2022			2021			2023			2022			2021
Net cash from operating activities		200,386			247,825			298,655			432,520			385,516			453,850
Additions to property and equipment		(84,152	)		(74,237	)		(60,541	)		(160,400	)		(164,072	)		(95,756	)
Proceeds from sale of property and equipment		19,465			44,071			29,608			44,180			87,986			46,608
Proceeds from sale of assets held for sale		2,380			91,928			210			17,486			91,928			6,701
Free cash flow		138,079			309,587			267,932			333,786			401,358			411,403

The Company's objectives when managing its cash flow from operations are to ensure proper capital investment in order to provide stability and competitiveness for its operations, to ensure sufficient liquidity to pursue its growth strategy, and to undertake selective business acquisitions within a sound capital structure and solid financial position.

For the six-month period ended June 30, 2023, TFI International generated free cash flow of $333.8 million, compared to $401.4 million in 2022, which represents a year-over-year decrease of $67.6 million, or 17%. This decrease is due almost entirely to reduced proceeds from the sale of assets, as proceeds from the sale of assets held for sale decreased by $74.4 million and proceeds from the sale of property and equipment decreased by $43.8 million. The decrease in the proceeds from the sale of property and equipment is due to less sales of equipment primarily attributable to the sale of CFI. The decreased from the reduced proceeds on the sale of assets was offset partially by an increase of $47.0 million in net cash from operating activities as explained above.

Free cash flow conversion1, which measures the level of capital employed to generate earnings, for the six-month period ended June 30, 2023, of 84.5% compares to 91.8% in the same prior year period.

Based on the June 30, 2023, closing share price of $115.42, the free cash flow1 generated by the Company in the preceding twelve months ($813.3 million, or $9.48 per share outstanding) represented a yield of 8.2%.

Financial position

(unaudited) (in thousands of U.S. dollars)	As at June 30, 2023		As at December 31, 2022
Intangible assets		1,675,392		1,592,110
Total assets, less intangible assets1		3,816,029		3,913,720
Long-term debt		1,336,802		1,315,757
Lease liabilities		400,280		413,039
Shareholders' equity		2,546,735		2,463,070
1 This is a non-IFRS measure. For a reconciliation refer to the “Non-IFRS financial measures” section below.

As compared to December 31, 2022, the Company’s financial position has not significantly changed. The variations are primarily from fluctuations in working capital, exchange rates, and business acquisitions.

Contractual obligations, commitments, contingencies and off-balance sheet arrangements

The following table indicates the Company’s contractual obligations, excluding purchase commitments, with their respective maturity dates at June 30, 2023, including future interest payments.

(unaudited) (in thousands of U.S. dollars)	Total		Less than 1 year		1 to 3 years		3 to 5 years		After 5 years
Unsecured revolving facility – August 2025		37,716		—		37,716		—		—
Unsecured debenture – December 2024		151,035		—		151,035		—		—
Unsecured senior notes – December 2026to March 2037		1,080,000		—		—		150,000		930,000
Conditional sales contracts		72,119		30,565		32,792		8,762		—
Lease liabilities		400,280		118,195		159,501		69,493		53,091
Interest on debt and lease liabilities		357,694		57,920		93,390		71,965		134,419
Total contractual obligations		2,098,844		206,680		474,434		300,220		1,117,510

As at June 30, 2023, the Company’s long-term debt is comprised of 97% of fixed rate debt (2022 – 100%) and 3% variable rate debt (2022 – nil).

1 This is a non-IFRS measure. Refer to the “Non-IFRS financial measures” section below.

16

Management’s Discussion and Analysis

The following table indicates the Company’s financial covenants to be maintained under its credit facility. These covenants are measured on a consolidated rolling twelve-month basis and are calculated as prescribed by the credit agreement which, among other things, requires the exclusion of the impact of the new standard IFRS 16 Leases:

(unaudited) Covenants	Requirements	As at June 30, 2023
Funded debt-to- EBITDA ratio [ratio of total debt, net of cash, plus letters of credit and some other long-term liabilities to earnings before interest, income tax, depreciation and amortization (“EBITDA”), including last twelve months adjusted EBITDA from business acquisitions]	< 3.50		1.11
EBITDAR Coverage Ratio [ratio of EBITDAR (EBITDA before rent and including last twelve months adjusted EBITDAR from business acquisitions) to interest and net rent expenses]	> 1.75		5.70

As at June 30, 2023, the Company had $69.2 million of outstanding letters of credit ($66.8 million on December 31, 2022).

As at June 30, 2023, the Company had $157.4 million of purchase commitments and $46.9 million of purchase orders that the Company intends to enter into a lease which is expected to materialize within a year (December 31, 2022 – $149.8 million and $13.9 million, respectively).

Dividends and outstanding share data

Dividends

The Company declared $30.0 million in dividends, or $0.35 per common share, in the second quarter of 2023. On July 31, 2023, the Board of Directors approved a quarterly dividend of $0.35 per outstanding common share of the Company’s capital, for an expected aggregate payment of $30.0 million to be paid on October 16, 2023, to shareholders of record at the close of business on September 30, 2023.

Outstanding shares and share-based awards

A total of 85,801,479 common shares were outstanding as at June 30, 2023 (December 31, 2022 – 86,539,559). There was no material change in the Company’s outstanding share capital between June 30, 2023 and July 31, 2023. The average diluted shares for the three months ended June 30, 2023, were 87,124,817 shares as compared to 92,343,315 shares in the same prior year period. The average diluted shares for the six months ended June 30, 2023, were 87,537,123 shares as compared to 93,161,215 shares in the same prior year period. This reduction is due to the share repurchases and cancellations.

As at June 30, 2023, the number of outstanding options to acquire common shares issued under the Company’s stock option plan was 930,152 (December 31, 2022 – 1,301,972) of which 900 991 were exercisable (December 31, 2022 – 1,272,811). Each stock option entitles the holder to purchase one common share of the Company at an exercise price based on the volume-weighted average trading price of the Company’s shares for the last five trading days immediately preceding the effective date of the grant.

As at June 30, 2023, the number of restricted share units (‘’RSUs’’) granted under the Company’s equity incentive plan to its senior employees was 191,389 (December 31, 2022 – 272,330). On February 6, 2023, the Board of Directors approved the grant of 55,400 RSUs under the Company’s equity incentive plan. The RSUs will vest in February of the third year following the grant date. Upon satisfaction of the required service period, the plan provides for settlement of the award through shares. On April 26, 2023, the Company granted a total of 7,632 RSUs under the Company's equity incentive plan to the directors as part of the director compensation plan. The fair value of the RSUs is determined to be the share price fair value at the date 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 $115.51 per unit for the February grant and $117.85 per unit for the April grant.

As at June 30, 2023, the number of performance share units (‘’PSUs’’) granted under the Company’s equity incentive plan to its senior employees was 183,757 (December 31, 2022 – 261,451). On February 6, 2023, the Board of Directors approved the grant of 55,400 PSUs under the Company’s equity incentive plan. The PSUs will vest in February of the third year following the grant date. Upon satisfaction of the required service period, the plan provides for settlement of the award through shares.

Legal proceedings

The Company is involved in litigation arising from the ordinary course of business primarily involving claims for bodily injury and property damage. It is not feasible to predict or determine the outcome of these or similar proceedings. However, the Company believes the ultimate recovery or liability, if any, resulting from such litigation individually or in total, would not materially adversely nor positively affect the Company’s financial condition or performance and, if necessary, has been provided for in the financial statements.

17

Management’s Discussion and Analysis

OUTLOOK

The North American economic growth forecast from leading economists remains subdued and uncertain due to a variety of factors including elevated interest rates, high inflation, labor shortages, global supply chain challenges, and slower growth in many international markets. Despite reduced freight volumes industrywide, TFI International’s diversity across industrial and consumer end markets and across many modes of transportation, along with the Company’s disciplined approach to operations, helped support results during the second quarter. However, macro conditions have slowed and the possibility of economic recession over the coming year remains.

TFI International remains vigilant in its monitoring for new potential risks that could cause further economic disruption, resulting in additional rounds of declining freight volumes and higher costs that could adversely affect TFI’s operating companies and the markets they serve. Lower diesel prices in the months ahead could cause a continued earnings headwind. Other uncertainties include but are not limited to geopolitical risk such as the ongoing war in Ukraine, weakening labor market conditions and reduced consumer sentiment that can affect end market demand, policy changes surrounding international trade, environmental mandates, interest rate policies and changes to the tax code in any jurisdictions in which TFI International operates.

While North American economic uncertainty is likely to continue weighing on freight demand dynamics, management believes the Company is well positioned to navigate these difficult operating conditions, benefiting from its financial foundation and strong cash flow that allows for a strategic approach to the business. The Company strives for a lean cost structure and has a longstanding focus on profitability, efficiency, network density, customer service, optimal pricing, driver retention, and capacity rationalization. TFI also continues to have material synergy opportunities related to the 2021 acquisition of TForce Freight and has opportunities to enhance performance within most of its other operations. Longer term, TFI’s diverse industrial exposure through its specialized TL and LTL segments should continue to benefit from a gradual shift toward domestic manufacturing, while its P&C and Logistics business segments should benefit over the long term from the expansion of e-commerce.

Regardless of the operating environment, management’s goal is to build shareholder value through consistent adherence to its operating principles, including customer focus, an asset-light approach, and continual efforts to enhance efficiencies. In addition, TFI International values free cash flow generation and strong liquidity with a conservative balance sheet that features a high portion of attractive fixed-rate spreads and limited near-term debt maturities. This strong financial footing allows the Company to prudently invest and pursue select, accretive acquisitions while returning excess capital to shareholders.

SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS

(in millions of U.S. dollars, except per share data)
	Q2’23		Q1’23		Q4’22		Q3’22		Q2’22		Q1’22		Q4’21		Q3’21
Total revenue		1,791.3		1,850.2		1,956.7		2,242.0		2,422.3		2,191.5		2,140.9		2,094.0
Adjusted EBITDA1		300.3		264.2		305.0		348.2		441.9		330.0		318.5		296.4
Operating income		192.4		166.4		216.9		318.4		391.0		219.8		215.0		191.6
Net income		128.2		111.9		153.5		245.2		276.8		147.7		144.1		131.6
EPS – basic		1.49		1.29		1.77		2.78		3.05		1.61		1.56		1.42
EPS – diluted		1.47		1.27		1.74		2.72		3.00		1.57		1.52		1.38
Adjusted net income1		138.9		116.5		151.8		181.2		241.1		157.6		148.6		138.9
Adjusted EPS -    diluted1		1.59		1.33		1.72		2.01		2.61		1.68		1.57		1.46
1 This is a non-IFRS measure. For a reconciliation refer to the “Non-IFRS financial measures” section below.

The differences between the quarters are mainly the result of seasonality (softer in Q1) and business acquisitions.

NON-IFRS FINANCIAL MEASURES

Financial data have been prepared in conformity with IFRS, including the following measures:

Operating expenses: Operating expenses include: a) materials and services expenses, which are primarily costs related to independent contractors and vehicle operation; vehicle operation expenses, which primarily include fuel, repairs and maintenance, vehicle leasing costs, insurance, permits and operating supplies; b) personnel expenses; c) other operating expenses, which are primarily composed of costs related to offices’ and terminals’ rent, taxes, heating, telecommunications, maintenance and security and other general administrative expenses; d) depreciation of property and equipment, depreciation of right-of-use assets, amortization of intangible assets and gain or loss on the sale of rolling stock and equipment, on derecognition of right-of use assets, on sale of business and on sale of land and buildings and assets held for sale; e) bargain purchase gain; and f) impairment of intangible assets.

Operating income (loss): Net income or loss before finance income and costs and income tax expense, as stated in theconsolidated financial statements.

18

Management’s Discussion and Analysis

This MD&A includes references to certain non-IFRS financial measures as described below. These non-IFRS financial measures are not standardized financial measures under IFRS used to prepare the financial statements of the Company to which the measures relate and might not be comparable to similar financial measures disclosed by other issuers. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and definitions of non-IFRS measures used in this MD&A and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided below.

Adjusted net income: Net income or loss excluding amortization of intangible assets related to business acquisitions, net change in the fair value and accretion expense of contingent considerations, net change in the fair value of derivatives, net foreign exchange gain or loss, impairment of intangible assets, bargain purchase gain, gain or loss on sale of land and buildings and assets held for sale, gain or loss on the sale of business and directly attributable expense due to the disposal, gain or loss on the disposal of intangible assets and U.S. Tax Reform. In presenting an adjusted net income and adjusted EPS, the Company’s intent is to help provide an understanding of what would have been the net income and earnings per share in a context of significant business combinations and excluding specific impacts and to reflect earnings from a strictly operating perspective. The amortization of intangible assets related to business acquisitions comprises amortization expense of customer relationships, trademarks and non-compete agreements accounted for in business combinations and the income tax effects related to this amortization. Management also believes, in excluding amortization of intangible assets related to business acquisitions, it provides more information on the amortization of intangible asset expense portion, net of tax, that will not have to be replaced to preserve the Company’s ability to generate similar future cash flows. The Company excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. Excluding these items does not imply they are necessarily non-recurring. See reconciliation on page 7.

Adjusted earnings per share (adjusted “EPS”) - basic: Adjusted net income divided by the weighted average number of common shares.

Adjusted EPS - diluted: Adjusted net income divided by the weighted average number of diluted common shares.

Adjusted EBITDA: Net income before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale, sale of business, and gain or loss on disposal of intangible assets. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to assist in determining the ability of the Company to assess its performance.

Segmented adjusted EBITDA refers to operating income (loss) before depreciation, amortization, impairment of intangible assets, bargain purchase gain, gain or loss on sale of business, land and buildings, and assets held for sale and gain or loss on disposal of intangible assets. Management believes adjusted EBITDA to be a useful supplemental measure. Adjusted EBITDA is provided to assist in determining the ability of the Company to assess its performance.

Consolidated adjusted EBITDA reconciliation:

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30			Six months ended June 30
	2023	2022	2021	2023	2022	2021
Net income	128,234	276,825	411,765	240,152	424,548	478,652
Net finance costs	18,730	21,537	16,612	35,859	41,726	31,047
Income tax expense	45,453	92,608	42,544	82,808	144,462	62,967
Depreciation of property and equipment	62,348	66,378	56,205	121,395	130,825	97,425
Depreciation of right-of-use assets	31,954	31,297	28,153	63,389	62,821	50,952
Amortization of intangible assets	13,872	14,130	13,658	27,445	28,391	28,029
Bargain purchase gain	—	—	(283,593)	—	—	(283,593)
(Gain) loss on sale of land and buildings	40	1	3	40	(43)	3
(Gain) loss on sale of assets held for sale	(340)	(60,876)	27	(6,591)	(60,876)	(3,911)
Loss on sale of intangible assets	—	—	5	—	—	5
Adjusted EBITDA	300,291	441,900	285,379	564,497	771,854	461,576

19

Management’s Discussion and Analysis

Segmented adjusted EBITDA reconciliation:

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30		Six months ended June 30
	2023	2022	2023	2022
Package and Courier
Operating income	27,104	36,800	54,427	62,885
Depreciation and amortization	6,301	6,776	12,703	13,630
Adjusted EBITDA	33,405	43,576	67,130	76,515
Less-Than-Truckload
Operating income	80,672	187,284	138,612	282,054
Depreciation and amortization	42,656	39,176	82,538	76,678
Loss on sale of land and buildings	36	1	36	1
Gain on sale of assets held for sale	(308)	(54,640)	(3,182)	(54,640)
Adjusted EBITDA	123,056	171,821	218,004	304,093
Truckload
Operating income	66,183	127,370	136,679	198,398
Depreciation and amortization	48,735	55,765	96,585	111,993
(Gain) loss on sale of land and buildings	4	—	4	(44)
Gain on sale of assets held for sale	(32)	(6,236)	(3,409)	(6,236)
Adjusted EBITDA	114,890	176,899	229,859	304,111
Logistics
Operating income	32,893	42,368	64,603	77,250
Depreciation and amortization	10,352	9,886	20,135	19,329
Adjusted EBITDA	43,245	52,254	84,738	96,579
Corporate
Operating loss	(14,435)	(2,852)	(35,502)	(9,851)
Depreciation and amortization	130	202	268	407
Adjusted EBITDA	(14,305)	(2,650)	(35,234)	(9,444)

Adjusted EBITDA margin is calculatedas adjusted EBITDA as a percentage of revenue before fuel surcharge.

Free cash flow: Net cash from operating activities less additions to property and equipment plus proceeds from sale of property and equipment and assets held for sale. Management believes that this measure provides a benchmark to evaluate the performance of the Company in regard to its ability to meet capital requirements. See reconciliation on page 15.

Free cash flowconversion: Adjusted EBITDA less net capital expenditures, divided by the adjusted EBITDA. Management believes that this measure provides a benchmark to evaluate the performance of the Company in regard to its ability to convert its operating profit into free cash flow.

Free cash flowconversion reconciliation:

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30		Six months ended June 30
	2023	2022	2023	2022
Net income	128,234	276,825	240,152	424,548
Net finance costs	18,730	21,537	35,859	41,726
Income tax expense	45,453	92,608	82,808	144,462
Depreciation of property and equipment	62,348	66,378	121,395	130,825
Depreciation of right-of-use assets	31,954	31,297	63,389	62,821
Amortization of intangible assets	13,872	14,130	27,445	28,391
(Gain) loss on sale of land and buildings	40	1	40	(43)
Gain on sale of assets held for sale	(340)	(60,876)	(6,591)	(60,876)
Adjusted EBITDA	300,291	441,900	564,497	771,854
Net capital expenditures	(50,806)	(20,320)	(87,429)	(63,425)
Adjusted EBITDA less net capital expenditures	249,485	421,580	477,068	708,429
Free cash flow conversion	83.1%	95.4%	84.5%	91.8%

20

Management’s Discussion and Analysis

Total assets less intangible assets: Management believes that this presents a more useful basis to evaluate the return on the productive assets. The excluded intangibles relate primarily to intangibles assets acquired through business acquisitions.

(unaudited) (in thousands of U.S. dollars)	Package  and  Courier		Less- Than-Truckload		Truckload		Logistics		Corporate		Eliminations		Total
As at June 30, 2023
Total assets		350,551		2,260,987		1,836,752		782,469		260,662		-		5,491,421
Intangible assets		184,087		173,192		788,931		529,045		137		-		1,675,392
Total assets less intangible assets		166,464		2,087,795		1,047,821		253,424		260,525		-		3,816,029
As at December 31, 2022
Total assets		362,724		2,275,672		1,861,093		731,564		274,777		-		5,505,830
Intangible assets		180,119		167,798		775,464		468,547		182		-		1,592,110
Total assets less intangible assets		182,605		2,107,874		1,085,629		263,017		274,595		-		3,913,720

21

Management’s Discussion and Analysis

Net capital expenditures: Additions to rolling stock and equipment, net of proceeds from the sale of rolling stock and equipment and assets held for sale excluding property. Management believes that this measure illustrates the recurring net capital expenditures which is required for the respective period.

