Q2 2024 TFI International Inc Earnings Call

Good day ladies and gentlemen. Thank you for standing by. Welcome to TFI International's second quarter 2024 results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session.

Operator: Nationals, Second Quarter, 2024 Results Conference Call. At this time, all participants are in a listen-only mode.

Operator: Second Quarter 2024 Results Conference. At this time, all participants are in a listen-only mode.

Operator: Following the presentation, we will conduct a question and answer session. Callers will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many callers as possible. Further instructions for entering the queue will be provided at that point. Please be advised that the conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially.

Operator: Following the presentation, we will conduct a question-and-answer session. Colors will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many colors as possible. Further instructions for entering the queue will be provided at that time.

Callers will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many callers as possible.

Operator: Please be advised that the conference call will contain statements that are looking forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to defer materially.

Further instructions for entering the queue will be provided at that time.

Please be advised that the conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially.

Operator: Also, I would like to remind everyone that this conference call is being recorded on Friday, July 26, 2024.

Operator: Also, I would like to remind everyone that this conference call is being recorded on Friday, July 26th, 2025. I will now turn the conference call over to Alain Bedard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead.

Alain Bedard: Also, I would like to remind everyone that this conference call is being recorded on Friday, July 26, 2024. I will now turn the conference call over to Alain Bedard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead, sir.

Operator: I will now turn the conference call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

Alain Bedard: Thank you, Operator, and welcome everyone to our call today. Our results released yesterday after the close were again very solid, with a year-over-year increase in both revenue and operating income. In all of our segments, our performance is still very lackluster-fraid environment. Our results reflect the hard work every day of our skilled and dedicated team members, as well as strong management and our many other self-help initiatives that will continue to benefit us going forward. Our overreaching focus as a company is on the long-held operating principle that got us here. We're focused on the details, including quality service that drives volumes.

Alain Bedard: Well, thank you, operator, and welcome, everyone, to our call today. Our results released yesterday after the close were again very solid, with a year-over-year increase in both revenue and operating income. In all of our segments, our performance is still very weak in a very lackluster freight environment.

Alain Bedard: Well, thank you, operator, and welcome, everyone, to our call today.

Speaker Change: Our results released yesterday after the close were again very solid, with a year-over-year increase in both revenue and operating income. In all of our segments, outperforming is still a very lackluster freight environment.

Alain Bedard: Our results reflect the hard work every day of our skilled and dedicated team members as well as strong management and our many other self-help initiatives that will continue to benefit us going forward. Our overreaching focus as a company is on the long-held operating principle that got us here. We're focused on the details, including quality service that drives volume. We're focused on freight quality, maximizing weight and revenue per shipment and always striving for cost management through greater efficiency.

Speaker Change: Our results reflect the hard work every day of our skilled and dedicated team members as well as strong management and our many other self-help initiatives that will continue to benefit us going forward.

Speaker Change: Our overreaching focus as a company is on the long-held

Speaker Change: That got us here. We're focused on the details, including quality service that drives volumes.

Alain Bedard: We're focused on freight quality, maximizing weight and revenue per shipment, and always striving for cost management through greater efficiencies. I believe that especially during weaker freight cycles, it's this adherence to the fundamentals that help us perform. All the while, we maintain a solid financial position that allows us to seek highly strategic and many opportunities to intelligently invest in the business and to return access to capital to shareholders whenever possible. During the second quarter of 2024, our revenue before fuel surcharge was of 27% to 1.96 billion. We generated operating income of 208 million, up from 192 million in the second quarter of 2023, with an operating margin of 10.6% relative to 12.4.

Speaker Change: We're focused on freight quality, maximizing weight and revenue per shipment and always striving for cost management through greater efficiencies.

Alain Bedard: I believe that, especially during weaker freight cycles, it's this adherence to the fundamentals that helps us perform. All the while, we maintain a solid financial position that allows us to seek highly strategic M&E opportunities, to intelligently invest in the business, and to return excess capital to shareholders whenever possible. During the second quarter of 2024, our revenue before fuel surcharge was 27% to $1.96 billion. We generated operating income of $208 million, up from $192 million in the second quarter of 2023, with an operating margin of 10.6% relative to 12.4%.

Speaker Change: I believe that especially during weaker freight cycles, it's this adherence to the fundamentals that helps us perform.

Speaker Change: All the while, we maintain a solid financial position that allows us to seek highly strategic M&E opportunities, to intelligently invest in the business.

Speaker Change: During the second quarter of 2024, our revenue before fuel surcharge was of 27% to $1.96 billion.

Speaker Change: We generated operating income of $208 million up for $192 million in the second quarter of 2023, with an operating margin of 10.6% relative to 12.4%.

Alain Bedard: We also produced adjusted net income of 146 million, up from 139 a year earlier, along with adjusted EPS of $1.71, up from $1.59 the prior year. Casual generation, as you've heard me say in the past, is always a focal point of ours, and during the second quarter we drove nearly $250 million of net cash from operating activities, well above the year earlier $200 million. We also generated free cash of 151 million, which was up from 138 million. Before moving on to consolidate the results.

Speaker Change: We also produced adjusted net income of $146 million up from $139 a year earlier, along with adjusted EPS of $1.71 up from $1.59 the prior year.

Alain Bedard: We also produced adjusted net income of $146 million, up from $139 a year earlier, along with adjusted EPS of $1.71, up from $1.59 the prior year. Cash Flow Generation, as you've heard me say in the past, is always a focal point of ours. And during the second quarter, we drove nearly $250 million of net cash from operating activities, well above the year earlier 200 million. We also generated free cash flow of 151 million, which was up from 138.

Speaker Change: Cash Flow Generation, as you've heard me say in the past, is always a focal point of ours. And during the second quarter, we drove nearly $250 million of net cash from operating activities.

Speaker Change: Well above the year earlier, $200 million. We also generated free cash flow of $151 million, which was up from $138 million.

Alain Bedard: Before moving on to the consolidated results, I want to summarize how the Dasky acquisition completed April 1st affected our reporting. Dasky added $329 million to second quarter revenue before fuel surcharge and over $23 million to our operating income, both reflected in our truckload business segment. In addition, our consolidated corporate level results reflect a non-recurring restructuring charge of $20 million.

Alain Bedard: I want to summarize how the DASCII acquisition completed April 1, affected our reporting. DASCII added $329 million to second quarter revenue before fuel surcharge and over $23 million to our offering income, both reflected in our truckload business segment. In addition, our consolidated corporate level results reflect a non-recurring, restructuring charge of $20 million related to the DASCII acquisition, which I'll touch on in a moment and which we've adjusted for the consolidated results I just reviewed, specifically, specifically adjusted net income and adjusted EPS.

Speaker Change: Before moving on to the consolidated results,

Speaker Change: I want to summarize how the Dasky Acquisition completed April 1st Affectadar reporting.

Speaker Change: The ASCII added $329 million to second quarter revenue before fuel surcharge and over $23 million to our operating income, both reflected in our truckload business segment.

Speaker Change: In addition, our consolidated corporate level results reflect a non-recurring restructuring charge of $20 million.

Alain Bedard: Related to the Dasky acquisitions, which I'll touch on in a moment, and which we've adjusted for the consolidated results I just reviewed, specifically adjusted net income and adjusted EPS. Now, let's talk about overall strategy. Our second quarter results, and in particular, our robust cash flow generation, even during this slow stretch of North American freight, reflect a number of positive factors.

Speaker Change: Related to the Dasky acquisitions, which I'll touch on in a moment, and which we've adjusted for the consolidated results I just reviewed, specifically adjusted net income and adjusted EPS. Thank you. Thank you.

Alain Bedard: Let's talk overall strategy, our second quarter results, and in particular our robust cashflow generation. Even during this stretch of North American freight, it reflects a number of positive factors. In addition to the hard work of our team and our laser focus on getting the fundamentals of the business right, our financial results should continue to benefit from, as I referred to last quarter, the very tangible opportunity to drive even stronger LTL results. We will continue to extract cars while at the same time driving top-line expansion through service quality. On both counts, we still have a lot of work to do.

Speaker Change: Let's talk overall strategy. Our second quarter resolves, and in particular our robust cash flow generation, even during this slow stretch of North American freight, reflects a number of positive factors.

Alain Bedard: In addition to the hard work of our team and our laser focus on getting the fundamentals of the business right, our financial results should continue to benefit from, as I referred to last quarter, the very tangible opportunity to drive even stronger LTL results. We will continue to extract cars while at the same time driving top-line expansion through service quality. On both counts, we still have a lot of work to do. Similarly, our recently completed Dasky acquisition brings opportunities that we've already started executing on to reduce costs and improve performance. Now turning to our business segment, we've now aggregated PNC into our LTL. However, over time, PNC has become a smaller portion of our overall business, especially following the Dasky acquisition.

