Q4 2020 TFI International Inc Earnings Call
Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby and thank you for your patience.
[music].
Good afternoon, ladies and gentlemen, thank you for standing by and welcome to Tee up I Internationals fourth quarter, 'twenty and 'twenty results conference call. At this time, all participants are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
Callers will be limited to one question and a follow up in order to get to as many callers as possible.
Further instructions for entering the queue will be provided at that time.
Before we turn the call over to management. Please be advised that this conference call will contain several statements that are forward looking and nature and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
Also please note the T F. I has changed its presentation currency and all dollar amounts are in U S dollars.
Lastly, I would like to remind everyone that this conference call is being recorded on Monday February eight 'twenty 'twenty one.
I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of T. F. I International. Please go ahead Sir.
Well, thank you very much operating and I want to welcome everyone to this afternoons call.
I mean today it was a specialty I guess is or press releases now I'll just since about five o'clock. So I don't know if it's because we changed.
From the Canadian dollars to U S dollars I mean, there was a glitch I'm sorry about that.
The press release is finally out so.
So in my script was saying well today after market close but really it was at five o'clock, we released our fourth quarter and full year 'twenty and 'twenty results.
No T F on international at another very strong quarter, which capped a very successful year.
A year that include our listing on the New York Stock Exchange, one year ago, This month and mobile.
Importantly, we generated robust operating and financial results. Despite the ongoing pandemic and our focus on health and safety of our employees and customers.
Looking back at 'twenty and 'twenty, we never strayed from our operating philosophy, which includes a relentless focus on the fundamentals of the business and on getting the details right.
Seeking opportunities to enhance efficiencies is a non stop focus of ours.
It became even more important and last year.
And as always we look to increase return on invested capital optimize our free cash flow and grow our earnings per share.
This in turn and place us in a position of strength with a strong financial profile that allows us to strategically expand our business.
Our ultimate aim is to create long term shareholder value returning excess capital to shareholders whenever possible.
The identification of strategic accretive acquisition opportunities to expand and enhance our platform has long been part of our strategy.
And so we're in the fourth quarter, we completed five acquisitions, bringing our total to 213 dwell time and highly strategic acquisition for the full year.
Subsequent to year and we have already complete another acquisition and as you know we have also announced an agreement to acquire U P. S rate expected to close during the second quarter.
And in a highly disciplined manner, we continue to selectively seek acquisition candidates that are both accretive and strategic to extend T. F. EIS International long and successful track record of growth through M&A.
Let's now talk Noah, let's and I'll walk through fourth quarter results, starting with our high level performance.
As you may have seen in our earnings release today, we have elected to change our presentation currency from Canadian to U S dollars due to our growing market presence in the U S and to facilitate a comparison of the company's financial position to that of its peers.
For comparative purposes, our historical financial statements have been restated.
Our total revenue for the quarter is $1 1 billion was up 13% compared to compared to the prior year's fourth quarter, marking a return to a year over year growth.
And even more important and given our focus on profitability, our operating income increased 26% to $117 million and our adjusted EPS on a diluted basis expanded 36% to 98 cents up from 72 cents a year earlier.
Our net cash from continuing operations activities was a robust 165 million up 24% over the prior year.
As I mentioned, the strong cash flow and strategically important, allowing us to invest and our business and seek strategic expansion opportunities.
Big ink.
Digging in and further on these strong results lets review each of our four business segments, starting with our P&C.
P&C represents 15% of total segment revenue and saw a 21% increase and revenue before fuel surcharge versus the prior year December quarter.
Our operating income was $29 4 million was up 30% and the operating margin was up 19 point on up a 130 basis point.
Our growth over the prior year was due to a pick up and both b to C and b to B activity, which has come back well following the pandemic related slowdown earlier in the year.
As I mentioned last quarter and following the pandemic, our P&C segment as a more balance makes a b to C and b to B and we believe that we are well positioned to capitalize on future growth opportunities and boat.
Markets.
Yeah.
Our L. T. L segment represents 14% of total segment revenue and generated revenue before fuel surcharge of.
141 million compared to 151 million the prior year quarter.
Yeah.
While the pandemic related decline in demand persisted, we saw improvements during the quarter more importantly to us are L. T. L. Operating income grew 27% to $24 5 million and our operating margin expanded 450 basis points to 17 three.
This strong growth and operating income receive a small boost from the Canadian wage subsidy of $2 1 million, but was mainly driven by our success driving operating efficiencies at the same time that year over year revenue decline have continued to moderate to only 7% in the fourth quarter.
Moving on to truckload. This segment represents 42% of total segment revenue revenue before fuel surcharge return.
Returning to year over year growth and the fourth quarter up 6% and our truckload operating income also returned to growth up 15% to 54 million.
Our operating margin also expanded up 100 basis point to 12 point too.
Within truckload, both our U S and Canadian operations grew revenue before fuel surcharge and 3% over the prior year period, while our specialized business grew 9% and similar to L. T. L. We benefited from a small can eat what wage subsidy of $4 1 million and our truckload segment.
Yeah.
Completing our business segment discussion logistics represent 29% of total segment revenue.
Revenue before fuel surcharge jumped 62% driven by E. Commerce same day package delivery demand and our acquisition of T Force worldwide in November.
Our operating income nearly doubled to $26 5 million for $14. Two a year earlier driven by strong topline growth combined with a 110 basis points of operating margin expansion.
T F I international as balance sheet is a significant source of strength that allows us to be opportunistic as we execute our business plan we.
We ended the year with more than $800 million of liquidity, which benefited from our strong cash from operating during the fourth quarter and we reduce our long term debt by 35% over the course of 'twenty and 'twenty sub.
Subsequent to year and we further strengthened our financial profile, where January and private placement of 500 million and senior notes substantially extending maturity to eight to 15 years at fixed rates.
In conclusion.
I'll read it right that the Tsi International we focus on the fundamentals of the business to maximize profitability and cash flow and we seek to optimize our capital allocation to further enhance value.
This is our approach regardless of constancia and constantly changing macro condition.
And you saw us a dear to this philosophy during 'twenty and 'twenty, which was certainly an unprecedented year low.
Looking ahead, I believe and Tia Phi into Nashville is in its strongest position ever to create additional shareholder value. As you can rest assure that our entire team is focused on driving efficiencies to produce not just growth but profitable growth.
As I said at the outset of today's call. Our ultimate objective is to create and unlock shareholder value returning excess capital to our shareholders whenever possible.
And with that operator, if you could please open the lines, we can begin the Q&A session.
