Q1 2024 Mullen Group Ltd Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Ltd. 1st Quarter 2024 Earnings Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Mr. Murray K. Mullen, Chair, Senior Executive Officer, and President.

Thank you for standing by this is the conference operator, welcome to the Mullen Group Limited first quarter 'twenty 'twenty four earnings conference call and webcast.

Speaker Change: As a reminder, all participants are in listen only mode.

And the conference is being recorded after the presentation, there will be an opportunity to ask questions. They joined the question queue. You May Press Star then one on your telephone keypad.

Should you need assistance during the conference call, let me see the only an operator by pressing Star then zero.

Speaker Change: I would now like to turn the conference over to Mr. Murray K Mullen chairs senior Executive Officer and President.

Murray Kenneth Mullen: Thank you, good morning everyone. Welcome to the Mullen Group's quarterly conference call. This morning, we'll provide shareholders and interested investors with an overview of the first quarter financial results. In addition, we'll discuss the main drivers impacting these results or expectations for the balance of the year, and we'll close with a Q&A session. Before I commence today's review, I'll remind everyone that our presentation contains forward-looking statements that are based upon current expectations and are subject to a number of risks and uncertainties. And as such, actual results may differ materially.

Speaker Change: Please go ahead.

Speaker Change: Thank you and good morning, everyone welcome to Mullen group's quarterly conference call.

Speaker Change: So this morning, we will provide shareholders and interested investors with an overview of the first quarter financial results.

Speaker Change: In addition, we will discuss the main drivers impacting these results or expectations for.

Speaker Change: For the balance of the year, and we'll close with Q&A session.

Speaker Change: Well before I convince today's review I'll remind everyone that our presentation contains forward looking statements.

Speaker Change: That are based upon current expectations and are subject to a number of risks and uncertainties.

Speaker Change: And as such actual results may differ materially.

Murray Kenneth Mullen: Further information identifying the risks, uncertainties, and assumptions can be found in the disclosure documents filed on CDAR Plus and at www.mullen-group.com. So this morning, here in Okotoks, the entire senior team. We have Richard Maloney, who's our senior operating officer, Joanna Scott, who's our senior corporate officer, and senior financial officer is Carson Urlacher, and once again, Carson's the primary architect and author of the very informative and detailed Q1 interim report.

Speaker Change: Further information identifying the risks uncertainties and assumptions can be found in the disclosure documents, which are.

Speaker Change: You filed on SEDAR, plus and at Www Mullen Hyphen group Dot com.

Speaker Change: So this morning here in OCA talks or the senior our entire senior team.

Speaker Change: Richard Maloney Who's our senior operating officer, Joanna Scott Who's our senior corporate officer, and a senior financial officers Carson or labor.

Speaker Change: And once again Carson's the primary architect and author of the a very informative and detailed Q1 interim report.

Murray Kenneth Mullen: So today, Carson will be providing analysis and discussion on the Q1 performance, but before I turn the call over to Carson, let me start with some opening comments. If you look at the first quarter results, perhaps what I'll do as an opening comment is remind everyone. We expected some challenges in the freight market, in the economy, and more importantly, in the demand for freight to start the year. In the 2023 annual financial review, which we released in February of this year, we highlighted that in the first half of 2024, what we saw... and with economic activity gaining momentum, provided central banks start lowering interest rates.

Speaker Change: So today Carson won't be providing analysis or discussion on the Q1 performance, but before I turn the call over to Carl So let me start with some opening comments.

Speaker Change: If you look at the first quarter results.

Speaker Change: Uh huh.

Speaker Change: Perhaps what I'll do is opening comment is remind everyone and you know we were.

Speaker Change: We expect some challenges in the freight and the freight market and in the economy and then more importantly in the in the demand for freight to start the year in fact.

Speaker Change: In the 2023 annual financial review, which we released in February of this year, we highlighted that the first half of 'twenty four would be soft and with economic activity gaining momentum providing central banks started lowering interest rates. So until let's talk more about that in the outlook section, but we did.

Murray Kenneth Mullen: So let's talk more about that in the Outlook section, but what happened in this quarter was not really a surprise to us. And I think, well, based upon our court of results, it's pretty evident that we got the outlook right. At least the first part of the outlook, correct.

Speaker Change: With this what happened in this quarter is not really a surprise to us.

Speaker Change: And I think based upon our quarter results, it's pretty evident that we got the outlook at all.

Speaker Change: We used the first part of your outlook correct.

Speaker Change: Economic activity was muted, but more importantly to the logistics and warehousing industry freight demand. It was it was pretty soft and this was the case in most verticals.

Murray Kenneth Mullen: Economic activity was muted, but more importantly, to the logistics and warehousing industry, freight demand was pretty soft, and this was the case in most verticals. You have less freight to handle, a company because of the increase in capacity in virtually all, all parts of the business that were added during the 22-23 cycle. And this all led to competitive and, what I would now say, sometimes predatory pricing. This basically explains what happened in the first quarter, and not just at MTL, but across the transportation and logistics industry.

Speaker Change: You have less freight to handle.

Speaker Change: Accompanied by the increase in capacity in virtually all.

Speaker Change: All parts of the business.

Speaker Change: There were added during the 'twenty two 'twenty three cycle.

Speaker Change: And this all led to competitive in what I would now say, sometimes predatory pricing.

Speaker Change: This basically explains what happened in the first quarter and not just at M. T L O, but across the transportation and logistics industry.

Murray Kenneth Mullen: Quite simply, there just wasn't a lot of demand, and our results, however, on a comparative basis, held up reasonably well because, you know, truthfully, we were prepared for this market softness and we have a diversified business model. So, for example, our emphasis on investing in the LTL segment provides a solid base of revenue, and it's not as competitive as the long haul full truckload business. This is and will continue to be a significant competitive advantage, in my view.

Speaker Change: Quite simply there just wasn't a lot of demand and then our results. However on a comparative basis held up reasonably well because you know truthfully, we were prepared for this market softness and we have a diversified business model. So for example, our emphasis on investing in the <unk> segment provides a solid base of revenue and it's not as compare.

Speaker Change: Or is the long haul full truckload business.

Speaker Change: This is and what can you do continue to be a significant competitive advantage in my view.

Murray Kenneth Mullen: And as our competitors struggle with the reality of the current soft demand and overcapacity, we think it creates opportunity. So the strong, the nimble, they'll not just survive; they'll capitalize on opportunities. And the most effective way to capitalize on this market is through VEA acquisitions. It's the only bright spot for our organization, really, in the first quarter.

Speaker Change: And as our competitors struggle with the reality of the.

Speaker Change: Current soft demand and overcapacity and we think it creates opportunity.

Speaker Change: So the strong the nimble they'll not just survived though capitalize on opportunity and the most effective way to capitalize on this market as very acquisitions, it's the only bright spot for our organization really in the first quarter.

Murray Kenneth Mullen: So, for example, we added $20.5 million of incremental revenues from acquisitions that we completed in 2023. And primarily, that was the VNR Group, which was a very synergistic and strategic acquisition. Not a lot of money, but it did add $20.5 million of revenue in the first quarter. $20.5 million. So... And the other thing we had, and this didn't show up in our first quarter results, we announced the acquisition of Container World Freight Forwarding.

Speaker Change: So for example, we added $25 million of incremental revenues from acquisitions that we completed in 2023 and primarily that was to be in our group.

Speaker Change: It was a very synergistic and strategic acquisition not a lot of money, but it did add $20 5 million of revenue in the first quarter of $20 5 million.

Speaker Change: So.

Speaker Change: The other thing we had a plus a week and this didn't show up in our first quarter results, we announced the acquisition of container World our freight.

Speaker Change: Freight forwarding now that's a that gets us into a new vertical on the west coast, primarily but theyre in the in the distribution of the handling and the logistics warehousing of the liquor business. So I'm pleased to report that we have now received all regulatory approvals to proceed with that acquisition.

Murray Kenneth Mullen: Now, that gets us into a new vertical, primarily on the West Coast, but they're in the distribution, the handling, and the logistics warehousing of the liquor business. So I'm pleased to report that we have now received all regulatory approvals to proceed with that acquisition, meaning that we will close on May 1. And then we'll include those results in the beginning of May with the May results. So this transactional loan will get us back onto a growth path, which is, I think, a real positive in other words, otherwise kind of difficult quarter. So I'll turn it over to Carson, and he'll provide you with a more detailed analysis of the quarter. Carson, you're up.

Speaker Change: Meaning that we will close on May one.

Speaker Change: And then we will include those results in starting in May with the main results. So this transaction alone will get us back onto a growth path.

Speaker Change: <unk>, which is I think a real positive in other words, otherwise kind of a difficult quarter.

Speaker Change: So I'll turn it over to Carson and he will provide you a more detailed analysis of the of the quarter Carson Europe, Okay well.

Carson P. Urlacher: Thank you, Murray, and welcome everyone. Today I'll focus on the highlights from the first quarter, the details of which are fully explained in our Q1 interim report, which is available on CDAR Plus and on our website. So, in the first quarter interim report, you know, given the relative consistency and predictability of our business model, we highlight revenue per working day as a way to identify and explain year-over-year financial results and to identify variances in customer demand levels for our services.

Carson: Thank you Mary Anne and welcome everyone.

Carson: Today I'll focus on the highlights from the first quarter are the details of which are fully explained in our Q1 interim report, which is available on SEDAR plus and on our website.

Carson: So in the first quarter interim report you know given the relative consistency and predictability of our business model. We highlight revenue per working day as a way to identify and explain year over year financial results and to identify variances in customer demand levels for our services Consol.

Carson P. Urlacher: Consolidated revenue, OIBDA, and operating margin in the first quarter of 2024 all declined compared to the same period in 2023. However, all of these financial metrics exceeded the results recorded in the first quarter of 2022. Consolidated revenues in the first quarter were $462.6 million, a decrease of $35.2 million as compared to the prior year, and was due to a combination of a decline in revenue per work day and from one less working day in the quarter. What compounded this effect?

Carson: Consolidated revenue or IBD, a an operating margin in the first quarter of 2024, all declined compared to the same period in 2023. However, all of these financial metrics exceeded the results recorded in the first quarter of 2022.

Carson: Consolidated revenues in the first quarter was $462 6 million a decrease of $35 2 million as compared to the prior year and was due to a combination of a decline in revenue per work day and from one less working day in the quarter.

Carson: Compounded this effect.

Carson P. Urlacher: was the impact of losing three working days in the month of March, which is our most productive month in the court. Revenue per working day was $7.5 million in the first quarter of 2024, a decrease of approximately $400,000 per working day, as compared to $7.9 million in the first quarter of 2023. The $400,000 decline in revenue per working day was due to the following factors. Overall freight demand was negatively impacted as suppliers and manufacturers were reluctant to increase inventory levels.

Carson: What was the impact of losing three working days in the month of March which is our most productive month in the quarter.

Carson: Revenue per working day with $7 5 million in the first quarter of 2024, a decrease of approximately 400000 per working day as compared to $7 9 million in the first quarter of 2023.

Carson: The $400000 decline of revenue per working day was due to the following factors overall freight demand was negatively impacted as suppliers and manufacturers were reluctant to increase inventory levels.

Carson P. Urlacher: Economic activity levels slowed in Canada due to a lack of capital investment in the private sector. There was low demand for major capital construction projects, including pipelines, as both the Trans Mountain Expansion Project and the Coastal Gas Link Pipeline Project have essentially been completed. The activity that was generated by these large projects in the prior year has not been replaced.

Carson: Economic activity levels slowed in Canada due to a lack of capital investment in the private sector there.

Carson: There was a low demand for major capital construction projects, including pipelines as both the Trans Mountain expansion project and the coastal gas link pipeline project have essentially been completed.

Carson: The activity that was generated by these large projects in the prior year have not been replaced.

Carson P. Urlacher: Fuel surcharge revenue also declined by $12 million as diesel fuel prices declined on a year-over-year basis. However, somewhat offsetting these declines was $20.5 million of incremental revenue from acquisitions. We generated an OIBDA of $66.2 million, a decrease of $10.8 million compared to the prior year, due to the decline in consolidated revenues being somewhat offset by $3 million of incremental OIBDA from acquisitions. Operating margin declined to 14.3% as compared to 15.5% last year due to higher S&A expenses as a percentage of consolidated revenues, resulting from the relatively fixed nature of these expenses.

Carson: Fuel surcharge revenue also declined by 12 million as diesel fuel prices declined on a year over year basis.

Carson: Somewhat offsetting these declines was $25 million of Vancouver mental revenue from acquisitions we.

Carson: We generated a IBD a of 62 or $66 2 million a decrease of 10.8 million compared to the prior year due to the decline in consolidated revenues being somewhat offset by $3 million of incremental <unk> from acquisitions.

Carson: Operating margin declined to 14, 3% as compared to 15, 5% last year due to higher SG&A expenses as a percentage of consolidated revenues, resulting from the relatively fixed nature of these expenses.