Speaker Change: In addition to the hard work of our team and our laser focus on getting the fundamentals of the business right, our financial results should continue to benefit from, as I referred to last quarter, the very tangible opportunity to drive even stronger LTL results.

Speaker Change: We will continue to extract cars while at the same time driving top-line expansion through service quality. On both counts, we still have a lot of work to do.

Alain Bedard: Similarly, our recently completed DASCII acquisition brings opportunities on which we've already started executing to reduce costs and improve performance.

Speaker Change: Similarly, our recently completed Dasky acquisition brings opportunities, on which we've already started executing to reduce costs and improve performance.

Alain Bedard: Now, turning to our business segment, we've now aggregated PNC into our LTL. Over time, PNC has become a smaller portion of our overall business, especially following the DASCII acquisition. So we will now report as three segments, and we believe that this move will help simplify a net transparency to investor understanding. All the operational details are still in our quarterly report, and we can discuss anything you like during our Q&A. So with that, let's start with LTL, which was 40% of segment revenue before fuel surcharge during the quarter. We drew a revenue before fuel surcharge 1% over year, while our operating income was up 2%, reflecting a slight increase in our operating margin.

Speaker Change: Now, turning to our business segment, we've now aggregated PNC into our LTL. Over time, PNC has become a smaller portion of our overall business, especially following the Dasky acquisition.

Alain Bedard: So we will now report as three segments, and we believe that this move will help simplify and add transparency to investor understanding. All the operational details are still in our quarterly report, and we can discuss anything you'd like. Q&A: So with that, let's start with LTL, which was 40% of segment revenue before fuel surcharge during the quarter. We drew our revenue before fuel surcharge by 1% year-over-year, while our operating income was up 2%, reflecting a slight increase in our operating margin.

Speaker Change: So we will now report as three segments and we believe that this move will help simplify and add transparency to investor understanding. All the operational details are still in our quarterly report and we can discuss anything you'd like.

Speaker Change: during our Q&A.

Speaker Change: So with that, let's start with LTL, which was 40% of segment revenue before fuel surcharge during the quarter.

Speaker Change: We drew our revenue before fuel surcharge 1% year-over-year, while our operating income was up 2%, reflecting a slight increase in our operating margin.

Alain Bedard: So within LTL, starting with US-based operation, our revenue before fuel surcharge was 548 million, essentially flat relative to the prior year period, while our operating income climbed to 51 million, up from 47. Our US LTL tonnage was up 8%, and our revenue per shipment was up 7%, reflecting our focus on quality of freight and quality of revenue. Our operating ratio for US LTL was 90.8, 70 basis points better than last year, and our return on invested capital was 15.4. On the Canadian side of LTL, we generate revenue before fuel surcharge of 144 million, up 12% the past year, with operating income of 35 million, up from 34 million.

Alain Bedard: So within LTL, starting with U.S.-based operations, our revenue before fuel surcharge was $548 million, essentially flat relative to the prior year period, while our operating income climbed to $51 million, up from $47. Our US LTL tonnage was up 8%, and our revenue per shipment was up 7, reflecting our focus on quality of freight and quality of revenue. Our operating ratio for US LTL was 90.8, 70 basis points better than last year, and our return on invested capital was 15.5.

Speaker Change: So within LTL, starting with U.S.-based operation, our revenue before fuel surcharge was $548 million, essentially flat relative to the prior year period, while our operating income climbed to $51 million, up from $47.

Speaker Change: Our US LTL tonnage was up 8% and our revenue per shipment was up 7, reflecting our focus on quality of freight and quality of revenue.

Speaker Change: Our operating ratio for U.S. LTL was 90.8, 70 basis point better than last year, and our return on invested capital was 15.4.

Alain Bedard: On the Canadian side of LTL, we generate revenue before fuel surcharge of $144 million, up 12% the past year, with operating income of $35 million, up from $34 million. Our number of shipments was at 14%, although weight per shipment and revenue per shipment declined 4.5% and 1.2%, respectively.

Speaker Change: On the Canadian side of LTL, we generate revenue before fuel surcharge of $144 million, up 12% the past year, with operating income of $35 million, up from $34 million.

Alain Bedard: Our numbers of shipment was a 14% of the weight per ship and a revenue per shipment declined 4.5% and 1.2% respect. We had NOAA of 75.6 and our Return Invested Capital of Kennedy, NLTL was 19.1. Lastly, with LDL, our PNC operation drove $109 million of revenue before fuel search hours, compared to $116 million the prior year period, with operating income of $24 million relative to $27 last year. We had NOAA of 77.9, return invested capital of PNC was a very strong 24.2. Turning to truckload, this business segment was 37% of segment revenue before fuel search hours. Daski integration is off to a fast start, with a quick reduction in cost resulting in the one-time charge during the quarter.

Speaker Change: Our numbers of shipment was a 14% although weight per shipment and revenue per shipment declined 4.5% and 1.2% respectively.

Alain Bedard: We had an OR of 75.6, and our return on invested capital for Canadian Intel was 19.1. Lastly, with LDL, our PNC operation drove $109 million of revenue before fuel surcharge compared to $116 million for the prior year period, with operating income of $24 million relative to $27 million last year. We have a score of 77.9, and return on invested capital PNC was a very strong 24.2. Turning to truckload, this business segment was 37% of segment revenue before fuel surcharge.

Speaker Change: We had an OR of 75.6 and our Return Invested Capital for Canadian Intel was 19.1.

Speaker Change: Lastly, with LDL, our P&C operation drove $109 million of revenue before fuel surcharge compared to $116 million the prior year period, with operating income of $24 million relative to $27 million last year.

Speaker Change: We have a score of 77.9, return of PNC was a very strong 24.2.

Speaker Change: Turning to truckload, this business segment was 37% of segment revenue before fuel surcharge. Dasky integration is off to a fast start with a quick reduction in cost resulting to the one-time charge during the quarter.

Alain Bedard: Dasky integration is off to a fast start with a quick reduction in cost resulting from the one-time charge during the quarter. We produced truckload revenue before fuel surcharge of $738 million, as compared to $411 million the prior year, benefiting from the Dasky acquisition.

Alain Bedard: We produced truckload revenue before fuel search hours of $738 million as compared to $411 million prior year, benefiting from the Daski acquisition. Our truckload operating income of $83 million was up from $66. Also worth noting, our truckload R came in at an impressive $88.7, given where we are in the freight circuit cycle. And indications were executing well in that our unique specialized end market are proving more resilient. Taking deeper into truckload within specialized operation, we produced revenue before fuel search hours of $665 million, up from $335 million, largely due to the Daski acquisition, with operating income of $75 million, up from $54 million in the prior year period.

Speaker Change: We produced structural revenue before fuel surcharge of $738 million, as compared to $411 million the prior year, benefiting from the Dasky acquisition.

Alain Bedard: Our truckload operating income of $83 million was up from $66. Also worth noting, our truckload OR came in at an impressive 88.7, given where we are in the freight cycle, an indication that we're executing well and that our unique specialized end markets are proving more resilient. Digging deeper into truckload within specialized operations, we produce revenue before fuel surcharge of $665 million, up from $335 million, largely due to the Dasky acquisition, with operating income of $75 million, up from $54 million in the prior year period.

Speaker Change: Our truckload operating income of $83 million was up from $66 million.

Speaker Change: Also worth noting, our truckload OR came in at an impressive 88.7, given where we are in the freight CERC cycle.

Speaker Change: An indication we're executing well and that our unique specialized end markets are proving more resilient.

Speaker Change: Digging deeper into truckload within specialized operations, we produced revenue before fuel surcharge of $665 million, up from $335 million largely due to the Dasky acquisition, with operating income of $75 million, up from $54 million in the prior year period.

Alain Bedard: We saw increased productivity with revenue per week, up to percent, before fuel search hours were growing our truck count more than 70% with the acquisition. In addition, our specialized truckload R was $88.7, as I mentioned, and our Return Invested Capital came in at 7.3%, which I'll remind you includes only one quarter of contribution from Daski, and therefore should strengthen over the coming year. Starting to the Canadian based conventional truckload, we produced revenue before fuel search hours of $76 million, down just lightly from the past year, while our operating income of $8 million compared to $12 million in the year ago quarter.

Alain Bedard: We saw increased productivity with revenue per truck per week up 2% before fuel surcharge while growing our truck count more than 70% with the acquisition. In addition, our specialized truck load OR was 88.7%, as I mentioned, and our return invested capital came in at 7.3%, which I'll remind you includes only one quarter of contribution from Dasky and therefore should strengthen over the coming year. Turning to the Canadian-based conventional truckload, we produce revenue before fuel surcharge of $76 million, down just slightly from the past year, while our operating income of $8 million compares to $12 million in the year-ago quarter.

Speaker Change: We saw increased productivity with revenue per truck per week up 2% before fuel surcharge while growing our truck count more than 70% with the acquisition.

