Q2 2022 TFI International Inc Earnings Call
[music].
Good morning, ladies and gentlemen, thank.
Thank you for standing by.
Welcome to the T F I International second quarter, 2022 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 I'll follow up.
Again, that's one question and a follow up.
So that we can get to as many callers as possible for the instruction for entering the queue will be provided at that time.
Please be advised that this conference call will contain statements that are forward looking in nature and subject to a number of risks and uncertainties.
Yeah.
That could cause actual results to differ materially.
Also I.
I would like to remind everyone that this conference call is being recorded on Friday July 29 2022.
I will now turn the call over to Mr. Alain Bedard, Chairman, President and Chief Executive Officer of B S Hi International.
Please go ahead Sir.
Yeah.
T. A remarkable performance so far this year reflects our longstanding adherence to our print.
Simple operating philosophies as well as the many internal or self help opportunities that we see regardless of economy condition not the least of which is the continuing successful successful integration of T Force right.
Or just a year ago.
In addition, our favorable quarterly resolved reflect reflect strong execution across our diversified business driven by the many dedicated individuals at <unk> International we look forward to having you met some of our many talented leaders at our coming Investor day on November .
And with more details to follow.
For the second quarter of 2022 we reported a 76% increase in our adjusted net income over the prior year and an 81% increase in our adjusted diluted EPS, along with more than $300 million in quarterly free cash flow for the first time in our company's Easter.
Sorry.
All four of our business segments contributed to this strong outcome by producing very strong returns on invested capital and today, we are again, raising our outlook for the full year.
The economy and the wins as I'm sure you're all aware include the rising interest rates along with inflationary pressure at multi decade highs continued elevated energy prices unprecedented labor shortage resurfacing regional pandemic outbreaks and of course in the ongoing global supply.
I chain challenges.
Especially during uncertain times. This is when we re sharpen our focus on our long held operating principle, which bear repeating as they are so instrumental to our strong performance. We have a relentless detailed focus on getting the fundamentals of our business right now.
Quest to maximize efficiencies everything is within nine to work towards optimizing our free cash flow generating strong returns on invested capital and growing our earnings per share.
Why did we do this well because it facilitates the achievement of our ultimate goal, which is to create long term shareholder value, especially especially our strong cash flow and solid balance sheet permits the strategic identification of accretive acquisition opportunities, while returning excess capital to shoulder.
Whenever possible, which we did agree aggressively during the second quarter.
Given the choppy economy environment, we're especially fortunate to have many self help levers to pull as I referenced earlier.
Just one example of this during the second quarter, we sold a southern California L. T. All terminal this facility with 78 doors on approximately 14 acres not only did we realized proceeds of 83 million on the sale, but our existing usage of the terminal will be easily absorbed by our other name near.
By facility.
This is just one example of our internal opportunities to drive efficiencies.
Before turning to our segment by segment results on a consolidated basis EFI International total quality revenue were $2 4 billion up 32% over the prior year quarter.
And given our focus on profitability rather than growth for growth's sake.
We are very pleased to report that as I mentioned earlier of 76% increase in our adjusted net income and an 81% increase in our adjusted diluted EPS and also a 16% increase in our free cash flow of $3 million to $310 million.
It's important to note that in the year ago quarter, we had a large bargain purchase price gain of 284 million, which impact the year over year comparison on a non adjusted basis for a reported resolved not only on a consolidated basis, but for our L. T L and.
Sticks segments, especially specifically.
This year this year ago, a one time gain is reflected in our reported operating income which was down 17% as a result. In addition, our net cash from operating activity came in at 248 million relative to three on 299 million a year earlier due to another quarter of elevated war.
King capital needs associated with high fuel surcharge.
Also wanted to note that our deferred share units or D. S shoes provide a favorable $13 million variance to our reported earnings this quarter given the decline in our stock price.
Let's now turn to our four business segments, all of which generated an impressive returns on invested capital that helped drive our overall strong performance.
Our P&C segment represent 7% of our total revenue before fuel surcharge. Despite a 14% decline in revenue before fuel surcharge related to a slower e-commerce activity.
She benefited from better beat to be density and our increasing diversity she that allowed us to benefit from strong industrial activity.
For our specialized operation P&C is a good example of self help nature of our opportunities we produce a 25% increase in our operating income to 37 million with the operating margin up a noteworthy 910 basis point in our return on invested capital game came in at 27 points.
6% of 460 basis point.
This is much improved profitability reflects our own internal focus on driving density and productivity, which in part.
Which is part of our active management style.
While TL segment, which is 45% of segment revenue before fuel surcharge, we generated $870 million of revenue before fuel surcharge up 39% over the prior year quarter, which include just under two months worth of contribution from T Force rate acquired in early May last year.
L. T L operating income of $187 million includes a gain of $55 million associated with the aforementioned Southern California terminal state this compared to the year ago figure of 351 million that included a 272 million worth of the bargain purchase gain.
Drilling down further into our L. T L business, our Canadian operations continued to benefit from solid onshore industrial activity and we're able to grow revenue before fuel surcharge just slightly over the past year.
More importantly, given our focus can eat L. T O produce noteworthy operating ratio of 69.1, an improvement of 880 basis point over the past here.
Equally impressive our return on invested capital came in at 24 of 410 basis points.
Our U S. L. T O business was created just a year ago with the acquisition of U P. S rate, we see opportunities similar to the kidney nail T. L. Within this business and we are very pleased with our continuing integration progress revenue before fuel surcharge for U S. L. T. L was 725.
Within the war of 88.
More than 200 basis point improvement over improvement over the year ago quarter.
Meanwhile, our return on invested capital was 24.5, which is already quite strong after just one year as part of <unk> family of businesses.
Let's move along to our truckload segment, which is 29% of our segment revenue before fuel surcharge for the second quarter, our truckload revenue before fuel surcharge was 557 million, which was up 16% year over year, our truckload operating income reached 127 million more than doubling the prior year.
You figure and our operating margin was 22.9, expanding nearly 10 points driven by broad basis based improvement in our specialized Canadian and U S truckload operation they going deeper within truckload, starting with our specialized business, which grew quarterly revenue before fuel surcharge out there.
A healthy 18% over the past year to 272 million as our improved diversity allowed us to benefit from strong for our strength in the industrial end market more important to us our profitability measure were also improved with an adjusted or a 70 676.9.
And the improvement of 570 basis points and our return on invested capital of 13% an improvement of 180 basis point.
