Document:

EX-4.3

 Exhibit 4.3 
  

 
 MANAGEMENT’S DISCUSSION AND ANALYSIS 

For the fourth quarter and year ended 

December 31, 2019 

CONTENTS 
  

					
	 GENERAL INFORMATION
	  	 	2	 
		
	 FORWARD-LOOKING STATEMENTS
	  	 	2	 
		
	 SELECTED FINANCIAL DATA AND HIGHLIGHTS
	  	 	3	 
		
	 ABOUT TFI INTERNATIONAL
	  	 	4	 
		
	 CONSOLIDATED RESULTS
	  	 	5	 
		
	 SEGMENTED RESULTS
	  	 	9	 
		
	 LIQUIDITY AND CAPITAL RESOURCES
	  	 	15	 
		
	 OUTLOOK
	  	 	19	 
		
	 SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS
	  	 	20	 
		
	 NON-IFRS FINANCIAL MEASURES
	  	 	20	 
		
	 RISKS AND UNCERTAINTIES
	  	 	24	 
		
	 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
	  	 	37	 
		
	 CHANGES IN ACCOUNTING POLICIES
	  	 	38	 
		
	 CONTROLS AND PROCEDURES
	  	 	38	 

 Management’s Discussion and Analysis 

 

 GENERAL INFORMATION 

The following is TFI International Inc.’s management discussion and analysis (“MD&A”). Throughout this MD&A, the terms
“Company”, “TFI International” and “TFI” shall mean TFI International Inc., and shall include its independent operating subsidiaries. This MD&A provides a comparison of the Company’s performance for its
three-month period and year ended December 31, 2019 with the corresponding three-month period and year ended December 31, 2018 and it reviews the Company’s financial position as of December 31, 2019. It also includes a discussion
of the Company’s affairs up to February 10, 2020, which is the date of this MD&A. The MD&A should be read in conjunction with the audited consolidated financial statements and accompanying notes as at and for the year ended
December 31, 2019. 
 In this document, all financial data are prepared in accordance with the International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) unless otherwise noted. All amounts are in Canadian dollars, and the term “dollar”, as well as the symbols “$” and “C$”,
designate Canadian dollars unless otherwise indicated. Variances may exist as numbers have been rounded. This MD&A also uses non-IFRS financial measures. Refer to the section of this report entitled “Non-IFRS Financial Measures” for a complete description of these measures. 
 The Company’s audited
consolidated financial statements have been approved by its Board of Directors (“Board”) upon recommendation of its audit committee on February 10, 2020. Prospective data, comments and analysis are also provided wherever appropriate
to assist existing and new investors to see the business from a corporate management point of view. Such disclosure is subject to reasonable constraints for maintaining the confidentiality of certain information that, if published, would probably
have an adverse impact on the competitive position of the Company. 
 Additional information relating to the Company can be found on its website at www.tfiintl.com. The Company’s continuous disclosure materials, including its annual and quarterly MD&A, annual and quarterly consolidated
financial statements, annual report, annual information form, management proxy circular and the various press releases issued by the Company are also available on its website or directly through the SEDAR system at www.sedar.com. 
 FORWARD-LOOKING
STATEMENTS 
 The Company may make statements in this report that reflect its current expectations regarding future results of operations,
performance and achievements. These are “forward-looking” statements and reflect management’s current beliefs. They are based on information currently available to management. Words such as “may”, “might”,
“expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “to its knowledge”, “could”, “design”, “forecast”,
“goal”, “hope”, “intend”, “likely”, “predict”, “project”, “seek”, “should”, “target”, “will”, “would” or “continue” and words and
expressions of similar import are intended to identify these forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and
those presently anticipated or projected. 
 The Company wishes to caution readers not to place undue reliance on any forward-looking statements which
reference issues only as of the date made. The following important factors could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement: the highly competitive market
conditions, the Company’s ability to recruit, train and retain qualified drivers, fuel price variations and the Company’s ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental
standards and regulations, changes in governmental regulations applicable to the Company’s operations, adverse weather conditions, accidents, the market for used equipment, changes in interest rates, cost of liability insurance coverage,
downturns in general economic conditions affecting the Company and its customers, and credit market liquidity. 
 The foregoing list should not be
construed as exhaustive, and the Company disclaims any subsequent obligation to revise or update any previously made forward-looking statements unless required to do so by applicable securities laws. Unanticipated events are likely to occur. Readers
should also refer to the section “Risks and Uncertainties” at the end of this MD&A for additional information on risk factors and other events that are not within the Company’s control. The Company’s future financial and
operating results may fluctuate as a result of these and other risk factors. 

  

			
	

 	 	2

 Management’s Discussion and Analysis 

 

 SELECTED FINANCIAL DATA AND HIGHLIGHTS 

 

																									
	 	 	 
	 (unaudited)

(in thousands of dollars, except per share data)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2017*	 	  	2019	 	  	2018*	 	  	2017*	 
	 Revenue before fuel surcharge
	  	 	1,166,476	 	  	 	1,162,279	 	  	 	1,069,679	 	  	 	4,613,629	 	  	 	4,508,197	 	  	 	4,378,985	 
	 Fuel surcharge
	  	 	139,011	 	  	 	159,166	 	  	 	123,199	 	  	 	565,235	 	  	 	615,011	 	  	 	458,429	 
	 Total revenue
	  	 	1,305,487	 	  	 	1,321,445	 	  	 	1,192,878	 	  	 	5,178,864	 	  	 	5,123,208	 	  	 	4,837,414	 
	 Adjusted EBITDA from continuing operations1
	  	 	217,512	 	  	 	180,654	 	  	 	131,017	 	  	 	864,500	 	  	 	686,283	 	  	 	514,481	 
	 Operating income from continuing operations
	  	 	124,290	 	  	 	103,283	 	  	 	66,076	 	  	 	511,620	 	  	 	430,524	 	  	 	178,421	 
	 Net income
	  	 	74,828	 	  	 	76,728	 	  	 	120,192	 	  	 	310,283	 	  	 	291,994	 	  	 	157,988	 
	 Net income from continuing operations
	  	 	76,543	 	  	 	76,728	 	  	 	120,192	 	  	 	324,476	 	  	 	291,994	 	  	 	157,988	 
	 Adjusted net income from continuing operations1
	  	 	79,173	 	  	 	86,262	 	  	 	53,945	 	  	 	336,393	 	  	 	321,612	 	  	 	192,188	 
	 Net cash from continuing operating activities
	  	 	176,177	 	  	 	173,848	 	  	 	116,148	 	  	 	665,292	 	  	 	543,503	 	  	 	372,601	 
	 Free cash flow from continuing operations1
	  	 	103,240	 	  	 	103,917	 	  	 	102,432	 	  	 	462,983	 	  	 	339,707	 	  	 	376,487	 
	 Total assets
	  	 	4,557,255	 	  	 	4,049,960	 	  	 	3,727,628	 	  	 	4,557,255	 	  	 	4,049,960	 	  	 	3,727,628	 
	 Total long-term debt and lease liabilities
	  	 	2,206,529	 	  	 	1,584,423	 	  	 	1,498,396	 	  	 	2,206,529	 	  	 	1,584,423	 	  	 	1,498,396	 
	 Per share data
	  				  				  				  				  				  			
	 EPS – diluted
	  	 	0.90	 	  	 	0.85	 	  	 	1.31	 	  	 	3.63	 	  	 	3.22	 	  	 	1.70	 
	 EPS from continuing operations – diluted
	  	 	0.92	 	  	 	0.85	 	  	 	1.31	 	  	 	3.80	 	  	 	3.22	 	  	 	1.70	 
	 Adjusted EPS from continuing operations –
diluted1
	  	 	0.95	 	  	 	0.96	 	  	 	0.59	 	  	 	3.94	 	  	 	3.54	 	  	 	2.07	 
	 Dividends
	  	 	0.26	 	  	 	0.24	 	  	 	0.21	 	  	 	0.98	 	  	 	0.87	 	  	 	0.78	 
	 As a percentage of revenue before fuel surcharge
	  				  				  				  				  				  			
	 Adjusted EBITDA margin from continuing operations
1
	  	 	18.6%	 	  	 	15.5%	 	  	 	12.2%	 	  	 	18.7%	 	  	 	15.2%	 	  	 	11.7%	 
	 Depreciation of property and equipment
	  	 	5.1%	 	  	 	4.5%	 	  	 	4.5%	 	  	 	4.9%	 	  	 	4.4%	 	  	 	4.8%	 
	 Depreciation of right-of-use
assets
	  	 	2.2%	 	  	 	-	 	  	 	-	 	  	 	2.2%	 	  	 	-	 	  	 	-	 
	 Amortization of intangible assets
	  	 	1.4%	 	  	 	1.3%	 	  	 	1.5%	 	  	 	1.4%	 	  	 	1.4%	 	  	 	1.4%	 
	 Operating margin from continuing operations 1
	  	 	10.7%	 	  	 	8.9%	 	  	 	6.2%	 	  	 	11.1%	 	  	 	9.5%	 	  	 	4.1%	 
	 Adjusted operating ratio from continuing operations1
	  	 	90.1%	 	  	 	90.3%	 	  	 	93.8%	 	  	 	89.8%	 	  	 	90.6%	 	  	 	94.4%	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Q4 Highlights 
  

	 	•	 	 Record fourth quarter operating income from continuing operations increased to $124.3 million, up 20% from the same
quarter last year, driven by strong execution across the organization, increased quality of revenue, an asset-light approach, and cost efficiencies. 

  

	 	•	 	 Operating margin from continuing operations1, a non-IFRS measure, was up to 10.7% from 8.9% in the prior year quarter. 

  

	 	•	 	 Net income from continuing operations of $76.5 million compares to $76.7 million in Q4 2018.

  

	 	•	 	 Diluted earnings per share (diluted “EPS”) from continuing operations of $0.92 compares favorably to $0.85 in
Q4 2018. 

  

	 	•	 	 Adjusted net income from continuing operations1, a non-IFRS measure, of $79.2 million compared to $86.3 million in Q4 2018. 

  

	 	•	 	 Adjusted diluted EPS from continuing operations1, a non-IFRS measure, of $0.95 compared to $0.96 in Q4 2018. 

  

 

	 	•	 	 Net cash from continuing operating activities was $176.2 million, as compared to $173.8 million in Q4 2018,
benefitting from stronger operating performance and the impact of the adoption of IFRS 16. 

  

	 	•	 	 Free cash flow from continuing operation1, a non-IFRS measure, of $103.2 million, impacted negatively by a one-time real estate purchase of $38.0 million, compares to $103.9 million in Q4 2018.

  

	 	•	 	 The Company’s reportable segments performed as follows: 

 

	 	o	 Package and Courier operating income decreased 13% to $29.9 million, as the comparable period benefited from the
Canada Post strike; 

  

	 	o	 Less-Than-Truckload operating income increased 9% to $25.5 million; 

 

	 	o	 Truckload operating income increased 17% to $61.3 million; and 

 

	 	o	 Logistics operating income of $18.8 million compares to $2.9 million the prior year, which was impacted by
$12.6 million of impairment of intangibles. 

  

	 	•	 	 The Company returned $49.8 million to shareholders during the quarter, of which $19.7 million was through
dividends and $30.1 million was through share repurchases. 

  

	 	•	 	 On December 17, 2019, the Board of Directors of TFI declared a quarterly dividend of $0.26, an 8% increase over the
prior quarterly dividend, as was announced on October 24, 2019. 

  

 

	1 	 Refer to the section “Non-IFRS financial measures”. 

  

			
	

 	 	3

 Management’s Discussion and Analysis 

 

	 	•	 	 The Company borrowed $150 million in U.S. dollars under a new seven-year senior notes carrying a fixed interest rate
of 3.85%, and used the proceeds to pay down its existing unsecured revolving credit facility. In addition, the Company’s existing term loan was increased by $75 million, to a new amount of $200 million bearing interest at a rate of 3.77%
with an extended expiration date in 2024. As a result, the Company’s availability on its revolving credit facility has increased to approximately $585 million. 

 

 ABOUT TFI INTERNATIONAL 

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

	 	•	 	 Package and Courier; 

	 	•	 	 Less-Than-Truckload; 

	 	•	 	 Truckload; 

	 	•	 	 Logistics (previously named Logistics and Last Mile). 

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

As at December 31, 2019 the Company had 17,150 employees in TFI International’s various business segments across North America. This compares to
17,127 employees as at December 31, 2018. The year-over-year increase of 23 is attributable to business acquisitions that added 1,033 employees offset by rationalizations affecting 1,010 employees mainly in the Less-Than-Truckload
(“LTL”) and Truckload segments. The Company believes that it has a relatively low turnover rate among its employees in Canada, and a normal turnover rate in the U.S. comparable to other U.S. carriers, and that its employee relations are
very good. 
 Equipment 
 The Company believes
it has the largest trucking fleet in Canada and a significant presence in the U.S. market. As at December 31, 2019, the Company had 7,772 tractors, 25,505 trailers and 9,826 independent contractors. This compares to 7,465 tractors, 26,487
trailers and 8,527 independent contractors as at December 31, 2018.

 Facilities 

TFI International’s head office is in Montréal, Québec and its executive office is in Etobicoke, Ontario. As at December 31, 2019,
the Company had 380 facilities, as compared to 369 facilities as at December 31, 2018. Of these, 246 are located in Canada, including 158 and 88 in Eastern and Western Canada, respectively. The Company also had 122 facilities in the United
States and 12 facilities in Mexico. In the last twelve months, 44 facilities were added from business acquisitions, and terminal consolidation decreased the total number of facilities by 33, mainly in the Logistics segment. In Q4 2019, the Company
closed 10 sites. 
 Customers 
 The Company has
a diverse customer base across a broad cross-section of industries with no single client accounting for more than 5% of consolidated revenue. Because of its customer diversity, as well as the wide geographic scope of the Company’s service
offerings and the range of segments in which it operates, a downturn in the activities of individual customers or customers in a particular industry would not be expected to have a material adverse impact on operations. The Company has forged
strategic partnerships with other transport companies in order to extend its service offerings to customers across North America. 
  

							
	
Revenue by Top Customers’ Industry

(64% of total revenue)

	 Retail

Manufactured Goods

Building Materials

Automotive

Metals & Mining

Food & Beverage

Forest Products

Chemicals & Explosives

Energy

Services

Waste Management

Maritime Containers

Others
	  	 
 
 

 

 

 

 

 
	25
 16

9
 9

8
 7

5
 4

4
 3

2
 1

7
	% 
 % 

% 
 % 

% 
 % 

% 
 % 

% 
 % 

% 
 % 

% 
	 	 

 (For the year ended December 31, 2019)

 

  

			
	

 	 	4

 Management’s Discussion and Analysis 

 

 CONSOLIDATED RESULTS 

This section provides general comments on the consolidated results of operations. A more detailed analysis is provided in the “Segmented
results” section. 
 2019 business acquisitions 

In line with its growth strategy, the Company acquired eight businesses during 2019, all prior to the fourth quarter: Toronto Tank Lines
(“TTL”), Schilli Corporation (“Schilli”), Les Services JAG (“JAG”), Aulick Leasing Corp. (“Aulick”), certain assets of BeavEx Incorporated (“BeavEx”), Piston Tank Corporation (“Piston”),
selected assets of AT Group US Logistics, LLC (“US Logistics”), and Craler Inc. (“Craler”). 
 On February 15, 2019, TFI
International completed the acquisition of TTL. Based in Ontario, TTL specializes in the transportation and storage of food grade liquids, industrial chemicals, specialty oils and waxes throughout Canada, the United States and Mexico. 

On February 22, 2019, TFI International completed the acquisition of Schilli, which was renamed to BTC East in September 2019. Based in Missouri,
Schilli specializes in the transportation of dry and liquid bulk and offers dedicated fleet solutions and other value-add services throughout the Midwest, Southeast and Gulf Coast regions of the United States.

 On March 19, 2019, TFI International completed the acquisition of JAG. Based in Québec, JAG provides transportation services for
explosives, mining and steel products, electronics, and household goods. 
 On April 1, 2019, TFI International completed the acquisitions of
Aulick and its affiliate ShirAul, LLC. Based in Nebraska, Aulick provides contract hauling services for aggregate materials, wood by-product, agriculture/commodities, beets, dry bulk materials, railroad
traction sand and food grade product materials through the Central and Western U.S. ShirAul designs and manufactures the exclusive BulletTM trailer. 

On April 27, 2019, TFI International completed the acquisition of BeavEx and its affiliates Guardian Medical Logistics (“GML”), JNJW
Enterprises, Inc. and USXP, LLC for a cash consideration of US$7.2 million through the United States Bankruptcy Court for the District of Delaware. BeavEx primarily serves the growing final-mile delivery requirements of the financial,
healthcare, retail, industrial, and manufacturing sectors, offering same-day, next-day, and on-demand home delivery services. Its
logistics capabilities include final-mile, crossdocking, and distribution services. The BeavEx affiliate GML is an industry leading provider of final-mile, mission critical logistics and transportation services to the medical laboratory industry.

 On June 14, 2019, TFI International completed the acquisition of Piston. Based in Missouri, Piston specializes in the transportation of viscous
materials and offers a patented solution for the storage, handling, and transportation of these materials for the food and industrial products industries. 

On August 7, 2019, TFI international completed the acquisition of selected assets of US Logistics. Based in Georgia, US Logistics provides medical
logistics, final mile and brokerage services in select regions of the United States. 
 On August 22, 2019, TFI International completed the
acquisition of Craler. Based in Québec, Craler provides brokerage, direct trucking and warehousing services across Canada, the United States and Mexico. 

Revenue 
 For the three months ended
December 31, 2019, total revenue was $1,305.5 million, down 1%, or $16.0 million, from Q4 2018. The contribution from business acquisitions of $115.1 million was offset by decreases in fuel surcharge revenue of $27.0 million
and revenue before fuel surcharge of $103.9 million, both in existing operations. The average exchange rate used to convert TFI International’s revenue generated in U.S. dollars remained largely unchanged this quarter (C$1.3200) compared
to the same quarter last year (C$1.3204). 
 For the year ended December 31, 2019, total revenue reached $5.18 billion, up 1%, or
$55.7 million, as compared to $5.12 billion in 2018 mainly due to the contribution from business acquisitions of $424.2 million and positive currency impact of $34.3 million which were offset by decreases in fuel surcharge
revenue of $84.0 million and revenue before fuel surcharge of $318.8 million, both in existing operations. 
 Operating expenses from
continuing operations 
 For the three months ended December 31, 2019, the Company’s operating expenses from continuing operations
decreased by $37.0 million, to $1,181.2 million from $1,218.2 million in Q4 2018. The increase attributable to business acquisitions of $104.7 million was offset by a net decrease of $141.7 million, or 12%, in existing
operating expenses. Operating improvements, better fleet utilization and lower material and services expenses as a percentage of revenue contributed to maintaining the operating expenses in the Company’s existing operations below the Q4 2018
level as a percentage of total revenue, as well as $6.9 million of additional gains on the disposal of assets held for sale as compared to the same period in 2018. 

For the three months ended December 31, 2019, material and services expenses, net of fuel surcharge, decreased by 0.4 percentage points of revenue
before fuel surcharge compared to the same period last year due to lower subcontractor, rolling stock lease and fuel costs as a percentage of revenue before fuel surcharge. Mainly due to the adoption of IFRS 16, equipment lease expense decreased
$11.0 million compared to Q4 2018 as, since January 1, 2019, a significant portion of these operating leases are now capitalized with depreciation expense recorded and presented under the caption of depreciation of right-of-use assets in the income statement. Right-of-use assets depreciation on rolling stock
amounted to $10.0 million for Q4 2019. 

  

			
	

 	 	5

 Management’s Discussion and Analysis 

 

 Other operating expenses, which are primarily composed of costs related to office and terminal rent,
taxes, heating, telecommunications, maintenance and security and other general administrative expenses, decreased 1.7 percentage points of revenue before fuel surcharge compared to the same period last year due to lower terminal rent expenses. Due
to IFRS 16 adoption, real estate lease expense decreased $19.4 million compared to Q4 2018 as, since January 1, 2019, a significant portion of these leases are now capitalized with depreciation expense recorded and presented under
depreciation of right-of-use assets in the income statement. Right-of-use assets
depreciation on real estate leases amounted to $15.6 million for Q4 2019. 
 For the three months ended December 31, 2019, depreciation of right-of-use assets amounting to $25.8 million is mainly composed of rolling stock and real estate leases that are now treated as finance leases due to the adoption of
IFRS 16 on January 1, 2019. As permitted with this new standard, comparative information has not been restated. 
 For the three-month period ended
December 31, 2019, the gain on sale of assets held for sale was $8.4 million, compared to $1.5 million in Q4 2018. Five properties were disposed of for a cash consideration of $17.2 million. 

For the year ended December 31, 2019, the Company’s operating expenses from continuing operations increased by $24.3 million from
$4.08 billion in 2018 to $4.10 billion in 2019. The increase is mainly attributable to business acquisitions for $343.0 million offset by a net decrease of $318.7 million primarily attributable to lower material and service
expenses in the Company’s existing operations. 
 Operating income from continuing operations 

For the three months ended December 31, 2019, TFI International’s operating income from continuing operations rose by $21.0 million to
$124.3 million compared to $103.3 million in the same quarter in 2018. The adoption of IFRS 16 contributed $5.0 million to the increase (which primarily represents the interest expense on lease liabilities which is included in
interest expense in 2019). The operating margin from continuing operations as a percentage of revenue before fuel surcharge improved, from 8.9% in Q4 2018 to 10.7% in Q4 2019. All reportable segments except Package and Courier reported margin
increases. Notably, the Logistics segment reported a margin increase of 5.9 percentage points primarily as a result of an impairment of intangible assets recognized in 2018. 

For the year ended December 31, 2019, operating income from continuing operations increased by $81.1 million, or 19%, to $511.6 million
compared to $430.5 million in 2018, driven by operating improvements, business acquisitions, an increase on the gain on sale of assets held for sale of $13.0 million, a bargain purchase gain of $10.8 million, and a the
$12.6 million impairment of intangible assets recorded in 2018. 
 Finance income and costs 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
  
	  	 Three months ended

December 31
	 	 	 Years ended

December 31
	 
	 Finance costs (income)
	  	2019	 	 	2018*	 	 	2019	 	 	2018*	 
	 Interest expense on long-term debt
	  	 	14,976	 	 	 	13,159	 	 	 	58,290	 	 	 	54,609	 
	 Interest expense on lease liabilities
	  	 	4,560	 	 	 	-	 	 	 	18,551	 	 	 	-	 
	 Interest income and accretion on promissory note
	  	 	(818	) 	 	 	(747	) 	 	 	(3,001	) 	 	 	(2,807	) 
	 Net change in fair value and accretion expense of contingent considerations
	  	 	72	 	 	 	(12,686	) 	 	 	263	 	 	 	(12,189	) 
	 Net foreign exchange (gain) loss
	  	 	(523	) 	 	 	            1,611	 	 	 	267	 	 	 	              630	 
	 Net change in fair value of foreign exchange derivatives
	  	 	-	 	 	 	(12	) 	 	 	-	 	 	 	(311	) 
	 Net change in fair value of interest rate derivatives
	  	 	-	 	 	 	-	 	 	 	-	 	 	 	(46	) 
	 Mark-to-market (gain) loss on DSUs
	  	 	1,814	 	 	 	(3,368	) 	 	 	3,241	 	 	 	887	 
	 Others
	  	 	2,261	 	 	 	2,003	 	 	 	8,030	 	 	 	7,533	 
	 Net finance costs
(income)
	  	 	22,342	 	 	 	(40	) 	 	 	                85,641	 	 	 	48,306	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Interest expense on long-term debt 

Interest expense on long-term debt for the three-month period ended December 31, 2019 was $1.8 million higher than compared to the same quarter
last year. The increase is mainly attributable to a higher average debt level of $1.78 billion for the three months ended December 31, 2019 as compared to $1.54 billion to the same period in the prior year. For the year ended
December 31, 2019, interest expense increased by $3.7 million due to higher average borrowings in 2019 of $1.74 billion as compared to $1.55 billion in 2018. This increase was offset by a slightly lower average interest rate
during 2019 as compared to the prior year. 
 Interest expense on lease liabilities 

Following adoption of IFRS 16 Leases, the amounts previously recognized as lease expenses were replaced by the depreciation of right-of-use assets and the financing costs on the lease liabilities. As permitted with this new standard, comparative information has not been restated. 

  

			
	

 	 	6

 Management’s Discussion and Analysis 

 

 Net foreign exchange gain or loss and net investment hedge 

The Company designates as a hedge a portion of its U.S. dollar denominated debt held against its net investments in U.S. operations. This accounting
treatment allows the Company to offset the designated portion of foreign exchange gain (or loss) of its debt against the foreign exchange loss (or gain) of its net investments in U.S. operations and present them in other comprehensive income. Net
foreign exchange gains or losses recorded in income or loss are attributable to the U.S. dollar portion of the Company’s credit facility not designated as a hedge and to other financial assets and liabilities denominated in foreign currencies.
For the three-month period ended December 31, 2019, a gain of $7.6 million of foreign exchange variations (a gain of $6.6 million net of tax) was recorded to other comprehensive income as net investment hedge. For the three-month
period ended December 31, 2018, a loss of $18.4 million of foreign exchange variations (a loss of $16.0 million net of tax) was recorded to other comprehensive income as net investment hedge. For the year ended December 31, 2019, a
gain of $18.6 million of foreign exchange variations (a gain of $16.1 million net of tax) was recorded to other comprehensive income as net investment hedge. 

Net change in fair value of derivatives and cash flow hedge 

The fair values of the Company’s derivative financial instruments, which are used to mitigate foreign exchange and interest rate risks, are subject
to market price fluctuations in foreign exchange and interest rates. 
 The Company designates the interest rate derivatives as a hedge of the variable
interest rate instruments. Therefore, the effective portion of changes in fair value of the derivatives is recognized in other comprehensive income. For the three-month period ended December 31, 2019, the loss of $0.3 million on change in
fair value of interest rate derivatives was entirely designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge (a loss of $0.2 million net of tax). For the three-month period
ended December 31, 2018, a $7.1 million loss on change in fair value of interest rate derivatives (a loss of $5.2 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair
value of the cash flow hedge. 
 For year ended December 31, 2019, a $13.3 million loss on change in fair value of interest rate derivatives (a loss of
$9.8 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge. For year ended December 31, 2018, a $3.9 million loss on change in fair value of interest
rate derivatives (a loss of $2.8 million net of tax) was designated as cash flow hedge and recorded to other comprehensive income as a change in the fair value of the cash flow hedge. 

Income tax expense 
 For the three months ended
December 31, 2019, the Company’s effective tax rate was 24.9%. The income tax expense of $25.4 million reflects a $1.4 million favourable variance versus an anticipated income tax expense effect of $26.8 million based
on the Company’s statutory tax rate of 26.3%. The favourable variance is mainly due to tax exempt income of $4.9 million and positive differences between the statutory rate and the effective rates in other jurisdictions of
$2.3 million net of negative differences of $4.1 million for prior year adjustments and $2.0 million for non-deductible expenses. 

For the year ended December 31, 2019, the Company’s effective tax rate was 23.9%. The income tax expense of $101.5 million reflects an
$11.8 million favourable variance versus an anticipated income tax expense of $113.3 million based on the Company’s statutory tax rate of 26.6%. The favourable variance is due to rate differentials between jurisdictions of
$12.9 million and tax exempt income effect of $9.3 million net of unfavourable variances for prior year’s tax adjustments of $4.8 million, and multi-jurisdictions tax of $4.2 million. 

The U.S. Tax Reform Bill signed on December 22, 2017 introduced important changes to U.S. corporate income tax laws that may affect the
Company’s current and future years including limitations on the deduction for net interest expense incurred by U.S. corporations. Future regulations and interpretations to be issued by U.S. authorities may also impact the Company’s
estimates and assumptions used in calculating its income tax provisions. The timing and scope of such regulations and interpretative guidance are uncertain. Management believes that upon issuance of regulations and interpretative guidance that is
expected in the first half of 2020, an estimated tax benefit of $9.6 million could be reversed. This reversal would relate to fiscal year 2019 only and should not apply to future periods. 

Net loss from discontinued operations 
 During
the year ended December 31, 2019, the Company recognized a net loss on an accident claim of $14.2 million, or $16.6 million net of $2.4 million of tax recovery. This claim originated from an operating entity within the
discontinued rig moving operations, which were closed in 2015. 

  

			
	

 	 	7

 Management’s Discussion and Analysis 

 

 Net income and adjusted net income from continuing operations 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars, except per share data)
	  	 Three months ended

December 31
	 	 	 Years ended

December 31
	 
	  	  	2019	 	 	2018	 	 	2019	 	 	2018	 
	 Net income
	  	 	74,828	 	 	 	        76,728	 	 	 	                310,283	 	 	 	      291,994	 
	 Amortization of intangible assets related to business acquisitions, net of tax
	  	 	12,019	 	 	 	10,992	 	 	 	47,097	 	 	 	44,033	 
	 Net change in fair value and accretion expense of contingent considerations, net of tax
	  	 	53	 	 	 	(9,292	) 	 	 	193	 	 	 	(8,928	) 
	 Net change in fair value of derivatives, net of tax
	  	 	-	 	 	 	(9	) 	 	 	-	 	 	 	(262	) 
	 Net foreign exchange (gain) loss, net of tax
	  	 	(383	) 	 	 	1,180	 	 	 	196	 	 	 	461	 
	 Impairment of intangible assets, net of tax
	  	 	-	 	 	 	9,129	 	 	 	-	 	 	 	9,129	 
	 Bargain purchase gain
	  	 	-	 	 	 	-	 	 	 	(10,787	) 	 	 	-	 
	 Gain on sale of land and buildings and assets held for sale, net of tax
	  	 	(9,059	) 	 	 	(1,551	) 	 	 	(24,782	) 	 	 	(13,900	) 
	 Gain on sale of intangible assets, net of tax
	  	 	-	 	 	 	(915	) 	 	 	-	 	 	 	(915	) 
	 Net loss from discontinued operations
	  	 	1,715	 	 	 	-	 	 	 	14,193	 	 	 	-	 
	 Adjusted net income from continuing
operations1
	  	 	79,173	 	 	 	86,262	 	 	 	336,393	 	 	 	321,612	 
	 Adjusted EPS from continuing operations –
basic1
	  	 	0.97	 	 	 	0.99	 	 	 	4.03	 	 	 	3.66	 
	 Adjusted EPS from continuing operations – diluted1
	  	 	0.95	 	 	 	0.96	 	 	 	3.94	 	 	 	3.54	 

 For the three months ended December 31, 2019, TFI International’s net income was $74.8 million compared to
$76.7 million in Q4 2018. The Company’s adjusted net income from continuing operations1, a non-IFRS measure, which excludes items listed in the
above table, was $79.2 million this quarter compared to $86.3 million in Q4 2018, down 8% or $7.1 million. The adjusted EPS from continuing operations, fully diluted, decreased by $0.01 to $0.95 from $0.96 in Q4 2018. 

For the year ended December 31, 2019, TFI International’s net income was $310.3 million compared to $292.0 million in 2018. The
increase of $18.3 million is mainly attributable to the $10.8 million bargain purchase gain on the BeavEx acquisition, the increase of gains on sale of land and buildings and assets held for sale, net of tax, of $10.9 million and the
contribution from business acquisitions of $32.4 million net of the loss from discontinued operations of $14.2 million. The Company’s adjusted net income from continuing operations was $336.4 million in 2019 compared to
$321.6 million in 2018, up 5% or $14.8 million. Adjusted EPS from continuing operations, fully diluted, increased by 11%, to $3.94. 
  

 
  

                        
                             

1 Refer to the section “Non-IFRS financial measures”. 

  

			
	

 	 	8

 Management’s Discussion and Analysis 

 

 SEGMENTED RESULTS 

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

Selected segmented financial information 

																													
	 	 	 	 	 	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Package

and
 Courier
	 	  	 Less-

Than-
Truckload
	 	  	Truckload	 	  	Logistics	 	  	Corporate	 	 	Eliminations	 	 	Total	 
	Three months ended December 31, 2019	  	  	 	  	  	 	  	  	 	  	  	 	  	  	 	 	  	 	 	  	 
	
Revenue before fuel surcharge1
	  	 	168,040	 	  	 	199,718	 	  	 	544,833	 	  	 	262,608	 	  	 	-	 	 	 	(8,723	) 	 	 	1,166,476	 
	 % of total revenue2
	  	 	15%	 	  	 	18%	 	  	 	47%	 	  	 	20%	 	  	 	 	 	 	 	 	 	 	 	100%	 
	 Adjusted EBITDA from continuing operations
	  	 	38,673	 	  	 	41,283	 	  	 	119,320	 	  	 	28,943	 	  	 	(10,707	) 	 	 	-	 	 	 	217,512	 
	 Adjusted EBITDA margin3
	  	 	23.0%	 	  	 	20.7%	 	  	 	21.9%	 	  	 	11.0%	 	  				 				 	 	18.6%	 
	 Operating income (loss)
	  	 	29,943	 	  	 	25,498	 	  	 	61,251	 	  	 	18,752	 	  	 	(11,154	) 	 	 	-	 	 	 	124,290	 
	 Operating margin3
	  	 	17.8%	 	  	 	12.8%	 	  	 	11.2%	 	  	 	7.1%	 	  				 				 	 	10.7%	 
	 Net capital expenditures4, 5
	  	 	4,385	 	  	 	36,893	 	  	 	23,528	 	  	 	1,323	 	  	 	6,808	 	 	 	 	 	 	 	72,937	 
	 Three months ended December 31, 2018*
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 
	 Revenue before fuel surcharge1
	  	 	177,323	 	  	 	231,994	 	  	 	528,164	 	  	 	235,590	 	  	 	-	 	 	 	(10,792	) 	 	 	1,162,279	 
	 % of total revenue2
	  	 	15%	 	  	 	20%	 	  	 	46%	 	  	 	19%	 	  	 	 	 	 	 	 	 	 	 	100%	 
	 Adjusted EBITDA from continuing operations
	  	 	36,521	 	  	 	32,209	 	  	 	99,376	 	  	 	21,555	 	  	 	(9,007	) 	 	 	-	 	 	 	180,654	 
	 Adjusted EBITDA margin3
	  	 	20.6%	 	  	 	13.9%	 	  	 	18.8%	 	  	 	9.1%	 	  				 				 	 	15.5%	 
	 Operating income (loss)
	  	 	34,409	 	  	 	23,461	 	  	 	52,282	 	  	 	2,851	 	  	 	(9,720	) 	 	 	-	 	 	 	103,283	 
	 Operating margin3
	  	 	19.4%	 	  	 	10.1%	 	  	 	9.9%	 	  	 	1.2%	 	  				 				 	 	8.9%	 
	 Net capital expenditures4, 6
	  	 	8,342	 	  	 	5,197	 	  	 	55,469	 	  	 	365	 	  	 	558	 	 	 	 	 	 	 	69,931	 
	 YTD December 31, 2019
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 
	 Revenue before fuel surcharge1
	  	 	628,342	 	  	 	832,213	 	  	 	2,199,543	 	  	 	988,598	 	  	 	-	 	 	 	(35,067	) 	 	 	4,613,629	 
	 % of total revenue2
	  	 	14%	 	  	 	18%	 	  	 	48%	 	  	 	20%	 	  	 	 	 	 	 	 	 	 	 	100%	 
	 Adjusted EBITDA from continuing operations
	  	 	141,001	 	  	 	168,046	 	  	 	481,120	 	  	 	110,154	 	  	 	(35,821	) 	 	 	-	 	 	 	864,500	 
	 Adjusted EBITDA margin3
	  	 	22.4%	 	  	 	20.2%	 	  	 	21.9%	 	  	 	11.1%	 	  				 				 	 	18.7%	 
	 Operating income (loss)
	  	 	109,106	 	  	 	109,199	 	  	 	254,998	 	  	 	76,370	 	  	 	(38,053	) 	 	 	-	 	 	 	511,620	 
	 Operating margin3
	  	 	17.4%	 	  	 	13.1%	 	  	 	11.6%	 	  	 	7.7%	 	  				 				 	 	11.1%	 
	 Total assets less intangible assets
	  	 	234,955	 	  	 	529,077	 	  	 	1,567,027	 	  	 	206,707	 	  	 	64,587	 	 				 	 	2,602,353	 
	 Net capital expenditures4, 7
	  	 	14,508	 	  	 	36,448	 	  	 	143,097	 	  	 	2,638	 	  	 	5,618	 	 	 	 	 	 	 	202,309	 
	 YTD December 31, 2018*
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 
	 Revenue before fuel surcharge1
	  	 	633,046	 	  	 	902,320	 	  	 	2,064,588	 	  	 	953,727	 	  	 	-	 	 	 	(45,484	) 	 	 	4,508,197	 
	 % of total revenue2
	  	 	14%	 	  	 	21%	 	  	 	46%	 	  	 	19%	 	  	 	 	 	 	 	 	 	 	 	100%	 
	 Adjusted EBITDA from continuing operations
	  	 	125,197	 	  	 	117,006	 	  	 	380,707	 	  	 	91,348	 	  	 	(27,975	) 	 	 	-	 	 	 	686,283	 
	 Adjusted EBITDA margin3
	  	 	19.8%	 	  	 	13.0%	 	  	 	18.4%	 	  	 	9.6%	 	  				 				 	 	15.2%	 
	 Operating income (loss)
	  	 	113,214	 	  	 	85,132	 	  	 	207,723	 	  	 	54,492	 	  	 	(30,037	) 	 	 	-	 	 	 	430,524	 
	 Operating margin3
	  	 	17.9%	 	  	 	9.4%	 	  	 	10.1%	 	  	 	5.7%	 	  				 				 	 	9.5%	 
	 Total assets less intangible assets
	  	 	151,579	 	  	 	380,715	 	  	 	1,418,743	 	  	 	135,374	 	  	 	62,054	 	 				 	 	2,148,465	 
	 Net capital expenditures4, 8
	  	 	17,770	 	  	 	14,593	 	  	 	169,059	 	  	 	2,118	 	  	 	256	 	 	 	 	 	 	 	203,796	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

When the Company changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the
corresponding information for the comparative period is recast to conform to the new structure. 
  

                         
                            

1 Includes intersegment revenue. 

2 Segment revenue including fuel and intersegment revenue to consolidated revenue including fuel and intersegment
revenue. 
 3 As a percentage of revenue before fuel surcharge. 

4 Additions to property and equipment, net of proceeds from sale of property and equipment and assets held for
sale. 
 5 Q4 2019 net capital expenditures include proceeds from the sale of property for consideration of
$8.0 million in the LTL segment and of $9.3 million in the TL segment. 
 6 Q4 2018 net capital expenditures
include proceeds from the sale of property for consideration of $1.6 million in the LTL segment and of $2.5 million in the TL segment. 
 7 Q4 YTD 2019 net capital expenditures include proceeds from the sale of property for consideration of $2.5 million in the P&C segment, of $25.2 million in the LTL segment, of $21.2 million in
the TL segment and of $2.0 million in the corporate segment. 
 8 Q4 YTD 2018 net capital expenditures
include proceeds from the sale of property for consideration of $6.1 million in the LTL segment, of $24.3 million in the TL segment and of $0.8 million in the corporate segment. 

  

			
	

 	 	9

 Management’s Discussion and Analysis 

 

 Package and Courier 

																																	
	 	 	 
	(unaudited)	  	Three months ended December 31	 	  	Years ended December 31	 
	(in thousands of dollars)	  	2019	 	 	%	 	  	2018*	 	 	%	 	  	2019	 	 	%	 	  	2018*	 	 	%	 
	 Total revenue
	  	 	191,422	 	 				  	 	204,428	 	 				  	 	 715,821
	 	 				  	 	 728,556
	 	 			
	 Fuel surcharge
	  	 	(23,382	) 	 	 	 	 	  	 	(27,105	) 	 	 	 	 	  	 	 (87,479)
	 	 	 	 	 	  	 	 (95,510)
	 	 	 	 	 
	 Revenue
	  	 	168,040	 	 	 	100.0%	 	  	 	177,323	 	 	 	100.0%	 	  	 	628,342	 	 	 	100.0%	 	  	 	633,046	 	 	 	100.0%	 
	 Materials and services expenses (net of fuel surcharge)
	  	 	73,574	 	 	 	43.8%	 	  	 	76,509	 	 	 	43.1%	 	  	 	269,837	 	 	 	42.9%	 	  	 	266,301	 	 	 	42.1%	 
	 Personnel expenses
	  	 	46,493	 	 	 	27.7%	 	  	 	50,083	 	 	 	28.2%	 	  	 	183,246	 	 	 	29.2%	 	  	 	186,281	 	 	 	29.4%	 
	 Other operating expenses
	  	 	9,259	 	 	 	5.5%	 	  	 	14,235	 	 	 	8.0%	 	  	 	34,460	 	 	 	5.5%	 	  	 	55,359	 	 	 	8.7%	 
	 Depreciation of property and equipment
	  	 	3,438	 	 	 	2.0%	 	  	 	3,055	 	 	 	1.7%	 	  	 	13,322	 	 	 	2.1%	 	  	 	11,870	 	 	 	1.9%	 
	 Depreciation of right-of-use
assets
	  	 	4,901	 	 	 	2.9%	 	  	 	-	 	 	 	-	 	  	 	18,508	 	 	 	2.9%	 	  	 	-	 	 	 	-	 
	 Amortization of intangible assets
	  	 	309	 	 	 	0.2%	 	  	 	306	 	 	 	0.2%	 	  	 	1,182	 	 	 	0.2%	 	  	 	1,362	 	 	 	0.2%	 
	 (Gain) loss on sale of rolling stock and equipment
	  	 	61	 	 	 	0.0%	 	  	 	(25	) 	 	 	0.0%	 	  	 	(181	) 	 	 	0.0%	 	  	 	(92	) 	 	 	0.0%	 
	 Gain on derecognition of
right-of-use assets
	  	 	(20	) 	 	 	0.0%	 	  	 	-	 	 	 	-	 	  	 	(21	) 	 	 	0.0%	 	  	 	-	 	 	 	-	 
	 (Gain) loss on sale of land and buildings and assets held for sale
	  	 	82	 	 	 	0.0%	 	  	 	-	 	 	 	-	 	  	 	(1,117	) 	 	 	-0.2%	 	  	 	-	 	 	 	-	 
	 Gain on sale of intangible assets
	  	 	-	 	 	 	-	 	  	 	(1,249	) 	 	 	-0.7%	 	  	 	-	 	 	 	-	 	  	 	(1,249	) 	 	 	-0.2%	 
	 Operating income
	  	 	29,943	 	 	 	17.8%	 	  	 	34,409	 	 	 	19.4%	 	  	 	109,106	 	 	 	17.4%	 	  	 	113,214	 	 	 	17.9%	 
	 Adjusted EBITDA
	  	 	38,673	 	 	 	23.0%	 	  	 	36,521	 	 	 	20.6%	 	  	 	141,001	 	 	 	22.4%	 	  	 	125,197	 	 	 	19.8%	 
	 *  The current period results include the impacts from the adoption of
IFRS 16 Leases as discussed in note 3 of the audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable.