Speaker Change: In addition, our Specialized Truckload OR was 88.7% as I mentioned, and our Return Invested Capital came in at 7.3%, which I'll remind you, includes only one quarter of contribution from Dasky, and therefore should strengthen over the coming year.

Speaker Change: Starting to the Canadian-based conventional truckload, we produce revenue before fuel surcharge of $76 million, down just slightly from the past year, while our operating income of $8 million compares to $12 million in the year-ago quarter.

Alain Bedard: Our Canadian war was $89.3, while our Return Invested Capital was only $8.9.

Alain Bedard: Our Canadian Noir was 89.3, while our Return Investor Capital was only 8.9. And, wrapping up our business segment discussion, logistics was 22% of segment revenue before fuel surcharge and is performing very well. Our revenue before fuel surcharge was up 22% the past year, and operating income was up 54%.

Speaker Change: Our Canadian Noir was 89.3, while our Return Investor Capital was only 8.9.

Alain Bedard: In wrapping up our business segment discussion, logistics was 22% of segment revenue before fuel search hours and is performing very well. Our revenue before fuel search charge was up 22% the past year, and operating income was up 54%. In the second quarter, our logistics operating margin was $11.4, which is improved from $9.1 a year earlier, and our Return on Invested Capital was a very solid 20.5.

Speaker Change: And wrapping up our business segment discussion, logistics was 22% of segmented revenue before fuel surcharge and is performing very well. Our revenue before fuel surcharge was up 22% in the past year and operating income was up 54%.

Alain Bedard: In the second quarter, our logistics operating margin was 11.4, which is improved from 9.1 a year earlier, and our return on invested capital was a very solid 20.5. So let's move on to our liquidity and balance sheet. So during the quarter, we generated free cash flow of 151 million.

Speaker Change: In the second quarter, our logistics operating margin was 11.4, which has improved from 9.1 a year earlier, and our return on investment capital was a very solid 20.5.

Alain Bedard: Let's move on to our liquidity and balance sheet. During the second quarter, we generated free cash of over $131 million. That's up from $138 million a year earlier, and we end up June with a funded debt-to-BEDA ratio of $2.15. This strong financial position is a key start of our approach to the business that allows us to strategically invest, regardless of the economic cycle, while also returning capital to shoulders whenever possible. Currently, a dividend that is 14% higher than a year earlier at 40 cents per share that was paid on July 15.

Speaker Change: So let's move on to our liquidity and balance sheet. So during the second quarter, we generated free cash flow of $151 million. That's up from $138 million a year earlier. And we end up June with a funded debt to bid ratio of 2.15.

Alain Bedard: That's up from 138 million a year earlier, and we end June with a funded debt to bid ratio of 2.15. This strong financial position is a key start of our approach to the business that allows us to strategically invest regardless of the economic cycle while also returning capital to shareholders whenever possible. Speaking of investment and returning capital, during the second quarter, in addition to Dasky, we made four other smaller acquisitions and another small acquisition subsequent to the quarter. Also in June, our board declared a quarterly dividend that is 14% higher than a year earlier at 40 cents per share, which was paid on July 15.

Speaker Change: This strong financial position is a key start of our approach to the business that allows us to strategically invest regardless of the economic cycle while also returning capital to shareholders whenever possible.

Speaker Change: Speaking of investment and returning capital during the second quarter, in addition to Dasky, we made four other smaller acquisitions and another small acquisition subsequent to the quarter.

Speaker Change: Also in June , our board declared a quarterly dividend that is 14% higher than a year earlier at $0.40 per share that was paid on July 15.

Alain Bedard: Before opening the Q&A, I'll provide a quick review of our four-year guidance, which is on change from what we provided on our last call. In addition, we still intend to pay down $500 to $600 million a debt this year, and we repay it a little over $100 million in Q2.

Alain Bedard: Before opening the Q&A, I'll provide a quick review of our full-year guidance, which is unchanged from what we provided on our last call. Specifically, we look for EPS to be in the range of $675 to $7. We expect full-year free cash flow to be in the range of $825 to $900 million, with net capex of $275 million to $300 million.

Speaker Change: Before opening the Q&A, I'll provide a quick review of our full year guidance, which is unchanged.

Speaker Change: from what we provided on our last call. Specifically, we look for EPS to be in the range of $6.75 to $7. We expect full year free cash flow to be in the range of $8.25.

Speaker Change: to $900 million, with net capex of $275 million to $300 million. In addition, we still intend to pay down $500 to $600 million of debt this year.

Alain Bedard: In addition, we still intend to pay down $500 to $600 million of debt this year, and we repaid a little over $100 million in Q2. With that, operator, I'd be happy to take questions. If you could please open the line.

Alain Bedard: With that, operator, I'd be happy to take questions if you could please open the lines. Thank you, Mr. Bedard.

Speaker Change: And we repaid a little over $100 million in Q2. With that, operator, I'd be happy to take questions. If you could please open the lines.

Operator: Thank you, Mr. Bedard. Ladies and gentlemen, as stated, we do ask that you please limit yourself to one question and one follow-up so that we can get to as many callers as possible. If you have any questions at this time, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. And if you would like to withdraw from the polling process, please press star followed by. Please go ahead and press star 1 now if you have any questions.

Operator: Ladies and gentlemen, as stated, we do ask that you please limit yourself to one question and one follow-up so that we can get to as many callers as possible. Should you have any questions at this time, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. And if you would like to withdraw from the polling process, please press star followed by two. And if you are using your speaker phone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions.

Speaker Change: Thank you, Mr. Bedard. Ladies and gentlemen, as stated, we do ask that you please limit yourself to one question and one follow-up so that we can get to as many callers as possible.

Speaker Change: Should you have any questions at this time, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. And if you would like to withdraw from the polling process, please press star followed by two.

Speaker Change: If you are using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star 1 now if you have any questions.

Ravi Shankar: Your first question will be from Ravi Shankar at Morgan Stanley. Please go ahead.

Ravi Shanker: And your first question will be from Ravi Shanker at Morgan Stanley. Please go ahead. Thank you. Good morning, Alain. So we've heard from some of your US trucking peers that they're seeing better seasonality in 2Q, some signs of project business, and some tightening in the market. And we see that in the data as well. Would you underwrite that view, and are you getting any more optimistic about the cycle in the back half, or do you think it's still too early? It's too early, Ravi.

Speaker Change: And your first question will be from Ravi Shanker at Morgan Stanley . Please go ahead.

Ravi Shankar: Thank you.

Ravi Shankar: Morning, Alan. We heard from some of your US trucking peers that they are seeing better seasonality in QQ. Some signs of project business and some tightening of the market. We see that in the data as well.

Ravi Shankar: Thank you. Good morning, Alain. We've heard from some of your U.S. trucking peers that they're seeing better seasonality in 2Q, some signs of project business, and some tightening in the market. We see that in the data as well. Would you underwrite that view, and are you getting any more optimistic about the cycle in the back half, or do you think it's still too early?

Alain Bedard: Now, would you underwrite that view, and are you getting any more optimistic by the cycle in the back half, or do you think it's too early? That's too early, Ravi. I mean, what we're seeing is that it's still more the same. It's still a very, very difficult market right now. If we look at the US, our specialty truck load, I mean, we're still at pressure on race per mile. Although the guys are doing a good job of having the trucks on the road and moving freight around.

Alain Bedard: I mean, what we're seeing is that it's still more of the same. It's still a very, very difficult market right now. If we look at the US, our specialty truckload, I mean, we're still at pressure on race per mile. Although the guys are doing a good job of having the trucks on the road and moving freight around, but I would say that 24 is going to be a difficult year. This is why we have not changed our guidance.

Alain Bedard: It's too early, Ravi. I mean, what we're seeing is that it's still more the same. It's still a very, very difficult market right now. If we look at the U.S., our specialty truckload, I mean, we're still at pressure on race per mile.

Alain Bedard: Although the guys are doing a good job of having the trucks on the road and moving freight around, but I would say that 24 is going to be a difficult year. This is why we have not changed our guidance.

Alain Bedard: But I would say that 24 is going to be a difficult year. This is why we have not changed our guidance. We still think that the guidance that we provide in Q1 is attainable for the year.

Alain Bedard: We still think that the guidance that we provided in Q1 is attainable for the year. But when I look at the global North American market, the US and Canada, I think that Q3 and Q4 will still be difficult quarters. Q25 may be a different story, hopefully.

Alain Bedard: We still think that the guidance that we provide in Q1 is attainable for the year.

Alain Bedard: But when I look at the global North American market, the US and Canada, I think that Q3 and Q4 will still going to be difficult quarters. 25 may be a different story, hopefully.

Alain Bedard: But when I look at the global North American market, the US and Canada, I think that Q3 and Q4 will still going to be difficult quarters. 25 may be a different story.

