Third Quarter Ended September 30, 2016 1
Forward-Looking Statements In the interest of providing shareholders and potential investors with information regarding TransForce, including management s assessment of future plans and operations, certain statements in this presentation are forward-looking statements subject to risks, uncertainties and other important factors that could cause the Company s actual performance to differ materially from those expressed in or implied by such statements. Such factors are further discussed under Risks and Uncertainties in the Company s Annual Information Form and MD&A, but readers are cautioned that the list of factors that may affect future growth, results and performance is not exhaustive, and undue reliance should not be placed on forward-looking statements. Although the Company believes that the expectations conveyed by the forward-looking statements are based on information available to it on the date such statements were made, there can be no assurance that such expectations will prove to be correct. All subsequent forward-looking statements, whether written or orally attributable to the Company or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. Unless otherwise required by applicable securities laws, the Company expressly disclaims any intention, and assumes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2
Why Invest in TransForce Profitable earnings growth company Proven acquisition strategy Superior record of shareholder value creation Portfolio of value added solutions and services Financial discipline Market leader in key transportation and logistics segments Diversification by industry sectors and geography 3
Creating Shareholder Value Solidifying our position as a leader in the North American transportation and logistics industry Delivering profitable earnings growth both organic and through our proven acquisition strategy Disciplined, strategic, and profitable acquisitions and partnerships Focus on operations, integration, and realization of synergies Maintaining a strong balance sheet and access to capital Leveraging our team of dedicated professionals to provide value-added services and solutions across each of our business segments 4
Consistent, Profitable Growth Revenue Before Fuel Surcharge* (millions of CA$) EBITDA* and Diluted EPS* 4,000 3,607 500 433 2.00 3,000 2,000 400 300 200 1.56 1.75 1.50 1.25 1.00 100 0.75 1,000 11 12 13 14 15 TTM 0 0.50 11 12 13 14 15 TTM EBITDA (millions of CA$) Diluted EPS (CA$) 12.3% Revenue BFS CAGR (2011-TTM) 14.2% EBITDA CAGR (2011-TTM) 20.2% Diluted EPS CAGR (2011-TTM) *From continuing operations 5
Commitment to Generating Free Cash Flow 350 300 Free Cash Flow (FCF)* (millions of CA$) 316 800 700 600 Cumulative Cash Returned to Shareholders (millions of CA$) 720 250 500 400 200 300 150 200 100 100 11 12 13 14 15 TTM 12.2% FCF CAGR (2011-TTM) 88.7% FCF CONVERSION (TTM) 0 11 12 13 14 15 TTM * Defined as Net cash from continuing operations less additions to property and equipment plus proceeds from sale of property and equipment and assets held for sale. 6
Delivering Shareholder Value 400% 350% 5-year total return 300% 250% 200% 150% TSX Total Return 100% 50% 0% Sep/11 Sep/12 Sep/13 Sep/14 Sep/15 Sep/16 * Total return performance includes dividends. 7
Review of TransForce 8
Company Overview A North American leader in the transportation and logistics industry Canada s #1 transportation and logistics enterprise with U.S. transborder activities both in LTL and TL and international capabilities with our international partner Leadership position in both U.S. and Canada Same-Day / Last Mile Delivery A significant presence in U.S. domestic TL Our leadership position allows us to: Attract the most qualified people Attract larger and more diversified customers Play a key role in the direction and consolidation of the industry 14,187 qualified employees at September 30, 2016 plus significant use of independent contractors and agents 369 terminals (278 across Canada and 91 in the U.S.) 9
Business Strategy Diversified across four core business segments Focus on growing asset-light and value-added operations and lower capital intensity Segment s Total Revenue Contribution (before inter-segment eliminations) YTD 2016 2015 Package and Courier (P&C) 35% 33% Less-Than-Truckload (LTL) 21% 22% Truckload (TL) 38% 39% Logistics 6% 6% 10
