Q1 2024 TFI International Inc Earnings Call
Good day, ladies and gentlemen, thank you for standing by welcome to <unk> International's first quarter 2024 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 again, that's one question and a follow up so that we can get to as many callers as possible further instructions for entering the key will be will be provided at that time. Please be advised that this conference call will contain statements that are forward looking.
And subject to a number of risks and uncertainties that can cause actual results to differ materially.
Also I would like to remind everyone that this conference call is being recorded on Friday April 26 2024.
I will now turn the call conference call over to Alain Bedard, Chairman, President and Chief Executive Officer Tier by International. Please go ahead Sir.
Well. Thank you operator and welcome everyone to today's call are results released yesterday. After the close showed continued performance to start the new year in the context of the price.
Lilly weak freight environment.
Alf help opportunities along with the continued hard work of our many talented team members.
Again helped P F I international delivered a solid performance.
Especially during the week you freed cycles, we sharpen our focus on the long held operating principle that we have that have helped T. F. I expand rapidly over the years through organic growth and very strategic M&A, while always maintaining a strong financial foundation through our emphasis.
Just on profitability and cash flow.
We didn't use our excess cash to intelligently invest in returning excess capital to shareholders when possible.
Starting with a high level overview during the first quarter of a year, we produce operating income of 152 million versus 166 million a year earlier with an operating margin of 9.4 relative to 10.7.
Our adjusted net income of 106 million was down from $116 million in the first quarter of 2023, and our adjusted EPS of $1 24 was down from $1.33.
We produced just over $200 million in net cash from operating activities versus 232 million last year, and we generated positive free cash flow of about 137 million relative to 196 million.
Taking a step back I'd like to point on these results first they reflect a solid performance given the economy cycle of the U S. L. T O business, which is picking up steam.
The ongoing transformation is rooted in our overreaching focus on service quality and revenue per ship.
In particular, we saw tonnage inflect positive in the quarter, leading to a 12% increase in revenue per shipment.
The second observation is that we see very tangible opportunity ahead to drive much stronger L. T L results.
There remains much work to do on cost.
All while being only in the early innings of our service driven sustainable topline improvement program.
With that overview, let's take a closer look at each of our four business segments.
P. N C. Now represents 6% of our segment revenue before fuel surcharge.
As you know this market is experiencing softer volume across the industry and our revenue before fuel surcharge was down 8%.
Given primarily by a lower weight per shipment and slightly fewer shipments.
Our P&C operating income came in at 18 million or a margin of 18% down from 27 or a margin of 24% in the prior year quarter on lower operating leverage.
Our return on invested capital.
It's still a very solid 25, 7%.
Moving on to L. T L, which is 42% of segment revenue before fuel surcharge, we generated revenue before fuel surcharge that was down 8% over the past year, while our operating income despite lower gain on assets held for sale actually grew significantly.
Can lead to 67 million, which was up 15%.
This reflects a 140 basis point increase in our operating margin.
Looking more closely at these strong results are Canadian L. T L revenue.
Before fuel surcharge grew 8% year over year on a 9% increase on shipments and our claim ratio remain low at 0.2% return on invested capital for Kenny and the LTI was 19.1.
So I need to U S. L. T L revenue before fuel surcharge of 552 million was down 3% over the past year with the decline driven by our by our asset light operation G. F. P.
In the core L. T L business, we drove tonnage up 7% weight per shipment up 13% and revenue per shipment up 12%.
In addition, our operating ratio for a U S. L. T. L improves significantly significantly up 310 basis point to 92.6 and a return on invested capital was 15 point too.
Truckload is up next now 24% of segment revenue before fuel surcharge. This market remains weak and we produce revenue before fuel surcharge of 398 million, which was down 4% year over year, reflecting a decline in miles with pricing stable in specialized but under some pressure.
Indian Van Division.
Looking closer within truckload, our specialized segment generated revenue before fuel surcharge of 321 million, which was down 5% with an operating ratio of 89 versus <unk> 85 last year.
Return on invested capital and for specialized truckload was 9.5 compared to 14.1.
Moving onto the Canadian base conventional truckload, we slightly grew our revenue before fuel surcharge of 78 million with an adjusted operating ratio of 91 compared to 81, a year earlier and that return on invested capital was 10.4 down from 21.3.
Speaking of truckload as you know earlier this month, we closed the acquisition of Dash ski ski business is very complementary to our own serving many attractive specialize in the industrial end markets and providing us even greater scale you'll.
You'll begin to see the desk contribution in the second quarter and similar to other acquisition of ours, we see an immediate opportunity to enhance its financial results.
Rounding up rounding out our business segments review logistics is 27% of segmented revenue before fuel surcharge and again produced very strong resolved this quarter outperforming the industry.
Our revenue before fuel surcharge climbed 24% over the prior year and our operating income grew 27% to 40 million.
Our acquisition last summer of Ghd continues to benefit our results for.
For the quarter, our logistics operating ratio was 91 and return invested capital held steady versus the prior year period at just 19%.
Moving right along I'll provide an update on our balance sheet and liquidity for starters, we generate free cash flow of 137 million during the first quarter.
Adding to our liquidity near the end of March we closed a 500 million dollar term loan at an attractive rate with Chaucer's due March 25, two March 27.
We ended the quarter with a funded debt to EBITDA ratio of 1.6. This very solid financial foundation as a core part of our strategy, allowing for smart investments cycle in and cycle out.
In addition to the fourth quarter acquisition that that's key during the March quarter, We completed acquisition of Hercules, a well run L. T O carrier that adds to our cross border capabilities.
We also we're proud to declare another dividend during the quarter, we our board of director again, improving 40 cents per share paid on April 15, a level of 14% higher than the prior year quarter.
Wrapping up with guidance today, we introduce our 'twenty 'twenty four EPS outlook range of 675 to $7 and we expect full year free cash flow in the range of 825 to 900 million with net Capex up 275 to 300 million.
We also plan to pay down 500 million to $600 million of debt targeting a funded debt to EBITDA ratio under a 1.7 by year end.
Alright with that operator, if you could please open the line I'd be happy to take questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Press Star two if he would like to remove your question from the queue for participants using speaker equipment that may be necessary to pick up your handset before pressing the star as a final reminder, we ask that you limit yourself to one question and one follow up one moment. Please while we poll for your questions.
Our first questions come from the line of Brian Nowak with J P. Morgan. Please proceed with your questions.
Hey, good morning, Thanks for taking the question.