Ladies and gentlemen to ask a question you will need to press star one on your telephone keypad to withdraw your question. Please press the pound or hash key callers will be limited to one question and a follow up in order to get to as many callers as possible again Thats star one to ask a question. Please standby, while we compile the Q&A Rob.
Sure.
Your first question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.
Thanks, Good afternoon, Ala and can you give us some color on what our customer and industry feedback has been bullshit announcement of the UBS LDL acquisition.
You mean, the customer feedback that UBS breakdown from from this this acquisition is that the question.
All of the above kind of have you heard from from UBS customers going on.
Do you have a sense of how they're reacting to your approaches and the business and also kind of any of your existing customers or other people, who don't do business with kind of now that.
This deal is really put you on the map and the U S.
Yeah.
The customer reception is Wow. This is a fantastic transaction because as you know our U P. S rate for UBS was very very minimal in terms of their portfolio winters are the the percentage of their business. It was not a real focus of our others, I mean, which will be a real focus of ours.
Though.
And you know based on all the experience, we have and Canada and if you look at the profitability that we're able to come up and all the Canadian L. P. On market is very very very competitive and we're able to do really well there and I think that the UBS of free acquisition is is really league on it.
So with such a strategic acquisition for Us a T F. I, it's fantastic. So the I mean, we had the reaction from the employees are at the company. We had a reaction from customers. We have the reaction from suppliers. We have reaction from people that sells trucks because as you may have heard I mean, we're planning on investing on.
On a lot on on Capex there for the at least for the next two to three years in order to do a little bit of a catch up.
And the reaction so far has been really really positive.
You know and in Canada, right now T U P. S freight service scandal with a local cartage company.
And and for sure over time I mean, this is gonna be part of our strategy to really move that business away from the strategic partner that they use having canada and into our own network. So it's going to be really positive for the costs of our of our division and the U S and positive also.
For the profitability of our Canadian Division, that's going to take over that business over the next I don't know a year or two years, whatever they're trying to transition is going to be.
Great and as a follow up question and you guys were very.
Target and tactical with inroads into B to C E commerce business kind of going after really.
And profitable lanes that you said were more profitable than even you expected do you expect those opportunities to persist into 'twenty and 'twenty one once the war and starts normalizing again or do you feel like that was a a.
Our unique thing going on by the pandemic.
No no I don't think that it will ever go back to the pre COVID-19 market condition, I think that what you're seeing is a very successful.
And strategy that was put in place by Mr caught our EVP that runs their show for us and our P&C and his team are very successful and and really focusing and if you look at our EBIT margin in Q4, we've grown the top line, we've grown the bottom line and the margin as well. So you know we we asked for.
First if you go back maybe 18 24 months, we were always afraid of growing too much on the beat to see because there was a perception that because it's free you can't make money on it and you know we work we had customers pushing us into doing things that didn't make any sense and us we said no no no we're not and business practices.
Delivery when business to make money on behalf of our shareholders and and finally, we were able thanks, a little bit to this pandemic thing there to say well you know what be to see if we do it properly. If we do it you know where it makes sense, where the density is high.
Yeah, we could still come in with great margin and and the confirmation and then is in our Q4 numbers.
And wait till you see I've seen so far January and the trend is still the same are the organic growth is still about the same as we saw now I don't think that when b to be reopened fully let's say and six months nine months or a year, maybe there'll be a little bit of a small.
The effect on B to C, but by the time that this happens I mean b to C is growing all the time. The pandemic was just a major catalyst for this business to explode.
And we're not going back to the you know the free Covid at all Norway and you know if you look at our logistics. It's the same story on a resolves there are just going through the roof. We're on fire over there we're on fire and Canada Big time, the U S. A I mean, we still have a lot of work to do on the U S side.
But the team is really really focus on on improving.
We saw a major improvement to also on our <unk>.
U S operations, but not to the degree we're not growing organically and the U S. Today.
Same as we are growing and Canada, but that I mean, we'll we'll get there.
Great. Thank you.
Youre welcome.
Your next question comes from the line of Allison Landry with Credit Suisse. Your line is open.
Thanks, Good afternoon.
So it doesn't look like there was any specific guidance and obviously, there's quite a few transactions that you guys are digesting, but maybe if you can just give us a sense.
And for.
How youre thinking about organic topline growth and in 2021.
Obviously, there's a lot of margin improvement opportunities, both organic and and Inorganically, but just hoping you can give us some sort of broad guidepost for how to think about the earnings power of the business over the next 12 months and also absolutely cash flow generation.
That's a very good question and and there again, hi, guys I'm really sorry about this press release that came out so late that Ah I know you guys are good your faster either but you really have to read fast about whats going on but.
Your question about organic growth. If you look on my opinion sees resolved, okay and in Q4 and you look at the organic growth that we have there it's really very conferred thing to look at that.
And you know we're up.
About $20 million in the quarter Okay.
Which is huge I mean, it says like more than 10, and 20% we see the P&C growing and the same kind of rate into 'twenty. One so far L. T. L. They can email T. L. A you know we're down 7% and the quarter year over year, probably what we saw.
For 'twenty one is that this will probably remain a.
Like a negative five or negative five to 10.
On the top line not on the bottom line, though.
Because you know.
We have Lockdowns, and Canada, still big time, and Ontario, and Quebec, So our L. T. O is really affected by that that kind of a environment plus there's also a depreciation of the market and the sense that a lot of our customers are shutting down their doors because of the E. Commerce growth. So they are there's a rationalization.
The number of stores, so that affects our business on the L. T outside so L T O.
On the Canadian side, we see a net.
Organic growth there for 'twenty and 'twenty one.
21 now.
Now if you look at our Canadian truckload or specialty truckload and our U S. Truckload, we see a little bit of growth there are few points.
Not much I mean.
The focus for us is really get the business more efficient.
And we're talking about is.
We have a project and the U S with <unk> and TCE and maybe down the road once we acquired UBS raid the truckload division of U P. S right.
And the intention is really to have one business unit in the U S to reduce our overhead reduce our cost and and run a much better operation that will be able to be closer to the 85 or versus a 92 or like we are today.
Logistic that's also a big story for US I mean, yes, if you exclude the acquisition of a D. L S, which is T. M. W. W.
<unk>. He was so that I mean, we're growing we're growing and Canada like 20 to 25, right now and the U S. Not so much.
We're about flat to plus one plus two by the end of the year I think that it will be closer to a plus five plus six but more importantly.
Look at the improvement on the margin I mean, even if you exclude that.
Which has a much lower margin I mean D. L. S runs about three 4% our.