 
	    

	 	 	 
	Operational data	  	Three months ended December 31	 	  	Years ended December 31	 
	(unaudited)	  	2019	 	 	2018	 	  	Variance	 	 	%	 	  	2019	 	 	2018	 	  	Variance	 	 	%	 
	 Revenue per pound (including fuel)
	  	 	$0.47	 	 	 	$0.48	 	  	 	($0.01	) 	 	 	-2.1%	 	  	 	$0.47	 	 	 	$0.47	 	  	 	$0.00	 	 	 	0.0%	 
	 Revenue per pound (excluding fuel)
	  	 	$0.41	 	 	 	$0.42	 	  	 	($0.01	) 	 	 	-2.4%	 	  	 	$0.41	 	 	 	$0.41	 	  	 	$0.00	 	 	 	0.0%	 
	 Revenue per shipment (including fuel)
	  	 	$8.61	 	 	 	$8.43	 	  	 	$0.18	 	 	 	2.1%	 	  	 	$8.35	 	 	 	$8.19	 	  	 	$0.16	 	 	 	2.0%	 
	 Tonnage (in thousands of metric tons)
	  	 	185	 	 	 	192	 	  	 	(7	) 	 	 	-3.6%	 	  	 	695	 	 	 	709	 	  	 	(14	) 	 	 	-2.0%	 
	 Shipments (in thousands)
	  	 	22,244	 	 	 	24,238	 	  	 	(1,994	) 	 	 	-8.2%	 	  	 	85,743	 	 	 	88,998	 	  	 	(3,255	) 	 	 	-3.7%	 
	 Average weight per shipment (in lbs.)
	  	 	18.33	 	 	 	17.46	 	  	 	0.87	 	 	 	5.0%	 	  	 	17.86	 	 	 	17.56	 	  	 	0.30	 	 	 	1.7%	 
	 Vehicle count, average
	  	 	972	 	 	 	1,016	 	  	 	(44	) 	 	 	-4.3%	 	  	 	981	 	 	 	973	 	  	 	8	 	 	 	0.8%	 
	 Weekly revenue per vehicle (incl. fuel, in thousands of
dollars)
	  	 	$15.15	 	 	 	$15.48	 	  	 	($0.33	) 	 	 	-2.1%	 	  	 	$14.03	 	 	 	$14.40	 	  	 	($0.37	) 	 	 	-2.6%	 

 Revenue 
 For the
three-months ended December 31, 2019, revenue decreased by $9.3 million, from $177.3 million in 2018 to $168.0 million in 2019. This decrease in revenue is attributable to a 3.6% decrease in tonnage combined with a 2.4% decrease
in revenue per pound (excluding fuel surcharge). The decrease in tonnage was the result of an 8.2% decrease in the number of shipments offset by a 5.0% increase in average weight per shipment. Those two variations are directly related to the Canada
Post strike that took place in the first two months of the fourth quarter of 2018. 
 For the year ended December 31, 2019, revenue decreased by
$4.7 million, or 0.7%, from $633.0 million to $628.3 million, due to a slight decline in volumes attributable to 2018 benefitting from the Canada Post strike. 

Operating expenses 
 For the three months ended
December 31, 2019, materials and services expenses, net of fuel surcharge revenue, decreased $2.9 million or 4% due to a $3.7 million decrease in sub-contractor costs. Personnel expenses as a
percentage of revenue decreased from 28.2% in 2018 to 27.7% in 2019 and the reduction resulted mostly from lower direct salaries. Other operating expenses decreased $5.0 million in the fourth quarter of 2019 mainly due to the adoption of IFRS
16. Real estate lease expense decreased $4.8 million compared to Q4 2018 as, since January 1, 2019, a significant portion of these leases are now capitalized and a depreciation expense was recorded and presented under depreciation of right-of-use assets. Right-of-use assets depreciation on equipment and real estate leases
amounted to $4.9 million for Q4 2019. 
 For the year ended December 31, 2019, materials and services expenses, net of fuel surcharge revenue,
increased $3.5 million or 1.3% due to an $8.0 million decrease in fuel surcharge revenue partially offset by a $2.6 million reduction in rolling stock lease costs partly due to the adoption of IFRS 16. Personnel expenses as a
percentage of revenue slightly decreased from 29.4% in 2018 to 29.2% in 2019 and that decrease resulted entirely from a reduction in direct salaries. Other operating expenses decreased $20.9 million in 2019 mainly due to real estate lease
expense that decreased $20.8 million following the adoption of IFRS 16. Right-of-use assets depreciation on equipment and real estate leases amounted to
$18.5 million in 2019. 
 Gain on sale of property 

For the year ended December 31, 2019, a $1.1 million gain on sale of assets held for sale was recorded in the Package and Courier segment
following the sale of one property for a consideration of $2.4 million. 
 Operating income 

  

			
	

 	 	10

 Management’s Discussion and Analysis 

 

 Operating income for the three months ended December 31, 2019 decreased by 13% or $4.5 million
compared to the fourth quarter of 2018 and the operating margin was 17.8% in the fourth quarter of 2019 compared to 19.4% for the same period in 2018. The decrease is attributable to the fourth quarter in 2018 benefitting from the Canada Post
strike. 
 For the year ended December 31, 2019, operating margin was 17.4%, a slight decrease from 17.9% in 2018. 

Less-Than-Truckload 

																																	
	 	 	 
	(unaudited)	  	Three months ended December 31	 	  	Years ended December 31	 
	(in thousands of dollars)	  	2019	 	 	%	 	  	2018*	 	 	%	 	  	2019	 	 	%	 	  	2018*	 	 	%	 
	 Total revenue
	  	 	231,421	 	 				  	 	272,212	 	 				  	 	 964,951
	 	 				  	 	 1,057,396
	 	 			
	 Fuel surcharge
	  	 	(31,703	) 	 	 	 	 	  	 	(40,218	) 	 	 	 	 	  	 	 (132,738)
	 	 	 	 	 	  	 	 (155,076)
	 	 	 	 	 
	 Revenue
	  	 	199,718	 	 	 	100.0%	 	  	 	231,994	 	 	 	100.0%	 	  	 	832,213	 	 	 	100.0%	 	  	 	902,320	 	 	 	100.0%	 
	 Materials and services expenses (net of fuel surcharge)
	  	 	99,034	 	 	 	49.6%	 	  	 	120,153	 	 	 	51.8%	 	  	 	418,836	 	 	 	50.3%	 	  	 	478,169	 	 	 	53.0%	 
	 Personnel expenses
	  	 	50,426	 	 	 	25.2%	 	  	 	59,272	 	 	 	25.5%	 	  	 	212,037	 	 	 	25.5%	 	  	 	227,502	 	 	 	25.2%	 
	 Other operating expenses
	  	 	10,276	 	 	 	5.1%	 	  	 	20,770	 	 	 	9.0%	 	  	 	35,430	 	 	 	4.3%	 	  	 	80,505	 	 	 	8.9%	 
	 Depreciation of property and equipment
	  	 	6,794	 	 	 	3.4%	 	  	 	6,252	 	 	 	2.7%	 	  	 	26,168	 	 	 	3.1%	 	  	 	23,656	 	 	 	2.6%	 
	 Depreciation of right-of-use
assets
	  	 	8,129	 	 	 	4.1%	 	  	 	-	 	 	 	-%	 	  	 	32,937	 	 	 	4.0%	 	  	 	-	 	 	 	-%	 
	 Amortization of intangible assets
	  	 	2,809	 	 	 	1.4%	 	  	 	2,750	 	 	 	1.2%	 	  	 	11,088	 	 	 	1.3%	 	  	 	10,792	 	 	 	1.2%	 
	 Gain on sale of rolling stock and equipment
	  	 	(195	) 	 	 	-0.1%	 	  	 	(410	) 	 	 	-0.2%	 	  	 	(678	) 	 	 	-0.1%	 	  	 	(862	) 	 	 	-0.1%	 
	 Gain on derecognition of
right-of-use assets
	  	 	(1,106	) 	 	 	-0.6%	 	  	 	-	 	 	 	-%	 	  	 	(1,458	) 	 	 	-0.2%	 	  	 	-	 	 	 	-%	 
	 Gain on sale of land and buildings and assets held for sale
	  	 	(1,947	) 	 	 	-1.0%	 	  	 	(254	) 	 	 	-0.1%	 	  	 	(11,346	) 	 	 	-1.4%	 	  	 	(2,574	) 	 	 	-0.3%	 
	 Operating income
	  	 	25,498	 	 	 	12.8%	 	  	 	23,461	 	 	 	10.1%	 	  	 	109,199	 	 	 	13.1%	 	  	 	85,132	 	 	 	9.4%	 
	 Adjusted EBITDA
	  	 	41,283	 	 	 	20.7%	 	  	 	32,209	 	 	 	13.9%	 	  	 	168,046	 	 	 	20.2%	 	  	 	117,006	 	 	 	13.0%	 
	 *  The current period results include the impacts from the adoption of
IFRS 16 Leases as discussed in note 3 of the audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable.

 
	    

	 	 	 
	Operational data	  	Three months ended December 31	 	  	Years ended December 31	 
	(unaudited)	  	2019	 	 	2018	 	  	Variance	 	 	%	 	  	2019	 	 	2018	 	  	Variance	 	 	%	 
	 Adjusted operating ratio
	  	 	88.2%	 	 	 	90.0%	 	  				 				  	 	88.2%	 	 	 	90.9%	 	  				 			
	 Revenue per hundredweight (excluding fuel)
	  	 	$13.19	 	 	 	$13.79	 	  	 	($0.60	) 	 	 	-4.4%	 	  	 	$13.29	 	 	 	$12.71	 	  	 	$0.58	 	 	 	4.6%	 
	 Revenue per shipment (including fuel)
	  	 	$334.42	 	 	 	$324.84	 	  	 	$9.58	 	 	 	2.9%	 	  	 	$322.40	 	 	 	$305.69	 	  	 	$16.71	 	 	 	5.5%	 
	 Tonnage (in thousands of tons)
	  	 	757	 	 	 	841	 	  	 	(84	) 	 	 	-10.0%	 	  	 	3,132	 	 	 	3,548	 	  	 	(416	) 	 	 	-11.7%	 
	 Shipments (in thousands)
	  	 	692	 	 	 	838	 	  	 	(146	) 	 	 	-17.4%	 	  	 	2,993	 	 	 	3,459	 	  	 	(466	) 	 	 	-13.5%	 
	 Average weight per shipment (in lbs)
	  	 	2,188	 	 	 	2,007	 	  	 	181	 	 	 	9.0%	 	  	 	2,093	 	 	 	2,051	 	  	 	42	 	 	 	2.0%	 
	 Average length of haul (in miles)
	  	 	839	 	 	 	831	 	  	 	8	 	 	 	1.0%	 	  	 	830	 	 	 	828	 	  	 	2	 	 	 	0.2%	 
	 Vehicle count, average
	  	 	1,016	 	 	 	1,020	 	  	 	(4	) 	 	 	-0.4%	 	  	 	1,024	 	 	 	992	 	  	 	32	 	 	 	3.2%	 

 Revenue 
 For the
three months ended December 31, 2019, the LTL segment’s revenue was $199.7 million, a $32.3 million, or 14%, decrease when compared to the same period in 2018. The decrease in revenue was due to a 10% decrease in tonnage combined
with a 4.4% decrease in revenue per hundredweight (excluding fuel). The decrease in tonnage was the result of a 17% decrease in shipments partially offset by a 9% increase in average weight per shipment. 

For the year ended December 31, 2019, revenue decreased $70.1 million or 8% to $832.2 million. For the year ended December 31, 2019,
the LTL segment improved its yield as reflected by the 4.6% increase in revenue per hundredweight (excluding fuel) that went from $12.71 in 2018 to $13.29 in 2019. 

Operating expenses 
 For the three months ended
December 31, 2019, materials and services expenses, net of fuel surcharge revenue, decreased $21.1 million, or 18%, due to a $21.9 million decrease in sub-contractor cost, mostly attributable to
a decrease in tonnage. Following the same trend, personnel expenses decreased 14.9% year-over-year. Other operating expenses decreased $10.5 million in the fourth quarter of 2019, mainly due to the adoption of IFRS 16. Real estate lease expense
decreased $7.4 million compared to Q4 2018 as, since January 1, 2019, a significant portion of these leases are now capitalized and a depreciation expense was recorded and presented under depreciation of right-of-use assets. Right-of-use assets depreciation on equipment and real estate leases amounted to $8.1 million for Q4
2019. 
 For the year ended December 31, 2019, materials and services expenses, net of fuel surcharge, decreased $59.3 million, or 12%, due to
a $65.7 million reduction in subcontractor cost. Personnel expenses as a percentage of revenue before fuel surcharge slightly increased from 25.2% in 2018 to 25.5% in 2019. Other operating expenses decreased $45.1 million when compared to
the same period in 2018, mainly due to a $33.5 million decrease in real estate lease expense related to the adoption of IFRS 16. Right-of-use assets depreciation on
equipment and real estate leases was $32.9 million for 2019. 

  

			
	

 	 	11

 Management’s Discussion and Analysis 

 

 Gain on sale of property 

For the quarter ended December 31, 2019, a $1.9 million gain on sale of assets held for sale was recorded in the LTL segment following the sale
of two properties for a total cash consideration of $8.0 million. 
 For the year ended December 31, 2019, an $11.3 million gain on sale
of assets held for sale was recorded in the LTL segment following the sale of five properties for a total cash consideration of $25.2 million. 

Operating income 
 Operating income for the three
months ended December 31, 2019 increased $2.0 million, or 9%, when compared to the same period in 2018. As a percentage of revenue, operating income was 12.8% during the fourth quarter of 2019, a significant improvement versus 10.1% for
the same period in 2018. The fourth quarter of 2019 adjusted operating ratio was 88.2%, a 1.8 percentage points improvement compared to 90.0% for the same period in 2018. 

For the year ended December 31, 2019, operating income increased $24.1 million to $109.2 million and the adjusted operating ratio improved
2.7 percentage points, from 90.9% in 2018 to 88.2% in 2019. Although volume decreased 11.7% year over year, operating income grew through better yield and quality of revenue, continued tight asset management, cost optimisation and improvements in
route density. 

  

			
	

 	 	12

 Management’s Discussion and Analysis 

 

 Truckload 

																																	
	 	 	 
	(unaudited)	  	Three months ended December 31	 	  	Years ended December 31	 
	(in thousands of dollars)	  	2019	 	  	%	 	  	2018*	 	  	%	 	  	2019	 	  	%	 	  	2018*	 	  	%	 
	 Total revenue
	  	 	620,122	 	  				  	 	610,161	 	  				  	 	 2,509,752
	 	  				  	 	 2,388,865
	 	  			
	 Fuel surcharge
	  	 	(75,289)	 	  	 	 	 	  	 	(81,997)	 	  	 	 	 	  	 	 (310,209)
	 	  	 	 	 	  	 	 (324,277)
	 	  	 	 	 
	 Revenue
	  	 	544,833	 	  	 	100.0%	 	  	 	528,164	 	  	 	100.0%	 	  	 	2,199,543	 	  	 	100.0%	 	  	 	2,064,588	 	  	 	100.0%	 
	 Materials and services expenses (net of fuel surcharge)
	  	 	236,260	 	  	 	43.4%	 	  	 	236,226	 	  	 	44.7%	 	  	 	938,084	 	  	 	42.6%	 	  	 	956,913	 	  	 	46.3%	 
	 Personnel expenses
	  	 	177,624	 	  	 	32.6%	 	  	 	177,024	 	  	 	33.5%	 	  	 	729,358	 	  	 	33.2%	 	  	 	665,143	 	  	 	32.2%	 
	 Other operating expenses
	  	 	16,545	 	  	 	3.0%	 	  	 	19,738	 	  	 	3.7%	 	  	 	70,970	 	  	 	3.2%	 	  	 	71,621	 	  	 	3.5%	 
	 Depreciation of property and equipment
	  	 	47,805	 	  	 	8.8%	 	  	 	41,926	 	  	 	7.9%	 	  	 	180,590	 	  	 	8.2%	 	  	 	158,708	 	  	 	7.7%	 
	 Depreciation of right-of-use
assets
	  	 	9,300	 	  	 	1.7%	 	  	 	-	 	  	 	-	 	  	 	32,120	 	  	 	1.5%	 	  	 	-	 	  	 	-	 
	 Amortization of intangible assets
	  	 	7,494	 	  	 	1.4%	 	  	 	6,728	 	  	 	1.3%	 	  	 	29,734	 	  	 	1.4%	 	  	 	27,464	 	  	 	1.3%	 
	 Gain on sale of rolling stock and equipment
	  	 	(4,755)	 	  	 	-0.9%	 	  	 	(4,200)	 	  	 	-0.8%	 	  	 	(19,502)	 	  	 	-0.9%	 	  	 	(9,796)	 	  	 	-0.5%	 
	 Gain on derecognition of
right-of-use assets
	  	 	(161)	 	  	 	-0.0%	 	  	 	-	 	  	 	-	 	  	 	(487)	 	  	 	-0.0%	 	  	 	-	 	  	 	-	 
	 Gain on sale of land and buildings and assets held for sale
	  	 	(6,530)	 	  	 	-1.2%	 	  	 	(1,560)	 	  	 	-0.3%	 	  	 	(16,322)	 	  	 	-0.7%	 	  	 	(13,188)	 	  	 	-0.6%	 
	 Operating income
	  	 	61,251	 	  	 	11.2%	 	  	 	52,282	 	  	 	9.9%	 	  	 	254,998	 	  	 	11.6%	 	  	 	207,723	 	  	 	10.1%	 
	 Adjusted EBITDA
	  	 	119,320	 	  	 	21.9%	 	  	 	99,376	 	  	 	18.8%	 	  	 	481,120	 	  	 	21.9%	 	  	 	380,707	 	  	 	18.4%	 
	 *   The current period results include the impacts from the
adoption of IFRS 16 Leases as discussed in note 3 of the audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable.

 
	     

	 	 	 
	Operational data (unaudited)	  	Three months ended December 31	 	  	Years ended December 31	 
	(all Canadian dollars unless otherwise specified)	  	2019	 	  	2018	 	  	Variance	 	  	%	 	  	2019	 	  	2018	 	  	Variance	 	  	%	 
									
	 U.S. based Conventional TL
	  				  				  				  				  				  				  				  			
	 Revenue (in thousands of U.S. dollars)
	  	 	155,861	 	  	 	168,451	 	  	 	(12,590)	 	  	 	-7.5%	 	  	 	646,158	 	  	 	678,983	 	  	 	(32,825)	 	  	 	-4.8%	 
	 Adjusted operating ratio
	  	 	92.4%	 	  	 	93.3%	 	  				  				  	 	91.5%	 	  	 	94.6%	 	  				  			
	 Total mileage (in thousands)
	  	 	84,291	 	  	 	90,658	 	  	 	(6,367)	 	  	 	-7.0%	 	  	 	351,490	 	  	 	381,195	 	  	 	(29,705)	 	  	 	-7.8%	 
	 Tractor count, average
	  	 	2,929	 	  	 	3,053	 	  	 	(124)	 	  	 	-4.1%	 	  	 	2,960	 	  	 	3,083	 	  	 	(123)	 	  	 	-4.0%	 
	 Trailer count, average
	  	 	11,007	 	  	 	11,180	 	  	 	(173)	 	  	 	-1.5%	 	  	 	11,008	 	  	 	11,199	 	  	 	(191)	 	  	 	-1.7%	 
	 Tractor age
	  	 	1.8	 	  	 	2.0	 	  	 	(0.2)	 	  	 	-10.0%	 	  	 	1.8	 	  	 	2.0	 	  	 	(0.2)	 	  	 	-10.0%	 
	 Trailer age
	  	 	6.5	 	  	 	6.8	 	  	 	(0.3)	 	  	 	-4.4%	 	  	 	6.5	 	  	 	6.8	 	  	 	(0.3)	 	  	 	-4.4%	 
	 Number of owner operators, average
	  	 	424	 	  	 	408	 	  	 	16	 	  	 	3.9%	 	  	 	400	 	  	 	457	 	  	 	(57)	 	  	 	-12.5%	 
									
	 Canadian based Conventional TL
	  				  				  				  				  				  				  				  			
	 Revenue (in thousands of dollars)
	  	 	74,803	 	  	 	79,017	 	  	 	(4,214)	 	  	 	-5.3%	 	  	 	300,933	 	  	 	313,305	 	  	 	(12,372)	 	  	 	-3.9%	 
	 Adjusted operating ratio
	  	 	85.9%	 	  	 	85.9%	 	  				  				  	 	85.6%	 	  	 	87.0%	 	  				  			
	 Total mileage (in thousands)
	  	 	24,237	 	  	 	26,019	 	  	 	(1,782)	 	  	 	-6.8%	 	  	 	98,943	 	  	 	106,167	 	  	 	(7,224)	 	  	 	-6.8%	 
	 Tractor count, average
	  	 	641	 	  	 	708	 	  	 	(67)	 	  	 	-9.5%	 	  	 	684	 	  	 	712	 	  	 	(28)	 	  	 	-3.9%	 
	 Trailer count, average
	  	 	2,826	 	  	 	3,043	 	  	 	(217)	 	  	 	-7.1%	 	  	 	2,884	 	  	 	3,088	 	  	 	(204)	 	  	 	-6.6%	 
	 Tractor age
	  	 	2.3	 	  	 	2.7	 	  	 	(0.4)	 	  	 	-14.8%	 	  	 	2.3	 	  	 	2.7	 	  	 	(0.4)	 	  	 	-14.8%	 
	 Trailer age
	  	 	5.4	 	  	 	5.5	 	  	 	(0.1)	 	  	 	-1.8%	 	  	 	5.4	 	  	 	5.5	 	  	 	(0.1)	 	  	 	-1.8%	 
	 Number of owner operators, average
	  	 	317	 	  	 	363	 	  	 	(46)	 	  	 	-12.7%	 	  	 	333	 	  	 	367	 	  	 	(34)	 	  	 	-9.3%	 
									
	 Specialized TL
	  				  				  				  				  				  				  				  			
	 Revenue (in thousands of dollars)
	  	 	264,591	 	  	 	227,438	 	  	 	37,153	 	  	 	16.3%	 	  	 	1,049,546	 	  	 	877,463	 	  	 	172,083	 	  	 	19.6%	 
	 Adjusted operating ratio
	  	 	89.3%	 	  	 	89.2%	 	  				  				  	 	88.3%	 	  	 	87.9%	 	  				  			
	 Tractor count, average
	  	 	2,189	 	  	 	1,546	 	  	 	643	 	  	 	41.6%	 	  	 	2,099	 	  	 	1,450	 	  	 	649	 	  	 	44.8%	 
	 Trailer count, average
	  	 	6,142	 	  	 	4,693	 	  	 	1,449	 	  	 	30.9%	 	  	 	6,121	 	  	 	4,653	 	  	 	1,468	 	  	 	31.5%	 
	 Tractor age
	  	 	4.0	 	  	 	3.5	 	  	 	0.5	 	  	 	14.3%	 	  	 	4.0	 	  	 	3.5	 	  	 	0.5	 	  	 	14.3%	 
	 Trailer age
	  	 	11.7	 	  	 	9.7	 	  	 	2.0	 	  	 	20.6%	 	  	 	11.7	 	  	 	9.7	 	  	 	2.0	 	  	 	20.6%	 
	 Number of owner operators, average
	  	 	1,224	 	  	 	1,102	 	  	 	122	 	  	 	11.1%	 	  	 	1,191	 	  	 	1,085	 	  	 	107	 	  	 	9.8%	 

 Revenue 
 For
the three months ended December 31, 2019, TL revenue increased by $16.7 million or 3%, from $528.2 million in Q4 2018 to $544.8 million in Q4 2019, mainly due to business acquisitions’ contribution of $60.5 million,
offset by mileage and volume decreases. Average revenue per total mile for conventional TL operations decreased by 0.6% in Canada and by 1.1% in the U.S. compared to Q4 2018. 

As part of its asset-light strategy, the TL segment increased its brokerage revenue by 8%, to $75.2 million compared to the same quarter last year.

 For the year ended December 31, 2019, TL revenue increased by $135.0 million or 7%, from $2,064.6 million in 2018 to
$2,199.5 million in 2019. This increase is mainly due to recent business acquisitions’ contribution of $256.0 million and favourable currency fluctuations of $29.3 million, offset by a decrease in revenue from existing operations
of $121.1 million. On the brokerage side, revenue increased $16.7 million or 6%, while margins were steady. 
 Operating expenses 

For the three months ended December 31, 2019, operating expenses, including business acquisition impact and net of fuel surcharge, increased by
$7.7 million or 2%, from $475.9 million in Q4 2018 to $483.6 million in Q4 2019. Material and services expenses, net of fuel surcharge, decreased by 1.3 

  

			
	

 	 	13

 Management’s Discussion and Analysis 

 

 
percentage points of revenue compared to the fourth quarter of 2018, mainly due to the adoption of IFRS 16. Equipment lease expense decreased by $7.4 million compared to Q4 2018, as a
significant portion of these leases have been capitalized since January 1, 2019 and a depreciation expense of $9.3 million, of which $7.1 million is attributable to operational equipment, was recorded and presented under depreciation
of right-of-use assets in Q4 2019. Personnel expenses remained steady in the fourth quarter year over year and as a percentage of revenue. Other operating expenses
decreased by $3.2 million or 16% compared to Q4 2018, mainly due to the adoption of IFRS 16, where $2.1 million has been presented under depreciation of
right-of-use assets for leased buildings in Q4 2019. The Company continues to improve its cost structure and increase the efficiency and profitability of its existing
fleet and network of independent contractors. 
 For the year ended December 31, 2019, TL operating expenses, net of fuel surcharge, increased by
$87.7 million or 5%, which is mainly due to business acquisitions. Excluding business acquisitions, operating expenses decreased by $144.0 million or 8%, from $1,856.9 million in 2018 to $1,712.9 million in 2019. 

Gain on sale of property 
 For the year ended
December 31, 2019, a $16.3 million gain on sale of assets held for sale was recorded in the Truckload segment following the sale of four properties for a total consideration of $21.2 million. 

Operating income 
 The Company’s operating
income in the TL segment for the three months ended December 31, 2019 reached $61.3 million, up from $52.3 million in Q4 2018. This represents an increase of 17% and is mainly due to higher quality of freight, lower costs, and a more
efficient truckload freight network. Initiatives aimed at equipment cost reductions have continued to yield positive results, including lower repair and maintenance costs due to a newer fleet. Operating margin increased to 11.2% compared to 9.9% in
Q4 2018. 
 For the year ended December 31, 2019, the TL segment increased its operating income by $47.3 million or 23%, from
$207.7 million in 2018 to $255.0 million in 2019 as a result of better performance and a $3.1 million increase in gain on sales of assets held for sale. 

Logistics 

																																	
	 	 	 
	(unaudited)	  	Three months ended December 31	 	  	Years ended December 31	 
	(in thousands of dollars)	  	2019	 	 	%	 	  	2018*	 	 	%	 	  	2019	 	  	%	 	  	2018*	 	  	%	 
	 Total revenue
	  	 	272,252	 	 				  	 	246,990	 	 				  	 	 1,027,752
	 	  				  	 	 1,000,186
	 	  			
	 Fuel surcharge
	  	 	(9,644	) 	 	 	 	 	  	 	(11,400	) 	 	 	 	 	  	 	(39,154)	 	  	 	 	 	  	 	(46,459)	 	  	 	 	 
	 Revenue
	  	 	262,608	 	 	 	100.0%	 	  	 	235,590	 	 	 	100.0%	 	  	 	988,598	 	  	 	100.0%	 	  	 	953,727	 	  	 	100.0%	 
	 Materials and services expenses (net of fuel surcharge)
	  	 	184,809	 	 	 	70.4%	 	  	 	165,484	 	 	 	70.2%	 	  	 	695,167	 	  	 	70.3%	 	  	 	661,796	 	  	 	69.4%	 
	 Personnel expenses
	  	 	33,563	 	 	 	12.8%	 	  	 	31,549	 	 	 	13.4%	 	  	 	128,124	 	  	 	13.0%	 	  	 	134,000	 	  	 	14.1%	 
	 Other operating expenses
	  	 	15,507	 	 	 	5.9%	 	  	 	17,034	 	 	 	7.2%	 	  	 	55,499	 	  	 	5.6%	 	  	 	66,736	 	  	 	7.0%	 
	 Depreciation of property and equipment
	  	 	847	 	 	 	0.3%	 	  	 	774	 	 	 	0.3%	 	  	 	2,848	 	  	 	0.3%	 	  	 	2,969	 	  	 	0.3%	 
	 Depreciation of right-of-use
assets
	  	 	3,328	 	 	 	1.3%	 	  	 	-	 	 	 	-	 	  	 	18,776	 	  	 	1.9%	 	  	 	-	 	  	 	-	 
	 Amortization of intangible assets
	  	 	6,016	 	 	 	2.3%	 	  	 	5,348	 	 	 	2.3%	 	  	 	22,947	 	  	 	2.3%	 	  	 	21,298	 	  	 	2.2%	 
	 Impairment of intangible assets
	  	 	-	 	 	 	-	 	  	 	12,559	 	 	 	5.3%	 	  	 	-	 	  	 	-	 	  	 	12,559	 	  	 	1.3%	 
	 Bargain purchase gain
	  	 	-	 	 	 	-	 	  	 	-	 	 	 	-	 	  	 	(10,787)	 	  	 	-1.1%	 	  	 	-	 	  	 	-	 
	 Gain on sale of rolling stock and equipment
	  	 	(6)	 	 	 	-0.0%	 	  	 	(32)	 	 	 	-0.0%	 	  	 	(55)	 	  	 	-0.0%	 	  	 	(153)	 	  	 	-0.0%	 
	 Gain on derecognition of
right-of-use assets
	  	 	(208)	 	 	 	-0.1%	 	  	 	-	 	 	 	-	 	  	 	(291)	 	  	 	-0.0%	 	  	 	-	 	  	 	-	 
	 Loss on sale of land and buildings and assets held for sale
	  	 	-	 	 	 	-	 	  	 	23	 	 	 	0.0%	 	  	 	-	 	  	 	-	 	  	 	30	 	  	 	0.0%	 
	 Operating income
	  	 	18,752	 	 	 	7.1%	 	  	 	2,851	 	 	 	1.2%	 	  	 	76,370	 	  	 	7.7%	 	  	 	54,492	 	  	 	5.7%	 
	 Adjusted EBITDA
	  	 	28,943	 	 	 	11.0%	 	  	 	21,555	 	 	 	9.1%	 	  	 	110,154	 	  	 	11.1%	 	  	 	91,348	 	  	 	9.6%	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Revenue 
 For the three months ended
December 31, 2019, revenue increased by $27.0 million, or 11%, from $235.6 million in 2018 to $262.6 million. Excluding business acquisitions, revenue decreased by $20.8 million mainly attributable to lower volumes and non-recurring business in the prior year period. 
 For the year ended December 31, 2019, revenue increased by
$34.9 million, or 4%, from $953.7 million to $988.6 million. Excluding business acquisitions, revenue decreased by 8% or $76.3 million. 

Approximately 72% (2018 – 69%) of the Logistics segment’s revenues in the quarter were generated from operations in the U.S. and Mexico and
approximately 28% (2018 – 31%) were generated from operations in Canada. 

  

			
	

 	 	14

 Management’s Discussion and Analysis 

 

 Operating expenses 

For the three months ended December 31, 2019, total operating expenses, net of fuel surcharge, increased by $11.2 million, or 5%, from
$232.7 million in Q4 2018 to $243.9 million. As a percentage of revenue, materials and services expenses, net of fuel surcharge, increased by 0.2 percentage points of revenue in the fourth quarter of 2019 while personnel expenses decreased
by 0.6 percentage points of revenue. Other operating expenses as a percentage of revenue decreased from 7.2% in 2018 to 5.9% in 2019 mainly due to the adoption of IFRS 16. Real estate lease expense decreased $5.3 million compared to Q4 2018 as,
since January 1, 2019, a significant portion of these leases are now capitalized, and a depreciation expense was recorded and presented under depreciation of
right-of-use assets. Right-of-use assets depreciation on equipment and real estate leases
amounted to $3.3 million for Q4 2019. 
 For the year ended December 31, 2019, operating expenses increased $13.0 million compared to
2018, from $899.2 million to $912.2 million. This increase was mostly attributable to higher volumes offset by a foreign exchange impact. 

Operating income 
 Operating income in the
Logistic segment for the three-months ended December 31, 2019 increased by $15.9 million compared to the fourth quarter of 2018, from $2.9 million to $18.8 million. Excluding the $12.6 million impairment in the last quarter
of 2018, operating income increased 22% or $3.3 million with the operating margin increasing 0.6 percentage points to 7.1%. 
 For the year ended
December 31, 2019, operating income increased 40% or $21.9 million compared to 2018, from $54.5 million to $76.4 million. Excluding the $12.6 million impairment in the last quarter of 2018, operating income increased 14% or
$9.3 million with the operating margin increasing 0.7 percentage points to 7.7%. 
 LIQUIDITY AND CAPITAL RESOURCES 

Sources and uses of cash 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2019	 	  	2018*	 
	 Sources of cash:
	  				  				  				  			
	 Net cash from continuing operating activities
	  	 	176,177	 	  	 	            173,848	 	  	 	                    665,292	 	  	 	        543,503	 
	 Proceeds from sale of property and equipment
	  	 	27,438	 	  	 	25,461	 	  	 	95,180	 	  	 	81,051	 
	 Proceeds from sale of assets held for sale
	  	 	17,230	 	  	 	2,782	 	  	 	51,918	 	  	 	29,226	 
	 Net variance in cash and bank indebtedness
	  	 	281	 	  	 	-	 	  	 	-	 	  	 	3,237	 
	 Net proceeds from long-term debt
	  	 	-	 	  	 	79,514	 	  	 	181,117	 	  	 	21,727	 
	 Others
	  	 	6,416	 	  	 	3,029	 	  	 	24,456	 	  	 	19,874	 
	 Total sources
	  	 	227,542	 	  	 	284,634	 	  	 	1,017,963	 	  	 	698,618	 
	 Uses of cash:
	  				  				  				  			
	 Purchases of property and equipment
	  	 	122,310	 	  	 	113,004	 	  	 	346,313	 	  	 	314,300	 
	 Business combinations, net of cash acquired
	  	 	(371)	 	  	 	81,375	 	  	 	200,401	 	  	 	156,487	 
	 Net variance in cash and bank indebtedness
	  	 	-	 	  	 	258	 	  	 	8,494	 	  	 	-	 
	 Net repayment of long-term debt
	  	 	24,075	 	  	 	-	 	  	 	-	 	  	 	-	 
	 Repayment of lease liabilities
	  	 	26,213	 	  	 	-	 	  	 	99,573	 	  	 	-	 
	 Dividends paid
	  	 	19,660	 	  	 	18,475	 	  	 	80,703	 	  	 	74,096	 
	 Repurchase of own shares
	  	 	30,133	 	  	 	61,891	 	  	 	255,692	 	  	 	139,622	 
	 Net cash used in discontinued operations
	  	 	1,715	 	  	 	-	 	  	 	16,176	 	  	 	-	 
	 Others
	  	 	3,807	 	  	 	9,631	 	  	 	10,611	 	  	 	14,113	 
	 Total usage
	  	 	227,542	 	  	 	284,634	 	  	 	1,017,963	 	  	 	698,618	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Cash flow from continuing operating activities 

For the year ended December 31, 2019, net cash from continuing operating activities increased by 22% to $665.3 million from $543.5 million
in 2018. This $121.8 million increase is attributable to positive changes in cash generated from operating activities driven by stronger operating results and the replacement of lease expenses by the repayment of lease liabilities included in
financing activities and interest on lease liabilities as a result of the adoption of IFRS 16 Leases. IFRS 16 positively impacted cash from operating activities by a net amount of $99.6 million (which represents repayment of lease liabilities
which is classified as financing cash flows in 2019, compared with operating cash flows in 2018). In addition, income taxes paid negatively impacted net cash from continuing operating activities by $33.7 million, attributable to increased
income tax installments required on stronger operating results and the payment of the prior year tax balances. 

  

			
	

 	 	15

 Management’s Discussion and Analysis 

 

 Cash flow used in investing activities from continuing operations 

Property and equipment 
 The following
table presents the additions of property and equipment by category for the three-month periods and years ended December 31, 2019 and 2018. 
  

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018	 	  	2019	 	  	2018	 
	 Additions to property and equipment:
	  				  				  				  			
	 Purchases as stated on cash flow statements
	  	 	122,310	 	  	 	            113,004	 	  	 	                    346,313	 	  	 	        314,300	 
	 Non-cash adjustments
	  	 	(4,705)	 	  	 	(14,830)	 	  	 	3,094	 	  	 	(227)	 
	 	  	 	117,605	 	  	 	98,174	 	  	 	349,407	 	  	 	314,073	 
	 Additions by category:
	  				  				  				  			
	 Land and buildings
	  	 	48,204	 	  	 	3,625	 	  	 	52,566	 	  	 	15,412	 
	 Rolling stock
	  	 	65,283	 	  	 	91,520	 	  	 	280,704	 	  	 	284,459	 
	 Equipment
	  	 	4,118	 	  	 	3,029	 	  	 	16,137	 	  	 	14,202	 
	 	  	 	117,605	 	  	 	98,174	 	  	 	349,407	 	  	 	314,073	 

 The Company invests in new equipment to maintain its quality of service while minimizing maintenance costs. Its capital
expenditures reflect the level of reinvestment required to keep its equipment in good order and to maintain a strategic allocation of its capital resources. 

In the normal course of activities, the Company constantly renews its rolling stock equipment generating regular proceeds and gain or loss on disposition.
The following table indicates the proceeds and gains or losses from sale of property and equipment and assets held for sale by category for the three-month periods and years ended December 31, 2019 and 2018. 

 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018	 	  	2019	 	  	2018	 
	 Proceeds by category:
	  				  				  				  			
	 Land and buildings
	  	 	17,171	 	  	 	                4,121	 	  	 	                      50,871	 	  	 	31,153	 
	 Rolling stock
	  	 	27,407	 	  	 	24,095	 	  	 	95,039	 	  	 	79,049	 
	 Equipment
	  	 	90	 	  	 	27	 	  	 	1,188	 	  	 	75	 
	 	  	 	44,668	 	  	 	28,243	 	  	 	147,098	 	  	 	        110,277	 
	 Gains (losses) by category:
	  				  				  				  			
	 Land and buildings
	  	 	8,435	 	  	 	1,791	 	  	 	27,878	 	  	 	16,144	 
	 Rolling stock
	  	 	4,934	 	  	 	4,707	 	  	 	21,450	 	  	 	11,007	 
	 Equipment
	  	 	(79)	 	  	 	(40)	 	  	 	(287)	 	  	 	(104)	 
	 	  	 	13,290	 	  	 	6,458	 	  	 	49,041	 	  	 	27,047	 

 Business acquisitions 

For the year ended December 31, 2019, cash used in business acquisitions totalled $200.4 million to acquire eight businesses. Refer to the
section of this report entitled “2019 business acquisitions” and further information can be found in note 5 of the December 31, 2019 audited consolidated financial statements. 

Cash flow used in discontinued operations 
 For
the year ended December 31, 2019, discontinued operations used cash of $16.2 million. 

  

			
	

 	 	16

 Management’s Discussion and Analysis 

 

 Free cash flow from continuing operations 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2019	 	  	2018*	 
	 Net cash from continuing operating activities
	  	 	176,177	 	  	 	        173,848	 	  	 	                    665,292	 	  	 	        543,503	 
	 Additions to property and equipment
	  	 	(117,605)	 	  	 	(98,174)	 	  	 	(349,407)	 	  	 	(314,073)	 
	 Proceeds from sale of property and equipment
	  	 	27,438	 	  	 	25,461	 	  	 	95,180	 	  	 	81,051	 
	 Proceeds from sale of assets held for sale
	  	 	17,230	 	  	 	2,782	 	  	 	51,918	 	  	 	29,226	 
	 Free cash flow from continuing operations1
	  	 	103,240	 	  	 	103,917	 	  	 	462,983	 	  	 	339,707	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

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

For the year ended December 31, 2019, TFI International generated free cash flow from continuing operations of $463.0 million, compared to
$339.7 million in 2018, which represents a year-over-year increase of $123.3 million. This increase is mainly due to more net cash from continuing operating activities of $121.8 million, largely stemming from the adoption of IFRS 16
which had a positive impact of $99.6 million. 
 The free cash flow conversion, which measures the level of capital employed to generate earnings,
improved for the three months ended December 31, 2019 to 80.7% from 61.0%, due a higher volume of net capital expenditures in 2018. For the year ended December 31, 2019 the free cash flow conversion improved to 76.8% from 68.0%. 

Based on the December 31, 2019 closing share price of $43.77, the free cash flow generated by the Company during 2019 ($463.0 million) represented a
yield of 13.0%. 
 Financial position 

													
	 (unaudited)

(in thousands of dollars)
	  	
As at

December 31, 2019
	 	  	 As at

December 31, 2018*
	 	  	 As at

December 31, 2017*
	 
	 Total assets
	  	 	4,557,255	 	  	 	4,049,960	 	  	 	3,727,628	 
	 Long-term debt
	  	 	1,744,687	 	  	 	1,584,423	 	  	 	1,498,396	 
	 Lease liabilities
	  	 	461,842	 	  	 	-	 	  	 	-	 
	 Shareholders’ equity
	  	 	1,505,689	 	  	 	1,576,854	 	  	 	1,415,124	 

	*	 The current period figures include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Compared to December 31, 2018, the Company’s total assets and long-term debt and lease liabilities increased, mainly as a result of the
implementation of IFRS 16: total assets increased by $439.4 million and lease liabilities increased by $483.5 million. Please refer to note 3 of the audited consolidated financial statements for more details on IFRS 16. 

As at December 31, 2019, the Company’s working capital (current assets less current liabilities) was $50.6 million compared to
$52.8 million as at December 31, 2018. The decrease is mainly attributable to the increase in the short term portion of the lease liabilities of $99.1 million, net of a decrease in the current portion of long term debt of
$68.7 million and a reclassification of a note receivable to short term in the amount of $24.8 million. 
  

 

	1	 Refer to the section “Non-IFRS financial measures”.

  

			
	

 	 	17

 Management’s Discussion and Analysis 

 

 Contractual obligations, commitments, contingencies and
off-balance sheet arrangements 
 The following table indicates the Company’s contractual obligations
with their respective maturity dates at December 31, 2019, excluding future interest payments. 
  

																					
	 	 	 	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	Total	 	  	 Less than

1 year
	 	  	 1 to 3

years
	 	  	 3 to 5

years
	 	  	 After

5 years
	 
	 Unsecured revolving facility – June 2023
	  	 	593,495	 	  	 	-	 	  	 	-	 	  	 	593,495	 	  	 	-	 
	 Unsecured revolving facility – November 2020
	  	 	11,970	 	  	 	11,970	 	  	 	-	 	  	 	-	 	  	 	-	 
	 Unsecured term loan – June 2021 & 2022
	  	 	610,000	 	  	 	-	 	  	 	610,000	 	  	 	-	 	  	 	-	 
	 Unsecured debenture – December 2024
	  	 	200,000	 	  	 	-	 	  	 	-	 	  	 	200,000	 	  	 	-	 
	 Unsecured senior notes – December 2026
	  	 	194,820	 	  	 	-	 	  	 	-	 	  	 	-	 	  	 	194,820	 
	 Conditional sales contracts
	  	 	139,591	 	  	 	41,677	 	  	 	67,030	 	  	 	30,661	 	  	 	223	 
	 Lease liabilities
	  	 	461,842	 	  	 	99,133	 	  	 	155,552	 	  	 	95,623	 	  	 	111,534	 
	 Total contractual obligations
	  	 	2,211,718	 	  	 	        152,780	 	  	 	        832,582	 	  	 	        919,779	 	  	 	        306,577	 

 On February 1, 2019, the $500 million unsecured term loan was amended to increase the indebtedness to
$575 million. On February 11, 2019, the related incremental funds were used to reimburse a separate $75 million unsecured term loan that was due to mature in August 2019. 