So maybe you can just starting with them.
Some of the assumptions under the under the EPS guidance, because I think last last quarter, you gave us what it is a preview before the desk acquisition closed to yes, probably start with the seven so it's still within the range, but yes, there's a little bit lighter lighter than that in the lower end. So just wanted to see yes, you know what had changed and maybe what you saw with <unk>.
<unk> initially.
Yeah, well the dusky has really nothing to do with that are you know what we saw is in the Q1 has been we way worse than we anticipated would be right. Because if you look at our EPS of Q1 versus last year, our EPS is down.
Why is that well because their truckload in Q1 was just a disaster. Okay. In terms of just look at our peers in the U S.
Or our Canadian peers, I mean, it's it's a very very difficult market right now in their truckload. So this is this is the reason why you know instead of coming out with seven better than seven I mean, now we have to come to maybe you know more like 675 to seven I mean, our P&C in Canada.
As a as a very disappointing Q1.
But we believe that we'll be able to to change that over the next few quarters and get back on track to where we are normally but our P&C business is really small I mean, when you think about with the desk your acquisition or a P. N C is going to represent maybe 4% of our revenue, but C. N C. It's not it's not going to be the issue for us in two.
For I mean, we will get back on track with our P. N C that the problem is the market of our truckload now on the Canadian side.
As I've said many times I mean, we're fighting a driver Inc. A cancer that we have in Canada, whereby well, we we have competition from our from these guys that don't pay us, but they don't pay any benefits of their drivers. So that is really killing us. If you look at my or I'm I'm down 10 point.
So our year over year.
So that we don't anticipate that this is going to prove very much unless the market gets way better in terms of the freight environment.
On the U S side, I mean, we do pretty well.
If you look at if you compare us with our peers. Okay. We do pretty good but we still anticipate this freight kind of recession will will not change probably before 25, you know we have an election year in the U S. A I mean, a lot of our customers are just waiting to see what's going to happen.
Cetera et cetera.
So that's why we had to adjust a little bit from let's see seven and better to 675 to seven.
Thanks for that I appreciate it so the follow up would be just on T Force right now in that backdrop, you just outlined with the great recession, continuing maybe you can talk about some of the momentum that seems to be building, there, especially with the.
The weight per shipment moving up some.
Nice movement in yields and volume and just things moving looks like in the right direction. So.
Can that continue even if you do have that sort of backdrop, you're aligned with the broader U S freight market.
Well you see Ryan.
Brian.
We've been educating our sales team to bring freight that fits the model right. So we've been saying guys don't bring us read that average weight is 10 75.
Pound for shipping like it was so finally, you know I mean don't forget we bought this company three years ago right and me.
So it took us let's say two years just to try to convince these guys that are you know because you were paid by the way why would you hold late shipment I mean, this is stupid right, but it change it takes a long time to change. This mentality. The pricing also was bad okay and that puts us in a very non.
Competitive when the shipments were heavy so we've we had to change that we had to change the culture. We have to change a lot of things now we're not done because we still drive to minimize between each and every sub that kills our density compared to what we have in Canada, we still don't pick up enough.
Freight per stop Okay. So this is also part of the major improvement that we needs to happen for T force rate to come in to an 80 580 80 to 85 operating ratio down the road right. So their job is not done now for sure we understand that the freight environment, even in the L. P. A L S.
Soft right. Our focus right. Now is is like we just said on these three factors weight, okay density et cetera, et cetera, but also at the same time, we are working hard very hard at reducing the cost.
No. We we say that the Tiger is always the last one to survive in the jungle and.
T force rate today, I mean, we're we're a bunch of fat cows. Okay. We are way too fat, we have too many clerks, we have too many because of our technology is sold okay that it takes an army of people too to service our customer and this is something that is ongoing right now okay. So I was an exam.
Paul.
We will be improving our freight a billing system, our master file okay by the end of the year, which is causing US a lot of problem right now with billing our customers like we have too many too many issues with that and we have too. Many people at the same time. So this new tool that supposed to be implemented by year.
And this is going to help us with that our new tool on the lineup because one of the reason that we're gonna be doing better as our service is also improving so our miss pick up is improving we put more freight on the road, okay versus let's say a year ago on the line, though we use less rail okay. So rail.
Used to be a big portion of our line, though now the portion of rail is reducing and our own Lino is is picking up speed you know so I think that pretty soon we're going to be doing a probably like 60% off of the line haul miles will be our own guys. You know, let's say within a year or two so.
In order to again improve service.
So to me Bryan I mean, we still have a lot of work to do over there, but we know what to do but that's the that's the beauty is is we have to execute and we're just starting to see a little bit of improvement.
All of our execution.
Alright, thanks, very much I appreciate it.
Thank you Brian.
Thank you our next questions come from the line of Jordan Alger with Goldman Sachs. Please proceed with your questions.
Yeah, Hi morning, just to sort of follow up a little bit more.
Morning.
I know you mentioned sort of early innings in service.
Movement so.
So good to get a little bit more color on what you see.
No you've accomplished and what's next to come could get serviced and then ease.
Even though it's early innings are you at the point of service again, assuming the freight market cooperates, where you're going to have sustainability in that growth in tonnage. After our first quarter that saw an inflection.
Yeah.
Well, we believe so and you know if you look back that are an example of stupidity is miss pick up. So you know if you don't monitor that you can't you can't improve so this is something that we put in place to make sure that we monitored that now we still have a boat.
You know around the 2% of our pickup that we miss today Okay.
Pending on the terminal that you know we have better ones, we have and the ones that are not so good but you know the business afraid starts with a pickup so if you Miss the pickup you Miss the revenue. This is the kind of culture that we are changing for example, in California, where we cannot we can't afford to Miss pickup so we're changing that and that improves the service to the customer.
Can't have trusting you that you're going to show up and do that pickup right. That's number one number two is our billing system and I've been saying that for for two years. Okay. It's also a major issue of having like sand and the gearbox with our relation with customers. So we are fixing that during the course of.
24 finally, okay.
And in terms of the Lino you know if you rail your Lino a freight you're afraid on the line, though with rail.
We don't expect to be the only they expect that it's going to be on time.
Those guys are on time services is maybe not as good as the road and if you look at the my peers in the U S. I mean, the percentage of afraid that's run on the rail is is way less than then what we do us today. So this is also something that we are working on to improve.
<unk> and we can't change everything at the same time, but this is an ongoing process in 'twenty four and into 25 so.
