EX-99.2

We have audited the accompanying consolidated statements of financial position of TFI International Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the financial performance and its cash flows for the years ended December 31, 2023 and 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 15, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

As discussed in Note 17 to the consolidated financial statements, the Company has $123.6 million of self-insurance provisions as of December 31, 2023. As discussed in Note 3(k), self-insurance provisions represent the uninsured portion of outstanding claims at year-end. The provision represents an accrual for estimated future disbursements associated with the self-insured portion for claims filed at year-end and incurred but not reported related to cargo loss, bodily injury, worker’s compensation and property damages. The estimates are based on the Company’s historical experience including settlement patterns and payment trends.

We identified the assessment of the self-insurance provisions as a critical audit matter. Significant auditor judgment was required to evaluate the amounts that will ultimately be paid to settle these claims. Significant assumptions that affected the estimated provisions

included the consideration of historical claim experience, severity factors affecting the amounts ultimately paid which are used to determine the loss development patterns, and current and expected levels of cost per claims which are used to determine expected loss ratios. Additionally, the provisions included estimates for claims that have been incurred but have not been reported, and specialized skills and knowledge were needed to evaluate the actuarial methods and assumptions used to assess these estimates.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the reconciliation and monitoring of its self-insurance provision. For claims for which the estimate is determined using actuarial methods, which included claims incurred but not reported, we involved actuarial professionals with specialized skills and knowledge, who assisted in:

For claims for which the estimate is not determined using actuarial methods, for a selection of claims, we confirmed with the Company’s external counsel regarding the Company’s evaluation of claims and any excluded claims.

We have audited TFI International, Inc.’s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 15, 2024 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired JHT Holdings Inc. ("JHT") during 2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, JHT’s internal control over financial reporting associated with 3.3% of current assets and 7.2% of long term assets, 4.3% of current liabilities, 3.1% of long term liabilities, 3.0% of revenue, and 4.5% of net income included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of JHT.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Annual Report on Internal Controls over Financial Reporting section in the Company’s Management’s Discussion and Analysis. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent

or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The notes on pages 6 to 44 are an integral part of these consolidated financial statements.

Material accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, unless otherwise indicated. The accounting policies have been applied consistently by Group entities.

Basis of consolidation

Business combinations

The Group measures goodwill as the fair value of the consideration transferred including the fair value of liabilities resulting from contingent consideration arrangements, less the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at fair value as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in income or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination, are expensed as incurred.

ii)

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

iii)

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Foreign currency translation

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group’s entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate in effect at the reporting date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated at the rate in effect on the transaction date. Income and expense items denominated in foreign currency are translated at the date of the transactions. Gains and losses are included in income or loss.

ii)

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on business combinations, are translated to Canadian dollars at exchange rates in effect at the reporting date. The income and expenses of foreign operations are translated to Canadian dollars at the average exchange rate in effect during the reporting period.

Foreign currency differences are recognized in other comprehensive income (“OCI”) in the accumulated foreign currency translation differences account.

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

When a foreign operation is disposed of, the relevant amount in the cumulative amount of foreign currency translation differences is transferred to income or loss as part of the income or loss on disposal. On the partial disposal of a subsidiary while retaining control, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to income or loss.

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive income in the accumulated foreign currency translation differences account.

Translation gains and losses from the application of U.S dollars as the presentation currency while the Canadian dollar is the functional currency are included as part of the cumulative foreign currency translation adjustment.

Financial instruments

Non-derivative financial assets

The Group initially recognizes financial assets on the trade date at which the Group becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value, except for trade receivables which are initially measured at their transaction price when the trade receivables do not contain a significant financing component. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset’s acquisition or origination. On initial recognition, the Group classifies its financial assets as subsequently measured at either amortized cost or fair value, depending on its business model for managing the financial assets and the contractual cash flow characteristics of the financial assets and depending on the purpose for which the financial assets were acquired.

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Financial assets measured at amortized cost

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss, if:

•

The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

•

The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and/or interest.

The Group currently classifies its cash equivalents, trade and other receivables and long-term non-trade receivables included in other non-current assets as financial assets measured at amortized cost.

The Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost. The Group has a portfolio of trade receivables at the reporting date. The Group uses a provision matrix to determine the lifetime expected credit losses for the portfolio.

The Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in income or loss and reflected in an allowance account against trade and other receivables.

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Financial assets measured at fair value

These assets are measured at fair value and changes therein, including any interest or dividend income, are recognized in income or loss. However, for investments in equity instruments that are not held for trading, the Group may elect at initial recognition to present gains and losses in other comprehensive income. For such investments measured at fair value through other comprehensive income, gains and losses are never reclassified to profit or loss, and no impairment is recognized in profit or loss. Dividends earned from such investments are recognized in profit or loss, unless the dividend clearly represents a repayment of part of the cost of the investment.

Financial assets measured at fair value through other comprehensive income

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

ii)

Non-derivative financial liabilities

The Group initially recognizes debt issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

A financial liability is derecognized when its contractual obligations are discharged or cancelled or expire.

Financial liabilities are classified into financial liabilities measured at amortized cost and financial liabilities measured at fair value.

Financial liabilities measured at amortized cost

A financial liability is subsequently measured at amortized cost, using the effective interest method. The Group currently classifies bank indebtedness, trade and other payables and long-term debt as financial liabilities measured at amortized cost.

Financial liabilities measured at fair value

Financial liabilities at fair value are initially recognized at fair value and are re-measured at each reporting date with any changes therein recognized in net earnings. The Group currently classifies its contingent consideration liability in connection with a business acquisition as a financial liability measured at fair value.

iii)

Share capital

Common shares

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and stock options are recognized as a deduction to share capital, net of any tax effects.

When share capital recognized as equity is repurchased, share capital is reduced by the amount equal to weighted average historical cost of repurchased equity. The excess amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from retained earnings.

Hedge accounting

Management’s risk strategy is focused on reducing the variability in profit or losses and cash flows associated with exposure to market risks. Hedge accounting is used to reduce this variability to an acceptable level. The hedges employed by the Group reduce the currency fluctuation exposures.

On the initial designation of a hedging relationship, the Group formally documents the relationship between the hedging instrument and the hedged items, including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be effective in offsetting the changes in the fair value or cash flows of the respective hedged items throughout the period for which the hedge is designated.

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Net investment hedge

The Group designates a portion of its U.S. dollar denominated debt as a hedging item in a net investment hedge. The Group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the Company’s functional currency (CAD), regardless of whether the net investment is held directly or through an intermediate parent.

Foreign currency differences arising on the translation of a financial liability designated as a hedge of a net investment in foreign operations are recognized in other comprehensive income to the extent that the hedge is effective and are presented in the currency translation differences account within equity. To the extent that the hedge is ineffective, such differences are recognized in income or loss. When the hedged net investment is disposed of, the relevant amount in the translation reserve is transferred to income or loss as part of the gain or loss on disposal.

Property and equipment

Property and equipment are accounted for at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and borrowing costs on qualifying assets.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment, and are recognized in net income or loss.

Depreciation is based on the cost of an asset less its residual value and is recognized in income or loss over the estimated useful life of each component of an item of property and equipment.


The depreciation method and useful lives are as follows:

Categories	Basis	Useful lives
Buildings	Straight-line	15 – 40 years
Rolling stock	Primarily straight-line	3 – 20 years
Equipment	Primarily straight-line	5 – 12 years

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted prospectively, if appropriate.

Property and equipment are reviewed for impairment in accordance with IAS 36 Impairment of Assets when there are indicators that the carrying value may not be recoverable.

Intangible assets

Goodwill

Goodwill that arises upon business combinations is included in intangible assets.

Goodwill is not amortized and is measured at cost less accumulated impairment losses.

ii)

Other intangible assets

Intangible assets consist of customer relationships, trademarks, non-compete agreements and information technology.

The Group determines the fair value of the customer relationship intangible assets using the excess earnings model and internally developed significant assumptions including:

Forecasted revenue attributable to existing customer contracts and relationships;

Estimated annual attrition rate;

Forecasted operating margins; and

Discount rates

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The internally developed assumptions are based on limited observable market information which cause measurement uncertainty, and the fair value of the customer related intangible assets are sensitive to changes to these assumptions.

Intangible assets that are acquired by the Group and have finite lives are measured at cost less accumulated amortization and accumulated impairment losses.

Intangible assets with finite lives are amortized on a straight-line basis over the following estimated useful lives:


Categories	Useful lives
Customer relationships	5 – 20 years
Trademarks	5 – 20 years
Non-compete agreements	3 – 10 years
Information technology	5 – 7 years

Useful lives are reviewed at each financial year-end and adjusted prospectively, if appropriate.

Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

•

the contract involves the use of an identified asset – this may be specific explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, the asset is not identified;

•

the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

•

the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received.

The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Group is reasonably certain to exercise that option. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that cannot be readily determined, the Group's incremental borrowing rate. The incremental borrowing rate is a function of the Group’s incremental borrowing rate, the nature of the underlying asset, the location of the asset and the length of the lease. Generally, the Group uses its incremental borrowing rate as the discount rate.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in the future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or leases and leases of low-value assets. The Group recognises these lease payments as an expense on a straight-line basis over the lease term.

Impairment

Non-financial assets

The carrying amounts of the Group’s non-financial assets other than inventoried supplies and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated on December 31 of each year.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the group of CGUs (usually a Group’s operating segment), that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes. The Company performs goodwill impairment testing annually, or more frequently if events or circumstances indicate the carrying value of a CGU, which is a Group’s operating segment, may exceed the recoverable amount of the CGU. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or group of assets. The fair value less cost to sell is based on market comparable multiples applied to forecasted earnings before financial expenses, income taxes, depreciation and amortization ("adjusted EBITDA") for the next year, which takes into account financial forecasts approved by senior management.

The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, if any, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a prorata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment losses and impairment reversals are recognized in income or loss.

Assets held for sale

Non-current assets are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognized in income or loss.

Once classified as held-for-sale, intangible assets and property and equipment are no longer amortized or depreciated.

Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in income or loss in the periods during which

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

ii)

Defined benefit plans

The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods discounting that amount and deducting the fair value of any plan assets. The discount rate is the yield at the reporting date on AAA, AA or A credit-rated fixed income securities that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

iii)

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or income-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

iv)

Share-based payment transactions

The grant date fair value of equity share-based payment awards granted to employees is recognized as a personnel expense, with a corresponding increase in contributed surplus, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service condition at the vesting date.

The fair value of the amount payable to board members in respect of deferred share unit (“DSU”), which are to be settled in cash, is recognized as an expense with a corresponding increase in liabilities. The liability is remeasured at each reporting date until settlement. The Group presents mark-to-market (gain) loss on DSUs in personnel expenses.

Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be fully settled within 12 months of the end of the reporting period, then they are discounted.

Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the unwinding of the discount is recognized as finance cost.

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TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Self-Insurance

Self-insurance provisions represent the uninsured portion of outstanding claims at year-end. The provision represents an accrual for estimated future disbursements associated with the self-insured portion for claims filed at year-end and incurred but not reported, related to cargo loss, bodily injury, worker’s compensation and property damages. The estimates are based on the Group’s historical experience including settlement patterns and payment trends. The most significant assumptions in the estimation process include the consideration of historical claim experience, severity factors affecting the amounts ultimately paid, and current and expected levels of cost per claims. Changes in assumptions and experience could cause these estimates to change significantly in the near term.

Revenue recognition

The Group’s normal business operations consist of the provision of transportation and logistics services. All revenue relating to normal business operations is recognized over time in the statement of income. The stage of completion of the service is determined using the proportion of days completed to date compared to the estimated total days of the service. Revenue is presented net of trade discounts and volume rebates. Revenue is recognized as services are rendered, when the control of promised services is transferred to customers in an amount that reflects the consideration the Group expects to be entitled to receive in exchange for those services measured based on the consideration specified in a contract with the customers. The Group considers the contract with customers to include the general transportation service agreement and the individual bill of ladings with customers.

Based on the evaluation of the control model, certain businesses, mainly in the Less-Than-Truckload segment, act as the principal within their revenue arrangements. The affected businesses report transportation revenue gross of associated purchase transportation costs rather than net of such amounts within the consolidated statements of income.

Other operating expenses

Other operating expenses consist primarily of third-party commissions, information technology support and software expenses, building expenses (including repairs and maintenance, electricity, janitorial & security services and property taxes).

Finance income and finance costs

Finance income comprises interest income on funds invested, dividend income and interest. Interest income is recognized as it accrues in income or loss, using the effective interest method.

Finance costs comprise interest expense on bank indebtedness and long-term debt, unwinding of the discount on provisions and impairment losses recognized on financial assets (other than trade receivables).

Fair value gains or losses on derivative financial instruments and on contingent considerations, and foreign currency gains and losses are reported on a net basis as either finance income or cost.

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in income or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

│14


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable income will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held, if any. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held, for the effects of all dilutive potential common shares, which comprise convertible debentures, warrants, and restricted share units and stock options granted to employees.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s chief executive officer (“CEO”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group’s headquarters), head office expenses, income tax assets, liabilities and expenses, as well as long-term debt and interest expense thereon.

Sales between the Group’s segments are measured at the exchange amount. Transactions, other than sales, are measured at carrying value. Segment capital expenditure is the total cost incurred during the period to acquire property and equipment, and intangible assets other than goodwill.

New standards and interpretations adopted during the year

The following new standards, and amendments to standards and interpretations, are effective for the first time for periods beginning on or after January 1, 2023 and have been applied in preparing these consolidated 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. Early adoption is permitted. The amendments introduce a new definition for accounting estimates, clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy.

The adoption of the amendments did not have a material impact on the Group’s consolidated financial statements.

International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)

In May 2023, the International Accounting Standards Board issued International Tax Reform – Pillar Two Model Rules to amend IAS 12. The amendments provide a temporary mandatory exception from the accounting for deferred tax that arises from legislation implementing the GloBE model rules. Entities are effectively prohibited from recognizing or disclosing information about deferred tax assets and liabilities related to top-up tax. This temporary exception applies to annual financial statements ending for periods on or after December 31, 2023 and applies retrospectively.

The adoption of the amendments did not have a material impact on the Group’s consolidated financial statements.

New standards and interpretations not yet adopted

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

│15


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

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.

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.

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.

│16


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

(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” in the consolidated statements of income. Segment’s operating income or loss is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.


	Package		Less-
	and		Than-
	Courier		Truckload			Truckload			Logistics		Corporate			Eliminations			Total
2023
Revenue(1)		461,930		2,777,308			1,625,592			1,604,878		-			(52,822	)		6,416,886
Fuel surcharge(1)		121,268		591,259			310,446			92,138		-			(10,830	)		1,104,281
Total revenue(1)		583,198		3,368,567			1,936,038			1,697,016		-			(63,652	)		7,521,167
Operating income (loss)		114,360		310,429			237,393			160,112		(64,659	)		-			757,635
Selected items:
Depreciation and
amortization		25,070		173,684			194,761			47,914		546			-			441,975
Loss on sale of
land and buildings		-		(35	)		(5	)		-		-			-			(40	)
Gain, net of impairment,
on sale of assets held for sale		-		10,546			3,949			226		-			-			14,721
Loss on sale of business		-		-			-			-		(3,011	)		-			(3,011	)
Intangible assets		183,841		194,782			857,666			782,923		89			-			2,019,301
Total assets		359,177		2,329,677			2,004,163			1,140,174		450,429			-			6,283,620
Total liabilities		100,733		778,018			462,812			336,875		2,013,900			(128	)		3,692,210
Additions to property
and equipment		22,136		217,191			115,048			5,561		311			-			360,247

2022
Revenue(1)		498,972		3,243,556			1,986,331			1,689,122		-			(60,917	)		7,357,064
Fuel surcharge(1)		151,872		779,607			464,707			74,158		-			(14,917	)		1,455,427
Total revenue(1)		650,844		4,023,163			2,451,038			1,763,280		-			(75,834	)		8,812,491
Operating income		134,306		470,807			366,868			140,446		33,611			-			1,146,038
Selected items:
Depreciation and
amortization		26,532		152,666			212,430			38,244		721			-			430,593
Gain on sale of
land and buildings		-		-			43			-		-			-			43
Gain, net of impairment,
on sale of assets held for sale		-		55,714			22,197			-		-			-			77,911
Gain on sale of business		-		-			-			-		73,653			-			73,653
Intangible assets		180,119		167,798			775,464			468,547		182			-			1,592,110
Total assets		362,724		2,275,672			1,861,093			731,564		274,777			-			5,505,830
Total liabilities		126,383		836,937			464,962			239,916		1,374,687			(125	)		3,042,760
Additions to property
and equipment		15,097		168,667			165,953			1,150		402			-			351,269

(1) Includes intersegment revenue and intersegment fuel surcharge

│17


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Geographical information

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


	Package		Less-
	and		Than-
	Courier		Truckload		Truckload		Logistics		Eliminations			Total
2023
Canada		583,198		608,545		1,139,272		271,136		(34,915	)		2,567,236
United States		-		2,760,022		796,766		1,425,880		(28,737	)		4,953,931
Total		583,198		3,368,567		1,936,038		1,697,016		(63,652	)		7,521,167

2022
Canada		650,844		667,506		1,182,198		256,714		(34,202	)		2,723,060
United States		-		3,355,657		1,268,840		1,488,941		(41,632	)		6,071,806
Mexico		-		-		-		17,625		-			17,625
Total		650,844		4,023,163		2,451,038		1,763,280		(75,834	)		8,812,491

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


	As at		As at
	December 31, 2023		December 31, 2022
Property and equipment, right-of-use assets and intangible assets
Canada		2,208,595		1,848,746
United States		2,651,808		2,256,959
		4,860,403		4,105,705

Business combinations

In line with the Group’s growth strategy, the Group acquired twelve businesses during 2023, of which JHT Holdings, Inc. was considered material. All other acquisitions 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.

On August 16, 2023, the Group completed the acquisition of JHT Holdings, Inc. ("JHT"), a leading asset light logistics and transportation provider in North America for Class 6-8 truck manufacturers, which includes a joint-venture that is equity-accounted and included in other assets. The purchase price for this business acquisition totaled $309.3 million, which was funded by a mixture of cash on hand and the remaining balance was drawn from the currently existing unsecured revolving credit facility. During the year ended December 31, 2023, the business contributed revenue and net income of $225.3 million and $18.0 million, respectively since the acquisition.

Had the Group acquired JHT on January 1, 2023, as per management’s best estimates, the revenue and net income for this entity would have been $589.5 million and $50.5 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 acquisition 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 of the entity.

During the year ended December 31, 2023, the non-material businesses, in aggregate, contributed revenue and net loss of $178.3 million and $6.3 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 income for these entities would have been $333.2 million and $9.1 million, respectively. In determining these estimated amounts, management assumed that the fair value adjustments that arose on the date of acquisition would have been the same had the acquisitions occurred on January 1, 2023 and adjusted for interest, based on the purchase price and average borrowing rate of the Group, and income tax expenses based on the effective tax rate of the entities.

During the year ended December 31, 2023, transaction costs of $0.9 million 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 completed the determination of the fair value of assets acquired and liabilities assumed of the 2023 acquisitions. Information to confirm the fair value of certain assets and liabilities is still to be obtained for these acquisitions. As the Group obtains more information, the allocation will be completed.