Our Canadian base conventional truckload business generated a 43% jump in revenue before fuel surcharge to 88 million along with an adjusted or of 73.4, once again, an improvement of well over 10 points compared to a year ago. Similarly.
Our return on invested capital of $16 seven was up 420 basis point.
Lastly, within our truckload our U S based conventional business AD revenue before fuel surcharge reached $198 million up 5% over the prior year, a U S or improve sharply to 82.5 on it on these significant revenues. That's just over 1000 basis point better than last year, although gain.
Sale of equipment that accounted for 19 million of operating income.
In addition return on invested capital for this business reach eight point to relative to the prior year a 5.5 much of the improvement here relates to our dedicated business, where we've made significant progress on there Greg ores with leadership, but still have more work to do and we've been referencing since.
Last year.
In that regard one very noteworthy move is we are now making it is to a separate out of our dedicated operation and fine tune our leadership structure. Accordingly, our dedicated operations are significant with more than 1200 trucks, but they have been operating inside of our U.
Truckload segment by carving out dedicated from CF I. He's operation can now be run by Eric and sent and see broke Shaw.
Overseas, our specialized truckload division the operation, while Greg will continue to his oversight of our over the road operation.
Yeah.
Lastly, let's review the second quarter performance for our logistics segment now 19% of segment revenue before fuel surcharge logistics revenue before fuel surcharge grew another 12%.
Last year to 454 million, while our operating income.
42 million compares to 48 million in the prior year that prior year figure as I mentioned earlier benefited from a recognition of a bargain price purchase gain which was $12 million.
Yeah.
Our operating margin was nine 3% on a return on invested capital for logistics is 21.1 compared to 22 points for the prior year shifting gear now do you find international balance sheet and liquidity you have continued to strengthen even as we make the necessary investment to prompted me to profit they bleed grow.
Our business into the future and even as we return capital to shareholder through share repurchase and through our quarterly dividend, which itself has climbed 17% the past year as I referred to earlier, we produced free cash flow of 310 million during the quarter. We also repurchased approximately two 6 million shares of our common.
And this week, our board of director approved an increase to our and CIB program to the maximum of approximately $8 8 million shares about 1.8 million higher than the previous authorization.
Also during the quarter, we completed three small acquisitions plus two additional small acquisitions subsequent to quarter end, we finished June with a debt to.
To adjusted EBITDA ratio of only 132, despite the completed buyback and acquisition as of June 30.
76% of our debt was fixed rate, excluding equipment financing and we had a weighted average interest rate of 345% and a weighted average maturity of seven nine years.
Again, maintaining a strong balance sheet is core to our overall strategy.
Being able to strategically grow the business when the opportunity arise, while returning excess capital to shareholders whenever possible.
Wrapping up I'll update everyone on our full year outlook, which assumes that these.
These volatile brother macro conditions continue countered by our own strong execution on what T F I International can control.
And this is what I find most encouraging that continued streamlining is within our grasp specifically we plan to continue optimizing T force right.
Well I was saying focus on the fundamentals across our entire network as I said last quarter. This includes an emphasis.
On improving density providing superior service.
The amazing embracing increasing driver retention and a a concept that we are called freight that fits we only take on the right trade for our valuable network with this in mind for the full year 'twenty two we're again raising arent we.
We now expect earnings per share to be $8.
That's up from $6 50 to 675 previously.
We forecast free cash flow to be 900 million up four 700 billion previously.
So with that operator, we're ready for the Q&A. If you could please open the line.
Okay.
Thank you Tom.
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.
As a reminder, callers will be limited to one question and a follow up in order to get.
<unk> has many callers as possible.
Again, that's star one to ask a question.
Please standby, while we compile the Q&A roster.
Yeah.
Our first question comes from the line of Ravi Shanker from Morgan Stanley . Please go ahead.
Thanks, Good morning, Alan.
I know you mentioned in your comments, there's been much press dedicated to what the U S macro environment like may or may not be a recession, but.
Maybe investors here are not quite as clear, but what's happening in Canada. So can you give us a little bit of a snapshot into what.
The macro environment and outlook is like in Canada, and also what the kind of <unk> situation, there like <unk> and potentially a tailwind come back. Thank you.
Well very good question Ravi So E. L. D. I mean finally, our friends at the Federal government said that this is.
Going on into 'twenty three agenda, one of 23 and in terms of the general economy in Canada, we feel pretty good with that I mean, yes, we had two years of Covid like the rest of the world, but you know oil being at over a $100 a barrel really helps some of our provinces in Canada, because don't forget it.
They can't even though it was mostly like a petrodollar.
Ontario, and Quebec means economy are doing well as well. So so we have a lot of people are talking about a freight recession or may be a recession, but so far even when I look at our month of July I mean, we're still running on all cylinders, but it may be a storm could come.
Maybe I don't know maybe at the end of 'twenty, two or into 'twenty three but.
As I said many times you know us at T. F. I, we we know that storm will come one day and we're ready for that and we try of you know, we we do very well in the storm.
And it creates opportunity for us we have a very strong balance sheet. We generates today a lot of cash I mean, our forecast for two I need to like I said on my script is about 900 million U S. So and you know we we feel good about the economy as it stand for sure we have those challenges like inflation and all of that but.
You know we went through a COVID-19 for two years and prior to that there was another story. So it's in our world is always something that we have two two to live up to our challenge and you know if if there's a recession coming you know we're ready.
Great and then maybe as a follow up.
What kind of message do you want to send to investors in the street by raising your buyback at this point I mean, clearly like Richard New Guide I mean, I think it reflects kind of the the valuation on the stock, but maybe if you can talk in terms of like trough E. P. S.
Now a floor in the stock price can have what what what kind of signals are you, sending but that are with that upside.
[laughter], Yeah, well you know.
Ravi we we believe that even at the stock price today, it's still it's still cheap you know maybe not within the next six months, maybe because there is a recession coming but long term you know if you look the next five years, but we believe that at todays prices you know its the best use of our.
Cash because don't forget we do large M&A every three years on average and right now we're not doing in 'twenty two anything big anything of size that may come in twenty-three if market condition are are are fine but.
But in the meantime, we just buy back something that we know that what we're buying for sure is is T. F. I. So we'll keep we'll stay very aggressive on our buyback because we believe that long term valuation of T. F. I is still undervalued.
We believe that our T force rate could could be a navy yard down there or like I said over the next two to three years, we are investing in technology to help our team there we.
We're also investing in our equipment, which was you know a very under invested for a few years.