To your question of growing this company I mean for sure right now what we've been able to do is at least grow the weight per shipment which is.
A key to success I mean again, if you compare my average weight per shipment to my peers in the U S. I'm still way too low versus those guys. If you look at my weight per shipping in Canada that we understand the business and our weight per shipment is is way more than what it is in the U S. So that.
That is also a trend we're going to keep running and improving over the course of the next year or two. So this is why we're probably in the second inning of a nine inning game or on a on that T Force right. The L. P. L business I mean, we still have to work on the cost like I said, you know our P. N D. We still.
Right and to minimize our density is not as good as it should be you know, we don't pick up enough freight per stop et cetera et cetera. So these are all the different levers that we have to you know put in place do what we do it in Canada. I mean are you know we run in the war in Canada is second to none if you look at my.
<unk>, Canada sure. It went from 75, Okay last year to 81.
But you know in 81 of our in Canada, and they're very depressed market is not bad why because we have a density that is second to none and this is why we're trying also to build in the U S.
Do more with less.
Got it.
Just as a quick follow up taking all that together is it still the thought you could do around an area where they are this year.
[laughter] well when I talk to my guys. Okay, they're convinced that they could do it I had a little bit of concern when I look at you know the the environment in the market right. Now you know I would never joined anticipated that 24 was gonna be so rough in terms of the free the environment I mean, I'm I'm telling you.
If you would have asked me six months ago, what do you think about 'twenty early 'twenty four.
I would never I've said that it would be that bad I mean, I look at the truckload guys. Some guys are losing money I mean, it's this is a this is probably one of the worst market that we've seen in the last 30 years.
Thank you.
Youre welcome. Thank you. Our next question is come from the line of Ravi Shanker with Morgan Stanley. Please proceed with your questions.
Hi, Thanks, Good morning Atlanta.
On that point on the L. P O side, how much of that box to a tee it or as macro so depending on the perkin coming backwards. There's idiosyncratic actions I mean best practices from the Canadian operations or they are putting into the U S operation and so how quickly can you implement that idiosyncratic gotcha.
Yeah, Yeah, well when we talk about the business, where I mean, we never talk about the market because we don't control the market. So when we say that our we believe that we will get to an 88 O. R. This is based on market condition that we see right now I mean, nothing is based on the market that may improve down the road, we don't budget for that because we don't control them.
Market, what we do control is our cost and our efficiency and our productivity and this is what we're trying to do now in terms of the market is let's focus on the afraid that's fits okay that we can control, let's focus on ever Youre afraid versus you know later freight which is something that slowly we're starting to improve last fall.
So I'm trying to get more freight or something that's something that we can control you know when you're having the right discussion with the customer so but this 88 okay.
It has to be our target for us in 'twenty. Four is based on guys. We have to do a better job in terms of managing our costs better productivity getting more weight per shipment. So if you look at our you know our revenue is about stable, but our shipment count is down so it helps us on the cost side, because we had the same dollars well we have to do.
A little bit less worried because we pick up less shipments right. So this is the trend is based on guys. We can't control the market, but what we can control is our cost and the freight that we pick up and deliver.
Got it that's helpful and maybe as a follow up you said earlier that you're not expecting an inflection in the cycle under a 2025. So just so I understand is your full year guidance about 24, just based on normal seasonality off of <unk> number or are you accounting for any improvement at all this year.
No the way we see it Ravi is that this is gonna be not not a great year.
In terms of the freight environment.
Okay understood. Thanks, a lot.
Youre welcome.
Thank you. Our next question is coming from the line of Tom why do it with UBS. Please proceed with your question.
Hi, Yes, good morning Alain.
Good morning, Tony.
Yeah, let's see there's a lot going on in transports these days.
Wanted to get your sense on acquisitions.
You've had.
You know very very good skill at identifying.
Identifying value and taking out cost in doing acquisitions.
Historically, I think with T Force, obviously the market backdrop is tough, but it seems like it's been you know may be harder to fix than you might have anticipated or maybe I'll just take oh yeah.
And then you know you've got a pretty tough truckload backdrop in and you've got a big truckload carrier just bought so I guess the question is do you consider slowing the pace of acquisitions, maybe the next year or two and say Hey, we've got a lot to digest and you know maybe even takes longer to kind of.
Right you know the the truckload business as you're just thinking about how that might affect the pacing of what you do on the you know I don't know.
Strategic front.
Very good question I mean, the U P. S freed acquisition was very difficult to do number one because it's a carve out.
Carve out is always difficult because you know you don't know exactly okay.
The cost that you're gonna in there it et cetera, et cetera, and I have to tell you that our you know one thing that we were not aware of is that 35% of the freight was bad when we bought the company. So this is Lee.
Little bit of some of unknown, okay, and you're right. It it's taken us a little bit more time. So it took us two years to Unhook from U P. S financial system. You know so it's it's a carve out is always difficult to do okay. So, but we are you know right now we're completely out of the.
U P S environment right. So we are standalone.
And we're making progress over there now the desk you want that's a different story because that's key.
It's not a cargo it's a standalone business.
Number one number two is there a head office costs was through the roof, Okay to Iran. The desk yet offices. The cost was about the same as to run T F I head office.
Now that costs, a desk has been reduced by 75% okay over the course of the next year or two so we're gonna be down to very little cost and and the operating companies at desk key you could see there was about nine business unit that operates okay. So.
These operators I'm looking at the results for 23, excluding the head office. Okay. Those guys did a pretty good job in the market environment of 23, I'm looking at 24, and if I look only at the operating business. As these guys are on plan, they're down versus last year, they were down versus.
Twenty-three, but not that much so it's a little bit I mean, they're very you know, it's not like you P. S raid versus us and Canada in the kidney and L. T L, which was day and night in terms of results I mean, those guys are not as good as T F I, okay, but.
But the delta between the operating units and our operating units is not it's not 300000 points of or I mean, those guys. You know, it's not going to be the same phase now. The question is are we going to do something major in 'twenty four yeah, you're right. Tom I mean, we have to keep digesting.
T Force right and we have to do the same with the ASCII I mean, so this is why the M&A side for US 24 Tuck ins, yes in Canada easy to do.
But nothing major except it does keep transaction because as I said on on on the script there in the call.
We were planning on reducing our debt by between five to 600 million in 'twenty four to bring our leverage down to something like 1617 right now we're at about one six okay and we believe that by year end, we're going to be back to one six so bye.
By saying that I mean, there's nothing major Oh wait a minute that's going to happen in 'twenty four.