Net profit, it's really low but you know we just bought the company and a few months ago. So globally. You know, we don't give any guidance for 'twenty, one because there's so many things that can happen.
Just looked at the consensus on Bloomberg.
I think that this the consensus that we have for 'twenty one on the EPS diluted I think it's attainable.
But the guidance for us is not nothing before we get into Q1 and nothing before we're sure that.
And of everything that's going to go at a G. P. S radar T Force right.
So there's too many moving parts right now.
Okay that was that was actually really helpful and just and just.
Following up on on EPS rate any sense, I mean, obviously and just announce a transaction, but you know.
Is there any sort of possible real estate, our terminal sales or divestitures or anything like that that you can foresee with EPS rate and I know that you have an agreement there was some kind of a commercial arrangement with <unk> is there any sort of competitive and.
If a case and there maybe if you could speak to those two questions that would be great. Thank you.
Yeah, that's very good question and I was and the relationship with Saia is very strong and very solid as a matter of fact, we had a call with the team there just to make sure that they understand the transaction with U P. S. Freight has got nothing to do with the relationship between sales and one of our business unit, which is T. S. T C F.
And we're going to keep on working on this relationship and grow with that.
The U P. S freight acquisition, that's a different story I mean.
It's got nothing to do with the relationship we have with Saia now in terms of the real estate on my first comment on real estate I don't think that we will have any real estate to sell but what I think is going to happen over time is that we will have.
More revenue generating from our from the real estate portfolio. So let me explain what I mean by that 25 years ago. When I took over this a L T O company and Canada.
On a terminal was the only source of revenue was the L. T L operation, but if you look at the way we run our business today and.
Let's see and Toronto, Okay, one terminal I could have maybe 30% of.
This terminal being occupied by a T. A phy business and the rest is third party or different trucker, we rent space on the dock, we rented space and the yard I think that when I look at the real estate portfolio of U P. S. What I can see now okay, but it's still very early is not that we're going to be selling anything as a matter of fact, we will probably.
Gonna be building, okay terminals, there and to eliminate the leases that we have but what I think is gonna be a nice nice feature down the road is that it will bring.
Other revenues into our real estate portfolio by leasing space and our yard by leasing space on our dog, where it makes sense and where it fits.
Okay excellent thanks, Alain and Christina.
Pleasure Allison.
Your next question comes from the line of David Ross with Stifel. Your line is open.
Yes, good afternoon and lane.
And I have known David.
I wanted to talk about the dedicated opportunity and <unk>.
And as freight the dedicated truckload piece, that's being peeled off of there and once you merge it with.
CSI TCA.
How big is your total U S dedicated business going to be post deal.
Okay. So another very good question, David So if you look at TCA today, there's about 500 trucks running dedicated today.
And if you look at our U P. S. I mean do you run close to 1000 and so if you do the sum it's about 1500 trucks tomorrow, Okay, let's say in the summer of 'twenty one.
And I will run into our dedicated unit.
And.
I guess when you think about Ups's free on the <unk> side of things the T Force freed side.
What's the one thing you need to get right over the next couple of years to make everything else easier.
[laughter] yeah, that's it.
Boy.
There's many things that we have to get right. Okay. So.
Our first priority on us and I think I've said it.
<unk> is capex, because we want to have a fleet that represents the company and the sense that safety wise fuel economy wise maintenance wise. It's about the same plan that we did when we bought <unk> that our CFO and the time was running what we call it a rainbow fleet.
You know we have the similar kind of story over there so.
So safety.
You know driver satisfaction, and et cetera, et cetera, that's that's really key number one for US okay on the Capex side. The other thing also that's going to help US is on the claim okay. We are going to be really focus and reducing our claims because the cargo claim is an example.
And what is about 1% of revenue.
Today.
And 1% of revenue and our book is way too high I mean, so we're going to work with the team there to get this closer to app or off a point.
For sure we will have to address.
Some customers issue, Okay, because you know the rating of the business.
And and maybe some freight doesn't fit the network.
And we bought <unk>.
The truckload division of our X P O.
We were stuck with tons of afraid that did not fit <unk> took us a year to get rid of that freight that we were losing money on.
When we look at our U P. S rate, we have something similar there's some trade there that the company does not make any money on it.
Now its normal because it was part of a global commingling, a bundling whatever word you want to use.
For the good of the company, Okay, UBS and you. If you look at the results of Upa as there are fantastic.
But you'd be S right and not so much.
So now you P S Reed being a stand alone the average.
To stand on their own two feet and there's some freight maybe that don't fit the network. So we will have to address that.
As soon as possible as soon as we get in there, okay and talk to the customer who understand though if it fits or not and then take action. So.
If you asked me on there is it possible like you just said when you announced the deal that you could run that 96 or within 12 months I'm convinced.
And I'm also convinced that when I look at the good L. T L company and the U S and there's many like O D and <unk> and others that those guys will all run sub 90 or.
There's no reason why in two to three years, we are not in the same position of sub 90 or.
Now I know, there's always a story, yet, but theres, a union and blah blah blah.
Us.
And we work with the Union and we respect the contract, but we manage the business.
Hello, and thank you very much yeah.
Yep.
Your next question comes from the line of Scott Group with Wolfe Research. Your line is open.
Hey, Thanks afternoon guys.
I don't know about it and you've got.
And some history on that.
David and transport and used currency center on would be helpful and for everybody.
In terms of.
And maybe dispersed.
Can you just give us an update on the CLO assets.
Operator.
Hello.
And I'm, sorry, operator, because I cant you guys understand is this and it is this any better.
Oh, that's good and now I can't hear you. Okay. Go ahead. Please okay, sorry about that apologize.
I was saying I'll just start over David if you're on and and if you've got the some history of the.
Financials and U S currency that'd be helpful for everybody and then my question for you on how.
How is <unk> performing I know you mentioned sort of low single digit margins, where do you think those can go.
This year, yeah, yeah, well this year, here's my thinking I mean, we're happy with what we're seeing so far okay. In terms of revenue in terms of revenue growth in terms of gross margin you know it matches, what we thought it would be okay and in terms of free cash.
So it's fine now is are we where we think that we should be I don't think so.
So, but it's still too early and the game to really be able to say well how are we going to be running and 96 or all the time over there or are we able to run and 90 or 92, or I think that and 90 to 94 or is doable and this business.
But it's still too early and the game to get more specific on that I mean, we just bought the business and November right. So we have two to three months behind us it fits the plan its fits where and the plan that these guys provide us with.
I'm not happy with this for now yes can we do better absolutely I'm convinced now.