On February 1, 2019, the Company renegotiated the pricing grid of both its revolving credit facility and $575 million term loan. The
$575 million term loan remains within the confines of the credit facility, but now has a pricing grid different than the revolving credit facility. Based on the current
funded-debt-to-EBITDA ratio defined below, the renegotiation has no impact on the interest charged on the revolving credit facility, however it reduces the interest rate
charged on the term loan by 34 basis points. 
 On June 27, 2019, the Company extended its existing revolving credit facility by one year, to June
2023. 
 On June 27, 2019, the Company extended the maturity of the $575 million unsecured term loan by one year for each tranche, with
$200 million now due in June 2021 and $375 million now due in June 2022. 
 On November 22, 2019, the Company entered into a new
revolving credit facility agreement. The credit facility is unsecured and provides an availability of US$25 million maturing in November 2020. The interest applied to this credit facility is the same as applied to the existing revolving credit
facility. 
 On December 20, 2019, the Company entered into a new unsecured senior note agreement. This loan takes the form of senior notes each
carrying an interest rate of 3.85% and with a December 2026 maturity date. 
 On December 20, 2019, the unsecured debenture was amended to increase
the indebtedness by $75 million, to $200 million, and to extend maturity date by four years, to December 2024. Following this amendment, debenture is now carrying an interest rate between 3.32% and 4.22% (2018 – 3.00% to 3.45%)
depending on certain ratios. 
 On December 27, 2019, the $575 million unsecured term loan was amended to increase the indebtedness to
$610 million. This amendment increased the $375 million tranche due in June 2022 to $410 million. 
 The following table indicates the
Company’s financial covenants to be maintained under its credit facility. These covenants are measured on a consolidated rolling twelve-month basis and are calculated as prescribed by the credit agreement which, among other things, requires the
exclusion of the impact of the new standard IFRS 16 Leases: 
  

									
	 	 	 
	Covenants	  	                    
Requirements	 	  	 As at

December 31, 2019
	 
	 Funded debt-to- EBITDA
ratio [ratio of total debt plus letters of credit and some other long-term liabilities to earnings before interest, income tax, depreciation and amortization (“EBITDA”), including last twelve months adjusted EBITDA from business
acquisitions]
	  	 	< 3.50	 	  	 	2.25	 
	
EBITDAR-to-interest and rent ratio
[ratio of EBITDAR (EBITDA before rent and including last twelve months adjusted EBITDAR from business acquisitions) to interest and net rent expenses]
	  	 	> 1.75	 	  	 	4.54	 

 As at December 31, 2019, the Company had $41.7 million of outstanding letters of credit ($39.4 million on
December 31, 2018). 
 As at December 31, 2019, the Company had $35.2 million of purchase commitments and $12.0 million of purchase
orders that the Company intends to enter into a lease that is expected to materialize within a year (December 31, 2018 – $51.0 million and nil, respectively). 

  

			
	

 	 	18

 Management’s Discussion and Analysis 

 

 Dividends and outstanding share data 

Dividends 
 The Company declared
$21.2 million in dividends, or $0.26 per common share, in the fourth quarter of 2019. On February 10, 2020, the Board of Directors approved a quarterly dividend of $0.26 per outstanding common share of the Company’s capital, for an
expected aggregate payment of $21.2 million to be paid on April 15, 2020 to shareholders of record at the close of business on March 31, 2020. 

NCIB on common shares 
 Pursuant to the
renewal of the normal course issuer bid (“NCIB”), which began on October 2, 2019 and expires on October 1, 2020, the Company is authorized to repurchase for cancellation up to a maximum of 7,000,000 of its common shares under
certain conditions. As at December 31, 2019, and since the inception of this NCIB, the Company has repurchased and cancelled 679,100 common shares. 

For the year ended December 31, 2019, the Company repurchased 6,409,446 common shares (as compared to 3,755,002 in 2018) at a weighted average price
of $39.89 per share (as compared to $37.18 in 2018) for a total purchase price of $255.7 million (as compared to $139.6 million in 2018). 

Outstanding shares, stock options and restricted share units 

A total of 81,450,326 common shares were outstanding as at December 31, 2019 (December 31, 2018 – 86,397,588). There was no material change in
the Company’s outstanding share capital between December 31, 2019 and February 10, 2020. 
 As at December 31, 2019, the number of
outstanding options to acquire common shares issued under the Company’s stock option plan was 4,421,866 (December 31, 2018 – 5,031,161) of which 3,039,635, were exercisable (December 31, 2018 – 3,863,610). On February 27, 2019,
the Board of Directors approved the grant of 909,404 stock options under the Company’s stock option plan. Each stock option entitles the holder to purchase one common share of the Company at an exercise price based on the volume-weighted
average trading price of the Company’s shares for the last five trading days immediately preceding the effective date of the grant. 
 As at
December 31, 2019, the number of restricted share units (‘’RSUs’’) granted under the Company’s equity incentive plan to its senior employees was 239,337 (December 31, 2018 – 147,081). On February 27, 2019, the
Board of Directors approved the grant of 152,965 RSUs under the Company’s equity incentive plan. The RSUs will vest in December of the second year following the grant date. Upon satisfaction of the required service period, the plan provides for
settlement of the award through shares. 
 Legal proceedings 

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

OUTLOOK 
 North American economic growth has
continued despite headwinds from international trade negotiations and other geopolitical uncertainties, with unemployment rates near multi-decade lows and favorable readings for both consumer confidence and business optimism. The operating
environment remained challenging for the transportation and logistics industry throughout 2019 largely due to overcapacity concerns. More recently there have been early indications of improvement, with volumes and spot rates showing signs of
stabilization. In this mixed environment, TFI International believes it is favorably positioned and confident it can continue to execute its business plan, including internal initiatives designed to enhance profitability via improved efficiencies,
acquisition-related synergies and cost savings. 
 Looking ahead, one potential risk to the Company’s business is an economic decline after several
years of expansion, potentially caused by international trade negotiations that have already resulted in higher tariffs on shipped goods. Further economic challenges could in turn reverse recent improvements in industry overcapacity and drive
additional pricing pressure. Other risks include the possibility of more pronounced driver shortages and accompanying upward pressure on wages, and the potential for higher fuel, insurance, interest rates and other costs. 

Cognizant of changing macro conditions, TFI International seeks to generate strong and consistent free cash flow by executing on the fundamentals of the
business regardless of the economic cycle. This approach includes focusing on profitable business, improving efficiency, rationalizing assets to avoid internal overcapacity, and tightly controlling costs. In addition, the Company plans to capture M&A-related operating synergies and continue its disciplined pursuit of acquisition candidates in the fragmented North American transportation and logistics market. 

TFI International also aims to distinguish itself by providing innovative, value-added solutions to its growing North American customer base. The Company
is embracing an asset-light business model, and deploying capital toward initiatives that it believes provide strong returns and solid cash flow. 

  

			
	

 	 	19

 Management’s Discussion and Analysis 

 

 In summary, the Company believes it is well positioned to benefit from the current dynamics in the North
American freight environment, and that through adherence to its operating principles, with the same discipline and rigor that have made TFI International a North American leader in the transportation and logistics industry, it intends to continue to
create long-term shareholder value. 
 SUMMARY OF EIGHT MOST RECENT QUARTERLY RESULTS 

 

																																	
	(unaudited) - (in millions of dollars, except per share data)	 	  	  	 	  	  	 	  	  	 	  	  	 	  	  	 
	  	  	Q4’19	 	  	Q3’19	 	  	Q2’19	 	  	Q1’19	 	  	Q4’18*	 	  	Q3’18*	 	  	Q2’18*	 	  	Q1’18*	 
	 Total revenue
	  	 	1,305.5	 	  	 	        1,304.8	 	  	 	        1,337.8	 	  	 	        1,230.8	 	  	 	        1,321.4	 	  	 	        1,287.6	 	  	 	        1,317.7	 	  	 	        1,196.5	 
	 Adjusted EBITDA from continuing operations1
	  	 	217.5	 	  	 	221.6	 	  	 	236.5	 	  	 	188.9	 	  	 	180.7	 	  	 	190.0	 	  	 	186.7	 	  	 	129.0	 
	 Operating income from continuing operations
	  	 	124.3	 	  	 	131.9	 	  	 	149.2	 	  	 	106.3	 	  	 	103.3	 	  	 	128.2	 	  	 	123.6	 	  	 	75.4	 
	 Net income
	  	 	74.8	 	  	 	82.6	 	  	 	87.7	 	  	 	65.1	 	  	 	76.7	 	  	 	86.7	 	  	 	80.4	 	  	 	48.2	 
	 EPS – basic
	  	 	0.92	 	  	 	1.00	 	  	 	1.04	 	  	 	0.76	 	  	 	0.88	 	  	 	0.99	 	  	 	0.92	 	  	 	0.54	 
	 EPS – diluted
	  	 	0.90	 	  	 	0.98	 	  	 	1.01	 	  	 	0.74	 	  	 	0.85	 	  	 	0.96	 	  	 	0.89	 	  	 	0.53	 
	 Net income from continuing operations
	  	 	76.5	 	  	 	82.6	 	  	 	100.2	 	  	 	65.1	 	  	 	76.7	 	  	 	86.7	 	  	 	80.4	 	  	 	48.2	 
	 EPS from continuing operations – basic
	  	 	0.94	 	  	 	1.00	 	  	 	1.19	 	  	 	0.76	 	  	 	0.88	 	  	 	0.99	 	  	 	0.92	 	  	 	0.54	 
	 EPS from continuing operations – diluted
	  	 	0.92	 	  	 	0.98	 	  	 	1.16	 	  	 	0.74	 	  	 	0.85	 	  	 	0.96	 	  	 	0.89	 	  	 	0.53	 
	 Adjusted net income from continuing operations1
	  	 	79.2	 	  	 	88.1	 	  	 	102.0	 	  	 	67.1	 	  	 	86.3	 	  	 	95.0	 	  	 	89.9	 	  	 	50.4	 
	 Adjusted EPS from continuing operations- diluted1
	  	 	0.95	 	  	 	1.04	 	  	 	1.18	 	  	 	0.77	 	  	 	0.96	 	  	 	1.05	 	  	 	0.99	 	  	 	0.55	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

The differences between the quarters are mainly the result of seasonality (softer in Q1) and business acquisitions. Higher 2019 and 2018 operating income
was also driven by strong execution across the organization, increased quality of revenue, cost efficiencies and improvement in the Company’s U.S. TL operating segment. In 2019, higher adjusted EBITDA from continuing operations, compared to the
same periods in the prior year, is partially due to the implementation of IFRS 16 as lease expense was replaced by depreciation of right-of-use assets and interests on
lease liabilities. 
 NON-IFRS FINANCIAL MEASURES 

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

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

Operating income (loss) from continuing operations: Net income or loss from continuing operations before finance income and costs and income tax
expense (recovery), as stated in the audited consolidated financial statements. 
 This MD&A includes references to certain non-IFRS financial measures as described below. These non-IFRS measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other companies. Accordingly, they should not be considered in isolation, in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The terms and
definitions of IFRS and non-IFRS measures used in this MD&A and a reconciliation of each non-IFRS measure to the most directly comparable IFRS measure are provided
below. 
 Adjusted net income from continuing operations: Net income or loss excluding amortization of intangible assets related to business
acquisitions, net change in the fair value and accretion expense of contingent considerations, net change in the fair value of derivatives, net foreign exchange gain or 
  

 

	1	 Refer to the section “Non-IFRS financial measures”.

  

			
	

 	 	20

 Management’s Discussion and Analysis 

 

 
loss, impairment of intangible assets, bargain purchase gain, gain or loss on sale of land and buildings, assets held for sale and intangible assets, and loss from discontinued operations, net of
tax. In presenting an adjusted net income from continuing operations and adjusted EPS from continuing operations, the Company’s intent is to help provide an understanding of what would have been the net income from continuing operations and
earnings per share from continuing operations in a context of significant business combinations and excluding specific impacts and to reflect earnings from a strictly operating perspective. The amortization of intangible assets related to business
acquisitions comprises amortization expense of customer relationships, trademarks and non-compete agreements accounted for in business combinations and the income tax effects related to this amortization.
Management also believes, in excluding amortization of intangible assets related to business acquisitions, it provides more information on the amortization of intangible asset expense portion, net of tax, that will not have to be replaced to
preserve the Company’s ability to generate similar future cash flows. The Company excludes these items because they affect the comparability of its financial results and could potentially distort the analysis of trends in its business
performance. Excluding these items does not imply they are necessarily non-recurring. See reconciliation on page 8. 

Adjusted earnings per share (adjusted “EPS”) from continuing operations - basic: Adjusted net income from continuing operations divided
by the weighted average number of common shares. 
 Adjusted EPS from continuing operations - diluted: Adjusted net income from continuing
operations divided by the weighted average number of diluted common shares. 
 Adjusted EBITDA from continuing operations: Net income or
loss from continuing operations before finance income and costs, income tax expense, depreciation, amortization, impairment of intangible assets, bargain purchase gain, and gain or loss on sale of land and buildings, assets held for sale and
intangible assets. Segmented adjusted EBITDA from continuing operations refers to operating income (loss) from continuing operations before 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. Management believes adjusted EBITDA from continuing operations to be a useful supplemental measure. Adjusted EBITDA from continuing operations is provided to assist in
determining the ability of the Company to assess its performance. 
 Consolidated adjusted EBITDA from continuing operations reconciliation: 

 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2019	 	  	2018*	 
	 Net income from continuing operations
	  	 	76,543	 	  	 	            76,728	 	  	 	                    324,476	 	  	 	        291,994	 
	 Net finance costs (income)
	  	 	22,342	 	  	 	(40)	 	  	 	85,641	 	  	 	48,306	 
	 Income tax expense
	  	 	25,405	 	  	 	26,595	 	  	 	101,503	 	  	 	90,224	 
	 Depreciation of property and equipment
	  	 	59,028	 	  	 	52,392	 	  	 	223,794	 	  	 	198,492	 
	 Depreciation of
right-of-use assets
	  	 	25,751	 	  	 	-	 	  	 	102,573	 	  	 	-	 
	 Amortization of intangible assets
	  	 	16,838	 	  	 	15,460	 	  	 	65,925	 	  	 	62,101	 
	 Impairment of intangible assets
	  	 	-	 	  	 	12,559	 	  	 	-	 	  	 	12,559	 
	 Bargain purchase gain
	  	 	-	 	  	 	-	 	  	 	(10,787)	 	  	 	-	 
	 Gain on sale of land and buildings
	  	 	(10)	 	  	 	(312)	 	  	 	(12)	 	  	 	(524)	 
	 Gain on sale of assets held for sale
	  	 	(8,385)	 	  	 	(1,479)	 	  	 	(28,613)	 	  	 	(15,620)	 
	 Gain on sale of intangible assets
	  	 	-	 	  	 	(1,249)	 	  	 	-	 	  	 	(1,249)	 
	 Adjusted EBITDA from continuing
operations
	  	 	217,512	 	  	 	180,654	 	  	 	864,500	 	  	 	686,283	 
	 *  The current period results include the impacts from the adoption of
IFRS 16 Leases as discussed in note 3 of the audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. More specifically, in 2019, $44.2
million of lease expenses have been included in Adjusted EBITDA from continuing operations, whereas in 2018, $152.0 million of operating lease expenses have been included in Adjusted EBITDA from continuing operations.

 
 Segmented adjusted EBITDA from continuing operations
reconciliation:
  
	    

  

	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2019	 	  	2018*	 
	 Package and Courier
	  	 	 	  	 	 	  	 	 	  	 	 
	 Operating income
	  	29,943	 	  	            34,409	 	  	                    109,106	 	  	        113,214	 
	 Depreciation and amortization
	  	8,648	 	  	3,361	 	  	33,012	 	  	13,232	 
	 (Gain) loss on sale of assets held for sale
	  	82	 	  	-	 	  	(1,117)	 	  	-	 
	 Gain on sale of intangible assets
	  	-	 	  	(1,249)	 	  	-	 	  	(1,249)	 
	 Adjusted EBITDA
	  	38,673	 	  	36,521	 	  	141,001	 	  	125,197	 

  

			
	

 	 	21

 Management’s Discussion and Analysis 

 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	2019	 	  	2018*	 
	 Less-Than-Truckload
	  				  				  				  			
	 Operating income
	  	 	25,498	 	  	 	            23,461	 	  	 	                    109,199	 	  	 	            85,132	 
	 Depreciation and amortization
	  	 	17,732	 	  	 	9,002	 	  	 	70,193	 	  	 	34,448	 
	 Gain on sale of land and buildings
	  	 	-	 	  	 	(336)	 	  	 	-	 	  	 	(275)	 
	 (Gain) loss on sale of assets held for sale
	  	 	(1,947)	 	  	 	82	 	  	 	(11,346)	 	  	 	(2,299)	 
	 Adjusted EBITDA
	  	 	41,283	 	  	 	32,209	 	  	 	168,046	 	  	 	117,006	 
	 Truckload
	  				  				  				  			
	 Operating income
	  	 	61,251	 	  	 	52,282	 	  	 	254,998	 	  	 	207,723	 
	 Depreciation and amortization
	  	 	64,599	 	  	 	48,654	 	  	 	242,444	 	  	 	186,172	 
	 (Gain) loss on sale of land and buildings
	  	 	(10)	 	  	 	1	 	  	 	(12)	 	  	 	(279)	 
	 Gain on sale of assets held for sale
	  	 	(6,520)	 	  	 	(1,561)	 	  	 	(16,310)	 	  	 	(12,909)	 
	 Adjusted EBITDA
	  	 	119,320	 	  	 	99,376	 	  	 	481,120	 	  	 	380,707	 
	 Logistics
	  				  				  				  			
	 Operating income
	  	 	18,752	 	  	 	2,851	 	  	 	76,370	 	  	 	54,492	 
	 Depreciation and amortization
	  	 	10,191	 	  	 	6,122	 	  	 	44,571	 	  	 	24,267	 
	 Impairment of intangible assets
	  	 	-	 	  	 	12,559	 	  	 	-	 	  	 	12,559	 
	 Bargain purchase gain
	  	 	-	 	  	 	-	 	  	 	(10,787)	 	  	 	-	 
	 Loss on sale of land and buildings
	  	 	-	 	  	 	23	 	  	 	-	 	  	 	30	 
	 Adjusted EBITDA
	  	 	28,943	 	  	 	21,555	 	  	 	110,154	 	  	 	91,348	 
	 Corporate
	  				  				  				  			
	 Operating loss
	  	 	(11,154)	 	  	 	(9,720)	 	  	 	(38,053)	 	  	 	(30,037)	 
	 Depreciation and amortization
	  	 	447	 	  	 	713	 	  	 	2,072	 	  	 	2,474	 
	 (Gain) loss on sale of assets held for sale
	  	 	-	 	  	 	-	 	  	 	160	 	  	 	(412)	 
	 Adjusted EBITDA
	  	 	(10,707)	 	  	 	(9,007)	 	  	 	(35,821)	 	  	 	(27,975)	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Adjusted EBITDA margin from continuing operations is calculated as adjusted EBITDA from continuing operations as a percentage of revenue
before fuel surcharge. 
 Free cash flow conversion: Adjusted EBITDA from continuing operations less net capital expenditures (excluding
property), divided by the adjusted EBITDA from continuing operations. 
  

																					
	 	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	  	 	 	  	 Years ended

December 31
	 
	  	  	2019	 	  	2018*	 	  	  	 	  	2019	 	  	2018*	 
	 Net income from continuing operations
	  	 	76,543	 	  	 	            76,728	 	  	 	            	 	  	 	324,476	 	  	 	          291,994	 
	 Net finance costs (income)
	  	 	22,342	 	  	 	(40)	 	  				  	 	85,641	 	  	 	48,306	 
	 Income tax expense
	  	 	25,405	 	  	 	26,595	 	  				  	 	101,503	 	  	 	90,224	 
	 Depreciation of property and equipment
	  	 	59,028	 	  	 	52,392	 	  				  	 	223,794	 	  	 	198,492	 
	 Depreciation of
right-of-use assets
	  	 	25,751	 	  	 	-	 	  				  	 	102,573	 	  	 	-	 
	 Amortization of intangible assets
	  	 	16,838	 	  	 	15,460	 	  				  	 	65,925	 	  	 	62,101	 
	 Impairment of intangible assets
	  	 	-	 	  	 	12,559	 	  				  	 	-	 	  	 	12,559	 
	 Bargain purchase gain
	  	 	-	 	  	 	-	 	  				  	 	(10,787)	 	  	 	-	 
	 Gain on sale of land and buildings
	  	 	(10)	 	  	 	(312)	 	  				  	 	(12)	 	  	 	(524)	 
	 Gain on sale of assets held for sale
	  	 	(8,385)	 	  	 	(1,479)	 	  				  	 	(28,613)	 	  	 	(15,620)	 
	 Gain on sale of intangible assets
	  	 	-	 	  	 	(1,249)	 	  				  	 	-	 	  	 	(1,249)	 
	 Adjusted EBITDA from continuing operations
	  	 	217,512	 	  	 	180,654	 	  				  	 	864,500	 	  	 	686,283	 
	 Additions to rolling stock and equipment
	  	 	(69,401)	 	  	 	(94,549)	 	  				  	 	(296,841)	 	  	 	(298,661)	 
	 Proceeds from sale of rolling stock and
equipment
	  	 	27,497	 	  	 	24,122	 	  				  	 	96,227	 	  	 	79,124	 
	 Adjusted EBITDA from continuing operations net of net
capex, excluding property
	  	 	175,608	 	  	 	110,227	 	  	 	 	 	  	 	663,886	 	  	 	466,746	 
	 Free cash flow conversion
	  	 	80.7%	 	  	 	61.0%	 	  	 	 	 	  	 	76.8%	 	  	 	68.0%	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

Free cash flow from continuing operations: Net cash from continuing operating activities less additions to property and equipment plus
proceeds from sale of property and equipment and assets held for sale. Management believes that this measure provides a benchmark to evaluate the performance of the Company in regard to its ability to meet capital requirements. See reconciliation on
page 17. 

  

			
	

 	 	22

 Management’s Discussion and Analysis 

 

 Operating margin from continuing operations is calculated as operating income (loss) from
continuing operations as a percentage of revenue before fuel surcharge. 
 Adjusted operating ratio from continuing operations: Operating
expenses from continuing operations before 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 operating expenses”), net 

of fuel surcharge revenue, divided by revenue before fuel surcharge. Although the adjusted operating ratio is not a recognized financial measure defined
by IFRS, it is a widely recognized measure in the transportation industry, which the Company believes provides a comparable benchmark for evaluating the Company’s performance. Also, to facilitate the comparison of business level activity and
operating costs between periods, the Company compares the revenue before fuel surcharge (“revenue”) and reallocates the fuel surcharge revenue to materials and services expenses within operating expenses. 

Consolidated adjusted operating ratio from continuing operations reconciliation: 

 

																	
	 	 	 
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	    	 Years ended

December 31
	 
	  	 	2019	 	  	 	2018*	 	    	 	2019	 	  	 	2018*	 
	 Operating expenses
	  	 	1,181,197	 	  	 	1,218,162	 	    	 	4,667,244	 	  	 	4,692,684	 
	 Impairment of intangible assets
	  	 	-	 	  	 	(12,559)	 	    	 	-	 	  	 	(12,559)	 
	 Bargain purchase gain
	  	 	-	 	  	 	-	 	    	 	10,787	 	  	 	-	 
	 Gain on sale of land and building
	  	 	10	 	  	 	312	 	    	 	12	 	  	 	524	 
	 Gain on sale of assets held for sale
	  	 	8,385	 	  	 	1,479	 	    	 	28,613	 	  	 	15,620	 
	 Gain on sale of intangible assets
	  	 	-	 	  	 	1,249	 	    	 	-	 	  	 	1,249	 
	 Adjusted operating expenses
	  	 	1,189,592	 	  	 	1,208,643	 	    	 	4,706,656	 	  	 	4,697,518	 
	 Fuel surcharge revenue
	  	 	(139,011)	 	  	 	(159,166)	 	    	 	(565,235)	 	  	 	(615,011)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	1,050,581	 	  	 	1,049,477	 	    	 	4,141,421	 	  	 	4,082,507	 
	 Revenue before fuel surcharge
	  	 	1,166,476	 	  	 	1,162,279	 	    	 	4,613,629	 	  	 	4,508,197	 
	 Adjusted operating ratio
	  	 	90.1%	 	  	 	90.3%	 	    	 	89.8%	 	  	 	90.6%	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

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

  

																	
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	    	 Years ended

December 31
	 
	  	2019	 	  	2018*	 	    	2019	 	  	2018*	 
	 Less-Than-Truckload
	  				  				    				  			
	 Total revenue
	  	 	231,421	 	  	 	272,212	 	    	 	964,951	 	  	 	1,057,396	 
	 Total operating expenses
	  	 	205,923	 	  	 	248,751	 	    	 	855,752	 	  	 	972,264	 
	 Operating income
	  	 	25,498	 	  	 	23,461	 	    	 	109,199	 	  	 	85,132	 
					
	 Operating expenses
	  	 	205,923	 	  	 	248,751	 	    	 	855,752	 	  	 	972,264	 
	 Gain on sale of land and buildings and assets held
for sale
	  	 	1,947	 	  	 	254	 	    	 	11,346	 	  	 	2,574	 
	 Adjusted operating expenses
	  	 	207,870	 	  	 	249,005	 	    	 	867,098	 	  	 	974,838	 
	 Fuel surcharge revenue
	  	 	(31,703)	 	  	 	(40,218)	 	    	 	(132,738)	 	  	 	(155,076)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	176,167	 	  	 	208,787	 	    	 	734,360	 	  	 	819,762	 
	 Revenue before fuel surcharge
	  	 	199,718	 	  	 	231,994	 	    	 	832,213	 	  	 	902,320	 
	 Adjusted operating ratio
	  	 	88.2%	 	  	 	90.0%	 	    	 	88.2%	 	  	 	90.9%	 
	 Truckload
	  				  				    				  			
	 Total revenue
	  	 	620,122	 	  	 	610,161	 	    	 	2,509,752	 	  	 	2,388,865	 
	 Total operating expenses
	  	 	558,871	 	  	 	557,879	 	    	 	2,254,754	 	  	 	2,181,142	 
	 Operating income
	  	 	61,251	 	  	 	52,282	 	    	 	254,998	 	  	 	207,723	 
					
	 Operating expenses
	  	 	558,871	 	  	 	557,879	 	    	 	2,254,754	 	  	 	2,181,142	 
	 Gain on sale of land and buildings and assets held
for sale
	  	 	6,530	 	  	 	1,560	 	    	 	16,322	 	  	 	13,188	 
	 Adjusted operating expenses
	  	 	565,401	 	  	 	559,439	 	    	 	2,271,076	 	  	 	2,194,330	 
	 Fuel surcharge revenue
	  	 	(75,289)	 	  	 	(81,997)	 	    	 	(310,209)	 	  	 	(324,277)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	490,112	 	  	 	477,442	 	    	 	1,960,867	 	  	 	1,870,053	 
	 Revenue before fuel surcharge
	  	 	544,833	 	  	 	528,164	 	    	 	2,199,543	 	  	 	2,064,588	 
	 Adjusted operating ratio
	  	 	90.0%	 	  	 	90.4%	 	    	 	89.1%	 	  	 	90.6%	 

  

			
	

 	 	23

 Management’s Discussion and Analysis 

 

																	
	 (unaudited)

(in thousands of dollars)
	  	 Three months ended

December 31
	 	    	 Years ended

December 31
	 
	  	2019	 	  	2018*	 	    	2019	 	  	2018*	 
	 Truckload - Revenue before fuel surcharge
	  				  				    				  			
	 U.S. based Conventional TL
	  	 	206,810	 	  	 	223,128	 	    	 	858,214	 	  	 	880,631	 
	 Canadian based Conventional TL
	  	 	74,803	 	  	 	79,017	 	    	 	300,933	 	  	 	313,305	 
	 Specialized TL
	  	 	264,591	 	  	 	227,438	 	    	 	1,049,546	 	  	 	877,463	 
	 Eliminations
	  	 	(1,371)	 	  	 	(1,419)	 	    	 	(9,150)	 	  	 	(6,811)	 
	 	  	 	544,833	 	  	 	528,164	 	    	 	2,199,543	 	  	 	2,064,588	 
	 Truckload - Fuel surcharge revenue
	  				  				    				  			
	 U.S. based Conventional TL
	  	 	35,270	 	  	 	43,034	 	    	 	148,859	 	  	 	170,673	 
	 Canadian based Conventional TL
	  	 	10,133	 	  	 	12,257	 	    	 	41,973	 	  	 	49,693	 
	 Specialized TL
	  	 	29,945	 	  	 	26,815	 	    	 	120,288	 	  	 	104,464	 
	 Eliminations
	  	 	(59)	 	  	 	(109)	 	    	 	(911)	 	  	 	(553)	 
	 	  	 	75,289	 	  	 	81,997	 	    	 	310,209	 	  	 	324,277	 
	 Truckload - Operating income
	  				  				    				  			
	 U.S. based Conventional TL
	  	 	15,751	 	  	 	15,012	 	    	 	73,121	 	  	 	47,820	 
	 Canadian based Conventional TL
	  	 	10,562	 	  	 	11,172	 	    	 	43,264	 	  	 	47,793	 
	 Specialized TL
	  	 	34,938	 	  	 	26,098	 	    	 	138,613	 	  	 	112,110	 
	 	  	 	61,251	 	  	 	52,282	 	    	 	254,998	 	  	 	207,723	 
	 U.S. based Conventional TL
	  				  				    				  			
	 Operating expenses**
	  	 	226,329	 	  	 	251,150	 	    	 	933,952	 	  	 	1,003,484	 
	 Fuel surcharge revenue
	  	 	(35,270)	 	  	 	(43,034)	 	    	 	(148,859)	 	  	 	(170,673)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	191,059	 	  	 	208,116	 	    	 	785,093	 	  	 	832,811	 
	 Revenue before fuel surcharge
	  	 	206,810	 	  	 	223,128	 	    	 	858,214	 	  	 	880,631	 
	 Adjusted operating ratio
	  	 	92.4%	 	  	 	93.3%	 	    	 	91.5%	 	  	 	94.6%	 
	 Canadian based Conventional TL
	  				  				    				  			
	 Operating expenses**
	  	 	74,374	 	  	 	80,102	 	    	 	299,642	 	  	 	315,205	 
	 Gain on sale of land and buildings and assets held
for sale
	  	 	11	 	  	 	-	 	    	 	11	 	  	 	7,023	 
	 Adjusted operating expenses
	  	 	74,385	 	  	 	80,102	 	    	 	299,653	 	  	 	322,228	 
	 Fuel surcharge revenue
	  	 	(10,133)	 	  	 	(12,257)	 	    	 	(41,973)	 	  	 	(49,693)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	64,252	 	  	 	67,845	 	    	 	257,680	 	  	 	272,535	 
	 Revenue before fuel surcharge
	  	 	74,803	 	  	 	79,017	 	    	 	300,933	 	  	 	313,305	 
	 Adjusted operating ratio
	  	 	85.9%	 	  	 	85.9%	 	    	 	85.6%	 	  	 	87.0%	 
	 Specialized TL
	  				  				    				  			
	 Operating expenses**
	  	 	259,598	 	  	 	228,155	 	    	 	1,031,221	 	  	 	869,817	 
	 Gain on sale of assets held for sale
	  	 	6,519	 	  	 	1,560	 	    	 	16,311	 	  	 	6,165	 
	 Adjusted operating expenses
	  	 	266,117	 	  	 	229,715	 	    	 	1,047,532	 	  	 	875,982	 
	 Fuel surcharge revenue
	  	 	(29,945)	 	  	 	(26,815)	 	    	 	(120,288)	 	  	 	(104,464)	 
	 Adjusted operating expenses, net of fuel surcharge revenue
	  	 	236,172	 	  	 	202,900	 	    	 	927,244	 	  	 	771,518	 
	 Revenue before fuel surcharge
	  	 	264,591	 	  	 	227,438	 	    	 	1,049,546	 	  	 	877,463	 
	 Adjusted operating ratio
	  	 	89.3%	 	  	 	89.2%	 	    	 	88.3%	 	  	 	87.9%	 

	*	 The current period results include the impacts from the adoption of IFRS 16 Leases as discussed in note 3 of the
audited consolidated financial statements. As is permitted with this new standard, comparative information has not been restated and, therefore, may not be comparable. 

 

	**	 Operating expenses excluding intra TL eliminations 

 

 RISKS AND UNCERTAINTIES 

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

 Competition. The Company faces growing competition from other transporters in Canada, the United States and Mexico. These factors, including
the following, could impair the Company’s ability to maintain

 
or improve its profitability and could have a material adverse effect on the Company’s results of operations: 
  

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

  

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

  

	●	 some of the Company’s customers are other transportation companies or companies that also operate their own
private 

 

  

			
	

 	 	24

 Management’s Discussion and Analysis 

 

	 	 
trucking fleets, and they may decide to transport more of their own freight or bundle transportation with other services; 

 

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

 

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

  

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

 

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

  

	●	 some of the Company’s smaller competitors may not yet be fully compliant with recently-enacted regulations, such
as regulations requiring the use of electronic logging devices “ELDs” in the United States, which may allow such competitors to take advantage of additional driver productivity; 

 

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

  

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

  

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

 

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

  

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

  

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

 Regulation. In
Canada, carriers must obtain licenses issued by provincial transport boards in order to carry goods inter-provincially or to transport goods within any province. Licensing from U.S. and Mexican regulatory authorities is also required for the
transportation of goods in Canada, the United States, and Mexico. Any change in or violation of existing or future regulations could have an adverse impact

 
on the scope of the Company’s activities. Future laws and regulations may be more stringent, require changes in the Company’s operating practices, influence the demand for
transportation services or require the Company to incur significant additional costs. Higher costs incurred by the Company, or by the Company’s suppliers who pass the costs onto the Company through higher supplies and materials pricing, could
adversely affect the Company’s results of operations. 
 In addition to the regulatory regime applicable to operations in Canada, the Company is
increasing its operations in the United States, and is therefore increasingly subject to rules and regulations related to the U.S. transportation industry, including regulation from various federal, state and local agencies, including the Department
of Transportation (“DOT”) (in part through the Federal Motor Carrier Safety Administration (“FMCSA”)), the Environmental Protection Agency (“EPA”) and the Department of Homeland Security. Drivers must, both in Canada
and the United States, comply with safety and fitness regulations, including those relating to drug and alcohol testing, driver safety performance and hours of service. Weight and dimensions, exhaust emissions and fuel efficiency are also subject to
government regulation. The Company may also become subject to new or more restrictive regulations relating to fuel efficiency, exhaust emissions, hours of service, drug and alcohol testing, ergonomics,
on-board reporting of operations, collective bargaining, security at ports, speed limitations, driver training and other matters affecting safety or operating methods. 

In the United States, there are currently two methods of evaluating the safety and fitness of carriers: the Compliance, Safety, Accountability
(“CSA”) program, which evaluates and ranks fleets on certain safety-related standards by analyzing data from recent safety events and investigation results, and the DOT safety rating, which is based on an
on-site investigation and affects a carrier’s ability to operate in interstate commerce. Additionally, the FMCSA has proposed rules in the past that would change the methodologies used to determine
carrier safety and fitness. 
 Under the CSA program, carriers are evaluated and ranked against their peers based on seven categories of safety-related
data. The seven categories of safety-related data currently include Unsafe Driving, Hours-of-Service Compliance, Driver Fitness, Controlled Substances/Alcohol, Vehicle
Maintenance, Hazardous Materials Compliance and Crash Indicator (such categories known as “BASICs”). Carriers are grouped by category with other carriers that have a similar number of safety events (i.e. crashes, inspections, or
violations) and carriers are ranked and assigned a rating percentile or score. If the Company were subject to any such interventions, this could have an adverse effect on the Company’s business, financial condition and results of operations. As
a result, the Company’s fleet could be ranked poorly as compared to peer carriers. There is no guarantee that we will be able to maintain our current safety ratings or that we will not be subject to interventions in the future. The Company
recruits first-time drivers to be part of its fleet, and these drivers may have a higher likelihood of creating adverse safety events under CSA. The

 

  

			
	

 	 	25

 Management’s Discussion and Analysis 

 

 
occurrence of future deficiencies could affect driver recruitment in the United States by causing high-quality drivers to seek employment with other carriers or limit the pool of available
drivers or could cause the Company’s customers to direct their business away from the Company and to carriers with higher fleet safety rankings, either of which would materially adversely affect the Company’s business, financial condition
and results of operations. In addition, future deficiencies could increase the Company’s insurance expenses. 
 Additionally, competition for
drivers with favorable safety backgrounds may increase, which could necessitate increases in driver-related compensation costs. Further, the Company may incur greater than expected expenses in its attempts to improve unfavorable scores. 

In December 2015, the U.S. Congress passed a new highway funding bill called Fixing America’s Surface Transportation Act (the “FAST Act”),
which calls for significant CSA reform. The FAST Act directs the FMCSA to conduct studies of the scoring system used to generate CSA rankings to determine if it is effective in identifying high-risk carriers and predicting future crash risk. This
study was conducted and delivered to the FMCSA in June 2017 with several recommendations to make the CSA program more fair, accurate and reliable. In June 2018, the FMCSA provided a report to the U.S. Congress outlining the changes it may make to
the CSA program in response to the study. Such changes include the testing and possible adoption of a revised risk modeling theory, potential collection and dissemination of additional carrier data and revised measures for intervention thresholds.
The adoption of such changes is contingent on the results of the new modeling theory and additional public feedback. Thus, it is unclear if, when and to what extent such changes to the CSA program will occur. The FAST Act is set to expire in
September 2020, and the U.S. Congress has noted its intent to consider a multiyear highway measure that would update the FAST Act, which could lead to further changes to the CSA program. Any changes that increase the likelihood of the Company
receiving unfavorable scores could materially adversely affect the Company’s results of operations and profitability. 
 In December 2016, the
FMCSA issued a final rule establishing a national clearinghouse for drug and alcohol testing results and requiring motor carriers and medical review officers to provide records of violations by commercial drivers of FMCSA drug and alcohol testing
requirements. Motor carriers in the United States will be required to query the clearinghouse to ensure drivers and driver applicants do not have violations of federal drug and alcohol testing regulations that prohibit them from operating commercial
motor vehicles. The final rule became effective on January 4, 2017, with a compliance date of January 6, 2020. In December 2019, however, the FMCSA announced a final rule pursuant to which the compliance date for state driver’s
licensing agencies for certain Drug and Alcohol Clearinghouse requirements were extended for three years. The December 2016 commercial driver’s license rule initially required states to request information from the clearinghouse about
individuals prior to issuing, renewing, upgrading or transferring a commercial driver’s license. This new action will allow states to delay compliance with the requirement until January 2023.

 In addition, other rules have been recently proposed or made final by the FMCSA, including (i) a rule
requiring the use of speed-limiting devices on heavy-duty tractors to restrict maximum speeds, which was proposed in 2016, and (ii) a rule setting out minimum driver training standards for new drivers applying for commercial driver’s
licenses for the first time and to experienced drivers upgrading their licenses or seeking a hazardous materials endorsement, which was made final in December 2016 with a compliance date in February 2020 (FMCSA officials recently delayed
implementation of the final rule by two years). In July 2017, the DOT announced that it would no longer pursue a speed limiter rule, but left open the possibility that it could resume such a pursuit in the future. In 2019 U.S. Congressional
representatives proposed a similar rule related to speed limiting devices. The effect of these rules, to the extent they become effective, could result in a decrease in fleet production and/or driver availability, either of which could materially
adversely affect the Company’s business, financial condition and results of operations. 
 The Company currently has a satisfactory DOT rating for
each of its U.S. operations, which is the highest available rating under the current safety rating scale. If the Company were to receive a conditional or unsatisfactory DOT safety rating, it could materially adversely affect the Company’s
business, financial condition and results of operations as customer contracts may require a satisfactory DOT safety rating, and a conditional or unsatisfactory rating could materially adversely affect or restrict the Company’s operations and
increase the Company’s insurance costs. 
 The FMCSA has proposed regulations that would modify the existing rating system and the safety labels
assigned to motor carriers evaluated by the DOT. Under regulations that were proposed in 2016, the methodology for determining a carrier’s DOT safety rating would be expanded to include the on-road safety
performance of the carrier’s drivers and equipment, as well as results obtained from investigations. Exceeding certain thresholds based on such performance or results would cause a carrier to receive an unfit safety rating. The proposed
regulations were withdrawn in March 2017, but the FMCSA noted that a similar process may be initiated in the future. If similar regulations were enacted and the Company were to receive an unfit or other negative safety rating, the Company’s
business would be materially adversely affected in the same manner as if it received a conditional or unsatisfactory safety rating under the current regulations. In addition, poor safety performance could lead to increased risk of liability,
increased insurance, maintenance and equipment costs and potential loss of customers, which could materially adversely affect the Company’s business, financial condition and results of operations. The FMCSA also recently announced plans to
conduct a new study on the causation of certain crashes. Although it remains unclear whether such a study will ultimately be undertaken and completed, the results of such a study could spur further proposed and/or final rules regarding safety and
fitness in the United States. 
 From time to time, the FMCSA proposes and implements changes to regulations impacting hours-of-service. Such changes can negatively

 

  

			
	

 	 	26

 Management’s Discussion and Analysis 

 

 
impact the Company’s productivity and affect its operations and profitability by reducing the number of hours per day or week the Company’s U.S. drivers and independent contractors may
operate and/or disrupt the Company’s network. In August 2019, the FMCSA issued a proposal to make changes to its hours-of-service rules that would allow U.S. truck
drivers more flexibility with their 30-minute rest break and with dividing their time in the sleeper berth. It would also extend by two hours the duty time for drivers encountering adverse weather, and extend
the short haul exemption by lengthening the drivers’ maximum on-duty period from 12 hours to 14 hours. It is unclear how long the process of finalizing a final rule will take, if one does come to
fruition. Any future changes to hours of service regulations could materially and adversely affect the Company’s operations and profitability. 