Okay. That's really helpful. I just had one follow up on the L. T O U S. L T L.
How do we think about the improvement in or and the sensitivity to to freight market.
Versus what's in your control.
There are a bunch of things that are in your control, but it also feels like.
You know if youre going to get paid a higher price than it would help to have a tighter freight market.
And you know it feels like there is some sensitivity to it.
Pricing and freight market with within that improvement too. So I don't know how do you think about this year next year. How much is in your control I know our improvement in <unk> versus how much is kind of you know freight market sensitive.
Yeah, So like I said earlier, Tom I mean, we don't control the market I mean, the market is you know yellow disappear at 40000 shipments disappeared now it's been you know are across all the carriers, we don't control the market, but what we can control is the freight that we decided to halt okay.
So on that where we're going to be making some major improvements during the course of the next few years. So instead of hauling light freight like we used to do anything that is late we love that no no no no. So we have to change the focus. So this is why you know we have to to move that 1200 pounds that we have today versus more like.
15 are in pounds like most of our peers in the U S. Our average weight is.
That's number one so that's got nothing to do it. It's just a matter of picking up the right freight that fits for US number two is and I've said that many times, we have to improve our density because density is the name of the game in the freight environment. So.
Pick up more freight per stop that has nothing to do with the market. I mean, there's just like you'd have to have a sales team focus on okay. We get two shipments from this guy can we get five because we get three can we get four okay and in order to do that what do we have to do right.
This culture never existed at T force rate or U P. S. Right no. It was should name. Okay. So whatever afraid is there I mean, okay, let's pick it up no no no no no.
So we gotta be focus try to get more freight from each and every customer that we already go and pick up right.
Also.
Cut the.
Cut the the ZIP code coverage I mean, we do is improve the footprint reduce the footprint so that very expensive to do pickups or deliver afraid at 75 miles away from you or from your terminal because the guy has to drive about two hours to get there.
That's not for US Okay. That's not for US you know the way we do it in Canada is that we keep our network very tight and everything that is outside that network, we give that three to someone else now any and and we also unionized and we're doing that in Canada now in the U S. It's a different environment okay.
We get that for now so they'll wait to serve two services just to say well I'm sorry.
In this ZIP code I'm going down only twice a week as an example in order to be more efficient, but you say it upfront to the customer and that's what we're trying to do reduce the miles on the PND side and at the same time like I said something that we can control is our lino do less.
Miles with the rails, because you can't control those guys I mean, you get it when when you get it right.
But when it's your road asset when it's your own people that is something that you can control and provide the service that you have committed to the customer and when the phrases onto rail and its late you can see two Mister customer while I'm sorry.
I'm using a rail guy to do the Lino they don't want to listen to that right. So this is why these are all part of what we have to do with what we are doing now to improve the service and when you improve the service you could you know get.
Get better shipment and better money for your own shipment.
Right. Okay. Thanks for the time line.
Okay.
Thank you Tom.
Thank you our next questions come from the line of Kevin Chiang with CIBC. Please proceed with your questions.
Hi, good morning, Thanks for thanks for taking my question here.
Maybe if I could just go back to them.
Good morning.
The guidance so if I look at Q1 versus the midpoint of your guide it's about 18%.
Have your EPS, you know you're calling for in the first quarters. Your if I go back and I know, there's a lot of moving parts and when you go back historically because of your M&A track record, but if I go back to the last lets say 10 years that that's been about the average about 18%.
In Q1, and I guess I'm, just trying to get a sense of maybe the conservatism in your guidance and maybe what you're building in for certain Kpis, just I would've thought you would've seen better momentum as we get through the year, even in a tough freight environment. Because Q1 was tough just with some of the things you've mentioned already was within T Force freight it sounds like you're doing some.
In P&C. So yeah, maybe you can just frame that a little bit more in terms of.
You know, where you're seeing some of that momentum and maybe what some of the headwinds could be to maybe offset that to maybe drive a you know.
Maybe.
Not above seven Bucks a of EPS this year.
Right, Yeah, you know what Kevin I mean, you're absolutely right. I mean Q1 is about 18% of our EPS on average okay. So which is about the same but when we look at the environment. When we look at our peers, what we've seen so far I mean, we're very concerned about this free the environment. So this is why you know after this.
Seeing with our people our team said guys, let's let's be.
Very conservative Okay. So that we don't disappoint and come up again with a with a miss okay. Here in the next quarters, because there's so much I mean, when we look at the best truckload guys in the U S and in the kind of numbers that these guys are coming out with I mean, it's scary. It's scary. So this is why I said guy.
We have to be very prudent we have to focus on free cash flow, okay, which is going to be quite good in a very difficult here right.
I think that maybe we could do better than seven okay, but when I look at my peers, what I've seen so far in Q1 from those guys. Both on the U S and Canadian side when I look at our you know the environment are when I think about the driver Inc. Situation in Canada, that's not going to change.
It's just going to get worse.
So I said, let's let's be very careful so I mean, hopefully Kevin we'd do better than seven [laughter], okay, but right now that's the best that I could say I mean, I'm sorry, because we said that in Q4 that I think that our guidance will be at least starting with seven we're not there I'm sorry, because Q1 was.
So bad for me.
We thought that twenty-three was a bad year, but when I looked at the start of 'twenty four with my peers resolves I'm, saying, Oh, maybe 24 is going to be worse than than 'twenty.
23.
Who knows what I mean.
One quarter does not a year, but I mean, it's this is why we have to be more ill under promise and over delivery. That's always been the more tow of T F I.
I appreciate that given all the uncertainty that's obviously facing you and the broader transport space.
Maybe just my second question on P&C, you know you talked about the tough Q1 here, but you're taking steps.
To obviously turn this around and maybe we will see something in the next couple of quarters here.
I didn't notice.
Average weight per shipment I think it's the lowest I've seen in a long time in the first quarter vehicle count is pretty low just maybe any color on what's happening there and maybe what are some of the steps you can do to kind of turn that around.
Yeah, Yeah, yeah the COO.
Killer is is the freight that we all right now on the P&C side, it's too late right.
So yes, we have less shipments, we have three or 4% less shipment.
Speaker Change: But the killers, the weight because like L. T. L. We're paid by the week. So it's a little bit of a change okay in perspective and at the same time, you know Bob Mcgonigal that used to run their P. N. C. Now is working on the U S. L. T outside Okay, and we have also a new EVP that St.