Alain Bedard: But what we're seeing right now is our focus is to do more with less, to be more efficient. If you look at what we've done so far with Dasky on the truckload side, we're attacking costs like there's no tomorrow. And that's how we're able to bring an 88 OR combined with our own operating truckload business that was last year an 85 or something, 85.7, I think. So now, you know what, Ravi, I think we should be conservative, okay? I hope I'm wrong.

Alain Bedard: But what we're seeing right now is our focus on us is to do more or less is to be more efficient. If you look at what we've done so far with Daski on the truckload side, I mean, we're attacking cars like there's no tomorrow. And that's how we're able to bring an 808 OR combined with our own operating truckload business that was last year, an 85, something 85.7 I think.

Speaker Change: Hopefully, but you know, what we're seeing right now is our focus is to do more with less, is to be more efficient.

Speaker Change: If you look at what we've done so far with Dasky on the truckload side.

Speaker Change: I mean, we're attacking costs like there's no tomorrow. And that's how we're able to bring an 88 OR combined with our...

Speaker Change: with our own operating truckload business that was last year an 85 something, 85.7 I think.

Alain Bedard: Ravi, I think let's be conservative. I hope I'm wrong. I hope that things will get better, but I don't have this sense right now.

Speaker Change: So, now, you know what, Ravi? I think let's be conservative, okay? I hope I'm wrong, right? I hope that things will get better, but I don't have this sense right now.

Alain Bedard: I hope that things will get better, but I don't have that sense right now. And maybe as a follow-up on the LTL side, how are you seeing the environment right now? Obviously, there's some idiosyncratic kind of factors there on the capacity side as well. Do you think the market's tightening enough to support prices through the cycle? Or are you concerned about too much capacity there, maybe kind of losing the stream a little bit?

Ravi Shankar: And maybe I'll follow up on the LTL side. How are you seeing the environment right now? Obviously, there's some idiosyncratic factors there on the capacity side as well.

Ravi Shankar: Understood, and maybe as a follow-up on the LTL side...

Ravi Shankar: How are you seeing the environment right now? Obviously there's some idiosyncratic kind of factors there on the capacity side as well. Do you think the market's tightening enough to support pricing to the cycle or are you concerned about too much capacity there maybe kind of losing the stream a little bit?

Alain Bedard: Do you think the markets are tightening enough to support pricing to the cycle, or are you concerned about too much capacity there, maybe kind of losing the strings a little bit? Now, I think that we will win the war on LTL being more efficient, is by reducing our costs. Our costs are way too high, our in-cost, our way too high, our fleet cost is too high. And for us, our focus at T-Force Rate is really, really to be more lean and mean, to be more efficient. For sure, we are implementing a new technology within this company in terms of Lionel, in terms of billing, Masterfly, and all that.

Alain Bedard: I think that we will win the war on LTL by being more efficient by reducing our costs. Our costs are way too high. Our end-to-end costs are way too high. Our fleet costs are too high. For us, our focus at T-Force Rate is really to be more lean and mean, to be more efficient. For sure, we are implementing new technology within this company in terms of Lino, in terms of billing, MasterFi, and all that. But still, if I look at my IT costs as a percent of revenue, they're way too high. It's also true of Dasky.

Speaker Change: No, I think that we will win the war, us, on LTL being more efficient is by reducing our costs. Our costs are way too high.

Speaker Change: Our engine costs are way too high, our fleet cost is too high, and for us our focus at T-Force rate is really, really to be more lean and mean, to be more efficient.

Speaker Change: For sure, we are implementing

Alain Bdard: New technology within this company in terms of lino, in terms of billing, master plan and all that.

Alain Bedard: But still, if I look at my IT costs as percent of revenue, it is way too high, and it's also true of DASCII. I mean, if you look at our AT cost at DASCII, it's twice as much as the TFI truckload IT costs as percent of revenue.

Speaker Change: But still, if I look at my IT costs as a percent of revenue is way too high, and it's also true of Dasky. I mean, if you look at our IT costs at Dasky, it's twice as much as the TFI truckload IT costs as a percent of revenue.

Alain Bedard: If you look at our IT costs at Dasky, they're twice as much as the TFI truckload IT costs as a percent of revenue. So, for us, really... Ravi, the name of the game at USLPL to break that 90 OR once and for all is all about cost. Hopefully, the market stays okay. The market is not that strong. If you look at what's going on right now, our shipping count is steady, but it's not growing.

Alain Bedard: So, for us, really, the name of the game to our USLTL to break that 90-war, once and for all, is all about cost. Hopefully, the market stays okay. I mean, the market is not that strong. I mean, if you look at what's going on right now, our shipping count is steady, but it's not growing. I mean, what we are able to do is to grow the weight and grow the revenue per shipment. That's we were able to do that so far, but we still don't have, you know, our cost down in terms of reducing the miles for our P&D, improving our density.

Speaker Change: So, for us, really...

Speaker Change: Ravi, the name of the game at our US LPL to break that 90 OR once and for all is all about cost.

Speaker Change: Hopefully, the market stays okay.

Ravi Shankar: I mean, the market is not that strong. I mean, you know, if you look at what's going on right now, I mean, our shipping count is steady but it's not growing. I mean, what we are able to do is to grow the weight and grow the revenue per shipment. We were able to do that so far.

Alain Bedard: What we are able to do is to grow revenue per shipment. We've been able to do that so far, but we still don't have our costs down in terms of reducing the miles for our P&D and improving our density. We're still not there. Okay. Thank you, Alain. Thank you, Ravi.

Ravi Shankar: But we still don't have our costs down in terms of reducing the miles for our P&D, improving our density. We're still not there. We still have a lot of work to do.

Alain Bedard: We're still not there.

Alain Bedard: We still have a lot of work to do.

Ravi Shankar: Understood.

Ravi Shankar: Thank you, Ellen.

Ravi Shankar: Thank you, Ramy.

Alain: Understood. Thank you, Alain.

Ken Hexter: And next question will be from Ken Hexter at Bank of America.

Ken Hoexter: And the next question will be from Ken Hoexter at Bank of America; please go ahead. Hey, great. Good morning, Alain.

Ravi Shankar: Thank you, Ravi.

Ken Hexter: Please go ahead. Hey, great.

Speaker Change: And next question will be from Ken Hoexter at Bank of America. Please go ahead.

Alain Bedard: You know, I want to get on the Ravi's kind of topic on the backdrop, maybe a little bit more on the LTL side. You mentioned, you know, it's all about cost. But, you know, as you get peers opening more facilities, you had a peer this morning talk about more lightweight volumes that are kind of disrupting their network. It looked like your revenue per shipment x field decelerator was down sequentially, maybe talk about the rate environment.

Ken Hexter: Good morning, Elaine. You know, I've just written on the Ramy's kind of topic on the backdrop. Maybe a little bit more on the LPL side. You mentioned, you know, it's all about cost, but, you know, as you get peers opening more facilities. You had a peer this morning talk about more lightweight volumes that are kind of disrupting their network. It looked like your revenue per shipment, ex-fuel decelerator, was down sequentially. Maybe talk about the rate environment on the LPL side. Yeah, very good question. And for sure. I mean, we're seeing a lot of RFPs. We're seeing a lot of pressure because the market, like I said earlier, is still soft.

Ken Hoexter: Great. Good morning, Alain.

Speaker Change: You know, I think maybe just on Ravi's kind of topic on the backdrop, maybe a little bit more on the LTL side, you mentioned, you know, it's all about cost, but

Alain Bdard: Alain Bdard, Alain Bdard

Speaker Change: It looked like your revenue per shipment x-field decelerator was down sequentially. Maybe talk about the rate environment on the LTL side.

Alain Bedard: On the LTL side, we're seeing a lot of RFPs, and a lot of pressure because the market is still soft. It's a fact.

Speaker Change: Yeah, very good question, Kenneth. And for sure, I mean, we're seeing a lot of RFPs, we're seeing a lot of pressure, because the market, like I said earlier, is still soft. I mean...

Alain Bedard: I mean, so it's a fact. I mean, we've lost a major player a year ago in the industry, but it seems like we're back to square one in terms of volume. So this is why my comment is so important: that our focus is to keep what we've got in terms of volume, try to improve it, try to grow it slowly. But for us, the name of the game is we need; we're too fat. I mean, we got too much cost. Okay, if you compare our US gods versus the way we do business in Canada, I mean, we are like...

Alain Bedard: We lost a major player a year ago in the industry, but it seems like we're back to square one in terms of volume. This is why my comment is so important. Our focus is to keep what we've got in terms of volume, try to improve it, try to grow it slowly, but for us, the name of the game is we're too fat. We've got too much cost. If you compare our U.S. cost versus the way we do business in Canada, we are, like, way too fat.