Diversification Reduces Business Risks TransForce has built a robust and well-diversified revenue base No single client accounts for > 5% of consolidated revenue By Top Customers' Industry (6M-2016) By Geography (9M-2016) Retail 3% 3% 2% 4% Manufactured Goods Services 5% 5% 31% Automotive Food & Beverage Building Materials 5% 7% Energy Metals & Mining Forest Products 38% Canada 62% United States 7% 8% 8% 12% Chemicals & Explosives Maritime Containers Waste Management Others 11
Growth Opportunities 12
Acquisition of XPO Truckload (CFI) (Announced and Closed October 27, 2016) Top Quality TL Operation of Scale Strategic Benefits USD 530M revenue USD 115M EBITDA 29 locations 3,000 tractors and 7,500 trailers Approximately 50% of TransForce revenue now originates in the United States Approximately 50% of TransForce revenue is now in Truckload Access to Mexico Attractive Valuation EV/EBITDA multiple of less than 5x Immediately accretive to earnings Iconic Brand Reviving the iconic CFI brand under which this business has historically operated 13
Strong Shareholder Support TFI s share price increased 9% on the first day after the announcement on very high trading volume 9.0% increase Oct. 27 Oct. 28 Volume 14
Growth Through Acquisitions - Strategy Strategic, disciplined, and accretive acquisitions Proven track record of executing acquisition strategy Completed over 100 acquisitions in the past 10 years Strong focus on integration, operations and realization of synergies Recent significant acquisitions: Four businesses operating in the specialized TL segment and generating approximately $49 million in annual revenue (completed in Q1 and Q2 2016) All Canadian Courier (Same day/last mile P&C delivery, $25 million in revenue, completed in July 2015) Important provider of same-day and overnight delivery and logistics services in Canada Hazen Final Mile (Same day/last mile P&C delivery, US$45 million in revenue, completed in May 2015) Services retail clients in the United States 15
Growth Through Acquisitions - Synergies Example of synergy realization: terminal consolidation Notably in Package and Courier and LTL 35 terminal closures in the last 12 months, both in the U.S. and Canada through consolidation 4 sites closed in Q3-2016 Synergies within line haul and purchased transportation Greater purchasing power for equipment, fuel and insurance Lower facility expenses 16
Growth in E-Commerce TransForce services e-commerce from 80 North American cities Currently providing same-day delivery for a leading retailer in 18 North American markets, which is more than half the locations that company offers same-day delivery in E-commerce revenue trailing twelve months (TTM) of CA$389.8 million Further opportunities for the Package and Courier segment, both through acquisitions and organic growth Increasing facility utilization with addition of same-day service 17
TFI in E-Commerce Throughout the Portfolio TTM E-Commerce Revenue by Segment (millions of $CA) P&C TL LTL Logistics Total Canada 46.5 9.1 3.8-59.4 U.S. 240.5 89.5-0.4 330.4 Total 287.0 98.6 3.8 0.4 389.8 18
Evolution of E-Commerce Fulfillment The evolution of E-Commerce fulfillment has created numerous opportunities for TransForce companies Shipper - Warehouse Business Next-Day Services Delivery Pickup Sorting Facility Sorting Facility Linehaul Customer Region A Region B Shipper - Warehouse Same-Day Services Business Direct Delivery Customer 19
Growth in TFI E-Commerce Revenue 450.0 400.0 350.0 E-Commerce Revenue (millions of CA$) 389.8 300.0 250.0 200.0 150.0 100.0 11 12 13 14 15 TTM 22.1% E-Commerce Revenue CAGR (2011-TTM) 20
TFI s E-Commerce Customers Deliver Outsized Growth E-Commerce Revenue with Customer A (millions of CA$) 110 96 100 90 80 70 60 50 40 11 12 13 14 15 TTM 14.7% Revenue CAGR (2011-TTM) Evolution of B2B/B2C Split 22% 26% 31% 32% 34% 41% E-Commerce Revenue with Customer B (millions of CA$) 100 83 78% 74% 80 60 69% 68% 66% 59% 40 20 0 11 12 13 14 15 TTM 119.1% Revenue CAGR (2011-TTM) 11 12 13 14 15 TTM B2B B2C 21
Financial Highlights (From continuing operations) 22