So we believe that a T T force rate could be a Nader you are within the next few years like I said. So this is why for us buying back the stock long term, it's a great deal for our shoulder.
Great. Thanks, a lot.
Luxury.
Thank you our.
Our next question comes from the line of Ken Hook style from Bank of America. Please go ahead.
Great. Good morning, Alain maybe clarify that that last point you mentioned earlier in your opening comments that you thought the LTE all the U S. L deal could be similar to Canada. You just said in a D O R and obviously, Canada is now pushing below 70.
80, or target or are you throwing it out there longer term.
No no no. We're still we're still staying with a target of 80, you are okay, which is quite a challenge because don't forget a year ago. When we bought the company and the company was not very successful at the time. So now we're from a 98 now we're down to 88, we're making all these investments in technology and equipment and people, okay and and our.
[noise] forecasts is really to be a navy or within the next two years now can we be as good as Canada I mean, that's a different country. That's a different story, we are a dominant player in Canada. We are not a dominant player in the U S. Today. So no what we're saying is that the same recipe okay that are baked.
Cake, Okay of success in Canada, we're working with our U S team, okay to bringing a similar approach similar philosophy.
You guys have to do more with less you know we cannot haul freight that does not fit and if you go back to a year ago. When we bought the company I would say that about a third of the afraid that we were all in at the time did not fit okay. So it's not a situation that has been corrected.
In 12 months it will take more than 12 months to correct. We've made a lot of strive doing that but no. I mean that are good for T force rate reasonable target for the next two years is is a navy or it's not a 70 or 70 or you know it's it's best in class in the U S. I mean, there's only one company.
One of our peers, that's there and in the us where theyre, Okay in Canada, but Canada is not the U S.
Yeah. Thanks, I just wanted to clarify if you were setting a different signal.
No no no no no. It just to continue on that you sold a terminal you know is that just the start of youre digging through the process in terms of what L. T. O you know opportunities within the U S or was that a special case out in California.
Well that was a special situation because so far I mean are we got.
Read of one lease in Chicago, we're gonna be selling two small terminals to one of our peers, but that was a major one okay. So the usage of that terminal was very very small so that was a kind of a one timer, but for sure like I said earlier, when we bought the company a year ago are these.
Is where are they were managing about I would say like 11 to 12000 doors and we believe that there's at least 3000 doors to many so we just sold 74 to this to this are purchased from a third party, but theres more to come so are we going to be selling the terminal or are we gonna be a rent.
<unk> space like we do in Canada on our dock to third party or we gotta be signed to rent space in our yard because we have lots of space available in our yard for sure. Okay, but year. One was really just to try to understand what's going on okay and now our real estate team is working aggressively with our op.
<unk> team to identify the opportunity for renting space in our yard and our dock in terms of selling excess real estate that I said that was more of a one timer, although we're selling some small terminals here and there but as a matter of fact, we're also buying in one terminal four in one of our peers.
In Sacramento, Okay. So at least will be turned over to one of our own terminal in Sacramento. We're also looking at buying another one in Louisiana. So it's just a real estate complete our analysis, that's been going on and we didn't talk on the script about the environment, okay, but very important to see.
Say that we've pulled out fueling thanks, and and all of this equipment and about 40 of our sites. So far we shut down 100 fueling operation within the network and we've cleaning up all this environmental as we speak.
I think a great to watch and I appreciate your thoughts and insights. Thank you.
Pleasure again.
Yeah.
Thank you.
Our next question comes from the line of Jordan, Hi, legal.
From Goldman Sachs. Please go ahead.
Yeah, Hi morning, I was wondering if you could drill down a little bit deeper on the truckload profitability for the quarter specialized Canadian.
And I mean, just at a really big step up in margin and maybe give a little more details around that thank you.
Yeah very good question, Jordan, So our Canadian L. T L. Our Canadian truckload I mean, our van Division at you know they've done a fantastic job in the quarter Q2, they took advantage of market condition and they produce a known Lori in the 75 neighborhood and the same of our specialty trucks.
Because now specialty truckload is big Okay. We're the largest player by far in Canada are mostly on the eastern part of Canada, Ontario, Quebec, and and we're building also a quite solid specialty truckload, okay in the U S. Under the leadership of Steve brochure, and we reported a very improved.
Or are there because don't forget we've made a lot of acquisition in that sector over the last 12 to 18 months small tuck ins here and there and when we buy these companies normally they run a 95 or on average when we buy those guys and Steve and his team are slowly, bringing those guys closer.
To let's say, a 90 or and then in an 88 of the war and then an 85 or so we had a fantastic quarter in our specialty on the regular U S. Operation you know with the acquisition of U P. S. A year ago, we got about 750 trucks in the U P. S truckload dedicated division.
That was losing a ton of money, we were losing about $5 million a quarter. When we acquired this division and at the same time. We've also moved all the over the road operation of Transport America, two CFR. So C. F. I kept all the over the road the operation of the old T. A L.
And Ta kept all need the dedicated business that was intertwined okay with the over the road operation. So now the old T operation, which is about 500 trucks and the combination of the old U P. S. Truckload division, which is about 700 trucks the total of that dedicated.
The operation is 12 under drugs a year ago. These guys were losing money big time because of U P. S. Mostly know greg's team working with Eric they've turned the tide they've turned the page they've turned the corner and now we are in a profitable environment, Okay running an operation that is Iran.
That 94 or and and the reason we did the split is that we want Greg are seem to be really focus on over the road, which is a different world. Okay. Then dedicated dedicated is not the same kind of business in our mind, okay. Because we run also some dedicated business in Canada and for US it's always.
He's been part of our specialty truckload. So this is why we've announced on the call. This morning that we're making these changes so Greg keeps the over the road Eric is now a leader in the dedicated working with Steve's team in the U S.
Just a little complex.
Our earnings outlook then.
Within a few points the margin level.
Going forward for the combo.
Well, that's the intention of Jordan that's the intention is that by having their seemed more focus on just over the road with or CFR Luis CCAR Division in Mexico that guys, let's focus on being better at over the road and in the meantime, Eric is as running as operation working closely with Brooks.
Al.
Thank you.
Thank you.
Our next question comes from the line of Brian Austin back from J P. Morgan. Please go ahead.
Yeah.
Hey, good morning, Thanks for taking the question line.
So I wanted to ask you ask you a couple of questions about labor to start we've seen a b five not be heard by the Supreme Court just given the nature of T. F. EIS model and I think you just purchased.