│18


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The table below presents the determination of the fair value of assets acquired and liabilities assumed based on the best information available to the Group to date :


Identifiable assets acquired and liabilities assumed	Note		JHT			Others			December 31, 2023
Cash and cash equivalents				5,709			11,873			17,582
Trade and other receivables				38,250			39,650			77,900
Inventoried supplies and prepaid expenses				10,976			5,897			16,873
Property and equipment		9		65,489			174,850			240,339
Right-of-use assets		10		5,385			25,609			30,994
Intangible assets		11		198,659			80,807			279,466
Other assets				23,887			115			24,002
Trade and other payables				(35,221	)		(28,884	)		(64,105	)
Income tax (payable) receivable				(1,682	)		729			(953	)
Provisions		17		(19,919	)		-			(19,919	)
Other non-current liabilities				(444	)		(44	)		(488	)
Long-term debt		14		(4,808	)		-			(4,808	)
Lease liabilities		15		(5,385	)		(25,609	)		(30,994	)
Deferred tax liabilities		18		(55,367	)		(32,375	)		(87,742	)
Total identifiable net assets				225,529			252,618			478,147
Total consideration transferred				309,304			350,451			659,755
Goodwill		11		83,775			97,833			181,608
Cash				309,304			336,979			646,283
Contingent consideration				-			13,472			13,472
Total consideration transferred				309,304			350,451			659,755

The valuation techniques used for measuring the fair value of land and buildings ($49.5 million) and customer relationships ($175.2 million) acquired regarding JHT were as follows:


Assets acquired	Valuation technique	Key inputs
Land and buildings	Market comparison technique and cost technique: The valuation model considers market prices for comparable sites, when available, and considers depreciated replacement cost, which reflects adjustments for physical deterioration, when appropriate.	- Market prices for comparable sites - Average rebuild cost
Customer relationships	Excess earnings method: The valuation model considers the present value of net cash flows expected to be generated by the customer relationships, by excluding any cash flows related to contributory assets.	- Forecasted revenue attributable to existing customers and relationships - Annual attrition rate - Forecasted operating margin - Discount rate

The fair values measured on the amounts regarding JHT are on a provisional basis, mainly regarding land and buildings and deferred tax liabilities. This is mainly due to pending completion and review of valuations and site visits for the land and buildings and mainly due to the complexity of the information for the provisions. If new information is obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition that implies adjustments to the amounts, the accounting for the acquisition will be revised.

The trade receivables comprise gross amounts due of $80.0 million, of which $2.1 million was expected to be uncollectible at the acquisition date.

Of the goodwill and intangible assets acquired through business combinations in 2023, $18.9 million is deductible for tax purposes.

In line with the Group’s growth strategy, the Group acquired eleven businesses during 2022, 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 year ended December 31, 2022, the non-material businesses, in aggregate, contributed revenue and net income of $100.6 million and $5.9 million respectively since the acquisitions.

Had the Group acquired these non-material businesses on January 1, 2022, as per management’s best estimates, the revenue and net income for these entities would have been $235.7 million and $18.1 million, respectively. In determining these estimated amounts, management assumed that the fair value adjustments that arose on the date of acquisition would have been the same

│19


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

had the acquisitions occurred on January 1, 2022 and adjusted for interest, based on the purchase price and average borrowing rate of the Group, and income tax expenses based on the effective tax rate.

During the year ended December 31, 2022, transaction costs of $0.1 million were expensed in other operating expenses in the consolidated statements of income in relation to the above-mentioned business acquisitions.

Of the goodwill and intangible assets acquired through business combinations in 2022, $2.9 million was deductible for tax purposes.

The table below presents the determination of the fair value of assets acquired and liabilities assumed of the 2022 acquisitions as at December 31, 2022:



Identifiable assets acquired and liabilities assumed	Note		December 31, 2022
Cash and cash equivalents				863
Trade and other receivables				28,231
Inventoried supplies and prepaid expenses				2,179
Property and equipment		9		70,959
Right-of-use assets		10		28,269
Intangible assets		11		45,740
Other assets				368
Trade and other payables				(10,327	)
Income tax payable				(1,465	)
Provisions		17		(280	)
Lease liabilities		15		(28,269	)
Deferred tax liabilities		18		(13,848	)
Total identifiable net assets				122,420
Total consideration transferred				181,608
Goodwill				59,188
Cash				159,114
Contingent consideration				22,494
Total consideration transferred				181,608

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	December 31, 2023		December 31, 2022
Canadian Less-Than-Truckload	Less-Than-Truckload		9,142		-
U.S. Less-Than-Truckload	Less-Than-Truckload		3,376		-
Canadian Truckload	Truckload		16,017		811
Specialized Truckload	Truckload		43,080		35,865
Logistics	Logistics		109,993		22,512
			181,608		59,188

Contingent consideration

The contingent consideration for the year ended December 31, 2023 relates to non-material business acquisitions and is recorded in the original determination of the fair value of assets acquired and liabilities assumed. These considerations are contingent on achieving specified earning levels in future periods. The maximum amount payable is $13.5 million in less than one year, and $0.8 million in more than one year.

The contingent consideration for the year ended December 31, 2022 related to non-material business acquisitions and was recorded in the original determination of the fair value of assets acquired and liabilities assumed. This consideration was contingent on achieving specified earning levels in a future period. The maximum amount payable was $22.5 million in less than one year, and

│20


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

$21.0 million was paid prior to December 31, 2022. During the year ended December 31, 2023, no measurement adjustments were made.

The contingent consideration balance at December 31, 2023 is $13.2 million (2022 - $8.8 million) and is presented in other financial liabilities on the consolidated statements of financial position.

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 not mentioned previously. These acquisitions were accounted for under the provisions of IFRS 3. As required by IFRS 3, the provisional fair values have been reassessed in light of information obtained during the measurement period following the acquisition. Consequently, the fair value of certain assets acquired, and liabilities assumed of the non-material acquisitions in fiscal 2022 have been adjusted and finalized in 2023. No material adjustments were required to the provisional fair values for these prior period’s business combinations

Property and equipment


			Land and			Rolling
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2021				1,233,268			1,772,463			200,765			3,206,496
Additions through business combinations		5		2,003			66,240			2,716			70,959
Other additions				46,928			286,277			18,064			351,269
Disposals				(678	)		(122,946	)		(9,370	)		(132,994	)
Sale of business		6		(31,356	)		(452,547	)		(1,817	)		(485,720	)
Reclassification to assets held for sale				(67,203	)		-			-			(67,203	)
Effect of movements in exchange rates				(15,972	)		(47,939	)		(5,570	)		(69,481	)
Balance at December 31, 2022				1,166,990			1,501,548			204,788			2,873,326
Additions through business combinations		5		145,204			91,870			3,265			240,339
Other additions				77,516			265,687			17,044			360,247
Disposals				(398	)		(136,028	)		(529	)		(136,955	)
Reclassification to assets held for sale				(13,325	)		(19,741	)		-			(33,066	)
Reclassification between categories*				-			36,319			(36,319	)		-
Effect of movements in exchange rates				7,990			18,545			4,122			30,657
Balance at December 31, 2023				1,383,977			1,758,200			192,371			3,334,548

Accumulated Depreciation
Balance at December 31, 2021				72,012			577,893			101,450			751,355
Depreciation				21,353			203,431			23,854			248,638
Disposals				(137	)		(56,549	)		(7,191	)		(63,877	)
Sale of business		6		(6,837	)		(157,618	)		(142	)		(164,597	)
Reclassification to assets held for sale				(5,426	)		-			-			(5,426	)
Effect of movements in exchange rates				2,175			(23,885	)		(3,012	)		(24,722	)
Balance at December 31, 2022				83,140			543,272			114,959			741,371
Depreciation				21,841			210,523			17,471			249,835
Disposals				(92	)		(78,584	)		(410	)		(79,086	)
Reclassification to assets held for sale				(1,003	)		(4,947	)		-			(5,950	)
Reclassification between categories*				-			11,089			(11,089	)		-
Effect of movements in exchange rates				1,515			8,879			2,512			12,906
Balance at December 31, 2023				105,401			690,232			123,443			919,076

Net carrying amounts
At December 31, 2022				1,083,850			958,276			89,829			2,131,955
At December 31, 2023				1,278,576			1,067,968			68,928			2,415,472

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

As at December 31, 2023, there are no amounts included in trade and other payables for the purchases of property and equipment (December 31, 2022 – $1.3 million).

Security

As at December 31, 2023, certain rolling stock are pledged as security for conditional sales contracts, with a carrying amount of $89.6 million (December 31, 2022 - $126.4 million) (see note 14).

10.

Right-of-use assets


			Land and			Rolling
	Note		buildings			stock			Equipment			Total
Cost
Balance at December 31, 2021				510,277			233,710			3,903			747,890
Other additions				62,353			53,906			962			117,221
Additions through business combinations		5		14,217			14,052			-			28,269
Sale of business		6		(238	)		(5,780	)		-			(6,018	)
Derecognition*				(31,475	)		(34,221	)		(977	)		(66,673	)
Effect of movements in exchange rates				(26,343	)		(9,624	)		(91	)		(36,058	)
Balance at December 31, 2022				528,791			252,043			3,797			784,631
Other additions				74,580			79,690			948			155,218
Additions through business combinations		5		15,033			15,961			-			30,994
Derecognition*				(39,674	)		(62,276	)		(971	)		(102,921	)
Effect of movements in exchange rates				9,629			4,940			40			14,609
Balance at December 31, 2023				588,359			290,358			3,814			882,531

Depreciation
Balance at December 31, 2021				257,507			90,092			1,758			349,357
Depreciation				66,036			59,101			1,139			126,276
Sale of business		6		(130	)		(2,685	)		-			(2,815	)
Derecognition*				(22,733	)		(26,783	)		(1,082	)		(50,598	)
Effect of movements in exchange rates				(14,424	)		(4,754	)		(51	)		(19,229	)
Balance at December 31, 2022				286,256			114,971			1,764			402,991
Depreciation				66,877			64,340			895			132,112
Derecognition*				(28,074	)		(56,723	)		(971	)		(85,768	)
Effect of movements in exchange rates				5,456			2,089			21			7,566
Balance at December 31, 2023				330,515			124,677			1,709			456,901

Net carrying amounts
At December 31, 2022				242,535			137,072			2,033			381,640
At December 31, 2023				257,844			165,681			2,105			425,630

* 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.

11.