Carson P. Urlacher: DOE as a percentage of consolidated revenues remains consistent year over year, despite more competitive pricing conditions in certain markets and a reduction in higher-margin specialized business. Now, let's take a look at how we perform by segment.

Carson: D O E as a percentage of consolidated revenues remained consistent year over year, despite more competitive pricing conditions in certain markets and a reduction in higher margin specialized business now.

Speaker Change: Now, let's take a look at how we performed by segment.

Carson P. Urlacher: Starting with our largest segment, revenues in the LTL segment were $182.5 million, down $10.3 million from last year due to a change in working days compared to last year, a slight decline in revenue per working day due to lower freight demand, and a $6.4 million decrease in fuel surcharge revenue. However, these declines were somewhat offset by $5.5 million of incremental revenue from acquisitions. OIBDA was down $1 million to $30.8 million on lower segment revenue, while operating margin actually improved slightly by 0.4% to 16.9% due to lower DOE resulting from more efficient operations. Our second largest segment is our L&W segment.

Carson: Parting with our largest segment revenues in the <unk> segment were $182 5 million down $10 3 million from last year due to a change in working days compared to last year, a slight decline in revenue per working day on lower freight demand and a $6 $4 million decrease in fuel surcharge revenue.

Carson: These declines were somewhat offset by a $5 $5 million of incremental revenue from acquisitions.

Carson: <unk> was down $1 million to $30 8 million on lower segment revenue, while operating margin actually improved slightly by 0.4% to 16, 9% due to lower D O E, resulting from more efficient operations.

Carson: Our second largest segment is our <unk> segment revenues in the <unk> segment were $126 3 million down $17 8 million due to lower freight volumes and logistics <unk> logistics demand or lack of capital investment in cat and a competitive pricing in certain markets, while fuel surcharge decreased by $4 million.

Carson: Yeah.

Carson P. Urlacher: Revenue from the L&W segment was $126.3 million, down $17.8 million due to lower freight volumes and logistics demand, a lack of capital investment and competitive pricing in certain markets, while fuel surcharge decreased by $4 million. OIBDA was $22.5 million, down $3.6 million from the prior year period on lower segment revenues. Operating margins declined slightly by 0.3% to 17.8% primarily due to higher S&A expenses as a percentage of segment revenue. DOE improved due to our variable cost structure and our business unit's ability to adapt to current market conditions, resulting in lower DOE as a percentage of revenue.

Carson: Oh IBD, a was $22 5 million down $3 6 million from the prior year period on lower segment revenues operating margins declined slightly by <unk>, 3% to 17, 8%, primarily due to higher SG&A expenses as a percentage of segment revenue.

Carson: D O improve due to the our variable cost structure and our business units ability to adapt to current market conditions, resulting in lower D O as a percentage of revenue.

Carson: Moving to our F&I segment revenues were down slightly by 0.9 million to $111 9 million.

Carson: Lower demand for pipeline hauling and screening services accounted for an $8 $1 million reduction in revenue.

Carson: Smoke contractors experienced a $4 $6 million decline in revenue on lower demand for civil construction projects in northern Manitoba.

Carson: The production services business units experienced a decline in revenue due to inclement weather delaying the commencement of certain projects and fuel surcharge revenue declined by $1 6 million.

Carson P. Urlacher: Moving to our S&I segment, revenues were down slightly by $0.9 million to $111.9 million. Lower demand for pipeline hauling and stringing services accounted for an $8.1 million reduction in revenue. Smoot Contractors experienced a $4.6 million decline in revenue on lower demand for civil construction projects in northern Manitoba.

Carson: These declines were somewhat offset by $15 million of incremental revenue from acquisitions and greater activity levels in the western Canadian sedimentary basin, which resulted in higher revenue being generated by our drilling related services business units.

Carson: Canadian Dewatering also experienced greater demand for the sale of some water management equipment.

Carson P. Urlacher: The production services business units experienced a decline in revenue due to inclement weather, delaying the commencement of certain projects, and fuel surcharge revenue declined by $1.6 million. However, these declines were somewhat offset by $15 million of incremental revenue from acquisitions and greater activity levels in the Western Canadian Sedimentary Basin, which resulted in higher revenue being generated by our drilling-related services business units. Canadian dewatering also experienced a greater demand for the sale of some water management equipment.

Carson: Oh IBD a decreased by $3 7 million to $16 7 million due to lower OE BDA at premade pipeline and smooth contractors on reduced activity levels Canadian.

Carson: Canadian Dewatering generated lower Oh, IBD eight due to a change in sales mix and from preparing equipment for upcoming projects to commence later this year.

Carson: Somewhat offsetting these declines was $1 9 million of incremental <unk> from acquisitions operating margins decreased to 14, 9% from 18, 1% on higher daily and SG&A expenses as a greater proportion are due to a greater proportion of lower margin business and from preparing equip.

Carson P. Urlacher: OIBDA decreased by $3.7 million to $16.7 million due to lower OIBDA at premade pipeline and smooth contractors on reduced activity levels. Canadian dewatering generated lower OIBDA due to a change in sales mix and from preparing equipment for upcoming projects to commence later this year. Somewhat offsetting these declines was $1.9 million of incremental OIBDA from acquisition. However, operating margins decreased to 14.9% from 18.1% on higher DOE and S&A expenses due to a greater proportion of lower-margin business and from preparing equipment for project work to commence later in the year.

Carson: For project work to commence later in the year.

Carson: In our non asset based U S. Three PL segment revenues declined by $6 6 million to $44 4 million due to a slowing freight volumes in excess trucking capacity in the U S market, particularly for full truckload shipments, resulting in lower pricing per shipment.

Carson: Oh, IBD, a decline to zero point $5 million and margins came in at just over 1% due to higher D O and <unk> expenses as a percentage of segment revenue.

Carson: Operating margin on a net revenue basis was 12, 8% compared to 25% in 2023.

Carson P. Urlacher: In our non-asset-based US3PL segment, revenues declined by $6.6 million to $44.4 million due to slowing freight volumes and excess trucking capacity in the US market, particularly for full truckload shipments, resulting in lower pricing per shipment. OIBDA declined to $0.5 million, and margins came in at just over 1% due to higher DOE and S&A expenses as a percentage of segment revenue. Operating margin on a net revenue basis was 12.8% compared to 25% in 2023.

Carson: From a balance sheet perspective, we continue to maintain a well structured balance sheet with a book value of over $2 billion in total assets with our largest asset class being real estate.

Carson: In January we entered into a new $125 million credit agreement with PNC Bank, Canada branch.

Carson: Leasing the amount available on our bank credit facilities to $375 million.

Carson: We had a $98 million drawn on these bank credit facilities at March 31.

Carson: Providing us with over $280 million of borrowing availability.

Carson: October 2024, we have $217 million of private debt notes coming due that we expect to be able to replace with new long term debt. This year.

Carson P. Urlacher: From a balance sheet perspective, we continue to maintain a well-structured balance sheet with a book value of over $2 billion in total assets, with our largest asset class being real estate. In January, we entered into a new $125 million credit agreement with PNC Bank Canada Branch, increasing the amount available on our bank credit facilities to $375 million. We had $90.8 million drawn on these bank credit facilities on March 31st, providing us with over $280 million of borrowing availability.

Carson: Our debt to operating cash flow covenant under our private debt agreement was $1 94 to one meaning we could theoretically add $180 million of debt to our balance sheet and still be a full turn away from our covenant threshold.

Carson: We consistently generate free cash.

Carson: You know, so adding new debt to our balance sheet would be to grow the business through our precision based acquisition strategy. So with that Murray I'll pass the conference back to you.

Carson: Yes.

Murray: Thanks course.

Murray: You know, perhaps I'll just comment a little bit about the about the real estate since Carson highlighted that near the end.

Murray: Real estate.

Murray: It's our single largest asset is Carson suggested.

Murray: There's a funny thing about real estate real estate.

Murray: Seems to be like that elusive sports star Theres, a theres inflation for great players well real estate is very very similar real estate is really not going down in value are in fact, what we're noticing is it staying sticky I and even in some markets. If you can believe it is still going up and that's because of limited supply.

Carson P. Urlacher: In October 2024, we have $217 million of private debt notes coming due that we expect to be able to replace with new long-term debt this year. Our debt to Operating Cash Flow Covenant under our private debt agreement was $1.94 to $1, meaning we could theoretically add $180 million of debt to our balance sheet and still be a full turn away from our covenant threshold. We consistently generate free cash, as you know, so adding new debt to our balance sheet would be to grow the business through our precision-based acquisition strategy. So with that, Murray, I will pass the conference back.

Murray: And that's that's what.

Murray: Fundamentals of supply and demand always drive price, we all know that so are we.

Murray: We are delighted to say that our real estate is our single biggest asset holdings.

Murray: Yeah.

Murray: So.

Murray: In terms of the outlook, which is what our I think Ed.

Murray: Everybody's interested in well what's next we we've you've heard will argue this morning. So far we've discussed we've analyzed we provided our insight into why the first quarter results were soft okay yep, okay, but what's next.

Murray Kenneth Mullen: Thanks, of course. Perhaps I'll just comment a little bit about the real estate since Carson highlighted that near the end. You know, real estate. It's our single largest asset, as Carson suggested.

Murray:

Murray: That's what we got to talk about so first of all let's just reiterate it's this the softness was not unexpected from our perspective.

Murray: Nonetheless, it's quite sobering, what it happens to you don't like it but it happens but at least we were prepared and we were we were.

Murray Kenneth Mullen: There's a funny thing about real estate. It seems to be like that elusive sports star; there's inflation for great players. Well, real estate's very, very similar.

Murray: It didn't surprise us.

Murray: The softness that Youre seeing I think you have to be awfully careful because you're comparing to 22 and 'twenty three.

Murray Kenneth Mullen: Real estate isn't really going down in value. In fact, what we're noticing is it's staying sticky high, and even in some markets, if you can believe it, it's still going up, and that's because of limited supply. And that's what. Fundamentals of supply and demand always drive price. We all know that. We are delighted to say that real estate is our single biggest asset.

Murray: Which was a period of robust freight demand and tight.

Murray: Tight supply and favorable pricing.

Murray: 'twenty two 'twenty three was a market that was born out of Covid.

Murray: And but that market is over.

Murray Kenneth Mullen: In terms of the outlook, which is what I think... Everybody's interested in, well, what's next? We've, we've, you've heard big. You know, this morning so far, we've discussed, we've analyzed, we've provided our insight into why the first quarter results were soft. Okay, yeah, okay, but what's next?

Murray: We have a new market.

Murray: And it is different and I think the more most instructive.

Murray: Constructive thing that we can say, okay. How are we going to handle this market.

Murray: And we know what's different because all you have to do is look at say for example, the general trucking industry that general logistics industry. All the results coming out as an example.

Murray Kenneth Mullen: (inaudible) You know, that's what we've got to talk about. So first of all, let's just reiterate that the softness was not unexpected from our perspective. Nonetheless, it's quite sobering what happens to you; you don't like it, but it happens. But at least we were prepared, and it didn't surprise us. The softness that you're seeing, I think you have to be awfully careful because you're comparing it to 22 and 23.

Murray: The long haul full truckload both business specifically the conditions are awful, but demand is soft, but there's too much capacity and we all know what happens when supply exceeds demand prices fall. This is precisely what has happened and while I'm not exactly sure how long the current challenging conditions will last I can tell you there.

Murray: The only solution to the market challenges is higher prices not more freight at lower prices.

Murray Kenneth Mullen: Which was a period of robust freight demand, tight supply, and favorable pricing. 2223 was a market that was born out of COVID. But that market's over. Now we have a new market, and it's different.

Murray: And this is because the cost of doing business today.

Murray: Living is so high compared to yesteryear.

Murray: Let's consider the number one expense for nearly all businesses wages and benefits. These costs are up nearly 30% since pre COVID-19 equipment cost virtually doubled and this doesn't include new mandated emission free vehicles.

Murray Kenneth Mullen: And I think the most instructive thing that we can say, OK, how are we going to handle this market? And we know it's different because all you have to do is look at, say, for example, the general trucking industry, the general logistics industry, all the results coming out as an example. In the long-haul full truck light business specifically, the conditions are awful, the demand has softened, there's too much capacity, and we all know what happens when supply exceeds demand; prices fall. This is precisely what has happened.

Murray: And how about those carbon taxes does anyone really thank the taxes don't increased cost. This is why I suggest that only higher rates will cure the profit squeeze that is devastating many of the trucking industry.

Murray: And this is what happens when supply and demand fundamentals.

Murray: We will adjust it will eventually adjust so stay tuned on this because the current situation.

Murray: In my opinion cannot last much longer.

Murray: So how does this impact our business now even though we have a law, we do not have a large full truckload presence and by design by the way, we're two being affected by the slowdown of freight demand, we're starting to see it creep into the L. T. L segment. For example, we're feeling a little bit of a pinch there.