(unaudited) (in thousands of U.S. dollars)	Package  and  Courier			Less- Than-Truckload			Truckload			Logistics			Corporate			Eliminations	Total
Three months ended June 30, 2023
Additions to rolling stock		1,443			39,214			25,154			-			-				65,811
Additions to equipment		751			2,093			1,190			409			23				4,466
Proceeds from the sale of rolling stock		(399	)		(7,753	)		(11,154	)		(165	)		-				(19,471	)
Proceeds from the sale of equipment		-			-			-			-			-				-
Net capital expenditures		1,795			33,554			15,190			244			23				50,806
Three months ended June 30, 2022
Additions to rolling stock		447			16,225			44,336			-			-				61,008
Additions to equipment		535			2,567			73			66			(35	)			3,206
Proceeds from the sale of rolling stock		(680	)		(659	)		(42,041	)		(38	)		-				(43,418	)
Proceeds from the sale of equipment		-			(194	)		(282	)		-			-				(476	)
Net capital expenditures		302			17,939			2,086			28			(35	)			20,320
Six months ended June 30, 2023
Additions to rolling stock		3,756			84,440			34,080			74			-				122,350
Additions to equipment		1,446			3,637			3,687			442			75				9,287
Proceeds from the sale of rolling stock		(783	)		(14,356	)		(28,773	)		(171	)						(44,083	)
Proceeds from the sale of equipment					(111	)		(14	)									(125	)
Net capital expenditures		4,419			73,610			8,980			345			75				87,429
Six months ended June 30, 2022
Additions to rolling stock		3,244			61,956			77,681			-			-				142,881
Additions to equipment		1,159			5,287			1,209			585			45				8,285
Proceeds from the sale of rolling stock		(952	)		(3,828	)		(80,685	)		(50	)		-				(85,515	)
Proceeds from the sale of equipment		(3	)		(199	)		(2,025	)		-			-				(2,227	)
Net capital expenditures		3,448			63,216			(3,820	)		535			45				63,424

Currency translation impact is the amount of variation which results from the translation of a foreign currency to the presentation currency (CAD to USD). The impact is calculated on the given measure by applying the change in the exchange rate between the current period and the comparative period to the exposure of foreign balances. In Q2 2023 the change in the exchange rates to calculate the difference was $0.0650 as the exchange rate of Canadian dollars to U.S. dollars increased from $1.2780 in Q2 2022 to $1.3430 in Q2 2023. Management finds this measure to be useful in explaining the period over period variations.

Operating margin is calculatedas operating income (loss) as a percentage of revenue before fuel surcharge.

Adjusted operating ratio: Operating expenses before gain on sale of business, bargain purchase gain, and gain or loss on sale of land and buildings and assets held for sale, and gain or loss on disposal of intangible assets (“Adjusted operating expenses”), net of fuel surcharge revenue, divided by revenue before fuel surcharge. Although the adjusted operating ratio is not a recognized financial measure defined by IFRS, it is a widely recognized measure in the transportation industry, which the Company believes provides a comparable benchmark for evaluating the Company’s performance. Also, to facilitate the comparison of business level activity and operating costs between periods, the Company compares the revenue before fuel surcharge (“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses.

Consolidated adjusted operating ratio reconciliation:

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30			Six months ended June 30
	2023	2022	2021	2023	2022	2021
Operating expenses	1,598,849	2,031,347	1,365,787	3,282,624	4,003,100	2,412,849
Bargain purchase gain	—	—	283,593	—	—	283,593
Gain (loss) on sale of land and building	(40)	(1)	(3)	(40)	43	(3)
Gain (loss) on sale of assets held for sale	340	60,876	(27)	6,591	60,876	3,911
Loss on disposal of intangible assets	—	—	(5)	—	—	(5)
Adjusted operating expenses	1,599,149	2,092,222	1,649,345	3,289,175	4,064,019	2,700,345
Fuel surcharge revenue	(241,815)	(432,867)	(185,738)	(531,565)	(730,538)	(275,411)
Adjusted operating expenses, net of fuel surcharge revenue	1,357,334	1,659,355	1,463,607	2,757,610	3,333,481	2,424,934
Revenue before fuel surcharge	1,549,451	1,989,450	1,650,970	3,109,878	3,883,298	2,710,104
Adjusted operating ratio	87.6%	83.4%	88.7%	88.7%	85.8%	89.5%

22

Management’s Discussion and Analysis

Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments reconciliations:

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30		Six months ended June 30
	2023	2022	2023	2022
Less-Than-Truckload
Total revenue	803,364	1,097,977	1,652,102	2,098,087
Total operating expenses	722,692	910,693	1,513,490	1,816,033
Operating income	80,672	187,284	138,612	282,054
Operating expenses	722,692	910,693	1,513,490	1,816,033
Gain on sale of land and buildings and assets held for sale	272	54,639	3,146	54,639
Adjusted operating expenses	722,964	965,332	1,516,636	1,870,672
Fuel surcharge revenue	(130,537)	(227,801)	(288,413)	(392,512)
Adjusted operating expenses, net of fuel surcharge revenue	592,427	737,531	1,228,223	1,478,160
Revenue before fuel surcharge	672,827	870,176	1,363,689	1,705,575
Adjusted operating ratio	88.1%	84.8%	90.1%	86.7%
Less-Than-Truckload - Revenue before fuel surcharge
U.S. based LTL	549,726	725,289	1,119,173	1,421,051
Canadian based LTL	127,936	148,685	252,748	291,182
Eliminations	(4,835)	(3,798)	(8,232)	(6,658)
	672,827	870,176	1,363,689	1,705,575
Less-Than-Truckload - Fuel surcharge revenue
U.S. based LTL	99,317	179,653	220,156	311,486
Canadian based LTL	32,055	48,727	70,278	81,880
Eliminations	(835)	(579)	(2,021)	(854)
	130,537	227,801	288,413	392,512
Less-Than-Truckload - Operating income (loss)
U.S. based LTL	47,017	140,745	74,347	205,789
Canadian based LTL	33,655	46,539	64,265	76,265
	80,672	187,284	138,612	282,054
U.S. based LTL
Operating expenses*	602,026	764,197	1,264,982	1,526,748
Gain on sale of land and buildings and assets held for sale	272	54,019	3,146	54,019
Adjusted operating expenses	602,298	818,216	1,268,128	1,580,767
Fuel surcharge revenue	(99,317)	(179,653)	(220,156)	(311,486)
Adjusted operating expenses, net of fuel surcharge	502,981	638,563	1,047,972	1,269,281
Revenue before fuel surcharge	549,726	725,289	1,119,173	1,421,051
Adjusted operating ratio	91.5%	88.0%	93.6%	89.3%
Canadian based LTL
Operating expenses*	126,336	150,873	258,761	296,797
Gain on sale of land and buildings and assets held for sale	-	620	-	620
Adjusted operating expenses	126,336	151,493	258,761	297,417
Fuel surcharge revenue	(32,055)	(48,727)	(70,278)	(81,880)
Adjusted operating expenses, net of fuel surcharge	94,281	102,766	188,483	215,537
Revenue before fuel surcharge	127,936	148,685	252,748	291,182
Adjusted operating ratio	73.7%	69.1%	74.6%	74.0%

* Operating expenses excluding intra LTL eliminations

23

Management’s Discussion and Analysis

Less-Than-Truckload and Truckload reportable segments adjusted operating ratio reconciliation and Truckload operating segments reconciliations (continued):

(unaudited) (in thousands of U.S. dollars)	Three months ended June 30						Six months ended June 30
	2023			2022			2023			2022
Truckload
Total revenue		479,779			703,234			979,874			1,312,908
Total operating expenses		413,596			575,864			843,195			1,114,510
Operating income		66,183			127,370			136,679			198,398
Operating expenses		413,596			575,864			843,195			1,114,510
Gain on sale of land and buildings and assets held for sale		28			6,236			3,405			6,280
Adjusted operating expenses		413,624			582,100			846,600			1,120,790
Fuel surcharge revenue		(69,099	)		(146,340	)		(155,069	)		(240,089	)
Adjusted operating expenses, net of fuel surcharge revenue		344,525			435,760			691,531			880,701
Revenue before fuel surcharge		410,680			556,894			824,805			1,072,819
Adjusted operating ratio		83.9	%		78.2	%		83.8	%		82.1	%
Truckload - Revenue before fuel surcharge
U.S. based Conventional TL1		—			118,361			—			231,737
Canadian based Conventional TL		77,389			88,072			154,989			164,379
Specialized TL1		335,450			353,146			673,747			681,466
Eliminations		(2,159	)		(2,685	)		(3,931	)		(4,763	)
		410,680			556,894			824,805			1,072,819
Truckload - Fuel surcharge revenue
U.S. based Conventional TL1		—			35,301			—			59,841
Canadian based Conventional TL		12,367			18,216			28,082			29,467
Specialized TL1		57,006			93,470			127,488			151,655
Eliminations		(274	)		(647	)		(501	)		(874	)
		69,099			146,340			155,069			240,089
Truckload - Operating income
U.S. based Conventional TL1		—			22,992			—			40,404
Canadian based Conventional TL		12,143			23,437			26,760			34,497
Specialized TL1		54,040			80,941			109,919			123,497
		66,183			127,370			136,679			198,398
U.S. based Conventional TL1
Operating expenses*		—			130,670			—			251,174
Gain on sale of land and buildings and assets held for sale		—			6,235			—			6,235
Adjusted operating expenses		—			136,905			—			257,409
Fuel surcharge revenue		—			(35,301	)		—			(59,841	)
Adjusted operating expenses, net of fuel surcharge revenue		—			101,604			—			197,568
Revenue before fuel surcharge		—			118,361			—			231,737
Adjusted operating ratio		—			85.8	%		—			85.3	%
Canadian based Conventional TL
Operating expenses*		77,613			82,851			156,311			159,349
Gain on sale of land and buildings and assets held for sale		—			—			—			44
Adjusted operating expenses		77,613			82,851			156,311			159,393
Fuel surcharge revenue		(12,367	)		(18,216	)		(28,082	)		(29,467	)
Adjusted operating expenses, net of fuel surcharge revenue		65,246			64,635			128,229			129,926
Revenue before fuel surcharge		77,389			88,072			154,989			164,379
Adjusted operating ratio		84.3	%		73.4	%		82.7	%		79.0	%
Specialized TL1
Operating expenses*		338,416			365,675			691,316			709,624
Gain on sale of land and buildings and assets held for sale		28			1			3,405			1
Adjusted operating expenses		338,444			365,676			694,721			709,625
Fuel surcharge revenue		(57,006	)		(93,470	)		(127,488	)		(151,655	)
Adjusted operating expenses, net of fuel surcharge revenue		281,438			272,206			567,233			557,970
Revenue before fuel surcharge		335,450			353,146			673,747			681,466
Adjusted operating ratio		83.9	%		77.1	%		84.2	%		81.9	%
1 Recasted comparative figures for change in operating segments of the dedicated operations from US Conventional Truckload as a result of the sale of business of CFI.
* Operating expenses excluding intra TL eliminations

24

Management’s Discussion and Analysis

Return on invested capital (“ROIC”): Management believes ROIC at the segment level is a useful measure in the efficiency in the use of capital funds. The Company calculates ROIC as segment operating income net of exclusions, after tax, divided by the segment average invested capital. Operating income net of exclusions, after tax, is calculated as the trailing twelve months of operating income before bargain purchase gain, gain or loss on the sale of land and buildings and assets held for sale, and amortization of intangible assets, after tax using the statutory tax rate of the Company. Average invested capital is calculated as total assets excluding intangibles, net of trade and other payables, current taxes payable and provisions averaged between the beginning and ending balance over a twelve-month period.

Return on invested capital segment reconciliation:
(unaudited) (in thousands of U.S. dollars)	As at June 30
	2023			2022
Package and Courier
Operating income		125,848			123,458
Amortization of intangible assets		632			723
Operating income, net of exclusions		126,480			124,181
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		92,963			91,273
Intangible assets		184,087			189,914
Total assets, excluding intangible assets		166,464			188,106
less: Trade and other payables, income taxes payable and provisions		(36,638	)		(47,182	)
Total invested capital, current year		313,913			330,838
Intangible assets, prior year		189,914			199,603
Total assets, excluding intangible assets, prior year		188,106			183,208
less: Trade and other payables, income taxes payable and provisions, prior year		(47,182	)		(52,753	)
Total invested capital, prior year		330,838			330,058
Average invested capital		322,376			330,448
Return on invested capital		28.8	%		27.6	%
Less-Than-Truckload - Canadian based LTL
Operating income		131,014			136,111
Gain on sale of assets held for sale		(40	)		(2,254	)
Amortization of intangible assets		7,207			8,484
Operating income, net of exclusions		138,181			142,341
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		101,563			104,621
Intangible assets		162,729			174,782
Total assets, excluding intangible assets		361,612			387,877
less: Trade and other payables, income taxes payable and provisions		(57,458	)		(68,314	)
Total invested capital, current year		466,883			494,345
Intangible assets, prior year		174,782			198,122
Total assets, excluding intangible assets, prior year		387,877			395,880
less: Trade and other payables, income taxes payable and provisions, prior year		(68,314	)		(62,258	)
Total invested capital, prior year		494,345			531,744
Average invested capital		480,614			513,045
Return on invested capital		21.1	%		20.4	%

25

Management’s Discussion and Analysis

Return on invested capital segment reconciliation (continued):
(unaudited) (in thousands of U.S. dollars)	As at June 30
	2023			2022
Truckload - Canadian based Conventional TL
Operating income		76,584			49,924
Gain on sale of land and buildings		—			(44	)
Gain on sale of assets held for sale		(15,485	)		—
Amortization of intangible assets		1,983			2,034
Operating income, net of exclusions		63,082			51,914
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		46,365			38,157
Intangible assets		110,512			102,874
Total assets, excluding intangible assets		201,606			177,575
less: Trade and other payables, income taxes payable and provisions		(21,488	)		(26,569	)
Total invested capital, current year		290,630			253,880
Intangible assets, prior year		102,874			101,228
Total assets, excluding intangible assets, prior year		177,575			126,070
less: Trade and other payables, income taxes payable and provisions, prior year		(26,569	)		(24,328	)
Total invested capital, prior year		253,880			202,970
Average invested capital		272,255			228,425
Return on invested capital		17.0	%		16.7	%
Truckload - Specialized TL*
Operating income		222,836			196,901
Loss on sale of land and buildings		3			—
Gain on sale of assets held for sale		(3,891	)		(12,900	)
Amortization of intangible assets		20,769			19,306
Operating income, net of exclusions		239,717			203,307
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		176,192			149,431
Intangible assets		678,419			646,001
Total assets, excluding intangible assets		846,215			827,968
less: Trade and other payables, income taxes payable and provisions		(98,629	)		(121,203	)
Total invested capital, current year		1,426,005			1,352,766
Intangible assets, prior year		646,001			635,142
Total assets, excluding intangible assets, prior year		827,968			793,168
less: Trade and other payables, income taxes payable and provisions, prior year		(121,203	)		(102,637	)
Total invested capital, prior year		1,352,766			1,325,673
Average invested capital		1,389,386			1,339,220
Return on invested capital		12.7	%		11.2	%
Logistics
Operating income		127,799			143,418
Loss on sale of land and buildings		—			3
Amortization of intangible assets		22,386			21,999
Bargain Purchase gain		—			—
Operating income, net of exclusions		150,185			165,420
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		110,386			121,584
Intangible assets		529,045			490,002
Total assets, excluding intangible assets		252,983			300,296
less: Trade and other payables, income taxes payable and provisions		(155,856	)		(185,647	)
Total invested capital, current year		626,172			604,651
Intangible assets, prior year		490,002			454,157
Total assets, excluding intangible assets, prior year		300,296			261,320
less: Trade and other payables, income taxes payable and provisions, prior year		(185,647	)		(165,334	)
Total invested capital, prior year		604,651			550,143
Average invested capital		615,412			577,397
Return on invested capital		17.9	%		21.1	%
* Recasted comparative figures for change in operating segments of the dedicated operations from US Conventional Truckload as a result of the sale of business of CFI.

26

Management’s Discussion and Analysis

Return on invested capital for US LTL: Management believes ROIC at the segment level is a useful measure in the efficiency in the use of capital funds. The return on invested capital of the U.S. based LTL has been modified to remove the impacts of the bargain purchase gain from the operating income net of exclusions as well as from the average invested capital to align the capital with the acquisition price.

(unaudited) (in thousands of U.S. dollars)	As at June 30
	2023			2022
Less-Than-Truckload - U.S. based LTL
Operating income		196,353			345,310
Loss on sale of land and buildings		36			15
Gain on sale of assets held for sale		(4,217	)		(54,020	)
Amortization of intangible assets		1,211			1,146
Operating income, net of exclusions		193,383			292,451
Income tax		26.5	%		26.5	%
Operating income net of exclusions, after tax		142,137			214,951
Intangible assets		16,022			5,960
Total assets, excluding intangible assets		1,449,030			1,579,639
less: Total liabilities		(529,027	)		(668,293	)
Total invested capital, current year		936,025			917,306
Total invested capital, acquisition price		838,910			838,910
Average invested capital		887,468			878,108
Return on invested capital		16.0	%		24.5	%

* The return on invested capital for the U.S. LTL is not disclosed as the trailing twelve-month information was not available for 2021.

27

Management’s Discussion and Analysis

RISKS AND UNCERTAINTIES

The Company’s future results may be affected by a number of factors over many of which the Company has little or no control. The following discussion of risk factors contains forward-looking statements. The following issues, uncertainties and risks, among others, should be considered in evaluating the Company’s business, prospects, financial condition, results of operations and cash flows.

Competition. The Company faces growing competition from other transporters in Canada, the United States and Mexico. These factors, including the following, could impair the Company’s ability to maintain or improve its profitability and could have a material adverse effect on the Company’s results of operations:

•the Company competes with many other transportation companies of varying sizes, including Canadian, U.S. and Mexican transportation companies;

•the Company’s competitors may periodically reduce their freight rates to gain business, which may limit the Company’s ability to maintain or increase freight rates or maintain growth in the Company’s business;

•some of the Company’s customers are other transportation companies or companies that also operate their own private trucking fleets, and they may decide to transport more of their own freight or bundle transportation with other services;

•some of the Company’s customers may reduce the number of carriers they use by selecting so-called “core carriers” as approved service providers or by engaging dedicated providers, and in some instances the Company may not be selected;

•many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of the Company’s business to competitors;

•the market for qualified drivers is highly competitive, particularly in the Company’s growing U.S. operations, and the Company’s inability to attract and retain drivers could reduce its equipment utilization and cause the Company to increase compensation, both of which would adversely affect the Company’s profitability;

•economies of scale that may be passed on to smaller carriers by procurement aggregation providers may improve their ability to compete with the Company;

•some of the Company’s smaller competitors may not yet be fully compliant with recently-enacted regulations which may allow such competitors to take advantage of additional driver productivity;

•advances in technology, such as advanced safety systems, automated package sorting, handling and delivery, vehicle platooning, alternative fuel vehicles, autonomous vehicle technology and digitization of freight services, may require the Company to increase investments in order to remain competitive, and the Company’s customers may not be willing to accept higher freight rates to cover the cost of these investments;

•the Company’s competitors may have better safety records than the Company or a perception of better safety records, which could impair the Company’s ability to compete;

•some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, which could in turn reduce the Company’s revenues and market share;

•the Company’s brand names may be subject to adverse publicity (whether or not justified) and lose significant value, which could result in reduced demand for the Company’s services;

•competition from freight brokerage companies may materially adversely affect the Company’s customer relationships and freight rates; and

•higher fuel prices and, in turn, higher fuel surcharges to the Company’s customers may cause some of the Company’s customers to consider freight transportation alternatives, including rail transportation.

Regulation. In Canada, carriers must obtain licenses issued by provincial transport boards in order to carry goods inter-provincially or to transport goods within any province. Licensing from U.S. and Mexican regulatory authorities is also required for the transportation of goods in Canada, the United States, and Mexico. Any change in or violation of existing or future regulations could have an adverse impact on the scope of the Company’s activities. Future laws and regulations may be more stringent, require changes in the Company’s operating practices, influence the demand for transportation services or require the Company to incur significant additional costs. Higher costs incurred by the Company, or by the Company’s suppliers who pass the costs onto the Company through higher supplies and materials pricing, could adversely affect the Company’s results of operations.