Intangible assets


					Other intangible assets
											Non-
					Customer			Trademarks			compete			Information
Note		Goodwill			relationships			and other			agreements			technology			Total
Cost
Balance at December 31, 2021			1,572,291			588,514			88,811			17,948			31,996			2,299,560
Additions through business combinations	5		59,188			38,121			3,846			3,727			46			104,928
Other additions			-			-			-			-			6,120			6,120
Disposals			-			-			(380	)		-			-			(380	)
Sale of business	6		(210,806	)		(33,312	)		(28,589	)		(150	)		(1,075	)		(273,932	)
Extinguishments			-			(61,985	)		(19,058	)		(836	)		(1,321	)		(83,200	)
Effect of movements in exchange rates			(61,328	)		(17,641	)		(1,950	)		(682	)		(644	)		(82,245	)
Balance at December 31, 2022			1,359,345			513,697			42,680			20,007			35,122			1,970,851
Additions through business combinations	5		181,608			244,574			27,127			5,556			2,209			461,074
Other additions			-			-			-			-			2,758			2,758
Extinguishments			-			(7,203	)		(7,820	)		(2,524	)		(1,029	)		(18,576	)
Effect of movements in
exchange rates			21,176			6,127			685			280			245			28,513
Balance at December 31, 2023			1,562,129			757,195			62,672			23,319			39,305			2,444,620

Amortization and impairment losses
Balance at December 31, 2021			147,480			287,578			45,675			7,666			18,240			506,639
Amortization			-			43,538			4,764			3,702			3,675			55,679
Disposals			-			-			(130	)		-			-			(130	)
Sale of business	6		(66,255	)		(16,669	)		(2,996	)		(26	)		(836	)		(86,782	)
Extinguishments			-			(61,985	)		(19,058	)		(836	)		(1,321	)		(83,200	)
Effect of movements in exchange rates			(3,213	)		(8,210	)		(1,205	)		(376	)		(461	)		(13,465	)
Balance at December 31, 2022			78,012			244,252			27,050			10,130			19,297			378,741
Amortization			-			46,629			5,461			4,099			3,839			60,028
Extinguishments			-			(7,203	)		(7,820	)		(2,524	)		(1,029	)		(18,576	)
Effect of movements in exchange rates
exchange rates			1,040			3,150			428			168			340			5,126
Balance at December 31, 2023			79,052			286,828			25,119			11,873			22,447			425,319

Net carrying amounts
At December 31, 2022			1,281,333			269,445			15,630			9,877			15,825			1,592,110
At December 31, 2023			1,483,077			470,367			37,553			11,446			16,858			2,019,301

In 2022, CFI’s Truckload, Temp Control and Mexican non-asset logistics businesses were sold to Heartland Express, including the indefinite-life trademarks. At December 31, 2023 and December 31 2022, there are no material indefinite life intangible assets.

At December 31, 2023 and 2022, the Group performed its annual goodwill impairment tests for operating segments which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to each unit are as follows:


Reportable segment / operating segment	December 31, 2023		December 31, 2022
Package and Courier		182,120		177,941
Less-Than-Truckload
Canadian Less-Than-Truckload		140,402		128,449
U.S. Less-Than-Truckload		3,375		-
Truckload
Canadian Truckload		109,593		87,604
Specialized Truckload*		599,292		546,674
Logistics		448,295		340,665
		1,483,077		1,281,333

* On August 31,2022, TFI International sold CFI’s Truckload, Temp Control and Mexican non-asset logistics businesses, operating primarily in the US-based Conventional TL operating segment. Subsequent to the sale, the remaining businesses operations in TFI International’s US-based Conventional TL operating segment, were transferred to the Specialized TL operating segment.

│24


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The results as at December 31, 2023 and 2022 determined that the recoverable amounts of the Group’s operating segments exceeded their respective carrying amounts.

The recoverable amounts of the Group’s operating segments were determined using the value in use approach. The value in use methodology is based on discounted future cash flows. Management believes that the discounted future cash flows method is appropriate as it allows more precise valuation of specific future cash flows.

In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rates as follows:


Reportable segment / operating segment	2023			2022
Package and Courier		12.0	%		11.5	%
Less-Than-Truckload
Canadian Less-Than-Truckload		12.0	%		11.5	%
U.S. Less-Than-Truckload		11.4	%	-
Truckload
Canadian Truckload		14.4	%		13.9	%
Specialized Truckload*		13.2	%		12.7	%
Logistics		11.4	%		10.9	%

The discount rates were estimated based on past experience, and industry average weighted average cost of capital, which were based on a possible range of debt leveraging of 40.0% (2022 – 40.0%) at a market interest rate of 10.5% (2022 – 9.4%).

First year cash flows were projected based on forecasted cash flows which are based on previous operating results adjusted to reflect current economic conditions. For a further 4-year period, cash flows were extrapolated using an average growth rate of 2.0% (2022 – 2.0%) in revenues and margins were adjusted where deemed appropriate. The terminal value growth rate was 2.0% (2022 – 2.0%). The values assigned to the key assumptions represent management’s assessment of future trends in the transportation industry and were based on both external and internal sources (historical data).

14.

Long-term debt

This note provides information about the contractual terms of the Group’s interest-bearing long-term debt, which are measured at amortized cost. For more information about the Group’s exposure to interest rate, foreign exchange currency and liquidity, see note 26.


	As at		As at
	December 31, 2023		December 31, 2022
Non-current liabilities
Unsecured revolving facilities		22,166		-
Unsecured debenture		-		147,233
Unsecured senior notes		1,652,049		1,075,702
Conditional sales contracts		31,278		55,735
Other long-term debt		4,338		-
		1,709,831		1,278,670

Current liabilities
Current portion of unsecured debenture		151,023		-
Current portion of other long-term debt		354		-
Current portion of conditional sales contracts		22,974		37,087
		174,351		37,087

Terms and conditions of outstanding long-term debt are as follows:


							2023				2022
		Currency	Nominal interest rate			Year of maturity	Face value		Carrying amount		Face value		Carrying amount

Unsecured revolving facility	a	CAD	BA + 1.125%			2026		30,400		21,239		-		-
Unsecured revolving facility	a	USD	SOFR + 1.125%			2026		1,000		927		-		-
Unsecured debenture	b	CAD	3.32% - 4.22%			2024		200,000		151,023		200,000		147,233
Unsecured senior notes	c	USD	2.89% - 5.64%			2026- 2038		255,000		254,376		180,000		179,013
Unsecured senior notes	c	USD	3.15% - 3.50%			2029- 2036		500,000		499,100		500,000		497,258
Unsecured senior notes	c	USD	2.87% - 3.55%			2029- 2034		200,000		199,665		200,000		199,644
Unsecured senior notes	c	USD	3.5% - 3.8%			2032- 2037		200,000		199,808		200,000		199,787
Unsecured senior notes	c	USD	6.27%- 7.11%			2028- 2043		500,000		499,100		-		-
Conditional sales contracts	d	Mainly CAD	1.45% - 5.28%			2024-2027		71,847		54,252		125,810		92,822
Other long-term debt		USD		3.04	%	2027		4,692		4,692		-		-
										1,884,182				1,315,757

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


	Note		2023			2022
Balance at beginning of year				1,315,757			1,608,094
Proceeds from long-term debt				575,000			334,164
Business combinations		5		4,808			-
Repayment of long-term debt				(41,371	)		(369,692	)
Net increase (decrease) in revolving facilities				25,242			(236,502	)
Amortization of deferred financing fees				1,337			1,296
Effect of movements in exchange rates				41,322			(97,744	)
Effect of movements in exchange rates - debt
designated as net investment hedge				(37,913	)		76,141
Balance at end of year				1,884,182			1,315,757

Unsecured revolving credit facility

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 that were subject to LIBOR reform was 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. Deferred financing fees of $0.8 million were recognized on the extension.

│26


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The Canadian interest rate benchmark reform - cessation of CDOR is not expected to have a material impact on the Group's financial statements. As at December 31, 2023, the only debt balances subject to the CDOR reform are the CAD portion of unsecured revolver with a drawn amount of $24.0 million at year-end. The CDOR tenor will cease to exist no later than June 28, 2024. As at December 31, 2023, the Group has no interest rate swaps that hedge variable interest debt.

The revolving credit facility is unsecured and can be extended annually. The Group’s revolving facilities have a total size of $951.4 million (December 31, 2022 - $929.6 million). The agreement provides 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. As of December 31, 2023, the credit facility’s interest rate on CAD denominated debt was 6.58% (2022 – 4.49%) and on USD denominated debt was 6.60% (2022 – 4.30%).

The debt issuances described above are subject to certain covenants regarding the maintenance of financial ratios. The Group was in compliance with these covenants at year-end (see note 26(f)).

Unsecured debenture

The unsecured debenture is maturing in December 2024 and is carrying an interest rate between 3.32% and 4.22% (2022 – 3.32% to 4.22%) depending on certain ratios. As of December 31, 2023, the debenture’s effective rate was 3.32% (2022 – 3.32%). The debenture may be repaid, without penalty, after December 20, 2022, subject to the approval of the Group’s syndicate of bank lenders.

Unsecured senior notes

This loan takes the form of senior notes each carrying an interest rate and maturity date as detailed in the table above. These notes may be prepaid at any time prior to maturity date, in part or in total, at 100% of the principal amount and the make-whole amount determined at the prepayment date with respect to such principal amount.

On October 13, 2023, the Company received $500 million in proceeds from the issuance of new debts taking the form of unsecured senior notes consisting of five tranches, with terms from 5 to 20 years and bearing fixed interest rates between 6.27% and 7.11%. Deferred financing fees of $1.2 million were recognized as a result of the transaction.

On August 21, 2023, the Company received $75 million in proceeds from the issuance of new debts taking the form of unsecured senior notes consisting of two tranches, $50 million and $25 million, maturing on August 19, 2035 and 2038, bearing fixed interest rates of 5.56% and 5.64%, respectively. Deferred financing fees of $0.1 million were recognized as a result of the transaction.

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 in fiscal 2022 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. The Group was in compliance with these covenants at year-end (see note 26(f)).

Conditional sales contracts

Conditional sales contracts are secured by rolling stock having a carrying value of $89.6 million (December 31, 2022 - $126.4 million,) (see note 9).

│27


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Principal installments of long-term debt payable during the subsequent years are as follows:


	Less than		1 to 5		More than
	1 year		years		5 years		Total
Unsecured revolving facilities		-		23,906		-		23,906
Unsecured debenture		151,023		-		-		151,023
Unsecured senior notes		-		150,000		1,505,000		1,655,000
Conditional sales contracts		22,974		31,279		-		54,253
Other long-term debt		354		4,338		-		4,692
		174,351		209,523		1,505,000		1,888,874

16.

Employee benefits

TFI International pension plans

The Group sponsors defined benefit pension plans for 1 of its employees (2022 – 99).