The carrier service in California, maybe.
Maybe give us an update on on that as well as what you're expecting with the Teamsters on T force rate I'm.
Now coming up in the next year.
Yep, well there'd be five are I mean, we've been we've been preparing for that for the last two years. We at the time. When this came out we believe that this this would stay stayed the course, so that you need to eat Corey that we bought a few months ago is an employee model, okay, and we're just getting ready.
To grow with the employee model in California, what we've done with our last mile Operation is we don't have.
The owner operator today that works for us.
And has only one truck, okay and that creates an issue with AB five so I mean, we've cleaned all of this in the last I would say two to three years is to make sure that we would be you know clear of any issues with AB five as it is now.
Now in terms of our our discussion with the Teamsters I mean, we feel really good about that I mean.
Our intention is always like I said many times you know our our asset is our people and in the our approach with with our people is that we want salaries to be market and we are where we are there I mean, the base salary of our employees is market for sure it's in market.
Could be different in California, okay that it could be let's say in our Louisiana, Okay different market condition, or New York, or Texas, and our approach to US two two to our discussion is guys. Let's see what we can do together I mean, we're not about Ah trial.
Squeeze salary reduction or or whatever you want to call. Our approach is to do more with less so how do we do that.
It's very easy to say, but how do we do that so our approach US is guys can we can we reduce the because right now our driver spend about 55% our P. N D drivers spend about 55% of the time driving.
Why because between each and every stuff that we do overall T force rate our guys have to drive between on average 10 to 12 miles. So they spend more time driving a truck then picking up freight well that's completely different than what we do us and Canada. So why do we say to our team guys. We have.
To do more with less as we have to drive less miles so that our drivers pick up more freight.
And how do you do that well, let's focus on customer that are close.
Do you have a terminal why would you run 50 60 miles to deliver a pilot tried to deliver around your terminal a radius of 10 15 20 miles okay, but why would you run all 60 miles in rural areas, where there's no density. So that is one aspect the other aspect.
We're trying to do as we do in our P&C and if you look at our P&C results why are we so good is because there's been a little bit of a shift between b to C and b to B and B to B. Our density is way better. We've always said that b to B is way better and density. So we've done less in our P&C there's of a volume.
But our profit came up because of that change in mix. So what we're saying to our guys in the U S. L. T O US guys. When you stop at a customer and on average you pick up 1.1 shipping well try to grow that to one point through 1416 to two right. So you pick up more freight you.
Drive less miles so that's how you do more with less it's got nothing to do with the salary of the employee okay. So us we want to pay market conditions for salaries and this is what we'll be talking with our friends at the Teamsters.
Our job is to manage those employee better.
Okay to get more yield out of an hour of work.
Right two to have better tools like we're implementing over the course of 'twenty two.
AI tools to help us with our line haul operation and we believe that just the improvement on our Lino could provide us with a one one point saving on R. O R.
So we do more with less but that's got nothing to do with the rate per mile that we're paying our driver.
It's just that we manage those employees better.
Yeah.
Thank you for all those details Atlanta, and just to follow up on the building shipment density it looks like the T Force freight.
Shipments in tons are still down a bit quarter together.
Is that still part of the you know one third of the business that doesn't fit and maybe you could share some thoughts on where you are in that journey and when that might start to inflect positive. Thank you yeah yeah.
You're absolutely right I mean, if you look at <unk> history every time, we buy a company it always shrinks step one and T Force rate is not an exception is is what we do right now for sure. We have some kind of a pause right now okay. In terms of because you know a third of the ship and you can't.
Churn a third of your shipping within let's say a year. It's impossible. So what we did is we got rid of everything that was really really bad okay, but we still have some bad stuff in there.
But you know what between you and me we still have some bad stuff in Canada, right. So nobody's perfect, but in the U S.
It's going to take us to sure everything that doesn't fit.
Probably another two years right too because we have to do it on a timely manner. We can run from let's say 30000 ship in Dallas to 'twenty, it's not going to work right.
So this is why we're slowly and aggressively okay, replacing the things that are the worst the worst afraid that we've got you know what it's like.
Hauling mattresses that doesn't fit T force right.
<unk> carpet I mean, we were not in that business that should not be us right.
So to answer your question you know, we're probably at a T flat, okay organic growth or a little bit negative maybe in the next few quarters, but after that okay. We are investing in our sales team. Our approach is is different and one thing that's also important.
To note our guys is that our G. F P, which is our diamond within T Force right. There are our revenue are growing by about 20% a year.
Hey, that's our asset light operation in our L. T O.
Yeah.
Thanks, Helane very helpful. I appreciate it.
Pleasure.
Thank you. Our next question comes from the line of Tom <unk> from UBS. Please go ahead.
Yeah good morning.
Right.
Your I think theres been.
You know maybe greater caution on the truckload business that we've heard from you over I don't know if it's over the past year or whatever I think maybe some frustration with some of the challenges.
This quarter was.
You know I think we performed well across the board but.
Truckload was really notable how strong a performance was.
You know on the margin side and I think you said on an earlier question that you thought it was sustainable at this level.
So with that as a backdrop does it make you more optimistic.
And that business is an attractive segment.
You know and maybe something you'd want to grow more in the future and maybe that's more a conventional T. L question, because I know you like specialized TL.
Yeah, Yeah, you're absolutely right, we prefer okay for sure specialized but within our over the road operation. Okay. We have one part of our business, which is temperature control. Okay. That's doing really really well and we're growing that as a matter of fact, we did a small acquisition of D. N D. A small joplin 100.
Truck company. So we are investing in temperature control on the dry van side, you know I mean.
Right now our focus is really to do better with the assets that we have now right.
And that's why we did that split so that Gregg seen could be more focus on over the road and temperature control and then Eric has got because dedicated is really not the same business in our mind than it is with the overall stuff over the road stuff I mean, it it's not the same story to the employee.
Turnover is not the same so you know the overrode stuff 900 miles average length of all you end up with something like an 85 or 90 turnover dedicated normally you should be closer to a 50 in the U S. I'm talking 50, maybe 60 AR turnover. So it's a different stories.
The same so that's why we made the slit working with our with our dedicated team in Canada.
Under Steve broke sure that made a lot of sense. Eric. So these are changes that we're making to make sure that you know we could do a better job.
Yeah.
Right, Okay, so, but it doesn't necessarily change your you know your view of what you might want to grow in the future through acquisitions no truckload.