In addition to the regulatory regime applicable to operations in Canada, the Company is increasing its operations in the United States, and is therefore increasingly subject to rules and regulations related to the U.S. transportation industry, including regulation from various federal, state and local agencies, including the Department of Transportation (“DOT”) (in part through the Federal Motor Carrier Safety Administration (“FMCSA”)), the Environmental Protection Agency (“EPA”) and the Department of Homeland Security. Drivers must, both in Canada and the United States, comply with safety and fitness regulations, including those relating to drug and alcohol testing, driver safety performance and hours of service. Weight and dimensions, exhaust emissions and fuel efficiency are also subject to government regulation. The Company may also become subject to new or more restrictive regulations relating to

28

Management’s Discussion and Analysis

fuel efficiency, exhaust emissions, hours of service, drug and alcohol testing, ergonomics, on-board reporting of operations, collective bargaining, security at ports, speed limitations, driver training and other matters affecting safety or operating methods.

In the United States, there are currently two methods of evaluating the safety and fitness of carriers: the Compliance, Safety, Accountability (“CSA”) program, which evaluates and ranks fleets on certain safety-related standards by analyzing data from recent safety events and investigation results, and the DOT safety rating, which is based on an on-site investigation and affects a carrier’s ability to operate in interstate commerce. Additionally, the FMCSA has proposed rules in the past that would change the methodologies used to determine carrier safety and fitness.

Under the CSA program, carriers are evaluated and ranked against their peers based on seven categories of safety-related data. The seven categories of safety-related data currently include Unsafe Driving, Hours-of-Service Compliance, Driver Fitness, Controlled Substances/Alcohol, Vehicle Maintenance, Hazardous Materials Compliance and Crash Indicator (such categories known as “BASICs”). Carriers are grouped by category with other carriers that have a similar number of safety events (i.e. crashes, inspections, or violations) and carriers are ranked and assigned a rating percentile or score. If the Company were subject to any such interventions, this could have an adverse effect on the Company’s business, financial condition and results of operations. As a result, the Company’s fleet could be ranked poorly as compared to peer carriers. There is no guarantee that the Company will be able to maintain its current safety ratings or that it will not be subject to interventions in the future. The Company recruits first-time drivers to be part of its fleet, and these drivers may have a higher likelihood of creating adverse safety events under CSA. The occurrence of future deficiencies could affect driver recruitment in the United States by causing high-quality drivers to seek employment with other carriers or limit the pool of available drivers or could cause the Company’s customers to direct their business away from the Company and to carriers with higher fleet safety rankings, either of which would materially adversely affect the Company’s business, financial condition and results of operations. In addition, future deficiencies could increase the Company’s insurance expenses. Additionally, competition for drivers with favorable safety backgrounds may increase, which could necessitate increases in driver-related compensation costs. Further, the Company may incur greater than expected expenses in its attempts to improve unfavorable scores.

In December 2016, the FMCSA issued a final rule establishing a national clearinghouse for drug and alcohol testing results and requiring motor carriers and medical review officers to provide records of violations by commercial drivers of FMCSA drug and alcohol testing requirements. Motor carriers in the United States will be required to query the clearinghouse to ensure drivers and driver applicants do not have violations of federal drug and alcohol testing regulations that prohibit them from operating commercial motor vehicles. The final rule became effective on January 4, 2017, with a compliance date of January 6, 2020. In December 2019, however, the FMCSA announced a final rule extending by three years the date for state driver’s licensing agencies to comply with certain requirements. The December 2016 commercial driver’s license rule required states to request information from the clearinghouse about individuals prior to issuing, renewing, upgrading or transferring a commercial driver’s license. This new action will allow states’ compliance with the requirement, which was set to begin January 2020, to be delayed until January 2023. The compliance date of January 2020 remained in place for all other requirements set forth in the clearinghouse final rule, however. Upon implementation, the rule may reduce the number of available drivers in an already constrained driver market. Pursuant to a new rule finalized by the FMCSA, effective November 2021, states are required to query the clearinghouse when issuing, renewing, transferring, or upgrading a commercial drivers license and must revoke a driver’s commercial driving privileges if such driver is prohibited from driving a motor vehicle for one or more drug or alcohol violations.

In addition, other rules have been proposed or made final by the FMCSA, including (i) a rule requiring the use of speed-limiting devices on heavy-duty tractors to restrict maximum speeds, which was proposed in 2016, and (ii) a rule setting out minimum driver training standards for new drivers applying for commercial driver’s licenses for the first time and to experienced drivers upgrading their licenses or seeking a hazardous materials endorsement, which was made final in December 2016 with a compliance date in February 2020 (FMCSA officials delayed implementation of the final rule by two years). In July 2017, the DOT announced that it would no longer pursue a speed limiter rule, but left open the possibility that it could resume such a pursuit in the future. In May 2021, however, a bill was reintroduced in the U.S. House of Representatives that would require commercial motor vehicles with gross weight exceeding 26,000 pounds to be equipped with a speed limiting device, prohibiting speeds greater than 65 miles per hour. Whether the bill will become law is uncertain. The effect of these rules, to the extent they become effective, could result in a decrease in fleet production and/or driver availability, either of which could materially adversely affect the Company’s business, financial condition and results of operations.

The Company’s subsidiaries with U.S. operating authority currently have a satisfactory DOT rating, which is the highest available rating under the current safety rating scale. If the Company’s subsidiaries with U.S. operating authority were to receive a conditional or unsatisfactory DOT safety rating, it could materially adversely affect the Company’s business, financial condition and results of operations as customer contracts may require a satisfactory DOT safety rating, and a conditional or unsatisfactory rating could materially adversely affect or restrict the Company’s operations and increase the Company’s insurance costs.

The FMCSA has proposed regulations that would modify the existing rating system and the safety labels assigned to motor carriers evaluated by the DOT. Under regulations that were proposed in 2016, the methodology for determining a carrier’s DOT safety rating would be expanded to include the on-road safety performance of the carrier’s drivers and equipment, as well as results obtained from investigations. Exceeding certain thresholds based on such performance or results would cause a carrier to receive an unfit safety rating. The proposed regulations were withdrawn in March 2017, but the FMCSA

29

Management’s Discussion and Analysis

noted that a similar process may be initiated in the future. If similar regulations were enacted and the Company were to receive an unfit or other negative safety rating, the Company’s business would be materially adversely affected in the same manner as if it received a conditional or unsatisfactory safety rating under the current regulations. In addition, poor safety performance could lead to increased risk of liability, increased insurance, maintenance and equipment costs and potential loss of customers, which could materially adversely affect the Company’s business, financial condition and results of operations. The FMCSA has also indicated that it is in the early phases of a new study on the causation of large truck crashes. Although it remains unclear whether such a study will ultimately be completed, the results of such study could spur further proposed and/or final rules regarding safety and fitness in the United States.

From time to time, the FMCSA proposes and implements changes to regulations impacting hours-of-service. Such changes can negatively impact the Company’s productivity and affect its operations and profitability by reducing the number of hours per day or week the Company’s U.S. drivers and independent contractors may operate and/or disrupt the Company’s network. However, in August 2019, the FMCSA issued a proposal to make changes to its hours-of-service rules that would allow U.S. truck drivers more flexibility with their 30-minute rest break and with dividing their time in the sleeper berth. It also would extend by two hours the duty time for U.S. drivers encountering adverse weather, and extend the shorthaul exemption by lengthening the drivers’ maximum on-duty period from 12 hours to 14 hours. In June 2020, the FMCSA adopted a final rule substantially as proposed, which became effective in September 2020. Certain industry groups have challenged these rules in U.S. courts, and it remains unclear what, if anything, will come from such challenges. Any future changes to U.S. hours-of-service regulations could materially and adversely affect the Company’s operations and profitability.

The U.S. National Highway Traffic Safety Administration, the EPA and certain U.S. states, including California, have adopted regulations that are aimed at reducing truck emissions and/or increasing fuel economy of the equipment the Company uses. Certain of these regulations are currently effective, with stricter emission and fuel economy standards becoming effective over the next several years. Other regulations have been proposed in the United States that would similarly increase these standards. U.S. federal and state lawmakers and regulators have also adopted or are considering a variety of other climate-change legal requirements related to carbon emissions and greenhouse gas emissions. These legal requirements could potentially limit carbon emissions within certain states and municipalities in the United States. Certain of these legal requirements restrict the location and amount of time that diesel-powered trucks (like the Company’s) may idle, which may force the Company to purchase on-board power units that do not require the engine to idle or to alter the Company’s drivers’ behavior, which might result in a decrease in productivity and/or an increase in driver turnover. All of these regulations have increased, and may continue to increase, the cost of new trucks and trailers and may require the Company to retrofit certain of its trucks and trailers, may increase its maintenance costs, and could impair equipment productivity and increase the Company’s operating costs, particularly if such costs are not offset by potential fuel savings. The occurrence of any of these adverse effects, combined with the uncertainty as to the reliability of the newly-designed diesel engines and the residual values of the Company’s equipment, could materially adversely affect the Company’s business, financial condition and results of operations. Furthermore, any future regulations that impose restrictions, caps, taxes or other controls on emissions of greenhouse gases could adversely affect the Company’s operations and financial results. The Company cannot predict the extent to which its operations and productivity will be impacted by any future regulations. The Company will continue monitoring its compliance with U.S. federal and state environmental regulations.

In March 2014, the U.S. Ninth Circuit Court of Appeals (the “Ninth Circuit”) held that the application of California state wage and hour laws to interstate truck drivers is not pre-empted by U.S. federal law. The case was appealed to the U.S. Supreme Court, which denied certiorari in May 2015, and accordingly, the Ninth Circuit decision stood. However, in December 2018, the FMCSA granted a petition filed by the American Trucking Associations determining that federal law pre-empts California’s wage and hour laws, and interstate truck drivers are not subject to such laws. The FMCSA’s decision was appealed by labor groups and multiple lawsuits were filed in U.S. courts seeking to overturn the decision. I January 2021, however, the Ninth Circuit upheld the FMCSA’s determination that U.S. federal law does pre-empt California’s meal and rest break laws, as applied to drivers of property-carrying commercial motor vehicles. Other current and future U.S. state and local wage and hour laws, including laws related to employee meal breaks and rest periods, may vary significantly from U.S. federal law. Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state minimum wage laws. As a result, the Company, along with other companies in the industry, is subject to an uneven patchwork of wage and hour laws throughout the United States. In addition,the uncertainty with respect to the practical application of wage and hour laws are, and in the future may be, resulting in additional costs for the Company and the industry as a whole, and a negative outcome with respect to any of the above-mentioned lawsuits could materially affect the Company. If U.S. federal legislation is not passed pre-empting state and local wage and hour laws, the Company will either need to continue complying with the most restrictive state and local laws across its entire fleet in the United States, or revise its management systems to comply with varying state and local laws. Either solution could result in increased compliance and labor costs, driver turnover, decreased efficiency and increased risk of non-compliance. In April 2016, the Food and Drug Administration (“FDA”) published a final rule establishing requirements for shippers, loaders, carriers by motor vehicle and rail vehicle, and receivers engaged in the transportation of food, to use sanitary transportation practices to ensure the safety of the food they transport as part of the FSMA. This rule sets forth requirements related to (i) the design and maintenance of equipment used to transport food, (ii) the measures taken during food transportation to ensure food safety, (iii) the training of carrier personnel in sanitary food transportation practices, and (iv) maintenance and retention of records of written procedures, agreements, and training related to the foregoing items. These requirements took effect for larger carriers in April 2017 and apply to the Company when it acts as a carrier or as a broker. If the Company is found to be in violation of applicable laws or regulations related to the FSMA or if the Company transports food or goods that are

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Management’s Discussion and Analysis

contaminated or are found to cause illness and/or death, the Company could be subject to substantial fines, lawsuits, penalties and/or criminal and civil liability, any of which could have a material adverse effect on the Company’s business, financial condition, and results of operations.

Changes in existing regulations and implementation of new regulations, such as those related to trailer size limits, emissions and fuel economy, hours of service, mandating ELDs and drug and alcohol testing in Canada, the United States and Mexico, could increase capacity in the industry or improve the position of certain competitors, either of which could negatively impact pricing and volumes or require additional investments by the Company. The short-term and long-term impacts of changes in legislation or regulations are difficult to predict and could materially adversely affect the Company’s results of operations.

The right to continue to hold applicable licenses and permits is generally subject to maintaining satisfactory compliance with regulatory and safety guidelines, policies and laws. Although the Company is committed to compliance with laws and safety, there is no assurance that it will be in full compliance with them at all times. Consequently, at some future time, the Company could be required to incur significant costs to maintain or improve its compliance record.

United States and Mexican operations. A significant portion of the Company’s revenue is derived from operations in the United States and transportation to and from Mexico. The Company’s international operations are subject to a variety of risks, including fluctuations in foreign currencies, changes in the economic strength or greater volatility in the economies of foreign countries in which the Company does business, difficulties in enforcing contractual rights and intellectual property rights, compliance burdens associated with export and import laws, theft or vandalism, and social, political and economic instability. The Company’s international operations could be adversely affected by restrictions on travel. Additional risks associated with the Company’s international operations include restrictive trade policies, imposition of duties, changes to trade agreements and other treaties, taxes or government royalties by foreign governments, adverse changes in the regulatory environments, including in tax laws and regulations, of the foreign countries in which the Company does business, compliance with anti-corruption and anti-bribery laws, restrictions on the withdrawal of foreign investments, the ability to identify and retain qualified local managers and the challenge of managing a culturally and geographically diverse operation. The Company cannot guarantee compliance with all applicable laws, and violations could result in substantial fines, sanctions, civil or criminal penalties, competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect the Company’s results of operations.

The current United States Presidential Administration provided informal guidance that it is in favor of certain changes to U.S. tax law, including increasing the corporate tax rate from its current rate of 21%. In the event that the corporate tax rate is increased, the Company’s financial position, and financial results from its United States operations may be adversely affected.

The implementation of tariffs or quotas or changes to certain trade agreements could, among other things, increase the costs of the materials used by the Company’s suppliers to produce new revenue equipment or increase the price of fuel. Such cost increases for the Company’s revenue equipment suppliers would likely be passed on to the Company, and to the extent fuel prices increase, the Company may not be able to fully recover such increases through rate increases or the Company’s fuel surcharge program, either of which could have a material adverse effect on the Company’s business.

The United States-Mexico-Canada Agreement (“USMCA”) entered into effect in July 2020. The USMCA is designed to modernize food and agriculture trade, advance rules of origin for automobiles and trucks, and enhance intellectual property protections, among other matters, according to the Office of the U.S. Trade Representative. It is difficult to predict at this stage what could be the impact of the USMCA on the economy, including the transportation industry. However, given the amount of North American trade that moves by truck it could have a significant impact on supply and demand in the transportation industry, and could adversely impact the amount, movement and patterns of freight transported by the Company.

The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how the Company will apply the law and impact the Company’s results of operations in future periods. The timing and scope of such regulations and interpretative guidance are uncertain. In addition, there is a risk that states within the United States or foreign jurisdictions may amend their tax laws in response to these tax reforms, which could have a material adverse effect on the Company’s results.

In addition, if the Company is unable to maintain its Free and Secure Trade (“FAST”) and U.S. Customs Trade Partnership Against Terrorism (“C-TPAT”) certification statuses, it may have significant border delays, which could cause its cross-border operations to be less efficient than those of competitor carriers that obtain or continue to maintain FAST and C-TPAT certifications.

Operating Environment and Seasonality. The Company is exposed to the following factors, among others, affecting its operating environment:

•the Company’s future insurance and claims expense, including the cost of its liability insurance premiums and the number and dollar amount of claims, may exceed historical levels, which would require the Company to incur additional costs and could reduce the Company’s earnings;

•a decline in the demand for used revenue equipment could result in decreased equipment sales, lower resale values and lower gains (or recording losses) on sales of assets;

•truck and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts, including the current shortage of semiconductors and other components and supplies, such as steel, which may materially

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Management’s Discussion and Analysis

adversely affect the Company’s ability to purchase a quantity of new revenue equipment that is sufficient to sustain its desired growth rate and negatively impact the Company’s financial results if it incurs higher costs to purchase trucks and trailers; and

•increased prices for new revenue equipment, design changes of new engines, reduced equipment efficiency resulting from new engines designed to reduce emissions, or decreased availability of new revenue equipment.

The Company’s truck productivity decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments after the winter holiday season. Revenue may also be adversely affected by inclement weather and holidays, since revenue is directly related to available working days of shippers. At the same time, operating expenses increase and fuel efficiency declines because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair expenditures. The Company may also suffer from weather-related or other unforeseen events such as tornadoes, hurricanes, blizzards, ice storms, floods, and fires, which may increase in frequency and severity due to climate change, as well as other man-made disasters. These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, damage or destroy the Company’s assets or adversely affect the business or financial condition of the Company’s customers, any of which could materially adversely affect the Company’s results of operations or make the Company’s results of operations more volatile.

General Economic, Credit, and Business Conditions. The Company’s business is subject to general economic, credit, business and regulatory factors that are largely beyond the Company’s control, and which could have a material adverse effect on the Company’s operating results.

The Company’s industry is subject to cyclical pressures, and the Company’s business is dependent on a number of factors that may have a material adverse effect on its results of operations, many of which are beyond the Company’s control. The Company believes that some of the most significant of these factors include (i) excess truck and trailer capacity in the transportation industry in comparison with shipping demand; (ii) declines in the resale value of used equipment; (iii) limited supply and increased cost of new and used equipment; (iv) recruiting and retaining qualified drivers; (v) strikes, work stoppages or work slowdowns at the Company’s facilities or at customer, port, border crossing or other shipping-related facilities; (vi) compliance with ongoing regulatory requirements; (vii) increases in interest rates, fuel taxes, tolls and license and registration fees; and (vii) rising healthcare and insurance and claims costs in the United States; and (ix) the impact of the COVID-19 pandemic.

The Company is also affected by (i) recessionary economic cycles, which tend to be characterized by weak demand and downward pressure on rates; (ii) changes in customers’ inventory levels and in the availability of funding for their working capital; (iii) changes in the way in which the Company’s customers choose to source or utilize the Company’s services; and (iv) downturns in customers’ business cycles, such as retail and manufacturing, where the Company has significant customer concentration. Economic conditions may adversely affect customers and their demand for and ability to pay for the Company’s services. Customers encountering adverse economic conditions represent a greater potential for loss and the Company may be required to increase its allowance for doubtful accounts.

Economic conditions that decrease shipping demand and increase the supply of available trucks and trailers can exert downward pressure on rates and equipment utilization, thereby decreasing asset productivity. The risks associated with these factors are heightened when the economy is weakened. Some of the principal risks during such times include:

•the Company may experience a reduction in overall freight levels, which may impair the Company’s asset utilization;

•freight patterns may change as supply chains are redesigned, resulting in an imbalance between the Company’s capacity and assets and customers’ freight demand;

•the Company may be forced to accept more loads from freight brokers, where freight rates are typically lower, or may be forced to incur more non-revenue generating miles to obtain loads;

•the Company may increase the size of its fleet during periods of high freight demand during which its competitors also increase their capacity, and the Company may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if the Company is required to dispose of assets at a loss to match reduced freight demand;

•customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates in an attempt to lower their costs, and the Company may be forced to lower its rates or lose freight; and

•lack of access to current sources of credit or lack of lender access to capital, leading to an inability to secure credit financing on satisfactory terms, or at all.