Speaker Change: So, it's a fact. I mean, we've lost a major player a year ago in the industry, but it seems like we're back to square one in terms of volume. So, this is why...

Speaker Change: My comment is so important that our focus is to keep what we've got in terms of volume, try to improve it, try to grow it slowly. But for us, the name of the game is we're too fat, I mean, we got too much cost.

Speaker Change: Okay, if you compare our U.S. cause versus the way we do business in Canada, I mean, we are like...

Alain Bedard: We have to attack the costs. Our IT costs are too high, our fleet management costs, maintenance costs are too high, etc. This is what we have to do.

Alain Bedard: So we have to attack the cost or RIT costs are too high. Our fleet, the management cost, maintenance cost is too high, et cetera, et cetera. So this is us. I mean, we have to do the job. Now, the market is the market going to help us. I don't think so, right? Like, you know, you could hear from some of our peers. You know, if you look at the best player in the US, I mean those guys are doing really well. Why? Because they're better. We better than us on managing costs, right? So this is what we're trying to do.

Speaker Change: to way too fat. So we have to attack the cost. Our IT costs are too high. Our fleet management costs, maintenance cost is too high, etc etc. So this is us. This is us. I mean we have to do the job. Now the market

Alain Bedard: We have to do the job. Is the market going to help us? I don't think so.

Speaker Change: Is the market going to help us? I don't think so, right? Like, you know, you could hear from some of our peers.

Alain Bedard: You could hear from some of our peers. If you look at the best players in the US, those guys are doing really well. Why? Because they're way better than us at managing costs. This is what we're trying to do, and that's how we're going to be able to break that glass ceiling that we've been stuck with a 90-something OR. We want to go under this 90 OR, but the way we're going to win in 2024 and 2025 is by being lean and mean, reducing our costs, and doing a better job all over on our costs.

Speaker Change: If you look at the best player in the US, those guys are doing really well. Why? Because they're way better than us on managing costs. This is what we're trying to do.

Alain Bedard: And that's how we're going to be able to break that glass ceiling that we've been stuck with 90-something OR. We want to go under this 90 OR. But the way we're going to win in 24 and in 25 is by being lean and mean, reducing our costs, and doing a better job. Okay. All over on our cost. Now, what's also helping us, like I said many times, can is finally in 24, we have financial information by terminal. So for sure, this is going to be a huge help. Okay. But if you have a manager that sits on his hands, well, that's not going to help us.

Speaker Change: And that's how we're going to be able to break that.

Speaker Change: [inaudible]

Alain Bedard: Now, what's also helping us, like I said many times, Ken, is that, finally, in 2024, we will have financial information by terminal. For sure, this is going to be a huge help, but if you have a manager that sits on his hands, well, that's not going to help us.

Alain Bdard: Alain Bdard, Alain Bdard

Speaker Change: So, for sure this is going to be huge help, okay? But if you have a manager that sits on his hand, well...

Alain Bedard: So these guys have to go, and they have to be replaced by a manager that wants to do things and wants to reduce costs and be more efficient. And manage not just delivery of freight, but manage all the cost, the employee cost, the relationship with customers, et cetera, et cetera. So we have a big job to do. Don't forget, we bought T-Force Rate three years ago. Okay. We made a lot of improvement there, but we're still running it just the 90 OR operation, right? 90 when something 90.8 in Q2. Right. So we have a long way to go to get to the 85, and for us, I don't see the market 24, 25 helping us too much.

Alain Bedard: These guys have to go, and they have to be replaced by a manager that wants to do things and wants to reduce costs and be more efficient and manage not just delivery of freight but all the costs, the employee costs, the relationship with customers, etc. So, we have a big job to do. Don't forget, we bought T-Force Freight three years ago. We made a lot of improvements there, but we're still running just a 90 OR operation, 90-something, and 90.8 in Q2. So, we have a long way to go to get to the 85. And for us, I don't see the market 24-25 helping us too much. I think this is all us.

Speaker Change: That's not going to help us.

Speaker Change: So these guys have to go and they have to be replaced by a manager that wants to do things and wants to reduce costs and be more efficient.

Speaker Change: and manage not just delivery of freight, but manage...

Alain Bdard: All the cost, the employee cost, the relationship with customers, etc, etc.

Alain Bdard: So, we have a big job to do. Don't forget, we bought T-Force Raid three years ago. Okay, we made a lot of improvement there, but we're still running at just a 90 OR operation, right? 90 point something, 90.8 in Q2.

Alain Bdard: So we have a long way to go to get to the 85 and for us, I don't see the market 24-25 helping us too much. I think this is all us. We have to do the job.

Ken Hexter: I think this is all us. We have to do the job. Yeah.

Alain Bedard: We have to do the job. Yeah, let me ask a quick follow up on logistics, right? Which usually I don't know, what would you call that?

Alain Bedard: I mean, solid results there? Would that be an early indication of some sort of turn? Or would you look at it and say, wow, that's just benefiting from the weak market? Or is it even the last mile, not even an indication of the logistics side? You know what, Ken?

Ken Hexter: Let me just click follow up on logistics, right, which usually, I don't know what you call that. I mean, solid results there. Would that be an early indication of some sort of turn, or would you look at it and say, wow, that's just benefiting from the weak market? Or is it even last mile, not even an indication of the logistics side? You know, again, our logistics resolve our second to none. I mean, when you look at that, we're very proud of what the guys are doing over there. I mean, and they will continue to improve.

Speaker Change: Let me ask a quick follow-up on logistics, right, which usually, I don't know, would you call that, I mean, solid results there, would that be an early indication of some sort of turn, or would you look at it and say, wow, that's just benefiting from the weak market, or is it even last mile, not even an indication of the logistics side?

Alain Bedard: Our logistics results are second to none. I mean, when you look at that, we're very proud of what the guys are doing over there. And they will continue to improve.

Speaker Change: You know what Ken, our logistics results are second to none. I mean, when you look at that, we're very proud of what the guys are doing over there.

Alain Bedard: They will continue to improve. And, you know, we made a fantastic acquisition a year ago when we bought GHT. I think we have more to come in that sector, probably, hopefully. And for sure, we're in business to make money. We don't like the returns of 23,456%. So this is why, if you look at our OR for the first time, we're broke the 90. Okay, we've never been under 90 or in our logistics. For the first time now, we are under 90; as a matter of fact, even under the 89. So we feel good, because, like I said, on the U.S.

Speaker Change: I mean, and, and they will continue to improve, you know, they will continue to improve. And, you know, we made a fantastic acquisition a year ago, when we bought GHT, I think we have more to come in that sector.

Alain Bedard: They will continue to improve. And, you know, we made a fantastic acquisition a year ago when we bought GHT. I think we have more to come in that sector, probably, and hopefully. And, for sure, we're in business to make money. We don't like returns of 2%, 3%, 4%, 5%, 6%. So this is why, if you look at our OR for the first time, we broke the 90. We've never been under 90 OR in our logistics. For the first time now, we are under 90. As a matter of fact, even under 89.

Speaker Change: We are in business to make money. We don't like returns of 2%, 3%, 4%, 5%, 6%.

Speaker Change: So this is why, if you look at our OR, for the first time we broke the 90. Okay, we've never been under 90 OR in our logistics. For the first time now, we are under 90. As a matter of fact, even under 89.

Alain Bedard: So we feel good because, like I said, on the M&E side, on the US side, we are looking at two sectors really only right now. It's either an LTL play or a logistics 425.

Speaker Change: So, we feel good because, like I said, on M&E's side, on the U.S. side, we are looking at two sectors really only right now. It's either an LTL play or a logistics play.

Alain Bedard: side, we are looking at two sectors really only right now. It's either an LTL play or a logistics play. 425. I mean, because, I mean, we've been busy in 24 with DASCII. We're also busy, okay, with small tuck-ins mostly in Canada. Okay, because it's easy for us to do a small tuck-ins in Canada because we have a band strength by a second to none. So, but in 25, we're getting ready. This is why, you know, if you look at my leverage right now, I'm at 2.15, something like that. Our plan is to be my reimbursing debt, like I mentioned on the call. We're going to be at 175, probably by year end, right?

Alain Bedard: I mean, because, I mean, we've been busy in 24 with Dasky. We're also busy, okay, with small tuck-ins, mostly in Canada, okay, because it's easy for us to do small tuck-ins in Canada because we have a bench strength that is second to none. So, but in 25, we're getting ready. This is why, you know, if you look at my leverage right now, I'm at 2.15, something like that. Our plan is to be by repaying debt, like I mentioned on the call. We're going to be at $175 probably by year end, right?

Speaker Change: For 25, I mean, because, I mean, we've been busy in 24 with Dasky. We're also busy, okay, with small tuck-ins, mostly in Canada. Okay, because it's easy for us to do a small tuck-ins in Canada because we have a bench strength that is second to none.