Murray Kenneth Mullen: And while I'm not exactly sure how long the current challenging conditions will last, I can tell you that the only solution to the market challenges is higher prices, not more freight at lower prices. And this is because the cost of doing business today, and even living, is so high compared to yesteryear. Let's consider the number one expense for nearly all businesses, wages and benefits. These costs are up nearly 30%. Since pre-COVID, equipment costs have virtually doubled, and this doesn't include new mandated emission-free vehicles. And how about those carbon taxes? Does anyone really think that taxes don't increase costs?

Murray: This means we have to watch costs very carefully our business units must work together more closely than they have in the past finding those elusive synergies that everyone talks about.

Murray: And at the corporate level.

Murray: We need to find those tuck in acquisitions.

Murray: And our team is laser focused on that.

Murray: Acquisitions that will backfill any loss in overall end demand, which by the way will come once the consumer has more disposable income. So in other words I think overall demand will improve once the consumer has more disposable income and this is why it's been so adamant that interest rates need to come down.

Murray: Until this day, however, I do not expect any significant economic growth.

Murray: Or significant improvement.

Murray: In our other segments I simply ask where is the growth. Thus far we just don't see it no economy will achieve overachieve, sorry, when governments the public sector becomes the primary fuel for the economy. So until the private sector starts to believe the rewards associated with taking risk and investing improve my question of the economy.

Murray Kenneth Mullen: This is why I suggest that only higher rates will cure the profit squeeze that is devastating many in the trucking industry. And this is what happens when supply and demand fundamentals will adjust. They will eventually adjust.

Murray Kenneth Mullen: So stay tuned on this because the current situation, in my opinion, cannot last much longer. So how does this impact our business? Now even though we have a large presence, we don't have a large full truckload presence. And by design, by the way, we're also being affected by the slowdown of freight demand. We're starting to see it creep into the LTL segment, for example. We're feeling a little bit of a pinch there.

Murray: He can actually grow there will be business for sure, but I just do not see growth. So once again. This means must we must be razor focused on costs.

Speaker Change: As we wrap up this morning's call it would be easy to be quite cynical, but if the Mullen group I'll be honest with you. We're built for these types of markets why do I say it yeah, we've been through it before and today just like yesterday, we are well positioned to plan to prepare and to grow for Tomorrow's market, which will come just like it always has and the only way to really.

Murray Kenneth Mullen: This means we have to watch costs very carefully. Our business units must work together more closely than they have in the past, finding those elusive synergies that everyone talks about. And at the corporate level, we need to find those tuck-in acquisitions. And our team is laser focused on that.

Murray: It could grow today is via acquisitions, just like container world and now that we're out of the quiet period.

Murray: Due to the review of the competition Bureau, and we will be looking to add additional synergistic opportunities as the year unfolds and Trust me. This market is providing plenty of opportunity on this front, we will focus on those that just don't provide growth, but also will provide our group will do achieve margin improvement we have the balance sheet and we are.

Murray Kenneth Mullen: Acquisitions that will backfill any loss in overall end demand, which, by the way, will come once the consumer has more disposable income. So in other words, I think overall demand will improve once the consumer has more disposable income. And this is why I've been so adamant that interest rates need to come down.

Murray: The balance sheet, because Carson, we didn't do any acquisitions in 2022 and 2023 when the market was at its peak.

Murray Kenneth Mullen: Until this day, however, I do not expect any significant economic growth or significant improvement. In our other segments, I simply ask, where's the growth? Thus far, we just don't see it. No economy will overachieve when governments, the public sector, become the primary fuel for the economy.

Murray: So that discipline is going to prove has is going to give us that opportunity today. So lastly in terms of the dividend we'll leave it at the current rate and 72 cents.

Speaker Change: And to all of our shareholders I say this your dividend is sacred and you can count on your monthly dividend, even as the market conditions are challenging so thanks for joining us and let's go straight to the Q&A session.

Murray Kenneth Mullen: So until the private sector starts to believe the rewards associated with taking risks and investing improve, I question if the economy can actually grow. There will be business, for sure, but I just do not see growth. So once again, this means we must be razor focused on costs. As I wrap up this morning's call, it would be easy to be quite cynical, but at the Mullen Group, I'll be honest with you, we're built for these types of markets. Why do I say that?

Speaker Change: We will now begin the question and answer session join the question queue. You May Press Star then one on your telephone keypad, you will hear it someone acknowledging your request if youre using a speakerphone. Please pick up your handset before.

Murray: We draw your question. Please press Star then two.

Murray: The first question comes from Kevin Chiang CIBC. Please go ahead.

Murray Kenneth Mullen: Eh, we've been through it before. And today, just like yesterday, we are well positioned to plan, to prepare, and to grow for tomorrow's market, which will come just like it always has. And the only way to realistically grow today is via acquisitions, just like Container World. And now that we're out of the quiet period, due to the review of the Competition Bureau, we'll be looking to add additional synergistic opportunities as the year unfolds.

Kevin Chiang: Hi, Thanks, Good morning first of all on but thanks for taking my my question quite a sobering outlook.

Kevin Chiang: There are Murray on the broader Canadian economy.

Murray: Hum.

Speaker Change: I guess when I think of.

Speaker Change: The way Q1 played out it sounds like well broadly speaking it kind of played out the way.

Murray Kenneth Mullen: And trust me, this market is providing plenty of opportunity on this front. We will focus on those that just don't provide growth but also will help our group to achieve margin improvement. We have the balance sheet, and we have the balance sheet because, Carson, we didn't do any acquisitions in 2022, 2023, when the mark was at its peak.

Speaker Change: The way you expected I guess, the one segment I wanted to focus in on what was at the die.

Speaker Change: $17 million.

Speaker Change: EBITDA in the quarter, you have a full year target of them.

Speaker Change: Hi, good million.

Speaker Change: Maybe just walk me through kind of how you.

Speaker Change: How you I guess.

Speaker Change: Momentum on what you see in the <unk>.

Speaker Change: Pipeline that allows me to kind of broke out kind of as we look through the year, just kind of hit that hit that target.

Murray Kenneth Mullen: So that discipline is gonna give us that opportunity today. So lastly, in terms of the dividend, we'll leave it at the current rate of 72 cents. And to all of our shareholders, I say this, your dividend is sacred, and you can count on your monthly dividend, even as the market conditions are challenging. So thanks for joining us, and let's go straight to the Q&A session.

Speaker Change: <unk> segment.

Speaker Change: Which as you know, it's a pretty large segment in our group.

Speaker Change: We knew that the pipeline business was the pipelines were.

Speaker Change: We're.

Speaker Change: Being completed so that we factored in.

Speaker Change: When you're building pipelines our pipeline group.

Speaker Change: <unk> did very well.

Speaker Change:

Speaker Change: And there was a lot of economic spinoff when you've got.

Speaker Change: All of that happening well, we knew that was winding down so we saw that what.

Operator: We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear its own acknowledgment of your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. The first question comes from Kevin Chiang of CIBC. Please go ahead.

Speaker Change: What we didn't see common Kevin was that we thought that that business would be replaced with more drilling activity.

Speaker Change: Because once the pipe is built you got to fill it with natural gas.

Speaker Change: And with crude oil for example, but we didn't see drilling activity really improve because truthfully.

Speaker Change: Natural gas prices are totally collapse, so temporarily they've dropped the NASA.

Speaker Change: Natural gas producers have really cut back on their capex programs in their drilling programs for a little bit and so that's just what happened so that just delays when our F&I will improve but it definitely did hit in the quarter.

Kevin Chiang: Good morning, first of all, and thanks for taking my question. Quite a sobering outlook you provided there, Murray, on the broader Canadian economy. I guess when I think of the way Q1 played out, it sounds like, broadly speaking, it kind of played out the way you expected. I guess the one segment I wanted to focus on was S&I, you know, about $17 million of EBITDA in the quarter.

Speaker Change: Just not as much.

Speaker Change: Drilling activity.

Speaker Change: And damn that cold weather virtually shut down or.

Speaker Change: Our oilfield and specialized business in the first part of January So yeah. I mean, you can't go to work when it's 40 below it just doesn't work.

Speaker Change: So that kind of set us back in January is usually a good month for our for our all in oil and gas business and our specialized side. So.

Kevin Chiang: You have a full year target of roughly $100 million. Maybe just walk me through kind of how you. How do you, I guess, build momentum of what you see in the pipeline that allows you to kind of build momentum as we work through the year to kind of hit that target?

Speaker Change: That we didn't kind of count on that that's really the in the F&I side. That's the only thing that kind of caught us off guard a bit.

Speaker Change: I think really just that cold weather and.

Speaker Change: Natural gas prices collapsed, so they didn't quite drill as much but I think what that does is it just backs up when it goes eventually they're going to drill I am just saying they didn't drill in the first quarter because natural gas prices were.

Murray Kenneth Mullen: Yeah, the S&I segment, which is, you know, it's a pretty large segment in our group, we knew that the pipeline business was, the pipelines were... [inaudible] you know, being completed. So we packed it in.

Speaker Change: We're quite we're quite soft so.

Speaker Change: Yeah. So that part is down we'll still do okay in that sector. Because we did the <unk> acquisition last year, it'll be about flat, but I don't see any growth there.

Murray Kenneth Mullen: And, you know, when you're building pipelines, our pipeline group did very well. And there was a lot of economic spinoff when you've got all that happening. What we knew was winding down, so we saw that what We didn't see coming, Kevin, was that we thought that that business would be replaced with more drilling activity. Because once the pipe is built, you've got to fill it with natural gas, and with crude oil, for example.

Speaker Change: And the only part will probably be really be down on us because.

Speaker Change: We're just not going to replace that pipeline business until.

Speaker Change: Until and unless Canadian support.

Speaker Change: More pipelines. That's just in fact, so we will be very cautious on that side and we've just leaned up our <unk> pipeline side.

Speaker Change: And.

Speaker Change: Those kind of things but.

Speaker Change: That was a that was a good driver for us for a bit, but our Canadian dewatering side, it's going to be fine.

Speaker Change: Theres there stopped they've gone back to work on I mean, they were busy in the first quarter selling pumps, but.

Murray Kenneth Mullen: But we didn't see drilling activity really improve because, truthfully, natural gas prices have totally collapsed. So temporarily, natural gas producers have really cut back on their CapEx programs and their drilling programs for a little bit. And so that's just what happened.

Speaker Change: But their project work was delayed because of weather. So we didn't have the high margin business, but they still have business put up a high margin business right course, that's correct. Yeah. Yeah. There was a shift in their revenue mix really going from there.

Speaker Change: Selling water management equipment versus Oh, you know what their day to day water management services, which is which is higher margin.

Murray Kenneth Mullen: So, you know, that just delays when our S&I will improve. But it definitely did in the quarter, just not as much cap drilling activity. And damn, that cold weather virtually shut down our... You can't go to work when it's 40 below, it just doesn't work.

Speaker Change: So <unk> be fine except for the pipeline side of the business.

Speaker Change: Okay. So that's okay.

Speaker Change: That makes a ton of sense.

Murray Kenneth Mullen: So that kind of set us back, and January is usually a good month for our oil and gas business and our specialized side. So we didn't kind of count on that. That's really the, on the S&I side, that's the only thing that kind of caught us off guard a bit, was I think really just that cold weather and, you know, natural gas prices collapsed, so they didn't quite drill as much. But I think what that does, it just backs up when it goes.

Speaker Change: Thanks, Jamie.

Speaker Change: Maybe just what you're seeing in the LPL side of things so.

Speaker Change: And I look at what.

Speaker Change: Just more publicly traded LDL players in the United States.

Speaker Change: Kind of sum up I think what they're saying is you know.

Speaker Change: As we look through Q1 and into early Q2, your revenue trends have been improving on a year over year basis, but maybe below normal seasonal trends.

Murray Kenneth Mullen: Eventually, they're going to drill. We're quite sawed off. Yeah, so that part that part is down. We'll still do okay in that sector because we did the B&R acquisition last year. It'll be about flat, but I don't see any growth there, and the only part will probably be really down on us because we're just not going to replace that pipeline business until, Until, and unless, Canadian support more pipelines. That's just a fact.

Speaker Change: Okay.

Speaker Change: No there is pressure on <unk> volumes that leaking into the weaker truckload market as rates are are soft.

Speaker Change: Is that effectively what you're seeing in Canada, as well too or is there anything different.

Speaker Change: On the Canadian <unk> market versus maybe what youre seeing here within the U S players.

Speaker Change: Players.

Speaker Change:

Speaker Change: That's a that's a really good question. It's one we think about a lot kept so I'll give you my view.

Murray Kenneth Mullen: So we'll be very cautious on that side. And we've just leaned up on our pre-made pipeline side and those kind of things. But that was a good driver for us for a bit. But you know, our Canadian e-watering side, it's going to be fine.

Speaker Change: First of all the <unk> market in the U S is different than the alltel market in Canada.

Speaker Change: We have to it's.

Murray Kenneth Mullen: There's stuff they've gone back to work on. I mean, they were busy in the first quarter selling pumps, but their project work was delayed because of weather. So we didn't have the high-margin business, but they still had business, but not the high-margin business.