These plans are all within Canada and include one unregistered plan. The last pension benefits were paid in 2023 for all the defined benefit pension plans but one. The defined benefit plans are no longer offered to employees. Therefore, the future obligation will only vary by actuarial re-measurements.

The Group measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each year. The most recent actuarial valuation of the pension plans for funding purposes was as of December 31, 2022 and the next required valuation will be as of December 31, 2023.

TForce Freight pension plans

Pursuant to the terms of the purchase agreement for TForce Freight, the Group has recognized defined benefit pension plans for certain participants of the UPS Pension plans. The pension plans have ongoing benefit accruals and new employees that are eligible to participate in the plans once they satisfy the participation requirements. The pension plans include 6,895 active participants (2022 - 8,787).

The plans do not have recurring contributions for employees. These plans are still required to fund past service costs and are fully funded by the Group. The Group measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each year. The most recent actuarial valuation of the pension plans for funding purposes was as of December 31, 2022 and the next required valuation will be as of December 31, 2023.

Information in the tables that follow pertains to all of the Group’s defined benefit pension plans.


	December 31, 2023									December 31, 2022
	TFI			TForce						TFI			TForce
	International			Freight						International			Freight
	pension			pension						pension			pension
	plans			plans			Total			plans			plans			Total
Defined benefit obligation		13,999			212,373			226,372			20,189			144,110			164,299
Fair value of plan assets		(200	)		(172,941	)		(173,141	)		(10,214	)		(158,444	)		(168,658	)
Net defined benefit liability (asset)		13,799			39,432			53,231			9,975			(14,334	)		(4,359	)

Plan assets comprise:


	December 31, 2023			December 31, 2022
TFI International pension plans
Equity securities		14	%		7	%
Debt securities		0	%		91	%
Other		86	%		2	%
TForce Freight pension plans
Equity securities		95	%		95	%
Debt securities		5	%		5	%

All equity and debt securities have quoted prices in active markets. Debt securities are held through mutual funds and primarily hold investments with ratings of AAA, AA or A, based on Moody’s ratings.

│29


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Movement in the present value of the accrued benefit obligation for defined benefit plans:


	December 31, 2023									December 31, 2022
	TFI			TForce						TFI			TForce
	International			Freight						International			Freight
	pension			pension						pension			pension
	plans			plans			Total			plans			plans			Total

Defined benefit obligation,
beginning of year		20,189			144,110			164,299			27,127			133,653			160,780
Current service cost		382			58,155			58,537			539			115,967			116,506
Interest cost		787			7,342			8,129			730			3,522			4,252
Benefits paid		(10,139	)		(3,832	)		(13,971	)		(985	)		(1,283	)		(2,268	)
Remeasurement loss (gain) arising from:
- Demographic		-			1,017			1,017			-			(12,200	)		(12,200	)
- Financial assumptions		566			7,303			7,869			(4,880	)		(83,707	)		(88,587	)
- Experience		1,849			(1,760	)		89			(489	)		(11,463	)		(11,952	)
Settlement		28			29			57			-			82			82
Effect of movements in exchange rates		337			9			346			(1,853	)		(461	)		(2,314	)
Defined benefit obligation, end of year		13,999			212,373			226,372			20,189			144,110			164,299

Movement in the fair value of plan assets for defined benefit plans:


	December 31, 2023									December 31, 2022
	TFI			TForce						TFI			TForce
	International			Freight						International			Freight
	pension			pension						pension			pension
	plans			plans			Total			plans			plans			Total
Fair value of plan assets,
beginning of year		10,214			158,444			168,658			13,437			80,466			93,903
Interest income		250			8,124			8,374			348			3,746			4,094
Employer contributions		37			-			37			457			103,099			103,556
Benefits paid		(10,139	)		(3,832	)		(13,971	)		(985	)		(1,283	)		(2,268	)
Fair value remeasurement		(165	)		11,816			11,651			(2,066	)		(25,407	)		(27,473	)
Plan administration expenses		(44	)		(1,623	)		(1,667	)		(59	)		(1,735	)		(1,794	)
Effect of movements in exchange rates		47			12			59			(918	)		(442	)		(1,360	)
Fair value of plan assets, end of year		200			172,941			173,141			10,214			158,444			168,658

Expense recognized in income or loss:


	December 31, 2023								December 31, 2022
	TFI		TForce						TFI			TForce
	International		Freight						International			Freight
	pension		pension						pension			pension
	plans		plans			Total			plans			plans			Total
Current service cost		382		58,155			58,537			539			115,967			116,506
Net interest cost		537		(782	)		(245	)		382			(224	)		158
Plan administration expenses		44		1,623			1,667			59			1,735			1,794
Net settlement		28		29			57			-			82			82
Pension expense		991		59,025			60,016			980			117,560			118,540
Actual return on plan assets		85		19,940			20,025			(1,718	)		(21,661	)		(23,379	)

Actuarial losses recognized in other comprehensive income:


	December 31, 2023								December 31, 2022
	TFI		TForce						TFI			TForce
	International		Freight						International			Freight
	pension		pension						pension			pension
	plans		plans			Total			plans			plans			Total
Amount accumulated in retained		8,871		(75,238	)		(66,367	)		12,174			6,643			18,817
earnings, beginning of year
Recognized during the year		2,580		(5,256	)		(2,676	)		(3,303	)		(81,881	)		(85,184	)
Amount accumulated in retained
earnings, end of year		11,451		(80,494	)		(69,043	)		8,871			(75,238	)		(66,367	)
Recognized during the year, net of tax		1,902		(3,918	)		(2,016	)		(2,435	)		(61,073	)		(63,508	)

│30


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The significant actuarial assumptions used (expressed as weighted average):


	December 31, 2023						December 31, 2022
	TFI			TForce			TFI			TForce
	International			Freight			International			Freight
	pension			pension			pension			pension
	plans			plans			plans			plans
Defined benefit obligation:
Discount rate at		4.8	%		5.0	%		5.0	%		5.2	%
Future salary increases		3.0	%		2.0	%		1.6	%		2.0	%
Employee benefit expense:
Discount rate at		5.0	%		5.0	%		2.4	%		5.2	%
Rate of return on plan assets at		5.0	%		5.0	%		2.4	%		5.2	%
Future salary increases		3.0	%		2.0	%		3.0	%		2.0	%

Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the value of the liabilities in the defined benefit plans are as follows:


	December 31, 2023				December 31, 2022
	TFI		TForce		TFI		TForce
	International		Freight		International		Freight
	pension		pension		pension		pension
	plans		plans		plans		plans
Longevity at age 65 for current pensioners
Males		22.3		19.1		22.7		19.0
Females		25.0		22.0		24.9		21.4
Longevity at age 65 for current members aged 45
Males		23.8		20.6		23.6		20.6
Females		26.3		23.4		25.8		22.9

At December 31, 2023 the weighted average duration of the defined benefit obligation was:


TFI International pension plans			9.5
TForce Freight pension plans			17.6

The following table presents the impact of changes of major assumptions on the defined benefit obligation for the years ended:


	2023					2022
	Increase			Decrease		Increase			Decrease
Discount rate (1% movement)		(34,520	)		44,102		(25,536	)		32,517

Historical information:


	2023			2022			2021			2020			2019
Defined benefit obligation		226,372			164,299			160,780			35,529			31,449
Fair value of plan assets		(173,141	)		(168,658	)		(93,903	)		(21,147	)		(18,108	)
Deficit (surplus) in the plan		53,231			(4,359	)		66,877			14,382			13,341

Experience adjustments arising on plan obligations		8,975			(112,739	)		5,823			3,220			2,116
Experience adjustments arising on plan assets		11,651			(27,473	)		310			1,129			467

The Group expects contributions of $20.0 million to be paid to its defined benefit plans in 2024.

Contributions to multi-employer plans

Pursuant to the terms of the purchase agreement for JHT, the Group participates in, under collective bargaining agreements, three multi-employer benefit plans named :

•

Central States, Southeast and Soutwest Areas Pension Plan

•

IAM National Pension Fund

•

Western Congerence of Teamsters Pension Plan

The Groups contribution under the plans were expensed as incurred and totaled $3.5 million in 2023.

17.

Provisions


	Note		Self-insurance			Other			Total
Balance at December 31, 2021				69,467			77,690			147,157
Additions through business combinations		5		-			280			280
Provisions made during the year				126,439			15,372			141,811
Provisions used during the year				(80,040	)		(13,470	)		(93,510	)
Provisions reversed during the year				(13,236	)		(306	)		(13,542	)
Unwind of discount on long-term provisions				(4,153	)		-			(4,153	)
Sale of business		6		(1,465	)		-			(1,465	)
Effect of movements in exchange rates				(761	)		(178	)		(939	)
Balance at December 31, 2022				96,251			79,388			175,639
Additions through business combinations		5		16,364			3,555			19,919
Provisions made during the year				159,276			12,937			172,213
Provisions used during the year				(129,089	)		(52,637	)		(181,726	)
Provisions reversed during the year				(16,705	)		(7,080	)		(23,785	)
Unwind of discount on long-term provisions				(2,666	)		-			(2,666	)
Effect of movements in exchange rates				214			92			306
Balance at December 31, 2023				123,645			36,255			159,900

As at December 31, 2023
Current provisions				46,940			19,625			66,565
Non-current provisions				76,705			16,630			93,335
				123,645			36,255			159,900

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 year-end. The current portion reflects the amount expected to be paid in the following year. Due to the long-term nature of the liability, the provision has been calculated using a discount rate of 3.84% (2022 – 3.99%). Other provisions include mainly litigation provisions of $16.6 million (2022 - $42.3 million) and environmental remediation liabilities of $9.7 million (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.

18.

