Has TFI International Truly Turned the Corner? A Deep Dive Into U.S. LTL and Daseke Recovery

When it comes to logistics companies, the line between resilience and reinvention is razor-thin. TFI International (TFII), a cornerstone of North American freight, has been navigating a storm of headwinds in its U.S. LTL and Daseke segments. But with Q2 2025 earnings in hand and a slate of strategic moves under its belt, the question on every investor's mind is: Has this company genuinely turned a corner, or is it just papering over cracks? Let's dig into the numbers, the narrative, and what this means for long-term shareholders.

The U.S. LTL Segment: A Tale of Two Metrics

The U.S. LTL segment remains TFI's bread and butter, contributing 39% of total revenue before fuel surcharge in Q2 2025. While revenue fell 11% year-over-year to $704 million, the operating ratio (OR) improved by 3.6 basis points sequentially to 89.5%. That may not sound like much, but in a sector where margins are razor-thin, even incremental gains are significant.

The real story here is the operational overhaul. TFI has deployed Optum software for line-haul optimization, which is reducing empty miles and improving delivery times. The introduction of sleeper trucks—a move to handle time-sensitive shipments more effectively—has boosted customer satisfaction. Meanwhile, the Prism billing system is cutting down on billing errors, a pain point for many LTL players. These aren't just cost-cutting measures; they're foundational shifts that could stabilize the segment's long-term profitability.

But let's not ignore the elephant in the room: Revenue is still down. The 11% decline reflects broader macroeconomic pressures, including soft retail demand and inventory corrections. However, the sequential OR improvement and 12.9% ROIC suggest TFI is operationalizing its way out of the doldrums. If these trends continue, the U.S. LTL segment could become a reliable cash cow again.

Daseke's Rocky Road: Industrial Woes and Strategic Reinvention

Daseke, TFI's 72%-owned specialized truckload arm, is facing a tougher battle. Industrial freight demand has cratered, with miles down 10% year-to-date due to tariff uncertainties and a sluggish manufacturing sector. Yet, the CEO's optimism isn't unwarranted. The Trump administration's infrastructure agenda—think $3 trillion in planned spending—could catalyze a rebound by late 2025 or early 2026.

What's more, Daseke's transformation from a “fleet of good truckers” to a “fleet of good business truckers” is a game-changer. This shift prioritizes profit margins over sheer volume, a critical adjustment in a low-growth environment. The new tax savings from U.S. legislation ($20 million in 2025 and another $20 million in 2026) will further pad Daseke's bottom line, giving it room to invest in capacity expansion or rate hikes.

Still, the 10% drop in miles is alarming. Investors must ask: Is this a temporary blip, or a sign of structural challenges in the industrial sector? The answer will determine whether Daseke's recovery is a V-shaped rebound or a prolonged slog.

Capital Allocation: A Shareholder-Friendly Playbook

Here's where TFI shines. Despite the revenue miss, the company's capital allocation strategy is a masterclass in shareholder value. Q2 2025 saw $85 million in share repurchases and $39 million in dividends, totaling $124 million returned to investors. With a funded debt-to-EBITDA ratio of 2.4x and $182 million in free cash flow, TFI has the financial flexibility to continue this approach.

The CEO's guidance for Q3 2025 (adjusted EPS of $1.10–$1.25) and $200 million in annual capital expenditures also signals confidence. TFI isn't just managing its balance sheet—it's leveraging it to fund growth while rewarding shareholders.

The Verdict: A Turnaround in the Making?

TFI's sequential improvements in the U.S. LTL segment and Daseke's strategic pivot suggest the company is genuinely turning a corner. The OR improvements, ROIC, and capital returns are all indicators of a firm that's regaining its footing. However, the industrial sector's recovery is far from guaranteed, and the stock's 3.57% post-earnings drop reflects lingering skepticism.

For long-term investors, the key is to stay patient. TFI's balance sheet is strong, its operational upgrades are tangible, and its capital allocation strategy is disciplined. If the industrial sector rebounds as expected, Daseke's tax savings and rate hikes could unlock new value. But for now, the stock's 52-week low of $93.58 and a wide range of analyst price targets ($86–$160) suggest the market is still waiting for proof.

In the end, TFI International isn't just surviving—it's adapting. And in logistics, that's half the battle.