Speaker Change: It's L T L, but it's it's not the same duck.

Speaker Change:

Speaker Change: And in the U S.

Speaker Change: Last year, you know they lost a really really big competitor in that market called yellow. They just shut down now that supported the market and all the <unk> carriers in the short term when the overall market and the overall demand.

Carson P. Urlacher: Right, Carson? That's correct. Yeah.

Speaker Change: Was softening.

Speaker Change: So even the best of the best down in the U S are seeing no growth in <unk> and Thats with one of the major competitors going down that tells you.

Murray Kenneth Mullen: Yeah, there was a shift in their revenue mix really, going from selling water management equipment versus their day-to-day water management services, which is higher-margin.

Speaker Change: Freight overall freight demand is not growing.

Carson P. Urlacher: So, S&I will be fine except for the pipeline side of the business. Okay.

Speaker Change: My view.

Speaker Change: Now in Canada.

Kevin Chiang: Okay, so that makes a ton of sense to me. Let me just ask what you're seeing on the LTL side of things. So if I look at just more publicly traded LTL players in the United States, if I kind of sum up, I think what they're saying is, you know, as we've worked through Q1 and into early Q2 here, revenue trends have been improving on a year-over-year basis, but maybe below normal seasonal trends, you know, they're still seeing, you know, there's pressure on LTL volumes that's leaking Is there anything different in the Canadian LTL market versus maybe what you're seeing or hearing from the US players?

Speaker Change: Yeah, yellow shutdown in Canada, but really they werent, a big player in Canada, and the Canadian market, we haven't had any.

Speaker Change: Major failure in the <unk> side so.

Speaker Change: There is no growth in demand.

Speaker Change: It's not collapsing.

Speaker Change: <unk> by any stretch.

Speaker Change: As you can see by our numbers it still held in pretty good but there is no growth. So the way you are going to be able to do that.

Speaker Change: As with our tuck in acquisitions in my view.

Speaker Change: And.

Speaker Change: Which we're well prepared to do and.

Speaker Change: We'll continue to do that.

Speaker Change: But that market is not growing at the moment.

Speaker Change: And.

Speaker Change: You know, it's going to be it's going to be a challenge and so consolidation will happen in our industry that it.

Murray Kenneth Mullen: You know, that's a really good question. It's one we think about a lot, so I'll give you my view.

Speaker Change: It's got to happen.

Speaker Change: For sure for sure.

Speaker Change: We're in pretty good shape when it comes to the consolidation game.

Murray Kenneth Mullen: First of all, the LTL market in the U.S. is different than the LTL market in Canada. It's LTL, but it's not the same duck. And in the U.S. Last year, you know, they lost a really, really big competitor in that market called Yellow. They just shut down. Now, that supported the market and all the LTL carriers in the short term, but when the overall market and overall demand... We're softening. So even the best of the best down in the U.S. are seeing no growth in LTL, and that's with one of the major competitors going down. That tells you... Overall freight demand is not growing, in my view.

Speaker Change: Yeah for sure your balance sheets in a great spot there.

Speaker Change: Maybe just last one for me and I know you are at least unless I totally missed it somewhere I don't think you provide like a mark to market on.

Speaker Change: On your real estate, but you did make a comment in your prepared remarks.

Speaker Change: If I look at it simplistically like your cost base.

Speaker Change: Under appreciated value is probably about eight bucks a share it sounds like the value that's probably higher than what you.

Speaker Change: You have on your balance sheet on a gross basis.

Speaker Change: I know you get this question.

Speaker Change: Sticking with you or not but is there anything you can do to surface that value.

Murray Kenneth Mullen: Now in Canada, you know, Yellow shut down in Canada, but really they weren't a big player in the Canadian market. We haven't had any major failures on the LTL side, so there's no growth in demand. I think it is with Tuck-In Acquisitions, in my view. (inaudible) You know, which we're well prepared to do, and, you know, we will continue to do that. But, you know, that market's not growing at the moment. You know, it's going to be a challenge, and so consolidation will happen in our industry as it has.

Speaker Change: Or was it highlighted to investors you stocked up that's needed at the.

Speaker Change: The gross book values at a it.

Speaker Change: It sounds like.

Speaker Change: Martha I was probably higher than that honestly.

Speaker Change: The market that Didnt do much better.

Speaker Change: The closet here.

Speaker Change:

Speaker Change: You always have options right.

Speaker Change: To do things of which we got options.

Speaker Change: And.

Speaker Change: Our preferred path.

Speaker Change: Is to use that really really strong asset base to secure long term funding at the very best rates that we can.

Murray Kenneth Mullen: We're in pretty good shape when it comes to consolidation. Yeah, yeah, for sure.

Speaker Change: So.

Kevin Chiang: Your balance sheet is in a great spot there. Maybe just the last one for me, and I know you, unless I've totally missed it somewhere, I don't think you provide like a month to mark it on your real estate. But if you did make a comment in your prepared remarks, if I look at it simplistically, like your cost base, let's say your undepreciated value is probably about eight bucks a share. It sounds like the value that's probably higher than what you have on your balance sheet on a gross basis.

Speaker Change: Because once you secure long term funding.

Speaker Change: Then you can play the long game in terms of acquisition whatever you do with the rest of your business. So I think that's our primary objective and we're well down that path Kevin.

Speaker Change: <unk>.

Speaker Change: You know of securing long term.

Speaker Change: Long term funding that will replace our long term bonds that come due in October.

Speaker Change:

Speaker Change: And you know, it's either that or you monetize them and then you pay off so.

Speaker Change: But that's our primary that's our primary thing and the other thing I would say to shareholders.

Kevin Chiang: I mean, I know you get this question frequently enough, but is there anything you think you can do to surface that value? Or even highlight it to investors? Your stock's at 13 minutes, and the gross book value's at eight. It sounds like you think the market value is probably higher than that. Obviously, the market's not giving you much benefit for this physical asset here.

Speaker Change: It's an irreplaceable asset like it you just cant go get that stuff in the open market take a look at yellow yellow the business made no sense.

Speaker Change: They couldnt make any money, but they are but they're real estate was worth a ton.

Speaker Change: Okay.

Speaker Change: It's a good point yeah.

Speaker Change: So.

Speaker Change: You know, maybe maybe some investors don't see the value of that but I can tell you.

Murray Kenneth Mullen: I mean, you always have options, right? to do things of which we have options. And, you know, our preferred path is to use that really, really strong asset base to secure long-term funding at the very best rates that we can. So.

Speaker Change: As a large investor and as.

Speaker Change: Senior executive of this company I go I love holding in real estate.

Speaker Change: It also advertise this I don't know I also love owning the business.

Speaker Change: That's occupying a realist because I'd like to I'd like to know the tenant and so we like we like to onboard.

Speaker Change: Carson you were going to say Oh, I was just going to say it also protects us quite nicely from inflationary pressures when you go to renew lease agreements.

Murray Kenneth Mullen: Because once you secure long-term funding... Then you can play the long game in terms of acquisition, whatever you do with the rest of your business. So I think that's our primary objective, and we're well down that path, Kevin, you know, you know, of securing the long term. Long-term funding that will replace our long-term bonds that come due in October. All right. And, you know, it's either that or you monetize them, and then you pay them off, so. But that's our primary thing, and the other thing I'd say to Sherwood is...

Carson: Agreements with landlords and such so.

Carson: As those rates come up.

Carson: For the property that those kind of get passed on through higher trucking rates and so.

Carson: Owning your own real estate in that network.

Carson: <unk> provides a benefit to our organization.

Carson: The last point I'll make on that cap is that.

Carson: When you own your own real estate.

Carson: You can probably pay your shareholders a dividend because theyre really the they're really the landowners.

Murray Kenneth Mullen: It's an irreplaceable asset, like you just can't get that stuff in the open market. Take a look at yellow. Yellow, the business made no sense. They couldn't make any money, but their real estate was worth a ton.

Carson: <unk>.

Carson: Perfectly.

Carson: Yes.

Speaker Change: That's great color there Marine Carson.

Speaker Change: For taking my question.

Carson P. Urlacher: Thank you.

Carson P. Urlacher: The next question comes from David Ocampo of corporate Securities. Please go ahead.

David Ocampo: Good morning, David.

David Ocampo: Hey, good morning, Thanks for taking my questions Marine Carson at my I really.

Kevin Chiang: Yeah, that's a good point.

Murray Kenneth Mullen: So... You know, maybe some investors don't see the value in that, but I can tell you... As a large investor and as... a senior executive of this company, I go, I love holding real estate.

David Ocampo: Kate.

David Ocampo: All the commentary that you provided on the outlet both in the MD&A in your in your prepared remarks.

David Ocampo: You guys are calling for kind of more of the same in the short run as it could take some time for capacity to exit the market here.

Murray Kenneth Mullen: I also love owning the business that's occupying the real estate because I like to know the tenant, and so we like to own both of them. Carson, what were you going to say?

David Ocampo: When we kind of look back at your your your plan for 'twenty for you originally calling for $325 million of EBITDA and that was before acquisitions. So just curious with your current view of the market and with container World closing, how should we be thinking about that number for 2024 now.

Carson P. Urlacher: I was just going to say it also protects us quite nicely from inflationary pressures when you go to renew lease agreements with landlords and such, so as those rates come up for the property, those have got to get passed on through higher trucking rates, so owning your own real estate in that network provides a benefit to our organization. You have the last.

David Ocampo:

Speaker Change: Well in the market.

David Ocampo: Yeah.

David Ocampo: Honestly I think that maybe the one thing that I had anticipated.

David Ocampo: David was there.

David Ocampo: I.

Murray Kenneth Mullen: Yeah, the last point I'll make on that, Kev, is that when you own your own real estate, you can probably pay your shareholders a dividend because they're really the landowners.

David Ocampo: Personally didn't see from what we were looking at is that how interest rates could stay stay high.

David Ocampo: And that they had to come down and then that would spur demand and then we would be.

David Ocampo: Everything would be good.

Kevin Chiang: Perfect. No, that was great. Great color there, Murray and Carson. Thanks for taking my question. Thank you.

David Ocampo: I have to question whether that thesis that I had is correct now it doesn't appear that's damn interest rates are coming down and if interest rates don't come down.

Operator: The next question comes from David Ocampo of Kormark Securities. Please go ahead. Good morning, David.

David Ocampo: I don't know, how we spur demand.

David Ocampo: It's going to be complicated so.

David Ocampo: Good morning. Thanks for taking my questions, Murray and Carson. I really appreciate all the commentary that you provided on the outlook, both in the MD&A and in your prepared remarks. You guys are calling for more of the same in the short run, as it could take some time for capacity to exit the market here. When we look back at your plan for 2024, you were originally calling for $325 million of EBITDA in 2024, and that was before acquisitions. I'm just curious, with your current view of the market and with Container World closing, how should we be thinking about that number for 2024?

David Ocampo: It might be pushed out.

David Ocampo: Think my.

David Ocampo: And analysis might be pushed out until interest rates start coming down and then I can see demand that'll be I think the catalyst for growth.

David Ocampo: For the consumer because of lower interest rates.

David Ocampo: Actual disposable income into consumers' hands and it makes it easier to invest for capital So honestly.

David Ocampo: I thought interest rates I thought they had to come down.

David Ocampo: From our perspective, they need to come down, but they arent coming down.

David Ocampo: So I have to be realistic on that so that.

David Ocampo: We'll probably right now I think were still okay for the.

David Ocampo: For the year end revenue and EBITDA, but but we're not going to be above it now we will need acquisitions to backfill to get to that number.

Murray Kenneth Mullen: Well, the market... You know, honestly, I think that maybe the one thing that I had anticipated, David was the one that I personally didn't see, from what we were looking at, is how interest rates could stay high and that they had to come down and then that would spur demand, and then we would be. You know, everything would be good.

David Ocampo: Yeah.

Speaker Change: I think that's a fair just given that interest rates are not coming down as I had originally anticipated and so it's going to push off as to when that demand increase comes now once that demand increase comes.

Speaker Change: Then.

Speaker Change: Everything changes again.

Murray Kenneth Mullen: I have to question whether that thesis that I had is correct now. It doesn't appear that those damn interest rates are coming down, and if interest rates don't come down... I don't know how we spurred them on. It's going to be complicated.

David Ocampo: Because then you've got the economics change on supply and demand and then rate per shipment will go up that's the fundamental problem. We got in the business right now is that this business, but the rates for that business, our ultra competitive so something has to change.

David Ocampo: And if you get a demand push or you get companies going bankrupt then rates will adjust to where they need to so you cannot just cover cost you can have an appropriate return on your capital investment.

Murray Kenneth Mullen: Analysis might be pushed out until interest rates start coming down. Then I can see demand, and that'll be, I think, the catalyst for growth. Vote for the consumer because lower interest rates put actual disposable income into consumers' hands, and it makes it easier to invest in capital.

Speaker Change: That makes sense and when I look at your LDL Division I mean, even against that backdrop, you guys are able to improve your margin profile and I think even in the outlook section you guys are calling for another 100 basis points increase for the full year. So I'm just curious where you guys are finding those efficiencies to drive up your margin profile.