Ray Kashi is working with Tom and the crew there for sure it's a big cultural change for them.
Yeah, I'll just give you a small example is that they never manage the cash.
And so so our focus on US is we have to manage the cash so no we have one.
Supplier.
That we were paying those guys at seven days.
A transportation company and you say why are we paying those guys had seven day as well is because you know it looks better.
Well no.
We changed that to 30 days because normally in our book our logistics company, our working capital negative. So you don't need a working capital to manage these business, but in the case of the L. S. R T and Ww now we need on working cap to operate the business. So I mean, one step at a time.
And I'm by the summer. Okay are we will be moved out of S. P. A dummy into our Oracle system.
Okay, and then you will start to see because we're still net transition agreement, we're paying for their service as we speak so for sure I mean, there's going to be some saving over there down the road.
It's still too early to say, but top line is there gross margin is there the overhead I'm convinced that there is something that we could do about that.
Okay. Thanks, and then just last one since announcing U P. S. Freight you've also announced another smaller tuck in acquisitions should we expect that Youll continue to do a bunch of those tuck ins this year or with UBS freight do you think there's less of the small activity.
No the small ones I mean, we do them all the time all the time I mean, the the big ones is once every three years 234 years, we do a large one but the small ones. We do them. All the time I mean, you know we've got so many opportunities our pipeline is full of what we could do now.
For sure.
It's got to fit it's got a the price has to be reasonable and and the resource has to be there. So this one day, we just announced this year is under and Mr. Bruce Shaw, our specialty TL specialty TL operation. So absolutely if we could buy a company in Canada right now that would be in the <unk>.
Same business as a P&C group absolutely we would do this deal if we could find and L. T. L company in Canada that fits absolutely will do the deal at all no.
And are we going to do any L. T L deals in the U S. After this deal no I mean are we going to be really busy and the U S.
Getting this company to the level of profitability that is normal.
Got it thank you guys.
Our pleasure.
Your next question comes from the line of Walter <unk> with RBC capital markets. Your line is open and thanks, very much operator, and good afternoon and leg.
Good afternoon and Walter.
So.
Keeping on with the acquisitions I know you were you were talking last year about your focus on and potential something and the truckload space I'm curious with UBS.
That off the table now or.
Both because of balance sheet and resources that you're devoting to the integration or is it do you consider yourself, you're able to do still a larger.
Deal in a separate.
Segment EBITDA.
And if the stars align.
Yeah, if it's the right deal Walter we'll do it I mean in our truckload division and absolutely it can be either and the U S or and Canada, if it's the right fit and if it's if it fits.
They will look at it because don't forget really this ups's free thing there is going to take a lot of my time, a lot of the time of our E. L. T. L group working with those guys yes.
Yes, okay, but our truckload guys are logistics guys.
And if if theres a deal that fits if theres something thats reasonable that there's a nice payback and absolutely we won't pass on it but nothing major though nothing I mean, theres not going to be a a 300 million dollar investment into a company right.
And right now it's impossible.
But something small that the investment is going to be 2030, 40, 50, 60, yes got it okay and understanding you're not giving guidance on any of the major items I was wondering and.
And if.
Some of the other other areas like your Capex spend anticipated.
And you gave us some indication with EPS freight and what would be required on a kind of global U S dollar side.
And your tax rate I don't know if you have any any DNA.
Cash out there or any of those kind of more accounting related or.
So along those lines that you might be able to give us some insight on for this year if possible.
Yeah, you know Walter what we would prefer to do right now is to get the while Q4 is behind US now Q1, Okay and once we get Q1 out I mean, we will have a much better feel about where we're going capex. Okay. If you exclude okay are the.
The <unk> acquisition I mean, our capex is going to be normal again this year like in Canadian dollars net of disposal. It's always about 200 million right. So our dividend stays the same I mean, its 29 cents a share right now per quarter that doesn't change there there's many things that.
Don't change and it's just that we don't know enough about are what's going to happen and in Q2 and in Q3 Q2 because of the amount of subsidy that we got in Q2, okay. So we want to get closer to Q2. So that we are really going to be and are positioned to say, okay forget about the subsidy and then if you look at our Q4.
For subsidy is minimal and I think it's about six or 7 million, probably Q1 is going to be close to zero and Q2 is probably going to be again zero right. So we just want to see a little bit more not to mislead the investors what I could say that the consensus that is out right now for 'twenty one.
In terms of diluted EPS I think it's attainable.
The Capex basically it's about $200 million Canadian for for the existing business and then over and above that we're going to do more into a with a T. T force freed the acquisition.
And I've got a 25% effective tax rate is that is that good to keep using that tax rate yep yep, well, it's lower than that this quarter, but a 25% is reasonable.
Okay I appreciate the time.
Pleasure Walter.
Your next question comes from the line of Tom <unk> with UBS. Your line is open.
Yes, good afternoon.
And so on.
Let's see.
I know you've been asked a bit about kind of day.
I guess, whether you can do small deals and other deals how long do you think that it takes to digest something this large.
Is this something that you know don't look for another large deal or.
Two or three years, because because you need that kind of time.
How do you think about how because it's really big for you and you know theres a lot of work to be done.
Yeah, absolutely I mean, if you look at history.
There's always three years between a big deal for Tsi right.
So 2011 was a big deal for Us big year.
14 was big 16 into 17 and see if I was the one and now it's a 21.
Is as UBS theres nothing major that can't happen in 'twenty, one 'twenty two impossible.
We will be laser focus on T force, right and Ups's free and whatever you want to call it right now.
That's going to be our mission is to bring this company to the level of profitability that is normal right now.
99 or it's.
It's not normal.
So that's going to be our focus and the small deals yes, we could do the small tuck ins and truckload the Dell tailing CAD and.
In P&C and Canada no sweat.
Paul.
And when I say small is the aggregate could be like $200 million Canadian invested or let's say 150 U S.
On the small deals.
Yes, okay.
That makes sense.
What about synergies across the system I think we haven't.
You know really seen historically that truckload and <unk> companies together.
And I guess, Keith and point would be kind of.
Con way bought.
And then they ended up.
Renting them and I'm, just wondering how you think about potential.
Potential synergies across your different businesses and the U S and the network and also whether there's a.
Mick.
Union on the <unk> side, and non union on truckload side, whether that.
A barrier to sharing some of the terminals or whatever kind of resources assets you might want to share.
Yeah.
Well in terms of the synergies you're absolutely right I mean, except for the buying power okay.
So when you discuss with the truck manufacturer when you discuss with a fuel provider.