<unk> of our P&C and he came with a plan, Okay and then the leadership, but Ken part Loomis I mean, the guy at Jimmy used to run it.
You know you gotta drinking the Kool aid so a friend Jimmy did not really drink the Kool aid. So he decided to retire and went to work for a G. L. S.
So now we have a new crew so Mike over that used to run a key for Street, Canada Division that was in charge and he's drinking the Kool aid of that new plan again being more picky on the freight and and we can't haul feathers, because when you're paid by the pound feathers are not very heavy.
So so we've taken action in Q1 that will start to show results more like Q2 and in Q3, okay. Because it always takes time to implement our customers and pricing and things like that so that's why I'm, saying that.
Q1 for P&C was not good right I mean, Oh are.
As you know when you look at the or of our P. N C is 81 or 82, okay.
You say well he was not bad but we were at 75 right. So we got to get back down to under 80, and we have to change the pattern of our freight so we need heavier freight there and we'll do that I mean, we have a plan.
Going to take us probably into Q3 and in Q4 to see the results of that so but I feel good about PNC. My biggest problem is really the truckload okay.
With that we have now that ski is adding to that but we believe that maybe not in 'twenty four but in twenty-five this market has to change.
And with the desk your acquisition in our specialty truckload.
I think it will be very well positioned but there again, if you look at my or on my specialty truckload I run and 89 or okay, which is <unk>.
Winter, Okay not great.
And we used to be an 84, while we're now in 89 or okay, but when I look at what's going on in the U S. In the truckload world.
I feel good about 89.
No I don't like to be at 89 Guy So now with the dashed key acquisition.
I said to Steve Brookside, the Guy in charge I mean, those guys have to be as good as us within a year right. So.
And the market hopefully improves in 'twenty five and we'd ask you will you again working on do more with less.
That's all that's all very great color. Thanks for taking my questions Elena of <unk> have a great weekend there.
Likewise, thank you Kevin.
Thank you our next questions come from the line of Walter <unk> with RBC capital markets. Please proceed with your question.
Very much operator, good morning Ali.
So going well there.
I guess.
Going back to some of the self help and corporate activity that you you could look at it and one of the things that you used about in the past with the spin off now.
Truckload Division I'm. Just curious is this something that you want to have <unk> fully integrated before you contemplate that and if so is the year. The typical timeframe that you would see desk.
Integrated and therefore would contemplate something like a spin off of the truckload Division.
You don't want to walk through it we believe that if this makes sense to spin up down the road I think it could be done late twenty-five into early 'twenty six because that's key like I said earlier I mean, the eight nine business unit there they operate really well, there's maybe one or two that are sub par. Okay. There we go.
You have to work on our the head office of Basket was the cancer was those guys were costing a fortune and the results were not there. So you know we did have some cleanup over there we've reduced our salaries of desk yet office on the early pieces of about $12 million plus pennies.
So I mean, it's going to take us a year to really improve but it's not U P. S. Right. I mean, you P. S rate was.
You know there was a lot of things to fix their desk E. If you exclude the head office I mean, the operation are pretty good they could they will be better okay, but they are pretty good now in the market environment that we're going through right now in the U S. Those guys are doing pretty good now for sure will be worth.
King with them, okay to improve but I think that to say that Oh, you guys would be ready. If you have to do if you want to do something late 'twenty five 'twenty six I would say absolutely, yes, we'll be ready.
Got it, okay, and and and building in basket because its a larger revenue item. It does it does affect our model is quite a bit depending on what kind of about where we are assuming is there any.
Yeah any indication you can give us given that we haven't had a look at what how desk. It looks within your operation how it is relative to.
Your your existing business.
But understanding that it's probably a little less.
Less profitable what kind of operating ratio where margin degradation in the sequential.
The Q2.
'twenty 'twenty four should we just get our head wrapped around as we build it into our model and then build the integration synergies after that.
Yeah. So so what I could say is that if you look at 'twenty three of Das keys resolved. If you exclude all the craziness of the head office and all of that.
You're running twenty-three desk.
You know a low 90 or.
In the neighborhood of 90 to 90 394 or depending on the quarter. So it's not a disaster. It's thought a U P. S freight where these guys were losing money like crazy.
So that that is the starting point, okay that we have over there. So you got some pretty good guys. We got one or two operating companies that are running a little under 90, you are okay, but you get a one or two guys are running closer to 100 door right, but I would say that twenty-three twenty-three.
Okay do you think about 90 394 on average right. So that's the starting point.
So when we take over and then they add office was the big culprit that was dragging our there or okay.
Up or down I mean in the in the worst that direction. Okay. So those guys I mean, where we're shrinking the head office costs as we speak so.
Again, you'll see that in our Q2 results are what we can say that a it's not a fixer upper okay like U P. S rate was.
We have a good solid base business there we have good people with good teams.
And and but if I compare with our own U S operation. They have a they have some improvement okay. So, but I mean, we know what to do.
And we'll work with the Guy right.
Excellent thanks, very much for the time I like.
Pleasure Walter.
Thank you. Our next question comes from the line of Qunar Gupta with Scotia Capital. Please proceed with your questions.
Thanks, operator, good morning Ali.
I'm just wondering how dynamic.
My question is on U S. L. T L. A bit here you don't like what we can see it in yours piece is that the weight per shipment.
Coming down yes.
Industry right. Obviously, you said, it's a challenging environment our grades are holding up.
Part of your business you guys are looking to increase that you havent done obviously in the last few quarters. So that's great, but you're also looking to improve the rates at the same time to keep the quality high so I'm not I'm trying to just kind of understand how difficult is it to increase your weight.
While at the same time, keeping the pricing up when the industry is kind of losing the weight is it more like you need to be more competitive on pricing to get that more weight per shipment or you have to tweak some of those things.
No.
Not necessarily so one of the reason to US we were not big in and heavy shipment. It was because we were stupid our pricing was bad right. So so one of the first thing that we had to do was to correct our pricing model, which we did about a year ago right.
Because don't forget.
We were tied up with the U B S system. So it was difficult for us to have some some quality information in that regard and.
And we took over February of 'twenty three all the financial information. So so at that point, we were able to work with the team that we have there to adjust the pricing. So that we can be competitive okay on heavier shipping and by doing that and also by having our sales team focusing on that.
Stead of focusing on light freight or retail freight more industrial afraid every your freight than you know we were able to slowly move the average weight of our shipment okay up closer to our peers because like I guess it appears right not hauling at a 1000 pound.