Speaker Change: So, but in 25, we're getting ready. This is why, you know, if you look at my leverage right now, I'm at 2.15, something like that.

Alain Bedard: TFI, it's a cash flow machine, a free cashloon. Yeah. No, yeah. I was just wondering if it was just an indication of the market. Now, I understand you're doing a great job. Just if it's telling you...

Speaker Change: Our plan is to be, by reimbursing debt, like I mentioned on the call, we're going to be at $175 probably by year-end, right? TFI, it's a cash flow machine.

Alain Bedard: TFI, it's a cashflow machine, a free cashflow machine. Yep, no, yeah, I was just wondering if it was just an indication of the market, not again. You're doing a great job, just if it's telling you. No, I don't think it's the market. I don't think it's the market. I think it's our guys are doing a fantastic job, but we'll see. I mean, when an RPS comes up, I mean, we'll have a better understanding.

Speaker Change: A free cash flow machine.

Speaker Change: Yep. No, yeah, I was just wondering if it was just an indication of the market. Now, I get you're doing a great job. Just if it's telling you... No, I don't think it's the market. I don't think...

Alain Bedard: I don't think it's the market. I don't think... Hey, Ken, I don't think it's the market. I don't think it's the market. I think it's our guys that are doing a fantastic job. But we'll see.

Ken: Hey, Ken, I don't think it's the market. I don't think it's the market. I think it's our guys that are doing a fantastic job, but we'll see. I mean, when our PES comes up, I mean, we'll have a better understanding.

Alain Bedard: I mean, when our PES comes up, I mean, we'll better understand. Wonderful. Thanks a lot. Appreciate talking to you. Thank you again.

Ken Hexter: Wonderful. Thank you. I appreciate that. Thank you, Ken.

Ken Hexter: Thank you.

Ken: Wonderful. Thanks a lot. Appreciate talking to you. Thank you again.

Walter Spracklin: Next question will be from Walter Spracklin at RBC Capital Markets.

Walter Spracklin: The next question will be from Walter Spracklin at RBC Capital Markets. Please go ahead. Yeah, thanks very much, operator. Alain, good morning. Good morning, Walter.

Speaker Change: Thank you. Next question will be from Walter Spracklin at RBC Capital Markets. Please go ahead.

Walter Spracklin: Please go ahead. Yeah, thanks very much, operator. Alain, good morning. You could touch a little bit on your trends toward your target of an USLTL 88; you referenced it in your earlier in the call. I'm just noticing you're at about a 92 year to date in your USLTL. Yeah, yeah. You know, 85 ish for the rest of the year to hit the 88. Is that still an achievable target? Can you talk about what will cause you to do that step down? No, no, no, Walter.

Walter Spracklin: Yeah, thanks very much, operator. Alain, good morning.

Alain Bedard: You can touch a little bit on your trends toward your target of a USLTL 88. You referenced it earlier in the call. I'm just noticing you're at about 92 year to date in your USLTL, and you need 85 ish for the rest of the year to hit 88. Is that still an achievable target? And can you talk about, you know, what will cause you to do that step down? No, Walter

Walter Spracklin: If you could touch a little bit on your trends toward your target of a USLTL 88, you referenced it earlier in the call. I'm just noticing you're at about a 92 year to date in your USLTL.

Speaker Change: you know 85-ish for the rest of the year to hit the 88. Is that still an achievable target and can you talk about you know what will cause you to do that step down?

Alain Bedard: For sure, for the year 88, as I see it right now, it's impossible. What we're trying to do between now and the end of the year is to break the 90 in Q2 and Q4. When we look at our plan in the fall of 2023, when I listened to our guys, our team, we thought that we would grow our shipment count at the same time as reducing costs. But what we're seeing is that we're not growing our shipment counts.

Alain Bedard: I mean, for sure, for the year 88, as I see it right now, it's impossible. What we're trying to do between now and the end of the year is to break the 90, okay, Q2 and Q4, right? You know, when we look at our plan in the fall of 23, when I listened to our guys, our team, we thought that we would grow our shipment count at the same time as reduce costs. So what we're seeing is we're not growing our shipment counts. I mean, our shipment count is steady eddy about the same, okay? And we anticipate that probably by year, and I mean, we're still maybe going to grow the shipment count a little bit, but not much.

Speaker Change: No, no, no, Walter. I mean, for sure, for the year 88, as I see it right now, it's impossible. What we're trying to do between now and the end of the year is to break the 90, okay, in Q2 and Q4.

Speaker Change: When we look at our plan in the fall of 2023, when I listened to our guys, our team, we thought that we would grow our shipment count at the same time as reduce costs.

Speaker Change: So what we're seeing is we're not growing our shipment counts. I mean, our shipment counts is steady eddy, about the same.

Alain Bedard: I mean, our shipment counts are steady, eddy, about the same, okay? And we anticipate that probably by year end, we're still maybe gonna grow the shipment count a little bit, but not much. So really, the name of the game to break the 90 OR is gonna be all costs for us, a reduction in our costs, in Q3 and in Q4 to finally break this 90, which has been, you know, a difficult task for us to do.

Speaker Change: Okay, and we anticipate that probably by year end, I mean, we're still maybe going to grow the shipment count a little bit, but not much. So really the name of the game to break the 90 OR is going to be all costs for us, reduction of our costs.

Alain Bedard: So really, the name of the game to break the 90 OR is going to be all costs for us, reduction of our costs in the Q3 and Q4 to finally break this 90, which has been, you know, a difficult task for us to do. And going into 25, though, if market condition stays about the same as 24, I think that we'll be able to be on a yearly basis, okay, under the 90 OR. But if you look at what we have done so far after six months, like you said, we're 92. So I believe that with our cost control and implementation of better productivity, will be probably in the same market condition in 25, we'll be able to show up to six months of 25 under 90, okay.

Speaker Change: in the Q3 and in Q4 to finally break this 90, which has been...

Alain Bedard: And going into 25, though, if the market condition stays about the same as 24, I think that we'll be able to, on a yearly basis, okay, under the 90 OR. But if you look at what we have done so far, after six months, like you said, we're 92. So I believe that with our cost control and implementation of better productivity, we'll probably be in the same market condition in 25. We'll be able to show after six months of 25, under 90.

Speaker Change: You know, a difficult task for us to do, you know.

Speaker Change: And going into 25, though, if markets condition stays about the same as 24, I think that we'll be able to...

Speaker Change: to be, on a yearly basis, okay, under the 90 OR. If you look at what we have done so far, after six months, like you said, we're 92.

Speaker Change: So, I believe that with our cost control and implementation of better productivity, we'll be probably in the same market condition in 2025, we'll be able to show after six months of 2025, under 90, okay, if we keep working at attacking our cost.

Alain Bedard: Okay, if we keep working at attacking our cost, that's great. And just on the follow-up to the macro, just a few small questions here, like, you mentioned you don't, you're not calling for an upturn. I'm curious if you would, at least, you know, do you see it as a bottoming?

Alain Bedard: If we keep working at attacking our costs.

Walter Spracklin: Okay, that's great. And just on the follow up to the macro, just a few small questions here. Like you mentioned, you don't; you're not calling for an upturn. I'm curious if you would at least, you know, do you see it as a bottoming? I know a few of your peers have said they believe at least it's not getting worse. And whether whether an upturn comes or not, it may be delayed, but at least it's bottoming. And then are you seeing any positive or negative impact from shipper diversions that are avoiding the Canadian rail strike? I know CNN CP have called out some diversions away from their lanes in worrying about a strike.

Alain Bedard: I know a few of your peers have said they believe at least it's not getting worse. And whether an upturn comes or not may be delayed, but at least it's bottoming out. And then, are you seeing any positive or negative impact from shipper diversions that are avoiding the Canadian rail strike? I know CN and CP have called out some diversions away from their lanes in it, worrying about a strike.

Speaker Change: Okay, that's great. And just on the follow-up to the macro, just a few small questions here.

Speaker Change: You mentioned you're not calling for an upturn.

Speaker Change: I'm curious if you would at least, you know, do you see it as a bottoming? I know a few of your peers have said they believe at least it's it's not getting worse and whether it whether an upturn comes or not maybe

Alain Bedard: Is that impacting you at all? Either positive or negative. You know what, Walter? When they started talking about a strike in Canada two months ago, yes, we saw a little bit of that. But you know what? Us, we run a lot of stuff on the rails. So it's a positive on one side, but it's also a negative on the other side. Because if you look at intermodal LTL, the minute these guys start to talk about strike, I mean, they start moving our LTL that's today run on the rail, they move it on the road. For us, it's not that good to have a strike with the real guys.

Alain Bdard: Alain Bdard, Alain Bdard

Alain Bdard: Are you seeing any positive or negative impact from shipper diversions that are avoiding the Canadian Rail Strike?