On care, if it's L T L or truckload. So so the sum of the two normally we should get a better deal so that could be and area of synergies. Okay. The spare parts for the and the maintenance and all of that in terms of the customer in terms of we don't see a lot and we don't see that the bundling, where we're not big fan of bundling.
Because you know if you tell me that I'm going to lose money with this account because Paul makes money on it I don't I don't we don't we don't do that us as Peter has to make money pause to make money, so very simple and Peter who runs this show and Paul is the same so.
But in terms of purchasing power, yes, there's some synergies there that are attainable and doable like the tires and all of that.
In terms of under the same roof, okay, having a union or nonunion carrier okay.
I mean, we don't have a problem and in Canada, we do that all the time, we've done that.
And the last 25 years now maybe in the U S. It will be a different story I don't know, okay, but what I can tell you though is that.
In my mind, the terminals that we're buying.
Our own by a real estate company.
We will be owned by a real estate company, which is gonna be a subsidiary of Tee up high and that's the plan and that's what we're working on now.
So the operating unionized company is a tenant.
Of the real estate company like anybody else.
And.
We'll see.
Right.
Okay. So that's helpful.
Well, what we like to you guys to understand is our philosophy is that terminal is not a union terminal because it's a real estate asset.
That will be leased.
Two a union carrier that's owned by T F I R and nonunion and carrier that's owned by T. F. I R and non Union carrier that's owned by somebody else.
Yeah.
So, but it remains to be seen whether that theres receptiveness from the union to that approach is that fair or do you think you have visibility to that.
Well I mean, it's just a real estate transaction I mean, the important thing is that the operating company is a tenant like everybody else.
Right.
Okay well. Thank you for the perspective is helpful.
Youre welcome.
Your next question comes from the line of <unk> Gupta with Scotiabank. Your line is open.
Thanks, and good evening and law and David.
Good evening.
Alright.
First of all glad to see the numbers on U S. Dollar you sure scared me for a minute and some AI bought on there.
Yeah.
Maybe first one on.
And not to beat the dead horse here, but just from the UBS acquisition.
I understand.
And that you are buying the small and kind of piece from UBS here.
Obviously, clearly they were bundled and the freight business you acquired deals with UBS the parent company has on us.
Other external customers, so like now and when.
And you talked about focusing on improving their profitability one of the key tenets to that is you have to kind of you know.
And it or improve the pricing and some businesses and so you'll have to let go of that business, perhaps but.
My question is how like what what would be the take on the reaction from from UBS parent.
On the external customers, let me go to them and ask for.
And putting the right price on the fair price there and.
They might think maybe they go to somebody else and like what is sort of the risks and pitfalls and going to those customers telling them all of us and them that we will not be able to provide the same pricing UBS and core for many years.
Well you know if you look at one experience that just took place the last few years as the large.
Competition to U P. S is another group that is also the number one L T L provider.
Okay, and the largest L. T L carrier, Okay, and the U S is competing with UBS and the parcel business right.
And they used to do a lot of bundling and they used to do a lot of you know.
Give me a good price on my package and I'll give you a deal on the L. T O. So the reaction of this company has been.
Fedex and I'm talking about you know what guys. We are so overwhelmed with volume.
Why would we be using L. T L as a loss leader.
Right.
So I think that if you would ask the question to the UBS team. There I think that they are overwhelmed with volume and a lot of customers.
Calling us and them and Fedex and everywhere for capacity.
Right.
So I think that it's the same problem also with the L. T O. There's there's a capacity issue there as well.
US our approach with customer who's going to be very simple is that guys. This freight does not fit.
So I mean, either you know it fits or doesn't fit.
And it could be because the lane.
The lane does not fit or it could be because the commodity does not fit because there's too many claims where he could be you know the the region does not fit because we don't cover it ourself and we lose money with the agent.
And Theres many reasons, but then we sit down with the customer and have a discussion and.
And and we can provide to a customer another solution.
Let's say it doesn't fit our operating company and maybe it fits our logistics company.
Oh. So this will take time guys. It's it's all going to happen overnight.
It's the same kind of discussion and we just add on the real estate side. This will take time.
It's not going to happen overnight and that we're gonna have tenant in our real estate portfolio outside tenants, but if you look at 25 years ago Cabana Okays away. There was none today, we generate a ton of money and our real estate Division.
Renting space to third party.
Right.
It's the same story with the customer we Gotta go step by step and avid chance to discuss and but we have lots of tailwind right now and the industry.
On the package side and on the <unk> side, and the U S and I'm talking about.
Alright, so it's kind of fair to expect that perhaps the first three to six months post closing and there'll be a lot of discussion with the existing customers on on the on that comes on and conditions like this.
Yeah, but don't forget guys are focused number one is gonna be the equipment, we want to reduce the maintenance we want to improve the safety. We want to also improve the drivers' experience instead of driving at 2000 and for the Guy and drives at 2021, it's not the same.
Experience, there's more safety on the truck. It's a you know we want to do all of this step one and also on the same time slowly addressed the situation because we want to be lean and mean in terms of cost one big area that we can do without making a mistake because you know what.
And where you can make a mistake alright, so it takes time.
On the Capex side, replacing old equipment with new equipment.
And reducing your maintenance GARS and.
Improving safety improving the drivers' experience by replacing 2004 with 2021, you can't make a mistake by doing that.
Alright, and then thanks for that day.
And my last one on the on the investment so thanks for providing color on Capex and tuck ins just wanted to parse out the capex number so what would be if you have a $200 million net capex, let's say from it and existing operations what does.
What is sort of a disposal number implied day at all our growth Capex whichever you want to kind of call out and free cash.
And what is obviously very very strong and 2020.
And in terms of U S dollars, but just wondering if with the Capex guidance you provided plus the investments you have to make up the EPS.
Should we expect free cash flow to improve this year from last year.
Yeah. So so this year was exceptional and our sense that.
No we did not invest the capex that we should normally have done because we put a lot of capex on the old and Q2.
So so we will have a little bit of this recoup and to a certain degree so growth capex normally.
Pre acquisition of a U P. S freight in Canadian dollar is going to be about $2 52 to 60 minus the disposal, which is net of about 200 and Canadian right.
So I'm gonna have to get used to the U S. D numbers, because that's the way we're gonna be reporting but that that is the capex. Because you know USD is something and also new for us.
And that's not going to change now over and above that the normal Capex for T Force freight.
Globally or U P. S right in my mind sustainable Capex to sustain the existing business and U S. Dollar.
<unk> net of disposal is about 90 million U S.