The Company is subject to cost increases that are outside the Company’s control that could materially reduce the Company’s profitability if it is unable to increase its rates sufficiently. Such cost increases include, but are not limited to, increases in fuel and energy prices, driver and office employee wages, purchased transportation costs, taxes, interest rates, tolls, license and registration fees, insurance premiums and claims, revenue equipment and related maintenance, and tires and other components. Strikes or other work stoppages at the Company’s service centers or at customer, port, border or other shipping locations, deterioration of Canadian, U.S. or Mexican transportation infrastructure and reduced investment in such infrastructure, or actual or threatened armed conflicts or terrorist attacks, efforts to combat terrorism, military action against a foreign state or group located in a foreign state or heightened security requirements could lead to wear, tear and damage to the Company’s equipment, driver dissatisfaction, reduced economic demand,

32

Management’s Discussion and Analysis

reduced availability of credit, increased prices for fuel or temporary closing of the shipping locations or borders between Canada, the United States and Mexico. Further, the Company may not be able to appropriately adjust its costs and staffing levels to meet changing market demands. In periods of rapid change, it is more difficult to match the Company’s staffing level to its business needs.

The Company’s operations, with the exception of its brokerage operations, are capital intensive and asset heavy. If anticipated demand differs materially from actual usage, the Company may have too many or too few assets. During periods of decreased customer demand, the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open market or turn in equipment under certain equipment leases in order to right size its fleet. This could cause the Company to incur losses on such sales or require payments in connection with equipment the Company turns in, particularly during times of a softer used equipment market, either of which could have a material adverse effect on the Company’s profitability.

Although the Company’s business volume is not highly concentrated, its customers’ financial failures or loss of customer business may materially adversely affect the Company. If the Company were unable to generate sufficient cash from operations, it would need to seek alternative sources of capital, including financing, to meet its capital requirements. In the event that the Company were unable to generate sufficient cash from operations or obtain financing on favorable terms in the future, it may have to limit its fleet size, enter into less favorable financing arrangements or operate its revenue equipment for longer periods, any of which could have a materially adverse effect on its profitability.

Coronavirus and its variants (“COVID-19”) outbreak or other similar outbreaks. The recent outbreak of COVID-19, and any other outbreaks of contagious diseases or other adverse public health developments, could have a materially adverse effect on the Company’s financial condition, liquidity, results of operations, and cash flows. The outbreak of COVID-19 has resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, increased border and port controls and closures, and shutdowns. There is considerable uncertainty regarding such measures and potential future measures, including vaccine, testing and masks mandates, all of which could limit the Company’s ability to meet customer demand, as well as reduce customer demand. Furthermore, government vaccine, testing, and mask mandates may increase the Company’s turnover and make recruiting more difficult, particularly among the Company’s driver personnel.

Certain of the Company’s office personnel have been working remotely, which could disrupt to a certain extent the Company’s management, business, finance, and financial reporting teams. The Company may experience an increase in absences or terminations among its driver and non-driver personnel due to the outbreak of COVID-19, which could have a materially adverse effect on the Company’s operating results. Further, the Company’s operations, particularly in areas of increased COVID-19 infections, could be disrupted resulting in a negative impact on the Company’s operations and results.

The outbreak of COVID-19 has significantly increased uncertainty. Risks related to a slowdown or recession are described in the Company’s risk factor titled “General Economic, Credit and Business Conditions”.

Short-term and long-term developments related to COVID-19 have been unpredictable and the extent to which further developments could impact the Company’s operations, financial condition, access to credit, liquidity, results of operations, and cash flows is highly uncertain. Such developments may include the geographic spread and duration of the virus, the distribution and availability of vaccines, vaccine hesitancy, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak.

In November 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) published an emergency temporary standard requiring all employers within the U.S. with over 100 employees to ensure that their employees are fully vaccinated or, in the alternative, to ensure that all unvaccinated employees return a negative COVID-19 test at least once a week before coming to work. However, the United States Supreme Court blocked this emergency temporary standard from coming into effect.

Effective January 2022, the Canadian government was prohibiting unvaccinated foreigners, including U.S. citizens, from crossing the border. Effective January 2022, the U.S. Government is prohibiting unvaccinated foreigners, including Canadian citizens, from crossing the U.S.-Canada border and the U.S.-Mexico border. The effect of these border requirements, in addition to any other vaccine, testing, or mask mandates that go into effect may, amongst other things, (i) cause the Company’s employees to go to smaller employers, especially if any future mandates are only subject to larger employers, or leave the trucking industry altogether, (ii) result in logistical issues, increased expenses, and operational issues resulting from ensuring compliance with such mandates, such as the costs of arranging for COVID-19 tests for the Company’s unvaccinated employees, especially for the Company’s unvaccinated drivers, (iii) result in increased costs relating to recruiting and training of drivers, and (iv) result in decreased revenue and other operational issues if we are unable to recruit and retain drivers. Any such vaccine, testing, or mask mandate that is interpreted as to apply to commercial drivers would significantly reduce the pool of drivers available to us and the industry as a whole, exacerbating the current driver shortage even further. Accordingly, any vaccine, testing, or mask mandate, to the extent that it goes into effect, may have a material adverse effect on the Company’s business, the Company’s operations, and the Company’s financial condition and position.

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Management’s Discussion and Analysis

Interest Rate Fluctuations. Future cash flows related to variable-rate financial liabilities could be impacted by changes in benchmark rates such as Bankers’ Acceptance or secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”). In addition, the Company is exposed to gains and losses arising from changes in interest rates through its derivative financial instruments carried at fair value.

Currency Fluctuations. The Company’s financial results are reported in U.S. dollars and a large portion of the Company’s revenue and operating costs are realized in currencies other than the U.S. dollar, primarily the Canadian dollar. The exchange rates between these currencies and the U.S. dollar have fluctuated in recent years and will likely continue to do so in the future. It is not possible to mitigate all exposure to fluctuations in foreign currency exchange rates. The results of operations are therefore affected by movements of these currencies against the U.S. dollar.

Price and Availability of Fuel. Fuel is one of the Company’s largest operating expenses. Diesel fuel prices fluctuate greatly due to factors beyond the Company’s control, such as political events, commodity futures trading, currency fluctuations, natural and man-made disasters, terrorist activities and armed conflicts, any of which may lead to an increase in the cost of fuel. Fuel prices are also affected by the rising demand for fuel in developing countries and could be materially adversely affected by the use of crude oil and oil reserves for purposes other than fuel production and by diminished drilling activity. Such events may lead not only to increases in fuel prices, but also to fuel shortages and disruptions in the fuel supply chain. Because the Company’s operations are dependent upon diesel fuel, significant diesel fuel cost increases, shortages or supply disruptions could have a material adverse effect on the Company’s business, financial condition and results of operations.

While the Company has fuel surcharge programs in place with a majority of the Company’s customers, which historically have helped the Company offset the majority of the negative impact of rising fuel prices, the Company also incurs fuel costs that cannot be recovered even with respect to customers with which the Company maintains fuel surcharge programs, such as those associated with non-revenue generating miles or time when the Company’s engines are idling. Moreover, the terms of each customer’s fuel surcharge program vary from one division to another, and the recoverability for fuel price increases varies as well. In addition, because the Company’s fuel surcharge recovery lags behind changes in fuel prices, the Company’s fuel surcharge recovery may not capture the increased costs the Company pays for fuel, especially when prices are rising. This could lead to fluctuations in the Company’s levels of reimbursement, such as has occurred in the past. There can be no assurance that such fuel surcharges can be maintained indefinitely or that they will be fully effective.

Insurance. The Company’s operations are subject to risks inherent in the transportation sector, including personal injury, property damage, workers’ compensation and employment and other issues. The Company’s future insurance and claims expenses may exceed historical levels, which could reduce the Company’s earnings. The Company subscribes for insurance in amounts it considers appropriate in the circumstances and having regard to industry norms. Like many in the industry, the Company self-insures a significant portion of the claims exposure related to cargo loss, bodily injury, workers’ compensation and property damages. Due to the Company’s significant self-insured amounts, the Company has exposure to fluctuations in the number or severity of claims and the risk of being required to accrue or pay additional amounts if the Company’s estimates are revised or claims ultimately prove to be in excess of the amounts originally assessed. Further, the Company’s self-insured retention levels could change and result in more volatility than in recent years.

The Company holds a fully-fronted policy of CAD $10 million limit per occurrence for automobile bodily injury, property damage and commercial general liability for its Canadian Insurance Program, subject to certain exceptions. The Company retains a deductible of US $2.25 million for certain U.S. subsidiaries on their primary US $5 million limit policies for automobile bodily injury and property damage, also subject to certain exceptions, and a 50% quota share deductible for the US $5 million limit in excess of US $5 million. The Company retains a deductible of US $1 million on its primary US $5 million limit policy for certain U.S. subsidiaries for commercial general liability. The Company retains deductibles of up to US $1 million per occurrence for workers’ compensation claims. The Company’s liability coverage has a total limit of US $100 million per occurrence for both its Canadian and U.S. divisions.

Although the Company believes its aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that the amount of one or more claims could exceed the Company’s aggregate coverage limits or that the Company will chose not to obtain insurance in respect of such claims. If any claim were to exceed the Company’s coverage, the Company would bear the excess, in addition to the Company’s other self-insured amounts. The Company’s results of operations and financial condition could be materially and adversely affected if (i) cost per claim or the number of claims significantly exceeds the Company’s coverage limits or retention amounts; (ii) the Company experiences a claim in excess of its coverage limits; (iii) the Company’s insurance carriers fail to pay on the Company’s insurance claims; (iv) the Company experiences a significant increase in premiums; or (v) the Company experiences a claim for which coverage is not provided, either because the Company chose not to obtain insurance as a result of high premiums or because the claim is not covered by insurance which the Company has in place.

The Company accrues the costs of the uninsured portion of pending claims based on estimates derived from the Company’s evaluation of the nature and severity of individual claims and an estimate of future claims development based upon historical claims development trends. Actual settlement of the Company’s retained claim liabilities could differ from its estimates due to a number of uncertainties, including evaluation of severity, legal costs and claims that have been incurred but not reported. Due to the Company’s high retained amounts, it has significant exposure to fluctuations in the number and

34

Management’s Discussion and Analysis

severity of claims. If the Company were required to accrue or pay additional amounts because its estimates are revised or the claims ultimately prove to be more severe than originally assessed, its financial condition and results of operations may be materially adversely affected.

Employee Relations. With the acquisition of UPS Freight and prior Canadian acquisitions, the Company has a substantial number of unionized employees in the U.S. and Canada. Although the Company believes that its relations with its employees are satisfactory, no assurance can be given that the Company will be able to successfully extend or renegotiate the Company’s current collective agreements as they expire from time to time or that additional employees will not attempt to unionize.

The unionization of the Company’s employees in additional business units, adverse changes in terms under collective bargaining agreements, or actual or threatened strikes, work stoppages or slow downs, could have a material adverse effect on the Company’s business, customer retention, results of operations, financial condition and liquidity, and could cause significant disruption of, or inefficiencies in, its operations, because:

•restrictive work rules could hamper the Company’s ability to improve or sustain operating efficiency or could impair the Company’s service reputation and limit its ability to provide certain services;

•a strike or work stoppage could negatively impact the Company’s profitability and could damage customer and employee relationships;

•shippers may limit their use of unionized trucking companies because of the threat of strikes and other work stoppages;

•the Company could fail to extend or renegotiate its collective agreements or experience material increases in wages or benefits;

•disputes with the Company’s unions could arise; and

•an election and bargaining process could divert management’s time and attention from the Company’s overall objectives and impose significant expenses.

The Company’s collective agreements have a variety of expiration dates, to the last of which is in March 2028. In a small number of cases, the expiration date of the collective agreement has passed; in such cases, the Corporation is generally in the process of renegotiating the agreement. The Company cannot predict the effect which any new collective agreements or the failure to enter into such agreements upon the expiry of the current agreements may have on its operations.

The Company has limited experience with unionized employees in the U.S. There may be additional risks related to the increased number of unionized U.S. employees from the acquisition of UPS Freight. The impact the Company’s unionized operations could have on non-unionized operations is uncertain. On July 13, 2023, the Company reached an agreement with the US International Brotherhood of Teamster Union for the renewal of the Collective Bargaining Agreement. This new five-year agreement is subject to ratification by the employees.

Drivers. Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a material adverse effect on the Company’s profitability and the ability to maintain or grow the Company’s fleet.

Like many in the transportation sector, the Company experiences substantial difficulty in attracting and retaining sufficient numbers of qualified drivers. The trucking industry periodically experiences a shortage of qualified drivers. The Company believes the shortage of qualified drivers and intense competition for drivers from other transportation companies will create difficulties in maintaining or increasing the number of drivers and may negatively impact the Company’s ability to engage a sufficient number of drivers, and the Company’s inability to do so may negatively impact its operations. Further, the compensation the Company offers its drivers and independent contractor expenses are subject to market conditions, and the Company may find it necessary to increase driver and independent contractor compensation in future periods.

In addition, the Company and many other trucking companies suffer from a high turnover rate of drivers in the U.S. TL market. This high turnover rate requires the Company to continually recruit a substantial number of new drivers in order to operate existing revenue equipment. Driver shortages are exacerbated during periods of economic expansion, in which alternative employment opportunities, including in the construction and manufacturing industries, which may offer better compensation and/or more time at home, are more plentiful and freight demand increases, or during periods of economic downturns, in which unemployment benefits might be extended and financing is limited for independent contractors who seek to purchase equipment, or the scarcity or growth of loans for students who seek financial aid for driving school. In addition, enrollment at driving schools may be further limited by COVID-19 social distancing requirements, vaccine, testing, and mask mandates, and other regulatory requirements that reduces the number of eligible drivers. The lack of adequate truck parking along some U.S. highways and congestion caused by inadequate highway funding may make it more difficult for drivers to comply with hours of service regulations and cause added stress for drivers, further reducing the pool of eligible drivers. The Company’s use of team-driven trucks for expedited shipments requires two drivers per truck, which further increases the number of drivers the Company must recruit and retain in comparison to operations that require one driver per truck. The Company also employs driver hiring standards, which could further reduce the pool of available drivers from which the Company would hire. If the Company is unable to continue to attract and retain a sufficient number of drivers, the

35

Management’s Discussion and Analysis

Company could be forced to, among other things, adjust the Company’s compensation packages, increase the number of the Company’s trucks without drivers or operate with fewer trucks and face difficulty meeting shipper demands, any of which could adversely affect the Company’s growth and profitability.

Independent Contractors. The Company’s contracts with U.S. independent contractors are governed by U.S. federal leasing regulations, which impose specific requirements on the Company and the independent contractors. If more stringent state or U.S. federal leasing regulations are adopted, U.S. independent contractors could be deterred from becoming independent contractor drivers, which could materially adversely affect the Company’s goal of maintaining its current fleet levels of independent contractors.

The Company provides financing to certain qualified Canadian independent contractors and financial guarantees to a small number of U.S. independent contractors. If the Company were unable to provide such financing or guarantees in the future, due to liquidity constraints or other restrictions, it may experience a decrease in the number of independent contractors it is able to engage. Further, if independent contractors the Company engages default under or otherwise terminate the financing arrangements and the Company is unable to find replacement independent contractors or seat the trucks with its drivers, the Company may incur losses on amounts owed to it with respect to such trucks.

Pursuant to the Company’s fuel surcharge program with independent contractors, the Company pays independent contractors with which it contracts a fuel surcharge that increases with the increase in fuel prices. A significant increase or rapid fluctuation in fuel prices could cause the Company’s costs under this program to be higher than the revenue the Company receives under its customer fuel surcharge programs.

U.S. tax and other regulatory authorities, as well as U.S. independent contractors themselves, have increasingly asserted that U.S. independent contractor drivers in the trucking industry are employees rather than independent contractors, and the Company’s classification of independent contractors has been the subject of audits by such authorities from time to time. U.S. federal and state legislation has been introduced in the past that would make it easier for tax and other authorities to reclassify independent contractors as employees, including legislation to increase the recordkeeping requirements for those that engage independent contractor drivers and to increase the penalties for companies who misclassify their employees and are found to have violated employees’ overtime and/or wage requirements. The most recent example being the Protecting the Rights to Organize (“PRO”) Act, which was passed by the U.S. House of Representatives and received by the U.S. Senate in March 2021 and remains with the U.S. Senate’s Committee on Health, Education, Labor, and Pensions. The PRO Act proposes to apply the “ABC Test” (described below) for classifying workers under Federal Fair Labor Standards Act claims. It is unknown whether any of the proposed legislation will become law or whether any industry-based exemptions from any resulting law will be granted. Additionally, U.S. federal legislators have sought to abolish the current safe harbor allowing taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice, to extend the U.S. Fair Labor Standards Act to independent contractors and to impose notice requirements based on employment or independent contractor status and fines for failure to comply. Some U.S. states have put initiatives in place to increase their revenue from items such as unemployment, workers’ compensation and income taxes, and a reclassification of independent contractors as employees would help states with this initiative. Further, courts in certain U.S. states have issued decisions that could result in a greater likelihood that independent contractors would be judicially classified as employees in such states.

In September 2019, California enacted a new law, A.B. 5 (“AB5”), that made it more difficult for workers to be classified as independent contractors (as opposed to employees). AB5 provides that the three-pronged “ABC Test” must be used to determine worker classifications in wage order claims. Under the ABC Test, a worker is presumed to be an employee and the burden to demonstrate their independent contractor status is on the hiring company through satisfying all three of the following criteria: (a) the worker is free from control and direction in the performance of services; (b) the worker is performing work outside the usual course of the business of the hiring company; and (c) the worker is customarily engaged in an independently established trade, occupation, or business. How AB5 will be enforced is still to be determined. In January 2021, however, the California Supreme Court ruled that the ABC Test could apply retroactively to all cases not yet final as of the date the original decision was rendered, April 2018. While it was set to enter into effect in January 2020, a U.S. federal judge in California issued a preliminary injunction barring the enforcement of AB5 on the trucking industry while the California Trucking Association (“CTA”) moves forward with its suit seeking to invalidate AB5. The Ninth Circuit rejected the reasoning behind the injunction in April 2021, ruling that AB5 is not pre-empted by U.S. federal law, but granted a stay of the AB5 mandate in June 2021 (preventing its application and temporarily continuing the injunction) while the CTA petitioned the United States Supreme Court (the “Supreme Court”) to review the decision. In November 2021, the Supreme Court requested that the U.S. solicitor general weigh in on the case. The injunction will remain in place until the Supreme Court makes a decision on whether to proceed in hearing the case. While the stay of the AB5 mandate provides temporary relief to the enforcement of AB5, it remains unclear how long such relief will last, and whether the CTA will ultimately be successful in invalidating the law. It is also possible AB5 will spur similar legislation in states other than California, which could adversely affect the Company’s results of operations and profitability.

U.S. class action lawsuits and other lawsuits have been filed against certain members of the Company’s industry seeking to reclassify independent contractors as employees for a variety of purposes, including workers’ compensation and health care coverage. In addition, companies that use lease purchase independent contractor programs, such as the Company, have been more susceptible to reclassification lawsuits, and several recent decisions have been made in favor of those seeking to classify independent contractor truck drivers as employees. U.S. taxing and other regulatory authorities and courts apply a variety of standards in their determination of independent contractor status. If the independent contractors with whom the Company contracts

36

Management’s Discussion and Analysis

are determined to be employees, the Company would incur additional exposure under U.S. federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings, and the Company’s business, financial condition and results of operations could be materially adversely affected. The Company has settled certain class action cases in Massachusetts and California in the past with independent contractors who alleged they were misclassified.