Deferred tax assets and liabilities


	December 31, 2023			December 31, 2022
Property and equipment		(382,208	)		(360,111	)
Intangible assets		(127,547	)		(72,032	)
Right-of-use assets		8,600			7,497
Employee benefits		26,510			23,111
Provisions		51,458			53,818
Tax losses		10,054			5,686
Other		506			892
Net deferred tax liabilities		(412,627	)		(341,139	)
Presented as:
Deferred tax assets		20,615			27,047
Deferred tax liabilities		(433,242	)		(368,186	)

│32


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Movement in temporary differences during the year:



	Balance			Recognized			Recognized			Disposal			Acquired			Balance
	December 31,			in income			directly			of			in business			December 31,
	2022			or loss			in equity			business			combinations			2023
Property and equipment		(360,111	)		8,637			(3,233	)		-			(27,501	)		(382,208	)
Intangible assets		(72,032	)		10,870			(798	)		-			(65,587	)		(127,547	)
Long-term debt		7,497			660			443			-			-			8,600
Employee benefits		23,111			5,119			(1,720	)		-			-			26,510
Provisions		53,818			(5,399	)		(2,303	)		-			5,342			51,458
Tax losses		5,686			2,953			1,411			-			4			10,054
Other		892			(396	)		10			-			-			506
Net deferred tax liabilities		(341,139	)		22,444			(6,190	)		-			(87,742	)		(412,627	)

	Balance			Recognized			Recognized			Disposal			Acquired			Balance
	December 31,			in income			directly			of			in business			December 31,
	2021			or loss			in equity			business			combinations			2022
Property and equipment		(432,334	)		1,397			7,194			67,442			(3,810	)		(360,111	)
Intangible assets		(78,888	)		8,231			1,956			8,490			(11,821	)		(72,032	)
Long-term debt		8,025			(31	)		(497	)		-			-			7,497
Employee benefits		43,821			6,711			(27,421	)		-			-			23,111
Provisions		57,961			(4,466	)		406			(1,490	)		1,407			53,818
Tax losses		10,272			(4,058	)		(545	)		-			17			5,686
Other		(2,917	)		696			2,755			-			358			892
Net deferred tax liabilities		(394,060	)		8,480			(16,152	)		74,441			(13,848	)		(341,139	)

21.

Share-based payment arrangements

Stock option plan (equity-settled)

The Company offers a stock option plan for the benefit of certain of its employees. The maximum number of shares that can be issued upon the exercise of options granted under the current 2012 stock option plan is 5,979,201. Each stock option entitles its holder to receive one common share upon exercise. The exercise price payable for each option is determined by the Board of Directors at the date of grant, and may not be less than the volume weighted average trading price of the Company’s shares for the last five trading days immediately preceding the grant date. The options vest in equal installments over three years and the expense is recognized following the accelerated method as each installment is fair valued separately and recorded over the respective vesting periods. The table below summarizes the changes in the outstanding stock options:

│34


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022


(in thousands of options and in dollars)				2023					2022
				Weighted					Weighted
	Number			average		Number			average
	of			exercise		of			exercise
	options			price		options			price
Balance, beginning of year		1,302			27.89		2,061			25.70
Exercised		(512	)		25.92		(755	)		21.84
Forfeited		-			-		(4	)		40.41
Balance, end of year		790			29.17		1,302			27.89
Options exercisable, end of year		790			29.17		1,273			27.60

The following table summarizes information about stock options outstanding and exercisable at December 31, 2023:


(in thousands of options and in dollars)		Options outstanding and exercisable

				Weighted
				average
		Number		remaining
		of		contractual life
Exercise prices		options		(in years)
	26.82		13		0.1
	23.70		233		1.1
	30.71		496		2.2
	40.41		48		3.6
			790		1.9

Of the options outstanding at December 31, 2023, a total of 726,572 (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 2023 was $123.72 (2022 – $99.32).

In 2023, the Group recognized a compensation expense of $0.2 million (2022 - $0.4 million) with a corresponding increase to contributed surplus.

No stock options were granted during 2023 and 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)	2023			2022
Balance, beginning of year		310,128			306,554
Paid		(313,312	)		-
Forfeited		(170	)		-
Dividends paid in units		3,354			3,574
Balance, end of year		-			310,128

In 2023, the Group recognized, as a result of the cash-settled director compensation plan, a compensation expense of $1.1 million (2022 - $1.2 million).

In personnel expenses, the Group recognized a mark-to-market loss on DSUs of $4.5 million (2022 – gain of $1.3 million).

As at December 31, 2023, the total carrying amount of liabilities for cash-settled arrangements recorded in trade and other payables is $2.9 million (2022 - $31.0 million) following the settlement of all outstanding DSUs in 2023 for a total cash settlement of $35.8 million, of which $2.9 million is payable at the end of 2024.

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 performance share units (“PSUs”) and of restricted share units (‘’RSUs’’). The PSUs are subject

│35


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

to both performance and time cliff vesting conditions on the third anniversary of the award whereas the RSUs are only subject to a time cliff vesting condition 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 to the directors of the Company under the new 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 and in dollars)				2023					2022
				Weighted					Weighted
	Number			average		Number			average
	of			grant date		of			grant date
	RSUs			fair value		RSUs			fair value
Balance, beginning of year		272			58.33		272			54.27
Granted		63			115.81		74			96.04
Reinvested		4			74.69		3			60.68
Settled		(145	)		36.87		(49	)		93.80
Settled on sale of business		-			-		(15	)		44.19
Forfeited		(2	)		69.92		(13	)		71.13
Balance, end of year		192			93.62		272			58.33

The following table summarizes information about RSUs outstanding and exercisable as at December 31, 2023:


(in thousands of RSUs and in dollars)		RSUs outstanding
				Remaining
		Number of		contractual life
Grant date fair value		RSUs		(in years)
	70.59		71		0.1
	117.85		8		0.3
	98.27		58		1.1
	115.51		55		2.1
			192		1.0

The weighted average share price at the date of settlement of the other RSUs vested in 2023 was $115.13 (2022 – $83.28). The excess of the purchase price paid to repurchase shares on the market over the carrying value of awarded RSUs, in the amount of $18.3 million (2022 – $1.2 million), was charged to retained earnings as share repurchase premium.

On August 31, 2022, due to the sale of CFI’s truckload, Temp Control and Mexican non-asset logistics businesses, a total of 22,876 RSUs were cancelled (14,630 RSUs settled and 8,246 RSUs forfeited), and the employees were compensated based on the plan terms,

│36


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

which required unvested awards to be forfeited and vested awards to be paid out in cash equal to the fair value of the shares. The weighted average share price at the date of settlement of RSUs was $104.28. The Group expensed the total initial grant date fair value of the settled RSUs and the excess of the price paid over the carrying value of shares, in the amount of $0.8 million, was accounted for as repurchase of an equity interest and charged to retained earnings.

In 2023, the Group recognized, as a result of RSUs, a compensation expense of $6.0 million (2022 - $6.9 million) with a corresponding increase to contributed surplus.

Of the RSUs outstanding at December 31, 2023, a total of 116,368 (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 December 31, 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 December 31, 2023.

The table below summarizes changes to the outstanding PSUs:


(in thousands of PSUs and in dollars)				2023					2022
				Weighted					Weighted
	Number			average		Number			average
	of			grant date		of			grant date
	PSUs			fair value		PSUs			fair value
Balance, beginning of year		261			62.87		226			52.25
Granted		55			135.15		63			100.43
Reinvested		4			84.93		3			62.94
Settled		(267	)		32.70		(6	)		47.77
Added due to performance conditions		134			32.93		22			50.87
Settled on sale of business		-			-		(28	)		46.85
Forfeited		(3	)		109.61		(19	)		75.59
Balance, end of year		184			106.17		261			62.87

The following table summarizes information about PSUs outstanding and exercisable as at December 31, 2023:


(in thousands of PSUs and in dollars)		PSUs outstanding
				Remaining
		Number of		contractual life
Grant date fair value		PSUs		(in years)
	89.64		71		0.1
	100.43		58		1.1
	135.15		55		2.1
			184		1.0

The weighted average share price at the date of settlement of the other PSUs vested in 2023 was $115.13 (2022 – $104.53). The excess of the purchase price paid to repurchase shares on the market over the carrying value of awarded PSUs, in the amount of $36.6 million, was charged to retained earnings as share repurchase premium (2022 – $1.8 million).

On August 31, 2022, due to the sale of CFI’s truckload, Temp Control and Mexican non-asset logistics businesses, a total of 41,380 PSUs, including 18,504 PSUs added for performance conditions met as per PSU plan terms, were cancelled (28,442 PSUs settled and

│37


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

12,938 PSUs forfeited), and the employees were compensated based on the plan terms, which require unvested awards to be forfeited and vested awards to be paid out in cash equal to the fair value of the shares. The weighted average share price at the date of settlement of PSUs was $104.28. The Group expensed the total fair value of the settled PSUs and the excess of the price paid over the carrying value of shares, in the amount of $0.8 million, was accounted for as repurchase of an equity interest and charged to retained earnings.

In 2023, the Group recognized, as a result of PSUs, a compensation expense of $7.3 million (2022 - $7.3 million) with a corresponding increase to contributed surplus.

Of the PSUs outstanding at December 31, 2023, a total of 116,368 (2022 – 171,790) are held by key management personnel.

25.

Income tax expense

Income tax recognized in income or loss:


	2023			2022
Current tax expense
Current period		192,388			263,877
Adjustment for prior years		1,943			(12,988	)
		194,331			250,889
Deferred tax expense (recovery)
Origination and reversal of temporary differences		(20,102	)		(19,834	)
Variation in tax rate		1,551			(242	)
Adjustment for prior years		(3,893	)		11,596
		(22,444	)		(8,480	)
Income tax expense		171,887			242,409

│38


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Income tax recognized in other comprehensive income:


	2023									2022
				Tax									Tax
	Before			(benefit)			Net of			Before			(benefit)			Net of
	tax			expense			tax			Tax			expense			tax
Foreign currency translation differences		(881	)		-			(881	)		(10,148	)		-			(10,148	)
Defined benefit plan remeasurement gains (losses)		2,676			660			2,016			85,184			21,676			63,508
Employee benefit		-			-			-			304			12			292
Gain (loss) on net investment hedge		37,913			(1,792	)		39,705			(76,141	)		(4,095	)		(72,046	)
Change in fair value of investment in equity securities		8,383			1,102			7,281			(6,573	)		(1,078	)		(5,495	)
		48,091			(30	)		48,121			(7,374	)		16,515			(23,889	)

Reconciliation of effective tax rate:


			2023					2022
Income before income tax				676,764					1,065,641
Income tax using the Company’s
statutory tax rate	26.5	%		179,342		26.5	%		282,395

Increase (decrease) resulting from:
Rate differential between jurisdictions	0.1	%		548		-0.2	%		(2,206	)
Variation in tax rate	0.2	%		1,551		0.0	%		(242	)
Non deductible expenses	0.3	%		2,005		0.3	%		3,105
Tax deductions and tax
exempt income*	-2.2	%		(14,909	)	-3.8	%		(40,172	)
Adjustment for prior periods	-0.3	%		(1,950	)	-0.1	%		(1,392	)
Multi-jurisdiction tax	0.8	%		5,300		0.1	%		921
	25.4	%		171,887		22.7	%		242,409

* Tax deductions and tax exempt income for 2022 is mainly due to the gain on sale of business recorded on the sale of CFI’s Truckload, Temp Control and Mexican non-asset logistics businesses resulting in no taxes.