Okay. So we got to do more than that.
S going from acquisition and it will take us maybe three or four months before we get the stuff. So let's say by Q3, and Q4 will probably do like 60 million U S. Okay, because we won't get all this stuff because you got some delay et cetera.
Et cetera, and then into 'twenty, two and instead of being $90 million Capex normal for 'twenty. Two we're gonna talk between the 150 to $1 65 in 'twenty two.
The full year.
And so I think.
And there you are.
165 right.
U S yep, perfect and that makes sense. So much appreciate the time on that thank you.
Right.
Your next question comes from the line of Jason Seidl with Cowen Your line is open.
Thank you operator.
Afternoon Helane.
I wanted to just talk a little bit.
About.
Getting added to the U S indices, which I think is on.
And next important step for you guys you know, what's what's left and whats the timeline that investors can look at.
Very good question, Jason and I mean, we're thinking about it but in order to be that we have to be a U S Corporation, we are still a Canadian company today.
So we are in discussion right now with the legal and tax David and myself and and our group to see if it's doable if it's possible.
Some Canadian companies have done it.
And it's not simple to do.
So we'll see I mean, but we are thinking about it for sure it would be a great benefit to our shareholder base to be part of the index.
But so far.
We don't have a timeline the Jason on that we know we're looking at it but we have nothing.
And to really come up with a we're going to do that within a year or two years or whatever.
Okay Sir.
Fair enough alone a follow up question.
And you touched a little bit on Capex I was wondering if within that number what is your assumption.
For truck count growth or decline, if you will and the U S.
Right now, Jason and the numbers and I'm talking about is there's no loss of business or there's no revenue loss because of a of a discussing with customers are afraid that don't fit because you know we know in principle, what we know so far guys is that this process.
And of discussing with customer and.
As already started at <unk> freight, it's not something that is going to be new they already have started this process, probably like six seven months ago, and what they've seen so far okay. What the guys are telling us is that they haven't lost any any piece of business.
Right right.
Alright so.
But you know it's the pace.
And all fast these guys are going about it and it's also if you're a little have a chat with an account that you lose 15% and you asked the guy from 2% and the market is really you know 5% more than the price that you're charging and you're asking only for two for sure you're not going to lose the business because the guy I understand that you still are.
Fantastic deal with you.
And now this is why.
And not knowing really the U S market the <unk> market.
This is why we bought this D. L. S company because those guys are.
It's a brokerage operation.
So they buy and sell all the time right. So with them. We have also and idea now of what the lane, what what's the market of that lane, Okay, and and that's where we're going to have some good discussion with our guys at the two P. S freight or T force right now.
Down the road and then we'll address the customer one by one.
It's a long process you you don't want to rock the boat you Wanna go slowly about it and this is why our main focus is going to be us working on efficiency and cost and and improving safety and things like that that we're sure we cannot make a mistake.
And at the same time, we're learning about the customer and the business and all so that when we start discussing and having a good plan with customers. We have more knowledge than on may 1st because my first week, we don't know anything about the business we have to learn.
So okay. That's that's great color on there and so it's going to be basically a flat tractor count between.
CSI and transport club.
So quickly also you mentioned, obviously the money that you want to put into a new fleet and better technology within the caps.
At <unk> freight.
There anything on the dark side that you guys are looking into that you think there could be additive down the line and.
In terms of improving productivity.
What we've seen are adjacent so far on the dock is they just did the rollout of a new technology that these guys have.
And and.
We're really impressed with the tools that these guys have to monitor productivity on the dock I mean between you and me they have better tools and then what we have us and Canada. Now tools is one thing is like and mechanic you could have the tool, but you need the mechanic to repair the car.
And what we're seeing is that they have a fantastic tool box now how are they using it I mean.
And it will take us from time to really evaluate that.
And I appreciate the time as always.
Sure.
Pleasure Jason.
Your next question comes from the line of Ken <unk> with Bofa. Your line is open.
Hey, Great I mean, David if youre there good afternoon.
Major moves over the year. So congrats on all the acquisitions over the last few months.
But I think you mentioned earlier on the call blending some assets and the U S talking about <unk> and other things and that's a little bit different than the way you've tackled by keeping things individually is that on any kind of structural change or is that blending moving to blend. The TL would you look to do that and any other segments, where youre looking at keeping.
Brand name separate.
Yeah, Yeah, Yeah, Yeah, that's a that's a good point, Ken and you know why are we doing that okay, and it's because we look at dedicated with the flash acquisition, a safe lashed U P. S freight acquisition I mean, it makes sense now to have a dedicated business because right now and we have TCE, which is 50.
And dedicated and the other 50 years not we look at <unk> is it's got no base dedicated business and then and we just bought M. C. T about a few months ago, which is a temperature control thing there and how are we going to use M. C. T. So there was no value to M. C. T. So now we said, okay, we're going to use <unk>.
Temperature control and it is going to fall on the sheer Fi umbrella and then were buying a U P. S. Freight. So what are we going to do with that the U P. S freight.
Truckload Division are we going to keep the name no. We can't so what are we going to do Oh, we're going to fold that into TCA and then okay. TCA will become a dedicated carrier and then whatever is not dedicated will fall under <unk> and after having all kinds of discussion with our people. Okay. We came to.
The conclusion that.
Probably.
Maybe it makes sense to keep two or three D. B doing business as like T C or doing business as CFO temperature control, but really down the road. Okay. We're gonna be one business unit and our U S TL operation.
And with different sectors logistics being one.
The dedicated truckload being another one.
Temperature control and just the the other CFR van regular business.
Yeah.
And just a follow on would you look to do that any other area with one brand name like in Canada on LCL or is this just a special case with U S steel.
Well, it's something that we're always thinking about so if you look at what we've done in Canada and the summer of 'twenty, we can buy and T. S T and C F and it's a it's been a fantastic results, Okay and and that's one of the reason if you look at our margin on the L. T L.
And with with less revenue I mean, our margin and dollars and and percentage is just.
Doing very very well so it's something that we always look at I mean, and sometime if a brand is worth something okay, we'll be careful but in the case of our truckload operation.
We know <unk> is a diamond in terms of Bran M. C. T. There was no value was confirmed.
The TCE were not sure. So this is why Greg and the team there are discussing that but in terms of the business unit for us it's going to be one.
Maybe we'll use to D. B a C F I and TCA I mean, the guys are still talking about that but for sure. The truckload division of UBS rate is not going to be called U P. S freight truckload division and whatever once we buy the company.
It's going to fall on there Greg into CFR.
Perfect.