The U.S. National Highway Traffic Safety Administration, the EPA and certain U.S. states, including California, have adopted regulations that are aimed at
reducing tractor emissions and/or increasing fuel economy of the equipment the Company uses. Certain of these regulations are currently effective, with stricter emission and fuel economy standards becoming effective over the next several years.
Other regulations have been proposed in the United States that would similarly increase these standards. U.S. federal and state lawmakers and regulators have also adopted or are considering a variety of other climate-change legal requirements
related to carbon emissions and greenhouse gas emissions. These legal requirements could potentially limit carbon emissions within certain states and municipalities in the United States. Certain of these legal requirements restrict the location and
amount of time that diesel-powered tractors (like the Company’s) may idle, which may force the Company to purchase on-board power units that do not require the engine to idle or to alter the
Company’s drivers’ behavior, which might result in a decrease in productivity and/or an increase in driver turnover. All of these regulations have increased, and may continue to increase, the cost of new tractors and trailers and may
require the Company to retrofit certain of its tractors and trailers, may increase its maintenance costs, and could impair equipment productivity and increase the Company’s operating costs, particularly if such costs are not offset by potential
fuel savings. The occurrence of any of these adverse effects, combined with the uncertainty as to the reliability of the newly-designed diesel engines and the residual values of the Company’s equipment, could materially adversely affect the
Company’s business, financial condition and results of operations. Furthermore, any future regulations that impose restrictions, caps, taxes or other controls on emissions of greenhouse gases could adversely affect the Company’s operations
and financial results. The Company cannot predict the extent to which its operations and productivity will be impacted by any future regulations. The Company will continue monitoring its compliance with U.S. federal and state environmental
regulations. 
 In March 2014, the U.S. Ninth Circuit Court of Appeals held that the application of California state wage and hour laws to interstate
truck drivers is not pre-empted by U.S. federal law. The case was appealed to the U.S. Supreme Court, which denied certiorari in May 2015, and

 
accordingly, the Ninth Circuit Court of Appeals decision stands. However, in December 2018, the FMCSA granted a petition filed by the American Trucking Associations determining that federal law pre-empts California’s wage and hour laws, and interstate truck drivers are not subject to such laws. The FMCSA’s decision has been appealed by labour groups and multiple lawsuits have been filed in U.S.
federal courts seeking to overturn the decision, and thus it is uncertain whether it will stand. Current and future U.S. state and local wage and hour laws, including laws related to employee meal breaks and rest periods, may vary significantly from
U.S. federal law. Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state minimum wage laws. As a result, the Company, along with other companies
in the industry, is subject to an uneven patchwork of wage and hour laws throughout the United States. In addition, the uncertainty with respect to the practical application of wage and hour laws are, in the future may be, resulting in additional
costs for the Company and the industry as a whole, and a negative outcome with respect to any of the above-mentioned lawsuits could materially affect the Company. There is proposed federal legislation to solidify the
pre-emption of state and local wage and hour laws applied to interstate truck drivers; however, passage of such legislation is uncertain. If U.S. federal legislation is not passed, the Company will either need
to continue complying with the most restrictive state and local laws across its entire fleet in the United States, or revise its management systems to comply with varying state and local laws. Either solution could result in increased compliance and
labour costs, driver turnover, decreased efficiency and increased risk of non-compliance. 
 In April 2016, the Food and Drug Administration
(“FDA”) published a final rule establishing requirements for shippers, loaders, carriers by motor vehicle and rail vehicle, and receivers engaged in the transportation of food, to use sanitary transportation practices to ensure the safety
of the food they transport as part of the FSMA. This rule sets forth requirements related to (i) the design and maintenance of equipment used to transport food, (ii) the measures taken during food transportation to ensure food safety,
(iii) the training of carrier personnel in sanitary food transportation practices, and (iv) maintenance and retention of records of written procedures, agreements, and training related to the foregoing items. These requirements took effect
for larger carriers in April 2017 and apply to the Company when it acts as a carrier or as a broker. If the Company is found to be in violation of applicable laws or regulations related to the FSMA or if the Company transports food or goods that are
contaminated or are found to cause illness and/or death, the Company could be subject to substantial fines, lawsuits, penalties and/or criminal and civil liability, any of which could have a material adverse effect on the Company’s business,
financial condition, and results of operations. 
 Changes in existing regulations and implementation of new regulations, such as those related to
trailer size limits, emissions and fuel economy, hours of service, mandating ELDs and drug and alcohol testing in Canada, the United States and Mexico, could increase capacity in the industry or improve the position of certain competitors,

 

  

			
	

 	 	27

 Management’s Discussion and Analysis 

 

 
either of which could negatively impact pricing and volumes or require additional investments by the Company. The short-term and long-term impacts of changes in legislation or regulations are
difficult to predict and could materially adversely affect the Company’s results of operations. 
 The right to continue to hold applicable
licenses and permits is generally subject to maintaining satisfactory compliance with regulatory and safety guidelines, policies and laws. Although the Company is committed to compliance with laws and safety, there is no assurance that it will be in
full compliance with them at all times. Consequently, at some future time, the Company could be required to incur significant costs to maintain or improve its compliance record. 

United States and Mexican operations. A growing portion of the Company’s revenue is derived from operations in the United States and
transportation to and from Mexico. The Company’s international operations are subject to a variety of risks, including fluctuations in foreign currencies, changes in the economic strength or greater volatility in the economies of foreign
countries in which the Company does business, difficulties in enforcing contractual rights and intellectual property rights, compliance burdens associated with export and import laws, theft or vandalism, and social, political and economic
instability. The Company’s international operations could be adversely affected by restrictions on travel. Additional risks associated with the Company’s international operations include restrictive trade policies, imposition of duties,
changes to trade agreements and other treaties, taxes or government royalties by foreign governments, adverse changes in the regulatory environments, including in tax laws and regulations, of the foreign countries in which the Company does business,
compliance with anti-corruption and anti-bribery laws, restrictions on the withdrawal of foreign investments, the ability to identify and retain qualified local managers and the challenge of managing a culturally and geographically diverse
operation. The Company cannot guarantee compliance with all applicable laws, and violations could result in substantial fines, sanctions, civil or criminal penalties, competitive or reputational harm, litigation or regulatory action and other
consequences that might adversely affect the Company’s results of operations. 
 The United States has imposed tariffs on certain imported steel
and aluminum. The implementation of these tariffs, as well as the imposition of additional tariffs or quotas or changes to certain trade agreements, including tariffs applied to goods traded between the United States and China, could, among other
things, increase the costs of the materials used by the Company’s suppliers to produce new revenue equipment or increase the price of fuel. Such cost increases for the Company’s revenue equipment suppliers would likely be passed on to the
Company, and to the extent fuel prices increase, the Company may not be able to fully recover such increases through rate increases or the Company’s fuel surcharge program, either of which could have a material adverse effect on the
Company’s business. 

 The United States-Mexico-Canada Agreement (“USMCA”) has been ratified by the United States and
Mexico but must be ratified by the Parliament of Canada before it enters into effect. The USMCA is designed to modernize food and agriculture trade, advance rules of origin for automobiles and trucks, and enhance intellectual property protections,
among other matters, according to the Office of the U.S. Trade Representative. The USMCA is now in the process of being ratified by each country. It is difficult to predict at this stage what could be the impact of the USMCA on the economy,
including the transportation industry. However, given the amount of North American trade that moves by truck, if the USMCA enters into effect, it could have a significant impact on supply and demand in the transportation industry, and could
adversely impact the amount, movement and patterns of freight transported by the Company. 
 In December 2017, the United States enacted comprehensive
tax legislation, commonly referred to as the 2017 Tax Cuts and Jobs Act. The new law requires complex computations not previously required by U.S. tax law. The Treasury has issued final regulations and interpretive guidance on specific areas since
the 2017 Tax Cuts and Jobs Act was enacted, but there remain significant regulations that are still awaiting finalization. The finalization of these proposed regulations could have a material adverse effect on the Corporation’s results in
future periods. Further, compliance with the new law and the accounting for such provisions require preparation and analysis of information not previously required or regularly produced. In addition, the U.S. Department of Treasury has broad
authority to issue regulations and interpretative guidance that may significantly impact how the Company will apply the law and impact the Company’s results of operations in future periods. The timing and scope of such regulations and
interpretative guidance are uncertain. In addition, there is a risk that states within the United States or foreign jurisdictions may amend their tax laws in response to these tax reforms, which could have a material adverse effect on the
Company’s results. 
 In addition, if the Company is unable to maintain its Free and Secure Trade (“FAST”) and U.S. Customs Trade
Partnership Against Terrorism (“C-TPAT”) certification statuses, it may have significant border delays, which could cause its cross-border operations to be less efficient than those of competitor
carriers that obtain or continue to maintain FAST and C-TPAT certifications. 
 Operating Environment and
Seasonality. The Company is exposed to the following factors, among others, affecting its operating environment: 
 the Company’s future
insurance and claims expense, including the cost of its liability insurance premiums and the number and dollar amount of claims, may exceed historical levels, which would require the Company to incur additional costs and could reduce the
Company’s earnings; 
 a decline in the demand for used revenue equipment could result in decreased equipment sales, lower resale values and lower
gains (or recording losses) on sales of assets; 

 

  

			
	

 	 	28

 Management’s Discussion and Analysis 

 

 tractor and trailer vendors may reduce their manufacturing output in response to lower demand for their
products in economic downturns or shortages of component parts, which may materially adversely affect the Company’s ability to purchase a quantity of new revenue equipment that is sufficient to sustain its desired growth rate; and 

increased prices for new revenue equipment, design changes of new engines, reduced equipment efficiency resulting from new engines designed to reduce
emissions, or decreased availability of new revenue equipment. 
 The Company’s tractor productivity decreases during the winter season because
inclement weather impedes operations and some shippers reduce their shipments after the winter holiday season. Revenue may also be adversely affected by inclement weather and holidays, since revenue is directly related to available working days of
shippers. At the same time, operating expenses increase and fuel efficiency declines because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair expenditures. The Company may also
suffer from weather-related or other unforeseen events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes and explosions. These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes,
affect regional economies, damage or destroy the Company’s assets or adversely affect the business or financial condition of the Company’s customers, any of which could materially adversely affect the Company’s results of operations
or make the Company’s results of operations more volatile. 
 General Economic, Credit, and Business Conditions. The Company’s business
is subject to general economic, credit, business and regulatory factors that are largely beyond the Company’s control, and which could have a material adverse effect on the Company’s operating results. 

The Company’s industry is subject to cyclical pressures, and the Company’s business is dependent on a number of factors that may have a material
adverse effect on its results of operations, many of which are beyond the Company’s control. The Company believes that some of the most significant of these factors include (i) excess tractor and trailer capacity in the transportation
industry in comparison with shipping demand; (ii) declines in the resale value of used equipment; (iii) recruiting and retaining qualified drivers; (iv) strikes, work stoppages or work slowdowns at the Company’s facilities or at
customer, port, border crossing or other shipping-related facilities; (v) compliance with ongoing regulatory requirements; (vi) increases in interest rates, fuel taxes, tolls and license and registration fees; and (vii) rising
healthcare costs in the United States. 
 The Company is also affected by (i) recessionary economic cycles, which tend to be characterized by weak
demand and downward pressure on rates; (ii) changes in customers’ inventory levels and in the availability of funding for their working capital; (iii) changes in the way in which the Company’s customers choose to source or
utilize the Company’s services; and (iv) downturns in customers’ business cycles,

 
such as retail and manufacturing, where the Company has significant customer concentration. Economic conditions may adversely affect customers and their demand for and ability to pay for the
Company’s services. Customers encountering adverse economic conditions represent a greater potential for loss and the Company may be required to increase its allowance for doubtful accounts. 

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

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

freight patterns may change as supply chains are redesigned, resulting in an imbalance between the Company’s capacity and assets and customers’
freight demand; 
 the Company may be forced to accept more loads from freight brokers, where freight rates are typically lower, or may be forced to
incur more non-revenue generating miles to obtain loads; 
 the Company may increase the size of its fleet
during periods of high freight demand during which its competitors also increase their capacity, and the Company may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if the Company is
required to dispose of assets at a loss to match reduced freight demand; 
 customers may solicit bids for freight from multiple trucking companies or
select competitors that offer lower rates in an attempt to lower their costs, and the Company may be forced to lower its rates or lose freight; and 

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

 

  

			
	

 	 	29

 Management’s Discussion and Analysis 

 

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

The Company’s operations, with the exception of its brokerage operations, are capital intensive and asset heavy. If anticipated demand differs
materially from actual usage, the Company may have too many or too few assets. During periods of decreased customer demand, the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open market or turn in
equipment under certain equipment leases in order to right size its fleet. This could cause the Company to incur losses on such sales or require payments in connection with equipment the Company turns in, particularly during times of a softer used
equipment market, either of which could have a material adverse effect on the Company’s profitability. 
 Although the Company’s business
volume is not highly concentrated, its customers’ financial failures or loss of customer business may materially adversely affect the Company. If the Company were unable to generate sufficient cash from operations, it would need to seek
alternative sources of capital, including financing, to meet its capital requirements. In the event that the Company were unable to generate sufficient cash from operations or obtain financing on favorable terms in the future, it may have to limit
its fleet size, enter into less favorable financing arrangements or operate its revenue equipment for longer periods, any of which could have a materially adverse effect on its profitability. 

Interest Rate Fluctuations. Future cash flows related to variable-rate financial liabilities could be impacted by changes in benchmark rates such
as Bankers’ Acceptance or London Interbank Offered Rate (Libor). In addition, the Company is exposed to gains and losses arising from changes in interest rates through its derivative financial instruments carried at fair value. 

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

Price and Availability of Fuel. Fuel is one of the Company’s largest operating expenses. Diesel fuel prices fluctuate greatly due to factors
beyond the Company’s control, such as political events, commodity futures trading, currency fluctuations, natural and man-made disasters, terrorist activities and armed conflicts, any of which may lead to
an increase in the cost of fuel. Fuel prices are also affected by the rising

 
demand for fuel in developing countries and could be materially adversely affected by the use of crude oil and oil reserves for purposes other than fuel production and by diminished drilling
activity. Such events may lead not only to increases in fuel prices, but also to fuel shortages and disruptions in the fuel supply chain. Because the Company’s operations are dependent upon diesel fuel, significant diesel fuel cost increases,
shortages or supply disruptions could have a material adverse effect on the Company’s business, financial condition and results of operations. 

While the Company has fuel surcharge programs in place with a majority of the Company’s customers, which historically have helped the Company offset
the majority of the negative impact of rising fuel prices, the Company also incurs fuel costs that cannot be recovered even with respect to customers with which the Company maintains fuel surcharge programs, such as those associated with non-revenue generating miles or time when the Company’s engines are idling. Moreover, the terms of each customer’s fuel surcharge program vary from one division to another, and the recoverability for fuel
price increases varies as well. In addition, because the Company’s fuel surcharge recovery lags behind changes in fuel prices, the Company’s fuel surcharge recovery may not capture the increased costs the Company pays for fuel, especially
when prices are rising. This could lead to fluctuations in the Company’s levels of reimbursement, such as has occurred in the past. There can be no assurance that such fuel surcharges can be maintained indefinitely or that they will be fully
effective. 
 Insurance. The Company’s operations are subject to risks inherent in the transportation sector, including personal injury,
property damage, workers’ compensation and employment and other issues. The Company’s future insurance and claims expenses may exceed historical levels, which could reduce the Company’s earnings. The Company subscribes for insurance
in amounts it considers appropriate in the circumstances and having regard to industry norms. Like many in the industry, the Company self-insures a significant portion of the claims exposure related to cargo loss, bodily injury, workers’
compensation and property damages. Due to the Company’s significant self-insured amounts, the Company has exposure to fluctuations in the number or severity of claims and the risk of being required to accrue or pay additional amounts if the
Company’s estimates are revised or claims ultimately prove to be in excess of the amounts originally assessed. Further, the Company’s self-insured retention levels could change and result in more volatility than in recent years. 

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

 

  

			
	

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 Management’s Discussion and Analysis 

 

 
retains a deductible of US $1 million on its primary US $5 million limit policy for certain U.S. subsidiaries for commercial general liability. The Company retains deductibles of up to US
$1 million per occurrence for workers’ compensation claims. The Company’s liability coverage has a total limit of US $100 million per occurrence for both its Canadian and U.S. divisions. 

Although the Company believes its aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that the amount of
one or more claims could exceed the Company’s aggregate coverage limits or that the Company will chose not to obtain insurance in respect of such claims. If any claim were to exceed the Company’s coverage, the Company would bear the
excess, in addition to the Company’s other self-insured amounts. The Company’s results of operations and financial condition could be materially and adversely affected if (i) cost per claim or the number of claims significantly
exceeds the Company’s coverage limits or retention amounts; (ii) the Company experiences a claim in excess of its coverage limits; (iii) the Company’s insurance carriers fail to pay on the Company’s insurance claims;
(iv) the Company experiences a significant increase in premiums; or (v) the Company experiences a claim for which coverage is not provided, either because the Company chose not to obtain insurance as a result of high premiums or because
the claim is not covered by insurance which the Company has in place. 
 The Company accrues the costs of the uninsured portion of pending claims based
on estimates derived from the Company’s evaluation of the nature and severity of individual claims and an estimate of future claims development based upon historical claims development trends. Actual settlement of the Company’s retained
claim liabilities could differ from its estimates due to a number of uncertainties, including evaluation of severity, legal costs and claims that have been incurred but not reported. Due to the Company’s high retained amounts, it has
significant exposure to fluctuations in the number and severity of claims. If the Company were required to accrue or pay additional amounts because its estimates are revised or the claims ultimately prove to be more severe than originally assessed,
its financial condition and results of operations may be materially adversely affected. 
 Employee Relations. Most of the Company’s
unionized employees are Canadian employees with a small number of unionized employees in the United States. Although the Company believes that its relations with its employees are satisfactory, no assurance can be given that the Company will be able
to successfully extend or renegotiate the Company’s current collective agreements as they expire from time to time or that additional employees in the United States will not attempt to unionize. If the Company fails to extend or renegotiate the
Company’s collective agreements, if disputes with the Company’s unions arise, or if the Company’s unionized or non-unionized workers engage in a strike or other work stoppage or interruption,
the Company could experience a significant disruption of, or inefficiencies in, its operations or incur higher labour costs, which could have a material

 
adverse effect on the Company’s business, results of operations, financial condition and liquidity. 

At the date hereof, the collective agreements between the Company and the vast majority of its unionized employees have been renewed. The Company’s
collective agreements have a variety of expiration dates, to the last of which is in September 2024. In a small number of cases, the expiration date of the collective agreement has passed; in such cases, the Corporation is generally in the process
of renegotiating the agreement. The Company cannot predict the effect which any new collective agreements or the failure to enter into such agreements upon the expiry of the current agreements may have on its operations. 

Drivers. Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a material adverse effect on the
Company’s profitability and the ability to maintain or grow the Company’s fleet. 
 Like many in the transportation sector, the Company
experiences substantial difficulty in attracting and retaining sufficient numbers of qualified drivers. The trucking industry periodically experiences a shortage of qualified drivers. The Company believes the shortage of qualified drivers and
intense competition for drivers from other transportation companies will create difficulties in maintaining or increasing the number of drivers and may negatively impact the Company’s ability to engage a sufficient number of drivers, and the
Company’s inability to do so may negatively impact its operations. Further, the compensation the Company offers its drivers and independent contractor expenses are subject to market conditions, and the Company may find it necessary to increase
driver and independent contractor compensation in future periods. 
 In addition, the Company and many other trucking companies suffer from a high
turnover rate of drivers in the U.S. TL market. This high turnover rate requires the Company to continually recruit a substantial number of new drivers in order to operate existing revenue equipment. Driver shortages are exacerbated during periods
of economic expansion, in which alternative employment opportunities, including in the construction and manufacturing industries, which may offer better compensation and/or more time at home, are more plentiful and freight demand increases, or
during periods of economic downturns, in which unemployment benefits might be extended and financing is limited for independent contractors who seek to purchase equipment, or the scarcity or growth of loans for students who seek financial aid for
driving school. The lack of adequate tractor parking along some U.S. highways and congestion caused by inadequate highway funding may make it more difficult for drivers to comply with hours of service regulations and cause added stress for drivers,
further reducing the pool of eligible drivers. The Company’s use of team-driven tractors for expedited shipments requires two drivers per tractor, which further increases the number of drivers the Company must recruit and retain in comparison
to operations that require one driver per tractor. The Company also employs driver hiring standards, which could further reduce the pool of available drivers from which the Company would hire. If the Company is unable to continue to attract and
retain a 

 

  

			
	

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 Management’s Discussion and Analysis 

 

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

Independent Contractors. The Company’s contracts with U.S. independent contractors are governed by U.S. federal leasing regulations, which
impose specific requirements on the Company and the independent contractors. If more stringent state or U.S. federal leasing regulations are adopted, U.S. independent contractors could be deterred from becoming independent contractor drivers, which
could materially adversely affect the Company’s goal of maintaining its current fleet levels of independent contractors. 
 The Company provides
financing to certain qualified Canadian independent contractors and financial guarantees to a small number of U.S. independent contractors. If the Company were unable to provide such financing or guarantees in the future, due to liquidity
constraints or other restrictions, it may experience a decrease in the number of independent contractors it is able to engage. Further, if independent contractors the Company engages default under or otherwise terminate the financing arrangements
and the Company is unable to find replacement independent contractors or seat the tractors with its drivers, the Company may incur losses on amounts owed to it with respect to such tractors. 

Pursuant to the Company’s fuel surcharge program with independent contractors, the Company pays independent contractors with which it contracts a
fuel surcharge that increases with the increase in fuel prices. A significant increase or rapid fluctuation in fuel prices could cause the Company’s costs under this program to be higher than the revenue the Company receives under its customer
fuel surcharge programs. 
 U.S. tax and other regulatory authorities, as well as U.S. independent contractors themselves, have increasingly asserted
that U.S. independent contractor drivers in the trucking industry are employees rather than independent contractors, and the Company’s classification of independent contractors has been the subject of audits by such authorities from time to
time. U.S. federal and state legislation has been introduced in the past that would make it easier for tax and other authorities to reclassify independent contractors as employees, including legislation to increase the recordkeeping requirements for
those that engage independent contractor drivers and to increase the penalties for companies who misclassify their employees and are found to have violated employees’ overtime and/or wage requirements. Additionally, U.S. federal legislators
have sought to abolish the current safe harbor allowing taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice, to extend the U.S. Fair Labor Standards Act to
independent contractors and to impose notice requirements based on employment or independent contractor status and fines for failure to comply. Some U.S. states have put initiatives in place to increase their revenue from items such as unemployment,
workers’

 
compensation and income taxes, and a reclassification of independent contractors as employees would help states with this initiative. Further, courts in certain U.S. states have recently issued
decisions that could result in a greater likelihood that independent contractors would be judicially classified as employees in such states. 
 In
September 2019, California enacted a new law, A.B. 5 (“AB5”), that made it more difficult for workers to be classified as independent contractors (as opposed to employees). AB5 provides that the three-pronged “ABC Test” must be
used to determine worker classifications in wage order claims. Under the ABC Test, a worker is presumed to be an employee and the burden to demonstrate their independent contractor status is on the hiring company through satisfying all three of the
following criteria: (a) the worker is free from control and direction in the performance of services; (b) the worker is performing work outside the usual course of the business of the hiring company; and (c) the worker is customarily
engaged in an independently established trade, occupation, or business. How AB5 will be enforced is still to be determined. While it was set to enter into effect in January 2020, a federal judge in California issued a preliminary injunction barring
the enforcement of AB5 on the trucking industry while the California Trucking Association (“CTA”) moves forward with its suit seeking to invalidate AB5. While this preliminary injunction provides temporary relief to the enforcement of AB5,
it remains unclear how long such relief will last, whether the CTA will ultimately be successful in invalidating the law, and whether other U.S. States will enact laws similar to AB5. 

U.S. class action lawsuits and other lawsuits have been filed against certain members of the Company’s industry seeking to
reclassify independent contractors as employees for a variety of purposes, including workers’ compensation and health care coverage. In addition, companies that use lease purchase independent contractor programs, such as the Company, have been
more susceptible to reclassification lawsuits, and several recent decisions have been made in favour of those seeking to classify independent contractor truck drivers as employees. U.S. taxing and other regulatory authorities and courts apply a
variety of standards in their determination of independent contractor status. If the independent contractors with whom the Company contracts are determined to be employees, the Company would incur additional exposure under U.S. federal and state
tax, workers’ compensation, unemployment benefits, labour, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings, and the Company’s business, financial condition
and results of operations could be materially adversely affected. The Company has settled certain class action cases in Massachusetts and California in the past with independent contractors who alleged they were misclassified. 

Acquisitions and Integration Risks. Historically, acquisitions have been a part of the Company’s growth strategy. The
Company may not be able to successfully integrate acquisitions into the Company’s business, or may incur significant unexpected costs in doing so. Further, the process of integrating acquired businesses may be

 

  

			
	

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 Management’s Discussion and Analysis 

 

 
disruptive to the Company’s existing business and may cause an interruption or reduction of the Company’s business as a result of the following factors, among others: 

 

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

 

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

  

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

  

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

 

	●	 unanticipated environmental or other liabilities; 

 

	●	 failure to coordinate geographically dispersed organizations; and 

 

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

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

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

 
acquisitions and investments and funding requirements, the Company may need to raise substantial additional capital and increase the Company’s indebtedness. Instability or disruptions in the
capital markets, including credit markets, or the deterioration of the Company’s financial condition due to internal or external factors, could restrict or prohibit access to the capital markets and could also increase the Company’s cost
of capital. To the extent the Company raises additional capital through the sale of equity, equity-linked or convertible debt securities, the issuance of such securities could result in dilution to the Company’s existing shareholders. If the
Company raises additional funds through the issuance of debt securities, the terms of such debt could impose additional restrictions and costs on the Company’s operations. Additional capital, if required, may not be available on acceptable
terms or at all. If the Company is unable to obtain additional capital at a reasonable cost, the Company may be required to forego potential acquisitions, which could impair the execution of the Company’s growth strategy. 

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

There is no assurance that the Company will be successful in identifying, negotiating, consummating or integrating any future acquisitions. If the Company
does not make any future acquisitions, or divests certain of its operations, the Company’s growth rate could be materially and adversely affected. Any future acquisitions the Company does undertake could involve the dilutive issuance of equity
securities or the incurring of additional indebtedness. 
 Growth. There is no assurance that in the future, the Company’s business will
grow substantially or without volatility, nor is there any assurance that the Company will be able to effectively adapt its management, administrative and operational systems to respond to any future growth. Furthermore, there is no assurance that
the Company’s operating margins will not be adversely affected by future changes in and expansion of its business or by changes in economic conditions or that it will be able to sustain or improve its profitability in the future. 

Environmental Matters. The Company uses storage tanks at certain of its Canadian and U.S. transportation terminals. Canadian and U.S. laws and
regulations generally impose potential liability on the present and former owners or occupants or custodians of properties on which contamination has occurred, as well as on parties who arranged for the disposal of waste at such properties. Although
the Company is not aware of any contamination which, if remediation or clean-up were

 

  

			
	

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 Management’s Discussion and Analysis 

 

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

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

Environmental laws may authorize, among other things, federal, provincial, state and local environmental regulatory agencies to issue orders, bring
administrative or judicial actions for violations of environmental laws and regulations or to revoke or deny the renewal of a permit. Potential penalties for such violations may include, among other things, civil and criminal monetary penalties,
imprisonment, permit suspension or revocation and injunctive relief. These agencies may also, among other things, revoke or deny renewal of the Company’s operating permits, franchises or licenses for violations or alleged violations of
environmental laws or regulations and impose environmental assessment, removal of contamination, follow up or control procedures. 
 Environmental
Contamination. The Company could be subject to orders and other legal actions and procedures brought by governmental or private parties in connection with environmental contamination, emissions or discharges. If the Company is involved in a
spill or other accident involving hazardous substances, if there are releases of hazardous substances the Company transports, if soil or groundwater contamination is found at the Company’s current or

 
former facilities or results from the Company’s operations, or if the Company is found to be in violation of applicable laws or regulations, the Company could be subject to cleanup costs and
liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on the Company’s business and operating results. 

Key Personnel. The future success of the Company will be based in large part on the quality of the Company’s management and key personnel. The
Company’s management and key personal possess 
 valuable knowledge about the transportation and logistics industry and their knowledge of and
relationships with the Company’s key customers and vendors would be difficult to replace. The loss of key personnel could have a negative effect on the Company. There can be no assurance that the Company will be able to retain its current key
personnel or, in the event of their departure, to develop or attract new personnel of equal quality. 
 Dependence on Third Parties. Certain
portions of the Company’s business are dependent upon the services of third-party capacity providers, including other transportation companies. For that portion of the Company’s business, the Company does not own or control the
transportation assets that deliver the customers’ freight, and the Company does not employ the people directly involved in delivering the freight. This reliance could cause delays in reporting certain events, including recognizing revenue and
claims. These third-party providers seek other freight opportunities and may require increased compensation in times of improved freight demand or tight trucking capacity. The Company’s inability to secure the services of these third parties
could significantly limit the Company’s ability to serve its customers on competitive terms. Additionally, if the Company is unable to secure sufficient equipment or other transportation services to meet the Company’s commitments to its
customers or provide the Company’s services on competitive terms, the Company’s operating results could be materially and adversely affected. The Company’s ability to secure sufficient equipment or other transportation services is
affected by many risks beyond the Company’s control, including equipment shortages in the transportation industry, particularly among contracted carriers, interruptions in service due to labour disputes, changes in regulations impacting
transportation and changes in transportation rates. 
 Loan Default. The agreements governing the Company’s indebtedness, including the
Credit Facility and the Term Loan, contain certain restrictions and other covenants relating to, among other things, funded debt, distributions, liens, investments, acquisitions and dispositions outside the ordinary course of business and affiliate
transactions. If the Company fails to comply with any of its financing arrangement covenants, restrictions and requirements, the Company could be in default under the relevant agreement, which could cause cross-defaults under other financing
arrangements. In the event of any such default, if the Company failed to obtain replacement financing or amendments to or waivers under the applicable financing

 

  

			
	

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 Management’s Discussion and Analysis 

 

 
arrangement, the Company may be unable to pay dividends to its shareholders, and its lenders could cease making further advances, declare the Company’s debt to be immediately due and
payable, fail to renew letters of credit, impose significant restrictions and requirements on the Company’s operations, institute foreclosure procedures against their collateral, or impose significant fees and transaction costs. If debt
acceleration occurs, economic conditions may make it difficult or expensive to refinance the accelerated debt or the Company may have to issue equity securities, which would dilute share ownership. Even if new financing is made available to the
Company, credit may not be available to the Company on acceptable terms. A default under the Company’s financing arrangements could result in a materially adverse effect on its liquidity, financial condition and results of operations. As at the
date hereof, the Company is in compliance with all of its debt covenants and obligations. 
 Credit Facilities. The Company has significant
ongoing capital requirements that could affect the Company’s profitability if the Company is unable to generate sufficient cash from operations and/or obtain financing on favourable terms. The trucking industry and the Company’s trucking
operations are capital intensive, and require significant capital expenditures annually. The amount and timing of such capital expenditures depend on various factors, including anticipated freight demand and the price and availability of assets. If
anticipated demand differs materially from actual usage, the Company’s trucking operations may have too many or too few assets. Moreover, resource requirements vary based on customer demand, which may be subject to seasonal or general economic
conditions. During periods of decreased customer demand, the Company’s asset utilization may suffer, and it may be forced to sell equipment on the open market or turn in equipment under certain equipment leases in order to right size its fleet.
This could cause the Company to incur losses on such sales or require payments in connection with such turn ins, particularly during times of a softer used equipment market, either of which could have a materially adverse effect on the
Company’s profitability. 
 The Company’s indebtedness may increase from time to time in the future for various reasons, including
fluctuations in results of operations, capital expenditures and potential acquisitions. The agreements governing the Company’s indebtedness, including the Credit Facility and the Term Loan, mature on various dates, ranging from 2020 to 2026.
There can be no assurance that such agreements governing the Company’s indebtedness will be renewed or refinanced, or if renewed or refinanced, that the renewal or refinancing will occur on equally favourable terms to the Company. The
Company’s ability to pay dividends to shareholders and ability to purchase new revenue equipment may be adversely affected if the Company is not able to renew the Credit Facility or the Term Loan or arrange refinancing of any indebtedness, or
if such renewal or refinancing, as the case may be, occurs on terms materially less favourable to the Company than at present. If the Company is unable to generate sufficient cash flow from operations and obtain financing on terms favourable to the
Company in the future, the Company may have to limit the Company’s fleet size, enter into less favourable financing arrangements or operate the

 
Company’s revenue equipment for longer periods, any of which may have a material adverse effect on the Company’s operations. 

Increased prices for new revenue equipment, design changes of new engines, decreased availability of new revenue equipment and future use of autonomous
tractors could have a material adverse effect on the Company’s business, financial condition, operations, and profitability. 
 The Company is
subject to risk with respect to higher prices for new equipment for its trucking operations. The Company has experienced an increase in prices for new tractors in recent years, and the resale 

value of the tractors has not increased to the same extent. Prices have increased and may continue to increase, due to, among other reasons,
(i) increases in commodity prices; (ii) U.S. government regulations applicable to newly-manufactured tractors, trailers and diesel engines; and (iii) the pricing discretion of equipment manufacturers. Increased regulation has
increased the cost of the Company’s new tractors and could impair equipment productivity, in some cases, resulting in lower fuel mileage, and increasing the Company’s operating expenses. Further regulations with stricter emissions and
efficiency requirements have been proposed that would further increase the Company’s costs and impair equipment productivity. These adverse effects, combined with the uncertainty as to the reliability of the vehicles equipped with the newly
designed diesel engines and the residual values realized from the disposition of these vehicles could increase the Company’s costs or otherwise adversely affect the Company’s business or operations as the regulations become effective. Over
the past several years, some manufacturers have significantly increased new equipment prices, in part to meet new engine design and operations requirements. Furthermore, future use of autonomous tractors could increase the price of new tractors and
decrease the value of used non-autonomous tractors. The Company’s business could be harmed if it is unable to continue to obtain an adequate supply of new tractors and trailers for these or other reasons. As a result, the Company expects to
continue to pay increased prices for equipment and incur additional expenses for the foreseeable future. 
 Tractor and trailer vendors may reduce their
manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts. A decrease in vendor output may have a materially adverse effect on the Company’s ability to purchase a quantity of new
revenue equipment that is sufficient to sustain its desired growth rate and to maintain a late model fleet. Moreover, an inability to obtain an adequate supply of new tractors or trailers could have a material adverse effect on the Company’s
business, financial condition, and results of operation. 
 The Company has certain revenue equipment leases and financing arrangements with balloon
payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. If the Company does not purchase new equipment

 

  

			
	

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 Management’s Discussion and Analysis 

 

 
that triggers the trade-back obligation, or the equipment manufacturers do not pay the contracted value at the end of the lease term, the Company could be exposed to losses equal to the excess of
the balloon payment owed to the lease or finance company over the proceeds from selling the equipment on the open market. 
 The Company has trade-in and repurchase commitments that specify, among other things, what its primary equipment vendors will pay it for disposal of a certain portion of the Company’s revenue equipment. The prices the Company
expects to receive under these arrangements may be higher than the prices it would receive in the open market. The Company may suffer a financial loss upon disposition of its equipment if these vendors refuse or are unable to meet their financial
obligations under these agreements, it does not enter into definitive agreements that reflect favorable equipment replacement or trade-in terms, it fails to or is unable to enter into similar arrangements in
the future, or it does not purchase the number of new replacement units from the vendors required for such trade-ins. 

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

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

The Company is dependent upon its vendors and suppliers for certain products and materials. The Company believes that it has positive vendor and supplier
relationships and it is generally able to obtain acceptable pricing and other terms from such parties. If the Company fails to maintain positive relationships with its vendors and suppliers, or if its vendors and suppliers are unable to provide the
products and materials it needs or undergo financial hardship, the Company could experience difficulty in obtaining needed goods and services because of production interruptions, limited material availability or other reasons. As a consequence, the
Company’s business and operations could be adversely affected. 
 Customer and Credit Risks. The Company provides services to clients
primarily in Canada, the United States and Mexico. The concentration of credit risk to which the Company is exposed is limited due to the significant number of customers that make up its client base and their distribution across different geographic
areas. Furthermore, no client accounted for more than 5% of the Company’s total accounts receivable for the year ended December 31, 2019. Generally, the Company does not have long-term contracts with its major customers. Accordingly, in
response to economic conditions, supply and demand factors in the industry, the Company’s performance, the Company’s customers’ internal initiatives or other factors, the Company’s

 
customers may reduce or eliminate their use of the Company’s services, or may threaten to do so in order to gain pricing and other concessions from the Company. 

Economic conditions and capital markets may adversely affect the Company’s customers and their ability to remain solvent. The customers’
financial difficulties can negatively impact the Company’s results of operations and financial condition, especially if those customers were to delay or default in payment to the Company. For certain customers, the Company has entered into
multi-year contracts, and the rates the Company charges may not remain advantageous. 
 Availability of Capital. If the economic and/or the
credit markets weaken, or the Company is unable to enter into acceptable financing arrangements to acquire revenue equipment, make investments and fund working capital on terms favourable to it, the Company’s business, financial results and
results of operations could be materially and adversely affected. The Company may need to incur additional indebtedness, reduce dividends or sell additional shares in order to accommodate these items. A decline in the credit or equity markets and
any increase in volatility could make it more difficult for the Company to obtain financing and may lead to an adverse impact on the Company’s profitability and operations. 

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

The Company’s operations and those of its technology and communications service providers are vulnerable to interruption by natural and man-made disasters and other events beyond the Company’s control, including cybersecurity breaches and threats, such as hackers, malware and viruses, fire, earthquake, power loss, telecommunications failure,
terrorist attacks and Internet failures. The Company’s systems are also vulnerable to unauthorized access and viewing, misappropriation, altering or deleting of information, including customer, driver, vendor, employee and service provider
information and its proprietary business information. If any of the Company’s critical information systems fail, are breached or become otherwise unavailable, the Company’s ability to manage its fleet efficiently, to respond to
customers’ requests effectively, to maintain billing and other records reliably, to maintain the confidentiality of the Company’s data and to bill for services and prepare financial statements accurately or in a timely manner would be
challenged. Any significant system failure, 

 

  

			
	

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 Management’s Discussion and Analysis 

 

 
upgrade complication, cybersecurity breach or other system disruption could interrupt or delay the Company’s operations, damage its reputation, cause the Company to lose customers, cause the
Company to incur costs to repair its systems, pay fines or in respect of litigation or impact the Company’s ability to manage its operations and report its financial performance, any of which could have a material adverse effect on the
Company’s business. 
 Litigation. The Company’s business is subject to the risk of litigation by employees, customers, vendors,
government agencies, shareholders and other parties. The outcome of litigation is difficult to assess or quantify, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to
defend litigation may also be significant. Not all claims are covered by the Company’s insurance, and there can be no assurance that the Company’s coverage limits will be adequate to cover all amounts in dispute. For example, during the
year ended December 31, 2019, the Company recognized a net loss on an accident claim of CAD $14.2 million representing (CAD $16.6 million net of CAD $2.4 million of tax recovery). In the United States, where the Company has growing operations, many
trucking companies have been subject to class-action lawsuits alleging violations of various federal and state wage laws regarding, among other things, employee classification, employee meal breaks, rest periods, overtime eligibility, and failure to
pay for all hours worked. A number of these lawsuits have resulted in the payment of substantial settlements or damages by the defendants. The Company may at some future date be subject to such a class-action lawsuit. In addition, the Company may be
subject, and has been subject in the past, to litigation resulting from trucking accidents. The number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other motorists. To the extent the Company
experiences claims that are uninsured, exceed the Company’s coverage limits, involve significant aggregate use of the Company’s self-insured retention amounts or cause increases in future funded premiums, the resulting expenses could have
a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. 
 Internal Control.
Effective internal controls over financial reporting are necessary for the Company to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required
new or improved controls, or difficulties encountered in their implementation could cause the Company to fail to meet its reporting obligations. In addition and when required, any testing by the Company conducted in connection with section 404 of
the U.S. Sarbanes-Oxley Act, or the subsequent testing by the Company’s independent registered public accounting firm, may reveal deficiencies in the Company’s internal controls over financial reporting that are deemed to be material
weaknesses or that may require prospective or retrospective changes to the Company’s consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose
confidence in the Company’s reported financial information, which could have a negative effect on the trading price of the Common Shares.

 Material Transactions. The Company has acquired numerous companies pursuant to its
acquisition strategy and, in addition, has sold business units, including the sale in February 2016 of its then-Waste Management segment for CAD $800 million. The Company buys and sells business units in the normal course of its business.
Accordingly, at any given time, the Company may consider, or be in the process of negotiating, a number of potential acquisitions and dispositions, some of which may be material in size. In connection with such potential transactions, the Company
regularly enters into non-disclosure or confidentiality agreements, indicative term sheets, non-binding letters of intent and other similar agreements with potential sellers and buyers, and conducts extensive due diligence as applicable. These
potential transactions may relate to some or all of the Company’s four reportable segments, that is, TL, Logistics, LTL, and Package and Courier. The Company’s active acquisition and disposition strategy requires a significant amount of
management time and resources. Although the Company complies with its disclosure obligations under applicable securities laws, the announcement of any material transaction by the Company (or rumours thereof, even if unfounded) could result in
volatility in the market price and trading volume of the Common Shares. Further, the Company cannot predict the reaction of the market, or of the Company’s stakeholders, customers or competitors, to the announcement of any such material
transaction or to rumours thereof. 
 Dividends and Share Repurchases. The payment of future dividends and the amount thereof is uncertain and is
at the sole discretion of the Board of Directors of the Company and is considered each quarter. The payment of dividends is dependent upon, among other things, operating cash flow generated by the Company, its financial requirements for operations,
the execution of its growth strategy and the satisfaction of solvency tests imposed by the Canada Business Corporations Act for the declaration and payment of dividends. Similarly, any future repurchase of shares by the Company is at the sole
discretion of the Board of Directors and is dependent on the factors described above. Any future repurchase of shares by the Company is uncertain. 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES 
 The
preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and
liabilities, the disclosures about contingent assets and liabilities, and the reported amounts of revenues and expenses. Such estimates include the valuation of goodwill and intangible assets, the measurement of identified assets and liabilities
acquired in business combinations and provisions for claims and litigations. These estimates and assumptions are based on management’s best estimates and judgments.

 

  

			
	

 	 	37

 Management’s Discussion and Analysis 

 

 Management evaluates its estimates and assumptions on an ongoing basis using historical experience and
other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from
these estimates. Changes in those estimates and assumptions resulting from changes in the economic environment will be reflected in the financial statements of future periods. 

CHANGES IN ACCOUNTING POLICIES 
 Adopted
during the period 
 The following new standards, and amendments to standards and interpretations, are effective for the first time for interim
periods beginning on or after January 1, 2019 and have been applied in preparing the audited consolidated financial statements: 

            IFRS 16, Leases 

            IFRIC 23, Uncertainty over Income Tax Treatments 

            Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) 

            Annual Improvements to IFRS Standards (2015-2017 cycle) 

            Prepayment Features with Negative Compensation (Amendments to IFRS 9) 

Except modifications from the adoption of IFRS 16 as reported in note 3, these new standards did not have a material impact on the Company’s audited
consolidated financial statements. 
 To be adopted in future periods 

The following new standards and amendments to standards are not yet effective for the year ended December 31, 2019, and have not been applied in
preparing the audited consolidated financial statements: 

	 	Definition	 of a business (Amendments to IFRS 3) 

Further information can be found in note 3 of the December 31, 2019 audited consolidated financial statements. 

CONTROLS AND PROCEDURES 
 In compliance with
the provisions of Canadian Securities Administrators’ National Instrument 52-109, the Company has filed certificates signed by the President and Chief Executive Officer (“CEO”) and by the Chief
Financial Officer (“CFO”) that, among other things, report on: 

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

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

 Disclosure controls and procedures (“DC&P”) 

The President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), have designed DC&P, or have caused them
to be designed under their supervision, in order to provide reasonable assurance that: 

	•	 	 material information relating to the Company is made known to the CEO and CFO by others, particularly during the period
in which the interim and annual filings are being prepared; and

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

As at December 31, 2019, an evaluation was carried out, under the supervision of the CEO and the CFO, of the design and operating effectiveness of
the Company’s DC&P. Based on this evaluation, the CEO and the CFO concluded that the Company’s DC&P were appropriately designed and were operating effectively as at December 31, 2019. 

Internal controls over financial reporting (“ICFR”) 

The CEO and CFO have also designed ICFR, or have caused them to be designed under their supervision, in order to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. 
 As at
December 31, 2019, an evaluation was carried out, under the supervision of the CEO and the CFO, of the design and operating effectiveness of the Company’s ICFR. Based on this evaluation, the CEO and the CFO concluded that the ICFR were
appropriately designed and were operating effectively as at December 31, 2019, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013
framework). 
 Changes in internal controls over financial reporting 

No changes were made to the Company’s ICFR during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to
materially affect, the Company’s ICFR. 
     

 

  

			
	

 	 	38EX-4.4

 Exhibit 4.4 

MANAGEMENT PROXY CIRCULAR 

SOLICITATION OF PROXIES BY MANAGEMENT 

This Management Proxy Circular (the “Circular”) is furnished in connection with the solicitation by the management of TFI
International Inc. (the “Corporation”) of proxies to be used at the annual and special meeting of shareholders of the Corporation (the “Meeting”) to be held at the time and place and for the purposes set out in
the Notice of Meeting. It is expected that the solicitation will be made primarily by mail. However, officers and employees of the Corporation may also solicit proxies by telephone, telecopier, e-mail or
in person. The total cost of solicitation of proxies will be borne by the Corporation. Pursuant to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer
(“NI 54-101”), arrangements have been made with clearing agencies, brokerage houses and other financial intermediaries to forward proxy-related materials to certain
beneficial owners of the shares. See “Appointment and Revocation of Proxies – Notice to Beneficial Holders of Shares” below. 