Speaker Change: I know CN and CP have called out some diversions away from their lanes in worrying about a strike. Is that impacting you at all, either positive or negative?

Alain Bedard: You know what, Walter? When he started talking about a Sprack in Canada two months ago, yes, we saw a little bit of that, but you know what? Us, we run a lot of stuff on the rail, right? So it's a positive on one side, but it's also a negative on the other side, because if you look at Intermodal LPL, the minute these guys start to talk about strike, I mean, they start moving our LPL. That's today, run on the rail, they're moving on the road. So it's for us, it's not that good to have a strike with the rail guys.

Speaker Change: You know what, Walter, Wendy, start talking about a strike in Canada.

Walter Spracklin: two months ago. Yes, we saw a little bit of that.

Speaker Change: But you know what, us, we run a lot of stuff on the rail, right? So it's a positive on one side, but it's also a negative on the other side, because if you look at our intermodal LTL...

Speaker Change: The minute these guys start to talk about strike, I mean, they start moving our LTL that's today run on the rail, they move it on the road. So

Alain Bedard: Hopefully, these guys can settle and get this thing behind us. In terms of, have we hit rock bottom? That's probably right.

Speaker Change: It's for us, it's not that good to have a strike with the rail guys. I mean, hopefully these guys could settle and get this thing behind us. Now, in terms of, have we hit the bottom?

Alain Bedard: I mean, hopefully these guys could settle and get this thing behind us. Now in terms of, have we hit the bottom? That's probably right. I mean, can we see this thing getting worse? I don't think so, but I don't see that major improvement in 24. I think it's going to be more the same, okay, for the rest of the year. And hopefully, okay, things will start improving now.

Alain Bedard: Can we see this thing getting worse? I don't think so, but I don't see that much of a major improvement in 2024. I think it's going to be more of the same for the rest of the year. Hopefully, things will start improving. Don't forget, there's also a US election in November.

Speaker Change: That's probably right. I mean, can we see this thing getting worse? I don't think so.

Speaker Change: But I don't see that major improvement in 24. I think it's going to be more the same, okay, for the rest of the year. And hopefully, okay, things will start improving now.

Alain Bedard: Don't forget, there's also a US election in November, right? So depending on who takes over, if it's the, you know, it could also change things in 25.

Alain Bedard: Depending on who takes over, it could also change things in 2025. But we don't know that. We are really focused on what we can do ourselves, which is that we can't control the market. The market is the world, so we can't control the market. What we can control is our costs, and we're trying to be way better. If you look at our US LTL, we have a lot of work to do there. If you look at our Canadian LTL, we're doing quite well.

Speaker Change: Don't forget, there's also a U.S. election in November , right? So depending on who takes over, it could also change things in 25. So we don't know that.

Alain Bedard: So we don't know that, but us, I mean, we are really focused on what we can do ourselves, which is we can't control the market. The market is the market. So we can control the market, but what we can control is our cost, and we're trying to be way better. Okay, if you look at our US LPL, we have a lot of work to do there. If you look at our Canadian LPL, we're doing quite well. If you look at our PNC, I mean, yes, we had a little bit of a soft patch in Q1, but we are improving in Q2 and we'll keep improving in Q3 and 4 and into 25.

Speaker Change: But us, I mean, we are really focused on what we can do ourselves, which is we can't control the market. The market is the market, so we can't control the market, but what we can control is our costs, and we're trying to be way better, okay? If you look at our US LTL, we have a lot of work to do there.

Alain Bedard: If you look at our PNC, yes, we had a little bit of a soft patch in Q1, but we are improving in Q2, and we'll keep improving in Q3 and Q4 and into 2025. You know, if you look at our specialty truck load, I'm really proud of what Steve Brookshaw has done with his team, you know, with Dasky's team there. I mean, like I said on Q1's call, the Dasky thing there, I mean, we're going to run Dasky sub 90 OR within a year, and I'm still very confident about that. I mean, the guys are doing a good job.

Speaker Change: If you look at our Canadian LTL, we're doing quite well. If you look at our PNC, I mean, yes, we had a little bit of a soft patch in Q1, but we are improving in Q2 and we'll keep improving in Q3 and Q4 and into Q25.

Alain Bedard: You know, if you look at our specialty truck, I'm really proud of what Steve Brooks has done with his team, you know, with Daski's team there. I mean, like I said on Q1's call, the Daski thing there, I mean, we're going to run Daski sub 90 or within a year. And I'm still very confident about that. I mean, the guys are doing a good job. And like I said, just a simple IT cost. I mean, we're going to have to cut the IT cost of Daski in half to be comparable to our cost to run the business.

Speaker Change: You know, if you look at our specialty truck load, I'm really proud of what Steve Brookshaw has done with his team, you know, with Dasky's team there. I mean, like I said on Q1's call, the Dasky thing there, I mean, we're going to run Dasky sub-90 OR within a year.

Speaker Change: and and I'm still very confident about that I mean the guys are doing a good job and like I said

Alain Bedard: And like I said, just a simple IT cost. I mean, we're going to have to cut the IT cost of Desk in half to be comparable to our cost to run the business, right? So we have a lot of opportunities. And, for sure, it takes a little bit of time.

Speaker Change: Just a simple IT course.

Speaker Change: I mean, we're going to have to...

Speaker Change: Cut the IT cost of desk in half to be comparable to our cost to run the business.

Alain Bedard: So we got a lot of opportunities, and for sure it takes a little bit of time, but I feel really good about what's going on right now. When I look at my peers in the truckload sector in the US, I mean, I think everybody is suffering big time. Is that going to change for the rest of the year? I don't think so. Is that going to be better in 25? I think so. Why? Because it's been going on for more than two years right now. So this thing has to break at one point. Okay.

Alain Bedard: But I feel really good about what's going on right now. When I look at my peers in the truckload sector in the US, I mean, I think everybody is suffering big time. Is that going to change for the rest of us? I don't think so.

Speaker Change: [inaudible]

Speaker Change: Is that going to change for the rest of the year? I don't think so. Is that going to be better in 2025? I think so. Why? Because it's been going on for more than two years right now. So this thing has to break at one point.

Alain Bedard: Is that going to be better in 25? I think so. Why? Because it's been going on for more than two years right now. So this thing has to break at some point. I appreciate the color outline, as always.

Walter Spracklin: I appreciate the color. Ellen is always.

Walter Spracklin: Thank you. Thank you, Walter.

Thomas Wadewitz: Thank you, Walter. The next question will be from Tom Wadewitz at UBS; please go ahead. Good morning, Alain.

Speaker Change: Okay. I appreciate the color outlining as always. Thank you.

Tom Waterwoods: Next question will be from Tom Waterwoods at UBS. Please go ahead.

Walter Spracklin: Thank you, Walter.

Walter Spracklin: The next question will be from Tom Wadewitz at UBS. Please go ahead.

Tom Waterwoods: Good morning, Elaine. What a job.

Tom Waterwoods: What did I ask you a little more on USLTL? What's the mandate for sales people in USLTL right now? I mean, you've talked about, you know, kind of bad mix of shipments, too much distance between pickups. You know, you've talked about maybe like have your way for shipment. When I look at the numbers, it looked like you did see some sequential growth in shipments, but some decline in revenue for shipment. So I guess it's wondering. Yeah. Is it focus on better mix?

Walter Spracklin: Good morning, Alain. Morning, Tom.

Alain Bedard: I wanted to ask you a little more about USLTL. What's the mandate for salespeople in USLTL right now? I mean, you've talked about, you know, kind of a bad mix of shipments, too much distance between pickups. You know, you've talked about maybe like, heavier weight per shipment. When I looked at the numbers, it looked like you did see some sequential growth in shipments but some decline in revenue per shipment. So I guess I'm just wondering, yeah, is it focused on a better mix?

Thomas Wadewitz: I wanted to ask you a little more on USLTL. What's the mandate for sales sales people in USLTL right now? I mean you've talked about, you know, kind of bad mix of shipments, too much distance between pickups, you know, you've talked about maybe like

Thomas Wadewitz: Heavier weight per shipment.

Speaker Change: When I look at the numbers, it looked like you did see some sequential growth in shipments, but some decline in revenue per shipment.

Alain Bedard: Is it, hey, we'll give up a little price to get more shipments, or what's the focus you got for the sales people in USLTL right now? Yeah, yeah. So the focus is number one is, guys, we have to move the weight per shipping up because we're paid by the weight, right? So when we bought UPS rate, these guys were hauling average weight at 1075. So now we're just a little bit above 1200. But if you look at my tears, the average is probably 1500. So rule number one, guys, is that we have to slowly get more into the industrial freight, okay, versus the retail freight, okay, fine.

Speaker Change: I guess I'm just wondering, is it focus on better mix, is it hey we'll give up a little price to get more shipments, what's the focus you got for the sales people in USLTL right now?