Switch subjects from my follow up real quick you said focus on maintenance and safety driver experience, but I think earlier on the call you mentioned that your your.
And I guess damage was up to 1% did I hear that right versus kind of peers at one 1% I guess O D Argo or a half a percentage, yes cargo claim.
Argo cargo is.
What was that youre answering what needs to be done why is that so high relative is that that's not relative to the equipment or safety right. So whats no no no no no no no no. The cargo claims got nothing to do with equipment and it's got something to do with the freight the way its baggage et cetera et cetera, and this is an ongoing thing I mean for sure I'll give you. An example, we start.
And our E commerce business with the largest retailer in Canada, and we dealt with Amazon for a long long time and never any issues with Amazon because the weighted package the product is fantastic.
But this retailer.
Largest retailer and the world one of the largest one there they're not used to E commerce I'm talking two or three years ago. So we had lots of issues. Okay with the way the product was package for delivery to our consumer so we sat with them, we talk with them and finally I look at what we do with them today is fantastic. So.
What I'm, saying is that and our L. T. L. One of the reason that you have claims.
There's a few if you touch the product 25 times every time you touched on a product you may break it so you've got to make sure that you don't touch it too much so that.
The average line haul the number of hubs that you have so if you shift from let's say L. A to New York and you have 25 arbs and between she touches the product twenty-five times load on load you have more chance to break it that if you run direct.
The commodity that you hold all saw it's got something to do so what I'm, saying is that cargo claim is scenario that.
We see that there could be improving.
But that's nothing compared to workers comp claim okay and accidents.
So.
Accidents, and our mine and our experience there.
And more safety you have and the equipment.
That helps the driver so that drive it does not make a mistake because this guy doesn't want to be involved and in an accident, but he makes a mistake as a human being.
Okay. So we can make mistake.
But if you've got equipment.
After today's technology that tells you Hey don't change Lane there.
There is another car, there and you're going to hit the car.
That helps you know reduce the number of claims and reduce the B I D.
The same thing collision avoidance that guy the driver it's got some distraction.
And E reader and a car well with today's technology on the truck it's going to help you.
Right. So what I'm, saying is that there's many things that we could do to reduce.
The cost of the operation today in terms of the freight that fits.
In terms of rate or in terms of cargo claim.
And then also the accident and the workers comp.
That's something that it's it's it's our control.
And then something that is our control, but also needs the customer to help us.
Is the rate, but this is why for US really is our focus is going to be what can we do us to be better okay and at the same time, yes slowly we'll have a discussion with customer and to make sure that we're all in afraid that fits and raise that makes sense.
Yeah.
Great I appreciate the time.
Thank you.
Pleasure Kent.
Your next question comes from the line of Tim James with TD Securities. Your line is open.
Thanks, Good evening and ring.
And Tim.
Just wondering if youre seeing any kind of residual efficiency challenges related to kind of disruption like hangover from from the pandemic docks terminals, what have you and and I'm just trying to understand if you know as we get to a more normalized environment.
And if that maybe is an opportunity on the cost side theres still some some challenges there today that may subside going forward.
Oh, absolutely absolutely I mean, the logged on and there's a big problem for us.
We have used logged on and Quebec huge lockdown and Ontario I mean this is this is not helping us.
So yes, it helps us it says that our P&C guys are the E. Commerce is just booming true.
But we're losing on the B to B side. So you know if this pandemic and go away by the end of 'twenty, One I mean, our 22 year in my mind, Okay should be even better and the sands that are all of these are you know you have six sick people are you know.
And if someone is.
It didn't get sick at the at the workplace, but he got sick because his partner.
Got sick at their workplace. So it's just the global issue you got guys that are our no show because they said a I don't want to go because I'm afraid that I'm gonna catch the virus I'm talking truckload drivers in Canada that doesn't want to cross the border into the U S. Because the they listen to the news and they say on.
And so there's a lot of Covid thing and the U S. So it's it's a disruptive for sure.
Reading and talking to are still all in department now we're short the chips for the manufacturing of cars and trucks. So it will affect the seal and the aluminum shipments. So it's a it's all related to you know the global supply chain.
<unk> and and over and above and it's been just made it worse with this pandemic.
Okay. Thank you that's helpful. My follow up question, you've given some great color on.
And where you're thinking in terms of tuck in opportunities.
Going forward and I'm just wondering.
<unk> has the pandemic.
And changed at all the opportunities that you see like if we were and it kind of you know.
Back up to 12 months ago.
Has your view on.
What maybe makes sense and what doesn't make sense. So has that changed at all or is it more or less the same.
No I wouldn't say that are there the to me it's more of the same thing and the only thing that I could say that our pre COVID-19 and now is we and the perception.
With our P and see that B to C would dilute our margin.
And when and when we got stuck in a locked down and.
March and April.
We had no other option than to look at the B to C and and we looked at it.
And we looked at it in a smart way and.
And our perception pre COVID-19.
And that it would be dilutive to the margin was wrong, because we do it the right way and if you just look at our Q4 numbers, it's just a confirmation of that.
Although we came out late with our press release I'm, sorry, again about that guys I mean.
And there was a little bit of a glitch I don't know what happened but.
We're going to make sure that it never happens again.
Okay. Thank you very much and.
It's a pleasure.
Your next question comes from the line of Brian Austin back with J P. Morgan Your line is open.
Hey, good evening and Wayne Thanks for taking the questions.
Pleasure pleasure.
So let me talk a little bit about synergies and how you might be on that use the footprint at EPS freight today and on last call, but I was wondering if you could do something along the lines of the bank and <unk>.
L. P O consolidation business, where you you go into large retailers helped them.
Oh two standards.
Is that something you think that the footprint is well suited for when it comes to leveraging the.
The hard assets and also having.
And our space and on some of these stocks or maybe even expanding the warehousing footprint to be able to be more of an aggregator of sorts.
For that particular end market.
You know what it's what you're saying just made a lot of sense, but I cannot answer that right now because I don't have a clear picture of what we can do.
You know one thing that we look at US is what we call door door pressure is on many bills a day would go through a door, okay and when we compare the door pressure of UBS freight today versus what we do and Canada I mean, it's day and night, so that tells us that there's over <unk>.
The real estate is big and there's some some things that we could do but it's still too early I mean, what we're doing now guys is just the phase one and phase two where it needs to be done in terms of the environment. So I havent toured any real estate, so far I haven't seen anything but for sure it's gonna be a priority.
Real estate is expensive and you want to make sure that you get every dollar out of that major investment that you do in terms of Atlanta and in terms of building.