Murray Kenneth Mullen: I thought interest rates had to come down. From our perspective, they need to come down, but they aren't coming down. So I have to be realistic about that. You know, we'll probably, right now, I think we're still okay for the... For the year-end revenue and EBITDA, but we're not going to be above it now. We will need acquisitions to backfill to get to that number.

Speaker Change: Especially against.

Speaker Change: A tougher pricing environment.

Speaker Change: I would say one of the one of the items there David that.

Speaker Change: It is obviously the acquisition of <unk> last year.

Speaker Change: Last year, we got revenue from from the <unk> acquisition and LPL.

Speaker Change: But we did not get EBITDA.

Murray Kenneth Mullen: I think that's fair, just given that interest rates are not coming down as I had originally anticipated, and so it's going to push off as to when that demand increase comes. Now once that demand increase comes...

Speaker Change: So I think the margin improvement of us calling for 1%.

Speaker Change: In large part we've restructured that business now.

Speaker Change: Now it's now it's into a network, where there is technology, there's a there's a.

Murray Kenneth Mullen: Everything changes again. Because then you've got the economics of change on supply and demand, and then the rate per shipment will go up. That's the fundamental problem we have in the business right now is that there is business, but the rates for that business are ultra-competitive, so something has to change. And if you get a demand push, or you don't. Companies are going bankrupt. Then rates will adjust to where they need to so you can not just cover costs; you can have an appropriate return on your capital investment.

Speaker Change: A greater load factor because we're not running two trucks to the same Tao.

Speaker Change: So those sorts of things so we see margin improvement on that side.

Speaker Change: Going forward for the remainder of this year as a comparative to what we did in 2023.

Speaker Change: So David will.

Speaker Change: We will continue to you know as car such as the <unk> thing was we knew what we were getting into which is which was factored into our price when we paid for we didn't pay much in it.

David Ocampo: That makes sense, Murray. And when I look at your LTL division, I mean, even against that backdrop, you guys were able to improve your margin profile. And I think even in the outlook section, you guys are calling for another 100 basis points increase for the full year. So I'm just curious where you guys are finding those efficiencies to drive up your margin profile, especially against a tougher, you know, pricing environment.

Speaker Change: Got it for asset value, but.

Speaker Change: We knew what the challenges were but we did the restructuring last year you can't do it on day, one, but we did get it done relatively quickly in nine months rich Joanna we got that done in restructuring.

Speaker Change: Usually means job losses, and I think we had.

Speaker Change: I think 50.

Carson P. Urlacher: I would say one of the items there, David, that... It is obviously the acquisition of B&R Eccles last year. Last year we got revenue from the B&R acquisition in LTL, but we did not get EBITDA. So I think the margin improvement of us calling for 1% is, in large part, because we've restructured that business now. Now it's into a network where there is technology, there's a greater load factor because we're not running two trucks to the same town, so those sorts of things. So we see margin improvement on that side going forward for the remainder of this year as compared to what we did in 2023.

Speaker Change: Thereabouts Joanna are roughly 15 right.

Speaker Change: <unk>.

Speaker Change: And that business.

Speaker Change: <unk>.

Speaker Change: David the average.

Speaker Change: Average employee cost is about 100 grand per employee so that's $5 million right there.

Speaker Change: Alright, great that makes a lot sense. Okay. That's all the questions I had thanks guys.

Speaker Change: Have to be smart youre going to have to consolidate if growth isn't happening. You know are will continue and we did a couple consolidation opportunities in our was one and we did one with a couple of other business units and we will look at a couple more this year.

Speaker Change: If business stays slow for a bit we'll have to combine the best with the best.

Speaker Change: And.

Speaker Change: And give it to our very best met by variable.

Speaker Change: Very best teams, that's what we'll do David It's Richard the other thing and you know LPL as a core.

Murray Kenneth Mullen: So David, we'll continue to, as Carson says, the B&R thing was, we knew what we were getting into, which was factored into our price when we paid for it. We didn't pay much. We just got it for asset value. We knew what the challenges were, but we did the restructuring last year. You can't do it on day one, but we did get it done relatively quickly in nine months.

Speaker Change: Strategic focus for us in anything when we talk about <unk>.

Speaker Change: Consistently and constantly looking at how to get better load factors together better process improvements are not only with the PNR tuck ins, but every other of our business units and <unk>.

Murray Kenneth Mullen: Rich, Joanna, we got that done and, you know, restructuring usually means job losses, and I think we had... I think 50, thereabouts, Joanna, roughly 50. And in that business, David, the average employee cost is about $100,000 per employee, so that's $5 million right.

Speaker Change: First we will focus how do we get more stuff in the back of the trailer at 53 foot trailer going to where it needs to go and that is our focus we're looking at technology process improvement and everything of course and highlighted when we were able to go to one spot and wherever else or one truck full rather than two trucks with a third or half.

Speaker Change: Paul.

Paul: Doesn't mean, an immediate gain that's how we continue and will continue to look at out here.

Murray Kenneth Mullen: You're going to have to be smart; you're going to have to consolidate. If growth isn't happening, you know, we'll continue. We did a couple of consolidation opportunities, B&R was one, and we did one with a couple other business units, and we'll look at a couple more this year if business stays slow for a bit. We'll have to combine the best with the best. And, the best teams. That's what we'll do.

Speaker Change: The other thing that I would comment on David I think that.

Speaker Change: That is happening in this market I think every company ours included.

Speaker Change: We're focusing on where we have competitive advantage and we're exiting business, where we were just doing it to do it that didn't really add margin. So we're being laser focused in the business right now not just on cost brought on where we can be profitable and win the game. If we're just playing the game.

Richard J. Maloney: David, it's Richard. The other thing, and you know LTL is a core. So we have a strategic focus for us, and anything we talk about LTL, we are consistently and constantly looking at how to get better load factors and get better process improvement. So not only with the B&R tuck-ins, but every other of our business units in LTL, that's a perpetual focus. How do we get more stuff in the back of the trailer, that 53-foot trailer, going where it needs to go?

Speaker Change: We may exit it.

Speaker Change: We will be laser focused on where we can win the game.

Speaker Change: That's where you get margin improvement.

Speaker Change: Okay. That's perfect. Thanks, a lot around.

Speaker Change: The next question comes from Kamran direction of National Bank Financial. Please go ahead.

Kamran: Yeah, Thanks, very much good morning, everyone.

Kamran: A question on the container world good to see that you got all the regulatory approvals and it's going to close soon.

Kamran: Could you just maybe talk about I guess the margin impact that business will have on the logistics and warehousing segment, if I understand correctly I guess, maybe as it's currently constituted the businesses, maybe a little lower than the average margin. So just wondering if you can talk about the margin impact and how you see.

Richard J. Maloney: And that is the focus we're looking at, technological process improvement and everything. When we were able to go to one spot in wherever, Alberta, with one truck full rather than two trucks with a third or a half full, that's an immediate gain. That's how we continue to, and will continue to look at LTL.

David Ocampo: The other thing that I would comment on, David, is that I think that it's happening in this market. I think every company, ours included.

Kamran: Your ownership of that business.

Kamran: Improving margins over the next the next couple of years.

Murray Kenneth Mullen: We're focusing on where we have a competitive advantage, and we're exiting businesses where we were just doing it because it didn't really have margin. So we're being laser focused in the business right now, not just on cost but on where we can be profitable and win the game. If we're just playing the game, we may exit. We will be laser focused on where we can win the game. That's where you get margin improvement.

Kamran: Oh, you know what it's going to be with containerboard is going to be a little bit like DNR are we know what we're getting into we didn't.

Kamran: The company ran into a little bit of problems.

Kamran: As a result of the freight search it happened later, they got trapped with that some additional cost savings were able to really manage through that so.

Kamran: But that those things are behind them now so we stepped in and.

Kamran: And we got that business.

Kamran: I wouldn't.

Kamran: It wasn't highly profitable, but I can tell you our expectation is out of the shoot we will probably have low teen margins.

David Ocampo: Okay, that's perfect. Thanks a lot, everyone.

Operator: The next question comes from Cameron Doerksen of National Bank Financial. Please go ahead.

Kamran: That's not to our standard.

Kamran:

Cameron Doerksen: Yeah, thanks very much. Good morning, everyone.

Kamran: Cameron, but I would say to you over time.

Kamran: You improve margin with technology with automation.

Cameron Doerksen: Question on the container world. Good to see that you got all the regulatory approvals and it's going to close soon. Can you just maybe talk about, I guess, the margin impact that business will have on the logistics and warehousing segment? If I understand correctly, I guess maybe as it's currently constituted, the business is maybe a little lower than the average margin. So just wondering if you can talk about the margin impact and how you see your ownership of that business improving margins over the next couple of years.

Kamran: With robotics and with using our critical mass buying power as an example on equipment.

Speaker Change: Excuse me.

Kamran: And then sharing within our network. So we're pretty confident that we saw synergy there and it'll take us a little bit of time to achieve that don't get me wrong. If you buy a company you can go in and it takes a little bit of time to earn.

Kamran: The trust and respect of the people and the customers in those kind of things but.

Kamran: Like every one of our other business units like guard wine like Jays like.

Murray Kenneth Mullen: Oh, you know what? It's going to be a container world. It's going to be a little bit like being our, you know, we know what we're getting into. We didn't. The company ran into a little bit of problems. As a result of the freight surge that happened, they got trapped with that. Some additional costs that we were able to really manage through that. So.

Kamran: Nearly all of our <unk> businesses and logistics I mean, we own prove the margins that's what we do here.

Kamran: We acquire companies and we strive to improve their performance that's what we do.

Kamran: And we will do it here too I'm, absolutely convinced of it if I wasn't convinced I wouldn't have sponsored and said, let's do it.

Kamran: But give us a little bit of time, we'll get it done the great news is.

Murray Kenneth Mullen: But those things are behind them now, so we stepped in, and we got that business. It wasn't highly profitable, but I can tell you our expectation is that out of the chute, we'll probably have low team margins. You know, that's not up to our standard.

Kamran: The previous owner.

Kamran: Dennis Christmas did a fantastic job of growing the business as I said to that team. The heavy lifting has been done you've got significant market presence that is not easy to get in any vertical and they've done it and now with us going in we will measure.

Murray Kenneth Mullen: Cameron, but I would say to you over time... You improve margin with technology, with automation, with robotics, and with using our critical mass buying power as an example for equipment and then sharing within our network. So we're pretty confident that we have seen synergy there, and it'll take us a little bit of time to achieve it. Don't get me wrong, you buy a company, you go in, and it takes a little bit of time to earn the trust and the respect of the people and the customers and those kind of things.

Kamran: <unk>, we will focus and we will improve margins period.

Speaker Change: Okay, No that gives us just give us a little bit of time, and we will get it done.

Kamran: Alright.

Kamran: But put that in your calendar that said Murray said on this day.

Speaker Change: I'll do that.

Speaker Change: Second quick question.

Speaker Change: Sort of thinking about competitive capacity I mean, it gets clear theres, an unbalanced market here between supply and demand in your comment I guess was that the current market conditions. He really can't be sustained for much longer I'm. Just wondering if you are seeing at all some of this competitive capacity disappear field bankruptcy no.

Murray Kenneth Mullen: Like every one of our other business units, like Gardwine, like Jay's, like... Nearly all of our LTL businesses and logistics, I mean, we all improve the margins. That's what we do here. We acquire companies, and we strive to improve their performance. That's what we do. And we will do it here too. I'm absolutely convinced of that. If I wasn't convinced, I wouldn't have sponsored and said, "let's do it." So, give us a little bit of time; we'll get it done.

Speaker Change: No no we're not seeing a disappear.

Speaker Change:

Murray Kenneth Mullen: The great news is... The previous owner, Dennis Christmas, did a fantastic job of growing the business. As I said to that team, the heavy lifting's been done. Significant market presence. That is not easy to get in any vertical, and they've done it.

Speaker Change: What was the first the first phase that you got to go through his denial and everybody thinks all in all it's all going to get better in the market and I can I can just everybody stays in business. The next phase is animal instincts kick in which is survival and thats where were at right now but.

Murray Kenneth Mullen: And now with us going in, we will measure, we will focus, and we will improve margins. Period. Just give us a little bit of time, and we'll get it done. [inaudible] Put that in your calendar that says Murray said on this day.

Kamran: So it's going to take us a quarter or two I think.

Kamran: But eventually it's going to happen Kamran I'll tell you why capital is going to dry up.

Kamran: And Richard knows this we all know it here.

Kamran: Don't have the balance sheet, you can't get the insurance if you can't get the insurance you can't you can't get your license and I think that.

Cameron Doerksen: Okay, I'll do that. Just a second, quick question. I mean, just sort of thinking about competitive capacity. It's clear there's an unbalanced market here between supply and demand. And your comment, I guess, was that the current market conditions really can't be sustained for much longer. I'm just wondering if you are seeing at all some of this competitive capacity disappear, you know, bankruptcy?