Five-Year Financial Highlights 4 3 2 1 Revenue before Fuel Surcharge (billions of CA$) 3.6 12 13 14 15 TTM 500 450 400 350 300 250 200 EBITDA* (millions of CA$) 433 12 13 14 15 TTM 350 300 250 200 150 100 Free Cash Flow* (millions of CA$) 316 12 13 14 15 TTM 1.89 1.64 2.45 2.91 3.32 $ / share 350 300 250 200 150 100 Operating Income (millions of CA$) 253 12 13 14 15 TTM 7.5% 7.3% 7.7% 7.6% 7.0% Margin as a % of revenue before fuel surcharge * These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 23
Five-Year Financial Highlights Cash Flow Usage Net maintenance Capex 45.2 26.2 43.9 117.8 75.6 Proceeds from excess assets (12.6) (25.7) (58.8) (52.4) (28.8) Business acquisitions 80.4 57.3 814.2 44.8 30.7 Net long-term debt repayment 63.5 71.2 (579.4) 139.1 824.3 (proceeds) Cash return to shareholders 108.5 67.3 114.0 190.4 Dividend paid 46.6 48.1 56.6 68.6 Share buy back 61.9 19.2 57.4 121.8 Others (1.4) 24.5 (38.6) (2.7) 30.7 Net cash from discontinued operations 400 350 300 250 200 150 Net Cash Flow from Continuing Operations (in millions of CA$) 223.0 65.2 157.8 (71.9) (68.6) (66.8) (78.2) (790.7) TOTAL 211.7 152.2 228.5 358.8 364.8 364.8 100 2012 2013 2014 2015 TTM 24
Five-Year Financial Highlights CAPEX and depreciation are very low when compared to the industry due to asset-light model, which reduces capital intensity 4.5% 4.0% 3.5% 3.0% Capital Expenditures (% of Total Revenue) 2.8% 4.5% 4.0% 3.5% 3.0% Depreciation (% of Total Revenue) 3.3% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 12 13 14 15 TTM 1.0% 12 13 14 15 TTM 25
Segmented Financial Highlights Q3 2016 (in millions of $) Package and Courier Less-Than- Truckload Truckload Logistics Total (*) Q3-2016 Q3-2015 Q3-2016 Q3-2015 Q3-2016 Q3-2015 Q3-2016 Q3-2015 (restated) Q3-2016 Q3-2015 (restated) Revenue before fuel surcharge 328 318 181 192 343 362 58 59 897 913 EBITDAR 56 45 26 23 66 78 9 8 150 150 EBITDAR Margin (%) 16.9% 14.2% 14.3% 12.0% 19.3% 21.4% 15.7% 14.0% 16.7% 16.4% EBITDA 42 31 22 20 52 64 8 7 117 117 EBITDA Margin (%) 12.8% 9.8% 12.4% 10.4% 15.2% 17.7% 13.1% 11.5% 13.0% 12.8% Operating income 34 22 15 12 25 37 7 6 72 73 Operating margin (%) 10.2% 7.0% 8.5% 6.3% 7.2% 10.3% 11.5% 10.1% 8.1% 8.0% Total Assets 696 726 618 686 1,523 1,574 131 132 3,007 3,134 Total Hard Assets 250 261 407 467 771 803 37 43 1,502 1,588 Adjusted Net Income** 56 49 Free Cash Flow** 81 56 * Including inter-segment revenue eliminations and corporate expenses and assets. ** These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 26
Segmented Financial Highlights 9M 2016 (in millions of $) Package and Courier Less-Than- Truckload Truckload Logistics Total (*) 9M-2016 9M-2015 9M-2016 9M-2015 9M-2016 9M-2015 9M-2016 9M-2015 (restated) 9M-2016 9M-2015 (restated) Revenue before fuel surcharge 971 910 538 573 1,031 1,071 171 190 2,668 2,692 EBITDAR 150 129 65 67 203 220 24 29 420 432 EBITDAR Margin (%) 15.5% 14.1% 12.1% 11.7% 19.6% 20.6% 13.8% 15.4% 15.7% 16.0% EBITDA 109 89 55 59 160 182 19 25 321 341 EBITDA Margin (%) 11.2% 9.8% 10.2% 10.3% 15.5% 17.0% 11.2% 13.3% 12.0% 12.7% Operating income 83 64 33 35 77 104 16 23 186 210 Operating margin (%) 8.6% 7.0% 6.2% 6.1% 7.5% 9.7% 9.5% 11.9% 7.0% 7.8% Total Assets 696 726 618 686 1,523 1,574 131 132 3,007 3,134 Total Hard Assets 250 261 407 467 771 803 37 43 1,502 1,588 Adjusted Net Income** 143 143 Free Cash Flow** 190 166 * Including inter-segment revenue eliminations and corporate expenses and assets. ** These are non-ifrs measures. Please refer to the tables at the end of the presentation for a reconciliation of non-ifrs measures. 27
Balance Sheet Leverage metrics Disciplined acquisition strategy with focus on preserving balance sheet strength and attractive cost of capital Debt as at September 30, 2016: $853.9 million Total Debt / EBITDA Total Debt (millions of CA$) 4.6x 1,618 1,615 3.6x 2.9x 2.9x 2.0x 808 774 854 12 13 14 15 TTM 12 13 14 15 TTM 5.6% 5.2% 4.0% 3.7% 3.7% Weighted average cost 28
Balance Sheet Debt structure $1.2 billion unsecured banking credit facility Matures in June 2020 and can be extended annually Provides favourable terms and conditions and capital management flexibility $125 million unsecured debentures Interest rate between 3% and 3.45% and matures in December 2020 Can be repaid, without penalty, after December 18, 2019 $75 million unsecured term loan 3.95% interest rate and matures in August 2019 Can be repaid, without penalty, after August 18, 2018 New $500 million acquisition credit (as of October 2016) Two tranches, $200 million maturing in October 2018 and $300 million maturing in October 2019 Same pricing, covenants and conditions as the revolving banking credit facility 29