No no no no where we're doing a lot of small M&A. Okay is in the U S. In our specialty truckload. So you know we just made to acquisition lately in the U S. Two to three okay, mostly on the flatbed side.
And this is where we're growing on the U S side is our specialty truckload not our van Division over the road Division.
Right, Okay, and then I guess second question a follow up.
How do you think about where you might have a risk on the cycle side I mean, it seems like you have a pretty strong exposure to industrial through L. T L and specialized P. L and everything and there is seems to be on the U S. Consumer side, So where do you think if there is a falloff in imports and in kind of consumer related freight.
Where you know, which businesses, where we where would you see risk and potential I don't know pressure on revenue and performance.
Looking out a quarter or two.
Yeah, I would I would say that it to me to me, it's mostly our truckload operation. That's that you may be more concerned that our U S. L. T. L. R. R. U S logistics, our last mile are in our logistics you know when the market is getting you know a little bit softer.
We do an even better job than what we're doing today. So to me. It's really you know the truckload operation the van operation that could be a little bit more affected than the rest of the business.
Right. Okay makes sense. Thank you for the time.
It's a pleasure.
Okay.
Okay.
Thank you our.
Our next question comes from the line of <unk> Gupta from Scotia Bank. Please go ahead.
Thanks, operator, good morning, how are you.
I'm good how about you.
Thanks, Helane. Thanks, So maybe digging for there on the margin side I know you touched on the Canadian conventional truck to load a bear the margin was pretty close to 30%, but you also saw a 30% kind of margins and PNC and Canadian L. D L.
Just wondering like you talked about some salary levels.
Well as you know margin control et cetera, but was there anything nonrecurring in nature like not necessarily you know sales or something but just anything that benefited you in Q2 for those two or three segments, what 30% margin or was that purely kind of a good operational performance and you can be to expect.
Those segments to deliver those kind of margins going forward.
Yeah, Yeah well.
On the truckload that Canadian truckload is really the market condition that we really took advantage of you know the market has been tight activity has been good. Okay. So really its just market condition right, though we took advantage because if you go back to let's say two three quarters ago. I mean, we were not able okay.
To provide these kinds of resolved because the market was not helping us on that so so really for our Canadian truckload Canadian L. T. L. It's a little bit of a different story because we keep on building you know more afraid more dense to reduce our costs.
So I could say that our because of fuel being so high.
And when your density is also above average okay compared to your peers, which is not the case for us in the U S. Like I said earlier our density in the U S compared to our peers, it's probably not as good but I would say that our density in Canada is way better okay.
Hey, Dan I would say compared to our peers normal and when fuel is high and you've got efficient equipment, which is not the case I mean in the U S. We have old trucks. So we get the double whammy of not being efficient. So we have all trucks and not good density. So fuel is high in the U S. L. T L. It.
Kills us on the Canadian side, we have a young fleet, Okay, and we have high density So to answer your question, maybe on the package and the LDL in Canada, because fuel is high it's a little bit of a tailwind for us that let's say if fuel goes back to normal.
So it could be a little bit of a detriment to our profitability because we make it a little bit is because we are so efficient, but also help us on the U S side, if you're all gums down okay. It should be a good benefits for us because it will take us two years to bring a if our fleet to a normal age.
See we have reduced the average age of one by one year. Okay from 8.3, when we bought the company average age up trucks in the U S. L. T O now we're down to about seven and a quarter.
Seven a quarter is way too all right. So we're going to bring that down. So that is the only thing I would say that is something that is.
Unusual okay that if fuel goes back to normal yeah yeah.
Right that makes sense. Thanks, Nicole early and then moving on to the pricing environment.
I think some of your U S peers have recently.
Alluded to the fact that rates have started to kind of soft and I'm not talking about spot I'm talking about contract I know you have minimal exposure to spot, but even on the contract side. They are anticipating some sort of softness in the second half well seek wisely, they will still be up versus last year that maybe.
What are you seeing from your perspective in Europe .
A rate discussion with your customers and I know your book kind of comes around pretty quickly every year, so any thought yet.
You don't want.
Because of all the effort that we had to do on our dedicated because when we got this business from UBS. It was really really losing money big time, Okay, and Gregg team's focus has been on correcting that so a lot of energy from the sales Department and everybody was there to correct the situation, but I believe.
That our average revenue per mile in our over the road today is under market.
The guys were to focus on dedicated maybe not enough.
Okay on over the road so our contracted rate today, Okay. We're still not seeing that pressure that some of our peers may have because probably the quality of revenue is better than ours, because us. Our team was had to focus more on the dedicated to correct the situation.
That was completely not acceptable we were losing money I didn't make any sense, we ideas with customary that had no sense, but you know what when you have to adjust rate. It's hard to you have to chase the customer. So it takes time and you know a lot of discussion et cetera, et cetera, so a little bit of out of.
Our focus because of that dedicated I would say that you know maybe a race at overall compared to our peers are not where they should have been okay.
So we're still over book every morning as of today, we still are overbooked by 5% to 8% to 10% we used to be overbook by 15 that world, but overbook only by five okay to Ted.
But still I don't see it in the next.
Let's say two quarters to for the rest of the year.
Don't see any pressure on the truckload U S truckload rates for us.
That's great color. Thank all right I appreciate the time.
Pleasure.
Thank you.
Ladies and gentlemen, as a reminder, please limit yourself to one question and a follow up.
Our next question comes from the line of Kevin Chiang.
See I D. C. Please go ahead.
Hi, good morning, Congrats on the good results here.
Thank you Kevin.
Maybe just I'll keep it to one question if I could just look at your wholesale division if I look at your revenue per shipment excluding.
Excluding fuel for both of you up in Canada.
Sequentially. They were up a couple of percentage in one of your peers north of the ball.
Order.
Oh, it was pointing to.
The pricing environment in the Canadian market, and I think part of that might be.
I think Bobby method.
So maybe a little bit of a catch up on pricing be interesting to hear what you think the trends.
L T O yields or pricing or revenue per shipment, but whatever metric you want you want to call out looks like through the balance of the year and then maybe.
Into 2000 22023.
Well you see Kevin if you compare us in the U S. L deal with our peers. The big Big issue is our average weight right. So average weight is not even 1100 pounds per shipment.
And most of our peers are at least above 1300.
So you know the cost of all the palette, that's 1100 pound versus you know delivering a pilot or picking up about 1600 pounds. I mean, the costs are basically the same.
But the problem is the revenue is not the same right why because most of the pricing is based on you know per hundred weight.