26.

Financial instruments and financial risk management

Risks

In the normal course of its operations and through its financial assets and liabilities, the Group is exposed to the following risks:

•

credit risk

•

liquidity risk

•

market risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives and processes for managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

Risk management framework

The Group’s management identifies and analyzes the risks faced by the Group, sets appropriate risk limits and controls, and monitors risks and adherence to limits. Risk management is reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Board of Directors has overall responsibility of the Group’s risk management framework. The Board of Directors monitors the Group’s risks through its audit committee. The audit committee reports regularly to the Board of Directors on its activities.

The Group’s audit committee oversees how management monitors and manages the Group’s risks and is assisted in its oversight role by the Group’s internal audit. Internal audit undertakes both regular and ad hoc reviews of risk, the results of which are reported to the audit committee.

│39


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises principally from the Group’s trade receivables. The Group grants credit to its customers in the ordinary course of business. Management believes that the credit risk of trade receivables is limited due to the following reasons:

•

There is a broad base of customers with dispersion across different market segments;

•

No single customer accounts for more than 5% of the Group’s revenue;

•

Approximately 89.9% (2022 – 85.3%) of the Group’s trade receivables are not past due or 30 days or less past due;

•

Bad debt expense has been less than 0.3% of consolidated revenues for the last 2 years.

Exposure to credit risk

The Group’s maximum credit exposure corresponds to the carrying amount of the financial assets. The maximum exposure to credit risk at the reporting date was:


	December 31, 2023		December 31, 2022
Trade and other receivables		894,771		1,030,726

Impairment losses

The aging of trade and other receivables at the reporting date was:


			Allowance				Allowance
			for expected				for expected
	Total		credit loss		Total		credit loss
	2023		2023		2022		2022
Not past due		619,888		1,817		696,357		1,124
Past due 1 – 30 days		159,928		2,909		184,907		2,904
Past due 31 – 60 days		47,529		8,727		83,676		8,712
Past due more than 60 days		96,932		16,053		94,824		16,298
		924,277		29,506		1,059,764		29,038

The movement in the allowance for expected credit loss in respect of trade and other receivables during the year was as follows:


	2023			2022
Balance, beginning of year		29,038			27,317
Business combinations		2,100			127
Sale of business		-			(1,914	)
Bad debt expenses		30,992			19,644
Amount written off and recoveries		(33,302	)		(14,129	)
Effect of movements in exchange rates		678			(2,007	)
Balance, end of year		29,506			29,038

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation.

Cash inflows and cash outflows requirements from the Group’s entities are monitored closely and separately to ensure the Group optimizes its cash return on investment. Typically, the Group ensures that it has sufficient cash to meet expected operational expenses; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted. The Group monitors its short and medium-term liquidity needs on an ongoing basis using forecasting tools. In addition, the Group maintains revolving facilities, which have $915.3 million availability as at December 31, 2023 (2022 - $911.8 million) and an additional $190.0 million credit available (CAD $245 million and USD $5 million). The additional credit is available under certain conditions under the Group’s syndicated bank agreement (2022 - $185.8 million, CAD $245 million and USD $5 million).

│40


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The following are the contractual maturities of the financial liabilities, including estimated interest payment:


	Carrying		Contractual		Less than		1 to 2		2 to 5		More than
	amount		cash flows		1 year		years		years		5 years
2023
Trade and other payables		671,936		671,936		671,936		-		-		-
Long-term debt		1,884,274		2,644,474		257,414		354,206		293,772		1,739,082
Other financial liability		13,572		13,572		12,732		840		-		-
		2,569,782		3,329,982		942,083		355,046		293,772		1,739,082

2022
Trade and other payables		708,768		708,768		708,768		-		-		-
Long-term debt		1,315,757		1,659,085		80,916		268,727		229,969		1,079,473
Other financial liability		8,775		8,775		8,775		-		-		-
		2,033,300		2,376,628		798,459		268,727		229,969		1,079,473

It is not expected that the contractual cash flows could occur significantly earlier, or at significantly different amounts.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return.

The Group buys and sell derivatives, periodically, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Group’s management and it does not use derivatives for speculative purposes.

The Group buys investment in equity securities to hold the investments for the long term for strategic purposes. All investments are designated as fair value through OCI.

Currency risk

The Group is exposed to currency risk on financial assets and liabilities, sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities. Primarily the Canadian entities are exposed to U.S. dollars and entities having a functional currency other than the Canadian dollars (foreign operations) are not significantly exposed to currency risk. The Group mitigates and manages its future USD cash flow by creating offsetting positions through the use of foreign exchange contracts periodically and USD debt.

To mitigate its financial net liabilities exposure to foreign currency risk related to Canadian entities, the Group designated a portion of its U.S. dollar denominated debt as a hedging item in a net investment hedge.

The Group’s financial assets and liabilities exposure to foreign currency risk related to Canadian entities was as follows based on notional amounts:


	2023			2022
Trade and other receivables		41,239			50,732
Trade and other payables		(7,379	)		(8,301	)
Long-term debt		(1,654,689	)		(1,079,774	)
Balance sheet exposure		(1,620,829	)		(1,037,343	)
Long-term debt designated as investment hedge		1,655,000			1,080,000
Net balance sheet exposure		34,171			42,657

The Group estimates its annual net USD denominated cash flow from operating activities at approximately $470 million (2022 - $720 million). This cash flow is earned evenly throughout the year.

The following exchange rates applied during the year:


	December 31, 2023		December 31, 2022
Average USD for the year ended		1.3497		1.3013
Closing USD as at		1.3243		1.3554

│41


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

Sensitivity analysis

A 1-cent increase in the U.S. dollar at the reporting date, assuming all other variables, in particular interest rates, remain constant, would have increased (decreased) equity and income or loss by the amounts shown below. The analysis is performed on the same basis for 2022.


	2023						2022
	1-cent			1-cent			1-cent			1-cent
	Increase			Decrease			Increase			Decrease
Balance sheet exposure		(12,239	)		12,239			(7,653	)		7,653
Long-term debt designated as investment hedge		12,497			(12,497	)		7,968			(7,968	)
Net balance sheet exposure		258			(258	)		315			(315	)

Interest rate risk

The Group’s intention is to minimize its exposure to changes in interest rates by maintaining a significant portion of fixed-rate interest-bearing long-term debt. This is achieved by periodically entering into interest rate swaps, although no interest rate swaps were in effect during 2023.

At December 31, 2023 and 2022, the interest rate profile of the Group’s carrying amount of interest-bearing financial instruments excluding the effects of interest rate derivatives was:


	2023		2022
Fixed rate instruments		1,884,182		1,315,757
		1,884,182		1,315,757

The fair value of the interest rate swaps has been estimated using industry standard valuation models which use rates published on financial capital markets, adjusted for credit risk.

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial liabilities at fair value through income or loss. Therefore a change in interest rates at the reporting date would not affect income or loss.

Capital management

For the purposes of capital management, capital consists of share capital and retained earnings of the Group. The Group's objectives when managing capital are:

•

To ensure proper capital investment in order to provide stability and competitiveness to its operations;

•

To ensure sufficient liquidity to pursue its growth strategy and undertake selective acquisitions;

•

To maintain an appropriate debt level so that there are no financial constraints on the use of capital; and

•

To maintain investors, creditors and market confidence.

The Group seeks to maintain a balance between the highest returns that might be possible with higher levels of borrowings and the advantages and security of a sound capital position.

The Group monitors its long-term debt using the ratios below to maintain an appropriate debt level. The Group’s debt-to-equity and debt-to-capitalization ratios are as follows:


	2023		2022
Long-term debt		1,884,182		1,315,757
Shareholders' equity		2,591,410		2,463,070
Debt-to-equity ratio		0.73		0.53
Debt-to-capitalization ratio1		0.42		0.35

1 Long-term debt divided by the sum of shareholders' equity and long-term debt.

There were no changes in the Group’s approach to capital management during the year.

│42


TFI International Inc.	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands of U.S. dollars, unless otherwise noted.)	YEARS ENDED DECEMBER 31, 2023 AND 2022

The Group’s credit facility agreement requires monitoring of two ratios on a quarterly basis. The first is a ratio of total debt plus letters of credit and some other long-term liabilities less cash (unrestricted cash for the credit facility and cash up to $100 million for the unsecured senior notes) to net income or loss before finance income and costs, income tax expense (recovery), depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale and intangible assets (“Adjusted EBITDA”). The second is a ratio of adjusted earnings before interest, income taxes, depreciation and amortization and rent expense (“EBITDAR”), including last twelve months adjusted EBITDAR from acquisitions to interest and net rent expenses. These ratios are measured on a consolidated last twelve-month basis and are calculated as prescribed by the credit agreement which, among other things, requires the exclusion of the impact of IFRS 16 leases. These ratios must be kept below a certain threshold so as not to breach a covenant in the Group’s syndicated bank. At December 31, 2023 and 2022, the Group was in compliance with its financial covenants.

Management believes that the Group has sufficient liquidity to continue both its operations as well as its acquisition strategy.

Upon maturity of the Group’s long-term debt, the Group’s management and its Board of Directors will assess if the long-term debt should be renewed at its original value, increased or decreased based on the then required capital, credit availability and future interest rates.