Why Invest in TransForce 30
Delivering Shareholder Value 15.0% Return on Equity ROE - % 60 Expected Amortization of Intangible Assets & Incremental EPS 0.18 12.5% 0.14 0.16 0.14 10.0% 40 34.0 0.12 0.10 0.08 20 0.06 0.04 0.02 5.0% 13 14 15 TTM 0 16 17 18 19 20 21 0.00 Amortization (in M$) Incremental EPS (in $) 31
Delivering Shareholder Value Quarterly dividend was at $0.17; 12% increase to $0.19 on the next payment, annual dividend yield of 2.8% (on September 30, 2016 share price) Plan to distribute 20-25% of annualized free cash flow available Free Cash Flow from continuing operations of $3.32 per share for the last 12 months ended September 30, 2016 12.2% yield Healthy Free Cash Flow conversion ratio of 88.7% for the last 12 months ended September 30, 2016 (Defined as (EBITDA Net CAPEX) / EBITDA) Average ROE of 13.5% since 2012 Substantial issuer bid in Q1-2016 resulted in the repurchase of 2.7 million common shares at $22.00 per share for a total of $59.4 million Renewed NCIB to repurchase up to 6 million shares until September 29, 2017 3,702,200 common shares repurchased in the first 9 months for a total of $90.7 million Benefits from evolution to an asset-light business model Higher return on assets and asset turnover 32
Outlook In Canada, low oil prices continued to negatively impact the economy while the effects of a weak currency have yet to provide a boost to the manufacturing sector In the U.S. healthy consumer spending is favourable for the P&C segment, but a softer manufacturing sector is expected to further affect TL activities Ongoing focus on maximizing efficiency Cost reduction initiatives in the P&C and LTL segments Asset optimization throughout the organization Pursuing execution of a disciplined acquisition strategy in the fragmented North American transportation and logistics market Asset-light model further strengthens cash flow generation Used for strategic acquisitions and debt reduction Dividends and share repurchases further increase shareholder returns 33
Five-Year Reconciliation of EBITDA* (in millions of $) (from continuing operations) TTM Q3-2016 2015 2014 2013 2012 Net income 151.3 145.7 116.2 77.5 101.7 Net finance costs 52.5 75.7 64.2 72.9 37.2 Income tax expense 48.8 55.1 47.2 26.6 38.8 Operating income 252.6 276.5 227.6 177.0 177.7 Depreciation of property and equipment 129.4 129.1 86.0 65.5 70.1 Amortization of intangible assets 50.8 47.1 35.7 25.3 29.0 EBITDA 432.8 452.7 349.3 267.8 276.8 * This is a non-ifrs measure. 34
Five-Year Reconciliation of Free Cash Flow* (in millions of $) (from continuing operations) TTM Q3-2016 2015 2014 2013 2012 Net cash from operating activities 364.8 358.8 228.5 152.2 211.7 Additions to property and equipment (108.7) (157.8) (69.3) (49.2) (52.4) Proceeds from sale of property and equipment and AHFS 59.9 90.5 84.2 48.7 19.8 Free cash flow from continuing operations 316.0 291.5 243.4 151.7 179.1 * This is a non-ifrs measure. 35
Three-Month and Nine-Month Reconciliation of Adjusted Net Income from Continuing Operations* (in millions of $) Three months ended September 30 Nine months ended September 30 2016 2015 2016 2015 Net income 51.5 41.6 594.2 119.8 Amortization of intangible assets related to business acquisitions, net of tax 7.7 7.2 23.5 21.1 Net change in fair value of derivatives, net of tax (2.8) 8.7 5.6 13.4 Net foreign exchange loss (gain), net of tax 0.2 (1.2) 2.4 0.6 Tax on multi-jurisdiction distributions 0.2 2.0 0.6 2.4 Net income from discontinued operations (0.4) (9.7) (483.5) (14.6) Adjusted net income from continuing operations 56.4 48.6 142.8 142.7 * This is a non-ifrs measure. 36
Three-Month and Nine-Month Reconciliation of Free Cash Flow* (in millions of $) Three months ended September 30 Nine months ended September 30 2016 2015 2016 2015 Net cash from continuing operations 88.3 86.9 228.1 222.1 Additions to property and equipment (19.9) (42.3) (79.6) (128.7) Proceeds from sale of property and equipment 12.9 11.8 41.8 51.8 Proceeds from sale of assets held for sale - - - 20.6 Free cash flow from continuing operations 81.3 56.4 190.3 165.8 * This is a non-ifrs measure. 37