We're shipping I mean, our peers are running 14 1500 pounds and this is where we have to be slowly now by doing that okay. We we just have to be competitive to the market with rates that are there right and that's what we've done. So if you look at our average revenue per shipment is down a little bit.
Okay, because we have to match market race wherever you're shipping, but most importantly, okay is our revenue per shipment that is to me. The key because if you move a shipment for $300 or if you move of shipments for $400.
And the difference is only the weight everything else is the same I mean, two movies a ship and it moved out on the pallet. I mean this is this has got nothing to do the only hill and they kept that you could have is that you could have an issue with weight on your line, though but in today's market.
Four suites, we never have an issue with the weight, we have issues with volume never wait right. So this is why by moving to heavier shipment that.
That does not affect our costs at all okay, but and increase our revenue.
And that is you know to be more focus on for our sales team to be focused on the game, we want heavier shipment and and now we are price competitive okay with the market and we want more shipments per stop and we won't ship shippers closer to our terminal.
That is simple to say right. That's what we do in Canada. That's why you know if you compare us with the other major L. T O carrier that's public in Canada.
Mean.
We have different the wires.
Why is that because of our density is probably better than than this other guy it's not the right because the rate in this market.
Unless you unless you don't know the market I mean, the way the market is the market for all of us.
Right that makes sense. Thanks for the color there and then if I can follow up quickly on this.
Competitive landscape change are you know I think maybe in Canada, but perhaps in the U S. As well when I got there was a big Canadian player that is going through restructuring.
Lee.
Any thoughts on what kind of opportunities that present to you like is it more like a market share grab opportunity do you or would you be interested in some of the assets like trucks and drivers.
No no the the the guy that you're talking about is a is a driver and guy you know.
<unk>.
He is a guy he's a driver inc. So he's under the protection of the court right now, but are you still running the business I mean for sure he's probably going to have to downsize and do less but we're we're still fighting this guy and him and others, Okay, mostly based in Ontario.
And those guys that's why my or in my truckload My Canadian Truckload is is like it's a disaster. We went now were running 10 points behind last year in my or why is that because of these guys right that don't pay benefits to their employees because.
Because they run their driving model. So this guy no it's not going to help us at all because this guy keeps running.
And Oh, we'll see maybe he's going to downsize a bit.
But are these kind of guys will restart in the on the.
Under a different name whatever I mean, because their model is so good in cheating the Canadian system.
So to the benefit of the customers.
Yeah that makes sense. Thanks appreciate the time thank you.
So that's your score corner.
Thank you. Our next question is come from the line of Cameron <unk> with National Bank Financial. Please proceed with your questions.
Yes, I think so.
Good morning.
Just to kind of follow up on that.
Just on the on the Canadian dry van truckload I mean, if we don't see I guess a change in that.
I guess, the regulation or whatever you want to call. It here does it still make sense for you to have a Canadian dry van operation is that something that maybe you don't want to own anymore.
Yeah, you know what the Cameron, we're asking ourselves the question because we believe that our political leaders will will will act.
It's been years and years and they keep promising but they don't deliver so you know you're absolutely right. That's the question for US is that do we want to have $200 million of assets in a business that we're competing with guys that are not fair or not paying any benefits to their employees and us.
Our benefit of our employees keep growing because now we have Mr. True, though that gave 10 days of sick leave you gave three times three days a P. T O, which these guys don't don't have to pay for right.
So it's a it's a very good question and then for sure you will see our asset base reduce you will see that because I mean, if you can't beat them join them, but us we cannot join them I mean, we cannot be a driver in company in Canada.
Because you know, it's not fair for our employees it's completely unfair.
So we're not going to do that so youre, absolutely right down the road, okay, you'll see us shrinking now.
At the same time, Okay, we've got lots of opportunities to buy companies for about the asset price.
Because you know the small guy with 50 trucks or $40 billion revenue that guy he's behind right now so there's opportunity maybe too.
Beef up a little bit our truckload division by doing it with a small M&A here and there that makes sense in those guys are niche maybe okay, but overall, our Canadian truckload will will will shrink because of their driving absolutely and people will lose jobs good paying jobs at T. F I began.
Cause of that driving unfair competition.
Okay.
That's helpful and just staying with truckload just thinking about the specialized business, which obviously is a much larger.
A piece of the business now with ASCII. What are you seeing I guess on market conditions. There I mean, it's just historically being a little more stable from a market perspective, but and.
And any signs of a bottoming in the money are you feeling more optimistic.
Later in the year, just any thoughts around the market conditions.
Yeah, when we talk to customers right now I mean, everybody believes that you know 24 is gonna be you know some kind of a steady Eddie year, not a great year, but 25 and 26 in the U S will be great years. The reason being is that there's a major election in the U S right and in the countries is.
Divided 50 50 so.
You don't know if it's going to go left or right. So some guys are just waiting to see as an example, if you take G energy, okay with the windmills.
If it's a candidate one he's against windmill, so that business is going to fall right. If you take the number two guy well he likes windmill ease more green.
So that's why we have these kinds of.
Customers are just sitting on the fence not knowing where the ball is going to drop out left or right.
So.
No. The Danske acquisition in my mind is very well timed because we're buying that any very reasonable price. Okay. In a very depressed market right. So the only I mean.
Yes, it could still go down a bit.
But the probability of going down a bit is way way less than the probability over the next two to three years to go up like Crazy right.
So that's that is the intention behind okay. This transaction and at the same time like I said earlier.
I think the timing if we do something like a spin off or whatever in 26, I think that the market condition in 'twenty say, it's going to probably be maybe not as good as 22, but way better than 'twenty three 'twenty four.
Right, Okay that makes sense thanks for the time.
Thank you Kevin.
Thank you our next questions come from the line of band more with Deutsche Bank. Please proceed with your questions.
Hi, Good morning, Thanks for taking our question back to U S. L. T. L. Good morning, typical L T L industry or improves from <unk> to <unk> by about 300 basis points and it's typically flat to Q3, Q and then rises from three <unk> to four acute.
Typically about 200 basis points.
Wanted to ask you what are you what are the puts and takes to that as a base case, it looks like you'll need much better than that to get to your guided 88 for 2024 and are you expecting maybe 50 to 100 basis points better each quarter based on your actions assuming the freight market stays the same and maybe even a little bit better than that into two.
Given the weather in <unk>.
Yeah, Yeah, so you're absolutely right Ben and this is like I said earlier I mean, this is a little bit of a concern when I talk to my guys at the U S. L. T O and I say guys are you still confident and they are and and that's also part of that.