INTERNET AVAILABILITY OF PROXY MATERIALS 

Notice-and-Access 

The Corporation has elected to use
“notice-and-access” rules (“Notice-and-Access”) under NI 54-101 for distribution of Proxy-Related Materials (as defined below) to shareholders who do not hold shares of the Corporation in their own names (referred to herein as “Beneficial Shareholders”). Notice-and-Access is a set of rules that allows issuers to post electronic versions of Proxy-Related Materials on SEDAR and on one additional website, rather than mailing
paper copies. “Proxy-Related Materials” refers to this Circular, the Notice of Meeting, a voting instruction form (“VIF”) and the Corporation’s 2018 annual report containing the Corporation’s annual
audited consolidated financial statements for the year ended December 31, 2018 and the related Management’s Discussion and Analysis for the same period. 

The use of Notice-and-Access is more environmentally friendly
as it helps reduce paper use. It also reduces the Corporation’s printing and mailing costs. Beneficial Shareholders may obtain further information about
Notice-and-Access by contacting Broadridge Financial Solutions, Inc. (“Broadridge”) toll free at 1-855-887-2244. 
 The Corporation is not using Notice-and-Access for delivery to shareholders who hold their shares directly in their respective names (referred to herein as “Registered Shareholders”).
Registered Shareholders will receive paper copies of the Proxy-Related Materials via prepaid mail. 
 Websites Where Proxy-Related Materials are Posted

 The Proxy-Related Materials are available on the Corporation’s website at www.tfiintl.com and under the Corporation’s profile on SEDAR at www.sedar.com. All shareholders are reminded to review the Proxy-Related Materials before voting. 

Notice Package 
 Although the
Proxy-Related Materials have been posted on-line as noted above, Beneficial Shareholders will receive paper copies of a notice package (“Notice Package”) via prepaid mail containing
information prescribed by NI 54-101 such as: the date, time and location of the Meeting, the website addresses where the Proxy-Related Materials are posted, a VIF, and supplemental mail list return card for
Beneficial Shareholders to request they be included in the Corporation’s supplementary mailing list for receipt of the Corporation’s interim financial statements for the 2019 fiscal year. 

How to Obtain Paper Copies of Proxy-Related Materials 

Beneficial Shareholders may obtain paper copies of the Proxy-Related Materials free of charge by contacting Broadridge toll free at 1-877-907-7643. Any request for paper copies which are required in advance of the Meeting should be sent so that the request is
received by the Corporation by April 12, 2019 in order to allow sufficient time for Beneficial Shareholders to receive their paper copies and to return their VIF by its due date. 

  
 1 

 APPOINTMENT AND REVOCATION OF PROXIES 

Appointment of Proxy 
 A shareholder who
is unable to attend the Meeting in person is requested to complete and sign the enclosed form of proxy and to deliver it to Computershare (i) by mail or hand delivery to Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, or (ii) by facsimile to 416-263-9524 or 1-866-249-7775. A shareholder may also vote using the internet at
www.investorvote.com or by telephone at 1-866-732-8683. In order to be valid and acted upon at the Meeting, the form of proxy must be received no later than 5:00 p.m. (eastern time) on April 18, 2019 or be deposited with the
Secretary of the Corporation before the commencement of the Meeting or any adjournment thereof. 
 The document appointing a proxy
must be in writing and executed by a registered shareholder or his attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. 

A shareholder submitting a form of proxy has the right to appoint a person (who need not be a shareholder) to represent him or her at the
Meeting other than the persons designated in the form of proxy furnished by the Corporation. To exercise that right, the name of the shareholder’s appointee should be legibly printed in the blank space provided. In addition, the shareholder
should notify the appointee of the appointment, obtain his or her consent to act as appointee and instruct the appointee on how the shareholder’s shares are to be voted. 

Shareholders who are not registered shareholders should refer to “Notice to Beneficial Holders of Shares” below. 

Revocation of Proxy 
 A shareholder who
has submitted a form of proxy as directed hereunder may revoke it at any time prior to the exercise thereof. If a person who has given a proxy personally attends the Meeting at which that proxy is to be voted, that person may revoke the proxy and
vote in person. In addition to the revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing executed by the shareholder or his attorney or authorized agent and deposited with Computershare at any time up to
5:00 p.m. (eastern time) on April 18, 2019 (i) by mail or by hand delivery to Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, or (ii) by
facsimile to 416-263-9524 or 1-866-249-7775, or
deposited with the Secretary of the Corporation before the commencement of the Meeting, or any adjournment thereof, and upon either of those deposits, the proxy will be revoked. 

Notice to Beneficial Holders of Shares 

The information set out in this section is of significant importance to many shareholders, as a substantial number of shareholders are
Beneficial Shareholders who do not hold shares of the Corporation in their own names. Beneficial Shareholders should note that only proxies deposited by Registered Shareholders (shareholders whose names appear on the records of the Corporation as
the registered holders of shares) can be recognized and acted upon at the Meeting or any adjournment(s) thereof. If shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be
registered in the shareholder’s name on the records of the Corporation. Those shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of those shares are
registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Shares held by brokers or their nominees can be voted (for or against
resolutions or withheld from voting) only upon the instructions of the Beneficial Shareholder. Without specific instructions, the broker/nominees are prohibited from voting shares for their clients. Subject to the following discussion in relation to
NOBOs (as defined below), the Corporation does not know for whose benefit the shares of the Corporation registered in the name of CDS & Co., a broker or another nominee, are held. 

There are two categories of Beneficial Shareholders under applicable securities regulations for purposes of dissemination to Beneficial
Shareholders of Proxy-Related Materials and other security holder materials and requests for voting instructions from such Beneficial Shareholders. Non-objecting beneficial owners (“NOBOs”)
are Beneficial Shareholders who have advised their intermediary (such as brokers or other nominees) that they do not object to their intermediary disclosing ownership information to the Corporation, consisting of their name, address, e-mail address, securities holdings and preferred language of communication. Securities legislation restricts the use of that information to matters strictly relating to the affairs of the Corporation. Objecting
beneficial owners (“OBOs”) are Beneficial Shareholders who have advised their intermediary that they object to their intermediary disclosing such ownership information to the Corporation. 

  
 2 

 NI 54-101 permits the Corporation, in its
discretion, to obtain a list of its NOBOs from intermediaries and use such NOBO list for the purpose of distributing the Notice Package directly to, and seeking voting instructions directly from, such NOBOs. As a result, the Corporation is entitled
to deliver the Notice Package to Beneficial Shareholders in two manners: (a) directly to NOBOs and indirectly through intermediaries to all OBOs; or (b) indirectly to all Beneficial Shareholders through intermediaries. In accordance with
the requirements of NI 54-101, the Corporation is sending the Notice Package indirectly through intermediaries to all Beneficial Shareholders. The cost of the delivery of the Meeting Materials by
intermediaries to Beneficial Shareholders will be borne by the Corporation. 
 Applicable securities regulations require intermediaries, on
receipt of Meeting Materials that seek voting instructions from Beneficial Shareholders indirectly, to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings on Form
54-101F7. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their shares
are voted at the Meeting or any adjournment(s) thereof. Often, the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided to registered shareholders; however, its purpose is limited to instructing
the registered shareholder how to vote on behalf of the Beneficial Shareholder. Beneficial Shareholders who wish to appear in person and vote at the Meeting should be appointed as their own representatives at the Meeting in accordance with the
directions of their intermediaries and Form 54-101F7. Beneficial Shareholders can also write the name of someone else whom they wish to appoint to attend the Meeting and vote on their behalf. Unless prohibited
by law, the person whose name is written in the space provided in Form 54-101F7 will have full authority to present matters to the Meeting and vote on all matters that are presented at the Meeting, even if
those matters are not set out in Form 54-101F7 or this Circular. 
 The majority of brokers now
delegate responsibility for obtaining instructions from clients to Broadridge. Broadridge typically mails a VIF in lieu of a form of proxy. Beneficial Shareholders are requested to complete and return the VIF to Broadridge by mail or facsimile.
Alternatively, Beneficial Shareholders can call a toll-free telephone number to vote the shares held by them or access Broadridge’s dedicated voting website at
www.proxyvote.com to deliver their voting instructions. Broadridge will then provide aggregate voting instructions to
the Corporation’s transfer agent and registrar, which will tabulate the results and provide appropriate instructions respecting the voting of shares to be represented at the Meeting or any adjournment(s) thereof. 

EXERCISE OF DISCRETION BY PROXIES 

Common shares represented by properly-executed proxies in favour of the persons designated in the enclosed form of proxy, in the absence of
any direction to the contrary, will be voted for the: (i) election of each of the directors of the Corporation; (ii) appointment of the auditor of the Corporation;
(iii) resolution in the form annexed as Schedule A to the Circular, ratifying, confirming and approving the 2019 Stock Option Plan of the Corporation; and (iv) resolution in the form annexed as
Schedule B to the Circular, confirming an amendment to By-Law No. 1 of the Corporation deleting Section 7 thereof pertaining to a mandatory retirement
age for directors, as stated under such headings in this Circular. Instructions with respect to voting will be respected by the persons designated in the enclosed form of proxy. With respect to amendments or variations to matters identified in
the Notice of Meeting and other matters which may properly come before the Meeting, such common shares will be voted by the persons so designated in their discretion. At the time of preparing this Circular, management of the Corporation knows of no
such amendments, variations or other matters. 
 VOTING SHARES 

As of the close of business on March 14, 2019, there were 85,302,849 common shares of the Corporation issued and outstanding. Each common
share entitles the holder thereof to one vote. The Corporation has fixed March 14, 2019 as the record date (the “Record Date”) for the purpose of determining shareholders entitled to receive notice of the Meeting. 

Pursuant to the Canada Business Corporations Act, the Corporation is required to prepare, no later than ten days after the
Record Date, an alphabetical list of shareholders entitled to vote as of the Record Date that shows the number of common shares held by each shareholder. A shareholder whose name appears on the list referred to above is entitled to vote the common
shares shown opposite its name at the Meeting. The list of shareholders is available for inspection during usual business hours at the office of the Corporation’s transfer agent: Computershare, 1500 Boulevard Robert-Bourassa, 7th floor, Montréal, Québec H3A 3S8 and on the day of the Meeting. 

SHAREHOLDERS HOLDING MORE THAN 10% OF THE SHARES 

As at March 14, 2019, to the best knowledge of the Corporation, no shareholder beneficially owned or exercised control or direction over,
directly or indirectly, more than 10% of the issued and outstanding common shares of the Corporation. 

  
 3 

 ELECTION OF DIRECTORS OF THE CORPORATION 

The Board of Directors currently consists of ten directors. Unless otherwise specified, the persons named in the enclosed form of proxy
intend to vote for the election of the ten nominees whose names are set out in the section “Board of Directors Renewal and Director Selection – Nominees for Election as Director” below. Each director will hold
office until the next annual meeting of shareholders or until the election of his or her successor, unless the director’s office is earlier vacated in accordance with the by-laws of the Corporation. 

BOARD OF DIRECTORS RENEWAL AND DIRECTOR SELECTION 

Last year’s results 
 At last
year’s annual meeting of shareholders of the Corporation, held on April 25, 2018, all candidates proposed as directors were duly elected to the Board of Directors of the Corporation by a majority of the votes cast by shareholders present
or represented by proxy at the annual meeting, as follows: 
  

									
	  
 Name

 
	    	For	  	Withheld
	 	    	 Number
	    	 %
	  	 Number
	    	 %

	 Scott Arves
	    	 47,619,418
	    	 83.55
	  	 9,377,510
	    	 16.45

	 Alain Bédard
	    	 55,910,850
	    	 98.09
	  	 1,086,078
	    	 1.91

	 André Bérard
	    	 54,503,841
	    	 95.63
	  	 2,493,087
	    	 4.37

	 Lucien Bouchard
	    	 56,831,060
	    	 99.71
	  	 165,868
	    	 0.29

	 Richard Guay
	    	 54,550,942
	    	 95.71
	  	 2,445,986
	    	 4.29

	 Debra Kelly-Ennis
	    	 56,943,665
	    	 99.91
	  	 53,263
	    	 0.09

	 Neil Donald Manning
	    	 55,970,834
	    	 98.20
	  	 1,026,094
	    	 1.80

	 Arun Nayar
	    	 56,939,726
	    	 99.90
	  	 57,202
	    	 0.10

	 Joey Saputo
	    	 53,644,675
	    	 94.12
	  	 3,352,253
	    	 5.88

 Nominees for Election as Director 

The following tables set out information about each of the ten nominees for election as director. This information includes, for each nominee,
a summary of his or her career profile, residency, age, independence status, areas of expertise, current position with the Corporation, the names of other public companies on whose boards/committees the nominee currently serves, the total number of
securities of the Corporation held by the nominee, and whether the nominee is in compliance with the Corporation’s minimum share ownership policy for directors. The information as to securities of the Corporation beneficially owned or over
which the nominees exercise control or direction is not within the knowledge of the Corporation and has been furnished by the respective nominees individually. It includes Deferred Share Units (“DSUs”) for directors as well as
Restricted Share Units (“RSUs”) and stock options for the Chairman, President and Chief Executive Officer. 
 The
Corporation restricts the number of public-company boards on which a director may serve to four, including that of the Corporation. The Corporation also expects each director to devote sufficient time to carrying out his or her duties effectively.
Each director also commits to serve on the Corporation’s Board of Directors for an extended period of time. 

  
 4 

					
	  

     
 Palm Beach Gardens, FL, USA

 
 Current position with the Corporation:

 
 Director
  

Director since: 2018
  

Age: 60
  

Independent
  
	 	 Leslie Abi-Karam

 
 Leslie Abi-Karam is the former EVP and President of Pitney Bowes, a
leader in customer communications management. Mrs. Abi-Karam held a wide variety of leadership positions in Pitney Bowes’ Global Technology businesses and built both its e-commerce and software
businesses. She also served on the board of Pentair, Inc., a $4B industrial company, and as a member of its audit committee. Currently Mrs. Abi-Karam serves as an adviser to private equity firms and
start-ups in the technology space.
  

Principal occupation(1): Independent Adviser and Corporate Director

 
  
	 	 
	 	 Areas of Expertise:
  

e-Commerce
  

Software/SaSS
  

Operations
  

Financial services
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
  
	 	 	  	n/a	  	n/a

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
            DSUs        
    
  
	 	
      Total Shares and        
DSUs

 
	 	
    Total Market Value of    

Shares and DSUs
  
	 	
  Compliance with directors’  

    minimum shareholding policy    

 

	 December 31, 2018

 
	 	Nil	 	1,812	 	1,812	 	63,963(2)	 	In progress(3)

  

	    (1)	 Other than as may be set out above, Mrs. Abi-Karam has held this occupation for the last five years.

	    (2)	 Value calculated based on the closing price of the Corporation’s common shares on the Toronto Stock
Exchange (“TSX”) on December 31, 2018 ($35.30). 

	    (3)	 Mrs. Abi-Karam was appointed as a director on July 26, 2018 and consequently has until
July 26, 2022 to comply with the minimum share ownership requirement. 

  
 5 

					
	  
 

    
 Jupiter, Florida, USA

 
 Current position with the Corporation:

 
 Director, Chairman of the Board of Directors, President and Chief Executive Officer

 
 Director since(1):
1993
  
 Age: 65

 
 Non-Independent

 
	 	 Alain Bédard, FCPA, FCA

 
 Alain Bédard is a graduate in Accounting and Finance from the
Université de Sherbrooke, and began his career at KPMG in 1975. He rose to become a senior auditor within three years while obtaining his C.A. and CMA. Subsequently he served as a Controller in the forest products sector before joining Saputo
in 1984 where he progressed through the ranks to become its Vice-President Finance. In 1996 he assumed management of a regional trucking firm which eventually became TFI International Inc.

 
 From the outset, Mr. Bédard introduced a bold
strategic plan of expansion, based on specific criteria including profitability, market penetration and geographic expansion. He has built a strong management team and has empowered them to ensure the Corporation’s philosophy of
decentralization.
  
 Through a series of acquisitions and
strategic investments across Canada and the United States, Mr. Bédard has created a powerful, diversified trucking and logistics network. TFI International continually studies acquisition opportunities to further strengthen its
network.
  
 The creation of shareholder value is an
on-going focus and a key priority for Mr. Bédard.
  

Mr. Bédard’s community activities include participation in a range of humanitarian causes and support for foundations active in
health and higher education. Mr. Bédard was awarded the title of Fellow by the Quebec CPA Order in February 2011.
  

Principal occupation(2): President and Chief Executive Officer of the
Corporation.
  
	 	 
	 	 Areas of Expertise:
  

Finance
  

Accounting
  

Manufacturing / Operations
	 	  

	 	 	 	 

							
	  

Board/Committee Memberships
  
	 	  	  	  

Other Public Companies Currently Serving

	  	
Directorships
  
	  	
Committees
  

	Board of Directors (Chairman)	 	 	  	n/a	  	n/a

											
	
Stock Options Held
  

	  

Date Granted
  
	  	  

          Number          

	  	  

          Exercise Price        
  
	  	  

      Total Unexercised      
	  	  

        Value of Unexercised Options Granted (3)        

	 July 31, 2009
	  	922,000	  	  $6.32	  	450,000	  	$13,041,000	  	
Total market value:

$48,653,438

	 July 29, 2010
	  	496,800	  	  $9.46	  	496,800	  	$12,837,312
	 July 26, 2012
	  	418,600	  	$16.46	  	365,000	  	$6,876,600
	 July 25, 2013
	  	376,200	  	$20.18	  	376,200	  	$5,688,144
	 July 24, 2014
	  	172,560	  	$25.14	  	172,560	  	$1,753,210
	 July 23, 2015
	  	335,356	  	$24.93	  	335,356	  	$3,477,642
	 July 21, 2016
	  	361,803	  	$24.64	  	361,803	  	$3,856,820
	 February 16, 2017
	  	118,288	  	$35.02	  	118,288	  	$32,872
	 February 20, 2018
	  	202,655	  	$29.92	  	202,655	  	$1,089,838

																			
	Securities Held
	 As at

 
	 	
    Common Shares    

 
	 	
DSUs
  
	 	
RSUs
  
	 	
    Total # of    
Securities

 
	 	
  Total Market Value  

of Securities
  
	 	  

Compliance with
directors’ minimum
    shareholding policy    

  

	
December 31, 2018
	 	#  	 	4,281,627  	 	#  	 	17,715  	 	#  	 	50,034  	 	4,349,376  	 	$153,532,973(3)  	 	Yes
	 	$  	 	    151,141,433  	 	$  	 	    625,350  	 	$  	 	1,766,213  
	
December 31, 2017
	 	#  	 	4,188,759  	 	#  	 	17,311  	 	#  	 	68,732  	 	4,274,802  	 	$140,469,994(4)  	 	Yes
	 	$  	 	137,642,621  	 	$  	 	568,839  	 	$  	 	2,258,533  

  

	  (1)	 Of the Corporation or its predecessors. 

	  (2)	 Mr. Bédard has held this occupation for the last five years. 

	  (3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (4)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

  
 6 

					
	  
 

    
 Montreal, Québec, Canada

 
 Current position with the Corporation:

 
 Lead Director
  

Director since(1): 2003

 
 Age: 78
  

Independent
  
	 	 André Bérard

 
 André Bérard retired as Chief Executive Officer of the
National Bank of Canada in January 2002 and as the Bank’s Chairman of the Board in March 2004, following more than 40 years with the Bank.
  

Principal occupation(2): Corporate Director.

 
  
	 	 
	 	 Areas of Expertise:
  

Accounting
  

Finance
  

Human Resources / Compensation
  

Manufacturing / Operations
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of Directors
(Lead Director)
  
 Human Resources & Compensation Committee (Member)

 
 Corporate Governance and

Nominating Committee (Member)
  

 
	 	 	  	BMTC Group Inc.	  	 Audit Committee

 
 Management Resources and Compensation Committee

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
            DSUs        
    
  
	 	
      Total Shares and        
DSUs

 
	 	
    Total Market Value of Shares    

and DSUs
  
	 	
  Compliance with directors’  

    minimum shareholding    

policy    

 

	 December 31, 2018

 
	 	53,200	 	98,827	 	152,027	 	$5,366,553(3)	 	Yes
	 December 31, 2017

 
	 	53,200	 	91,962	 	145,162	 	$4,770,023(4)	 	Yes

  

	  (1)	 Of the Corporation or its predecessors. 

	  (2)	 Mr. Bérard has held this occupation for the last five years. 

	  (3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (4)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

  
 7 

					
	  
 

        
 Montreal, Québec, Canada

 
 Current position with the Corporation:

 
 Director
  

Director since(1): 2007

 
 Age: 80
  

Independent
  
	 	 Lucien Bouchard, LL.L.

 
 Lucien Bouchard is a Partner with the law firm Davies Ward Phillips
& Vineberg LLP, where he practices corporate and commercial law, is a negotiator and mediator for significant commercial and labour disputes, and advises major corporations on strategy and policy. He was Premier of Québec from 1996 to 2001,
and prior thereto successively served in the Federal Cabinet as Secretary of State and Minister of the Environment and was Leader of the Opposition in the House of Commons. Prior to his political career, Mr. Bouchard was Canada’s
Ambassador to France from 1985 to 1988. Mr. Bouchard is also Chairman of the Board of the Montreal Symphony Orchestra.
  

Principal occupation(2): Partner – Davies Ward Phillips & Vineberg
LLP (law firm).
	 	 
	 	 Areas of Expertise:
  

Legal / Governance
  

Environment
  

Consulting
  

Finance
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
 Corporate Governance and

Nominating Committee (Member)
  

 
	 	 	  	BMTC Group Inc.	  	 Human Resources and Corporate Governance
Committee
  

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
        DSUs        

 
	 	
    Total Shares and DSUs    

 
	 	
    Total Market Value of    

Shares and DSUs
  
	 	
    Compliance with directors’    

    minimum shareholding

policy    

 

	 December 31, 2018

 
	 	Nil	 	61,577	 	61,577	 	$2,173,668(3)	 	Yes
	 December 31, 2017

 
	 	Nil	 	57,197	 	57,197	 	$1,879,493(4)	 	Yes

  

	  (1)	 Of the Corporation or its predecessors. 

	  (2)	 Mr. Bouchard has held this occupation for the last five years. 

	  (3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (4)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

  
 8 

					
	  
 

    
 Shefford, Québec, Canada

 
 Current position with the Corporation:

 
 Director
  

Director since: 2018
  

Age: 58
  

Independent
  
	 	 Diane Giard

 
 Diane Giard retired as Executive Vice President of the National Bank of
Canada in 2018. Before joining the National Bank of Canada, she held different management positions at Scotia Bank. She has been ranked among the Top 25 in Quebec’s financial industry seven times, and was named one of Canada’s Most
Powerful Women by the Women’s Executive Network in 2014 and 2015.
  

Principal occupation(1): Consultant and Corporate Director.

 
	 	 
	 	 Areas of Expertise:
  

Finance
  

Marketing & Sales
  

Accounting
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
	 	 	  	 Bombardier Inc.

 
	  	 Chair of the Audit Committee

 

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
        DSUs        

 
	 	
      Total Shares and        
DSUs

 
	 	
    Total Market Value of    

Shares and DSUs

 
	 	
  Compliance with directors’  

    minimum shareholding policy    

 

	 December 31, 2018
	 	Nil	 	805	 	805	 	$28,417(2)	 	In progress(3)

  

	  (1)	 Other than as may be set out above, Mrs. Giard has held this occupation for the last five years.

	  (2)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (3)	 Mrs. Giard was appointed as a director on October 22, 2018 and consequently has until
October 22, 2022 to comply with the minimum share ownership requirement. 

  
 9 

					
	  
 

    
 Pointe-Claire, Québec, Canada

 
 Current position with the Corporation:

 
 Director
  

Director since(1): 2004

 
 Age: 68

 
 Independent

 
	 	 Richard Guay

 
 Richard Guay was Senior Executive Vice-President of the Laurentian Bank
of Canada until his retirement in 2003. Before joining the Laurentian Bank, Mr. Guay was President and CEO of La Financière Coopérants and also held different executive positions with the National Bank of Canada. After retiring
from the Laurentian Bank, Mr. Guay was involved with the Melior group, an owner and manager of senior residences, as an executive and consultant until June 2010.

 
 Mr. Guay is a director of Cogir Apartments REIT, and
Chair of the credit committees of Centria Capital Construction Fund, L.P., Centria Capital Development Fund, L.P and Centria Capital Business Evolution Fund, L.P. as well as a member of the credit committee of Fonds
CII-ITC Centria Capital S.E.C. and of Stonebridge Infrastructure Debt Fund.
  

Principal occupation(2): Consultant and Corporate Director.

 
	 	 
	 	 Areas of Expertise:
  

Finance
  

Accounting
  

Consulting
  

Human Resources / Compensation
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
 Human Resources and Compensation Committee (Chairman)

 
 Audit Committee (Member)
	 	 	  	n/a	  	n/a

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
            DSUs        
    
  
	 	  

      Total Shares and        
DSUs

 
	 	
    Total Market Value of     

Shares and DSUs
  
	 	
  Compliance with directors’  

    minimum shareholding policy    

 

	 December 31, 2018
	 	  9,204	 	44,835	 	54,039	 	$1,907,577(3)	 	Yes
	 December 31, 2017
	 	11,304	 	42,100	 	53,404	 	$1,754,855(4)	 	Yes

  

	 	(1)	 Of the Corporation or its predecessors. 

	 	(2)	 Mr. Guay has held this occupation for the last five years. 

	 	(3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	 	(4)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

  
 10 

					
	 

    
 Palm Beach Gardens, FL, USA

 
 Current position with the Corporation:

 
 Director
  

Director since: 2017
  

Age: 62
  

Independent
  
	 	 Debra Kelly-Ennis

 
 Debra Kelly-Ennis is the former President and CEO of Diageo Canada and
serves on the Board of Directors of Carnival Corporation & plc (Risk - Health, Environmental, Safety and Security Committee), the world’s largest travel and leisure company at over $16B in revenue (since 2012) and Altria Group, Inc.
(Innovation, Governance and Audit Committees), parent company for Philip Morris USA, John Middleton US, Smokeless Tobacco Company and Ste. Michele Wines, with revenues over $25B (since 2013).

 
 Earlier, she held executive leadership positions with
General Motors Corporation, Gerber Foods Company, RJR/Nabisco, Inc. and The Coca-Cola Company Foods Division.
  

Principal occupation(1): Consultant and Corporate Director

 
	 	 
	 	 Areas of Expertise:
  

Finance / Risk Management
  

Legal/Governance
  

Sales/Marketing
  

General Management
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
 Audit Committee (Member)
	 	 	  	 Carnival Corporation & plc

 
 Altria Group, Inc.
	  	 Risk - Health, Environmental, Safety and Security
Committee
  
 Innovation, Governance Committee Audit Committee

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
            DSUs        
    
  
	 	
      Total Shares and        
DSUs

 
	 	
    Total Market Value of     

Shares and DSUs
  
	 	
  Compliance with

directors’ minimum

    shareholding policy    

 

	 December 31, 2018

 
	 	Nil	 	6,643	 	6,643	 	$234,498(2)	 	In progress(4)
	 December 31, 2017

 
	 	Nil	 	2,416	 	2,416	 	79,390(3)	 	In progress(4)

  

	 	(1)	 Other than as may be set out above, Mrs. Kelly-Ennis has held this occupation for the last five years.

	 	(2)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	 	(3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

	 	(4)	 Mrs. Kelly-Ennis was appointed as a director on May 29, 2017 and consequently has until
May 29, 2021 to comply with the minimum share ownership requirement. 

  
 11 

					
	  
 

    
 Victoria, B.C., Canada

 
 Current position with the Corporation:

 
 Director
  

Director since: 2013
  

Age: 73
  

Independent
  
	 	 Neil Donald Manning

 
 Neil Donald Manning is Chairman of Coleridge Holdings Limited and is a
Corporate Director. From 2002 to 2012 he was President and Chief Executive Officer of Wajax Corporation, an industrial products distributor selling and servicing a complete range of equipment, industrial components and power systems to customers in
a wide range of industries.
  
 Principal occupation(1): Corporate Director
	 	 
	 	 Areas of Expertise:
  

Distribution
  

Marketing / Sales
  

Human Resources / Compensation
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
 Corporate Governance and

Nominating Committee (Chairman)
  

 
	 	 	  	n/a	  	n/a

											
	  

Securities Held
  

	 As at

 
	 	
    Common Shares    

 
	 	
        DSUs        

 
	 	
    Total Shares and    

DSUs
  
	 	
    Total Market Value of    

Shares and DSUs
  
	 	
    Compliance with    

directors’ minimum

shareholding policy

 

	 December 31, 2018

 
	 	16,000	 	25,474	 	41,474	 	$1,464,032(2)	 	Yes
	 December 31, 2017

 
	 	16,000	 	21,707	 	37,707	 	$1,239,052(3)	 	Yes

  

	  (1)	 Mr. Manning has held this occupation for the last five years. 

	  (2)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

  
 12 

					
	 

    
 New York, NY, USA

 
 Current position with the Corporation:

 
 Director
  

Director since: 2018
  

Age: 68
  

Independent
  
	 	 Arun Nayar

 
 Arun Nayar retired in 2015 as Executive Vice President and Chief
Financial Officer at Tyco International PLC, a provider of security products. He also held other highly-diverse leadership positions including Chief Financial Officer of Global Operations at PepsiCo Inc. and President of ABB Financial Services Inc.,
a wholly-owned subsidiary of ABB Ltd.
  
 Since 2015, Mr.
Nayar has been an independent member of the board of Bemis Company, a global supplier of flexible packaging and since 2016, Chairman of its Audit Committee. Since 2016, he has also been a Senior Advisor at BC Partners, a pan-European and North
American private equity firm and at McKinsey & Company, a global management consulting firm.
  

Principal occupation(1): Consultant and Corporate Director
	 	 
	 	 Areas of Expertise:
  

Accounting
  

Finance
  

Governance
  

Risk Management
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	
Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	Audit Committee (chairman)	 	 	  	 Bemis Company

 
 Rite Aid Inc.
	  	 Audit Committee (Chairman)

 
 Audit Committee and Executive Committee

 

											
	  

Securities Held
  

	 As at

 
	 	  

    Common Shares    

 
	 	  

        DSUs        

 
	 	  

    Total Shares and    

DSUs
  
	 	  

    Total Market Value of    

Shares and DSUs
  
	 	  

    Compliance with    

directors’ minimum

shareholding policy

 

	 December 31, 2018

 
	 	Nil	 	3,034	 	3,034	 	$107,100(2)	 	In progress (3)

  

	  (1)	 Other than as may be set out above, Mr. Nayar has held this occupation for the last five years.

	  (2)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (3)	 Mr. Nayar was first elected as a director on April 25, 2018 and consequently has until
April 25, 2022 to comply with the minimum share ownership requirement. 

  
 13 

					
	  
 

    
 Montreal, Québec, Canada

 
 Current position with the Corporation:

 
 Director
  

Director since(1): 1996

 
 Age: 54

 
 Independent

 
	 	 Joey Saputo

 
 Joey Saputo is President of Free2Be Holdings Inc., a
private holding company. He has held a variety of positions within Saputo Inc. and Jolina Capital Inc. since 1985. Until recently, Mr. Saputo was the President of the Montreal Impact, a professional soccer team he helped form in 1993, and Stade
Saputo, a soccer-specific stadium built in Montreal in 2008.
  

Principal occupation(2): Chairman of the Montreal Impact and Stade
Saputo (sports and entertainment), chairman of Bologna FC1909 and President of Arbec Forest Products Inc.
	 	 
	 	 Areas of Expertise:
  

Marketing / Sales
  

Human Resources / Compensation
  

Entertainment
	 	  

	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 		 	 
	 	 	 	 

							
	  

Board/Committee Memberships with the
Corporation

 
	 	  	  	  

Other Public Companies Currently Serving
  

	  	
Directorships
  
	  	
Committees
  

	 Board of
Directors
  
 Human Resources and Compensation

Committee (Member)
  

 
	 	 	  	n/a	  	 n/a

 

											
	  

Securities held
  

	 As at

 
	 	  

    Common    

Shares
  
	 	  

        DSUs        

 
	 	  

    Total Shares and    

DSUs
  
	 	  

    Total Market Value of    

Shares and DSUs
  
	 	  

    Compliance     

 

	 December 31, 2018

 
	 	207,746	 	45,318	 	253,064	 	$8,933,159(3)	 	Yes
	 December 31, 2017

 
	 	207,746	 	41,350	 	249,096	 	$8,185,294(4)	 	Yes

  

	  (1)	 Of the Corporation or its predecessors. 

	  (2)	 Mr. Saputo has held this occupation for the last five years. 

	  (3)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	  (4)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 29, 2017 ($32.86). 

 To the knowledge of the Corporation, none of the foregoing nominees for election as a
director: 
  

	(a)	 is, or within the last ten years has been, a director, chief executive officer or chief financial officer of
any company that: 

  

	 	(i)	 was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the
relevant company access to any exemption under applicable securities legislation, and which in all cases was in effect for a period of more than 30 consecutive days (an “Order”), which Order was issued while the proposed director
was acting in the capacity as director, chief executive officer or chief financial officer of such company; or 

  
 14 

	 	(ii)	 was subject to an Order that was issued after the proposed director ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer of such company; or 

 

	(b)	 is, or within the last ten years has been, a director or executive officer of any company that, while the
proposed director was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or 

  

	(c)	 has, within the last ten years, become bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold his assets, 

with the exception of Richard Guay, who sat as a representative of Investissement Québec on the Board of Directors of Trimag G.P.
Inc., the general partner of Trimag, S.E.C., a limited partnership which filed for protection under the Companies’ Creditors Arrangement Act (Canada) in April 2009. In September 2009, the partnership entered into a plan of arrangement
with its creditors, which was implemented. Mr. Guay was also the Executive Vice-President of Groupe Melior Inc. until October 2009. Groupe Melior Inc. filed a Notice of Intention on April 1, 2010 and filed an assignment in bankruptcy on
July 13, 2010. 
 To the knowledge of the Corporation, none of the foregoing nominees for election as a director has been subject to:

  

	(a)	 any penalties or sanctions imposed by a court relating to securities legislation or by a securities
regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or 

  

	(b)	 any other penalties or sanctions imposed by a court or regulatory body that would likely be considered
important to a reasonable securityholder in deciding whether to vote for a proposed director. 

 Majority Voting Policy 

The Board of Directors has adopted a policy to the effect that, in an uncontested election of directors, any nominee who receives a greater
number of “withheld” votes than “for” votes will be considered to have not received the support of the shareholders of the Corporation and will be expected to immediately submit his or her resignation to the Board of Directors,
such resignation to take effect upon acceptance, as the case may be, by the Board of Directors. Upon receipt of such resignation, the Chairman of the Board of Directors will meet with the Corporate Governance and Nominating Committee
(“CGNC”) with a view to making a recommendation to the Board of Directors. The Board of Directors will make its decision within 90 days from the date of resignation. A director who submits his or her resignation pursuant to this
policy will not participate in any deliberations of the Board of Directors or CGNC with respect to the resignation. If the Board of Directors accepts the director’s resignation, it may, subject to applicable corporate law: (i) leave the
resulting vacant position on the Board of Directors unfilled until the next meeting of shareholders of the Corporation, (ii) fill the vacant position through the appointment of a new director whom the Board of Directors considers merits the
confidence of the shareholders of the Corporation, or (iii) call a special meeting of shareholders at which a management nominee will be proposed to fill the vacant position. Alternatively, the Board of Directors may decide to not accept the
resignation. 
 Board and Committee Attendance 

During the 2018 fiscal year, there were five meetings of the Board of Directors, two meetings of the Human Resources and Compensation
Committee (“HRCC”), four meetings of the CGNC and five meetings of the Audit Committee. Directors are expected to attend all regularly-scheduled meetings. During 2018, all current directors attended all regularly-scheduled meetings
with the exception of Richard Guay, who was absent from one Board meeting and one Audit Committee meeting. Attendance of the members of the Board of Directors at meetings held during 2018 is set out in the table below: 

  
 15 

																																																			
	Director	 	Number and % of meetings attended(1)
	 	Board	 	Audit Committee	 	Human Resources &
Compensation Committee	 	 Corporate Governance

& Nominating

Committee
	 	 Committees 

(Total) 
	 	Overall
Attendance
	 	Member 	 	Attendance 	 	Member 	 	Attendance 	 	Member 	 	Attendance 	 	Member 	 	Attendance 	 	  	 	  
	
Leslie Abi-Karam(2)
	 	Ö	 	3/3
 (100%)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3/3

(100%)

	
Scott Arves(3)
	 	Ö	 	1/2
 (50%)
	 	 	 	 	 	 	 	 	 	Ö	 	1/2
 (50%)
	 	1/2
 (50%)
	 	2/4

(50%)

	
Alain Bédard
	 	Chair	 	5/5
 (100%)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5/5

(100%)

	
André Bérard
	 	Ö	 	5/5
 (100%)
	 	Ö(4) 	 	3/3
 (100%)
	 	Ö	 	2/2
 (100%)
	 	Ö	 	4/4
 (100%)
	 	9/9
 (100%)
	 	14/14

(100%)

	
Lucien Bouchard
	 	Ö	 	5/5
 (100%)
	 	 	 	 	 	 	 	 	 	Ö	 	4/4
 (100%)
	 	4/4
 (100%)
	 	9/9

(100%)

	
Diane Giard(5)
	 	Ö	 	2/2
 (100%)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2/2

(100%)

	
Richard Guay(6)
	 	Ö	 	4/5
 (80%)
	 	Ö	 	4/5
 (80%)
	 	Chair	 	2/2
 (100%)
	 	 	 	 	 	6/7
 (85%)
	 	10/12

(83%)

	
Debra Kelly-Ennis
	 	Ö	 	5/5
 (100%)
	 	Ö	 	5/5
 (100%)
	 	 	 	 	 	 	 	 	 	5/5
 (100%)
	 	10/10

(100%)

	
Neil D. Manning
	 	Ö	 	5/5
 (100%)
	 	 	 	 	 	 	 	 	 	Chair	 	4/4
 (100%)
	 	4/4
 (100%)
	 	9/9

(100%)

	
Arun Nayar(7)
	 	Ö	 	4/4
 (100%)
	 	Chair	 	3/3
 (100%)
	 	 	 	 	 	 	 	 	 	3/3
 (100%)
	 	7/7

(100%)

	
Joey Saputo
	 	Ö	 	5/5
 (100%)
	 	 	 	 	 	Ö	 	2/2
 (100%)
	 	 	 	 	 	2/2
 (100%)
	 	7/7

(100%)

  

	(1)	 Regular and special meetings. 

	(2)	 Leslie Abi-Karam was appointed as a director on July 26, 2018. 

	(3)	 Scott Arves retired from the Board of Directors on June 14, 2018. 

	(4)	 André Bérard was an interim member of the Audit Committee until September 30, 2018.

	(5)	 Diane Giard was appointed as a director on October 22, 2018. 

	(6)	 Richard Guay served as interim chair of the Audit Committee until October 22, 2018.

	(7)	 Arun Nayar was elected as a director on April 25, 2018 and was appointed as chair of the Audit Committee
on October 22, 2018. 

 The independent members of the Board of Directors meet at every Board meeting
without non-independent members of the Board of Directors or members of management present. In 2018, the independent members of the Board of Directors held five such in camera
meetings. 
 Director Tenure 

The following chart sets out the tenure of the members of the Board of Directors as of December 31, 2018: 

 
 

 
 The average tenure of the members of the Board of Directors is 9.4 years. 

  
 16 

 Director Independence 

The following table sets out the independence status of the directors, as defined in National Instrument
52-110 Audit Committees, as at the date of this Circular: 
  

					
	 Independence Status

 

	 Director

 
	  	        Independent          	  	Reason for non-independence
	 Leslie
Abi-Karam
	  	Yes	  	 
	 Alain
Bédard
	  	No	  	                President and 
Chief Executive Officer of the Corporation                
	
André Bérard
	  	Yes	  	 
	 Lucien
Bouchard
	  	Yes	  	 
	 Diane
Giard
	  	Yes	  	 
	 Richard
Guay
	  	Yes	  	 
	 Debra
Kelly-Ennis
	  	Yes	  	 
	 Neil D.
Manning
	  	Yes	  	 
	 Arun
Nayar
	  	Yes	  	 
	 Joey
Saputo
	  	Yes	  	 

 Directors’ Skills Matrix 

In order to meet the Corporation’s needs in terms of directors’ competencies and expertise, the CGNC has developed a skills matrix
survey based on knowledge areas and types of expertise. The results of such matrix are compiled and serve to determine any needs for educating the directors under the Corporation’s New Director Training and Development Program, as more
specifically detailed on page 49 – Orientation and continuing Education. 
 The Board of Directors also takes into consideration
the nominees’ independence, qualifications, financial acumen and business judgment and the dynamics of the Board of Directors. This skill matrix is reviewed regularly and is updated as may be required. The survey is taken by each director every
two years and the results help the CGNC to identify any gaps to be addressed in the director nomination process. 
 The following table sets
out the range of skills the Board of Directors perceives to be most important and indicates the extent to which they are met by current Board members: 
  

																																				
	Directors		Finance / Risk
Management		Accounting		Legal /
Governance		
Human Resources /  

Compensation
		Marketing / Sales		Transport /
Operations		IT
	 Leslie
Abi-Karam
		Ö						Ö				Ö		Ö
	 Alain
Bédard
		Ö		Ö								Ö		
	
André Bérard
		Ö		Ö				Ö						
	 Lucien
Bouchard
		Ö				Ö								
	 Diane
Giard
		Ö		Ö						Ö				
	 Richard
Guay
		Ö		Ö				Ö						
	 Debra
Kelly-Ennis
		Ö				Ö				Ö				
	 Neil D.
Manning
		Ö						Ö		Ö				
	 Arun
Nayar
		Ö						Ö						
	 Joey
Saputo
		Ö						Ö		Ö		Ö		

 Board Diversity Policy 

The CGNC considers potential candidates from time to time, with the support of an executive recruiting firm with which it discusses the
Board’s needs in term of competencies and expertise. 

  
 17 

 The CGNC encourages Board diversity, including with respect to background, business
experience, professional expertise, personal skills, geographic background and gender. Prior to nominating a new director for election or appointment, the President and Chief Executive Officer, along with the Chairman of the CGNC and the Lead
Director, meet with the candidate to discuss his or her interest and willingness to serve on the Board of Directors, potential conflicts of interest, and his or her ability to devote sufficient time and energy to the Board of Directors. 

The Corporation adopted a Board Diversity Policy that promotes the inclusion of different perspectives and ideas, mitigates against groupthink
and ensures that the Corporation has the opportunity to benefit from all available talent. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance. 

The Corporation seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of expertise, experience, skills
and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Corporation operates. For purposes of Board composition, diversity includes, but is not
limited to, business experience, geography, age, gender, and ethnicity and aboriginal status. In particular, the Board should include an appropriate number of women directors. 

The Corporation is committed to a merit-based system for Board composition within a diverse and inclusive culture which solicits multiple
perspectives and views and is free of conscious or unconscious bias and discrimination. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the
Corporation will consider candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board. 

Any search firm engaged to assist the Board or a committee of the Board in identifying candidates for appointment to the Board will be
specifically directed to include diverse candidates generally, and multiple women candidates in particular. 
 Annually, the Board or a
committee of the Board will review this policy and assess its effectiveness in promoting a diverse Board which includes an appropriate number of women directors. 

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS 

 

	1.0	 Compensation Governance 

 

	1.1	 Human Resources and Compensation Committee 

In 2018, the HRCC was composed of Richard Guay (Chair), André Bérard and Joey Saputo. No member of the HRCC is an officer,
executive or employee of the Corporation or of a subsidiary of the Corporation. All members of the HRCC are independent within the meaning of National Instrument 52-110 Audit Committees. 