Kamran: It will eventually happen camera, but it doesn't happen.

Kamran: And the first phase of the.

Kamran: What happens since I don't think that demand is going to come Roaring back I suspect it's going to take.

Kamran: A little longer for.

Kamran: The banks to kind of not just book there.

Kamran: Our bad debt, but too.

Kamran: Try and realize on that bad debt and it'll take a little bit of time, but it's going to happen.

Cameron Doerksen: No, no, no; we're not seeing it disappear. The first phase that you have to go through is denial, and everybody thinks, oh no, it's all going to get better in the market, and everybody stays in business. The next phase is animal instincts kick in, which is survival. And that's where we're at right now. So it's going to take us a quarter or two, I think.

Kamran: And I suspect that.

Kamran: We've already seen a major bankruptcy happened in the industry.

Kamran: Re receivership not a bankruptcy that's the wrong word it's a receivership but.

Kamran: That's.

Kamran: That's just the Canary in a coal mine.

Kamran: Cameron its Richard again too.

Speaker Change: <unk>. This is kind of a double edge store here, we're not seeing the capitulation, but what we are seeing is significant.

Murray Kenneth Mullen: But eventually, it's going to happen, Cameron, and I'll tell you why. Capital is going to dry up. And Richard knows this, we all know it here. If you don't have the balance sheet, you can't get the insurance. If you can't get the insurance, you can't get your license.

Speaker Change: Things being thrown at US right acquisition opportunities right. When people are desperate to get rid of their businesses I don't know if its a function of it was even before the full capital gains thing I won't get into that but people are looking to sell their trucking businesses and we are getting I got to pitch to me and within two hours yesterday and mortgage I mean, just on that I just got one.

Murray Kenneth Mullen: It will eventually happen, Cameron, but it doesn't happen in the first phase of what happens. And since I don't think that demand is going to come roaring back, I suspect it's going to take a little longer for the banks to kind of not just book their bad debt, but two, and it'll take a little bit of time, but it's going to happen. We've already seen a major bankruptcy happen in the industry. Receivership, not a bankruptcy, that's the wrong word, it's a receivership. But that's just the beginning.

Speaker Change: Come across mining, while where he is sitting here, while we're sitting here doing we're sitting here, giving this presentation. So so that speaks to the point Murray makes in Carson make that we will be focused on acquisitions, we're not going to do them. All we're not on some sort of super growth.

Speaker Change: Platform, but we will do the ones that makes sense precision based acquisition so.

Speaker Change: Just some color and commentary that ties our acquisition thesis on that yes.

Speaker Change: To put.

Speaker Change: To button that up for you.

Speaker Change: The current market conditions are brutal for carriers, but they are great for acquisitions.

Speaker Change: And great guess guess what we're good at.

Speaker Change: Yeah, absolutely look forward to see more activity there. So I appreciate it I'll pass the line thanks very much.

Murray Kenneth Mullen: It's kind of a double-edged sword here. We're not seeing the capitulation, but what we are seeing is significant, and Carson says that we will be focused on acquisitions. We're not going to do them all. We're not on some sort of super growth platform, but we will do the ones that make sense, precision-based acquisitions. So just some color and commentary that ties our acquisition thesis to that. Yeah, just so to put the, you know, to button that up for you, the current market conditions are brutal for carriers, but they're great for acquisition. And guess what we're good at?

Speaker Change: Okay.

Speaker Change: Okay.

Chronic: The next question comes from chronic to 10.

Scotiabank: That's scotiabank. Please go ahead.

Scotiabank: Thanks, operator, and good morning, everyone.

Scotiabank: Mike I know you love your stock.

Scotiabank: Stock, but just my you keep buying back in the market that and just kind of following up on your last comment on M&A.

Chronic: You've been getting a lot of these inbounds from Sandoz I get it but what's really kind of strategy you have with respect to M&A and he talked about like number of casino. One that's done you have more bandwidth.

Cameron Doerksen: Yeah. Absolutely. No, I look forward to seeing more activity there. So I appreciate it. I'll pass the line. Thanks very much.

Chronic: Bandwidth to do more tuck ins.

Chronic: That's really our focus in terms of M&A type size of quality on a region.

Operator: The next question comes from Konark Gupta of Scotiabank. Please go ahead.

Chronic: Are you focusing on right now and whats keeping you from doing something more imminent the answer both G&A and next quarters.

Konark Gupta: Good morning, everyone. Murray, I know you love your stock, which is why you keep buying it in the market. And just kind of following up on your last comment on M&A, you've been getting a lot of these inbound calls from sellers. I get it. But, you know, what's your kind of strategy here with respect to M&A? I mean, you talked about, you know, now the container world is done. You have more sort of bandwidth to do more tuck ins.

Chronic: While the first quarter was clearly the.

Chronic: Competition Bureau, we were in a quiet period with them cornered. So we kind of have to put everything on the back burner because once you're in what the competition Bureau, if we did anything else. We would have had to re file the comp we would never got container world done if we kept doing so we're in a bit of a quiet period, but.

Chronic: Now we've got we've got lots of our desks are all fall with the files of ones that.

Chronic: Intrigued us and with each one that we look at must make us better.

Chronic: And some are smaller.

Chronic: But really we will drive margin and certain of our business units. Those are the what tuck in acquisitions and others like container world get us into new verticals that we're really really like that we see a long term future and so can I tell you exactly which ones will no I can't tell you that because it's competitive but.

Murray Kenneth Mullen: What's really your focus in terms of M&A type, size, or quality, or region? You know, like, where are you focusing right now? And what's keeping you from doing something more imminently as opposed to, you know, in the next two quarters?

Murray Kenneth Mullen: Well, the first quarter was clearly the Competition Bureau. We were in a quiet period with them, Konark. So we kind of had to put everything on the back burner because once you're in with the Competition Bureau, if we did anything else, we'd have had to refile the company. We would never have got Container World done if we kept doing it. So we were in a bit of a quiet period.

Chronic: I can tell you we look at them Thats the two things we look at.

Chronic: Okay.

Speaker Change: Well. Thank you and then if I can.

Speaker Change: Dig into perhaps.

Speaker Change: On the performance in the quarter, it's great to see the revenue per day metric that kind of gets us more sort of visibility as to what's happening on a daily basis, and that's compared to just on the quarter, but.

Murray Kenneth Mullen: But, you know, now we've got lots of them; our desks are all full of files of ones that intrigue us, but each one that we look at must make us better. And some are smaller. But really, we'll drive margin in certain of our business units. Those are the what? Top gain acquisitions, and others like Container World get us into new verticals that we really, really like, that we see a long-term future in. So can I tell you exactly which ones? Well, no, I can't tell you that because it's competitive. But I can tell you we look at them. That's the two things we look at.

Speaker Change: Fans perspective, generally sounded like the weakest month.

Speaker Change: Any thoughts on how revenue or EBITDA per day extended.

Speaker Change: The quarter and into April so far so what I'm trying to get at is like how is your quarterly EBITDA progression planned to get to the full year 2025.

Speaker Change: Well that's a good question.

Speaker Change: Well, that's why we look at all the time to call at arc.

Speaker Change: But.

Speaker Change: Yes.

Speaker Change: Before I turn it over to Carlos I will just say look I.

Speaker Change: Adults.

Carlos: However, I don't see the second quarter.

Konark Gupta: Okay, that's helpful, thank you. And then if I can dig into perhaps the performance in the quarter, it's great to see the revenue per day metric, which kind of gives us more sort of visibility as to what's happening on a daily basis compared to just the quarter. But from Tranz's perspective, January sounded like the weakest month. Any thoughts on how revenue or EBITDA per day trended throughout the quarter into April so far? So what I'm trying to get at is, how is your quarterly EBITDA progression planned to get to the full year of $350,000?

Carlos: I don't see any economic growth coming in the second quarter and the first one we might not have the weather issues.

Carlos: And I think it's the same days the same number of working days cars.

Carlos: One less this year than last year last year's quarter, yes. So this in Q1 of this year. We had 62 working days versus 63 last year going into Q2, we're going to have 64 working days this year versus $60. So 63 last year. So we're gonna game that day back and it's really due to.

Carlos: When the Easter holiday fell so youll gain one day.

Murray Kenneth Mullen: Well that's a good question. That's one we look at all the time too, Konark. But, you know, and

Carlos: In terms of revenue and 700, Nab or 8 million when once we get a container world.

Carson P. Urlacher: Before I turn it over to Carson, I'll just say, look, I don't... Konark, I don't see the second quarter. I don't see any economic growth coming in the second quarter, or in the first quarter. We might not have the weather issues, you know, and I think it's the same days, same number of working days, Carson.

Carlos: Starting in May we'll be back up to $8 million a day.

Carlos: <unk> gross revenue that's.

Carlos: You can see how that changes, we'll just one working day right and.

Carlos: And.

Carlos: But the overall economy I don't I don't see.

Carlos: I don't in the absence of doing acquisitions corner, if theres no way that we're going to be at the same revenue per day as last year, because the economy is not strong it's adjusting to a little bit lower demand and much much more competitive than it was a year ago.

Carson P. Urlacher: Last year's quarter, in Q1 of this year, we had 62 working days versus 63 last year. Going into Q2, we're going to have 64 working days this year versus 63 last year, so we're going to gain that day back, and it's really due to when the Easter holiday fell.

Carlos: And.

Carlos: That's a similar situation and that's why we're sandy you got to be really really focused on cost today.

Murray Kenneth Mullen: So, you gain one day. In terms of revenue, and at $7.5M or $8M, once we get Container World starting in May, we'll be back up to $8M a day in gross revenue. You can see how that changes with just one working day, right? But the overall economy, I don't see... I don't, in the absence of doing acquisitions, Konark, there's no way that we're going to be at the same revenue per day as last year because the economy's not as strong. It's adjusting to a little bit lower demand and is much, much more competitive than it was a year ago.

Carlos: Can't be you can't be loose right now and.

Carlos: And you can't have too much debt.

Carlos: And you can't be on the bank too much money or else.

Carlos: Youre going to be we don't get a call from the owner or we get a call from a bank we get lots of restructuring costs Trust me.

Carlos: Yeah.

Speaker Change: Okay, that's fair.

Speaker Change: On the EBIT on the actual number.

Speaker Change: I guess, the only thing we're probably not going to have this quarters, maybe just that ugly weather.

Speaker Change: But.

Speaker Change:

Speaker Change: It's not going to be as strong as last year I don't see it.

Speaker Change: Because the revenue is not as strong as last year.

Speaker Change: On the same store sales, but then you add acquisitions coming in that will.

Speaker Change: We'll add a little bit to it.

Murray Kenneth Mullen: You know, that's just the reality of the situation. That's why we're saying to you, you've got to be really, really focused on cost today. You can't be, you can't be loose right now. You're, and you can't have too much debt. And you can't be owing the bank too much money or else... You're going to be... We don't get a call from the owner, we get a call from the bank, we get lots of restructuring calls, trust me.

Speaker Change: And thats going to be our game over the next pit is going to be tough par on the existing business and we'll backfill it with acquisitions. So.

Speaker Change: And then we wait for the next market and then next time the market turns will be bigger and will be better and more leaner and the profit margin of them will.

Speaker Change: We will go.

Speaker Change: Straight to shareholders.

Speaker Change: That's great color. Thanks, so much guys and then just maybe one quick follow up on Alan W.

Konark Gupta: Okay, that's fair; that's good.

Murray Kenneth Mullen: I just, the only thing we're probably not going to have this quarter is maybe just that ugly weather. It's not going to be as strong as last year, I don't see it, because the revenue is not as strong as last year. You know, on the same store sales, but then you add acquisitions coming in that will. We'll add a little bit to it, and that's going to be our game for the next bit.

Speaker Change: You talked about the full truckload market would be really kind of under pressure.

Speaker Change: Russia, because of overcapacity and pricing, which I think you guys going on across the industry right now.

Speaker Change: But how much business will truckload being a driver of the Allenby segment again like what's your exposure there directly or indirectly.

Murray Kenneth Mullen: It's going to be tough, Konark, on the existing business, and we'll backfill it with acquisitions. And then we wait for the next market, and then next time the market turns, we'll be bigger, and we'll be better, and we'll be leaner, and the profit margin of the company... It will go straight to shareholders.

Speaker Change: We really only have.

Speaker Change: Essentially two to three business units that dabble in that.

Speaker Change: In that space.

Speaker Change: It's not a significant component.

Speaker Change: Us.

Konark Gupta: That's great. Thanks so much, guys.

Speaker Change: By design and when we do dabble in that space, we do it with owner operators.

Konark Gupta: I just made one quick follow-up on L&W. You talked about the full truckload market being really kind of under pressure because of overcapacity and pricing, which I think you're seeing all across the industry right now. But how much is this full truckload being a driver for the L&W segment? What's the exposure there, directly or indirectly?

Speaker Change: Just saw that.

Speaker Change: It's a variable cost structure for us.

Speaker Change: We don't have.