It was $6 75 to $7. Okay is that you know.
If the market continues to be difficult. Okay. Like we're seeing now okay can we get to the 88, we're still convinced okay, but like you said, it's it's a tough it's a tough go what I could say so far when I look at April as we are on plan, okay, but our pant our plan.
Keeps improving during the course of the year.
And so again I mean, we'll see but I mean.
Our guys are still convinced that we can meet we can meet this flat.
I appreciate that and maybe as a follow up again on U S. L. T L. You've guided before on the 'twenty 'twenty four exit rate of 24000 to 25000 shipments a day and averaging 22% to 24000 for this year.
With one SKU at about 22000 that means two to 3000 of additional shipments per day to get to that point are these are all market share gains because we're assuming zero freight market.
Volume inflection and if so.
Are you taking market share from the smaller regional players given your servicing business.
Yeah, I think on that I mean, the the focus is to also like I said, many times to get more freight by the shippers that we already deal with right. So that we don't add stops.
Stops and we just add freight right. So you're absolutely right that we are running about 22 and our goal is to be more like 24, a guy at the end of the year.
So when again, where where our service is improving so we have customers now that are you know.
As one example, a large retailer that we used to do very little business with this guy, but now he sees that our service is improving so it's not just a matter of US okay trying to get more freight is this shipper you know what's also to diversify his carrier base. So he says you know what.
Now that you guys are doing way better than you used to on the service side.
Give us more okay.
<unk> two years ago, when the service was not good and the only way you could get more afraid as by cutting raised to someone else. That's not the goal of T. F. I mean, we're not trying to cut rates to get more afraid. We're trying to do is provide better service and then the customers sees that because he wants to diversify.
Also his carrier base. He says okay, guys will give you a little bit more.
And this is what we're trying to do.
To get to 24 right.
Thanks, a lot I appreciate the time and insights.
Youre welcome. Thank you.
Thank you our next questions come from the line of Ben Wyatt Korea with Desjardin capital markets. Please proceed with your questions.
Yeah, Good morning Ali.
Right right yeah, Okay, just to come back on the U S. E. L. M. Following the comments about the the volume and really the focus on putting more weight per shipment dealing with the same shippers any thoughts about your real estate footprint whether you.
C a fortunate.
To streamline given the kind of the volume rebound.
You see out there for U S silica yep.
Well see but anyway. This is an ongoing thing with us I mean as an example, we have a lease in Europe, that's gonna be switched over to another carrier. We have a terminal okay that is being sold to another carrier right now okay because we.
We have a network that we use on the real estate side about 65% of that so we could say well, we're going to fill it with the growth with this with that but that's going to take time right. So this is why we are shrinking our footprint as much as we can as fast as we can so as an example, we bought a terminal from wire.
See its a matter of fact, we bought two one in Sacramento one in Lexington.
So the the one we bought from Arsene likes it is way smaller smaller than ours. Okay. So we're gonna be moving into that new terminal for us in June.
But at the same time, we're selling okay, not to a strategic truckers, but to someone else. The Lexington terminal. Okay. So so we should be in a position to sell this terminal by let's say about $20 million. So we are adjusting our footprint all.
All the time I mean.
L T F I'm real estate is really the key one of the key of our success right.
And we know we still have lots to do so in Sacramento. For example, we have two terminals were moving into one this is going to be done in about a few weeks. So we're gonna be saving probably the first forecast we have about $1 million in Sacramento by having one terminal instead of two.
And then we're gonna be selling those those two terminals.
So the question has always been guys do more with less right on the real estate side I know with the trucks with the M. P. G with the idling everything at T. F is based on that premise you gotta do more with less.
Okay. That's great and then just a quick follow up.
When I look at your leverage ratio buyback you you were not active this quarter, obviously with the acquisition that I've made the last December but how would you look at the buybacks. These days and what kind of leverage would you like to see before stepping in.
Well, you know buyback for us, it's always been a way to improve okay, and and to give more cash to our shareholders. So it depends on the on the stock price right. So for sure I mean, we've not been active depending on the reaction depending on where in the market.
Speaker Change: Those I mean, absolutely we could reactivate. This this buyback now as you know.
There's been a change in the Canadian with Mr. Trudeau and all these other guys about the capital gain tax. So we anticipate that maybe no. The small investors could divest of their shares in Canada before the June Mark.
We anticipate that maybe are we have we don't have a lot of options outstanding at T. F. I, but we have about six 700000, so maybe those Canadian guys will take advantage of.
Of exercising those options earlier because of that new tax rule.
So we may jump in and Neil buyback, maybe half a million shares.
Our leverage.
Is forecasted to be around two at the end of Q2 and around 1617 at the end of the year. So for sure I mean to do to do a buyback at a at a let's say $150 U S or $160 you asked we would sit on.
The fans for now, but if the stock goes down to I don't know, let's say 125 U S. A 135 U S for sure I mean, well, we'll be looking at it very closely.
Okay.
Canadians are 175 Canadian yeah.
Okay. Thank you for the color on that.
Speaker Change: So I shouldn't but anyway.
Thank you our next questions come from the line of Adam Ross Koski with Bank of America. Please proceed with your questions.
Hi, Helane on for Ken extra today, Thanks for taking my question. So.
So apologies if I missed this quarter you noted.
Track renewals trended in U S. T I will trend at about 5% that was a little below peers.
Could you provide an update and <unk> and then any update on just month to date April trends in that business. Thanks.
[laughter].
Yeah business is doing fine in in April Okay. So it's trending in the right direction.
In terms of our renewals absolutely we could not do as good as our peers.
Like I said, because our service is not up to par to our peers, our best views, Okay, a better service than us okay, but we keep improving so next year it could be a different story, but for now I mean, we had to go on a lower basis.
Like again, if you look at our Q1, okay, yes, our revenue per hundred weight is not growing 7% like some of our peers, but the beauty of what we were able to accomplish though is that our revenue for per shipment is up big time, Okay. With the you know some some major improvement on the.
[noise] weight side. So this is more of our focus right now is guys, let's pick up the right afraid that fits us which is heavier freight okay. Yeah. We were in the business to move rates up as much as we can but let's be cautious because you know we still have some issues to fix right on that.
Service. So it's a it's a step by step kind of thing I mean, you cannot turn the dial from let's say 50 to 100 overnight.
Got it that's helpful. Yeah, I saw that the U S. L. T. O claims ratio was up maybe 20 bps from.
For Q.