The mandate of the HRCC consists of monitoring the performance assessment, succession planning and compensation of the Chief Executive Officer
(“CEO”), the Chief Financial Officer (“CFO”) and the three next most highly-compensated executive officers of the Corporation and its subsidiaries (collectively, the “Named Executive Officers” or
“NEOs”) and reviewing human-resources practices generally. Other responsibilities include: (i) appointing the executive officers of the Corporation upon recommendation of the CEO; (ii) reviewing the
performance evaluations of the NEOs; (iii) recommending the NEOs’ compensation levels to the Board of Directors; and (iv) retaining consulting services of outside experts for advice on executive compensation matters. 

 

	1.2	 The HRCC’s Role Regarding Compensation 

The HRCC monitors and assesses the performance of the NEOs and determines compensation levels on an annual basis. In its assessment of the
annual compensation of the NEOs, the HRCC takes into consideration the median compensation paid by other Canadian and American companies of comparable size and the absolute and relative performance of the Corporation relative to such other
companies. In addition, the HRCC takes into account other relevant factors such as pension benefits and costs. During the 2018 financial year, the HRCC held two (2) in camera sessions without members of management present at which the
HRCC discussed, among other things, the compensation of the President and CEO. 
 The following table sets out the respective roles of the
HRCC and management with regards to compensation decisions: 

  
 18 

					
	Compensation decisions	  	HRCC	  	Management
	Philosophy and policy	  	 ●  Work with management to develop
compensation philosophy and policy and review, approve and adopt the philosophy and policy.
	  	
●  Develop, recommend and implement compensation philosophy and policy.

 
 ●  Monitor actual practice to
ensure consistency with philosophy and policy and propose changes as appropriate.

	Plan design	  	 ●  Review, approve and adopt plan
objectives, plan type, eligibility, vesting provisions (including performance conditions) and other provisions such as change of control, death, disability, termination with/without cause, resignation, etc.
	  	
●  Work with HRCC to develop plan design.

 
 ●  Implement plan
design.

	Performance targets	  	 ●  Review, approve and adopt the
Corporation’s performance targets.
  

●  Receive division-level performance targets for information.

 
	  	
●  CEO recommends the Corporation’s performance targets for Board of Directors’
approval.
  
 ●  CEO
cross-calibrates and approves division-level performance targets.

	Performance evaluations	  	 ●  Conduct CEO performance evaluation.

 
 ●  Receive performance
evaluation information for succession planning purposes.
  
	  	
●  Conduct performance evaluations for direct reports and inform the HRCC for succession planning
purposes.
  

	Individual salary increases and incentive awards	  	 ●  Approve compensation for NEOs and
long-term incentive eligible groups.
	  	
●  CEO recommends compensation for NEOs and all long-term incentive eligible groups to the HRCC
for approval.

 The members of the HRCC have experience in executive compensation either as officers or directors of public
companies. The Board of Directors considers that the members of the HRCC together have the knowledge, the experience and the right profile in order to fulfill the HRCC mandate. As of December 31, 2018, none of the HRCC members was CEO of a
public company. 
 The following table sets out the HRCC members, their experience in executive compensation and their competencies and
experience in compensation policies and practices decision making: 
  

							
	Committee members		Independent		Direct experience in executive
compensation		Competencies and experience
in
compensation policies and practices decision-
making
	 Richard
Guay
		Yes		Ö		Ö
	
André Bérard
		Yes		Ö		Ö
	 Joey
Saputo
		Yes		Ö		Ö

  

	1.3	 Compensation Consultant 

The HRCC has the authority to retain independent consultants to advise the HRCC on compensation policy issues. 

During the 2016, 2017 and 2018 financial years, Willis Towers Watson (“WTW”) was retained by the HRCC to review the
compensation of executive positions and other matters relating to executive compensation. 
 The HRCC is not required to pre-approve other services that WTW or its affiliates provide to the Corporation at the request of management. 

  
 19 

 Executive Compensation and Succession Planning-Related Fees 

 

	(a)	 Executive Compensation and Succession Planning-Related Fees 

“Executive Compensation and Succession Planning-Related Fees” consist of fees for professional services billed by each consultant or
advisor, or any of its affiliates, that are related to determining compensation and succession planning for any of the Corporation’s directors and/or executive officers. WTW billed the Corporation $165,251 in Executive Compensation and
Succession Planning-Related Fees in the fiscal year 2016, $70,429 in 2017 and $221,718 in 2018. 
  

	(b)	 All Other Fees 

“All Other Fees” consist of fees for services that are billed by each consultant or advisor mentioned above and which are not
reported under “Executive Compensation and Succession Planning-Related Fees”. No other work was performed by WTW for the Corporation during the fiscal years 2016 and 2017. WTW billed the Corporation $11,198 in “All Other Fees” in
the fiscal year 2018. 
 Because of the policies and procedures that the HRCC and WTW have established, the HRCC is confident that the
advice it receives from any individual executive compensation consultant is objective and not influenced by WTW’s or its affiliates’ relationships with the Corporation. 

 

	1.4	 Managing Compensation Risk 

The Corporation’s compensation policies and practices encourage behaviour which aligns with the long-term interests of the Corporation
and its shareholders. The HRCC ensures that the policies, practices and plans respect applicable laws and continuously seeks improvement in compensation risk management monitoring. In fiscal 2018, the HRCC conducted their annual review of the
Corporation’s compensation program, policies and practices based on several criteria such as the governance of the plans, the nature and mix of performance measures, the weighting of the compensation elelemnts within the pay mix and the goal-setting process. Further to this review, the HRCC was satisfied that there are no risks arising from the Corporation’s compensation policies and practices that are reasonably likely to have a material
adverse effect on the Corporation. 
  

	1.5	 Clawback Policy 

The Corporation adopted a clawback policy with effect from January 1, 2015. This policy is designed to set the guidelines for recovery of
performance-based compensation of senior executives of the Corporation, including NEOs, in the event that, after the effective date, (i) the financial statements of the Corporation are restated as the direct or indirect result of fraud or
illegal misconduct on the part of one or more executives, and (ii) the amount of any performance-based compensation paid to any such executive for the year(s) in question would have been lower had it been calculated based on such restated
financial statements for the year(s) in question. See “Corporate Governance - Ethical Business Conduct” below. 
  

	1.6	 Anti-Hedging Policy 

The Corporation adopted an anti-hedging policy with effect from January 1, 2015. The policy prohibits directors and other senior
executives of the Corporation from using derivatives or other financial instruments to retain legal ownership of their shares in the Corporation while reducing their exposure to changes in the Corporation’s share price. See “Corporate
Governance - Ethical Business Conduct” below. 
  

	1.7.	 Succession Planning 

The Board of Directors of the Corporation has the mandate to review and support the succession plan for its senior officers and to ensure that
actions are taken to manage leadership and talent risk. Since 2014, successor identification efforts have been carried out and individual career plans drafted, resulting in many candidates moving into senior management positions (executive level).
The Board closely tracks the development of key talent at the Corporation, including planning for emergency replacements and contingencies. 

In 2018, the Board reviewed the high-potential and succession candidates for all business unit executive positions and members of the
Executive Committee, in Canada and the United States. More than 20 candidates underwent an exhaustive evaluation, consisting of interviews, psychometric tests, examination of strengths and areas for improvement, risk profiles, etc. Each

  
 20 

 
evaluation included a development plan to prepare the candidates to take on leading roles (executive level) over a time frame from six months to five years. The results of the psychometric tests
were shared with each candidate, and various coaching and development targets were identified and discussed during the sessions. Individual profiles, along with a consolidated analysis of the entire succession cohort, have given the Board a broad
appreciation of the leadership culture, business behaviours and key competencies that have been leveraged to respond to its various markets. The process not only engaged the senior management team in a structured process to develop its talent but
also provided information to the Board to allow it to play an active role in advancing succession at the Corporation. 
 In 2019, the
succession plan for the CEO will be the subject of even more specific measures to successfully complete the entire succession plan. The Board will be both the conductor and the architect of this part of the process. 

 

	2.0	 Determining Compensation 

 

	2.1	 Compensation Philosophy and Program Objectives 

Compensation is designed to attract, motivate and retain high-performing senior executives. The compensation program is intended to reward
overall operational performance and surplus cash creation and is closely linked to corporate performance (a pay-for-performance philosophy). The compensation program
aligns the executives’ interests with those of the Corporation’s shareholders by providing them with equity-based incentive plans and the opportunity for total compensation that is competitive with the compensation received by executives
employed by a group of comparable companies. 
  

	2.2	 Benchmarking Practices and Positioning 

The Corporation’s compensation philosophy for the President and CEO is to position base salary, total target cash compensation (base
salary and target short-term incentives) and total target direct compensation (total target cash compensation and long-term incentives) at the upper quartile of the Corporation’s comparator group. This target positioning is intended to reflect
the President and CEO’s role as founder of the Corporation. For the other NEOs, the Corporation’s target positioning is to align base salary, total target cash compensation and total target direct compensation at the median of the market,
with the possibility to reach the upper quartile for strong performance. 
 The composition of the comparator group is reviewed periodically
by the HRCC, to ensure its continued relevance. In 2018, WTW was mandated by the Board to conduct a thorough executive benchmarking review and provide market data for benchmarking aggregate total direct compensation and each individual element. As a
result of this review, the comparator group has been updated and is comprised of Canadian and American companies of similar size to the Corporation from various industries to reflect the scope of the executive roles, as well as other Canadian and
American companies with which the Corporation competes for executive talent within the same industry. 
 The comparator group is comprised
of five Canadian companies and twelve American companies listed below, with annual revenues between $1 billion and $16 billion (median revenues are in line with those of the Corporation) and also meeting one or more of the following
criteria: 
  

	 	●	 	 Operating in one of the following sectors: 

	 	–	 transportation/supply management 

	 	–	 large distribution network (e.g. retail/trade or consumer products) 

	 	–	 industrial/utilities 

	 	●	 	 Autonomous 

	 	●	 	 Publicly traded 

	 	●	 	 Entrepreneurial culture 

	 	●	 	 Growth by acquisitions 

Revenue size is considered relevant in selecting comparators given the correlation between pay levels and company size. The industry sector is
considered relevant in selecting comparators, as the Corporation competes directly with these organizations for customers, revenue, executive talent and capital. The nature of the organization (i.e., autonomous, publicly traded, entrepreneurial,
growth by acquisitions) is considered relevant as an indicator of the level of complexity, job scope and responsibility associated with senior executive positions. 

  
 21 

 The updated comparator group is comprised of the following companies: 

 

					
		 	 ●        Old Dominion Freight Line, Inc.
	  	 ●        Saia, Inc.

		 	 ●        Knight-Swift Transportation Holdings Inc.
	  	 ●        Schneider National Inc.

		 	 ●        JB Hunt Transport Services, Inc.
	  	 ●        YRC Worldwide Inc.

		 	 ●        ArcBest Corporation
	  	 ●        Canadian National Railway Company

		 	 ●        Landstar System, Inc.
	  	 ●        Werner Enterprises, Inc.

		 	 ●        C.H. Robinson Worldwide, Inc.
	  	 ●        Expeditors International of Washington, Inc.

		 	 ●        XPO Logistics, Inc.
	  	 ●        Canadian Pacific Railway Limited

		 	 ●        Air Canada
	  	 ●        Finning International Inc.

		 	 ●        Westjet Airlines Ltd.
	  	

 The median revenues of the comparator group is $5.34B versus the Corporation’s revenues of $5.12B and the
median market cap is $4.35B versus the Corporation’s $3.04B. 
  

	2.3	 Compensation Elements 

The Corporation’s executive compensation program is structured so as to have three main components: base salary, short-term incentives
(bonuses), and long-term incentives, including stock options and performance contingent restricted share units (“PCRSUs”). The following table sets out the Corporation’s plans by component of compensation and discusses how each
component relates to the Corporation’s overall executive compensation objective. 
  

							
	Compensation element	  	Form	  	Performance period	  	Objective
	Base Salary	  	Cash	  	Annual	  	 Immediate cash incentive for the
Corporation’s executive officers; should be at levels competitive with the comparator group that competes with the Corporation for business opportunities and executive talent.

 
 Ensure internal equity and competitiveness.

 

	Short-term incentive plan	  	Cash based on performance	  	Annual	  	 Encourage and reward performance
over the financial year compared to predefined goals and objectives and reflect progress toward company-wide performance objectives and personal objectives.
  

Reflect a pay-for-performance philosophy (corporate, business
unit and individual performance).

	Long-term incentive plan	  	Stock options (50%)	  	 7-year option term(1)
  

10-year option term(2)
	  	 Ensure that the
executive officers are motivated to achieve long-term growth of the Corporation and continuing increases in shareholder value and provide capital accumulation linked directly to the Corporation’s performance.

 
 75% of both long-term incentive plans are subject to
performance conditions at the date of grant or award. The other 25% is time-based.

	  	 PCRSUs (50%)

 
	  	34-month cliff vesting(3)
	Pension plans	  	Pension plan (defined benefits, defined contribution or RRSP)	  	Ongoing	  	 Attract and retain
highly-qualified executives by providing market-competitive benefits for income security in retirement.

	Health and other benefits and perquisites	  	 Health, dental, life, disability insurance plans

 
 Car allowance
	  	Ongoing	  	 Attract and retain healthy and
high-performing executives by providing market-competitive benefits and perquisites.

  

	(1)	 All grants after fiscal year 2010. 

	(2)	 All grants before fiscal year 2011. 

	(3)	 All grants after fiscal year 2016. 

The variable components of the Corporation’s executive compensation program are designed to closely link the compensation of the
Corporation’s NEOs, senior executives and management employees with the performance of the Corporation and its subsidiaries (a pay-for-performance philosophy). 

  
 22 

	2.3.1	 Base Salary 

In approving the base salary of the NEOs, including the President and CEO, the HRCC takes into consideration the salaries paid to senior
executives of other Canadian and American companies holding positions of similar importance, scope and complexity. The HRCC reviews the base salary of each NEO on a regular basis so that it may recommend to the Board of Directors that appropriate
adjustments be made thereto in order to ensure that the salaries of the Corporation’s NEOs remain competitive as per the compensation program objectives. 
  

	2.3.2	 Short-Term Incentive Plan 

NEOs and other senior executives of a group or division within the Corporation are eligible to receive an annual bonus under a short-term
incentive plan (“STIP”). The STIP provides an opportunity to receive an annual cash payment based on the degree of achievement of objectives set by the Board of Directors upon recommendation by the HRCC. The objectives of the STIP
are to reward achievement based on the Corporation’s financial performance and strengthen the link between pay and performance. 
 The
following table sets out the performance weightings and the potential STIP payouts as a percentage of base salary for the NEOs in 2018: 
  

									
	Name	  	Target payout as a
percentage of base
salary	  	Financial objectives(1)	  	
Individual / Non-

financial strategic
objectives

	  	Performance indicator	  	Weighting	  	Weighting
	
Alain Bédard
	  	200%	  	Revenues, Operating Earnings, EBITDA, EBITDAR and Cash flow(2)	  	80%(3)	  	20%(4)
	
Gregory W. Rumble
	  	75%	  	Operating Earnings of the Corporation	  	80%	  	20%
	
Rick Hashie
	  	70%	  	Business Unit Operating Earnings	  	80%	  	20%
	
Brian Kohut
	  	75%	  	Business Unit Operating Earnings	  	80%	  	20%
	
Robert McGonigal
	  	70%	  	Business Unit Operating Earnings	  	80%	  	20%

  

	(1)	 A minimum performance threshold of 80% is required to receive a STIP payout under the financial objectives.

	(2)	 Performance indicators for the CEO are based on corporate financial measures. 

	(3)	 Weighting for financial objectives performance indicators is 16% for each respective criterion, for a total
of 80%. 

	(4)	 The CEO has two non-financial strategic objectives and weighting for
each objective is 10%, for a total of 20%. 

 For the CEO, Alain Bédard, the 2018 STIP is based 80% on financial
objectives of the Corporation and 20% on non-financial strategic objectives. In order to be eligible to receive any payout under the 2018 STIP in respect of the financial-objectives component, a minimum
performance threshold of 80% of the budgeted Revenues/Operating Earnings/Earnings before interest, taxes, depreciation and amortization (“EBITDA”)/Earnings before interest, taxes, depreciation, amortization and rent
(“EBITDAR”)/Cash flow measures is required. 
 For the CFO, Gregory W. Rumble (since retired), 80% of the 2018 STIP is
based on Operating Earnings of the Corporation and 20% on individual objectives. For other NEOs, 80% of the 2018 STIP is based on attainment of budgeted Operating Earnings in their respective business units and 20% is based on individual objectives.

 The Board of Directors, upon recommendation by the HRCC, may modify actual STIP awards either upwards or downwards taking into
consideration exceptional circumstances as deemed appropriate. The overall mix of financial objectives reflects the Corporation’s balanced focus on top-line growth as well as bottom-line profitability. As
well, for other NEOs, the STIP performance indicators recognize the importance of the strong entrepreneurial culture and the autonomy of each entity within the Corporation. 

For the 2018 fiscal year, the HRCC approved the payment of an aggregate of $5,502,907 under the STIP for the NEOs, of which $3,057,889 was in
USD. The aggregate amount is in Canadian dollars and the US portion was converted to Canadian dollars based on the average Bank of Canada daily exchange rate for 2018 (1.00 USD = 1.2957 CAD). 

  
 23 

 Target performance goals in 2018 

The following table sets out the impact of the Corporation’s financial performance on the compensation earned by the NEOs during fiscal
year 2018. 
 Chief Executive Officer (“CEO”) 
  

					
	Corporate metrics	  	Target objectives in 
$000’s(3)   	  	Achievement in 2018(4)
	
Revenues(1)
	  	4,326,547	  	 The Corporation met 101.68% of
its target Revenues objectives

	
EBITDAR
	  	749,454	  	 The Corporation met 110.44% of
its target EBITDAR objectives

	
EBITDA
	  	600,525	  	 The Corporation met 113.93% of
its target EBITDA objectives

	
Operating Earnings
	  	342,559	  	 The Corporation met 123.92% of
its target Operating Earnings objectives

	
Cash flow(2)
	  	428,728	  	 The Corporation met 119.60% of
its target Cash flow objectives

  

	(1)	 Revenues before fuel surcharge. 

	(2)	 Net cash from operating activities before net change in non-cash
operating working capital. 

	(3)	 CEO is eligible for over-achievement as at least 95% of each objective was attained. 

	(4)	 Results exclude significant acquisitions. 

For the CEO, the following non-financial objectives were also identified and measured in 2018: 

 

					
	Objectives	 	  	  	Achievement in 2018
	 Identify acquisition opportunities
and when acquired and integrated, accomplish financial and non-financial objectives and/or develop a strategy to enhance shareholder value by reengineering the applicable business segments to ensure they are
best structured.
	 	 	  	 The objectives were met at
100%

	 Develop a compelling vision for an
organizational effectiveness that will build a strong team of highly-experienced operators that will capitalize on the capabilities of the Corporation to respond to a turbulent economic environment.
	 	 	  	 The objectives were met at
100%

 CFO 
 (Corporate)

  

					
	  

Corporate metrics
  
	  	Target objectives in $000’s  	  	Achievement in 2018(1)
	
Operating Earnings
	  	342,559	  	 The Corporation met 123.92% of
its target Operating Earnings objectives(2)

	(1)	 Results exclude significant acquisitions. 

	(2)	 The CFO’s 2018 STIP payout was at 125%. 

Other NEOs 
  

									
	NEOs	  	Metrics	  	 Target
Objectives  
 in $000’s  
	  	Main segment of activity(1)  
	  	Achievement in 2018
	
Rick Hashie
	  	Operating Earnings	  	42,349	  	Less-Than-Truckload and Package & Courier	  	Objectives met at 125%(2)
	
Brian Kohut
	  	Operating Earnings	  	76,382	  	Package & Courier	  	Objectives met at 125%(3)
	
Robert McGonigal
	  	Operating Earnings	  	18,948	  	Less-Than-Truckload and Specialized Truckload	  	Objectives met at 125%(4)

	(1)	 These are the main segments of activities of the respective NEOs. However, not all divisions within a segment
of activity are within the scope of the respective NEOs. 

	(2)	 Rick Hashie is eligible for over-achievement performance payment on financial criteria. The 2018 STIP
financial objectives payout was at 125%. 

	(3)	 Brian Kohut is eligible for over-achievement performance payment on financial criteria. The 2018 STIP
financial objectives payout was at 125%. 

	(4)	 Robert McGonigal is eligible for over-achievement performance payment on financial criteria. The 2018 STIP
financial objectives payout was at 125%. 

  
 24 

	2.3.3	 Long-Term Incentive Plans 

Long-Term Incentive Policy 
 The
Corporation’s long-term incentive philosophy is to provide executives with long-term compensation that aligns their interests with those of shareholders. Besides the link with the long-term performance of the stock, the long-term incentive
plans are also subject to rigorous performance hurdles that further ensures that pay is aligned with performance. The following table summarizes our long-term Incentive policy in this regard: 

 

																					
	
Long-Term Incentive

Vehicle
		    Weighting of Total LTIP    		Performance-bases long-term 
incentives		Non-performance-based  

long-term incentives  
		            Weighting            
		  Range of performance  		Weighting  
	
Stock Options
		50%		75%		0%-133%		25%
	
PCRSUs
		50%		75%		0%-133%		25%
	
Total
		100%		75%		0%-133%		25%

 Performance-based long-term incentives 

As mentioned above a large portion (75%) of our long-term incentives are subject to performance conditions. The performance hurdle is applied
at grant date and subjects grant levels to an EBIT condition. The performance grid that determines the level of grant of performance-based long-term incentives for various levels of attainment of EBIT is detailed in the following table: 

 

			
	Performance-based Stock Options and PCRSUs granted by level of performance
	Level of attainment of EBIT objective in relation to target	  	 Percentage of
Stock Options and PCRSUs granted or awarded in
 relation to target grant or award

	Below 80%	  	0%
	Between 80% and 90%	  	Between 46.67% and 86.67%
	Between 90% and 100%	  	Between 86.67% and 100%
	Between 100% and 110%	  	Between 100% and 113.33%
	Above 110%	  	133.33%

 Time-based long-term incentives 

Time-based long-term incentives represent 25% of total long-term incentives and are principally granted or awarded for retention purposes.

 Determination of grant and award sizes for 2018 

The following table sets out the level of attainment of the performance measure for purposes of the 2018 grant: 

 

																																				
	
Financial

Indicators
		Target
Objective in
$000’s(1)		Achievement
in $000’s		Performance-based long-term incentives		Time-based 
long-term incentives
		  Weighting    		Level of
attainment
of target		Percentage of LTI to 
be granted or awarded 
as percentage of target 		  Weighting  		Granted or awarded
as percentage of
target
	EBIT(2)		363,161 (3)		302,779		75%		83.37%		60.2%		25%		100%

  

	 	(1)	 The financial objective was measured over a reference from January 1, 2018 to December 31, 2018.

	 	(2)	 Significant acquisitions were not included. 

	 	(3)	 Weighting for target objective is based 100% on EBIT. 

The following table sets out the guideline LTI award, the target number of options and/or PCRSUs that can be granted or awarded and the number
of actual stock options granted and PCRSUs awarded to NEOs under the 2018 grant - Reference period: January 1, 2018 to December 31, 2018. 

  
 25 

 
																										
	Name		Guideline LTI
award
(% of base salary)		Target grant of options
(#)(1)
(50% of the guideline)		Actual option
grant
(#)(2)(4)		Target award of
PCRSUs
award
(#)(1)
(50% of the guideline)		Actual Award of
PCRSUs
(#)(3)
	 Alain
Bédard
		200%		289,011		202,655		43,947		30,816
	 Gregory W.
Rumble
		90%		59,341		41,610		9,023		6,327
	 Rick
Hashie
		70%		24,464		17,154		3,720		2,609
	 Brian
Kohut
		90%		42,033		29,474		6,392		4,482
	 Robert
McGonigal
		70%		23,571		16,528		3,584		2,513

  

							
	 (1)
	  	 Target number of stock options and PCRSUs that can be awarded in 2018 if the target financial objective is fully
met.
	  	
	 (2)
	  	 Option grant size =
	  	 Average Base Salary X LTI guideline level X 50% X Performance Factor
	  	
		  		  	 Reference grant price X Black-Scholes valuation ratio
	  	
	 (3)
	  	 PCRSU award size =
	  	 Average Base Salary X LTI guideline level X 50% X Performance Factor
	  	
		  		  	 Reference grant price
	  	
	 (4)
	  	 For the 2018 stock option grants, a Black-Scholes valuation ratio of 15.2% and a reference grant price of $29.92
were used. The reference grant price is based on the volume weighted average trading price of the common shares of the Corporation on the TSX for the last five days on which the shares traded on the TSX immediately prior to the day on which the
option is granted.

 Determination of grant and award sizes for previous years 

 

																																				
	Year		Target
Objective
in $000’s		 Achievement 
in $000’s		Performance-based long-term incentives		Time-based long-term incentives
		  Weighting  		Level of
  attainment of  
target		Percentage of LTI to be
granted or awarded as
percentage of target		  Weighting  		Granted or awarded
as percentage of
target
	 2017(1)
		$152,261		$145,729		75%		95.71%		94.3%		25%		100%
	
2016
		$311,840		$285,697		75%		91.62%		88.8%		25%		100%
	
2015
		$295,377		$290,767		75%		98.4%		97.9%		25%		100%
	
2014
		$254,719		$219,506		75%		86.2%		71.5%		25%		100%

  

	 	(1)	 The financial objective was measured over a reference from July 1, 2016 to December 31, 2016 –
6 months. 

 Performance Contingent Restricted Share Units 

On July 24, 2014, the Board of Directors established the Performance Contingent Restricted Share Unit Plan for officers and employees of
the Corporation and its subsidiaries (the “PCRSU Plan”). The PCRSU Plan was amended by the Board of Directors on July 1, 2014 and was amended effective on January 1, 2016, December 8, 2016 and December 23,
2016, respectively. The following is a description the current features of the PCRSU Plan: 
  

	(a)	 the Board of Directors of the Corporation may from time-to-time by resolution award PCRSUs to officers and/or employees of the Corporation and its subsidiaries; 

  

	(b)	 following the December 8, 2016 amendment, PCRSUs vest on the “Payment Date”, defined as
approximately 34 months following the “Award Date” for grants after fiscal year 2016; in the month of December of the second preceding calendar year, following the Award Date of such Award; 

 

	(c)	 during the term of a PCRSU, in the event that the Corporation declares and pays a cash dividend on its
common shares, PCRSU participants shall be entitled to receive “Dividend Equivalents” in the form of additional PCRSUs; the Corporation shall credit to a PCRSU participant, in respect of each PCRSU held by such participant, an additional
fraction of a PCRSU calculated by dividing the per share amount of the cash dividend by the volume weighted average trading price of the Corporation’s shares for the five trading days preceding the date on which the dividend is paid by the
Corporation; such additional fractions of PCRSUs vest on the “Payment Date” for the Award on which they have been credited; 

  

	(d)	 PCRSUs awarded under the PCRSU Plan are not transferable other than by will or by the laws of succession of
the domicile of a deceased PCRSU participant; 

  
 26 

	(e)	 no PCRSU awarded under the PCRSU Plan can be pledged, charged, transferred, assigned or otherwise encumbered
or disposed of, on pain of nullity; 

  

	(f)	 if a PCRSU participant takes normal retirement (as defined in the PCRSU Plan), such Participant shall
continue benefiting from his or her rights thereunder until the Payment Date; 

  

	(g)	 if a PCRSU participant’s employment with the Corporation is terminated for cause or the participant
resigns from his/her employment, any PCRSU not vested prior to the time of delivery by the Corporation to such PCRSU participant of a letter of termination of employment with the Corporation shall immediately lapse and become null and void upon such
delivery; 

  

	(h)	 upon a PCRSU participant’s employment or office with the Corporation terminating or ending by reason of
involuntary termination without cause, death, disability or early retirement (as defined in the PCRSU Plan), the PCRSUs held by the participant shall be adjusted proportionally to the number of days worked during the period that begins on the date
of the award set out in the Notice of Award and which ends of the applicable Deemed Date of Termination, by multiplying the number of PCRSUs held by the Participant by a fraction, the numerator of which is the number of days elapsed from the date of
the award to the Deemed Date of Termination and the denominator of which is equal to the number of days representing the full vesting period for the Grant. The resulting number of adjusted PCRSUs shall be the number of PCRSUs that shall be redeemed
on the applicable Deemed Date of Termination and all other PCRSUs become null and void; 

  

	(i)	 PCRSUs awarded pursuant to the PCRSU Plan are redeemed in “stock bought in the open market” less
required statutory deductions; 

  

	(j)	 in the event of any reorganization, change in the number of issued and outstanding shares by reason of any
stock dividend, stock split, reverse stock split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change, an equitable adjustment shall be made by the HRCC, by adjusting (i) the kind of
shares deliverable under the Plan, (ii) the number and/or kind of shares underlying outstanding PCRSUs, (iii) the factors and manner in which the settlement amount of a PCRSU is to be determined, or (iv) any other term or condition of
the PCRSUs. Such adjustment shall be final and binding on all parties; 

  

	(k)	 if within twelve months of a change of control, (i) a participant’s employment with the
Corporation is terminated without cause; or (ii) a participant voluntarily terminates his or her employment following a change in the participant’s position, conditions or location of employment, or responsibilities, then in such event all
of the participant’s unvested PCRSUs shall vest on the last day of active employment of the participant, notwithstanding the provisions of paragraphs (f), (g), (h) and (i) above. The redemption price of each PCRSU shall correspond to the
volume weighted average price for the five trading days preceding such last day of active employment and the Corporation shall make payment to the participant in accordance with the rules of the PCRSU Plan, as adjusted. However, if a participant
maintains employment in a position equivalent to the position he or she held before the change of control, the vesting of the PCRSUs shall follow its normal course in accordance with the PCRSU Plan; and 

 

	(l)	 the Board of Directors of the Corporation may make the following types of amendments to the PCRSU Plan
without seeking approval from the shareholders of the Corporation: (i) amendments of a “housekeeping” or ministerial nature, including any amendment for the purpose of curing any ambiguity, error or omission in the PCRSU Plan or to
correct or supplement any provision of the PCRSU Plan that is inconsistent with any other provision of the PCRSU Plan; (ii) amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules,
regulations and policies of the TSX); (iii) amendments necessary in order for PCRSUs to qualify for favourable treatment under applicable taxation laws; (iv) amendments respecting administration of the PCRSU Plan; (v) any amendment to the
“vesting” provisions of the PCRSU Plan or any PCRSU; (vi) any amendment to the early termination provisions of the PCRSU Plan or any PCRSU, whether or not such PCRSU is held by an “insider” of the Corporation, provided such
amendment does not entail an extension beyond the original expiry date; (vii) the addition or modification of the redemption feature, payable in shares of the Corporation bought in the market; (viii) amendments necessary to suspend or
terminate the PCRSU Plan; and (ix) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law. 

  
 27 

 2019 Stock Option Plan 

On February 26, 2019, the Board of Directors of the Corporation established the 2019 Stock Option Plan for officers and employees of the
Corporation and its subsidiaries (the “2019 Plan”) in that there was no further capacity to grant stock options under the 2012 Stock Option Plan of the Corporation (the “2012 Plan”). At the Meeting,
shareholders will be asked to approve the 2019 Plan. See “Ratification, Confirmation and Approval of 2019 Stock Option Plan” below. If approved by shareholders at the Meeting, the 2019 Plan will replace the 2012 Plan, in that no
further stock options will be granted under the 2012 Plan. The 2012 Plan will continue to apply to the options currently outstanding thereunder and such options may continue to be exercised in accordance with the 2012 Plan. The following is a
description of certain features of the 2019 Plan, as required by the TSX: 
  

	(a)	 the Board of Directors of the Corporation may from time-to-time by resolution grant options to purchase common shares to officers and/or employees of the Corporation and its subsidiaries, provided that the total number of shares to be issued under the 2019
Plan does not exceed the number set out in paragraph (b) below. Options may be granted by the Corporation only pursuant to resolutions of the Board of Directors; 

 

	(b)	 the maximum number of common shares that can be issued upon the exercise of options granted under the 2019
Plan is 5,000,000, representing 5.8% of the issued and outstanding shares of the Corporation as of the close of business on December 31, 2018; 

  

	(c)	 no option may be granted under the 2019 Plan to any optionee unless the aggregate number of common shares:
(i) issued to “insiders” within any one-year period; and (ii) issuable to “insiders” at any time, under the 2019 Plan, or when combined with all of the Corporation’s other
security-based compensation arrangements, could not exceed 10% of the total number of issued and outstanding common shares of the Corporation. For the purpose of the 2019 Plan, the term “insider” means “reporting insiders” as
defined in National Instrument – 55-104 Insider Reporting Requirements and Exemptions; 

  

	(d)	 no single person can hold at any time options covering more than 5% of the number of issued and outstanding
shares of the Corporation from time-to-time. In addition, it will not be permitted to issue to an “insider” or to any associate of an “insider”,
within a one-year period, upon the exercise of options granted pursuant to the 2019 Plan, a number of shares exceeding 5% of the number of issued and outstanding shares of the Corporation from time-to-time; 

  

	(e)	 the exercise price of options granted under the 2019 Plan is fixed by the Board of Directors at the time of
the grant of the options, but cannot be less than the volume weighted average trading price of the common shares of the Corporation on the TSX for the last five days on which the common shares traded on the TSX immediately prior to the day on which
the option is granted; 

  

	(f)	 the maximum period during which an option may be exercised is seven years from the date on which it is
granted, subject to the condition that if an option is to expire during a period when the optionee is prohibited by the Corporation from trading in the shares of the Corporation pursuant to its rules of conduct and other policies, or within ten
business days of the expiry of such “blackout period”, the term of such option will be automatically extended for a period of ten business days immediately following the end of the “blackout period”; 

 

	(g)	 at the time of granting an option, the Board of Directors, at its discretion, may set a “vesting
schedule”, that is, one or more dates from which an option may be exercised in whole or in part; 

  

	(h)	 options granted under the 2019 Plan are not transferable other than by will or by the laws of succession of
the domicile of a deceased optionee; 

  

	(i)	 no option granted under the 2019 Plan can be pledged, charged, transferred, assigned or otherwise encumbered
or disposed of, on pain of nullity; 

  

	(j)	 if an optionee’s employment with the Corporation is terminated for serious reason, any option not
exercised prior to the time of delivery by the Corporation to such optionee of a letter of termination of employment with the Corporation shall immediately lapse and become null and void upon such delivery; 

  
 28 

	(k)	 if an optionee takes a normal retirement (as defined in the Plan), the optionee shall be entitled to
exercise his rights under such option and continue benefiting from his rights during the three years following the commencement of his retirement or until the expiration of the term of the option, whichever occurs earlier. At the end of such
three-year period, the option term shall be deemed to have lapsed; 

  

	(l)	 if an optionee takes early retirement (as defined in the Plan), dies or becomes, in the determination of the
Board of Directors, permanently disabled, while employed by the Corporation, any “vested” option or unexercised part thereof granted to such optionee may be exercised by the optionee or the person to whom the option is transferred by will
or the laws of succession and distribution only for that number of common shares which the optionee was entitled to acquire under the option at the time of his retirement, death or permanent disability, as the case may be. Any such
“vested” option may be exercised within one year after the optionee’s retirement, death or permanent disability, as the case may be, or prior to the expiry of the term of the option, whichever occurs earlier. Any “unvested”
options at the time of retirement will become null and void upon retirement, death of permanent disability; 

  

	(m)	 upon an optionee’s employment or office with the Corporation terminating or ending otherwise than by
reason of retirement, death, permanent disability or termination for serious reason, any option or unexercised part thereof granted to such optionee may be exercised by the optionee only for that number of common shares which the optionee was
entitled to acquire under the option at the time of delivery by the Corporation to the optionee of a letter of termination of the optionee’s employment or office with the Corporation. Any such “vested” option may be exercised within
30 days after such delivery or prior to the expiry of the term of the option, whichever occurs earlier; 

  

	(n)	 the 2019 Plan does not provide for financial assistance from the Corporation to option holders;

  

	(o)	 options granted under the 2019 Plan may be exercised by the “cash exercise” or “cashless
exercise” method. An optionee may use the “cash exercise” method in respect of certain shares subject to an option and simultaneously use the “cashless exercise” method in respect of other shares subject to the same option;

  

	(p)	 under the “cash exercise” method, an option granted under the 2019 Plan may be exercised by the
optionee (or his personal representatives or legatees) giving notice in writing to the Secretary of the Corporation at its head office, which notice must specify the method of exercise and the number of shares in respect of which the option is being
exercised and which must be accompanied by full payment, by cash or certified cheque, of the purchase price for the number of shares specified. Upon such exercise of the option, subject to paragraph (r) below, the Corporation will forthwith
cause the transfer agent and registrar of its common shares to deliver to the optionee (or his personal representatives or legatees) a certificate in the name of the optionee representing in the aggregate such number of shares as the optionee (or
his personal representatives or legatees) shall have then paid for and as are specified in such written notice of exercise of option; 

  

	(q)	 under the “cashless exercise” method, an option granted under the 2019 Plan may be exercised by
the optionee (or his personal representatives or legatees) giving notice in writing to the Secretary of the Corporation at its head office, which notice must specify the method of exercise and the number of shares in respect of which the option is
being exercised and which must be accompanied by full payment, by cash or certified cheque, of the purchase price for the number of shares specified. Upon such exercise of the option, subject to paragraph (r) below, the Corporation will
forthwith cause the sale of the number of shares in respect of which the option is being exercised directly on the open market. The proceeds from the sale of the shares will be used first to pay any commissions or fees in connection with such sale
and, upon written instructions from the optionee, to repay any loan incurred by the optionee in connection with the exercise of the option, as the case may be. The balance of the proceeds will be paid to the optionee; 

 

	(r)	 if the Corporation is required under the Income Tax Act (Canada) or any other applicable law to remit
to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise of an option by an optionee, then the optionee must, concurrently with the exercise of the option: 

 

	 	(i)	 pay to the Corporation, in addition to the exercise price for the options, sufficient cash as is determined
by the Corporation, in its sole discretion, to be the amount necessary to fund the required tax remittance; 

  

	 	(ii)	 authorize the Corporation, on behalf of the optionee, to sell in the market, on such terms and at such time
or times as the Corporation determines, in its sole discretion, such portion of the common shares being issued upon exercise of the option as is required to realize cash proceeds in an amount necessary to fund the required tax remittance; or

  

	 	(iii)	 make other arrangements acceptable to the Corporation, in its sole discretion, to fund the required tax
remittance; 

  
 29 

	(s)	 in the event that the Corporation proposes to amalgamate or merge with another company (other than a
wholly-owned subsidiary of the Corporation), or to liquidate, dissolve or wind-up, or in the event that an offer to purchase common shares of the Corporation is made to all shareholders of the Corporation,
other than the offeror or offerors, the Corporation has the right, upon written notice to each optionee holding options under the 2019 Plan, to permit the exercise of all options outstanding under the 2019 Plan within a 20-day period following the date of such notice and to determine that upon the expiry of such 20-day period, all options terminate and cease to have effect;

  

	(t)	 if within twelve months of a change of control (as defined below), (i) an optionee’s employment with
the Corporation is terminated without cause; or (ii) an optionee voluntarily terminates his or her employment following a change in the optionee’s position, conditions or location of employment, or responsibilities, then in any such event
all of the optionee’s unvested options shall vest on the last day of active employment of the optionee and shall be exercisable within 30 days after the last day of active employment or prior to the expiration of the term of the option,
whichever occurs earlier. However, if an optionee maintains employment in a position equivalent to the position he or she held before the change of control, the vesting of the options shall follow its normal course in accordance with the
2019 Plan. For the purpose of this paragraph, “change of control” means the occurrence of any of the following events: (i) the sale of all or substantially all of the assets of the Corporation on a consolidated basis, in one
transaction or a series of related transactions, to a person that is at arm’s length from the Corporation, such that, for greater certainty, an internal reorganization shall not constitute a change of control; (ii) a merger, reorganization
or other similar transaction pursuant to which the holders of the Corporation’s outstanding voting rights immediately prior to such transaction do not own a majority of the outstanding voting rights of the resulting or successor entity (or its
ultimate parent, if applicable) immediately upon completion of such transaction, or (iii) any person or a group of persons acting jointly or in concert becoming the beneficial owner, directly or indirectly, of shares carrying at least a
majority of the outstanding voting rights of the Corporation; 

  

	(u)	 approval by the shareholders of the Corporation is required for the following amendments to the 2019 Plan:
(i) amendments to the number of shares issuable under the 2019 Plan, including an increase to a maximum percentage or number of shares; (ii) any amendment to the 2019 Plan that increases the length of the “blackout” extension
period; (iii) any amendment which reduces the exercise price or purchase price of an option, whether or not such option is held by an “insider” of the Corporation; (iv) any amendment extending the term of an option beyond its
original expiry date, whether or not such option is held by an “insider” of the Corporation, except as otherwise permitted by the 2019 Plan; and (v) amendments required to be approved by shareholders under applicable law (including,
without limitation, the rules, regulations and policies of the TSX); and 

  

	(v)	 the Board of Directors of the Corporation may make the following types of amendments to the 2019 Plan
without seeking approval from the shareholders of the Corporation: (i) amendments of a “housekeeping” or ministerial nature, including any amendment for the purpose of curing any ambiguity, error or omission in the 2019 Plan or to
correct or supplement any provision of the 2019 Plan that is inconsistent with any other provision of the 2019 Plan; (ii) amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules,
regulations and policies of the TSX); (iii) amendments necessary in order for options to qualify for favourable treatment under applicable taxation laws; (iv) amendments respecting administration of the 2019 Plan; (v) any amendment to the
“vesting” provisions of the 2019 Plan or any option; (vi) any amendment to the early termination provisions of the 2019 Plan or any option, whether or not such option is held by an “insider” of the Corporation, provided such
amendment does not entail an extension beyond the original expiry date; (vii) the addition of any form of financial assistance by the Corporation for the acquisition by all or certain categories of eligible participants of shares under the 2019
Plan, and the subsequent amendment of any such provisions; (viii) the addition or modification of a cashless exercise feature, payable in cash or shares of the Corporation; (ix) amendments necessary to suspend or terminate the 2019 Plan;
and (x) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law. 

 2012
Stock Option Plan 
 On April 26, 2012, the Board of Directors of the Corporation established the 2012 Plan for officers and
employees of the Corporation and its subsidiaries. The shareholders of the Corporation approved the 2012 Plan on April 26, 2013. The 2012 Plan incorporates amendments adopted by the Board of Directors on February 28, 2013 and
July 24, 2014, respectively. 