Speaker Change: Our fleet of company truck in the full long haul truckload business.

Speaker Change: That's where you get into trouble.

Speaker Change: So we we look at it differently and we've positioned our organization so that.

Murray Kenneth Mullen: We really only have essentially two to three business units that dabble in that space. It's not a significant component of us by design, and when we do dabble in that space, we do it with owner-operators, just so that it's a variable cost structure for us. We don't have a fleet of company trucks in the full long-haul truckload business. That's where you get into trouble. So we look at it differently, and we've positioned our organization so that it's more of a variable cost structure for us there at Konark. Very, very bite-sized

Speaker Change: So that's more of a.

Speaker Change: Our variable cost structure for us there are.

Speaker Change: Very very by design as I said in my comments earlier today call it the <unk>.

Speaker Change: Truckload business.

Speaker Change: Is not a business that.

Speaker Change: Attracts my attention or my capital I've been in this business too long.

Speaker Change:

Speaker Change: Just.

Speaker Change: It's just tough tough business. So that's not one that we like to put capital to work in.

Speaker Change: So the trucking business.

Speaker Change: In the trucking business is substantially different than that.

Murray Kenneth Mullen: Very, very by design, as I said in my comments earlier today, Konark, you know, the full truckload business, is not a business that attracts my attention or my capital. I've been in this business too long.

Speaker Change: For example, the rail business for both both sectors move a lot of freight but.

Speaker Change: But in rails, they don't they're not price competitive truckers can be.

Speaker Change: It can be predatory pricing for a short period of time and.

Speaker Change: We're going through a market segment like that right now so.

Murray Kenneth Mullen: It's just a tough, tough business, so that's not one that we'd like to put capital into. The trucking business. You know, the trucking business is substantially different than... And for example, the rail business. Both sectors move a lot of freight, but in rail, they don't; they're not price competitive. Truckers can be. They can charge predatory prices for a short period of time, and we're going through a market segment like that right now. So, the truckload business, which is a huge part of the Canadian landscape, that's not one that we'll probably put a lot of capital into, to be blunt.

Speaker Change: The truckload business, which is a huge part of the Canadian landscape. That's not one that will probably put a lot of capital and to be blunt.

Speaker Change: I appreciate the color guys. Thank you.

Speaker Change: Okay.

Speaker Change: The next question comes from Walter <unk> of RBC capital markets. Please go ahead.

Walter: Yeah, Thanks, very much and I, particularly everyone.

Walter: Hi, everyone.

Walter: Just just to recalibrate here I know you.

Walter: <unk> business plan and a lot has happened since Maria you called out interest rates that you thought would come down and spur growth, but have not yet.

Konark Gupta: I appreciate the call today.

Operator: The next question comes from Walter Spracklin of RBC Capital Markets. Please go ahead. Yeah, thanks.

Walter Noel Spracklin: Hi everyone. Just to recalibrate here. I know you gave us a business plan, and a lot has happened since, Murray. You called out interest rates that you thought would come down and spur growth but have not yet. You've seen some mixed changes in your business that have resulted in some lower-margin businesses taking more of your profits or representing a larger share of your total EBITDA. There has been M&A activity that you've done that is imminently closing. My question, I guess, is when you put all that together, how does that change the outlook you have out there officially on revenue and EBITDA, if at all?

Walter: You've seen some mixed changes in your business that that has resulted in some lower margin.

Speaker Change: Business take taking more more more of your representing a larger share of your total EBITDA.

Speaker Change: There has been M&A activity that you've done imminently closing.

Speaker Change: My question I guess is when you put all that together.

Speaker Change: How do you how does that how does that change the outlook you have out there are officially on on revenue and EBITDA if if at all.

Murray Kenneth Mullen: I don't think... I don't think the... With the acquisition that we've announced thus far, I think we meet our revenue targets quite easily, Carson. [inaudible] EBITDA may be close, but maybe not. Walter, is that on the specialized industrial side? They just aren't.

Speaker Change: Well I don't think.

Speaker Change: I don't think the.

Speaker Change: With the acquisition that we've announced thus far I think we meet our revenue targets quite easily Carson yes.

Speaker Change: EBITDA.

Speaker Change: May be close, but maybe not.

Speaker Change: Quite as strong and the reason is.

Speaker Change: Walter is that in the specialized industrial side they.

Murray Kenneth Mullen: They're just not drilling at the moment because natural gas prices are so low. So the whole thesis was you build the pipeline. Then you've got to drill to fill the pipelines, and they're just not drilling to fill the pipelines right at the moment, so they've just delayed some of those projects. You know, they're just working off their current inventory levels. And they probably won't drill until the prices of natural gas go up, but eventually, it will. And then

Speaker Change: They just start.

Speaker Change: Theyre just not drilling at the moment because natural gas prices are so low so the whole thesis was you build the pipelines.

Speaker Change: Then you've got a drill to fill the pipelines and they're just not drilling the film fill the pipelines right at the moment. So they've just delayed some of those projects. They're just you know.

Speaker Change: They're just working off their current inventory levels.

Speaker Change: And they probably won't dwell until the prices of natural gas goes up but eventually it will.

Murray Kenneth Mullen: You know, then that helps our specialized industrial side and gets us back to where we were, and that will replace what we lost on the high-margin pipeline business. So the drilling side, when it's going, is a high-margin business. The pipeline side, when it's going, is a high-margin business. The pipeline side is not there, and the drilling side needs to get going, but that's been pushed out now because natural gas prices are too low. You know, that caught a lot of people by surprise, and so it's pushed it out.

Speaker Change: And then.

Speaker Change: Then that helps our specialized industrial side and gets us back to where.

Speaker Change: Where we had been and that will replace what we lost on that by March and pipeline business. So the drilling side, when it's going as high margin business the pipeline side, when it's going as high margin business.

Speaker Change: The pipeline side is not there in the <unk>.

Speaker Change: Drilling side needs to get going in but that's been now pushed out because natural gas prices are too low.

Speaker Change: <unk>.

Speaker Change: That caused a lot of people by surprise.

Murray Kenneth Mullen: But eventually, our S&I side will be just, just fine. Now, I think the more instructive thing, are we going to put more capital to work in there? Eh, it's kind of like... Long haul trucking, we'll be really, really careful on that. Only, only when we get something at a, at a, such a favorable multiple that allows us to get like a quick, two to three year payback, would we even consider something like that, Walter? And.

Speaker Change: So it's pushed it out, but but eventually our F&I side.

Speaker Change: <unk> will be just just fine.

Speaker Change: No I think the more instructive.

Speaker Change: Are we going to put more capital to work in there.

Speaker Change: Yeah, it's kind of like.

Speaker Change: Long haul trucking will be really really careful on that only.

Speaker Change: Only one we'd get something at a better such a favorable multiple.

Speaker Change: That allows us to get like a quick.

Speaker Change: Two to three year payback, what we even consider something like that Walter.

Murray Kenneth Mullen: So really, that's not our preferred use of capital, and if we did go into that market, you know that we got a pure synergy. No growth. We don't really care about growth. We just want to maintain margin and grow margin.

Speaker Change: Uh huh.

Walter: So really that's not our preferred.

Speaker Change: Use of capital and if we did go into that market you knew that we got a pure synergy no. We don't we don't really care about growth, we just want to maintain margin and grow margin.

Speaker Change: And that second one your merch margin within that segment, given the fluctuation with commodity prices and so on.

Walter Noel Spracklin: In that segment, given the fluctuation with commodity prices and so on, you had trended up to just over 20% EBITDA margin in your INF segment, and I'm just curious; I think there were probably some expectations for that to continue to go higher. What I'm hearing from you is that, probably not this year, but on a longer-term basis, fundamentally, do you see this as a 20% margin business, something higher, or even something lower based on where you look at it today?

Speaker Change: You you had trended up to just over 20% EBITDA margin.

Speaker Change: In your.

Speaker Change: Segment I'm just curious if.

Speaker Change: There was probably some expectations for that to continue to go higher.

Speaker Change: What I what I'm hearing from you is that probably not this year, but on a longer term basis fundamentally do you see do you see this as a 20% margin business, something higher or or even something lower based on that on where you're looking at it today.

Murray Kenneth Mullen: Well, Walter, that's a good, uh, a really good point to consider. Twenty percent is kind of the minimum we expect in that business because it's a very capital-intensive business. So that business, if you're going to put more capital work in there, 20% is not high enough. Right now, we don't put a lot of capital work in S&I; we're still working off of yesteryear's capital.

Speaker Change: That's a good that's a good really good.

Speaker Change: Point to consider.

Speaker Change: 20%.

Speaker Change: Is kind of a minimum we expect in that business because it's a very capital intensive business. So if that business, if youre going to put more capital work on their 20% is not high enough.

Speaker Change: Right now we're still.

Speaker Change: We don't put a lot of capital to work in F&I.

Speaker Change: We're still working off of yesteryear as capital.

Murray Kenneth Mullen: But eventually... You know, just like it costs a lot more to build a pipeline, I can tell you it costs a lot more to get some of that equipment. So your prices have to go up before we will deploy capital. So if the capital goes, if I see margins and if I see prices going up, then we'll put capital to work, and then that will be the cue card that margin goes up.

Speaker Change: But eventually.

Speaker Change: You know.

Speaker Change: Like a cost a lot more to build a pipeline I can tell you it costs a lot more to get some of that equipment. So your prices have to go up.

Speaker Change: Before we will deploy capital.

Speaker Change: So if the capital goes if I see margins and if I see prices going up.

Speaker Change: Then we'll put capital to work and then that will be the acute card that margin goes up.

Murray Kenneth Mullen: But margin won't go up until capital gets more capital deployed, but we're not putting more capital deployed until rates go up. So it's kind of a... And I'm not presuming that they'll go up. I'm waiting for them to go up before I part ways with capital. I'm from Missouri. You've got to show me.

Speaker Change: But margin won't go up until capital gets more capital deployed but we're not putting more capital deployed to rates go up so it's kind of it.

Speaker Change: And im not presuming that they'll go up I'm waiting for them to go up before if our capital to work.

Speaker Change: I'm from Missouri, you got to show me.

Murray Kenneth Mullen: Yeah, in that segment, 20% you need that because you need 10% for depreciation. Yeah, yeah, very capital-intensive, Walter. So we'll be careful.

Speaker Change: Yeah in that segment.

Speaker Change: 20%, you need that because you need 10% for depreciation, yes, yes, very very capital intensive Walter So we'll be careful right now.

Murray Kenneth Mullen: Yeah, yeah, very, very capital intensive, Walter. So we'll be careful.

Speaker Change: Generates a ton of them. It's a segment that generates a lot of free cash for our business.

Speaker Change: We're not putting a lot of capital to work in there.

Speaker Change: But when you have to put capital to work I can tell you the margins will be going up.

Murray Kenneth Mullen: Right now, it generates a ton of free cash for our business because we're not putting a lot of capital into it. But when you have to put capital to work, I can tell you the margins will be going up.

Speaker Change: Okay. Okay. That's all my questions. Thank you very much for the time.

Speaker Change: Thank you.

Speaker Change: The next question comes from Tim James with TD Cowen. Please go ahead.

Tim James: I think some good morning, everyone.

Operator: The next question comes from Tim James of TD Cohen. Please go ahead.

Tim James: You can start.

Tim James: Kind of a big picture question, I guess Murray, So I think I'm hearing you correctly that conditions can improve through either a demand response, driven by by lower interest rates or a supply response by rationalization is as I guess current conditions eliminate some competition.

Tim James: I think I'm hearing you correctly that conditions can improve through either a demand response driven by lower interest rates or a supply response through rationalization as current conditions eliminate some competition. From your perspective, which path to stronger conditions is better? I'm just wondering if there's a bit of a silver lining to conditions remaining tough for a little bit longer because of what it will do to the longer-term competitive environment. Just curious about your thoughts on that. Yeah, so once again, that's

Tim James: From your perspective.

Tim James: Each path to stronger conditions is better is it a demand response or if there's a supply response I'm. Just wondering if you know there's a you know a bit of a silver lining to conditions remaining tough for a little bit longer because of what it will do to the longer term competitive environment. Just curious for your thoughts on that yeah. So one.

Murray Kenneth Mullen: Yeah, so once again, that's a good observation as a look to everyone I say this to. Look, we've been in business since 1949. We've seen every damn market you could imagine. We've seen brutal competition, we've seen the best of the best.

Speaker Change: Again, that's a that's a good observation as a look to everyone. I say this look we've been in business since $19 49, we've seen every damn market you could imagine.

Tim James: We've seen brutal we've seen the best of the best.

Murray Kenneth Mullen: This is pretty tough right now. What I've learned... From my experiences, the longer it stays tougher, those that are better prepared will do much, much better. So because we're able to play the long game, we're just fine. But for a lot of new entrants, for a lot of people that just got the idea, this is an easy business to get into. They're the ones that flooded the system with new market entrants. By the way, who funded them were the big banks. The banks are going to eat this. Because they funded them. They didn't pay cash.