Accounting classification and fair values

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statements of financial position, are as follows:


	December 31, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets
Assets carried at fair value
Investment in equity securities		50,209		50,209		85,964		85,964
Assets carried at amortized cost
Trade and other receivables		894,771		894,771		1,030,726		1,030,726
		944,980		944,980		1,116,690		1,116,690

Financial liabilities
Liabilities carried at fair value
Other financial liability		27,119		27,119		19,657		19,657
Liabilities carried at amortized cost
Trade and other payables		671,936		671,936		708,768		708,768
Long-term debt		1,884,182		1,678,662		1,315,757		1,300,591
		2,583,237		2,377,717		2,044,182		2,029,016

Interest rates used for determining fair value

The carrying amount of the Group’s debt does not approximate fair value. The interest rates used to discount estimated cash flows to calculate fair value, when applicable, are based on the current interest rates for debt with similar terms, company rating and remaining maturity.

Fair value hierarchy

The Group’s financial assets and liabilities recorded at fair value on a recurring basis are investment in equity securities discussed above. Investment in equity securities include Level 1 investments that are marked to market with the publicly traded information as at December 31, 2023, and Level 2 investments that are marked to market using valuation techniques in which all significant inputs were based on observable market data. The remaining investment in equity securities is measured using level-3 inputs of the fair value hierarchy.


CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	1
CONSOLIDATED STATEMENTS OF INCOME	2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	3
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	6


/s/ Alain Bédard	Director	/s/ André Bérard	Director
Alain Bédard		André Bérard


(In thousands of U.S. dollars)	2023			2022

Net income		504,877			823,232

Other comprehensive income (loss)
Items that may be reclassified to income or loss in future years:
Foreign currency translation differences		(881	)		(10,148	)
Net investment hedge, net of tax		39,705			(72,046	)
Employee benefits, net of tax		-			292
Items that may never be reclassified to income:
Defined benefit plan remeasurement, net of tax		2,016			63,508
Items directly reclassified to retained earnings:
Unrealized gain (loss) on investments in equity securities
measured at fair value through OCI, net of tax		7,281			(5,495	)
Other comprehensive income (loss), net of tax		48,121			(23,889	)

Total comprehensive income		552,998			799,343


(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			-			-			-			-			-			504,877			504,877
Other comprehensive income, net of tax			-			-			-			38,824			7,281			2,016			48,121
Realized (loss) gain on equity securities			-			-			-			-			(13,323	)		13,323			-
Total comprehensive (loss) income			-			-			-			38,824			(6,042	)		520,216			552,998

Share-based payment transactions, net of tax	21		-			21,424			-			-			-			-			21,424
Stock options exercised, net of tax	19, 21		17,179			(4,402	)		-			-			-			-			12,777
Dividends to owners of the Company	19		-			-			-			-			-			(124,254	)		(124,254	)
Repurchase of own shares	19		(28,303	)		-			-			-			-			(259,721	)		(288,024	)
Net settlement of restricted share units
and performance share units, net of tax	19, 21		29,185			(20,829	)		-			-			-			(54,937	)		(46,581	)
Total transactions with owners, recorded directly in equity			18,061			(3,807	)		-			-			-			(438,912	)		(424,658	)

Balance as at December 31, 2023			1,107,290			37,684			-			(200,296	)		(243	)		1,646,975			2,591,410

Balance as at December 31, 2021			1,133,181			39,150			(292	)		(156,926	)		12,553			1,282,689			2,310,355

Net income			-			-			-			-			-			823,232			823,232
Other comprehensive income (loss), net of tax			-			-			292			(82,194	)		(5,495	)		63,508			(23,889	)
Realized (loss) gain on equity securities			-			-			-			-			(1,259	)		1,259			-
Total comprehensive income (loss)			-			-			292			(82,194	)		(6,754	)		887,999			799,343

Share-based payment transactions, net of tax	21		-			16,298			-			-			-			-			16,298
Stock options exercised, net of tax	19, 21		22,800			(6,298	)		-			-			-			-			16,502
Dividends to owners of the Company	19		-			-			-			-			-			(102,615	)		(102,615	)
Repurchase of own shares	19		(68,536	)		-			-			-			-			(499,447	)		(567,983	)
Net settlement of restricted share units, net of tax	19, 21		1,784			(7,659	)		-			-			-			(2,955	)		(8,830	)
Total transactions with owners, recorded directly in equity			(43,952	)		2,341			-			-			-			(605,017	)		(646,628	)

Balance as at December 31, 2022			1,089,229			41,491			-			(239,120	)		5,799			1,565,671			2,463,070


(In thousands of U.S. dollars)	Note		2023			2022

Cash flows from operating activities
Net income				504,877			823,232
Adjustments for:
Depreciation of property and equipment		9		249,835			248,638
Depreciation of right-of-use assets		10		132,112			126,276
Amortization of intangible assets		11		60,028			55,679
Share-based payment transactions		21		13,451			14,648
Net finance costs		24		80,871			80,397
Income tax expense		25		171,887			242,409
Loss (gain) on sale of business		6		3,011			(73,653	)
Gain on sale of property and equipment				(15,470	)		(59,704	)
Gain on derecognition of right-of-use assets				(1,482	)		(210	)
Gain, net of impairment, on sale of assets held for sale				(14,721	)		(77,911	)
Employee benefits				60,212			14,946
Provisions, net of payments				(33,696	)		26,044
Net change in non-cash operating working capital		8		106,631			(147,453	)
Interest paid				(70,354	)		(77,512	)
Income tax paid				(233,353	)		(224,181	)
Net cash from operating activities				1,013,839			971,645

Cash flows (used in) from investing activities
Purchases of property and equipment		9		(361,563	)		(350,824	)
Proceeds from sale of property and equipment				73,339			128,821
Proceeds from sale of assets held for sale				50,280			131,250
Purchases of intangible assets		11		(2,758	)		(6,120	)
Proceeds from sale of intangible assets				-			250
Proceeds from sale of business, net of cash disposed		6		-			546,228
Business combinations, net of cash acquired		5		(628,701	)		(158,251	)
Purchases of investments				(41,719	)		(80,551	)
Proceeds from sale of investments				89,225			12,930
Others				24,565			(311	)
Net cash (used in) from investing activities				(797,332	)		223,422

Cash flows used in financing activities
Net (decrease) increase in bank indebtedness				(6,337	)		7,490
Proceeds from long-term debt		14		575,000			334,164
Repayment of long-term debt		14		(41,371	)		(369,692	)
Net increase (decrease) in revolving facilities		14		25,242			(236,502	)
Repayment of lease liabilities		15		(128,107	)		(123,606	)
Decrease of other financial liabilities				(9,572	)		(21,108	)
Dividends paid				(121,095	)		(97,321	)
Repurchase of own shares		19		(288,024	)		(567,983	)
Proceeds from exercise of stock options		19		12,777			16,502
Share repurchase for settlement of restricted share
units and performance share units				(46,581	)		(9,186	)
Net cash used in financing activities				(28,068	)		(1,067,242	)

Net change in cash and cash equivalents				188,439			127,825
Cash and cash equivalents, beginning of year				147,117			19,292
Cash and cash equivalents, end of year				335,556			147,117


(In thousands of U.S. dollars, except per share amounts)	Note	2023			2022

Revenue			6,416,886			7,357,064
Fuel surcharge			1,104,281			1,455,427
Total revenue			7,521,167			8,812,491

Materials and services expenses	22		3,805,846			4,592,191
Personnel expenses	23		2,109,622			2,362,856
Other operating expenses			434,751			492,291
Depreciation of property and equipment	9		249,835			248,638
Depreciation of right-of-use assets	10		132,112			126,276
Amortization of intangible assets	11		60,028			55,679
Loss (gain) on sale of business	6		3,011			(73,653	)
Gain on sale of rolling stock and equipment			(15,510	)		(59,661	)
Gain on derecognition of right-of-use assets			(1,482	)		(210	)
Loss (gain) on sale of land and buildings			40			(43	)
Gain, net of impairment, on sale of assets held for sale			(14,721	)		(77,911	)
Total operating expenses			6,763,532			7,666,453

Operating income			757,635			1,146,038

Finance (income) costs
Finance income	24		(8,612	)		(1,750	)
Finance costs	24		89,483			82,147
Net finance costs			80,871			80,397

Income before income tax			676,764			1,065,641
Income tax expense	25		171,887			242,409

Net income			504,877			823,232

Earnings per share
Basic earnings per share	20		5.88			9.21
Diluted earnings per share	20		5.80			9.02


	December 31, 2023		December 31, 2022
Trade receivables, net of expected credit loss		846,681		966,428
Other receivables		48,090		64,298
		894,771		1,030,726


	As at
	December 31, 2023
Less than 1 year		145,542
Between 1 and 5 years		295,989
More than 5 years		78,016
		519,547


(in number of shares)	Note		2023			2022
Balance, beginning of year				86,539,559			92,152,893
Repurchase and cancellation of own shares				(2,609,900	)		(6,368,322	)
Stock options exercised		21		512,074			754,988
Balance, end of period				84,441,733			86,539,559


(in thousands of dollars and number of shares)	2023			2022
Net income		504,877			823,232
Issued common shares, beginning of period		86,539,559			92,152,893
Effect of stock options exercised		340,802			314,112
Effect of repurchase of own shares		(972,615	)		(3,107,423	)
Weighted average number of common shares		85,907,746			89,359,582

Earnings per share – basic (in dollars)		5.88			9.21


	2023		2022
Independent contractors		2,805,924		3,394,544
Vehicle operation expenses		999,922		1,197,647
		3,805,846		4,592,191


Costs (income)	2023			2022
Interest expense on long-term debt and amortization of deferred financing fees		59,432			52,230
Interest expense on lease liabilities		16,042			13,264
Interest income		(8,121	)		(1,750	)
Net change in fair value and accretion expense of contingent considerations		165			216
Net foreign exchange (gain) loss		(491	)		556
Other financial expenses		13,844			15,881
Net finance costs		80,871			80,397
Presented as:
Finance income		(8,612	)		(1,750	)
Finance costs		89,483			82,147


	2023		2022
Short-term benefits		15,457		16,858
Post-employment benefits		619		800
Equity-settled share-based payment transactions		8,674		10,874
		24,750		28,532