Acquisitions and Integration Risks. Historically, acquisitions have been a part of the Company’s growth strategy. The Company may not be able to successfully integrate acquisitions into the Company’s business, or may incur significant unexpected costs in doing so. Further, the process of integrating acquired businesses may be disruptive to the Company’s existing business and may cause an interruption or reduction of the Company’s business as a result of the following factors, among others:

•loss of drivers, key employees, customers or contracts;

•possible inconsistencies in or conflicts between standards, controls, procedures and policies among the combined companies and the need to implement company-wide financial, accounting, information technology and other systems;

•failure to maintain or improve the safety or quality of services that have historically been provided;

•inability to retain, integrate, hire or recruit qualified employees;

•unanticipated environmental or other liabilities;

•risks of entering new markets or business offerings in which we have had no or only limited prior experience;

•failure to coordinate geographically dispersed organizations; and

•the diversion of management’s attention from the Company’s day-to-day business as a result of the need to manage any disruptions and difficulties and the need to add management resources to do so.

Given the nature and size of UPS Freight, as well as the structure of the acquisition as a carveout from UPS, the acquisition of UPS Freight presents the following risks, in addition to risks noted elsewhere in these risk factors:

•a large portion of the business of UPS Freight prior to the acquisition was with affiliates of UPS. While there are transportation service agreements in effect with such affiliates of UPS, such affiliates may decide to reduce or eliminate business with the Company in the future and we have limited contractual protections to prevent the loss of such business;

•some of the information and operating systems of UPS Freight were integrated with UPS prior to the acquisition. The Company is in the process of transitioning such systems and could experience disruptions during the transition or difficulty or delay in building its systems and personnel to operate them;

•the Company had limited experience in the U.S. LTL market prior to the acquisition and we may be unsuccessful in integrating UPS Freight and operating it profitably;

•given the size and complexity of the acquired U.S. LTL operations of UPS Freight, management’s attention may be diverted from other areas of the Company; and

•the Company acquired a substantial number of unionized U.S. employees in the acquisition and unionized employees present significant risks.

Anticipated cost savings, synergies, revenue enhancements or other benefits from any acquisitions that the Company undertakes may not materialize in the expected timeframe or at all. The Company’s estimated cost savings, synergies, revenue enhancements and other benefits from acquisitions are subject to a number of assumptions about the timing, execution and costs associated with realizing such synergies. Such assumptions are inherently uncertain and are subject to a wide variety of significant business, economic and competition risks. There can be no assurance that such assumptions will turn out to be correct and, as a result, the amount of cost savings, synergies, revenue enhancements and other benefits the Company actually realizes and/or the timing of such realization may differ significantly (and may be significantly lower) from the ones the Company estimated, and the Company may incur significant costs in reaching the estimated cost savings, synergies, revenue enhancements or other benefits. Further, management of acquired operations through a decentralized approach may create inefficiencies or inconsistencies.

Many of the Company’s recent acquisitions have involved the purchase of stock of existing companies. These acquisitions, as well as acquisitions of substantially all of the assets of a company, may expose the Company to liability for actions taken by an acquired business and its management before the Company’s acquisition. The due diligence the Company conducts in connection with an acquisition and any contractual guarantees or indemnities that the Company receives from the sellers of acquired companies may not be sufficient to protect the Company from, or compensate the Company for, actual liabilities. The representations made by the sellers expire at varying periods after the closing. A material liability associated with an acquisition, especially where there is no right to indemnification, could adversely affect the Company’s results of operations, financial condition and liquidity.

The Company continues to review acquisition and investment opportunities in order to acquire companies and assets that meet the Company’s investment criteria, some of which may be significant. Depending on the number of acquisitions and investments and funding requirements, the Company may need to raise substantial additional capital and increase the Company’s indebtedness. Instability or disruptions in the capital markets, including credit markets, or the deterioration of the Company’s financial condition due to internal or external factors, could restrict or prohibit access to the capital markets and could also increase the Company’s cost of capital. To the extent the Company raises additional capital through the sale of equity, equity-linked or convertible

37

Management’s Discussion and Analysis

debt securities, the issuance of such securities could result in dilution to the Company’s existing shareholders. If the Company raises additional funds through the issuance of debt securities, the terms of such debt could impose additional restrictions and costs on the Company’s operations. Additional capital, if required, may not be available on acceptable terms or at all. If the Company is unable to obtain additional capital at a reasonable cost, the Company may be required to forego potential acquisitions, which could impair the execution of the Company’s growth strategy.

The Company routinely evaluates its operations and considers opportunities to divest certain of its assets. In addition, the Company faces competition for acquisition opportunities. This external competition may hinder the Company’s ability to identify and/or consummate future acquisitions successfully. There is also a risk of impairment of acquired goodwill and intangible assets. This risk of impairment to goodwill and intangible assets exists because the assumptions used in the initial valuation, such as interest rates or forecasted cash flows, may change when testing for impairment is required.

There is no assurance that the Company will be successful in identifying, negotiating, consummating or integrating any future acquisitions. If the Company does not make any future acquisitions, or divests certain of its operations, the Company’s growth rate could be materially and adversely affected. Any future acquisitions the Company does undertake could involve the dilutive issuance of equity securities or the incurring of additional indebtedness.

Growth. There is no assurance that in the future, the Company’s business will grow substantially or without volatility, nor is there any assurance that the Company will be able to effectively adapt its management, administrative and operational systems to respond to any future growth. Furthermore, there is no assurance that the Company’s operating margins will not be adversely affected by future changes in and expansion of its business or by changes in economic conditions or that it will be able to sustain or improve its profitability in the future.

Environmental Matters. The Company uses storage tanks at certain of its Canadian and U.S. transportation terminals. Canadian and U.S. laws and regulations generally impose potential liability on the present and former owners or occupants or custodians of properties on which contamination has occurred, as well as on parties who arranged for the disposal of waste at such properties. Although the Company is not aware of any contamination which, if remediation or clean-up were required, would have a material adverse effect on it, certain of the Company’s current or former facilities have been in operation for many years and over such time, the Company or the prior owners, operators or custodians of the properties may have generated and disposed of wastes which are or may be considered hazardous. Liability under certain of these laws and regulations may be imposed on a joint and several basis and without regard to whether the Company knew of, or was responsible for, the presence or disposal of these materials or whether the activities giving rise to the contamination was legal when it occurred. In addition, the presence of those substances, or the failure to properly dispose of or remove those substances, may adversely affect the Company’s ability to sell or rent that property. If the Company incurs liability under these laws and regulations and if it cannot identify other parties which it can compel to contribute to its expenses and who are financially able to do so, it could have a material adverse effect on the Company’s financial condition and results of operations. There can be no assurance that the Company will not be required at some future date to incur significant costs or liabilities pursuant to environmental laws, or that the Company’s operations, business or assets will not be materially affected by current or future environmental laws.

The Company’s transportation operations and its properties are subject to extensive and frequently-changing federal, provincial, state, municipal and local environmental laws, regulations and requirements in Canada, the United States and Mexico relating to, among other things, air emissions, the management of contaminants, including hazardous substances and other materials (including the generation, handling, storage, transportation and disposal thereof), discharges and the remediation of environmental impacts (such as the contamination of soil and water, including ground water). A risk of environmental liabilities is inherent in transportation operations, historic activities associated with such operations and the ownership, management and control of real estate.

Environmental laws may authorize, among other things, federal, provincial, state and local environmental regulatory agencies to issue orders, bring administrative or judicial actions for violations of environmental laws and regulations or to revoke or deny the renewal of a permit. Potential penalties for such violations may include, among other things, civil and criminal monetary penalties, imprisonment, permit suspension or revocation and injunctive relief. These agencies may also, among other things, revoke or deny renewal of the Company’s operating permits, franchises or licenses for violations or alleged violations of environmental laws or regulations and impose environmental assessment, removal of contamination, follow up or control procedures.

Environmental Contamination. The Company could be subject to orders and other legal actions and procedures brought by governmental or private parties in connection with environmental contamination, emissions or discharges. If the Company is involved in a spill or other accident involving hazardous substances, if there are releases of hazardous substances the Company transports, if soil or groundwater contamination is found at the Company’s current or former facilities or results from the Company’s operations, or if the Company is found to be in violation of applicable laws or regulations, the Company could be subject to cleanup costs and liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on the Company’s business and operating results.

Key Personnel. The future success of the Company will be based in large part on the quality of the Company’s management and key personnel. The Company’s management and key personal possess valuable knowledge about the transportation and logistics industry and their knowledge of and relationships with the Company’s key customers and vendors would be difficult to replace. The loss of key personnel could have a negative effect on the

38

Management’s Discussion and Analysis

Company. There can be no assurance that the Company will be able to retain its current key personnel or, in the event of their departure, to develop or attract new personnel of equal quality.

Dependence on Third Parties. Certain portions of the Company’s business are dependent upon the services of third-party capacity providers, including other transportation companies. For that portion of the Company’s business, the Company does not own or control the transportation assets that deliver the customers’ freight, and the Company does not employ the people directly involved in delivering the freight. This reliance could cause delays in reporting certain events, including recognizing revenue and claims. These third-party providers seek other freight opportunities and may require increased compensation in times of improved freight demand or tight trucking capacity. The Company’s inability to secure the services of these third parties could significantly limit the Company’s ability to serve its customers on competitive terms. Additionally, if the Company is unable to secure sufficient equipment or other transportation services to meet the Company’s commitments to its customers or provide the Company’s services on competitive terms, the Company’s operating results could be materially and adversely affected. The Company’s ability to secure sufficient equipment or other transportation services is affected by many risks beyond the Company’s control, including equipment shortages in the transportation industry, particularly among contracted carriers, interruptions in service due to labor disputes, changes in regulations impacting transportation and changes in transportation rates.

Loan Default. The agreements governing the Company’s indebtedness, including the Credit Facility and the Term Loan, contain certain restrictions and other covenants relating to, among other things, funded debt, distributions, liens, investments, acquisitions and dispositions outside the ordinary course of business and affiliate transactions. If the Company fails to comply with any of its financing arrangement covenants, restrictions and requirements, the Company could be in default under the relevant agreement, which could cause cross-defaults under other financing arrangements. In the event of any such default, if the Company failed to obtain replacement financing or amendments to or waivers under the applicable financing arrangement, the Company may be unable to pay dividends to its shareholders, and its lenders could cease making further advances, declare the Company’s debt to be immediately due and payable, fail to renew letters of credit, impose significant restrictions and requirements on the Company’s operations, institute foreclosure procedures against their collateral, or impose significant fees and transaction costs. If debt acceleration occurs, economic conditions may make it difficult or expensive to refinance the accelerated debt or the Company may have to issue equity securities, which would dilute share ownership. Even if new financing is made available to the Company, credit may not be available to the Company on acceptable terms. A default under the Company’s financing arrangements could result in a materially adverse effect on its liquidity, financial condition and results of operations. As at the date hereof, the Company is in compliance with all of its debt covenants and obligations.

Credit Facilities. The Company has significant ongoing capital requirements that could affect the Company’s profitability if the Company is unable to generate sufficient cash from operations and/or obtain financing on favorable terms. The trucking industry and the Company’s trucking operations are capital intensive, and require significant capital expenditures annually. The amount and timing of such capital expenditures depend on various factors, including anticipated freight demand and the price and availability of assets. If anticipated demand differs materially from actual usage, the Company’s trucking operations may have too many or too few assets. Moreover, resource requirements vary based on customer demand, which may be subject to seasonal or general economic conditions. During periods of decreased customer demand, the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open market or turn in equipment under certain equipment leases in order to right size its fleet. This could cause the Company to incur losses on such sales or require payments in connection with such turn ins, particularly during times of a softer used equipment market, either of which could have a materially adverse effect on the Company’s profitability.

The Company’s indebtedness may increase from time to time in the future for various reasons, including fluctuations in results of operations, capital expenditures and potential acquisitions. The agreements governing the Company’s indebtedness, including the Credit Facility and the Term Loan, mature on various dates, ranging from 2023 to 2036. There can be no assurance that such agreements governing the Company’s indebtedness will be renewed or refinanced, or if renewed or refinanced, that the renewal or refinancing will occur on equally favorable terms to the Company. The Company’s ability to pay dividends to shareholders and ability to purchase new revenue equipment may be adversely affected if the Company is not able to renew the Credit Facility or the Term Loan or arrange refinancing of any indebtedness, or if such renewal or refinancing, as the case may be, occurs on terms materially less favorable to the Company than at present. If the Company is unable to generate sufficient cash flow from operations and obtain financing on terms favorable to the Company in the future, the Company may have to limit the Company’s fleet size, enter into less favorable financing arrangements or operate the Company’s revenue equipment for longer periods, any of which may have a material adverse effect on the Company’s operations.

Increased prices for new revenue equipment, design changes of new engines, decreased availability of new revenue equipment and future use of autonomous trucks could have a material adverse effect on the Company’s business, financial condition, operations, and profitability.

The Company is subject to risk with respect to higher prices for new equipment for its trucking operations. The Company has experienced an increase in prices for new trucks in recent years, and the resale value of the trucks has not increased to the same extent. Prices have increased and may continue to increase, due to, among other reasons, (i) increases in commodity prices; (ii) U.S. government regulations applicable to newly-manufactured trucks, trailers and diesel engines; (iii) the pricing discretion of equipment manufacturers; and (iv) component and supply chain issues that limit availability of new equipment and increase prices. Increased regulation has increased the cost of the Company’s new trucks and could impair equipment productivity, in

39

Management’s Discussion and Analysis

some cases, resulting in lower fuel mileage, and increasing the Company’s operating expenses. Further regulations with stricter emissions and efficiency requirements have been proposed that would further increase the Company’s costs and impair equipment productivity. These adverse effects, combined with the uncertainty as to the reliability of the vehicles equipped with the newly designed diesel engines and the residual values realized from the disposition of these vehicles could increase the Company’s costs or otherwise adversely affect the Company’s business or operations as the regulations become effective. Over the past several years, some manufacturers have significantly increased new equipment prices, in part to meet new engine design and operations requirements. Furthermore, future use of autonomous trucks could increase the price of new trucks and decrease the value of used non-autonomous trucks. The Company’s business could be harmed if it is unable to continue to obtain an adequate supply of new trucks and trailers for these or other reasons. As a result, the Company expects to continue to pay increased prices for equipment and incur additional expenses for the foreseeable future.

Truck and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts. Currently, truck and trailer manufacturers are experiencing significant shortages of semiconductor chips and other component parts and supplies, including steel, forcing many manufacturers to curtail or suspend their production, which has led to a lower supply of trucks and trailers, higher prices, and lengthened trade cycles, which could have a material adverse effect on the Company’s business, financial condition, and results of operations, particularly the Company’s maintenance expense and driver retention.

The Company has certain revenue equipment leases and financing arrangements with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. If the Company does not purchase new equipment that triggers the trade-back obligation, or the equipment manufacturers do not pay the contracted value at the end of the lease term, the Company could be exposed to losses equal to the excess of the balloon payment owed to the lease or finance company over the proceeds from selling the equipment on the open market.

The Company has trade-in and repurchase commitments that specify, among other things, what its primary equipment vendors will pay it for disposal of a certain portion of the Company’s revenue equipment. The prices the Company expects to receive under these arrangements may be higher than the prices it would receive in the open market. The Company may suffer a financial loss upon disposition of its equipment if these vendors refuse or are unable to meet their financial obligations under these agreements, it does not enter into definitive agreements that reflect favorable equipment replacement or trade-in terms, it fails to or is unable to enter into similar arrangements in the future, or it does not purchase the number of new replacement units from the vendors required for such trade-ins.

Used equipment prices are subject to substantial fluctuations based on freight demand, supply of used trucks, availability of financing, presence of buyers for export and commodity prices for scrap metal. These and any impacts of a depressed market for used equipment could require the Company to dispose of its revenue equipment below the carrying value. This leads to losses on disposal or impairments of revenue equipment, when not otherwise protected by residual value arrangements. Deteriorations of resale prices or trades at depressed values could cause losses on disposal or impairment charges in future periods.

Difficulty in obtaining goods and services from the Company’s vendors and suppliers could adversely affect its business.

The Company is dependent upon its vendors and suppliers for certain products and materials. The Company believes that it has positive vendor and supplier relationships and it is generally able to obtain acceptable pricing and other terms from such parties. If the Company fails to maintain positive relationships with its vendors and suppliers, or if its vendors and suppliers are unable to provide the products and materials it needs or undergo financial hardship, the Company could experience difficulty in obtaining needed goods and services because of production interruptions, limited material availability or other reasons. As a consequence, the Company’s business and operations could be adversely affected.

Customer and Credit Risks. The Company provides services to clients primarily in Canada, the United States and Mexico. The concentration of credit risk to which the Company is exposed is limited due to the significant number of customers that make up its client base and their distribution across different geographic areas. Furthermore, no client accounted for more than 5% of the Company’s total accounts receivable for the year ended December 31, 2022. Generally, the Company does not have long-term contracts with its major customers. Accordingly, in response to economic conditions, supply and demand factors in the industry, the Company’s performance, the Company’s customers’ internal initiatives or other factors, the Company’s customers may reduce or eliminate their use of the Company’s services, or may threaten to do so in order to gain pricing and other concessions from the Company.

Economic conditions and capital markets may adversely affect the Company’s customers and their ability to remain solvent. The customers’ financial difficulties can negatively impact the Company’s results of operations and financial condition, especially if those customers were to delay or default in payment to the Company. For certain customers, the Company has entered into multi-year contracts, and the rates the Company charges may not remain advantageous.

Availability of Capital. If the economic and/or the credit markets weaken, or the Company is unable to enter into acceptable financing arrangements to acquire revenue equipment, make investments and fund working capital on terms favorable to it, the Company’s business, financial results and results of

40

Management’s Discussion and Analysis

operations could be materially and adversely affected. The Company may need to incur additional indebtedness, reduce dividends or sell additional shares in order to accommodate these items. A decline in the credit or equity markets and any increase in volatility could make it more difficult for the Company to obtain financing and may lead to an adverse impact on the Company’s profitability and operations.

Information Systems. The Company depends heavily on the proper functioning, availability and security of the Company’s information and communication systems, including financial reporting and operating systems, in operating the Company’s business. The Company’s operating system is critical to understanding customer demands, accepting and planning loads, dispatching equipment and drivers and billing and collecting for the Company’s services. The Company’s financial reporting system is critical to producing accurate and timely financial statements and analyzing business information to help the Company manage its business effectively. The Company receives and transmits confidential data with and among its customers, drivers, vendors, employees and service providers in the normal course of business.

The Company’s operations and those of its technology and communications service providers are vulnerable to interruption by natural disasters, such as fires, storms, and floods, which may increase in frequency and severity due to climate change, as well as other events beyond the Company’s control, including cybersecurity breaches and threats, such as hackers, malware and viruses, power loss, telecommunications failure, terrorist attacks and Internet failures. The Company’s systems are also vulnerable to unauthorized access and viewing, misappropriation, altering or deleting of information, including customer, driver, vendor, employee and service provider information and its proprietary business information. If any of the Company’s critical information systems fail, are breached or become otherwise unavailable, the Company’s ability to manage its fleet efficiently, to respond to customers’ requests effectively, to maintain billing and other records reliably, to maintain the confidentiality of the Company’s data and to bill for services and prepare financial statements accurately or in a timely manner would be challenged. Any significant system failure, upgrade complication, cybersecurity breach or other system disruption could interrupt or delay the Company’s operations, damage its reputation, cause the Company to lose customers, cause the Company to incur costs to repair its systems, pay fines or in respect of litigation or impact the Company’s ability to manage its operations and report its financial performance, any of which could have a material adverse effect on the Company’s business.

