By most financial measures, TFI International’s second quarter was strong.

Second-quarter diluted earnings per share rose 41% to $1.65 from the same period a year earlier, and EBITDA increased by more than 11%.

Underneath those results, and as discussed in Monday evening’s conference call with analysts, the improvement in profitability came from TFI’s Truckload operations and its Logistics segment, while LTL, which accounted for 41% of revenue, improved but not as much as Truckload. That split matters because the company’s mix of business can shift which pressures show up first in margins and cash generation.

The contrast between the two largest segments at TFI (NYSE: TFII) was most visible in their EBITDA margins. LTL posted an 18% EBITDA margin, Truckload reached 24.1%, and Logistics came in at 16.3%. In the first quarter, the comparable figures were 12.1% for LTL and 19.5% for Truckload. Although LTL’s percentage gain was larger in the quarter, the segment still lagged Truckload on profitability.

In one notable part of the call, CEO Alain Bedard and CFO David Saperstein discussed the different market conditions affecting the two segments.

Supply, not demand

“What we see on the pricing side of Truckload is very impressive,” Bedard said. “It’s mostly because of the supply constraint, not because demand is going through the roof.”

Saperstein said Truckload’s revenue per truck per week accelerated during the quarter. On a year-over-year basis, that metric increased 11.1% in April, 13.3% in May and 14.4% in June.

Bedard said Truckload’s operating ratio in the first quarter was above 90%, specifically 92.7%. “And now we’re down to 86.1%. I think that this is quite an accomplishment,” he said.

By contrast, LTL shipments increased 7.5% in the quarter, but revenue per shipment declined 2%.

Asked by an analyst whether the current Truckload market differed from past bullish periods, Bedard said it was “absolutely right.”

“In a normal trucking environment, guys used to make a lot of money when the demand was high,” he said. “It could last a month, it could last a year, it could last 18 months.”

After that, demand would weaken and the bull market would end. “What I like about this market, which I’ve never seen before in 30 years, is now it’s the supply,” Bedard said. “I think this is more of a permanent thing than we’ve ever seen before.”

More volume in LTL means more costs

In TFI’s LTL operations, the 7.53% year-over-year increase in second-quarter shipments was not entirely positive, Bedard said.

“We incurred way too many costs in our second quarter operation because of this huge surge in volume,” he said. “But our service suffered also.”

Saperstein said TFI is making changes to its LTL pricing, with help from technology.

“We now have tools where we’re taking spreadsheets with about 500,000 lines and tons of columns, tons of data,” he said. Using those tools, “we’re able to really isolate the problematic lanes, the problematic freight. And then we’re using that to help our pricing team go in and be real surgical and move faster. We’ve able to treat large amounts of data in a way that we haven’t been able to in the past.”

Daseke’s impact

In Truckload, Bedard pointed not only to reduced supply but also to changes in the company’s specialized operations, much of which can be traced to TFI’s 2024 acquisition of publicly traded flatbed operator Daseke.

TFI’s financial performance also benefited from a 5.6% year-over-year decline in depreciation of property and equipment. Based on the call, much of that decline appears to have come from Truckload.

Bedard has previously said Daseke may have been too aggressive in buying new equipment, which hurt results when the costs showed up as depreciation. That expense is now falling.

“We bought Daseke in ‘24 and we were stuck with its capex,” Bedard said. “These guys liked to buy trucks and trailers. So we had too much capex in ‘24.” He said that, with various plans in place, the effect continued into 2025.

TFI is now “adjusting our asset base to the business we want,” Bedard said.

At the end of the second quarter, TFI had 11,987 trucks and 39,710 trailers, compared with 13,511 trucks and 42,796 trailers a year earlier.

Bedard said TFI’s flatbed operations have also benefited from work tied to wind turbines and data centers. He added that Lone Star Transportation, a TFI flatbed subsidiary, is “good with wind and good with data centers.”

On the call, Bedard said the Truckload improvements are expected to continue. For full-year 2026, he said TFI expects a 500-basis-point to 600-basis-point improvement in Truckload’s operating ratio. He also said the Logistics segment should improve by 250 to 350 basis points, while LTL would be “comparable.” LTL’s operating ratio in the quarter was 11.8%.

“The world of Truckload has changed tremendously over the last six to nine months, with all the things the administration has done in the U.S. to help us reduce supply,” Bedard said.

By contrast, he said the LTL markets in the U.S. and Canada remain “still very soft.”

“There’s no big revolution in demand there, so this is why we’re conservative,” Bedard said. “We want to say that in LTL, we don’t see a lot of major improvement versus what we can see in the Truckload or Logistics sectors.”

“What we’re seeing on LTL is that the reason margins are expected to be flat is because we have too much volume and not enough price,” Saperstein said. “And that’s what we’re working on fixing.”

Bedard also cited TFI’s free cash flow, which he said was about $200 million in the quarter, compared with about $186 million a year earlier. He said that helped TFI reduce its debt-to-EBITDA ratio to 2.4X from 2.5X at the start of the year.

TFI does not have publicly traded debt. About a year ago, LTL competitor XPO (NYSE: XPO) had its rating lowered by S&P Global Ratings to BB, below investment grade. At the time, S&P said XPO’s debt ratio was about 2.5X, roughly the same level Bedard discussed for TFI during the call.

For the third quarter, Bedard said TFI expects earnings per share of $1.70 to $1.80, compared with $1.65 in the second quarter.