First I guess, you'll be targeting sort of gradual improvements as you're still in early innings of service out of room in here and then one follow up on the I think you said, 65% sort of network is underutilized right. Now so is that implying maybe 35% excess capacity in the LTE network and how do you look to <unk>.
Right side.
What are you targeting kind of over the next couple of years, what's a normal level of sort of excess that you target.
Yeah normal access it I would say, it's not 35, it should be like 15, right. So we still have lots of work to do on that so every time that we are renewing a lease okay. We're adjusting the size and then when what when it comes to real estate that we own. Okay. So we did some swap with <unk>.
Other strategic.
One of our peers, we did some swap we are selling terminals. We're adjusting like I said, that's an example of the Lexington were switching from 150 doors of 100 and twenty-five doors terminal to more like more of a 60 kind of doors terminal because we don't have the volume we don't have the volume to sustain 120 door terminal over there. So this is.
Ongoing okay. We've made some major improvements since we bought a U P. S freight okay, but we still have a long way to go now at the same time you know once you start slowly growing the volume back. Okay. So we are 22000 and today when we bought the company we were.
32000 shipments a day, so we say oil by the end of the year or fleet will be 224, and then we'll start growing that slowly okay not by cutting rates. Because this is not the solution by improving service and having our customers, saying well because you guys are doing a better job now we can't give you more.
Right.
So slowly that GAAP of 35 by growing slowly the company that's it will shrink and by all the actions that we're taking in terms of when you when we renew a lease when the terminal is too big we're taking action.
It's going to take some time to get to maybe a 15% you know capacity.
From 35 could take us two to three to four years, depending how fast we can go but we're going to get there.
That's very helpful. Thank you.
Yeah.
Thank you. Our next question is coming from the line of bad more with Deutsche Bank. Please proceed with your questions.
Hi, Thanks, so much for bringing me back Uh huh.
To ask the question I appreciate the time.
Just a couple of follow ups, one is the ground freight pricing the GSP in the quarter, yes, roughly a soft 67 million about 14% of your U S. L. T. L revenue ex fuel I wanted to ask what are you doing to set up back on on the growth course, how should we think about that trending through the rest.
The year, maybe like 15% of U S. L T O.
Revenue ex feel to 20%, 22% as a steady state next year, how should we think about that cadence throughout the year.
Yeah, Yeah. So so this is a major disappointment for us I mean, our G. F. P revenue is down big time, Okay and for sure. There was some some issues that we have with some of our customers that are we're not acting properly because we are a reseller for U P. S.
So everything that doesn't fit us, okay, and fifth U P. S. I mean, we switch it to the U P. S and we had some issues with some customers. So that's why this revenue came down big time and the team is rebuilding that slowly I mean for sure we're not on plan on that.
At all but there again I mean, we have to work with our partner, which is UBS on that and.
So it's it's a five year contract we were three year down we have two years to go so for sure. We will have to start a discussion with our partner on that on that regard. Because this is this is a great business for you P. S. Right. It's also a great business for us and we would like to grow it but when you have a pause.
It takes two to dance right.
Got it appreciate that.
Final question.
Speaker Change: What's.
How do you how should we think about the timing of the full capture of your volume wins versus your pricing gains as a result of your service improvements are you aggressively pursuing price at the same time, you're pursuing new business wins or is there a lag to the pricing.
And how much is that lag like one to three quarters out and try to compare the runway for new business wins versus the runaway for pricing gains.
It's all about you know you can't you can't as more money from a customer if the service is not there as a matter of fact, if the service is not there the customer if he stays with you will ask for a reduction in rates right. So that's step number one okay in order to get better rates from.
Or is service and service has never been really good at UBS freight or T Force right and that's what we're working on okay right now so biggest.
The biggest issue okay with customers is if you were late and the reason you relate is because your line is late and the reason you're lino as late because you use the rail well you gotta be problems. So how do you solve that by trying to as the rail to be on time and good luck.
So you got to start moving more freight on the road less freight on the rail now you can't do that when you're a fleet average age is eight years.
Right, because you've got old trucks and old trucks, they break down all the time, they're always in the shop.
So that's why we put in a program okay. As soon as we were able to buy the company, but the first year, we were delayed because of COVID-19, because the guy who could not deliver et cetera et cetera. So now our average age of our fleet is getting close to normal at four seven.
Still do well we're on the right track and end by year end, we're going to be closer to four than than we are today.
So then putting more afraid on the road also you need the proper trailer, okay to do that right. So that makes up to 'twenty as doubled 20 AIDS versus 50 trees, our mix was completely off.
So again, we have to change the lineup fleet from let's say 28 to 50 threes, which we are doing now is a matter of fact, we're buying.
150 trailers 2019 from the bankruptcy of why our C. Those are 50 trees to help us accelerate okay.
Their transition from 228 to 50 threes on the lineup right. So again to provide better service.
Key is the service once you have good service their customer will give you more freight okay. If you ask for it and you are in a position to ask for more money to be closer to the market. Because when you have service is bad that's in the market for this freight is $100 customer will not be 100 dollar.
Because he was service is so poor you will try to discount the price because you're bad right.
So by moving service up you get closer to the market of the market rate right and so this is this is the direction that we're going at T Force right because our starting point was so bad.
Old fleet.
Poor service using the rail, okay, and and we're changing that slowly.
And it proves our service. The other thing also that was bad for US is this pickup so we didn't really care about misspeak up no no no no we do care because our pick up is the start of your revenue. If you don't pick it up you'll never get the revenue.
And worse than that so when you have lets say.
In a city like L. A 150 Ms pickup.
Then the Guy shows up the next day, the freight has gone quiet because the customer could not wait he gave it to someone else. So you got the double whammy of missing the revenue N.
And and incurring the costs.
Cause you show up there and the Frito has gone. So these are all things that you have to work on to improve the quality of service.
So I mean T force right now is managed by our accrual of L. T L people.
So this is like if you are you know a general contractor and you gave a plumbing job to an electrician.
I mean, the results are not going to be so good so.
T Force rates focus was not leadership with L. T. L team now it is.
Really appreciate the additional color. Thank you for your time.
Pleasure.
Thank you we have reached the end of our question and answer session I would now like to turn the call back over to Alain Bedard for any closing remarks.
Well. Thank you operator, and thank you everyone for being on today's call. So we look forward to keeping you updated as we move through the year and please don't hesitate to reach out if you have any additional questions Abby terrific weekend and stay safe. Thank you.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.
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