Litigation. The Company’s business is subject to the risk of litigation by employees, customers, vendors, government agencies, shareholders and other parties. The outcome of litigation is difficult to assess or quantify, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may also be significant. Not all claims are covered by the Company’s insurance, and there can be no assurance that the Company’s coverage limits will be adequate to cover all amounts in dispute. In the United States, where the Company has growing operations, many trucking companies have been subject to class-action lawsuits alleging violations of various federal and state wage laws regarding, among other things, employee classification, employee meal breaks, rest periods, overtime eligibility, and failure to pay for all hours worked. A number of these lawsuits have resulted in the payment of substantial settlements or damages by the defendants. The Company may at some future date be subject to such a class-action lawsuit. In addition, the Company may be subject, and has been subject in the past, to litigation resulting from trucking accidents. The number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other motorists. To the extent the Company experiences claims that are uninsured, exceed the Company’s coverage limits, involve significant aggregate use of the Company’s self-insured retention amounts or cause increases in future funded premiums, the resulting expenses could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Remote Work. The Company has, and will continue to have, a portion of its employees that work from home full-time or under flexible work arrangements, which exposes the Company to additional cybersecurity risks. Employees working remotely may expose the Company to cybersecurity risks through: (i) unauthorized access to sensitive information as a result of increased remote access, including employees' use of Company-owned and personal devices and videoconferencing functions and applications to remotely handle, access, discuss or transmit confidential information, (ii) increased exposure to phishing and other scams as cybercriminals may, among other things, install malicious software on the Company's systems and equipment and access sensitive information, and (iii) violation of international, federal, or state-specific privacy laws. The Company believes that the increased number of employees working remotely has incrementally increased the cyber risk profile of the Company, but the Company is unable to predict the extent or impacts of those risks at this time. A significant disruption of our information technology systems, unauthorized access or a loss of confidential information, or legal claims resulting from a privacy law could have a material adverse effect on the Company.

Internal Control. Beginning with the year ended December 31, 2021, the Company is required, pursuant to Section 404 of the U.S. Sarbanes-Oxley Act, to furnish a report by management on the effectiveness of its internal control over financial reporting. In addition, the Company’s independent registered public accounting firm must report on its evaluation of the Company’s internal control over financial reporting. The Company reported material weaknesses as of December 31, 2021 which were remediated in 2022 such that the 2022 evaluation of internal controls over financial reporting were effective. If the Company fails to comply with Section 404 of the Sarbanes-Oxley Act and does not maintain effective internal controls in the future, it could result in a material misstatement of the Company’s financial statements, which could cause investors to lose confidence in the Company’s financial statements and cause the trading price of the Common Shares to decline.

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Management’s Discussion and Analysis

Material Transactions. The Company has acquired numerous companies pursuant to its acquisition strategy and, in addition, has sold business units, including the sale in February 2016 of its then-Waste Management segment for CAD $800 million. The Company buys and sells business units in the normal course of its business. Accordingly, at any given time, the Company may consider, or be in the process of negotiating, a number of potential acquisitions and dispositions, some of which may be material in size. In connection with such potential transactions, the Company regularly enters into non-disclosure or confidentiality agreements, indicative term sheets, non-binding letters of intent and other similar agreements with potential sellers and buyers, and conducts extensive due diligence as applicable. These potential transactions may relate to some or all of the Company’s four reportable segments, that is, TL, Logistics, LTL, and Package and Courier. The Company’s active acquisition and disposition strategy requires a significant amount of management time and resources. Although the Company complies with its disclosure obligations under applicable securities laws, the announcement of any material transaction by the Company (or rumors thereof, even if unfounded) could result in volatility in the market price and trading volume of the Common Shares. Further, the Company cannot predict the reaction of the market, or of the Company’s stakeholders, customers or competitors, to the announcement of any such material transaction or to rumors thereof.

Dividends and Share Repurchases. The payment of future dividends and the amount thereof is uncertain and is at the sole discretion of the Board of Directors of the Company and is considered each quarter. The payment of dividends is dependent upon, among other things, operating cash flow generated by the Company, its financial requirements for operations, the execution of its growth strategy and the satisfaction of solvency tests imposed by the Canada Business Corporations Act for the declaration and payment of dividends. Similarly, any future repurchase of shares by the Company is at the sole discretion of the Board of Directors and is dependent on the factors described above. Any future repurchase of shares by the Company is uncertain.

Attention on Environmental, Social and Governance (ESG) Matters. Companies are facing increasing attention from stakeholders relating to ESG matters, including environmental stewardship, social responsibility, and diversity and inclusion. Organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings may lead to negative sentiment toward the Company, which could have a negative impact on the Company's stock price.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the 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 establishing the fair value of intangible assets related to business combinations, determining estimates and assumptions related to impairment tests for goodwill, determining estimates and assumptions related to the accrued benefit obligation, and determining estimates and assumptions related to the evaluation of provisions for self-insurance and litigations. These estimates and assumptions are based on management’s best estimates and judgments. Key drivers in critical estimates are as follows:

Fair value of intangible assets related to business combinations

•Projected future cash flows

•Acquisition specific discount rate

•Attrition rate established from historical trends

Impairment tests for goodwill

•Discount rates

•Forecasted revenue growth, operating margin, EBITDA margin as well as capital expenditures

•Comparable public company EBITDA multiples

Accrued benefit obligation

•Discount rates

•Salary growth

•Mortality tables

Self-Insurance and litigations

•Historical claim experience, severity factors affecting the amounts ultimately paid, and current and expected levels of cost per claims

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Management’s Discussion and Analysis

•Third party evaluations

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.

CHANGES IN ACCOUNTING POLICIES

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, 2023, and have been applied in preparing the unaudited condensed consolidated interim financial statements:

Definition of Accounting Estimates (Amendments to IAS 8)

These new standards did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

To be adopted in future periods

The following new standards and amendments to standards are not yet effective for the year ended December 31, 2023, and have not been applied in preparing the unaudited condensed consolidated interim financial statements:

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

Lease Liability in a Sales and Leaseback (Amendments to IFRS 16)

Further information can be found in note 3 of the June 30, 2023, unaudited condensed consolidated interim financial statements.

CONTROLS AND PROCEDURES

In compliance with the provisions of Canadian Securities Administrators’ National Instrument 52-109 and the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company has filed certificates signed by the President and Chief Executive Officer (“CEO”) and by the Chief Financial Officer (“CFO”) that, among other things, report on:

•their responsibility for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Company; and

•the design of disclosure controls and procedures and the design of internal controls over financial reporting.

Disclosure controls and procedures

The President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), have designed disclosure controls and procedures (as defined in National Instrument 52-109 and Rule 13a-15(e) and 15d-15(e) under the Exchange Act), or have caused them to be designed under their supervision, in order to provide reasonable assurance that:

•material information relating to the Company is made known to the CEO and CFO by others; and

•information required to be disclosed by the Company in its filings, under applicable securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.

As at June 30, 2023, an evaluation was carried out under the supervision of the CEO and CFO, of the design of the Company’s disclosure controls and procedures. Based on this evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures were appropriately designed as at June 30, 2023.

Management’s Annual Report on Internal Controls over Financial Reporting

The CEO and CFO have also designed internal control over financial reporting (as defined in National Instrument 52-109 and Rules 13a-15(f) and 15d-15(f) under the Exchange Act), or have caused them to be designed under their supervision, in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

As at December 31, 2022, an evaluation was carried out, under the supervision of the CEO and the CFO, of the effectiveness of the Company’s internal control over financial reporting. Based on this evaluation, the CEO and the CFO concluded that the Company’s internal control over financial reporting were appropriately designed and operating effectively as at December 31, 2022. The control framework used to design the Company’s internal controls over financial reporting is based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013 framework).

43

Management’s Discussion and Analysis

The effectiveness of internal controls over financial reporting as of December 31, 2022, has been audited by KPMG LLP, the Company’s registered public accounting firm that audited the consolidated financial statements and is included with the Company’s consolidated financial statements. KPMG LLP has concluded the Company has maintained effective internal control over financial reporting as of December 31, 2022.

Limitation on scope of design

As permitted under the relevant securities rules, the Company had previously limited the scope of its evaluation of disclosure controls and procedures and internal control over financial reporting to exclude controls, policies and procedures of UPS Freight (now TForce Freight) as it was acquired not more than 365 days before the end of the comparative financial period to which the CEO and CFO certificates relate. Beginning May 1, 2022, there is no longer a scope limitation with regards to TForce Freight as the it has been acquired over 365 days ago.

Changes in internal controls over financial reporting

No changes were made to the Company’s internal controls over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

44

EX-99.3

Exhibit 99.3

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the second quarter ended

June 30, 2023

CONTENTS

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	7

│1

TFI International Inc. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

(in thousands of U.S. dollars)		As at			As at
	Note	June 30, 2023			December 31, 2022
Assets
Cash and cash equivalents			178,134			147,117
Trade and other receivables			897,979			1,030,726
Inventoried supplies			23,653			24,181
Current taxes recoverable			30,016			12,788
Prepaid expenses			61,465			38,501
Assets held for sale			9,045			10,250
Current assets			1,200,292			1,263,563
Property and equipment	7		2,191,807			2,131,955
Right-of-use assets	8		368,542			381,640
Intangible assets	9		1,675,392			1,592,110
Investments	10		18,471			85,964
Employee benefits	13		-			4,359
Other assets			18,063			19,192
Deferred tax assets			18,854			27,047
Non-current assets			4,291,129			4,242,267
Total assets			5,491,421			5,505,830
Liabilities
Trade and other payables			639,336			708,768
Current taxes payable			2,712			41,714
Provisions	14		44,495			43,903
Other financial liabilities			18,587			19,275
Long-term debt	11		30,565			37,087
Lease liabilities	12		118,195			115,934
Current liabilities			853,890			966,681
Long-term debt	11		1,306,237			1,278,670
Lease liabilities	12		282,085			297,105
Employee benefits	13		25,805			-
Provisions	14		101,359			131,736
Other financial liabilities			12,800			382
Deferred tax liabilities			362,510			368,186
Non-current liabilities			2,090,796			2,076,079
Total liabilities			2,944,686			3,042,760
Equity
Share capital	15		1,118,427			1,089,229
Contributed surplus	15, 17		29,380			41,491
Accumulated other comprehensive loss			(198,110	)		(233,321	)
Retained earnings			1,597,038			1,565,671
Total equity			2,546,735			2,463,070
Contingencies, letters of credit and other commitments	21
Subsequent events	22
Total liabilities and equity			5,491,421			5,505,830

The notes on pages 7 to 24 are an integral part of these condensed consolidated interim financial statements.

│2

TFI International Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands of U.S. dollars, except per share amounts)		Three months			Three months			Six months			Six months
		ended			ended			ended			ended
	Note	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Revenue			1,549,451			1,989,450			3,109,878			3,883,298
Fuel surcharge			241,815			432,867			531,565			730,538
Total revenue			1,791,266			2,422,317			3,641,443			4,613,836
Materials and services expenses	18		897,705			1,259,124			1,837,985			2,399,532
Personnel expenses			492,360			618,770			1,034,632			1,243,605
Other operating expenses			104,752			126,822			217,190			243,027
Depreciation of property and equipment	7		62,348			66,378			121,395			130,825
Depreciation of right-of-use assets	8		31,954			31,297			63,389			62,821
Amortization of intangible assets	9		13,872			14,130			27,445			28,391
Gain on sale of rolling stock and equipment			(3,582	)		(24,344	)		(11,794	)		(44,170	)
(Gain) loss on derecognition of right-of-use assets			(260	)		45			(1,067	)		(12	)
Loss (gain) on sale of land and buildings			40			1			40			(43	)
Gain on sale of assets held for sale			(340	)		(60,876	)		(6,591	)		(60,876	)
Total operating expenses			1,598,849			2,031,347			3,282,624			4,003,100
Operating income			192,417			390,970			358,819			610,736
Finance (income) costs
Finance income	19		(1,648	)		(165	)		(3,358	)		(83	)
Finance costs	19		20,378			21,702			39,217			41,809
Net finance costs			18,730			21,537			35,859			41,726
Income before income tax			173,687			369,433			322,960			569,010
Income tax expense	20		45,453			92,608			82,808			144,462
Net income			128,234			276,825			240,152			424,548
Earnings per share
Basic earnings per share	16		1.49			3.05			2.78			4.65
Diluted earnings per share	16		1.47			3.00			2.74			4.56

The notes on pages 7 to 24 are an integral part of these condensed consolidated interim financial statements.

│3

TFI International Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands of U.S. dollars)	Three months			Three months			Six months		Six months
	ended			ended			ended		ended
	June 30, 2023			June 30, 2022			June 30, 2023		June 30, 2022
Net income		128,234			276,825			240,152		424,548
Other comprehensive income (loss)
Items that may be reclassified to income or loss in future periods:
Foreign currency translation differences		7,640			597			8,106		307
Net investment hedge, net of tax		23,822			(27,776	)		26,866		(20,166	)
Items directly reclassified to retained earnings:
Unrealized (loss) gain on investments in equity securities
measured at fair value through OCI, net of tax		(5,809	)		(2,891	)		13,562		(9,045	)
Other comprehensive income (loss), net of tax		25,653			(30,070	)		48,534		(28,904	)
Total comprehensive income		153,887			246,755			288,686		395,644

The notes on pages 7 to 24 are an integral part of these condensed consolidated interim financial statements.

│4

TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
	PERIODS ENDED June 30, 2023 AND 2022 (UNAUDITED)

(In thousands of U.S. dollars)											Accumulated			Accumulated
								Accumulated			foreign			unrealized						Total
								unrealized			currency			gain (loss)						equity
								loss on			translation			on invest-						attributable
								employee			differences			ments in			Retained			to owners
		Share			Contributed			benefit			& net invest-			equity			earnings			of the
	Note	capital			surplus			plans			ment hedge			securities			(deficit)			Company
Balance as at December 31, 2022			1,089,229			41,491			-			(239,120	)		5,799			1,565,671			2,463,070
Net income			-			-			-			-			-			240,152			240,152
Other comprehensive income, net of tax			-			-			-			34,972			13,562			-			48,534
Realized (loss) gain on equity securities			-			-			-			-			(13,323	)		13,323			-
Total comprehensive income			-			-			-			34,972			239			253,475			288,686
Share-based payment transactions, net of tax	17		-			11,949			-			-			-			-			11,949
Stock options exercised, net of tax	15, 17		12,078			(3,231	)		-			-			-			-			8,847
Dividends to owners of the Company	15		-			-			-			-			-			(60,401	)		(60,401	)
Repurchase of own shares	15		(12,065	)		-			-			-			-			(106,770	)		(118,835	)
Net settlement of restricted share units
and performance share units, net of tax	15, 17		29,185			(20,829	)		-			-			-			(54,937	)		(46,581	)
Total transactions with owners, recorded directly in equity			29,198			(12,111	)		-			-			-			(222,108	)		(205,021	)
Balance as at June 30, 2023			1,118,427			29,380			-			(204,148	)		6,038			1,597,038			2,546,735
Balance as at December 31, 2021			1,133,181			39,150			(292	)		(156,926	)		12,553			1,282,689			2,310,355
Net income			-			-			-			-			-			424,548			424,548
Other comprehensive income (loss), net of tax			-			-			-			(19,859	)		(9,045	)		-			(28,904	)
Realized (loss) gain on equity securities			-			-			-			-			(447	)		447			-
Total comprehensive income (loss)			-			-			-			(19,859	)		(9,492	)		424,995			395,644
Share-based payment transactions, net of tax	17		-			3,980			-			-			-			-			3,980
Stock options exercised, net of tax	15, 17		9,085			(2,442	)		-			-			-			-			6,643
Dividends to owners of the Company	15		-			-			-			-			-			(48,787	)		(48,787	)
Repurchase of own shares	15		(36,747	)		-			-			-			-			(248,979	)		(285,726	)
Net settlement of restricted share units, net of tax	15, 17		1,784			(4,554	)		-			-			-			(1,035	)		(3,805	)
Total transactions with owners, recorded directly in equity			(25,878	)		(3,016	)		-			-			-			(298,801	)		(327,695	)
Balance as at June 30, 2022			1,107,303			36,134			(292	)		(176,785	)		3,061			1,408,883			2,378,304

The notes on pages 7 to 24 are an integral part of these condensed consolidated interim financial statements.

│5

TFI International Inc.	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(UNAUDITED)

(In thousands of U.S. dollars)			Three months			Three months			Six months			Six months
			ended			ended			ended			ended
	Note		June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Cash flows from operating activities
Net income				128,234			276,825			240,152			424,548
Adjustments for:
Depreciation of property and equipment		7		62,348			66,378			121,395			130,825
Depreciation of right-of-use assets		8		31,954			31,297			63,389			62,821
Amortization of intangible assets		9		13,872			14,130			27,445			28,391
Share-based payment transactions		17		3,306			3,659			6,649			7,686
Net finance costs		19		18,730			21,537			35,859			41,726
Income tax expense		20		45,453			92,608			82,808			144,462
Gain on sale of property and equipment				(3,542	)		(24,343	)		(11,754	)		(44,213	)
(Gain) loss on derecognition of right-of-use assets				(260	)		45			(1,067	)		(12	)
Gain on sale of assets held for sale				(340	)		(60,876	)		(6,591	)		(60,876	)
Employee benefits				12,591			8,682			30,175			14,362
Provisions, net of payments				(19,909	)		7,755			(27,862	)		17,409
Net change in non-cash operating working capital		6		(14	)		(87,062	)		50,823			(223,306	)
Interest paid				(17,561	)		(19,781	)		(33,519	)		(40,005	)
Income tax paid				(74,476	)		(83,029	)		(145,382	)		(118,302	)
Net cash from operating activities				200,386			247,825			432,520			385,516
Cash flows used in investing activities
Purchases of property and equipment		7		(84,152	)		(74,522	)		(160,400	)		(164,948	)
Proceeds from sale of property and equipment				19,465			44,071			44,180			87,986
Proceeds from sale of assets held for sale				2,380			91,928			17,486			91,928
Purchases of intangible assets		9		(655	)		(1,297	)		(1,645	)		(2,737	)
Proceeds from sale of intangible assets				-			-			-			250
Business combinations, net of cash acquired		5		(30,309	)		(34,030	)		(115,052	)		(56,265	)
Purchases of investments				(4,352	)		(45,261	)		(4,352	)		(72,844	)
Proceeds from sale of investments				85,728			4,490			89,212			4,490
Others				(453	)		(66	)		(609	)		607
Net cash used in investing activities				(12,348	)		(14,687	)		(131,180	)		(111,533	)
Cash flows used in financing activities
Net decrease in bank indebtedness				(1,089	)		(108	)		(1,229	)		(346	)
Proceeds from long-term debt		11		-			4,160			-			314,185
Repayment of long-term debt		11		(9,002	)		(11,616	)		(22,497	)		(348,955	)
Net increase in revolving facilities		11		36,789			36,695			36,789			150,725
Repayment of lease liabilities		12		(31,229	)		(30,598	)		(62,564	)		(61,225	)
Increase (decrease) of other financial liabilities				653			(90	)		(3,297	)		(681	)
Dividends paid				(30,637	)		(24,210	)		(60,956	)		(49,150	)
Repurchase of own shares		15		(112,839	)		(211,697	)		(118,835	)		(285,726	)
Proceeds from exercise of stock options		15		2,146			2,441			8,847			6,643
Share repurchase for settlement of restricted share
units and performance share units				(1,056	)		(3,781	)		(46,581	)		(3,805	)
Net cash used in financing activities				(146,264	)		(238,804	)		(270,323	)		(278,335	)
Net change in cash and cash equivalents				41,774			(5,666	)		31,017			(4,352	)
Cash and cash equivalents, beginning of period				136,360			20,606			147,117			19,292
Cash and cash equivalents, end of period				178,134			14,940			178,134			14,940

The notes on pages 7 to 24 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 JUNE 30 2023 AND 2022 – (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 and six months ended June 30, 2023 and 2022 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, until August 31, 2022, 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 July 31, 2023.