So this is part of our strategy of improving the quality of revenue is two whole like we do in Canada. Our L. T L operation in Canada, I mean, we're heavy in industrial L. T O. There's not much industrial deal in Canada, but that's where we're focusing and that's why if you look at the average wait for shipping.
Canada is day and night versus what it is in the U S. Right. So so to me.
What I see I mean, what the guys are doing in Canada is exceptional.
Average weight is wow are or as you know we've never done a 69 the war right, but on the U S side, we've got a lot of things to fix like I said, when we bought the company at least a third of the shipment didn't make any sense. So we've corrected some of that but we still have to correct way more okay and this.
Is also part of the issues of the weight per shipment. So we've improve over a year and a little bit the weight per shipment just a little bit not much not enough right. So that's also part of our focus on our kind of three or four leg chairs.
I said earlier, one leg is to pick up more freight per sop. Another leg is to pick up more freight around your terminal so you're not stupid and having milk run about 300 miles or 200 miles that the guy keeps driving for about 65% or 70% of his time spending money and not picking up any freight and then.
Also as the weight per shipment. So we gotta be focus on the afraid that fits you don't want freight that is so light that waste to 100 pound because you're you're paid by the pound by the 100 pound right.
So to me.
I mean in the U S. We still have lots of opportunities lots of things from the fleet size. We believe that you know if we are.
Bringing our fleet to where it should be okay. There are some age we're gonna save on M. P. G are we gonna save on energy were going to save on maintenance when they save on the size of the fleet et cetera, et cetera, and that's about between two to three points of war, okay that.
We're not getting because compared to my peers I run a very old fleet right.
So all in all we're really happy with what's going on in our L. T. L for sure I mean, Canada is well U S is well guys are doing a much better job today than a year ago.
But that's just a clarification question when you think about E O. Our target in the next couple of years in the U S.
I guess that assumes that the fleet that's what place so you've got the two to three points.
The average wait gets up there are those kind of the two kpis that kind of are the major drivers of the ADR or was there anything else you would call.
All right.
Yeah. So so what we're saying Kevin in general Okay is if you look at today as operation So where are we going to take the let's say the 90 or to those eight to 10 points. Okay fleet. Okay is two to three points that is the big thing.
Getting more freight burst up the productivity of our operation is another two to three points.
The line all Okay that are you know, where we're bringing some new tools to help our guys. We believe that this is between the one to two points. Okay. Lino is our biggest expense at about 38% of revenue right. So you know it's a huge change okay. So the guys are.
Were working it said, it's a complex that work that we have in the U S. Contrary to Canada, Canada is a very easy.
Easy.
Complex, because you're Lino runs Toronto, Montreal, a little bit to the west no big deal, but in the U S. It's complicated because we got 20 hubs. So the tools that they have right now are not tools of the 21st century. So that's what we're doing okay, we should be up and running 100% by the end of this year.
And they're on the line, though we believe between you know one to two points of war will reduce right.
So all in all we have a path okay to the AUR, but that takes time right.
Perfect I'll leave it there have a great weekend. Thank you very much. Thank you likewise.
Thank you our next.
Next question comes from the line of Walter <unk> with RBC capital markets. Please go ahead. Thanks.
Thanks, very much good morning Ali.
Good morning Walter.
So I want to come back to the question on Segmenting you mentioned some leadership changes you've carved out U S. T L you're hosting an investor day.
Just curious as to whether all of this suggests that you're looking at businesses.
Either more on a standalone basis would you would you consider some to be none.
Non core but not strategic for you that you you could spin out that or you know just curious where they're all of these.
Changes are leading to you know something that you might might be C. Maybe you want to say it here, but I am I pulling together things that accurately here or or is that just something youre doing the normal course of how you're managing your business and nothing to read into.
It's normal course, Walter I'll give you an example, which I did talk about on the script. So what we've done is our western Canadian operation that was the responsibility of Steve broke Shaw. Okay. We said, Steve you know what this gotta go it's got to go to Chris Stryker switch as its own operation and out West. So we did that change about too much.
[noise] ago, and and that change was done why so we remove about $100 million revenue from.
From CS management, Okay, and we gave it to Chris because we saw an opportunity in a dedicated I mean, Greg and his team have done a fantastic job to turn this thing around okay, but doing that okay. Like I said earlier, we lost focus on the over the road thing at <unk>.
More importantly on the quality of revenue the revenue per mile I I'm convinced that we've missed okay. Because they were to focus on trying to correct.
Our situation okay at.
A dedicated so this is why you know our approach that says okay. Greg that's let's have you and your team focus on over the road only so that we could catch okay everything that a we didn't do because we were to focus on something that we have to correct and Steve Okay is growing more and more in.
Into our specialty truckload and there were also made a split between the flatbed operation that we have in the U S and the tank operation in the U S. So so cameron that used to run vote, okay until about two months ago Cameron ulcer now runs only that the tank operation.
And someone else forget his name runs our U S flatbed operation, which is upside I mean, we're doing about $100 million of flatbed in the U S. Today, and now bringing dedicated Eric with about 1200 trucks into the same fall or the same team.
Other thing also is the T. M S. Okay, we run mostly a T M W.
And T. M. W is the software in our dedicated that we got from U P. S. It's also the same kind of system that we have at the old T. A.
So it's two different role and our specialty in the U S. They all run T M W.
So you know it is the standardization thing that we're doing there Walter.
That makes sense, so more of an optimization standardization rub yesterday.
Got it okay.
Acquisitions, you mentioned, perhaps in 'twenty three I know Ah recently, when we were chatting you you mentioned.
You're always working on on on larger transactions and they take time.
Yes, and there were a few that you were you were kind of working on what my question is do you think those are advancing or mercury conditions, right now slowing that process down or pausing it or are they or are they continuing to proceed such that you know in 2023, we could very well see another larger deal from tier five.
Walter I think it's possible I think it's possible, but you can't say anything until it's done right, but for sure like I said, many many times you cannot buy something of size and do that overnight. That's not our style. We always believed that you make your money on the buying their own selling so you got to be smart.
Buyer and take opportunity.
Where are they where they lay so.
Plenty to its impossible for us what we're doing as we said, okay. We're buying T. F. I, we bought $2 6 million shares in Q2, you know we've increased from seven to eight something okay. According to our board approval. So we will be probably very active with our and CIB in 'twenty two.
Now going into 'twenty, three and you know what our forecast is that you know if we exercise all the share buyback that we could do well until the end of October because that is the and CIB. That's the expiry date of our actual NCI B b.