Okay got it but nothing structurally that would prevent you from doing that.
If it were to make sense.
I don't think so I don't think so I mean to me. This is why to US that this transaction is so important and that we have the real estate separate from the operating company. Because this is just a smart and we are doing it I mean, and then real estate has got nothing to do with the operator.
And you just attended like everybody else and then you build for US you know a third party or whatever you can do.
One thing I said on the call Ryan is that.
The way I look at it is that we are we are a tenant and about 50 terminals and.
And for sure if it makes sense, we want to get out of those leases and and have our own terminal and the U S where it makes sense for sure if theres capacity, we'll try to fit somebody else and there.
And if there's too much land and if there's a if the building is too big for sure and all of this will be addressed over time, because the focus at <unk> is how can we do more with less not the opposite do less with more.
Okay.
Understood.
A quick follow up you can just touch on what's going on and the.
And the U S logistics segment I think you still got some self help initiatives going on there the consolidation of that fragmented industry as Craig and it takes some time.
And we believe you mentioned that there wasn't too much growth there this quarter, where there was a lot and Canada. So.
If he can bring us up to speed on.
And on recent initiatives and what you see kind of on the table for the year ahead.
Yeah. So so the way we run on Canadian Operation is fantastic and we have growth right now of 30% to 35% and what we've done about a year ago. As we said you know, we're so successful and Canada. So I've asked Kal.
The Guy that runs our Canadian operations to get involved and two supporting our U S operation soon.
Since that time, Okay, what have we done so right now the <unk>.
The sales leader responsible for sales is in North American sales leader now so it's not just about the U S or Canada is both the guys response for both.
What we have just announced our February one is that the guy that used to run Canada for US Okay is going to be moving to the U S and we'll run the east coast because for Us U S is split into east and West So and then Leslie.
We will be now responsible for running the east coast operation and what we're trying to do is and we've been successful so far because if you look at the EBIT margin.
Our U S division a year ago versus what it is today, it's 100% improvement. Okay. You said, while 100%. This is fantastic no. It's not because we still have a long way before we get to they can eat and margin.
So we run right now the the U S operations only with a single high single digit EBIT number.
We could do way better than that but one step at a time, but also most importantly that organically our U S Division is not growing today, we're about flat all.
Year over year, it's not normal I mean, there's so much if we can grow 30%, 35% and Canada why are we flat and the U S. Well, it's just because that the this was not the focus of ours and this is what Cal and Dean and and the team. There is is going and we see the potential absolutely we're gonna start.
Growing the top line, but we want and make sure that we also provide the right service to the customer because you know if you have a business unit that's been use at zero growth or minus five negative growth.
They're not big fan of getting new customer in because you know they get lazy.
And now we have to change this kind of culture of Oh, Okay, and we're gonna do it today. The same thing as we did yesterday no more but it's again and one step process step by step.
And you'll see us by the end of 'twenty. One the plan is we're going to start growing organically by about 5%, 5%, there's not much but it's a step and the right direction and then in 'twenty two.
There's going to be more catch up versus our Canadian operations.
But at least Oh based on what I could see.
Well, we're going to break this single digit EBIT number in 'twenty, one and get into a double digit EBIT number and our logistics and last mile and the U S.
So a lot of good stuff on the go it just looked at on Q4 number.
Year over year improvement right.
Right.
Yes, and that was quite strong.
Thank you Larry I appreciate it.
Right and the only thing is you guys got on the numbers. So late that you couldn't have the chance to read them right I finally got through it and that's okay. No problem. Thank you okay. Good.
Your next question comes from the line of Benoit player with day Chardan capital markets. Your line is open.
Good afternoon, and congratulations for the result.
Yeah, Yeah. So thanks for the great color about fortunate to improve margins for U S loss last mile. What when we look now at truck.
Well, obviously, you break down into three different segments and what is nice to see a specialized surpassing the margins in Canada. So things on on a good path here.
Close to 85%.
Although when we look at U S C L 90, and 92% or in the 'twenty and 'twenty.
What is the real fortunate to.
To improve this or especially in the U S and recoup.
The GAAP versus specialize or Canada down the road on it could you maybe give us more color about this opportunity.
Well, but anyway, you know if you look at it and 19 tool on right now I mean for sure. It's a sum of two business units and T C and C O and the problem. We have is that CF is really running at a sub 90 or company.
No closer to and 80 580 687 during the course of 'twenty 'twenty, one 'twenty one 'twenty.
So the problem we have is with our other business unit and this is why like I said on the call with the the fact that flashes coming and not flashy, but T force.
Because the code name was flat. This is what confuses me, a little bit, but U P. S freight truckload division coming in and it opens up the opportunity for us to create okay. A real dedicated truckload business, Okay, upsize and I said it earlier on the call. So that means our dedicated truckload business is going to be about.
1500 trucks, 14, and 1500 trucks on.
Under the leadership of Greg or.
And and we will also run a temperature control okay separate segment.
And I think that during the course of 'twenty. One. This is when we're going to do all of this transformation and I believe that by the end of 'twenty. One we will be running closer to a 90 or okay globally, where 92, we should be running closer to 90 or now one thing is for sure.
Or is the business that we're buying through the U P. S. Those guys are running today and 96 or 90 697 or so so they were worst and then our business today at 92, okay.
So we have also a lot of work to do with those guys and the.
And the existing business and we have at TCA. So this is why I think that the good.
Hmm.
Way of approaching 21 is to rain globally, and you are to a 90 or because don't forget I mean, it takes time to correct the situation.
And then we will address that.
But I agree with you if you look at all the divisions of T. F. I, you know P&C logistics L. T L.
Our specialty truckload.
The only one that you could say you know and they you guys or a star.
You know you are a star of our company and PNC with the resolve the LTI blah blah blah blah, the only areas that you could maybe say well, we're not going to give you a triple a and we're gonna give you maybe a b. Okay is our U S. C out but the team is there and the guys are going to be working really hard to.
To move from B to closer to a knee or and E plus kind of and operation I'm convinced.
Okay. Thank you very much for the color on that.
Pleasure.
Yeah.
There are no further questions at this time I will turn the call back over to Mr. Bedard.
Okay, well, thank you very much operator for helping with the today's call on behalf of the dedicated men and women of T. F. Five international I want to thank everyone for joining us today and for your interest and T. F. I. We continue to work hard every day for our shareholders and I look forward to updating you on.
And on our progress throughout the year.
Please stay safe and don't hesitate to reach out with any follow up questions I have.
Have a great evening and thank you again bye.
All right.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
And.
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And.
Yes.
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