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’s consolidated interim financial statements are presented in U.S. dollars (“U.S. dollars” or “USD”).

The Company’s functional currency is the Canadian dollar (“CAD” or CDN$”). 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 identifiable assets and liabilities acquired in business combinations, income tax provisions, defined benefit obligation, the self-insurance and other provisions, and contingencies. These estimates and assumptions are based on management’s best estimates and judgments.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

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 2022 annual consolidated financial statements.

3.Significant accounting policies

The accounting policies described in the Group’s 2022 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, 2023 and have been applied in preparing these condensed consolidated interim financial statements.

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. 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 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 (the 2020 amendments), to clarify the classification of liabilities as current or non-current. On October 31, 2022, the IASB issued Non-current Liabilities with Covenants (Amendments to IAS 1) (the 2022 amendments), to improve the information a company provides about long-term debt with covenants. The 2020 amendments and the 2022 amendments (collectively “the Amendments”) are effective for annual periods beginning on or after January 1, 2024. Early adoption is permitted. A company that applies the 2020 amendments early is required to also apply the 2022 amendments.

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 exist at the end of the reporting period and have substance. The Amendments reconfirmed that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which a company must comply after the reporting date do not affect a liability’s classification at that date.

The Amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The Amendments state that:

•the settlement of a liability includes transferring a company’s own equity instruments to the counterparty; and

•when classifying liabilities as current or non-current a company can ignore only those conversion options that are recognized as equity.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

The adoption of the amendments is not expected to have a material impact.

Lease Liability in a Sale and Leaseback

On September 22, 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16). The amendments are effective for annual periods beginning on or after January 1, 2024. Early adoption is permitted. The amendment introduces a new accounting model which impacts how a seller-lessee accounts for variable lease payments that arise in a sale-and-leaseback transaction. The amendments clarify that on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising from a sale-and-leaseback transaction and after initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease liability such that it recognizes no gain or loss relating to the right of use it retains. The amendments need to be applied retrospectively, which require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since implementation of IFRS 16 in 2019. The adoption of the amendments is not expected to have a material impact.

4.Segment reporting

The Group operates within the transportation and logistics industry in the United States, Canada and, until August 31, 2022, 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 (a):	Pickup, consolidation, transport and delivery of smaller loads.
Truckload (b):	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 Less-Than-Truckload reporting segment represents the aggregation of the Canadian Less-Than-Truckload and U.S. Less-Than-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, amongst others, 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.

(b)Prior to August 31, 2022, the Truckload reporting segment represented 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, amongst others, 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. On August 31,2022, the Group sold CFI’s Truckload, Temp Control and Mexican non-asset logistics businesses, operating primarily in the U.S. Conventional Truckload operating segment. Subsequent to the sale, the remaining business operations in the Group’s U.S. Conventional Truckload operating segment were transferred to the Specialized Truckload operating segment. Because the transfer was amongst operating segments in the same reportable segment and the aggregation criteria continued to be met, there was no impact on the reportable segment results.

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 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.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

	Package		Less-
	and		Than-
	Courier		Truckload			Truckload			Logistics		Corporate			Eliminations			Total
Three months ended June 30, 2023
Revenue(1)		115,588		672,827			410,680			361,767		-			(11,411	)		1,549,451
Fuel surcharge(1)		26,651		130,537			69,099			17,705		-			(2,177	)		241,815
Total revenue(1)		142,239		803,364			479,779			379,472		-			(13,588	)		1,791,266
Operating income (loss)		27,104		80,672			66,183			32,893		(14,435	)		-			192,417
Selected items:
Depreciation and
amortization		6,301		42,656			48,735			10,352		130			-			108,174
Loss on sale of land
and buildings		-		(36	)		(4	)		-		-			-			(40	)
Gain on sale of
assets held for sale		-		308			32			-		-			-			340
Intangible assets		184,087		173,192			788,931			529,045		137			-			1,675,392
Total assets		350,551		2,260,987			1,836,752			782,469		260,662			-			5,491,421
Total liabilities		88,179		703,719			395,693			225,209		1,532,014			(128	)		2,944,686
Additions to property
and equipment		2,280		52,908			28,219			722		23			-			84,152
Three months ended June 30, 2022
Revenue(1)		125,082		870,176			556,894			453,701		-			(16,403	)		1,989,450
Fuel surcharge(1)		41,383		227,801			146,340			21,681		-			(4,338	)		432,867
Total revenue(1)		166,465		1,097,977			703,234			475,382		-			(20,741	)		2,422,317
Operating income (loss)		36,800		187,284			127,370			42,368		(2,852	)		-			390,970
Selected items:
Depreciation and
amortization		6,776		39,176			55,765			9,886		202			-			111,805
Loss on sale of land
and buildings		-		(1	)		-			-		-			-			(1	)
Gain on sale of
assets held for sale		-		54,640			6,236			-		-			-			60,876
Intangible assets		189,914		180,742			940,838			490,001		279			-			1,801,774
Total assets		378,020		2,419,851			2,360,822			790,298		131,318			-			6,080,309
Total liabilities		110,867		868,627			522,024			231,654		1,968,964			(131	)		3,702,005
Additions to property
and equipment		1,595		20,187			52,397			89		(31	)		-			74,237

(1) Includes intersegment revenue and intersegment fuel surcharge

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

	Package		Less-
	and		Than-
	Courier		Truckload			Truckload			Logistics		Corporate			Eliminations			Total
Six months ended June 30, 2023
Revenue(1)		228,148		1,363,688			824,805			717,018		-			(23,781	)		3,109,878
Fuel surcharge(1)		59,295		288,414			155,069			33,280		-			(4,493	)		531,565
Total revenue(1)		287,443		1,652,102			979,874			750,298		-			(28,274	)		3,641,443
Operating income (loss)		54,427		138,612			136,679			64,603		(35,502	)		-			358,819
Selected items:
Depreciation and
amortization		12,703		82,538			96,585			20,135		268			-			212,229
Loss on sale of
land and buildings		-		(36	)		(4	)		-		-			-			(40	)
Gain on sale of
assets held for sale		-		3,182			3,409			-		-			-			6,591
Intangible assets		184,087		173,192			788,931			529,045		137			-			1,675,392
Total assets		350,551		2,260,987			1,836,752			782,469		260,662			-			5,491,421
Total liabilities		88,179		703,719			395,693			225,209		1,532,014			(128	)		2,944,686
Additions to property
and equipment		5,693		108,944			43,404			895		148			-			159,084
Six months ended June 30, 2022
Revenue(1)		249,662		1,705,575			1,072,819			889,079		-			(33,837	)		3,883,298
Fuel surcharge(1)		69,638		392,512			240,089			35,723		-			(7,424	)		730,538
Total revenue(1)		319,300		2,098,087			1,312,908			924,802		-			(41,261	)		4,613,836
Operating income (loss)		62,885		282,054			198,398			77,250		(9,851	)		-			610,736
Selected items:
Depreciation and
amortization		13,630		76,678			111,993			19,329		407			-			222,037
Gain (loss) on sale of
land and buildings		-		(1	)		44			-		-			-			43
Gain on sale of
assets held for sale		-		54,640			6,236			-		-			-			60,876
Intangible assets		189,914		180,742			940,838			490,001		279			-			1,801,774
Total assets		378,020		2,419,851			2,360,822			790,298		131,318			-			6,080,309
Total liabilities		110,867		868,627			522,024			231,654		1,968,964			(131	)		3,702,005
Additions to property
and equipment		6,353		68,922			88,109			642		46			-			164,072

(1) Includes intersegment revenue and intersegment fuel surcharge

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

Geographical information

Revenue is attributed to geographical locations based on the origin of service location.

	Package		Less-
	and		Than-
	Courier		Truckload		Truckload		Logistics		Eliminations			Total
Three months ended June 30, 2023
Canada		142,239		146,170		278,946		66,990		(7,098	)		627,247
United States		-		657,194		200,833		312,482		(6,490	)		1,164,019
Total		142,239		803,364		479,779		379,472		(13,588	)		1,791,266
Three months ended June 30, 2022
Canada		166,465		183,843		321,625		67,470		(8,339	)		731,064
United States		-		914,134		381,609		400,946		(12,402	)		1,684,287
Mexico		-		-		-		6,966		-			6,966
Total		166,465		1,097,977		703,234		475,382		(20,741	)		2,422,317
Six months ended June 30, 2023
Canada		287,443		295,434		571,584		131,295		(15,405	)		1,270,351
United States		-		1,356,668		408,290		619,003		(12,869	)		2,371,092
Total		287,443		1,652,102		979,874		750,298		(28,274	)		3,641,443
Six months ended June 30, 2022
Canada		319,300		347,424		586,658		130,149		(17,836	)		1,365,695
United States		-		1,750,663		726,250		780,811		(23,425	)		3,234,299
Mexico		-		-		-		13,842		-			13,842
Total		319,300		2,098,087		1,312,908		924,802		(41,261	)		4,613,836

Segment assets are based on the geographical location of the assets.

	As at		As at
	June 30, 2023		December 31, 2022
Property and equipment, right-of-use assets and intangible assets
Canada		1,955,119		1,848,746
United States		2,280,622		2,256,959
		4,235,741		4,105,705

5.Business combinations

a)Business combinations

In line with the Group’s growth strategy, the Group acquired seven businesses during 2023, which were not considered to be material. These transactions were concluded in order to add density in the Group’s current network and further expand value-added services.

During the six months ended June 30, 2023, these non-material businesses, in aggregate, contributed revenue and net loss of $43.6 million and $2.0 million, respectively, since the acquisitions.

Had the Group acquired these non-material businesses on January 1, 2023, as per management’s best estimates, the revenue and net loss for these entities would have been $65.1 million and $0.4 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, 2023 and adjusted for interest, based on the purchase price and average borrowing rate of the Group, and income tax expense based on the effective tax rate.

During the six months ended June 30, 2023, $0.2 million of transaction costs (2022 – nil) have been expensed in other operating expenses in the consolidated statements of income in relation to the above-mentioned business acquisitions.

As of the reporting date, the Group had not yet completed the purchase price allocation over the identifiable net assets and goodwill of the 2023 acquisitions. Information to confirm the fair value of certain assets and liabilities still needs to be obtained for these acquisitions. As the Group obtains more information, the allocation will be completed.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

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		June 30, 2023
Cash and cash equivalents				8,998
Trade and other receivables				13,765
Inventoried supplies and prepaid expenses				1,385
Property and equipment		7		48,685
Right-of-use assets		8		5,524
Intangible assets		9		37,977
Other assets				154
Income tax receivable				80
Trade and other payables				(7,718	)
Other non-current liabilities				(44	)
Lease liabilities		12		(5,524	)
Deferred tax liabilities				(13,063	)
Total identifiable net assets				90,219
Total consideration transferred				138,319
Goodwill		9		48,100
Cash				124,050
Contingent consideration				14,269
Total consideration transferred				138,319

The trade receivables comprise gross amounts due of $13.8 million, of which nil was expected to be uncollectible at the acquisition date.

Of the goodwill and intangible assets acquired through business combinations in 2023, $18.2 million is deductible for tax purposes.

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	June 30, 2023		June 30, 2022
U.S. Less-Than-Truckload	Less-Than-Truckload		2,381		-
Canadian Truckload	Truckload		9,199		776
Specialized Truckload	Truckload		155		3,727
U.S. Truckload	Truckload		-		(1,083	)
Logistics	Logistics		36,365		24,422
			48,100		27,842

c)Contingent consideration

The contingent consideration for the six months ended June 30, 2023 relates to non-material business acquisitions and is recorded in the original purchase price allocation. The fair value was determined using expected cash flows discounted at a rate of 8.2%. These considerations are contingent on achieving specified earning levels in a future period. The maximum amount payable is $2.8 million in less than one year and $13.4 million in 2 years.

The contingent consideration balance at June 30, 2023 is $19.4 million (December 31, 2022 - $8.8 million) and is presented in other financial liabilities on the consolidated statements of financial position.

d)Adjustment to the provisional amounts of prior year’s non-material business combinations

The 2022 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 various 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. No material adjustments were required to the provisional fair values for these prior period business combinations during the six months ended June 30, 2023.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

6.Additional cash flow information

Net change in non-cash operating working capital

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Trade and other receivables		61,261			(78,576	)		153,280			(202,601	)
Inventoried supplies		(1,764	)		(1,439	)		1,088			(2,735	)
Prepaid expenses		(10,117	)		(447	)		(21,490	)		(8,695	)
Trade and other payables		(49,394	)		(6,600	)		(82,055	)		(9,275	)
		(14	)		(87,062	)		50,823			(223,306	)

7.Property and equipment

			Land and			Rolling
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2022				1,166,990			1,501,548			204,788			2,873,326
Additions through business combinations		5		19,553			28,673			459			48,685
Other additions				27,447			122,350			9,287			159,084
Disposals				(115	)		(93,413	)		(636	)		(94,164	)
Reclassification to assets held for sale				(11,161	)		-			-			(11,161	)
Reclassification between categories*				-			34,361			(34,361	)		-
Effect of movements in exchange rates				7,567			17,048			3,495			28,110
Balance at June 30, 2023				1,210,281			1,610,567			183,032			3,003,880
Accumulated Depreciation
Balance at December 31, 2022				83,140			543,272			114,959			741,371
Depreciation				10,998			101,514			8,883			121,395
Disposals				(76	)		(61,109	)		(553	)		(61,738	)
Reclassification to assets held for sale				(1,499	)		-			-			(1,499	)
Reclassification between categories*				-			10,290			(10,290	)		-
Effect of movements in exchange rates				1,463			8,634			2,447			12,544
Balance at June 30, 2023				94,026			602,601			115,446			812,073
Net carrying amounts
At December 31, 2022				1,083,850			958,276			89,829			2,131,955
At June 30, 2023				1,116,255			1,007,966			67,586			2,191,807

* Reclassification between categories had no impact on the depreciation policy of the reclassified property and equipment.

As at June 30, 2023, there are no amountsincluded in trade and other payables for the purchases of property and equipment (December 31, 2022 – $1.3 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 JUNE 30 2023 AND 2022 – (UNAUDITED)

8.Right-of-use assets

			Land and			Rolling
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2022				528,791			252,043			3,797			784,631
Other additions				18,207			29,753			334			48,294
Additions through business combinations		5		2,103			3,421			-			5,524
Derecognition*				(22,933	)		(44,338	)		(761	)		(68,032	)
Effect of movements in exchange rates				8,892			4,082			34			13,008
Balance at June 30, 2023				535,060			244,961			3,404			783,425
Depreciation
Balance at December 31, 2022				286,256			114,971			1,764			402,991
Depreciation				32,387			30,548			454			63,389
Derecognition*				(17,684	)		(39,997	)		(824	)		(58,505	)
Effect of movements in exchange rates				5,168			1,822			18			7,008
Balance at June 30, 2023				306,127			107,344			1,412			414,883
Net carrying amounts
At December 31, 2022				242,535			137,072			2,033			381,640
At June 30, 2023				228,933			137,617			1,992			368,542

* 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, 2022			1,359,345		513,697			42,680		20,007			35,122			1,970,851
Additions through
business combinations	5		48,100		33,683			2,170		2,049			75			86,077
Other additions			-		-			-		-			1,645			1,645
Extinguishments			-		(4,813	)		-		(1,800	)		(952	)		(7,565	)
Effect of movements in exchange rates			20,753		5,902			739		308			240			27,942
Balance at June 30, 2023			1,428,198		548,469			45,589		20,564			36,130			2,078,950
Amortization and impairment losses
Balance at December 31, 2022			78,012		244,252			27,050		10,130			19,297			378,741
Amortization			-		21,198			2,474		2,025			1,748			27,445
Extinguishments			-		(4,813	)		-		(1,800	)		(952	)		(7,565	)
Effect of movements in exchange rates			1,043		2,969			437		153			335			4,937
Balance at June 30, 2023			79,055		263,606			29,961		10,508			20,428			403,558
Net carrying amounts
At December 31, 2022			1,281,333		269,445			15,630		9,877			15,825			1,592,110
At June 30, 2023			1,349,143		284,863			15,628		10,056			15,702			1,675,392

10.Investments

	As at		As at
	June 30, 2023		December 31, 2022
Level 1 investments		-		71,979
Level 2 investments		4,352		-
Level 3 investments		14,119		13,985
		18,471		85,964

Level 3 investments were marked to fair value based on the company performance as at June 30, 2023. The Group elected to designate these investments as at fair value through OCI.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

11.Long-term debt

	As at		As at
	June 30, 2023		December 31, 2022
Non-current liabilities
Unsecured revolving facilities		35,489		-
Unsecured debenture		150,785		147,233
Unsecured senior notes		1,078,409		1,075,702
Conditional sales contracts		41,554		55,735
		1,306,237		1,278,670
Current liabilities
Current portion of conditional sales contracts		30,565		37,087
		30,565		37,087

The table below summarizes changes to the long-term debt:

		Six months ended			Six months ended
	Note	June 30, 2023			June 30, 2022
Balance at beginning of period			1,315,757			1,608,094
Proceeds from long-term debt			-			314,185
Business combinations			-			229
Repayment of long-term debt			(22,497	)		(348,955	)
Net increase in revolving facilities			36,789			150,725
Amortization of deferred financing fees			652			675
Effect of movements in exchange rates			30,072			(30,745	)
Effect of movements in exchange rates - debt
designated as net investment hedge			(23,971	)		23,218
Balance at end of period			1,336,802			1,717,426

The Group’s revolving facilities have a total size of $951.5 million at June 30, 2023 (December 31, 2022 – $929.6 million) and an additional $190.0 million of credit availability (CAD $245 million and USD $5 million).The additional credit is available under certain conditions under the Group’s syndicated revolving credit agreement.

On September 2, 2022, the Group extended its credit facility until August 16, 2026. Under the new extension, the CAD availability and USD availability remain unchanged. The adoption of the Interest Rate Benchmark Reform - Phase 2 did not have a material impact on the Group’s consolidated financial statements as the only debt balances subject to LIBOR reform is the USD portion of unsecured revolver. The revolver agreement indicated that SOFR would be the main replacement for LIBOR in the United States. Effective as of September 2, 2022, the interest rate was the sum of the adjusted term secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”) plus an applicable margin, which can vary between 113 and 175 basis points based on certain ratios. The change in interest rate did not have a material impact on the Group’s financial statements as the Group has no interest rate swaps that hedge variable interest debt. Deferred financing fees of $0.8 million were recognized on the extension.

On March 23, 2022, the Company received $200 million in proceeds from the issuance of new debts taking the form of unsecured senior notes consisting of two tranches, of $100 million each, maturing on March 23, 2032, and 2037, bearing fixed interest rates of 3.50% and 3.80%, respectively. Deferred financing fees of $0.3 million were recognized as a result of the transaction.