Buying back.
We believe that our leverage.
It is going to be at about one.
Right.
So it's it's it's going to be incredible. So that's our focus now twenty-three for sure if if it fits if it makes sense if market condition and maybe you know like everybody is saying, maybe there's a recession coming but if a recession is coming I like that on the M&A side because it is adjusted the value.
You, Okay through a recession right everybody is evaluation comes down if you look at since April most trucking companies valuations have come down 10, 15, 20% because the perception is that we're going into a recession right.
So that's why I think 23 is the right timing for us.
That you know our target.
That we have are still very interesting and let's.
Let's see what what 'twenty two ends up me and I.
I think it will be ready for something of size in 'twenty three.
When you got good free cash flow gives you lots of options buyback stock and still be able to do acquisition with a clean balance sheet. So that's great.
That's on a great quarter appreciate the time.
Thank you Walter.
Thank you.
Our next question comes from the line of Jason Seidl from Cowen. Please go ahead.
And good morning.
Morning, Jason.
Wanted to ask a couple questions here on some operational issues. So if you look at.
Your P&C business I mean, obviously theres been a switch away from the consumer more to be to be how should we think about the margins in that business trending forward with this shift going on.
I think that most of the shift Jason Whats Youre seeing in Q2, I think that it's probably going to be similar in the next three to four Q3 to four Q4 in 'twenty two I think that the switch okay. So if I take one of our divisions for instance, Ics.
Were really badly affected by B to b, the older closing et cetera et cetera. They are back to normal now right. So those guys are back to normal T. F. I S. Okay were badly affected by beat to be those guys are back to normal now our campfire Loomis operation mostly Luna.
Yes, Okay. There we've been down on volume because they were a big B to C player. When this COVID-19 thing hit us they were the choice the tool that we use and this is why our loomis operation as shed some volume and B to C will probably continue.
To shed a little bit of volume into the peak season Okay.
22, why because the consumers okay, we see that all around.
A lot of these guys are going back to the mall right. So it helps our T F. I S. It helps our Ics guys to the detriment mostly of our Loomis guys.
Okay. That's great color wanted to also follow up with a Canadian L. T. L. I mean, absolutely an amazing a war.
It's been on one of your docs years ago, when it was under a.
Another brand name with the with the rail tracks running through it and I think they were operating in the Ninety's so to be operating in the Sixty's is an amazing accomplishment.
Yes, we think about that going forward is this sort of plateauing and then we should think about potential growth on this or do you think there's even more to go there on the or.
No I think that you know when you run on the Canadian market are adjacent to 70 or I mean, it's like him.
[laughter], you cannot say impossible, but it's like very very difficult to do better than that I mean, you know our guys are working every day you know like Oh very professional to do better but you know when you are at say 69 70, you are in Canada, because if you compare the quality of revenue okay of our Canadian <unk>.
Shipping same way same legs have all okay, you compare that with the U S even better to the.
One of our peer in the U S is running at 769 or compare the quality of revenue of our U S 69, or with the quality of US. We do 69, Oh are you you will say Wow. This is incredible because the Canadian market.
<unk> is such a poor market in terms of quality of revenue.
Our team are doing a fantastic job if we if we would be able to replicate what we do in the U S. Okay.
I mean in Canada, and the U S with the same quality of revenue that we have in the U S. Even with shipment that don't fit we would probably be running at 55 of war.
Okay. So if you do them out because in our MD&A. Okay. We are showing all these different numbers and you would see that wow. Okay. So to answer you make a long story short.
It's difficult to do better than that right, but we've got to try.
Well it was extremely impressive nonetheless, and I look forward to you guys posted gains in the U S Division impressive quarter. Thank you for the time.
Thank you Jason.
Yeah.
Thank you.
Our next question comes from the line of benign part Yeah with Desjardins capital market. Please go ahead.
Hey, good morning, and congrats for the very impressive quarter.
Thank you Benoit.
Yes.
Strong performance from <unk>.
Yeah.
With the very impressive war, but.
We are aware about the supply chain issues in Montreal, and Toronto, the lack of warehousing and dry it's capped by city.
CDN obviously.
As many tools in their toolbox to help out customers. So could you provide some color about how.
The supply chain issues.
Yes.
What are the strong performance work boots segment.
It's sustainable going forward.
Like Jim going back to more normal levels at one point.
You know what you're right Ben why it may be may be you know, but our guys really took advantage of the market for sure because we have a good pulse we don't want the market can sustain and we took advantage of it now if supply chain issue within the year or 18 months or maybe because of recession.
Supply chain gets better.
Or worse I don't really know what one thing is for sure is that you know we always take advantage of market condition, the only areas, where our we've missed the boat a little bit like I said earlier is our U S. T O over the road because the Guy we're really focus on correcting our situation and our dedicated that need a lot of attention.
But the rest of our operations really are on Pauls, okay with market condition now if market condition change for sure that could affect us okay down the road, but you know what that also help us on the M&A side I know so if you look at 20 years of T F.
<unk> is Sri you know good times Bad times, but you know.
We adjust ourselves and we performed well.
Yeah, Okay, that's great color.
Ali.
With respect to the $8.
Yes target for the year.
Could you talk a little bit about the expectation for gain on the rolling stock in the second half when looking.
Looking at the Capex also.
Weaker in the quarter. So if you could or mentioned some color about the capex forecast your ability to get new trucks. These days that would be off yeah.
Yeah, well Fisher Q2 on the Capex side has been slow okay for our L. T O U S. L. T. L. I mean are we the the suppliers keep pushing back now we believe that three and four will be important in capex for our U S. L. T. L. You know, we're trying to catch up I mean, so far we replace.
About 650 trucks in the U S, which is way too low we believe that by the end of 'twenty two we'll be in a position to have been able to replace about 1400 of those trucks. So capex on Q3, and Q4 will be more important now in terms of gain.
Okay on equipment, we don't believe that the huge gain that we had in Q2, because we also took advantage of the market see we were selling.
Trailers in the U S for a $24000 in 2008 2009, Okay. In Q2 as of today. The same trailer is being sold for 515, a 15000. So it's still a lot of dollars for an old trailers, but it's not 25000 like it was like.
Two months ago right. So we don't believe that in three and four the gain on selling our pre owned used equipment is going to be in the same nature Q2 was exceptional on that in that regard.
But we.
Believe very very confident that both our $8 per share and our free cash of 900.
Okay. Thanks for the color there.