  
 30 

 The 2012 Plan replaced the 2008 Stock Option Plan of the Corporation (the “2008
Plan”), in that no further stock options have been granted under the 2008 Plan. The following is a description of certain features of the 2012 Plan, as required by the TSX: 

 

	(a)	 the Board of Directors of the Corporation may from time-to-time by resolution grant options to purchase common shares to officers and/or employees of the Corporation and its subsidiaries, provided that the total number of shares to be issued under the 2012
Plan does not exceed the number set out in paragraph (b) below. Options may be granted by the Corporation only pursuant to resolutions of the Board of Directors; 

 

	(b)	 the maximum number of common shares that can be issued upon the exercise of options granted under the 2012
Plan is 5,979,201, representing 6.92% of the issued and outstanding shares of the Corporation as of the close of business on December 31, 2018; 

  

	(c)	 no option may be granted under the 2012 Plan to any optionee unless the aggregate number of common shares:
(i) issued to “insiders” within any one-year period; and (ii) issuable to “insiders” at any time, under the 2012 Plan, or when combined with all of the Corporation’s other
security-based compensation arrangements, could not exceed 10% of the total number of issued and outstanding common shares of the Corporation. For the purpose of the 2012 Plan, the term “insider” means “reporting insiders” as
defined in National Instrument – 55-104 Insider Reporting Requirements and Exemptions; 

  

	(d)	 no single person can hold at any time options covering more than 5% of the number of issued and outstanding
shares of the Corporation from time-to-time. In addition, it will not be permitted to issue to an “insider” or to any associate of an “insider”,
within a one-year period, upon the exercise of options granted pursuant to the 2012 Plan, a number of shares exceeding 5% of the number of issued and outstanding shares of the Corporation from time-to-time; 

  

	(e)	 the exercise price of options granted under the 2012 Plan is fixed by the Board of Directors at the time of
the grant of the options, but cannot be less than the volume weighted average trading price of the common shares of the Corporation on the TSX for the last five days on which the common shares traded on the TSX immediately prior to the day on which
the option is granted; 

  

	(f)	 the maximum period during which an option may be exercised is seven years from the date on which it is
granted, subject to the condition that if an option is to expire during a period when the optionee is prohibited by the Corporation from trading in the shares of the Corporation pursuant to its rules of conduct and other policies, or within ten
business days of the expiry of such “blackout period”, the term of such option will be automatically extended for a period of ten business days immediately following the end of the “blackout period”; 

 

	(g)	 at the time of granting an option, the Board of Directors, at its discretion, may set a “vesting
schedule”, that is, one or more dates from which an option may be exercised in whole or in part; 

  

	(h)	 options granted under the 2012 Plan are not transferable other than by will or by the laws of succession of
the domicile of a deceased optionee; 

  

	(i)	 no option granted under the 2012 Plan can be pledged, charged, transferred, assigned or otherwise encumbered
or disposed of, on pain of nullity; 

  

	(j)	 if an optionee’s employment with the Corporation is terminated for serious reason, any option not
exercised prior to the time of delivery by the Corporation to such optionee of a letter of termination of employment with the Corporation shall immediately lapse and become null and void upon such delivery; 

 

	(k)	 if an optionee takes a normal retirement (as defined in the Plan), the optionee shall be entitled to
exercise his rights under such option and continue benefiting from his rights during the three years following the commencement of his retirement or until the expiration of the term of the option, whichever occurs earlier. At the end of such
three-year period, the option term shall be deemed to have lapsed; 

  

	(l)	 if an optionee takes early retirement (as defined in the Plan), dies or becomes, in the determination of the
Board of Directors, permanently disabled, while employed by the Corporation, any “vested” option or unexercised part thereof granted to such optionee may be exercised by the optionee or the person to whom the option is transferred by will
or the laws of succession and distribution only for that number of common shares which the optionee was entitled to acquire under the option at the time of his retirement, death or permanent disability, as the case may be. Any such
“vested” option may be exercised within one year after the optionee’s retirement, death or permanent disability, as the case may be, or prior to the expiry of the term of the option, whichever occurs earlier. Any “unvested”
options at the time of retirement will become null and void upon retirement, death of permanent disability; 

  
 31 

	(m)	 upon an optionee’s employment or office with the Corporation terminating or ending otherwise than by
reason of retirement, death, permanent disability or termination for serious reason, any option or unexercised part thereof granted to such optionee may be exercised by the optionee only for that number of common shares which the optionee was
entitled to acquire under the option at the time of delivery by the Corporation to the optionee of a letter of termination of the optionee’s employment or office with the Corporation. Any such “vested” option may be exercised within
30 days after such delivery or prior to the expiry of the term of the option, whichever occurs earlier; 

  

	(n)	 the 2012 Plan does not provide for financial assistance from the Corporation to option holders;

  

	(o)	 options granted under the 2012 Plan may be exercised by the “cash exercise” or “cashless
exercise” method. An optionee may use the “cash exercise” method in respect of certain shares subject to an option and simultaneously use the “cashless exercise” method in respect of other shares subject to the same option;

  

	(p)	 under the “cash exercise” method, an option granted under the 2012 Plan may be exercised by the
optionee (or his personal representatives or legatees) giving notice in writing to the Secretary of the Corporation at its head office, which notice must specify the method of exercise and the number of shares in respect of which the option is being
exercised and which must be accompanied by full payment, by cash or certified cheque, of the purchase price for the number of shares specified. Upon such exercise of the option, subject to paragraph (r) below, the Corporation will forthwith
cause the transfer agent and registrar of its common shares to deliver to the optionee (or his personal representatives or legatees) a certificate in the name of the optionee representing in the aggregate such number of shares as the optionee (or
his personal representatives or legatees) shall have then paid for and as are specified in such written notice of exercise of option; 

  

	(q)	 under the “cashless exercise” method, an option granted under the 2012 Plan may be exercised by
the optionee (or his personal representatives or legatees) giving notice in writing to the Secretary of the Corporation at its head office, which notice must specify the method of exercise and the number of shares in respect of which the option is
being exercised and which must be accompanied by full payment, by cash or certified cheque, of the purchase price for the number of shares specified. Upon such exercise of the option, subject to paragraph (r) below, the Corporation will
forthwith cause the sale of the number of shares in respect of which the option is being exercised directly on the open market. The proceeds from the sale of the shares will be used first to pay any commissions or fees in connection with such sale
and, upon written instructions from the optionee, to repay any loan incurred by the optionee in connection with the exercise of the option, as the case may be. The balance of the proceeds will be paid to the optionee; 

 

	(r)	 if the Corporation is required under the Income Tax Act (Canada) or any other applicable law to remit
to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise of an option by an optionee, then the optionee must, concurrently with the exercise of the option: 

 

	 	(i)	 pay to the Corporation, in addition to the exercise price for the options, sufficient cash as is determined
by the Corporation, in its sole discretion, to be the amount necessary to fund the required tax remittance; 

  

	 	(ii)	 authorize the Corporation, on behalf of the optionee, to sell in the market, on such terms and at such time
or times as the Corporation determines, in its sole discretion, such portion of the common shares being issued upon exercise of the option as is required to realize cash proceeds in an amount necessary to fund the required tax remittance; or

  

	 	(iii)	 make other arrangements acceptable to the Corporation, in its sole discretion, to fund the required tax
remittance; 

  

	(s)	 in the event that the Corporation proposes to amalgamate or merge with another company (other than a
wholly-owned subsidiary of the Corporation), or to liquidate, dissolve or wind-up, or in the event that an offer to purchase common shares of the Corporation is made to all shareholders of the Corporation,
other than the offeror or offerors, the Corporation has the right, upon written notice to each optionee holding options under the 2012 Plan, to permit the exercise of all options outstanding under the 2012 Plan within a 20-day period following the date of such notice and to determine that upon the expiry of such 20-day period, all options terminate and cease to have effect;

  

	(t)	 if within twelve months of a change of control (as defined below), (i) an optionee’s employment with
the Corporation is terminated without cause; or (ii) an optionee voluntarily terminates his or her employment following a change in the optionee’s position, conditions or location of employment, or responsibilities, then in any such event
all of the 

  
 32 

	 	 
optionee’s unvested options shall vest on the last day of active employment of the optionee and shall be exercisable within 30 days after the last day of active employment or prior to the
expiration of the term of the option, whichever occurs earlier. However, if an optionee maintains employment in a position equivalent to the position he or she held before the change of control, the vesting of the options shall follow its normal
course in accordance with the 2012 Plan. For the purpose of this paragraph, “change of control” means the occurrence of any of the following events: (i) the sale of all or substantially all of the assets of the Corporation on a
consolidated basis, in one transaction or a series of related transactions, to a person that is at arm’s length from the Corporation, such that, for greater certainty, an internal reorganization shall not constitute a change of control;
(ii) a merger, reorganization or other similar transaction pursuant to which the holders of the Corporation’s outstanding voting rights immediately prior to such transaction do not own a majority of the outstanding voting rights of the
resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, or (iii) any person or a group of persons acting jointly or in concert becoming the beneficial owner, directly or indirectly,
of shares carrying at least a majority of the outstanding voting rights of the Corporation; 

  

	(u)	 approval by the shareholders of the Corporation is required for the following amendments to the 2012 Plan:
(i) amendments to the number of shares issuable under the 2012 Plan, including an increase to a maximum percentage or number of shares; (ii) any amendment to the 2012 Plan that increases the length of the “blackout” extension
period; (iii) any amendment which reduces the exercise price or purchase price of an option, whether or not such option is held by an “insider” of the Corporation; (iv) any amendment extending the term of an option beyond its
original expiry date, whether or not such option is held by an “insider” of the Corporation, except as otherwise permitted by the 2012 Plan; and (v) amendments required to be approved by shareholders under applicable law (including,
without limitation, the rules, regulations and policies of the TSX); and 

  

	(v)	 the Board of Directors of the Corporation may make the following types of amendments to the 2012 Plan
without seeking approval from the shareholders of the Corporation: (i) amendments of a “housekeeping” or ministerial nature, including any amendment for the purpose of curing any ambiguity, error or omission in the 2012 Plan or to
correct or supplement any provision of the 2012 Plan that is inconsistent with any other provision of the 2012 Plan; (ii) amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules,
regulations and policies of the TSX); (iii) amendments necessary in order for options to qualify for favourable treatment under applicable taxation laws; (iv) amendments respecting administration of the 2012 Plan; (v) any amendment to the
“vesting” provisions of the 2012 Plan or any option; (vi) any amendment to the early termination provisions of the 2012 Plan or any option, whether or not such option is held by an “insider” of the Corporation, provided such
amendment does not entail an extension beyond the original expiry date; (vii) the addition of any form of financial assistance by the Corporation for the acquisition by all or certain categories of eligible participants of shares under the 2012
Plan, and the subsequent amendment of any such provisions; (viii) the addition or modification of a cashless exercise feature, payable in cash or shares of the Corporation; (ix) amendments necessary to suspend or terminate the 2012 Plan;
and (x) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law. 

 2008
Stock Option Plan 
 On May 12, 2008, the Board of Directors established the 2008 Plan for officers and employees of the
Corporation and its subsidiaries. The shareholders of the Corporation approved the 2008 Plan on April 24, 2009. The 2008 Plan incorporates amendments adopted by the Board of Directors on April 24, 2009, July 22, 2009, August 19,
2009, December 8, 2010 and May 17, 2011, respectively. 
 On April 26, 2012, the Board of Directors adopted the 2012 Plan in
replacement of the 2008 Plan. Since April 26, 2012, all stock options granted by the Corporation have been granted under the 2012 Plan and no further stock options have been or will be granted under the 2008 Plan. The 2008 Plan continues to
apply to the options currently outstanding thereunder and such options continue to be exercised in accordance with the 2008 Plan. 
 The
purpose of the 2008 Plan is to provide officers and employees with a proprietary interest through the granting of non-transferable options to purchase common shares of the Corporation and also to attract,
retain and motivate key employees who share primary responsibility for the management, growth and protection of the Corporation’s business. 

The following is a description of certain features of the 2008 Plan, as required by the TSX: 

 

	(a)	 the 2008 Plan is administered by the Board of Directors of the Corporation, which delegates this
responsibility to the HRCC; 

  
 33 

	(b)	 the maximum number of common shares that can be issued pursuant to the 2008 Plan is equal to 10% of the
number of issued and outstanding shares of the Corporation from time to time. Shares in respect of which options are not exercised, due to the expiration, termination or lapse of such options, are available for options to be granted thereafter;

  

	(c)	 no option may be granted to any optionee under the 2008 Plan unless the aggregate of the shares:
(i) issued to “insiders” within any one-year period; and (ii) issuable to “insiders” at any time, under the 2008 Plan, or when combined with all of the Corporation’s other
security-based compensation arrangements, could not exceed 10% of the total number of issued and outstanding common shares of the Corporation. For the purpose of the 2008 Plan, the term “insider” has the same meaning as in the
Securities Act (Ontario); 

  

	(d)	 a single person cannot hold at any time options in respect of more than 5% of the number of issued and
outstanding shares of the Corporation from time-to-time. In addition, the 2008 Plan does not permit the issuance to an “insider” or to any associate of an
“insider”, within a one-year period, of a number of shares exceeding 5% of the number of issued and outstanding shares of the Corporation from time-to-time; 

  

	(e)	 the option exercise price is fixed by the Board of Directors of the Corporation at the time of granting an
option. The exercise price cannot be less than the volume weighted average trading price of the common shares of the Corporation on the TSX during the last five days on which the shares traded on the TSX immediately prior to the day on which the
option is granted; 

  

	(f)	 at the time of granting an option, the Board of Directors, at its discretion, may set a “vesting
schedule”, that is, one or more dates from which an option may be exercised in whole or in part. In such event, the Board of Directors is not under any obligation to set a “vesting schedule” in respect of any other option granted
under the 2008 Plan; 

  

	(g)	 the term of an option may not exceed seven years from the date the option is granted. However, if an option
is to expire during a period in which an optionee is prohibited by the Corporation from trading in the Corporation’s shares pursuant to the policies of the Corporation, or within ten business days of the expiry of such “blackout
period”, the term of such option will be automatically extended for a period of ten business days immediately following the end of the “blackout period”; 

 

	(h)	 if an optionee’s employment with the Corporation is terminated for serious reason, any option not
exercised prior to the time of delivery by the Corporation to the optionee of a letter of termination of employment with the Corporation shall immediately lapse and become null and void upon such delivery; 

 

	(i)	 if an optionee takes normal retirement (as defined in the 2008 Plan), the optionee will be entitled to
exercise his rights under such option and continue benefiting from his rights during the three years following the commencement of his retirement or prior, until the expiration of the term of the option, whichever occurs earlier. At the end of such
three-year period, the option term shall be deemed to have lapsed. If an optionee takes early retirement (as defined in the 2008 Plan), dies or becomes, in the determination of the Board of Directors, permanently disabled, while employed by the
Corporation, any option or unexercised part thereof granted to such optionee may be exercised by the optionee or the person to whom the option is transferred by will or the laws of succession and distribution only for that number of shares which he
was entitled to acquire under the option at the time of his retirement, death or permanent disability, as the case may be. Any such “vested” option shall be exercisable within one year after the optionee’s retirement, death or
permanent disability, as the case may be, or prior to the expiration of the term of the option, whichever occurs earlier; 

  

	(j)	 upon an optionee’s employment or office with the Corporation terminating or ending otherwise than by
reason of retirement, death, permanent disability or termination for serious reason, any option or unexercised part thereof granted to such optionee may be exercised by him only for that number of shares which he was entitled to acquire under the
option at the time of delivery by the Corporation to the optionee of a letter of termination of the optionee’s employment or office with the Corporation. Any such “vested” option shall be exercisable within 30 days after such delivery
or prior to the expiration of the term of the option, whichever occurs earlier; 

  

	(k)	 any option granted under the 2008 Plan shall not form part of an optionee’s compensation from the
Corporation for purposes of determining any severance payment, indemnity in lieu of reasonable notice, or other payment to the optionee in the event of termination of the optionee’s employment or office by the Corporation;

  
 34 

	(l)	 if the Corporation is required under the Income Tax Act (Canada) or any other applicable law to remit
to any governmental authority an amount on account of tax on the value of any taxable benefit associated with the exercise of an option by an optionee, then the optionee must, concurrently with the exercise of the option: 

 

	 	(i)	 pay to the Corporation, in addition to the exercise price for the options, sufficient cash as is determined
by the Corporation, in its sole discretion, to be the amount necessary to fund the required tax remittance; 

  

	 	(ii)	 authorize the Corporation, on behalf of the optionee, to sell in the market, on such terms and at such time
or times as the Corporation determines, in its sole discretion, such portion of the Shares being issued upon exercise of the option as is required to realize cash proceeds in an amount necessary to fund the required tax remittance; or

  

	 	(iii)	 make other arrangements acceptable to the Corporation, in its sole discretion, to fund the required tax
remittance. 

  

	(m)	 options may be exercised through the “cash exercise” or “cashless exercise” method, or a
combination of these two methods. There is no financial assistance available to optionees under the 2008 Plan; 

  

	(n)	 the Board of Directors may make the following types of amendments to the 2008 Plan without seeking
shareholder approval: (i) amendments of a “housekeeping” or ministerial nature, including any amendment for the purpose of remedying any ambiguity, error or omission in the 2008 Plan or to correct or supplement any provision of the
2008 Plan that is inconsistent with any other provision of the 2008 Plan; (ii) amendments necessary to comply with the provisions of applicable law (including the rules, regulations and policies of the TSX); (iii) amendments necessary in order
for options to qualify for favourable treatment under applicable taxation laws; (iv) amendments respecting administration of the 2008 Plan; (v) any amendment to the “vesting” provisions of the 2008 Plan or any option, it being
understood that in the event of the amendment to the “vesting” provisions of an option, the Board of Directors will not be under any obligation to amend the “vesting” provisions of any other option; (vi) any amendment to the
early termination provisions of the 2008 Plan or any option, whether or not such option is held by an “insider”, provided such amendment does not entail an extension beyond the original expiry date; (vii) the addition of any form of
financial assistance by the Corporation for the acquisition by all or certain categories of eligible participants of shares under the 2008 Plan, and the subsequent amendment of any such provisions; (viii) amendments necessary to suspend or
terminate the 2008 Plan; and (ix) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law; 

  

	(o)	 shareholder approval will be required for the following types of amendments: (i) amendments to the
number of shares issuable under the 2008 Plan, including an increase to a maximum percentage or number of shares; (ii) any amendment to the 2008 Plan that increases the length of a “blackout extension period”; (iii) any amendment
which reduces the exercise price or purchase price of an option, whether or not such option is held by an “insider”; (iv) any amendment extending the term of an option held by an “insider” beyond its original expiry date, except
as otherwise permitted by the 2008 Plan; and (v) amendments required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the TSX). 

No further stock options can be granted under the 2008 Plan. 

Stock Options Issued and Outstanding and “Annual Burn Rate” 

The following table sets out information regarding the Corporation’s shares reserved as of December 31, 2018 for purposes of equity
compensation: 
  

																
	Plan Category		Number of Securities to be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights		Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights		Number of Securities
Remaining
Available for Future Issuance under
Equity Compensation Plans (excluding
securities reflected in the first column)
	Equity compensation plans approved by security holders		5,031,161		$21.01		952,374
	Equity compensation plans not approved by security holders		—		—		—
	
Total
		5,031,161		$21.01		952,374

  
 35 

 The Corporation does not have any equity compensation plans under which equity securities
are authorized for issuance, not previously approved by shareholders. 
 In 2018, under the 2012 Plan, stock options in respect of a total
of 617,735 common shares with an exercise price of $29.92 were granted on February 20, 2018 to a total of 74 optionees. The stock options granted during the fiscal year ended December 31, 2018 represent 0.7% of the
Corporation’s weighted average number of shares outstanding during the 2018 fiscal year, constituting the “annual burn rate” for the 2012 Plan as required by the TSX. The “annual burn rate” for the 2012 Plan, as so
calculated, was 0.44% in 2017 and 1.11% in 2016. 
 The Corporation did not grant any stock options under the 2008 Plan in 2018, 2017 or
2016. According, the “annual burn rate” for the 2008 Plan for each of those years is nil. 
 The table below sets out the number
of options granted, outstanding and available for grant under the 2012 Plan and 2008 Plan, respectively, as at December 31, 2018: 
  

																					
	Measure of Dilution		# of options		Total %
of
shares
    outstanding    
		   2008 Plan  

 
		  2012 Plan  		    Total    
	 Options outstanding

the total number of options outstanding, including the annual grant
		1,094,586		3,936,575		5,031,161		5.8
	 Options available for grant

the number of options in reserve that are available for grant
		-		952,374		952,374		1.1
	 Overhang

the number of options outstanding plus the number of options in reserve that are available for grant in the future
		1,094,586		4,888,949		5,983,535		6.9

  

	(1)	 As indicated in the section entitled “2008 Stock Option Plan”, stock options currently outstanding
under the 2008 Plan may continue to be exercised in accordance with the 2008 Plan. However, since April 26, 2012, no further stock options have been or will be granted under the 2008 Plan and all stock options granted by the Corporation since
that date have been granted under the 2012 Plan. 

  

	2.4	 Executive Stock Ownership Policy 

Since January 1, 2014, executive officers, including NEOs, are required to maintain share ownership levels that meet or exceed the
following guidelines: 
  

					
	 ●
	  	 Chief Executive Officer:
	  	 5.0 X annual base salary

	 ●    
	  	 CFO and Executive Vice-Presidents:
	  	 2.0 X annual base salary

	 ●
	  	 All Other Designated Executives:
	  	 0.5 X annual base salary

 NEOs must retain and not dispose of, sell or transfer 100% of Gain Shares resulting from the exercise of
stock options and 100% of after-tax shares resulting from the vesting of PCRSUs. “Gain Shares” means the net number of shares left subsequent to the sale of shares used for payment of the
shares being exercised and for any tax withholding obligations. 
 NEOs who were subject to the original “Executive Stock Ownership
Policy” effective January 1, 2011 are required to comply with the required level of share ownership applicable to their position within two years of the Effective Date. New NEOs designated on or after the Effective Date will have five
years from the date of designation to comply with the required level of share ownership. 
 The following types of equity instruments are
included in determining share ownership for purposes of this policy: 
  

	 	(a)	 For at least 50% of the targeted ownership requirement: 

 

	 	●	 	 shares directly owned by the NEO or owned jointly with an immediate family member residing in the same
household; 

	 	●	 	 shares indirectly owned by the NEO, through a holding company in which the Designated Executive directly or
indirectly owns shares; and 

	 	●	 	 shares held in trust for the benefit of the NEO or jointly with an immediate family member of the NEO.

  
 36 

	 	(b)	 For the remainder of the targeted ownership requirement, if necessary: 

 

	 	●	 	 100% of unvested Share Units pursuant to any such future plans. 

The following table sets out the minimum share ownership requirement of each NEO and related information: 

 

																															
	
Name
  
		
Minimum
ownership
requirement(1)
($)

 
		
Deadline for
compliance
  
		 Common shares(2)
  
		 Other equity instruments(3)
  
		Value of holdings as
at
December 31, 2018(6), per
minimum share
ownership policy
($)		
Compliant
 as
at
December 31,
2018
  

		Value as at
December 31, 2018(6)
($)		Value as at December 31,
2018(6)
($)
	
Alain Bédard

 
		8,519,228(4)  
		 January 1, 2016 
		 151,824,180 
		 1,766,214 
		 153,590,394 
		 Yes 

	
Gregory W. Rumble(7)

 
		1,200,000(5)  
		 January 1, 2020 
		 173,535 
		 362,627 
		 536,162 
		In progress  

	
Rick Hashie
  
		720,000(5)  
		 January 1, 2022 
		 360,166 
		 141,249 
		 501,415 
		In progress  

	
Brian Kohut
  
		880,000(5)  
		 January 1, 2016 
		 1,377,936 
		 256,873 
		 1,634,808 
		 Yes 

	
Robert McGonigal

 
		720,000(5)  
		 January 1, 2021 
		 525,476 
		 124,674 
		 650,149 
		In progress  

  

	(1)	 Includes shares, 100% of DSUs and 100% of unvested PCRSUs. 

	(2)	 Includes shares and 100% of DSUs. 

	(3)	 Includes 100% of unvested PCRSUs. 

	(4)	 Five times annual base salary as at December 31, 2018. The minimum ownership requirement figure shown
for Alain Bédard in the table above is in Canadian dollars and is the equivalent of USD$6,575,000 based on the average Bank of Canada daily exchange rate for 2018 (1.00 USD = 1.2957 CAD). 

	(5)	 Two times annual base salary as at December 31, 2018. 

	(6)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30). 

	(7)	 Mr. Rumble retired as of December 31, 2018. 

 

	2.5	 Rules of Conduct of Insiders Respecting Trading of Securities of the Corporation

 The Rules of Conduct of Insiders Respecting Trading of Securities of the Corporation apply to the members of
the Board of Directors and to senior executives of the Corporation and its major subsidiaries. The Rules of Conduct provide for “blackout” periods during which trading in the securities of the Corporation is not permitted, and require that
prior approval for trading in securities of the Corporation be obtained from either the President and CEO or the Secretary of the Corporation. 

The Anti-Hedging Policy of the Corporation was adopted to prohibit directors and other senior executives of the Corporation and its divisions
from using derivatives or other financial instruments to retain legal ownership of their shares in the Corporation while reducing their exposure to changes in the Corporation’s share price. 

See “Corporate Governance - Ethical Business Conduct” below. 

 

	2.6	 Performance Graph 

The following graph compares the total return of a $100 investment in the common shares of the Corporation made on January 2, 2014 with
the cumulative return of the S&P TSX Capped Equity Index for the five-year period ended December 31, 2018. 
  

 

  
 37 

	2.7	 President and CEO Compensation Look-back table and Five-Year TSR Comparison

 The Corporation’s compensation policies are designed to align compensation with the creation of
shareholder value. As a result, a significant portion of the President and CEO’s compensation is at risk and long-term incentives are structured to deliver compensation value if value is created for the shareholder. The table below hedges the
current value (both realized and realizable) as at December 31, 2018. The Compensation outcomes are set against the performance of the yearly cumulative total shareholder return on a $100 investment in the Corporation’s common shares
beginning January 1, 2014 to the period ended December 31, 2018. It assumes reinvestment of all dividends during the covered period. 
  

																										
	Year		 Total
Direct
        Compensation        
 Awarded(1)
($) 
  
		 Actual Value as
at
    December 31, 2018(2)    

($)
		Period		  

Value of 100$
  

		  

To President and
CEO
  
		
To Shareholders
  

	
2014
		6,772,757		8,098,590		Jan 1, 2014 to Dec 31, 2018		120		154
	
2015
		7,634,802		10,303,448		Jan 1, 2015 to Dec 31, 2018		135		154
	
2016
		10,132,157		13,633,504		Jan 1, 2016 to Dec 31, 2018		135		153
	
2017
		6,839,995		6,275,229		Jan 1, 2017 to Dec 31, 2018		92		106
	
2018
		7,510,188		7,861,136		Jan 1, 2018 to Dec 31, 2018		105		121

	(1)	 Direct compensation (salary earned, actual short-term incentive award, special bonus and the grant date fair
market value of long-term incentive awards) reported in the summary compensation table (3.0) and in prior management proxy circulars. 

	(2)	 Includes salary earned, actual short-term incentive award, special bonus, vested value of PCRSU awards
granted during that fiscal year, the value of unvested PCRSU awards granted during that fiscal year as at December 31, 2018, assuming 100% vesting, and for the stock options granted in that particular year, the value of gains realized upon
exercise of options and the in-the-money value of unexercised options as at December 31, 2018. 

 

	2.8	 Trend and NEO Compensation Relative to Total Shareholder Return 

The trend in the compensation of the NEOs has to some extent followed, although is less pronounced than, the trend of increasing Total
Shareholder Return over the last five years as per the table below: 
  

																										
	Fiscal year ended December 31		2014		2015		2016		2017		2018
	Variation in total compensation for all NEOs(1) (percentage)		36%		37%		15%		-27%		10%
	Total Shareholder Return (percentage)		19%		-18%		51%		-4%		10%

  

	(1)	 Variation in total compensation is calculated based on the NEOs’ aggregate compensation as disclosed in
the Corporation’s management proxy circulars. 

  

	2.9	 Cost of Management Ratio 

The following table sets out the total cost of compensation to the NEOs expressed as a percentage of EBIT and as a percentage of the
Corporation’s equity market capitalization for the fiscal years ended December 31, 2018, 2017, and 2016: 
  

																
	
Fiscal year ended

December 31
		Total cost of compensation to
NEOs(1)
($)
		Total cost of compensation to NEOs/
EBIT(2)
(%)		Total cost of compensation to NEOs/
Total equity
market capitalization
(%)
	
2018
		12,585,256		2.9		0.4
	
2017
		11,410,263		6.4		0.4
	
2016
		15,655,589		6.1		0.5

  

	(1)	 The annual salary of Alain Bédard, and other portions of his annual compensation are paid in U.S.
dollars as Mr. Bédard is a resident of the United States. The figures shown in the table above are in Canadian dollars and are based on the average Bank of Canada daily or noon exchange rates for 2018 (1.00 USD = 1.2957 CAD), 2017 (1.00
USD = 1.2986 CAD) and 2016 (1.00 USD = 1.3248 CAD) respectively. See “Summary Compensation Table” and notes (1), (3), (6), (7) and (8) thereto below, relating to Mr. Bédard’s compensation. 

	(2)	 EBIT from continuing operations of the Corporation. 

  
 38 

	3.0	 Summary Compensation Table 

The following table sets out all annual and long-term compensation earned by the NEOs for services rendered in all capacities to the
Corporation and its subsidiaries during the fiscal years ended December 31, 2018, 2017 and 2016: 
  

																																														
	
Name and
 principal

position
		  Year  		Salary
($)		Share-
based
awards(2)
($)		Option-
based
awards(2)
($)		Non-equity incentive
plan compensation
($)		Pension
value
($)		All other
compensation
($)		Total
compensation
($)
		Annual
incentive
plans
($)		Long-term
incentive
plans
($)
	Alain Bédard		2018		1,703,846(1)		922,078		922,078		3,962,107(4)		—		553,200		105,162(5)		8,168,470
	President and		2017		1,707,659(1)		629,293(3)		629,293(3)		2,575,150(4)		—		458,500		1,407,751(6)		7,407,646
	CEO		2016		1,742,112(1)		1,204,803		1,204,803		3,463,319(4)		—		416,600		2,661,776(7)		10,693,413
	Gregory W.		2018		600,000		189,324		189,324		540,000		—		—		47,431(5)		1,566,079
	Rumble(8)		2017		600,000		129,209(3)		129,209(3)		413,059		—		—		208,702(6)		1,480,178
	CFO		2016		600,000		247,374		247,374		462,280		—		—		154,905(7)		1,711,933
	Rick Hashie		2018		360,000		78,052		78,052		302,400		—		—		33,457(5)		851,962
	Executive		2017		360,000		45,395(3)		45,395(3)		227,601		—		—		32,664(6)		711,055
	Vice-President		2016		316,200		86,058		86,058		227,664		—		—		32,140(7)		748,120
	Brian Kohut		2018		440,000		134,105		134,105		396,000		—		13,250		35,207(5)		1,152,666
	Executive		2017		425,000		91,523(3)		91,523(3)		318,750		—		13,115		34,339(6)		974,250
	Vice-President		2016		425,000		175,223		175,223		382,500		—		13,005		44,398(7)		1,202,345
	Robert		2018		360,000		75,204		75,204		302,400		—		—		33,271(5)		846,079
	McGonigal		2017		360,000		32,900(3)		32,900(3)		257,400		—		—		32,446(6)		685,647
	Executive Vice-President		2016		275,000		43,978		43,978		27,500		—		—		31,961(7)		442,416

	(1)	 Mr. Bédard’s 2018, 2017 and 2016 salaries, in the respective amounts of USD $1,315,000, USD
$1,315,000 and USD $1,315,000, were paid in U.S. dollars as Mr. Bédard is a resident of the United States. The figures shown in the table above are in Canadian dollars and are based on the average Bank of Canada daily or noon
exchange rates for 2018 (1.00 USD = 1.2957 CAD), 2017 (1.00 USD = 1.2986 CAD) and 2016 (1.00 USD = 1.3248 CAD) respectively. 

	(2)	 Options were issued pursuant to the 2012 Plan (see section 2.3.3 above for more details on the 2012 Plan).
Option-based awards have been valued using the Black-Scholes option valuation methodology, which was selected by the Corporation as it is the most widely-adopted and used option-valuation method. The following table sets out the assumptions used to
determine the Black-Scholes value for years 2018, 2017 and 2016. 

  

																		
	 		 		2018		2017		2016
			 Risk-free interest rate
		1.83%		1.04%		0.56%
			 Stock volatility
		21.92%		22.46%		23.01%
			 Expected option life
		4.5 years		4.5 years		4.5 years
			 Expected dividend yield
		2.56%		2.17%		2.83%

  

	(3)	 The 2017 Long Term Incentive Grant has a six-month reference period,
from July 1, 2016 to December 31, 2016. 

	(4)	 Mr. Bédard’s 2018, 2017 and 2016 non-equity annual
incentive plan compensation, in the respective amounts of USD$3,057,889, USD $1,983,020, and USD $2,614,220, was paid in U.S. dollars as Mr. Bédard is a resident of the United States. The figures shown in the table above are in Canadian
dollars and are based on the average Bank of Canada daily or noon exchange rates for 2018 (1.00 USD = 1.2957 CAD), 2017 (1.00 USD = 1.2986 CAD) and 2016 (1.00 USD = 1.23248 CAD), respectively. 

	(5)	 In 2018, Mr. Bédard was awarded $33,752 for long-term disability insurance premiums, USD $24,000
for annual car allowance, and USD $25,680 for sport club membership. The aggregate figure shown in the table above is in Canadian dollars; the payments made in U.S. dollars have been converted to Canadian dollars based on the average Bank of Canada
daily exchange rate for 2018 (1.00 USD = 1.2957 CAD). Mr. Rumble received $28,800 for annual car allowance, $1,554 for club membership, $3,828 for professional fees and a contribution of $13,250 to a Deferred Profit Sharing Plan
(“DPSP”). Mr. Kohut received an annual car allowance of $13,200 and a contribution of $13,250 to a DPSP. Mr. Hashie received an annual car allowance of $12,000 and a contribution of $13,250 to a DPSP. Mr. McGonigal
received an annual car allowance of $12,000 and a contribution of $13,250 to a DPSP. 

	(6)	 In 2017, Mr. Bédard was awarded a special bonus in the amount of USD$1,000,000 following the
important acquisition of Contract Freighters, Inc. (“CFI”), $33,767 for long-term disability insurance premiums, USD $24,000 for annual car allowance, and USD $24,492 for sport club membership. The aggregate figure shown in the
table above is in Canadian dollars; the payments made in U.S. dollars have been converted to Canadian dollars based on the average Bank of Canada daily exchange rate for 2017 (1.00 USD = 1.2986 CAD). Mr. Rumble received a special bonus in the
amount of $150,000 following the important acquisition of CFI, $28,800 for annual car allowance and a contribution of $13,115 to a Deferred Profit Sharing Plan (“DPSP”). Mr. Kohut received an annual car allowance of $13,200 and
a contribution of $13,115 to a DPSP. Mr. Hashie received an annual car allowance of $12,000 and a contribution of $13,115 to a DPSP. Mr. McGonigal received an annual car allowance of $12,000 and a contribution of $13,115 to a DPSP.

	(7)	 In 2016, Mr. Bédard was awarded a special bonus in the amount of USD$1,900,000 in recognition of
the successful sale transaction of Matrec, generating above-target value for the shareholders, $34,002 for long-term disability insurance premiums, USD $24,000 for annual car allowance, and USD $25,137 for sport club membership. The aggregate figure
shown in the table above is in Canadian dollars; the payments made in U.S. dollars have been converted to Canadian dollars based on the average Bank of Canada noon exchange rate for 2016 (1.00 USD = 1.3248 CAD). Mr. Rumble received a special
bonus in the amount of $100,000 in recognition of the successful sale transaction of Matrec, generating above-target value for the shareholders, $28,800 for annual car allowance and a contribution of $13,005 to a DPSP. Mr. Kohut received an
annual car allowance of $13,200 and a contribution of $13,005 to a DPSP. Mr. Hashie received an annual car allowance of $12,000 and a contribution of $12,591 to a DPSP. Mr. McGonigal received an annual car allowance of $12,000 and a
contribution of $13,005 to a DPSP. 

	(8)	 Mr. Rumble retired as of December 31, 2018. 

  
 39 

	4.0	 Incentive Plan Awards 

Outstanding share-based awards and option-based awards 

The following table sets out information with respect to all unexercised option-based and share-based awards granted to NEOs outstanding as at
December 31, 2018: 
  

																																														
	Name		Option-based awards		Share-based awards
		Date of grant		 Number of securities

underlying
		Option
    exercise    
price
($)		Option expiration
date		Value of
      unexercised      
in-the-money
options
($)(2)		 Number
of
    shares or    
 units of
shares that
have not
vested
(#)
		Market
or
      payout value of      
share-based
awards that have not
vested
($)(3)		
Market or
    payout value of    
vested share-

based awards not
 paid out
or
distributed
($)

		      Total      
granted
options(1)
(#)		    Unexercised    
options
(#)
	Alain Bédard		July 31, 2009		922,000		450,000		6.32		July 31, 2019		13,041,000		—		—		—
		July 29, 2010		496,800		496,800		9.46		July 29, 2020		12,837,312		—		—		—
		July 26, 2012		418,600		365,00		16.46		July 26, 2019		6,876,600		—		—		—
		July 25, 2013		376,200		376,200		20.18		July 25, 2020		5,688,144		—		—		—
		July 24, 2014		172,560		172,560		25.14		July 24, 2021		1,753,210		—		—		—
		July 23, 2015		335,356		335,356		24.93		July 23, 2022		3,477,642		—		—		—
		July 21, 2016		361,803		361,803		24.64		July 21, 2023		3,856,820		—		—		—
		February 16, 2017		118,288		118,288		35.02		February 16, 2024		32,872		18,724		660,948		—
		February 20, 2018		202,655		202,655		29,92		February 20, 2025		1,089,838		31,311		1,105,266		—
	Gregory W. Rumble		July 23, 2015		34,428		—		24.93		July 23, 2022		0		—		—		—
		July 21, 2016		74,286		24,762		24.64		July 21, 2023		263,963		—		—		—
		February 16, 2017
 February 20, 2018
		24,287
 41,610
		16,192
 41,610
		35.02
 29,92
		February 16, 2024
 February 20, 2025
		4,500
 223,770
		3,844
 6,429
		135,699
 226,928
		—
 —

	Rick Hashie		July 25, 2013		12,700		—		20.18		July 25, 2020		—		—		—		—
		July 24, 2014		8,217		—		25.14		July 24, 2021		—		—		—		—
		July 23, 2015		23,717		23,717		24.93		July 23, 2022		245,945		—		—		—
		July 21, 2016		25,843		25,843		24.64		July 21, 2023		275,486		—		—		—
		February 16, 2017
 February 20, 2018
		8,533
 17,154
		8,533
 17,154
		35.02
 29,92
		February 16, 2024
 February 20, 2025
		2,371
 92,251
		1,351
 2,651
		47,673
 93,576
		—
 —

	Brian Kohut		July 31, 2009		63,200		26,367		6.32		July 31, 2019		764,116		—		—		—
		July 29, 2010		37,200		37,200		9.46		July 29, 2020		961,248		—		—		—
		August 1, 2011		36,000		—		14.28		August 1, 2018		—		—		—		—
		July 26, 2012
 July 25, 2013
		53,300
 47,500
		53,300
 47,500
		16.46
 20.18
		July 26, 2019
 July 25, 2020
		1,004,172
 718,200
		—
 —
		—
 —
		—
 —

		July 24, 2014		27,733		27,733		25.14		July 24, 2021		281,767		—		—		—
		July 23, 2015		48,773		48,773		24.93		July 23, 2022		505,776		—		—		—
		July 21, 2016		52,620		52,620		24.64		July 21, 2023		560,929		—		—		—
		February 16, 2017		17,204		17,204		35.02		February 16, 2024		4,781		2,723		96,119		—
		February 20, 2018		29,474		29,474		29,92		February 20, 2025		158,505		4,554		160,754		—
	Robert McGonigal		July 26, 2012
 July 25, 2013
		6,400
 5,700
		—
 —
		16.46
 20.18
		July 26, 2019
 July 25, 2020
		—
 —
		—
 —
		—
 —
		—
 —

		July 24, 2014		4,679		—		25.14		July 24, 2021		—		—		—		—
		July 23, 2015		7,842		7,842		24.93		July 23, 2022		81,322		—		—		—
		July 21, 2016		13,206		13,206		24.64		July 21, 2023		140,776		—		—		—
		February 16, 2017
 February 20, 2018
		6,184
 16,528
		6,184
 16,528
		35.02
 29,92
		February 16, 2024
 February 20, 2025
		1,719
 88,884
		978
 2,553
		34,541
 90,133
		—

—

  

	(1)	 The “vesting schedule” for these options provides that
one-third of the options will vest on each of the first three anniversaries following the date of grant. 

	(2)	 This amount is calculated based on the difference between the closing price of the Corporation’s shares
on the TSX on December 31, 20118 ($35.30) and the option exercise price. 

	(3)	 The value of PCRSUs awarded to the NEOs is based on the closing price of the Corporation’s shares on the
TSX on December 31, 2018 ($35.30), multiplied by the number of PCRSUs awarded. 

 Incentive plan awards – value vested or
earned during the year 
 The following table sets out the value of options vested or bonuses earned by NEOs during the fiscal year
ended December 31, 2018: 
  

																
	Name		Option based awards –
Value vested during the year
($)		Share-based awards - 
Value
vested during the year
($)		Non-equity incentive plan 
compensation –
Value earned during the year (1)
($)
	 Alain
Bédard
		1,236,264		2,054,133		3,962,107(2)
	 Gregory
W. Rumble
		201,637		421,782		540,000
	 Rick
Hashie
		88,072		146,741		302,400
	 Brian
Kohut
		179,801		298,734		396,000
	 Bob
McGonigal
		41,285		74,988		302,400

	(1)	 These amounts represent amounts earned under the STIP. 

	(2)	 The value earned during the year as non-equity incentive plan
compensation for Mr. Bédard is $3,057,889 paid in US dollars; the figure shown in the table above is in Canadian dollars and is based on the average Bank of Canada daily exchange rate for 2018 (1.00 USD = 1.2957 CAD).

  
 40 

 The following table sets out the realized value upon exercise of vested options by NEOs
during the fiscal year ended December 31, 2018: 
  

																										
	Name		Date of Exercise		Quantity
    Exercised    		    Grant Price    		      Sale Price      		  Stock Option Benefit – Realized 
 
Value
	Alain Bédard		January 21, 2018		34,300		$14.28		$32.64		$629,904
		March 22, 2018		40,000		$14.28		$33.03		$750,154
		May 7, 2018		80,000		$14.28		$37.02		$1,819,363
		August 2, 2018		130,000		$14.28		$43.46		$3,793,613
		August 8, 2018		100,000		$6.32		$45.55		$3,923,264
		August 15, 2018		50,000		$6.32		$46.81		$2,024,581
		August 24, 2018		53,600		$16.46		$47.57		$1,667,496
	Gregory W. Rumble		August 17, 2018		12,572		$24.64		$47.40		$286,139
		August 17, 2018		34,428		$24.93		$47.40		$773,597
		August 22, 2018		10,700		$24.64		$47.50		$244,602
		August 23, 2018		8,095		$35.02		$47.50		$101,009
		August 23, 2018		26,252		$24.64		$47.50		$600,121
	Rick Hashie		August 21, 2018		8,217		$25.14		$47.17		$181,021
	Robert McGonigal		January 2, 2018		5,700		$20.18		$32.74		$71,592
		August 9, 2018		4,679		$25.14		$46.00		$97,604

  

	5.0	 Pension Plan Benefits 

 

	5.1	 Defined Benefit Plan 

Chief Executive Officer of the Corporation 

Alain Bédard participates in a non-contributory defined benefit pension plan. In addition,
Mr. Bédard has entered into a supplementary executive retirement agreement (“SERP”) whereby he receives one year of pensionable service under his SERP for every year he serves as an officer of the Corporation, one of its
subsidiaries or an associated company as of January 1, 2004. Service for the period between January 1, 1997 and January 1, 2004 has been recognized as credited past service under the SERP. 

Retirement eligibility is a function of Mr. Bédard’s age and service. The Board may credit additional years of service
towards retirement eligibility, pension benefit calculation or both, through a special arrangement. Mr. Bédard is eligible to receive SERP benefits as of age 55. 

Pension benefits are calculated based on pensionable service and pensionable earnings. Pensionable earnings include salary. The annual average
of Mr. Bédard’s best consecutive 36 months of pensionable earnings is used to calculate his pension. 