Tim James: This is pretty tough right now what I've learned.

Tim James: From my experiences the longer it stays tough for those that are better prepared we will do much much better so because we're able to play the long game.

Tim James: We were just fine.

Tim James: But for a lot of new entrants for a lot of people that just got in there, but this is an easy business to get into they are the ones that flooded the system with market by the way who funded them was the big banks the banks are going to eat this.

Tim James: Because they funded them they didn't pay cash they borrowed.

Murray Kenneth Mullen: They borrowed it, and I suspect it. When you talk to the banks about tightening lending standards today, that creates... Less capacity tomorrow. And then eventually. Interest rates. We'll find a new path. And either interest rates come down, or you're going to continue to have inflation for a long period of time because... You can't put canoe capital to work, Tim, unless we get higher prices. No, nobody's going to do that, which tells me.

Tim James: And I suspect.

Tim James: When you go talk to the banks that they are tightening lending standards today that creates.

Tim James: Less capacity tomorrow.

Tim James: And then eventually into.

Tim James: Interest rates.

Tim James: We will find a new path.

Tim James:

Tim James: And either interest rates come down.

Tim James: Youre going to have continue to have inflation for a long period of time because.

Tim James: You can't book of New capital to work, Tim unless we get higher prices.

Tim James: Nobody is going to do that which tells me.

Murray Kenneth Mullen: Interest rates might stay a lot higher for longer because the only cure for many of the problems is higher rates. And I don't know if higher rates really help inflation pressures, to be honest. So I'm not, you know, we've really kicked the can down the road on lower interest rates. We've kind of come to grips with it here that says, man, it's the... They're staying stickier than I want them to do, but... What I want to happen and what really happens are two different things. I don't see them coming down.

Tim James: Interest rates might stay a lot higher for longer because the only cure to many of the problems is higher rates.

Tim James: I don't know if higher rates really help inflation pressures to be honest.

Tim James: Okay.

Tim James: Really kicked the can down the road on it on lower interest rates, we've we've kind of come to grips with it here that says man.

Tim James: They're staying stickier than what I want them to do but.

Tim James: What I want to happen and what really happens is two different things I don't I don't see them coming down so.

Murray Kenneth Mullen: That means it's going to be slower growth for a while, but eventually, higher rates are coming, Tim. It's, I'm telling you, it's coming.

Tim James: That means it's going to be slower growth for a while.

Tim James: But eventually higher rates are coming.

Speaker Change: I'm, telling you it's coming in.

Murray Kenneth Mullen: It's just we just got to bide our time, and we'll focus on one of those things that we can control. Rich, you've talked about it, and it will be a laser focus on cost. We'll do restructuring, and, of course, we'll backfill with acquisitions because we have the balance sheet, and we have lots of lots of capacity to backfill in position for tomorrow's market. And that's everything we're focused on right now. The short term is we got all our business units focused on costs, but at corporate, we're focused on how we position ourselves for the future.

Tim James: We just got to bide, our time and and we will focus on one of those things that we can control reps you've talked about it will be laser focus on costs will do restructuring and of course, we will backfill with acquisitions because we.

Tim James: We've got the balance sheet and we.

Tim James: Lots of lots of capacity to to backfill in position.

Tim James: For Tomorrow's market and Thats everything we're focused on right now the short term as we got all our business units focused on costs, but our corporate.

Tim James: We're focused on how we position for the future.

Tim James: Okay, thank you. That's helpful. And then just my second question, Murray, you mentioned earlier that, or I can't remember whether it was yourself or Carson who mentioned that some of the TL weakness that's been prevalent for a while now, you're seeing it creep into the LTL market. Just wondering if you could kind of expand on that comment and what the kind of tie is there between the two or how that's happening.

Speaker Change: Okay. Thank you that's helpful. And then just my second question you mentioned earlier on that or can't remember with yourself for Carson mentioned that.

Tim James: Some of the TL weakness.

Speaker Change: <unk> been prevalent for a while now youre seeing it creep into the <unk> market. Just wondering if you could kind of expand on that comment in and.

Speaker Change: The kind of tie is there between the two or how that's happening.

Murray Kenneth Mullen: Yeah, it's just, you know, the LTL is a much, much more disciplined market than the truckload market, which is why we've invested in the LTL market. It's much more disciplined, but that doesn't mean that it can't be more competitive.

Speaker Change: Yes, it's just the <unk> is much much more disciplined market then.

Speaker Change: Then the truckload market, which is why we've invested in the <unk> market.

Speaker Change: It's much more discipline, but that doesn't mean that it can't be more competitive.

Murray Kenneth Mullen: And then the second thing is, in the LTL market, as Richard mentioned, we're always looking at efficiencies. How can we combine, how can we share freight? How can we make sure every truck is loaded to its max? Part of that is sharing, but part of that is technology.

Speaker Change: And then the second thing is in the <unk> market as Richard opined about is look we're always looking at efficiencies how do we how can we combine how can we share freight how can we make sure every truck is loaded towards Max part of that is sharing but part of that is technology.

Tim James: So you always can work on productivity improvements in the <unk> sector in the truckload side.

Murray Kenneth Mullen: And so you can always work on productivity improvements in the LTL sector. On the truckload side... A truckload is a truckload is a truckload. You can't hold more weight than you already are. You can't go more miles than you've already done. So really, the only thing that cures that market is rate. LTL, you can always be more efficient. You can swap better paying freight for lower quality freight, etc. So we're always working on a margin there.

Tim James: Truckload is a truckload as a truckload you can't hold more weight.

Tim James: Than you already are you cant go more miles and you've already going so really the only thing that cures that market is.

Tim James: Right <unk> you can always be more efficient you can swap better paying freight for lower quality freight et cetera. So we're always working on margin there.

Speaker Change: Okay Super Thank you very much.

Speaker Change: Once again, if you have a question. Please press Star then one.

Speaker Change: The next question comes from Michael Barnes with Raymond James. Please go ahead.

Michael Barnes: Hi, Good morning, most of my questions have been answered, but just two quick ones.

Tim James: Super, thank you very much. Once again, if you have a question, please press star then. The next question comes from Michael Barth of Raymond James. Please go ahead. Hi, good morning. Most of my questions have been answered, but just two quick ones.

Michael Barnes: First I'm, just curious given the broader industry weakness, our seller valuation expectations declining significantly or is there some stubbornness, there and I ask because you've indicated the denial phase is behind us.

Michael Barnes: And then a follow up to that.

Operator: Once again, if you have a question, please press star then. The next question comes from Michael Barth of Raymond James. Please go ahead.

Michael Barnes: In the past when your stock offer good value you've shown a willingness to really ramp up buybacks.

Michael Barnes: And so just given where the stock is this morning I'm curious how you view the relative attractiveness of M&A versus buying back more of your own shares.

Michael Barth: I think you're sitting in our boardroom talking with our board. I'll leave you with this, Michael: M&A is the way we grow the business. So, I would tell you that is our preferred use of pre-cash and the preferred use of our balance. And that's what we articulate to our board. In saying that...

Michael Barnes: Hi.

Speaker Change: You think you are sitting in our board room talking with our board.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: I'll leave you with this Mike Michael is that.

Speaker Change: M&A is the way we grow the business.

Speaker Change: So I would tell you that is our preferred.

Michael Barnes: Use of free cash and the preferred use of our balance sheet.

Speaker Change: And Thats, what we articulate to our board.

Speaker Change: And seeing that.

Murray Kenneth Mullen: Sometimes it's compelling to buy back your own stock when others don't believe in you and don't believe in the long term. So we have a sure buy back. And

Speaker Change: Sometimes it's compelling to buyback your own stock.

Speaker Change: When others don't believe in you and don't believe in the long term.

Speaker Change: So we have a share buyback.

Murray Kenneth Mullen: You know, we'll most likely be active buyers, you know, we'll balance it, but our preferred way is to grow the business and plan for tomorrow. If we buy back stocks... You know, that's... That's really just kind of short-term thinking.

Speaker Change: And.

Speaker Change: <unk>.

Speaker Change: You know it will.

Speaker Change: We'll most likely be active buying.

Speaker Change: Balance it but our preferred way.

Speaker Change: Is to grow the business and plan for tomorrow.

Speaker Change: If we buy back stock.

Speaker Change: Yes.

Speaker Change: That's really just kind of short term thinking.

Speaker Change:

Murray Kenneth Mullen: It may be supporting the stock price, but, you know, that's kind of short term. Longer term, I'm a big investor, and we'll balance it. So I don't mind increasing my position in Mullen Group. I bought some stock last quarter and might buy some more, but I don't mind if others don't like it; we'll buy it back. But I also like building; I'm a build

Speaker Change: And maybe supporting our stock price, but.

Speaker Change: That's kind of short term longer term I'm, a big investor.

Speaker Change: And we will balance it so I don't mind, increasing my position and Mullen group.

Speaker Change: I bought some stock last quarter and buy some more but.

Speaker Change: I don't mind, if others don't like it will buy it back but I also like building I'm a builder, we've always done acquisitions, we've always grown so that's my preferred way to do it but we're not naive and where we'll be we'll be.

Murray Kenneth Mullen: We've always done acquisitions, we've always grown, so that's my preferred way to do it. But we're not naive, and we'll look at all of them, all opportunities. We will not increase the dividend right now.

Speaker Change: We'll look at all of them are all opportunities.

Speaker Change: We will not increase the dividend right now will we will keep the dividend as is.

Murray Kenneth Mullen: We'll keep the dividend as is, and we'll either grow through M&A or we'll buy back stock. If we don't like the M&A opportunities that come across our desk, well, then we'll be aggressive in buying back stock. But my God, the sellers, they are.

Speaker Change: And we'll either growth through M&A or we will buy back stock. If we don't like the M&A opportunities that come across our desk, while they will be aggressive on buying back stock.

Speaker Change: But.

Speaker Change: My God the sellers there.

Murray Kenneth Mullen: You're in virtual panic mode, where I have not seen panic yet, on the real estate front, Michael. So real estate is still stubbornly high if you want that prime piece of property that hasn't. There's no capitulation there, I can tell you. I don't see it, Richard?

Speaker Change: They are in.

Speaker Change: Virtual panic mode, where I have not seen panic yet is.

Speaker Change: He is on the real estate front okay.

Speaker Change: Michael.

Speaker Change: So real estate is still stubbornly high.

Speaker Change: You want that.

Speaker Change: Prime piece of property that that Hasnt.

Speaker Change: There is no capitulation there I can tell you I don't see it Richard not at all not at all.

Murray Kenneth Mullen: Not at all. Okay, that's helpful. So, look, we... Just to summarize, when the market was at its peak in 22-23... We didn't bite on acquisition. Now, many of our peers did bite on acquisition. I guess that the market would stay strong forever. But I never did buy that thesis.

Speaker Change: Okay. That's helpful.

Speaker Change: Hello.

Speaker Change: Look we.

Speaker Change: Just to summarize when the market was at its peak in 'twenty two 'twenty three.

Speaker Change: We didn't bite on acquisition now many of our peers has been on acquisition.

Speaker Change: They thought.

Speaker Change: I guess that the market would stay strong forever I never did by that thesis.

Murray Kenneth Mullen: But I'll tell you what, we did a hell of a good job of capitalizing on the market and letting our business units do a great job. We capitalized on it. But we were quiet on the M&A front. I don't think we'll be quiet at the bottom of the market because all your risk is gone. There's no risk now. Everybody knows what the bottom is. So it's just a matter of when it returns, and it will turn, just like every market always does.

Speaker Change: But I'll tell you what we did a hell of a good job of capitalizing on the market and letting our business units.

Speaker Change: Did a great job, we capitalize on it but we were quiet on the M&A front.

Speaker Change: I don't think will be quiet in at the bottom of the market because all your risk is gone.

Speaker Change: There is no risk now everybody knows what the bottom is.

Speaker Change: So it's just a matter of when it returns and it will turn just like every market always dose.

Murray Kenneth Mullen: So, yeah. We think we're going to be able to really be in a great position to grow the business in this cycle because M&A is very attractive right now. We just have to pick the right ones that fit in our group.

Speaker Change: So yeah.

Speaker Change: We think we're going to be able to really be in a great position to.

Speaker Change: To grow the business in this cycle because M&A.

Speaker Change: It's.

Speaker Change: Very attractive right now, we just have to pick the right the right the right ones that fit in our group.

Speaker Change: <unk> taken the right horse Okay. That's helpful. Thank you. Thank you bye bye.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Mr. Mullen for any closing remarks.

Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Mr months for any closing remarks.

Murray Kenneth Mullen: Yeah, thank you, folks. We'll let you get going. It's the end of the quarter, and I know everybody has got a lot of quarter results to look at, and we have a business to run, so thank you very much for joining us. Take care.

Mr Months: Yes, Thanks folks will let you get going.

Mr Months: At the end of the quarter and I know everybody has got a lot of quarterly results to look at and we've got a business to run. So thank you very much for joining us take care.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Speaker Change: Yes.

Speaker Change: Hum.

Speaker Change: [music].