Yeah.
So I shouldn't but anyway.
Thank you.
Next question comes from the line of Bascom majors with Susquehanna. Please go ahead.
Can you talk about how would you compare quantitatively. The return you expect on buying your stock versus the return you think you can earn from M&A and what that comparison looks like today, where your stock price is trading this morning, and just to clarify does the EPS guidance assume that you get.
Through the full expanded eight 8 million share buyback or does it not no no.
No no when we talk about are the $8 per share it assumes a share count as we have it today after that two 6 million.
Shares that we bought back in Q2.
Okay.
So if we buy back another let's say two to 3 million shares okay that could be a different story on the EPS.
Okay. Thank you and in the return comparison.
How does your hyper returned comparison is always difficult to do okay, but what we believe is if you look at it today he or she may.
Maybe it's close to a breakeven always depending on what is the cost of purchasing their stock back, but we know long term, okay, it's going to be a huge advantage for our shoulder.
I'm talking long term as I'm talking three to five years.
Okay.
Thank you for the time.
Pleasure.
Thank you.
Next question comes from the line of Ari Rosa.
With credit Suisse. Please go ahead.
Great. Thank you good morning Ilan.
Good morning impressive results here.
So.
You laid out a path to get to an 80 or on the U S. L T outside.
Obviously, you guys have done since acquiring that business has been extremely impressive.
Maybe I could just get you to speculate or discuss.
What would be the obstacles to getting to that 80 or you know two to three years down the road if you guys aren't there.
What would be kind of the reasons that that might not happen and specifically on the kind of competitive landscape in U S. L. T. L. We've seen a number of the big players looking to expand.
And obviously a lot of people are going over after that heavier weighted shipments.
Related shipments.
That sort of thing does that present any kind of competitive risks to achieving that.
And if not that is there something else that that might be an obstacle to getting there.
You know what I don't think so I think that you know we have a lot of opportunity for us to to correct. The situation that has been there for too long like you know when you run an old fleet like we do now Okay. That's got nothing to do with the market that's got something to do with the decision of.
The owner of the company to invest or not to invest and when you don't invest okay. Well. That's the result that you're getting is your maintenance cost per mile instead of being five cents a mile on the equipment on your truck is going to run to 40 cents a mile because you're running in 2008 or 2009 truck. So so on the two.
Two three points of O R. Okay that relates to the fleet. This is us I mean this is us investing in the future of the company right.
On trying to do more with less on the PND side and on the.
The line haul side again this is us I mean, we have to provide our team there the tools to be able to be efficient like our peers.
Or is that are you know we're implementing in our line though.
Most of our peers are using that tool. So for sure. They are more efficient than us because it's not about market condition. It's about just providing our team the tools to be successful.
And that's what we're doing we're implementing those tools on the PND side and on the you know the freight that's fits again, that's a decision that was made to go after everything that moves right our approach us as more and no no no no we're not jack-of-all-trades master of none where we're not.
<unk> mattresses, where not only serve board to California, that's not us.
So guys, let's focus on what makes sense, okay, let's try to pick up more freight flow through to our terminal, let's try to pick up more freight per stop for per customer. That's what we do in Canada. So it's got nothing to do with the market. This is all us doing a better job.
Okay with better tools right now if market condition change, let's say that the you know if I look at one of my peers. My best fear. Okay. Ex fuel is revenue per shipment was up 9% year over year.
That's great that's fantastic.
But that's not us I mean.
As you know we are big time, because we got rid of a lot of trade that did not fit that's how we're able to get a better revenue per shipment, we did not raise our raw.
Rate on average by 9% year over year with existing customer in no way, we're not in that position today right. So a lot of improvement from a 90 or to Anita you are it's just us it's us doing a better job, providing our team with better equipment providing them.
With AI tools, because we run a complex network that that's just us.
Got it got it.
Looking forward to seeing that play out Oh I'll keep my questions to one thanks for the time okay.
Thank you.
Thank you.
Next question comes from the line of Cameroon Dukson.
With National Bank financial Please go ahead.
Thanks, very much good morning.
Kevin So.
So I just wanted to actually follow up on the comment you just made about are some of the peers and maybe their ability to price a little higher and I guess one of the things that some of them are pointed out is having.
Having very good service metrics is one of the to get the levers for having improved pricing could you talk about I guess, the the T Force freight service metrics, how that has evolved since you've owned the company and you want more maybe needs to be done that maybe down. The road you will have maybe a little more pricing power.
Yeah, that's a very good question Cameron and for sure you should compare me with the best peers in the U S. Our service is not up to that level, Okay, and you're right you're absolutely right you got the correct your service to be able to or adjust your service to let's see what the peers are now one of the reason okay.
Our service is not up to par compared to our guys, which we have to approve it and we keep improving it is is the equipment right and the tools. We have right. So so that's something that will be corrected over time and.
So claims it's also a nightmare for customers. So we used to have one or 1.25% of our revenue to pay for claims. So so when you have claims customers are not happy because you have players because either you break the guy's stuff or you lose it right. So now are clear.
<unk> per dollar of revenue is down to about <unk> five. So so we are solving this issue billing okay.
Billing with the T Force right.
From day, one and this has been an ongoing thing for us okay.
I mean billing failures, we have way too many right.
Alright. So so this is what we've done is we've brought in all the billing okay fast as fast as we could from.
The TSA the deal we have with UBS into our own family the customer Master file the same thing. So if you compare me with my peers on mistakes on billing well for sure.
First and most of my peers. So this is something that we are correcting and you're absolutely right Cameron.
We have to face all of these things, okay and in order to be able to get the same kind of quality of revenue as my peers right. So these are all the things like I said earlier that it's US okay, but we are investing okay, and we're bringing all of this into our own house.
So that we are in control.
It's the same same approach same philosophy as we have in Canada.
No that's great. That's extremely helpful. I'll keep it to one question thanks very much.
Specialty Kamran.
Yeah.
Okay.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session.
I would now like to turn the conference over to Mr alien, but not for closing remarks.
Well. Thank you operator, and thank you everyone for being with US. This morning again, we look forward to see many of you at our upcoming Investor Day on November <unk> as always we appreciate your interest in <unk> International and we'll keep you posted on our ongoing quest to create and unlock shareholder value. Please feel free to.
Contact us with any remaining questions and I hope everyone has a terrific weekend. Thank you again.
Yeah.
Thank you Sir the conference off P. F. I International has come to an end. Thank you for your participation you may now disconnect your lines.
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