Mr. Bédard will receive 3% of his average pensionable earnings for each year of pensionable service as his total pension benefit
under the pension plan and SERP. The pension is payable for life. A surviving spouse will receive 60% of the pension that is payable to Mr. Bédard. 

Based on current final average earnings and pensionable service, the estimated annual pension benefits payable to Mr. Bédard under
the pension plan and SERP are as set forth in the following table: 

  
 41 

 Pension Plan Table 

 

					
	  	  	(at January 1, 2019)	  	 
	    Years of Pensionable Service	  	22	  	
	 		
	    Pension Plan	  	$45,400	  	
	    SERP	  	$822,500	  	
	    Total	  	$867,900	  	

 For purposes of providing additional disclosure to shareholders, the following table shows a
reconciliation of the accrued obligation in respect of pension arrangements applicable to Mr. Bédard, from December 31, 2017 to December 31, 2018, as well as his number of years of pensionable service as at December 31,
2018: 
  

																																				
	Name and principal
position		Number of years
of pensionable
service		 Annual
pension
benefits payable
 ($)
		 Accrued

obligation at

start of year
		Compensatory
change		Non
compensatory
change		
Accrued
obligation at

year end

	 		(#)		At year end		At age 65(1)		($)		($)		($)		($)
	
Alain Bédard
President and Chief Executive Officer

 
		22		867,900		N/A		14,348,800		553,200		(703,000)		14,199,000

 (1) Mr. Bédard reached the age of 65 prior to year-end. 

Additional information with respect to the valuation method and assumptions used to calculate the accrued obligation at year end is presented
in the notes to consolidated financial statements. 
  

	5.2	 Defined Contribution Plan 

In 2018, Brian Kohut participated in a Defined Contribution Plan to which the Corporation contributes. The Corporation will match
Mr. Kohut’s contributions up to a level of 5% of his base salary. In 2018, Mr. Kohut received contributions of $13,250 to his Defined Contribution Plan. All contributions in a year are limited (in aggregate) to the tax-deductible defined contribution limit under the Income Tax Act (Canada) for that year. The investment of the contributions to the Plan is participant-directed with an array of investment options provided.
Vesting of the Corporation’s contributions is immediate and, at retirement, the accumulated value of the account may either be transferred to a locked-in retirement vehicle or used to purchase a life
annuity. The following table sets out the value accumulated under the Defined Contribution Plan applicable to Mr. Kohut from December 31, 2017 to December 31, 2018: 

 

																
	Name		Accumulated value at start of year
($)		Compensatory
($)		Accumulated value at year end
($)
	 Brian
Kohut
		644,550		13,250		654,943

  

	5.3	 Deferred Profit Sharing Plan 

In 2018, Rick Hashie, Robert McGonigal and Gregory W. Rumble each participated in an RRSP to which the Corporation contributes via a DPSP.
Under the DPSP, the Corporation will match the NEO’s contributions up to a level of 5% of the NEO’s base salary. NEOs can also make supplementary individual contributions. The Corporation ensures that all contributions in a year are
limited to the DPSP limit under the Income Tax Act (Canada) for that year. In 2018, Mr. Hashie, Mr. McGonigal and Mr. Rumble each received an annual contribution of $13,250 to their DPSPs. 

 

	6.0	 Termination of Employment and Change of Control 

As at December 31, 2018, except for the President and CEO, there is no contract, arrangement or any other understanding with respect to
employment, termination of employment, a change of control or a change in responsibilities following a change of control, between the Corporation and any of the NEOs. 

  
 42 

 Alain Bédard, President and CEO 

On March 2, 2015, the HRCC adopted an agreement between the Corporation and Alain Bédard, President and CEO of the
Corporation, with respect to a change of control of the Corporation. Under the terms of this agreement, a change of control is defined as a (i) merger, reorganization, arrangement, as a result of or following which any person beneficially owns
or exercises control or direction over voting securities carrying at least 35% of the votes attached to all voting securities of the Corporation then outstanding; (ii) any event as a result of or following which any person beneficially owns or
exercises control or direction over voting securities carrying at least 20% of the votes attached to all voting securities of the Corporation then outstanding and a change in the composition of the Board such that, at any time within two years
following the occurrence of any event described in clause (ii), individuals who are members of the Board immediately prior to such event cease to constitute a majority of the Board; or (iii) the sale in one transaction or a series of related
transactions, to a person who is not affiliated with the Corporation within the meaning of the Canada Business Corporations Act, of assets, at a price, including the assumption by that person of any debt of the Corporation, which is greater
than or equal to 50% of the market capitalization of the Corporation. For greater certainty, an internal reorganization does not constitute a change of control. The agreement is a “double trigger” agreement, which requires both a change of
control and the involuntary termination of employment of the CEO as of or within two years of the date of any such change of control. 

Within ten days of an involuntary termination of Mr. Bédard following a change of control, Mr. Bédard is entitled to:
(i) an amount equal to two times his annual base salary immediately prior to the date of the change of control or the involuntary termination, whichever is greater, (ii) an amount equal to two times the annual bonus, which will be
determined based on the greater of (a) the average three highest annual amounts of annual bonus compensation paid to Mr. Bédard during the last five calendar years prior to the calendar year in which the involuntary termination
occurs, and (b) the amount of the base target bonus compensation most recently communicated in writing to Mr. Bédard as being payable, (iii) an amount equal to two times the annual cash value paid or reimbursed to
Mr. Bédard as benefits, including but not limited to health benefits, sport club memberships, professional association fees, car allowance, annual executive medical examinations and any other particular benefit provided to
Mr. Bédard, but excluding pension and supplementary pension benefits, as provided to Mr. Bédard immediately prior to the date of the change of control, and (iv) an amount equal to two times Mr. Bédard’s
annual pension value immediately prior to the date of the change of control or the involuntary termination, whichever is greater. Furthermore, if (a) there is a change of control which does not trigger the change of control provision of the
Corporation’s stock option plans, and (b) Mr. Bédard holds any options pursuant to the Corporation’s stock option plans that have not otherwise vested, the Corporation will waive the vesting requirements of any such
options so as to permit the immediate vesting of all such options within a period of time to be determined by the Board, but which shall not be more than three months. If (a) there is a change of control which does not trigger the change of
control provision of the Corporation’s Deferred Share Unit Plan or PCRSU Plan, and (b) to the extent Mr. Bédard holds any DSUs or PCRSUs granted under any of the Corporation’s long-term incentive plans that have not
otherwise vested, the Board and Mr. Bédard undertake to waive the vesting requirements of such DSUs and PCRSUs so as to permit their immediate vesting as of the date of Mr. Bédard’s involuntary termination. 

Mr. Bédard has agreed not to, either during his employment or for a period of 18 months following the termination of his
employment, for any reason, directly or indirectly, induce or attempt to induce any of the employees of the Corporation or any of its subsidiaries to leave their employment. In addition, Mr. Bédard has agreed not to, either during his
employment or for a period of 18 months following the termination of his employment, for any reason, directly or indirectly, without the consent of the Corporation, which consent shall not be unreasonably withheld, contact or solicit any clients of
the Corporation or any of its subsidiaries for the purpose of selling to those customers any products or services which are the same as or substantially similar to, or in any way competitive with, the products or services sold by the Corporation or
any of its subsidiaries at the time of the Mr. Bédard’s termination. Furthermore, Mr. Bédard has agreed not to, either during his employment or any time thereafter, directly or indirectly, use or disclose to any person
any confidential information, unless however, the confidential information is available to the public or in the public domain at the time of disclosure or the disclosure of the confidential information is required by any law, regulation,
governmental body or authority or by court order. 
 The following table sets out the estimated incremental payments that
Mr. Bédard would have received upon termination of employment following a change of control on December 31, 2018: 
  

															
	Name	 	Event	 	Salary
($)	 	Annual
incentive plan
($)	 	Benefits and
pension value
($)	 	Long-Term Incentive Plans	 	Total
($)
	 	Stock Options
($)	 	PCRSUs
($)
	
Alain Bédard  
	 	 Change of control

 
	 	3,407,691(1)	 	7,924,214(2)	 	1,316,723	 	2,830,785	 	1,105,266	 	18,928,107

  

	(1)	 Mr. Bédard’s salary is paid in U.S. dollars as he is a resident of the United States. This figure
is in Canadian dollars and is the equivalent of USD $2,630,000. It has been converted to Canadian dollars based on the Bank of Canada average exchange rate in 2018 (1.00 USD = 1.2957 CAD). 

	(2)	 Mr. Bédard’s non-equity annual incentive plan
compensation is paid in U.S. dollars as he is a resident of the United States. This figure is in Canadian dollars and is the equivalent of USD $6,115,901. It has been converted to Canadian dollars based on the Bank of Canada average exchange rate in
2018 (1.00 USD = 1.2957 CAD). 

  
 43 

 COMPENSATION OF DIRECTORS 

The Corporation believes that an efficient Board of Directors plays an important role in creating shareholder value. The Corporation has
placed emphasis on the compensation of directors, in order to attract and retain qualified candidates to serve on the Board of Directors and to align the interests of the directors with those of the Corporation’s shareholders. The following
table sets out the various components of the compensation received by the members of the Board of Directors during the fiscal year ended December 31, 2018: 
  

			
	 Type of
Fee
  
	  	
Amount ($)(4)           
 
  

	
Annual Retainers

	
●  Board Members (including Lead Director)
	  	100,000            
	
●  Additional Fees for Chairman of the Board of Directors(1)
	  	—            
	
●  Additional fee for Lead Director
	  	50,000            
	
●  Committee Chairs
	  	12,000            
	
●  Committee Members (other than the Committee Chair)
	  	5,000            
	
Per-meeting fees

	
●  Committee Chairs
	  	1,500(2)(3)            

	
●  Board and Committee Members (other than the Committee Chair)
	  	1,500(3)            

  

	(1)	 The Chairman of the Board of Directors does not receive any additional fees for his role as Chairman.

	(2)	 The Committee Chairs received the same per-meeting fee as other
directors and committee members, respectively. The Chairman of the Board of directors does not receive any per-meeting fee. 

	(3)	 This amount applies for meetings attended in person. The per-meeting
fee is $850 if the director or committee member participates by telephone. 

	(4)	 Since April 2017, the amounts payable to directors who are U.S. residents are paid in U.S. dollars.

 Since 2015, Alain Bédard has not been compensated and does not receive any annual retainer or per-meeting fee for serving as Chairman of the Board of Directors or as a director. 
 Deferred Share Unit Plan

 Effective January 1, 2009, the Corporation adopted the Deferred Share Unit Plan (the “DSU Plan”) to align
the interests of directors with those of the Corporation’s shareholders and help directors comply with the minimum shareholding policy applicable to them, as described below under “Ownership Requirements for Directors”. Under the DSU
Plan, directors may elect to receive in the form of DSUs either 50% or 100% of their annual retainer and other fees payable in respect of serving as director. Until the minimum shareholding policy requirement for a director is met, a 100% election
is mandatory. 
 Under the DSU Plan, directors are granted, as of the last day of each of the Corporation’s fiscal quarters, a number
of DSUs determined on the basis of the amount of deferred remuneration payable to directors in respect of such quarter divided by the “Fair Market Value” of a DSU, which is the average of the closing prices of the common shares of the
Corporation on the TSX for the five trading days immediately preceding the last day of such quarter. Directors to whose accounts DSUs are credited receive additional DSUs whenever cash dividends are paid on the Corporation’s common shares. DSUs
granted under the DSU Plan are redeemable, and the value thereof payable, only after the holder of DSUs ceases to serve as a director of the Corporation. Subject to Board of Directors’ approval, a director may elect to receive the redemption
price of his or her credited DSUs in cash or in the form of common shares of the Corporation purchased on the open market. 

  
 44 

 The table below sets out in detail the total compensation earned by the directors during the
fiscal year ended December 31, 2018. 
  

													
	 	 	 	 	 	 	 
	Name	  	Retainer
earned(3)
($)	 	 Meeting fees

earned
($)
	  	 Other

($)
	 	Total Compensation
earned
($)	  	Percentage
elected as
DSUs (%)	  	Number of
DSUs earned
	 	 	 	 	 	 	 
	
Leslie Abi-Karam
	  	66,375(4)	 	6,020(4)	  	—	 	72,395(4)	  	100	  	1,812
	 	 	 	 	 	 	 
	
Scott Arves(1)
	  	  68,728(4)  	 	4,996(4)	  	  30,922(5)  	 	104,646(4)	  	100	  	2,167
	 	 	 	 	 	 	 
	
Alain Bédard(2)
	  	—	 	—	  	—	 	—	  	—	  	—
	 	 	 	 	 	 	 
	
André Bérard
	  	162,500	 	19,050	  	—	 	181,550	  	100	  	6,865
	 	 	 	 	 	 	 
	
Lucien Bouchard
	  	105,000	 	12,200	  	—	 	117,200	  	100	  	4,380
	 	 	 	 	 	 	 
	
Diane Giard
	  	25,000	 	3,000	  	—	 	28,000	  	100	  	805
	 	 	 	 	 	 	 
	
Richard Guay
	  	120,500	 	13,700	  	—	 	134,200	  	50	  	2,735
	 	 	 	 	 	 	 
	
Debra Kelly-Ennis
	  	138,422(4)	 	19,895(4)	  	—	 	158,317(4)	  	100	  	4,227
	 	 	 	 	 	 	 
	
Neil D. Manning
	  	112,000	 	12,200	  	—	 	124,200	  	100	  	3,767
	 	 	 	 	 	 	 
	
Arun Nayar
	  	107,585(4)	 	14,036(4)	  	—	 	121,621(4)	  	100	  	3,034
	 	 	 	 	 	 	 
	
Joey Saputo
	  	105,000	 	9,850	  	—	 	114,850	  	100	  	3,967
	 	 	 	 	 	 	 
	
Total
	  	1,011,110	 	114,947	  	30,922	 	1,156,979	  	—	  	33,759

	(1)	 Scott Arves retired from the Board of Directors on June 14, 2018. 

	(2)	 Since 2015, Alain Bédard, President and CEO of the Corporation, has not received any compensation,
including any annual retainer or per-meeting fee, for serving as a director or as Chairman of the Board of Directors. 

	(3)	 Includes all annual retainers for serving on the Board and its committees. 

	(4)	 The fees paid to directors who were U.S. residents are paid in U.S. dollars. The figures shown in the table
above are in Canadian dollars and are based on the 5-day average exchange rate preceding the payment date as established by the Bank of Canada daily exchange rate and for each quarter, namely:

 Q1 exchange rate: $1.2884 

Q2 exchange rate: $1.3298 

Q3 exchange rate: $1.2964 

Q4 exchange rate: $1.3586 

	(5)	 In 2018, Scott Arves received consulting fees for services rendered to the Corporation. The fees paid to him
shown in the table above are in Canadian dollars and are based on the average Bank of Canada daily exchange rate during the first quarter of 2018 (1.00 USD = 1.2884 CAD). 

Ownership Requirements for Directors 

The Corporation has adopted a minimum shareholding policy, requiring directors to hold a minimum value in common shares of the Corporation or
DSUs, or a combination thereof. Through this policy, the directors are motivated to help the Corporation reach its annual-return objectives and improve long-term value for shareholders. 

Under the policy, as amended, each director is required to hold shares with a minimum value equal to five times the amount of the
director’s annual Board retainer fees and is required to comply within four years from the date of becoming a member of the Board. With each increase in the amount of the annual Board retainer, directors are required to attain the applicable
increased minimum share ownership value level within two years from the date of such increase. 
 Until a director has attained the minimum
share ownership value, 100% of director’s fees must be paid in the form of DSUs. Once the necessary level has been attained, a director may elect to receive only 50% of director’s fees in the form of DSUs. 

Directors must keep at least 50% of their shares for a period of six months following the termination of service as a director. 

  
 45 

 The following table sets out the current share ownership value requirement and share
ownership value as at December 31, 2018 for directors: 
  

											
	Name	  	Share ownership
requirement(8)
($)	 	  	  Deadline for compliance  	  	
Value as of
  December 31, 2018(1)  

($)
	  	Compliance as of
December 31, 2018
	
Leslie Abi-Karam
	  	 	647,850(7)    	 	  	July 26, 2022	  	$63,963	  	In progress(2)
	
Alain Bédard
	  	 	647,850(7)    	 	  	December 5, 2014	  	$153,532,973(3)	  	Yes
	
André Bérard
	  	 	500,000       	 	  	December 5, 2014	  	$5,366,553	  	Yes
	
Lucien Bouchard
	  	 	500,000       	 	  	December 5, 2014	  	$2,173,668	  	Yes
	
Diane Giard
	  	 	500,000       	 	  	October 22, 2022	  	$28,417	  	In progress(4)
	
Richard Guay
	  	 	500,000       	 	  	December 5, 2014	  	$1,907,577	  	Yes
	
Debra Kelly-Ennis
	  	 	647,850(7)    	 	  	May 29, 2021	  	$234,498	  	In progress(5)
	
Neil D. Manning
	  	 	500,000       	 	  	April 25, 2017	  	$1,464,032	  	Yes
	
Arun Nayar
	  	 	647,850(7)    	 	  	April 25, 2022	  	$107,100	  	In progress(6)
	
Joey Saputo
	  	 	500,000       	 	  	December 5, 2014	  	$8,933,159	  	Yes

  

	(1)	 Value calculated based on the closing price of the Corporation’s common shares on the TSX on
December 31, 2018 ($35.30) and including value of DSUs held. 

	(2)	 Leslie Abi-Karam was appointed as a director on July 26, 2018 and consequently has until July 26,
2022 to comply with the minimum share ownership requirement. 

	(3)	 Value of the stock options held by Mr. Bédard is not included for the purpose of determining
share ownership value. 

	(4)	 Diane Giard was appointed as a director on October 22, 2018 and consequently has until October 22,
2022 to comply with the minimum share ownership requirement. 

	(5)	 Debra Kelly-Ennis was appointed as a director on May 29, 2017 and consequently has until May 29,
2021 to comply with the minimum share ownership requirement. 

	(6)	 Arun Nayar was first elected as a director on April 25, 2018 and consequently has until April 25,
2022 to comply with the minimum share ownership requirement. 

	(7)	 Since the directors’ fees paid to directors who are U.S. residents are paid in U.S. dollars, the minimum
share ownership requirement (5x annual retainer) shown in the table above is in Canadian dollars and was calculated based on the average Bank of Canada daily exchange rate for 2018 (1.00 USD = 1.2957 CAD). 

	(8)	 Value equal to five times the amount of the director’s annual Board retainer fees.

 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS 

As at March 14, 2019, none of the directors, executive officers, employees or former directors, executive officers or employees of the
Corporation or any of its subsidiaries was indebted to the Corporation or a subsidiary of the Corporation in connection with a purchase of securities or for any other matter nor was any such person indebted to any other entity where such
indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or a subsidiary of the Corporation. 

During the fiscal year ended December 31, 2018, none of the directors or executive officers of the Corporation, proposed nominees for
election as a director, or any associate of the foregoing was indebted to the Corporation or any subsidiary of the Corporation nor was any such person indebted to any other entity where such indebtedness was the subject of a guarantee, support
agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or a subsidiary of the Corporation. 

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS 

No executive officer, director of the Corporation or any subsidiary of the Corporation, person or company who beneficially owns, or controls
or directs, directly or indirectly, voting securities of the Corporation carrying more than 10% of the voting rights attached to all outstanding voting securities of the Corporation, person proposed for election as a director, or any associate or
affiliate of the foregoing had a material interest in any material transaction effected by the Corporation since the commencement of the Corporation’s most recently-completed financial year or in any proposed material transaction. 

  
 46 

 AUDIT COMMITTEE INFORMATION 

Reference is made to the section entitled “Audit Committee” of the Corporation’s 2018 Annual Information Form for required
disclosure relating to the Audit Committee of the Board of Directors. The 2018 Annual Information Form will be available under the Corporation’s profile on SEDAR at www.sedar.com on or about March 30, 2019 and may also be obtained by
contacting the Secretary of the Corporation at 8801 Trans-Canada Highway, Suite 500, Saint-Laurent, Québec H4S 1Z6, telephone (514) 331-4000. 

APPOINTMENT OF AUDITOR 

KPMG LLP, Chartered Professional Accountants, have been the auditor of the Corporation or its predecessors since 2003. Except where
authorization to vote with respect to the appointment of the auditor is withheld, the persons named in the accompanying form of proxy intend to vote at the Meeting for the appointment of KPMG LLP, Chartered Professional
Accountants, as the auditor of the Corporation until the next annual meeting of shareholders and at such remuneration as may be set by the directors. 

RATIFICATION, CONFIRMATION AND APPROVAL OF 2019 STOCK OPTION PLAN 

The terms and conditions of the 2019 Plan are set out above under “Executive Compensation – Compensation Discussion and Analysis
– Determining Compensation – Long-Term Incentive Plans”. Under the policies of the TSX, a security-based compensation arrangement such as the 2019 Plan must, when initially put in place,
receive shareholder approval at a duly-called meeting of shareholders. Accordingly, at the Meeting, shareholders will be asked to adopt a resolution in the form annexed hereto as Schedule A (the “2019 Plan Resolution”),
ratifying, confirming and approving the 2019 Plan. In order to be adopted, the 2019 Plan Resolution must be approved by a majority of the votes cast by the holders of the common shares of the Corporation, either present in person or represented
by proxy at the Meeting. Should shareholders fail to ratify, confirm and approve the 2019 Plan, it will be cancelled. Unless otherwise specified, the persons named in the accompanying form of proxy intend to vote for the 2019 Plan Resolution.

 The complete text of the 2019 Plan is available to shareholders on request from the Secretary of the Corporation. Shareholders wishing to
receive a copy of the 2019 Plan should contact the Secretary of the Corporation at 8801 Trans-Canada Hwy, Suite 500, Saint-Laurent, Québec H4S 1Z6, telephone (514) 331-4000. 

CONFIRMATION OF AMENDMENT TO BY-LAWS 

Mandatory Retirement Age of Directors 

Section 7 of By-Law No. 1 of the Corporation previously provided that no person could be
elected a director of the Corporation if he or she had attained the age of 80 prior to the date of the meeting at which an election of directors was to take place, subject to the right of the Board to waive the foregoing retirement age in one-year increments as regards a candidate for election as director if the Board determined it was in the interests of the Corporation to do so. 

At a meeting held on December 17, 2018, the Board of Directors adopted a resolution to amend
By-Law No. 1 in order to delete Section 7, effectively removing a mandatory retirement age for directors. The Board of Directors is of the view that an arbitrary age limit may restrict experienced
and valuable Board members from serving the Corporation. Rather than imposing an age limit, the Corporate Governance and Nominating Committee will continue to monitor the overall composition of the Board of Directors, having regard to, among other
things, the Board’s diversity of skill sets and an alignment of the Board’s areas of expertise with the Corporation’s strategy. 

At the Meeting, shareholders will be asked to approve a resolution in the form annexed hereto as Schedule B (the “By-Law Resolution”) confirming the amendment to By-Law No. 1. In order to be adopted, the By-Law Resolution must be
approved by a majority of the votes cast by the holders of the common shares of the Corporation, either present in person or represented by proxy at the Meeting. Unless otherwise specified, the persons named in the accompanying form of proxy
intend to vote for the By-Law Resolution. 

  
 47 

 SHAREHOLDER PROPOSALS 

The Canada Business Corporations Act (the “CBCA”) provides that a registered holder or beneficial owner of shares that
is entitled to vote at an annual meeting of the Corporation may submit to the Corporation notice of any matter that the person proposes to raise at the meeting (referred to as a “Proposal”) and discuss at the meeting any matter in
respect of which the person would have been entitled to submit a Proposal. The CBCA further provides that the Corporation must set out the Proposal in its management proxy circular along with, if so requested by the person who makes the
Proposal, a statement in support of the Proposal by such person. However, the Corporation will not be required to set out the Proposal in its management proxy circular or include a supporting statement if, among other things, the Proposal is not
submitted to the Corporation at least 90 days before the anniversary date of the notice of meeting that was sent to the shareholders in connection with the previous annual meeting of shareholders of the Corporation. As the notice in connection
with the Meeting is dated March 14, 2019, the deadline for submitting a proposal to the Corporation in connection with the next annual meeting of shareholders is December 14, 2019. 

The foregoing is a summary only. Shareholders should carefully review the provisions of the CBCA relating to Proposals and consult with
a legal advisor. 
 CORPORATE GOVERNANCE 

National Policy 58-201 Corporate Governance Guidelines and National Instrument 58-101 Disclosure of Corporate Governance Practices set out a series of guidelines for effective corporate governance. The guidelines address matters such as the composition and independence
of corporate boards, the functions to be performed by boards and their committees, and the effectiveness and education of board members. Each reporting issuer such as the Corporation must disclose on an annual basis and in prescribed form, the
corporate governance practices that it has adopted. The following is the Corporation’s required annual disclosure of its corporate governance practices. 

At present, ten individuals serve as directors of the Corporation. If the persons named under “Board of Directors Renewal and Director
Selection – Nominees for Election as Director” above are elected, there will be ten individuals serving as directors of the Corporation. 
  

	1.	 Board of Directors 

The Board considers that Leslie Abi-Karam, André Bérard, Lucien Bouchard, Diane Giard,
Richard Guay, Debra Kelly-Ennis, Neil D. Manning, Arun Nayar and Joey Saputo are independent within the meaning of National Instrument 52-110 Audit Committees. 

The Board of Directors considers that Alain Bédard is not independent within the meaning of National Instrument 52-110 Audit Committees in that he is the President and CEO of the Corporation. 

As at December 31, 2018, nine of the ten members of the Board of Directors are independent within the meaning of National
Instrument 52-110 Audit Committees. Accordingly, a majority of the directors on the Board of Directors is independent. 

The following directors are currently directors of other issuers that are reporting issuers (or the equivalent) in a
jurisdiction of Canada or a foreign jurisdiction: 
  

			
	Name of Director	 	Issuer
	 	 
	
André Bérard
	 	BMTC Group Inc.
	 	 
	 Lucien
Bouchard
	 	BMTC Group Inc.
	 	 
	 Diane
Giard
	 	Bombardier Inc.
	 	 
	 Debra
Kelly-Ennis
	 	 Carnival Corporation & plc

Altria Group, Inc.

	 	 
	 Arun
Nayar
	 	 Bemis Company

Rite Aid Inc.

 The independent members of the Board of Directors meet at least on a quarterly basis
without non-independent members of the Board of Directors or members of management present. In 2018, the independent members of the Board of Directors held an in camera meeting following each of the
five Board meetings held, at which non-independent members of the Board of Directors and members of management were not present. 

  
 48 

 As Alain Bédard, the Chairman of the Board of Directors, is not
an independent director, the Board of Directors has appointed André Bérard as “lead director” of the Board. The Board of Directors considers that André Bérard is independent within the meaning of
National Instrument 52-110 Audit Committees. 
 As lead director of the Board
of Directors, Mr. Bérard provides leadership in ensuring the effectiveness of the Board of Directors and is responsible for: (i) ensuring committees of the Board of Directors function appropriately; (ii) chairing meetings of
the independent members of the Board of Directors; (iii) chairing meetings of the Board of Directors when Alain Bédard, the Chairman of the Board of Directors, is absent; and (iv) ensuring that the Board of Directors functions
independently of management. 
 In 2018, there were five Board meetings, two HRCC meetings, four CGNC meetings and five
Audit Committee meetings. Attendance of members of the Board at the meetings is set out in the table on page 16 of this Circular. 
  

	2.	 Board Mandate 

The Charter of the Board of Directors is incorporated by reference in this Circular and is available under the
Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s website at www.tfiintl.com. 

The Board of Directors has adopted a policy regarding majority voting for the election of directors. The policy is described
on page 15 of this Circular. 
  

	3.	 Position Description 

The Board of Directors has developed a written position description for the Chairman of the Board of Directors. 

The primary role and responsibility of the chair of each committee of the Board of Directors is to: (i) in general,
ensure that the committee fulfills its mandate, as determined by the Board of Directors; (ii) chair meetings of the committee; (iii) report thereon to the Board of Directors; and (iv) act as liaison between the committee and the Board
of Directors and, if necessary, management of the Corporation. 
 The Board of Directors has developed a written position
description for the Lead Director. This position is described in section 1 above. 
 The Board of Directors has developed a
written position description for the President and CEO. The primary role and responsibility of the President and CEO is to (i) direct, supervise, coordinate and assume overall management responsibility for all areas of the Corporation’s
businesses, and have full profit and loss responsibility for the Corporation; (ii) be responsible for developing the strategic direction for the business, evaluating alternative market strategies, identifying competitive issues, capitalizing on
the core strengths of the enterprise, and developing and implementing operating plans to achieve the organization’s objectives; (iii) represent the Corporation, as appropriate, in its relationships with major customers, suppliers, the
banking and financial community, and the public to promote a positive image in the industry and to promote business growth and success; (iv) motivate, measure, coach and mentor the management staff and employee base to ensure optimum operating
performance; and (v) work closely with the Board to keep it informed and enable it to render effective counsel to ensure long-term success. 
  

	4.	 Orientation and Continuing Education 

The Corporation provides new members of the Board of Directors with an appropriate orientation and company package and has
adopted a New Director Training and Development Program. 
 Occasionally, Board meetings are held at operating sites of the
Corporation’s various divisions and the directors are offered guided tours of operational sites. 
 Members of
executive management regularly meet with the directors at Board meetings to familiarize the Board of Directors with the Corporation’s business issues and opportunities. They offer high-level presentations to the directors about their respective
businesses. In addition, the Board is also offered presentations by third parties such as financial institutions. The following presentations were offered to the Board in 2018: 

  
 49 

	 	●	 	 February 2018 - Presentation given by the Vice President, Insurance and Compliance of the Corporation on the
Insurance and Claim challenges in the industry, at which all Board members were present. 

  

	 	●	 	 December 2018 - Presentation given by the Vice President, Information Technologies of the Corporation on Cyber
Security, at which all Board members were present. 

 Board members are encouraged to attend conferences,
seminars and training on relevant topics with a view to individual development and education as well as improvement of Board effectiveness. The Board members have access to a list of conferences, seminars and training on different relevant topics
which they are invited to attend on a voluntary basis. 
 On an annual basis, the Board of Directors is surveyed to
determine the knowledge of its members on various matters. The topics of education will be influenced by the results of such surveys, in order to address any lack of knowledge or gaps in the collective education of the directors. 

 

	5.	 Ethical Business Conduct 

The Board of Directors has adopted a Code of Ethics for the Corporation, a copy of which is sent to all employees of the
Corporation and its subsidiaries. The Code of Ethics is available under the Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s website at www.tfiintl.com. 

The CGNC ensures that a copy of the Code of Ethics is sent to all new employees. On an annual basis, the CGNC reviews the Code
of Ethics and questions management as to how the Code of Ethics has been applied. In particular, the CGNC determines whether there have been derogations from the Code of Ethics and, if so, the circumstances and details thereof. 

There are no material change reports filed since the beginning of the Corporation’s most recently-completed financial
year that pertain to any conduct of a director or executive officer that constitutes a departure from the Code of Ethics. 

Since the beginning of the Corporation’s most recently-completed financial year, it has not entered into any transactions
or agreements in respect of which a member of the Board of Directors or an executive officer of the Corporation had a material interest. If such a transaction or agreement arises, the member of the Board of Directors who has a material interest
therein will not participate in meetings of the Board of Directors at which the transaction or agreement is considered. 

In addition to the measures set out above, the Board of Directors has adopted the following policies: 

Rules of Conduct of Insiders Respecting Trading of Securities of the Corporation. The Rules of Conduct apply to the
members of the Board of Directors and to senior executives of the Corporation and its major subsidiaries. Approximately 150 people are subject to the Rules of Conduct. The Rules of Conduct provide for “blackout” periods during which
trading in the securities of the Corporation is not permitted, and require that prior approval for trading in securities of the Corporation be obtained from either the President and CEO or the Secretary of the Corporation. 

Disclosure Policy. This policy is applicable to the Board of Directors and to all executive officers and employees of
the Corporation and its subsidiaries, and is intended to ensure compliance by the Corporation with legal disclosure requirements and good corporate governance. 

Privacy Policy. This policy is intended to protect the privacy of all information related to employees, directors,
officers, agents, independent contractors, consultants, advisors, suppliers and customers of the Corporation and its subsidiaries. 

Clawback Policy and Anti-Hedging Policy. These policies were adopted by the CGNC on January 1, 2015. The Clawback
Policy is designed to set the guidelines for recovery of performance-based compensation of senior executives of the Corporation in certain circumstances when the financial statements of the Corporation are restated. The Anti-Hedging Policy was
adopted to prohibit directors and other senior executives of the Corporation and its divisions from using derivatives or other financial instruments to retain legal ownership of their shares in the Corporation while reducing their exposure to
changes in the Corporation’s share price. 
 Social Media Policy. Adopted in 2016, this policy is intended to
control use of social media which is increasingly prevalent in daily communications and has a rapid, far-reaching effect. The Policy serves as a guide to employees and to those doing business with the
Corporation, to ensure all fully understand the implications of using this interactive technology platform. Those who work for or represent the Corporation are expected to adhere to this policy. 

  
 50 

 Child Labour and Forced Labour Policy. This Policy is based on the
Corporation’s commitment to find practical, meaningful and appropriate responses to support the prevention and effective elimination of child labour and forced labour practices, in accordance with the principles set forth by the International
Labour Organization (ILO) and by the Canada Labor Code and similar legislation in force in each of the provinces of Canada. 
  

	6.	 Nomination of Directors 

The CGNC is responsible for recommending candidates for election, filling vacancies on the Board of Directors and assessing
the performance of the Board of Directors. The Board of Directors also uses the services of recruitment firms in order to identify potential new members of the Board of Directors. 

The responsibilities, powers and operations of the CGNC are set out in its charter, which is incorporated by reference in this
Circular and available under the Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s
website at www.tfiintl.com. The CGNC is composed exclusively of independent directors. 

 

	7.	 Compensation 

The CGNC is mandated to review and recommend to the Board of Directors for approval the compensation of the directors of the
Corporation. The review is done on an annual basis in light of market conditions and, if appropriate, adjustments are made to the level of compensation of the directors at the beginning of each year. 

The role of the HRCC is to monitor and assess the performance of the NEOs and determine their compensation levels on an annual
basis. Further information is provided under the section “Executive Compensation – Compensation Discussion and Analysis” above. 

The Board of Directors adopted a shareholding policy for directors under which the directors were originally required to own a
minimum number of common shares of the Corporation equivalent in value to twice their annual retainer as Board members. This policy was amended a first time to increase the minimum shareholding to three times the annual retainer of the Board members
and a second time to increase such minimum to five times the annual retainer of the Board members. The directors have a period of four years from the date of their appointment to comply with the minimum shareholding requirement, and a period of two
years from the date of any increase in their annual retainer fees or from the date of any other increase in the minimum shareholding value to comply with any such increase to the minimum shareholding requirement. 

The Board of Directors adopted a shareholding policy for NEOs under which the NEOs are required to own a minimum number of
common shares of the Corporation equivalent in value to: (i) five times annual salary for the CEO; (ii) two times annual salary for Executive Vice-Presidents; and (iii) 0.5 times annual salary for other designed executives. Designated
Executives have a period of two years from the date the minimum requirement is increased to comply with the additional new minimum requirement. Until a Designated Executive’s minimum share ownership requirement is met, he or she must retain
100% of Gain Shares resulting from the exercise of stock options. “Gain Shares” means the net number of shares remaining subsequent to the sale of shares used for payment of the stock option being exercised and for any tax
withholding obligations. A Designated Executive who is subsequently promoted to a higher level will have five years from the date of promotion to acquire any additional shares to comply with the required level of share ownership. Once achieved,
ownership of the shares must be maintained as long as the executive remains a Designated Executive. 
 The responsibilities,
powers and operations of the HRCC are set out in its charter, which is incorporated by reference in this Circular and available under the Corporation’s profile on SEDAR at
www.sedar.com and on the Corporation’s website at www.tfiintl.com. The HRCC is composed exclusively of independent directors. 

The Corporation has used WTW to provide advice on various executive compensation matters. 

Further information is provided under the section entitled “Executive Compensation – Compensation Discussion and
Analysis” above. 
  

	8.	 Other Board Committees 

There are no committees of the Board other than the: Audit Committee, HRCC and CGNC. 

  
 51 

	9.	 Assessments 

Each member of the Board of Directors completes a questionnaire on an annual basis assessing the effectiveness of the Board of
Directors. The completed questionnaires are analyzed by the Secretary of the Corporation, who reports to the Chairman of the CGNC. In particular, if two or more members of the Board of Directors express the same concern, it is reported to the Chair
of the CGNC and addressed at the next meeting of the CGNC. If necessary, the concern is also addressed at the next meeting of the Board of Directors. 
  

	10.	 Director Term Limits and Other Mechanisms of Board Renewal 

Previously, under By-law No. 1 of the Corporation, no person could be elected a
director of the Corporation if he or she had attained the age of 80 prior to the date of the meeting at which an election of directors was to take place, subject to the right of the Board to waive the foregoing retirement age in one-year increments as regards a candidate for election as director if the Board determined it was in the interests of the Corporation to do so. On December 17, 2018, the Board of Directors adopted a resolution
to amend By-Law No. 1 in order to delete the foregoing provision, effectively removing a mandatory retirement age for directors. At the Meeting, shareholders will be asked to approve the By-Law Resolution in the form annexed hereto as Schedule B, confirming the foregoing amendment to By-Law No. 1. 

The Corporation has considered but has not adopted other term limits for directors or other formal mechanisms of Board
renewal. This topic is assessed and discussed yearly by the CGNC when evaluating the Corporation’s corporate governance practices compared to best practices. 
  

	11.	 Policies Regarding the Representation of Women on the Board 

The Corporation considers diversity, including gender, as an important component of the selection process for new Board
members. The Board considers the presence of men and women on the Board as an added value. In 2018 the CGNC had given itself the mandate to find at least a second woman to sit on the Board, to meet a target of at least two women to sit on the Board
in the next two years. The CGNC surpassed its objective by recruiting two additional women in 2018, so that three women now sit on the Board. 

The Board adopted a Board Diversity Policy which is described on pages 17-18 of this
Circular. 
  

	12.	 Consideration of the Representation of Women in the Director Identification and Selection Process

 Representation of women on the Board is one of the factors taken into consideration by the CGNC in
the selection process for new Board members. This consideration is assessed yearly by the CGNC when evaluating the Corporation’s corporate governance practices compared to best practices. The CGNC has emphasized recruiting women in recent years
in the mandates it has given to search firms and by identifying candidates who are women in its selection process. In 2018, women represented 30% of the Board composition. 

The Board adopted a Board Diversity Policy which is described on pages 17-18 of this
Circular. 
  

	13.	 Consideration Given to the Representation of Women in Executive Officer Appointments

 The Corporation gives consideration to gender diversity in its executive-officer appointment
process. The Corporation considers the presence of men and women on its executive team as an added value. At present, 17.6% of the Corporation’s executive officers, as defined in National Instrument
58-101 Disclosure of Corporate Governance Practices, are women. 
  

	14.	 Issuer’s Targets Regarding the Representation of Women on the Board and in Executive Officer
Positions 

 The Corporation has not adopted a “target” regarding women on the Board of
Directors or in executive officer positions. The term “target” is defined in National Instrument 58-101 Disclosure of Corporate Governance Practices as, in effect, a number or percentage, or a
range of numbers or percentages, adopted by the Corporation of women on the Board of Directors or in executive officer positions of the Corporation by a specific date. Although the Corporation has not adopted a target for the number of women on the
Board of Directors or in executive officer positions, it has always supported and continues to pursue its efforts to promote female representation, as evidenced by the percentages set out in sections 12 and 13 above. In its work related to the
composition of the Board of Directors, representation of women on the Board is one of the factors taken into consideration by the CGNC. 

  
 52 

	15.	 Number of Women on the Board and in Executive Officer Positions 

In 2018, of the ten members of the Board of Directors of the Corporation, three (30%) were women. 

Of the 17 executive officers of the Corporation, as defined in National Instrument
58-101 Disclosure of Corporate Governance Practices, three (17.6%) are women. 
 INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON 
 The Corporation is not aware of any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, of (i) any person who has been a director or executive officer of the Corporation at any time since the beginning of the Corporation’s last financial year, (ii) any nominee for election
as director of the Corporation, or (iii) any associate or affiliate of the persons listed in (i) and (ii), in any matter to be acted upon at the Meeting, other than the election of directors. 

OTHER MATTERS 
 Management
of the Corporation knows of no other matter to come before the Meeting other than those referred to in the Notice of Annual and Special Meeting of Shareholders. However, if any other matters which are not known to management should properly come
before the Meeting, the accompanying form of proxy confers discretionary authority upon the persons named therein to vote on such matters in accordance with their best judgment. 

ADDITIONAL INFORMATION 

The Corporation’s financial information is included in its consolidated financial statements, the notes thereto and Management’s
Discussion and Analysis for the financial year ended December 31, 2018. Copies of the foregoing documents and additional information relating to the Corporation can be found under the Corporation’s profile on SEDAR at www.sedar.com and may also be obtained upon request to the Secretary of the Corporation at its head office,
8801 Trans-Canada Highway, Suite 500, Saint-Laurent, Québec H4S 1Z6, telephone (514) 331-4000. 

AUTHORIZATION 
 The
contents and the mailing of this Circular have been approved by the Board of Directors of the Corporation. 
 (signed) Alain Bédard 

Alain Bédard, FCPA, FCA 
 President and Chief Executive
Officer 
 TFI International Inc. 
 Signed in
Etobicoke, Ontario 
 March 14, 2019 

  
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 SCHEDULE A 

SHAREHOLDERS’ RESOLUTION 

WHEREAS on February 27, 2019, the Board of Directors of the Corporation adopted the 2019 Stock Option Plan; and 

WHEREAS pursuant to the policies of the Toronto Stock Exchange, it is necessary to obtain the approval of the shareholders of
the Corporation with respect to the 2019 Stock Option Plan. 
 BE AND IT IS HEREBY RESOLVED: 

THAT the 2019 Stock Option Plan, as adopted by the Board of Directors of the Corporation on February 27, 2019 and as
described in the management proxy circular of the Corporation dated March 14, 2019, be and it is hereby ratified and confirmed; 

THAT the maximum number of common shares that can be issued upon the exercise of options granted under the 2019 Stock Option
Plan is five million (5,000,000); and 
 THAT the directors and proper officers of the Corporation be and they are hereby
authorized, on behalf of the Corporation, to execute and sign any documents and perform all acts necessary or useful, in their discretion, in order to give effect to this resolution. 

  
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 SCHEDULE B 

SHAREHOLDERS’ RESOLUTION 

CONFIRMATION OF AMENDMENT TO BY-LAWS – MANDATORY RETIREMENT AGE OF DIRECTORS 

WHEREAS Section 7 of By-Law No. 1 of the Corporation previously provided, in effect,
that no person could be elected as a director of the Corporation if he or she had attained the age of 80 prior to the date of the meeting at which an election of directors was to take place, subject to the right of the Board of Directors to waive
the foregoing retirement age in one-year increments as regards a candidate for election as director if the Board determined it was in the interests of the Corporation to do so; 

WHEREAS on December 17, 2018, the Board of Directors adopted a resolution to delete Section 7 in its entirety, thereby
eliminating in effect the mandatory retirement age for directors; and 
 WHEREAS pursuant to the Canada Business Corporations
Act, the foregoing amendment is effective from the date of the resolution of the Board of Directors until it is confirmed, confirmed as amended or rejected by the shareholders of the Corporation; 

BE AND IT IS HEREBY RESOLVED: 

THAT the foregoing amendment to Section 7 of By-Law No. 1 be and it is
hereby confirmed; and 
 THAT the directors and proper officers of the Corporation be and they are hereby authorized, on
behalf of the Corporation, to execute and sign any documents and perform all acts necessary or useful, in their discretion, in order to give effect to this resolution. 

  
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