On March 23, 2022, the Company received additional $100 million in proceeds from the amendment and restatement of the debt agreement signed on July 2, 2021, taking the form of unsecured senior notes as the third tranche maturing on April 2, 2034, bearing fixed interest rate of 3.55%. Deferred financing fees of $0.1 million were recognized as a result of the transaction.

The proceeds raised from the two debt issuances were used in full to pay off the unsecured term loan which was due in June 2022 without any penalty.

The debt issuances described above are subject to certain covenants regarding the maintenance of financial ratios. These are the same covenants as previously required by the Company’s syndicated revolving credit agreement as described in note 26(f) of the 2022 annual consolidated financial statements.

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

12.Lease liabilities

	As at		As at
	June 30, 2023		December 31, 2022
Current portion of lease liabilities		118,195		115,934
Long-term portion of lease liabilities		282,085		297,105
		400,280		413,039

The table below summarizes changes to the lease liabilities:

			Six months ended			Six months ended
	Note		June 30, 2023			June 30, 2022
Balance at beginning of period				413,039			429,206
Business combinations		5		5,524			3,946
Additions				48,294			43,349
Derecognition*				(10,594	)		(8,840	)
Repayment				(62,564	)		(61,225	)
Effect of movements in exchange rates				6,581			(5,027	)
Balance at end of period				400,280			401,409

* 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 $7.9 million (December 31, 2022 – $9.9 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 $377.0 million (December 31, 2022 - $377.7 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
	June 30, 2023
Less than 1 year		132,234
Between 1 and 5 years		250,780
More than 5 years		57,686
		440,700

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

13.Employee benefits

The Group has various benefit plans, mainly TForce Freight pension plans and TFI International pension plans, under which participants are entitled to benefits once participation requirements are satisfied. Additional information relating to the retirement benefit plans is provided in Note 16 - Employee benefits of the Group’s 2022 annual consolidated financial statements.

Net periodic benefit cost and pension contributions are as follows for the TForce Freight pension plans:

	Three months			Three months		Six months			Six months
	ended			ended		ended			ended
	June 30, 2023			June 30, 2022		June 30, 2023			June 30, 2022
Current service cost		12,522			31,280		29,980			62,561
Net interest (income) cost		(260	)		52		(516	)		105
Net periodic benefit cost		12,262			31,332		29,464			62,666
Pension contributions		-			25,750		-			51,500

The pension plan is funded in line with the statutory funding requirements of the Employee Retirement Income Security Act.

14.Provisions

	Self insurance		Other		Total
As at June 30, 2023
Current provisions		36,344		8,151		44,495
Non-current provisions		64,859		36,500		101,359
		101,203		44,651		145,854
As at December 31, 2022
Current provisions		33,918		9,985		43,903
Non-current provisions		62,333		69,403		131,736
		96,251		79,388		175,639

Self-insurance provisions represent the uninsured portion of outstanding claims at period-end. Other provisions include mainly litigation provisions of $19.0 million (December 31, 2022 - $42.3 million) and environmental remediation liabilities of $16.8 million (December 31, 2022 - $23.4 million). Litigation provisions contain various pending claims for which management used judgement and assumptions about future events. The outcomes will depend on future claim developments.

15.Share capital and other components of equity

The following table summarizes the number of common shares issued:

(in number of shares)			Six months			Six months
			ended			ended
	Note		June 30, 2023			June 30, 2022
Balance, beginning of period				86,539,559			92,152,893
Repurchase and cancellation of own shares				(1,109,900	)		(3,365,041	)
Stock options exercised		17		371,820			306,669
Balance, end of period				85,801,479			89,094,521

The following table summarizes the share capital issued and fully paid:

	Six months			Six months
	ended			ended
	June 30, 2023			June 30, 2022
Balance, beginning of period		1,089,229			1,133,181
Repurchase and cancellation of own shares		(12,065	)		(36,747	)
Cash consideration of stock options exercised		8,847			6,643
Ascribed value credited to share capital on stock options exercised, net of tax		3,231			2,442
Issuance of shares on settlement of RSUs and PSUs, net of tax		29,185			1,784
Balance, end of period		1,118,427			1,107,303

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

Pursuant to the normal course issuer bid (“NCIB”) which began on November 2, 2022 and ending on November 1, 2023, the Company is authorized to repurchase for cancellation up to a maximum of 6,370,199 of its common shares under certain conditions. As at June 30, 2023, and since the inception of this NCIB, the Company has repurchased and cancelled 1,546,720 shares.

During the six months ended June 30, 2023, the Company repurchased 1,109,900 common shares at a weighted average price of $107.07 per share for a total purchase price of $118.8 million relating to the NCIB. During the six months ended June 30, 2022, the Company repurchased 3,365,041 common shares at a weighted average price of $84.91 per share for a total purchase price of $285.7 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 $106.8 million (2022 – $249.0 million) was charged to retained earnings as share repurchase premium.

16.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			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Net income		128,234			276,825			240,152			424,548
Issued common shares, beginning of period		86,771,197			91,579,954			86,539,559			92,152,893
Effect of stock options exercised		43,080			42,456			217,693			132,565
Effect of repurchase of own shares		(679,238	)		(975,885	)		(400,102	)		(981,053	)
Weighted average number of common shares		86,135,039			90,646,525			86,357,150			91,304,405
Earnings per share – basic (in dollars)		1.49			3.05			2.78			4.65

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		Three months		Six months		Six months
	ended		ended		ended		ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net income		128,234		276,825		240,152		424,548
Weighted average number of common shares		86,135,039		90,646,525		86,357,150		91,304,405
Dilutive effect:
Stock options, restricted share units
and performance share units		989,778		1,696,790		1,179,973		1,856,810
Weighted average number of diluted common shares		87,124,817		92,343,315		87,537,123		93,161,215
Earnings per share - diluted (in dollars)		1.47		3.00		2.74		4.56

As at June 30, 2023, nostock options were excluded from the calculation of diluted earnings per share (June 30, 2022 – nil) as none were 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.

17.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

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

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	Three months					Three months					Six months					Six months
and in dollars)				ended					ended					ended					ended
	June 30, 2023					June 30, 2022					June 30, 2023					June 30, 2022
				Weighted					Weighted					Weighted					Weighted
	Number			average		Number			average		Number			average		Number			average
	of			exercise		of			exercise		of			exercise		of			exercise
	options			price		options			price		options			price		options			price
Balance, beginning of period		1,011			29.02		1,879			26.01		1,302			27.89		2,061			25.70
Exercised		(81	)		27.57		(125	)		19.27		(372	)		24.75		(307	)		21.14
Balance, end of period		930			29.14		1,754			26.49		930			29.14		1,754			26.49
Options exercisable, end of period												901			28.78		1,399			24.96

The following table summarizes information about stock options outstanding and exercisable at June 30, 2023:

(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
	18.83		3		0.1		3
	26.82		61		0.6		61
	23.70		278		1.6		278
	30.71		510		2.7		510
	40.41		78		4.1		49
			930		2.3		901

Of the options outstanding at June 30, 2023, a total of 831,736 (December 31, 2022 - 1,106,883) are held by key management personnel.

The weighted average share price at the date of exercise for stock options exercised in the six months ended June 30, 2023 was $118.63 (June 30, 2022 – $95.52).

For the three and six months ended June 30, 2023, the Group recognized a compensation expense of $0.1 million and $0.2 million, respectively (June 30, 2022 - $0.1 million and $0.2 million)with a corresponding increase to contributed surplus.

No stock options were granted during the three and six months ended June 30, 2023 or June 30, 2022 under the Company’s stock option plan.

Deferred share unit plan for board members (cash-settled)

Quarterly cash amounts are paid to the board members on the second Thursday following each quarter. In addition, an equity portion of compensation is awarded, comprised of restricted share units granted annually effective on the date of each Annual Meeting, with a vesting period of one year.

Until December 31, 2020, the Company offered a deferred share unit (“DSU”) plan for its board members. Under this plan, 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		Three months		Six months			Six months
	ended		ended		ended			ended
	June 30, 2023		June 30, 2022		June 30, 2023			June 30, 2022
Balance, beginning of period		259,050		307,278		310,128			306,554
Paid		-		-		(51,925	)		-
Forfeited		-		-		(170	)		-
Dividends paid in units		785		999		1,802			1,723
Balance, end of period		259,835		308,277		259,835			308,277

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

For the three and six months ended June 30, 2023, the Group recognized, as a result of the cash-settled director compensation plan, a compensation expense of $0.3 million and $0.6 million respectively (June 30, 2022 – $0.3 million and $0.6 million). In personnel expenses, the Group recognized a mark-to-market gain on DSUs of $1.9 million and loss $3.2 million for the three and six months ended June 30, 2023 respectively (June 30, 2022 – gain of $7.1 million and $9.2 million). As at June 30, 2023, the total carrying amount of liabilities for cash-settled arrangements recorded in trade and other payables amounted to $29.6 million (December 31, 2022 - $31.0 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. Each participant’s annual LTIP allocation is split in two equally weighted awards of restricted share units (‘’RSUs’’) and of performance share units (“PSUs”). The RSUs are only subject to a time cliff vesting condition on the third anniversary of the award whereas the PSUs are subject to both performance and time cliff vesting conditions on the third anniversary of the award. The performance conditions attached to the PSUs are 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.

Restricted share units

On February 6, 2023, the Company granted a total of 55,400 RSUs under the Company’s equity incentive plan of which 38,275 were granted to key management personnel. The fair value of the RSUs is determined to be the share price fair value at the date 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 $115.51 per unit.

On April 26, 2023, the Company granted a total of 7,632 RSUs under the Company’s equity incentive plan of which 7,632 were granted to the directors under the director compensation plan. The fair value of the RSUs is determined to be the share price fair value at the date 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 $117.85 per unit.

On February 7, 2022, the Company granted a total of 63,404 RSUs under the Company’s equity incentive plan of which 39,750 were granted to key management personnel. The fair value of the RSUs is determined to be the share price fair value at the date 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 $98.27 per unit.

On April 28, 2022, the Company granted a total of 10,815 RSUs under the Company’s equity incentive plan of which 10,815 were granted the directors under the director compensation plan. The fair value of the RSUs is determined to be the share price fair value at the date 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 $83.28 per unit.

The table below summarizes changes to the outstanding RSUs:

(in thousands of RSUs	Three months					Three months					Six months					Six months
and in dollars)				ended					ended					ended					ended
	June 30, 2023					June 30, 2022					June 30, 2023					June 30, 2022
				Weighted					Weighted					Weighted					Weighted
	Number			average		Number			average		Number			average		Number			average
	of			grant date		of			grant date		of			grant date		of			grant date
	RSUs			fair value		RSUs			fair value		RSUs			fair value		RSUs			fair value
Balance, beginning of period		193			92.11		334			62.52		272			58.33		272			54.27
Granted		8			117.85		11			83.28		63			115.81		74			96.04
Reinvested		1			92.43		2			62.38		2			74.53		2			62.38
Settled		(11	)		84.69		(46	)		96.96		(145	)		36.87		(46	)		96.96
Forfeited		-			-		(2	)		62.06		(1	)		85.37		(3	)		65.41
Balance, end of period		191			93.62		299			57.98		191			93.62		299			57.98

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

The following table summarizes information about RSUs outstanding and exercisable as at June 30, 2023:

(in thousands of RSUs and in dollars)		RSUs outstanding
				Remaining
		Number of		contractual life
Grant date fair value		RSUs		(in years)
	70.59		70		0.6
	117.85		8		0.8
	98.27		58		1.6
	115.51		55		2.6
			191		1.5

The weighted average share price at the date of settlement of the RSUs vested in the six months ended June 30, 2023 was $115.13 (2022– $81.89).

For the three and six months ended June 30, 2023, the Group recognized, as a result of RSUs, a compensation expense of $1.6 million and $3.2 million, respectively (June 30, 2022 - $1.8 million and $4.1 million) with a corresponding increase to contributed surplus.

Of the RSUs outstanding at June 30, 2023, a total of 118,367 (December 31, 2022 – 171,790) are held by key management personnel.

Performance share units

On February 6, 2023, the Company granted a total of 55,400 PSUs under the Company’s equity incentive plan of which 38,275 were granted to key management personnel. The fair value of the PSUs is determined using a Monte Carlo simulation model for the TSR portion and using management’s estimates for the absolute earnings before interest and income tax portion. The estimates related to the absolute earnings before interest and income tax portion are revised during the vesting period and the cumulative amount recognized at each reporting date is based on the number of equity instruments for which service and non-market performance conditions are expected to be satisfied. The share-based compensation expense is recognized, through contributed surplus, over the vesting period. The fair value of the PSUs granted was $135.15 per unit as at grant date and $135.15 per unit as at June 30, 2023.

On February 7, 2022, the Company granted a total of 63,404 PSUs under the Company’s equity incentive plan of which 39,750 were granted to key management personnel. The fair value of the PSUs is determined using a Monte Carlo simulation model for the TSR portion and using management’s estimates for the absolute earnings before interest and income tax portion. The estimates related to the absolute earnings before interest and income tax portion are revised during the vesting period and the cumulative amount recognized at each reporting date is based on the number of equity instruments for which service and non-market performance conditions are expected to be satisfied. The share-based compensation expense is recognized, through contributed surplus, over the vesting period. The fair value of the PSUs granted was $100.43 per unit as at grant date and $120.08 per unit as at June 30, 2023.

The table below summarizes changes to the outstanding PSUs:

(in thousands of PSUs	Three months					Three months					Six months					Six months
and in dollars)				ended					ended					ended					ended
	June 30, 2023					June 30, 2022					June 30, 2023					June 30, 2022
				Weighted					Weighted					Weighted					Weighted
	Number			average		Number			average		Number			average		Number			average
	of			grant date		of			grant date		of			grant date		of			grant date
	PSUs			fair value		PSUs			fair value		PSUs			fair value		PSUs			fair value
Balance, beginning of period		184			106.27		288			62.70		261			62.87		226			52.25
Granted		-			-		-			-		55			135.15		63			100.43
Reinvested		1			106.78		2			62.88		3			77.65		2			62.88
Settled		-			-		-			-		(267	)		32.70		-			-
Added due to performance conditions		-			-		-			-		134			32.93		-			-
Forfeited		(1	)		116.95		(2	)		67.05		(2	)		106.46		(3	)		70.71
Balance, end of period		184			106.22		288			62.67		184			106.22		288			62.67

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

The following table summarizes information about PSUs outstanding and exercisable as at June 30, 2023:

(in thousands of PSUs and in dollars)		PSUs outstanding
				Remaining
		Number of		contractual life
Grant date fair value		PSUs		(in years)
	89.64		70		0.6
	100.43		59		1.6
	135.15		55		2.6
			184		1.5

The weighted average share price at the date of settlement of the PSUs vested in the six months ended June 30, 2023 was $115.13 (2022– nil).

For the three and six months ended June 30, 2023, the Group recognized, as a result of PSUs, a compensation expense of $1.6 million and $3.2 million, respectively (June 30, 2022 – $1.8 million and $3.4 million) with a corresponding increase to contributed surplus.

Of the PSUs outstanding at June 30, 2023, a total of 118,367 (December 31, 2022 - 171,790) are held by key management personnel.

18.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 consist primarily of fuel costs, repairs and maintenance, insurance, permits and operating supplies.

	Three months		Three months		Six months		Six months
	ended		ended		ended		ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Independent contractors		673,911		920,614		1,381,781		1,768,954
Vehicle operation expenses		223,794		338,510		456,204		630,578
		897,705		1,259,124		1,837,985		2,399,532

19.Finance income and finance costs

Recognized in income or loss:

Costs (income)	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Interest expense on long-term debt and amortization of
deferred financing fees		12,511			14,146			24,415			26,277
Interest expense on lease liabilities		3,796			3,262			7,584			6,623
Interest income		(1,219	)		(60	)		(2,581	)		(83	)
Net change in fair value and accretion expense
of contingent considerations		384			72			434			29
Net foreign exchange (gain) loss		(429	)		(105	)		(777	)		202
Other financial expenses		3,687			4,222			6,784			8,678
Net finance costs		18,730			21,537			35,859			41,726
Presented as:
Finance income		(1,648	)		(165	)		(3,358	)		(83	)
Finance costs		20,378			21,702			39,217			41,809

│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 JUNE 30 2023 AND 2022 – (UNAUDITED)

20.Income tax expense

Income tax recognized in income or loss:

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Current tax expense
Current period		57,844			107,298			98,834			159,733
Adjustment for prior periods		(2	)		(1	)		(393	)		(126	)
		57,842			107,297			98,441			159,607
Deferred tax expense (recovery)
Origination and reversal of temporary differences		(12,167	)		(14,044	)		(16,297	)		(17,290	)
Variation in tax rate		(139	)		123			584			462
Adjustment for prior periods		(83	)		(768	)		80			1,683
		(12,389	)		(14,689	)		(15,633	)		(15,145	)
Income tax expense		45,453			92,608			82,808			144,462

Reconciliation of effective tax rate:

	Three months					Three months					Six months					Six months
	ended					ended					ended					ended
	June 30, 2023					June 30, 2022					June 30, 2023					June 30, 2022
Income before income tax				173,687					369,433					322,960					569,010
Income tax using the Company’s
statutory tax rate		26.5	%	46,027			26.5	%	97,900			26.5	%	85,584			26.5	%	150,788
Increase (decrease) resulting from:
Rate differential between jurisdictions		0.0	%	(54	)		-0.2	%	(825	)		0.2	%	535			-0.1	%	(771	)
Variation in tax rate		-0.1	%	(139	)		0.0	%	123			0.2	%	584			0.1	%	462
Non deductible expenses		0.3	%	522			0.2	%	856			0.2	%	737			0.3	%	1,678
Tax deductions and tax exempt income		-2.1	%	(3,568	)		-1.3	%	(4,917	)		-2.3	%	(7,314	)		-1.7	%	(9,718	)
Adjustment for prior periods		0.0	%	(85	)		-0.2	%	(769	)		-0.1	%	(313	)		0.3	%	1,557
Multi-jurisdiction tax		1.6	%	2,750			0.1	%	240			0.9	%	2,995			0.1	%	466
		26.2	%	45,453			25.1	%	92,608			25.6	%	82,808			25.4	%	144,462

21.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 June 30, 2023, the Group had $69.2 million of outstanding letters of credit (December 31, 2022 - $66.8 million).

c)Other commitments

As at June 30, 2023, the Group had $157.4 million of purchase commitments (December 31, 2022 – $149.8 million) and $46.9 million of purchase orders for leases that the Group intends to enter into and that are expected to materialize within a year (December 31, 2022 – $13.9 million).

22.Subsequent events

Subsequent to June 30, 2023, the Group closed on the previously announced acquisition of Siemens Transportation Group for a total purchase price of $79.6 million.

│24

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Alain Bédard, Chairman of the Board, President and Chief Executive Officer of TFI International Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of TFI International Inc. (the “issuer”) for the interim period ended June 30th, 2023.

2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the 2013Internal Control – Integrated Framework

published by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).

5.2 ICFR – material weakness relating to design: N/A.

5.3 Limitation on scope of design: N/A.

6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1st, 2023 and ended on June 30th, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

July 31st, 2023

(signed) Alain Bédard

Alain Bédard, FCA, CMA

Chairman of the Board

President and Chief Executive Officer

EX-99.5

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, David Saperstein, Chief Financial Officer of TFI International Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of TFI International Inc. (the “issuer”) for the interim period ended June 30th, 2023.

2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the 2013Internal Control – Integrated Framework

published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2ICFR – material weakness relating to design: N/A.

5.3Limitation on scope of design: N/A.

6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1st, 2023 and ended on June 30th, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

July 31st, 2023

(signed) David Saperstein

David Saperstein

Chief Financial Officer