Alain Bedard: Is it, hey, we'll give up a little price to get more shipments or what? What's the focus you have for the salespeople at USLTL right now? Yeah, yeah.

Alain Bedard: So the focus is, number one, is guys. We have to move the weight per shipment up because we're paid by the weight, right? So when we bought the UPS rate, these guys were hauling an average weight of 1075. So now we're just a little bit above 1200. But if you look at my peers, the average is probably 1,500.

Speaker Change: Yeah, yeah. So the focus is, number one, is guys...

Speaker Change: We have to move the weight per shipment up because we're paid by the weight, right? So when we bought UPS Rate, these guys were hauling average weight at $1,075. So now we're just a little bit above $1,200.

Alain Bedard: So rule number one, guys, is that we have to slowly get more into the industrial freight, OK, versus the retail freight. OK, fine. So that's, let's say, target number one. Target number two for these guys is, you know what?

Speaker Change: But if you look at my peers, the average is probably 1500. So rule number one, guys, is that we have to slowly get more into the industrial freight, okay, versus the retail freight. Okay, fine. So that's, let's say, target number one.

Alain Bedard: So that's, let's see, target number one. Target number two for these guys is you know what guys to pick up a shipment. Okay, let's try to pick up more shipment per stop versus what we're doing now. So when you have a discussion with a customer, let's talk about getting more shipment from this guy when we go there and pick up free. Okay, target number three is us. We have what we call within T-force rate a GFP ground freight pricing. We are the only one that has a partnership with our friend UPS, and then when we have a small ship and small weight, okay instead of trying to hold that freight or say we don't want to hold that freight within T-force rate.

Speaker Change: Target number two for these guys is, you know what, guys?

Alain Bedard: To pick up a shipment, okay, let's try to pick up more shipments per stop versus what we're doing now. So, when you have a discussion with a customer, let's talk about getting more shipments from this guy when we go there and pick up freight. Okay. Target number three is us. We have what we call within T-Force Freight, a GFP, Ground Freight Pricing.

Speaker Change: To pick up a shipment, okay, let's try to pick up more shipment per stop.

Speaker Change: versus what we're doing now. So, when you have a discussion with a customer,

Speaker Change: Let's talk about getting more shipment from this guy when we go there and pick up freight. Okay. Target number three is us. We have what we call within T-Force Freight, a GFP, Ground Freight Pricing.

Alain Bedard: We are the only one that has a partnership with our friend UPS. And then when we have a small shipment, a small weight, okay, instead of trying to haul that freight or say we don't want to haul that freight within T-Force, right, Mr. Customer? We have a solution. This is GFP.

Speaker Change: We are the only one that has a partnership with our friend UPS.

Speaker Change: And then, when we have a small shipment, small weight, okay, instead of trying to haul that freight, or say, we don't want to haul that freight with NTFORCE freight, Mr. Customer, we have a solution for you.

Alain Bedard: Mr. Customer, we have a solution for you, right? This is GFP.

Alain Bedard: Now, if you look at my GFP, it's been a year since we went through a lot of issues with GFP because there were some customers that were cheating the system at UPS. These guys got cut off; we had to cut them off, so our revenue at GFP is down big time. But now, all these issues have been resolved between us and our partner, and now we're ready to go and start growing that.

Alain Bedard: Now if you look at my GFP, okay, it's been a year that we went through a lot of issues with GFP because, you know, there were some customers that were cheating the system at UPS. These guys got caught up, we have to cut them off, blah blah. So our revenue at GFP is down big time, but now all these issues have been resolved between, you know, us and our partner, and now we're ready to go and start growing that. So third mandate for ourselves, guy, wake up, guys, smell the coffee, it's early in the morning, let's sell GFP because we are the only one that can offer to a shipper, okay, a solution that is way more efficient for them and for us and for UPS. So let's try to grow that. And then last is let's focus on customers that are close by our terminal. Let's not try to get a shipment, okay, outbound from a guy that's 85 miles away from our terminal. Let's try to grow business around the terminal as much as possible so that we reduce our P and D miles. So far, okay, we've done a little bit of that, but where we are doing a much better job is on our line haul, okay? So our line haul now is less on rail, more road, okay, and we have a better service for sure, right? And we'll keep growing that so that our sales team, when they talk to a customer, service is less and less of an issue. So if you compare that to three years ago versus today, our service is much improved, and that is what we have to keep doing, right? So that's a mandate for our sales team, okay? Yeah, that's very helpful. Just one quick follow-up, I think people are trying to get their arms around what's happening with the pricing dynamic and, you know, USLTL, right? And I think there's the underlying assumption that there's discipline, but it just seems like, you know, you wonder because the market's a little soft, and you know, do you think that there's, you know, some pressure developing on price in USLTL, or do you think it's just like, hey, this is normal and freight's a little bit soft, and you know, there's still good discipline in the market? You know what, Tom?

Speaker Change: This is GFP.

Speaker Change: Now, if you look at my GFP, okay, it's been a year that we went through a lot of issues with GFP because...

Speaker Change: You know, there was some customers that were cheating the system at UPS, these guys got cut off, we had to cut them off, blah, blah, blah. So our revenue at GFP is down big time, but now all these issues have been resolved between

Alain Bedard: So, third mandate for our sales guy, wake up guys, smell the coffee, it's early in the morning, let's sell GFP because we are the only one that can offer a shipper a solution that is way more efficient for them and for us and for UPS, so let's try to grow that. And then lastly, let's focus on customers that are close by term. Let's not try to get a shipment outbound from a guy that's 85 miles away from our terminal.

Speaker Change: You know, us and our partner.

Speaker Change: And now we're ready to go and start growing that. So third mandate for our sales guy, wake up guys, smell the coffee, it's early in the morning, let's sell GFP because we are the only one that can offer to a shipper.

Speaker Change: A solution that is way more efficient for them, and for us, and for UPS, so let's try to grow that.

Speaker Change: And then last is, let's focus on customers that are closed by a terminal.

Speaker Change: Let's not try to get a shipment, okay, outbound from a guy that's 85 miles away from our terminal. Let's try to grow business around the terminal as much as possible so that we reduce our P&D miles.

Alain Bedard: Let's try to grow business around the terminal as much as possible so that we reduce our P&D miles. So far, we've done a little bit of that, but where we are doing a much better job is on our Lionel.

Speaker Change: So far, okay, we've done a little bit of that, but where we are doing a much better job is on our line-all.

Alain Bedard: Our Lionel now is less on rail, more on road, and we have a better service, for sure. And we'll keep growing that so that our sales team, when they talk to a customer, service is less and less of an issue. If you compare that to three years ago versus today, our service is much improved, and that is what we have to keep doing. So that's the mandate for our sales. Okay, yeah, that's very helpful.

Speaker Change: Okay, so our Lionel now is less on rail, more on road, okay, and we have a better service, for sure. Right? And we'll keep growing that so that our sales team, when they talk to a customer,

Speaker Change: Service is less and less of an issue, so if you compare that to three years ago versus today, our service is much improved, and that is what we have to keep doing, right?

Speaker Change: So that's the mandate for our sales team.

Alain Bedard: Just one quick follow-up. I think people are trying to get their arms around what's happening with the pricing dynamic and in US LTL, right? And I think there's the underlying assumption that there's discipline, but it just seems like, you know, you wonder because the market's a little soft. And, you know, do you think that there is? Transcribed by https://otter.ai. You know what, Tom?

Speaker Change: Okay, yeah, that's very helpful. Just one quick follow up.

Speaker Change: I think people are trying to get their arms around what's happening with the pricing dynamic and, you know, US LTL, right? And I think there's the underlying assumption that there's discipline, but

Speaker Change: It just seems like, you know, you wonder because the market's a little soft and, you know, do you think that there is, you know, some pressure developing on price in US LTL? Or do you think it's just like, hey, this is normal and freight's a little bit soft and, you know, there's still good discipline in the market?

Alain Bedard: That's a very, very good question. Because, you know, for sure, when we look at guys adding doors, adding capacity, then we say, Oh, that doesn't look too good. But we can't control that, right? We can't control what some of our peers are doing. So, this is why when I talk to my guys, we have to be lean. We have to be on a diet.

Alain Bedard: That's a very, very good question because, you know, for sure when we look at guys adding doors, adding capacity, then we say, oh, that doesn't look too good, but we can control that, right? We can control what some of our peers are doing.

Speaker Change: You know what, Tom? That's a very, very good question because, you know, for sure, when we look at guys adding doors, adding capacity, then we say, oh, that doesn't look too good. But we can't control that, right? We can't control what some of our peers are doing.

Alain Bedard: So this is why, when I talk to my guys, guys, we have to be lean, we have to be on a diet, okay? We have to reduce our cause because if something happens to the quality of revenue, we'll be on this market, although it's never happened last. If you look at the last 10 years, I mean, this industry, the USLTL, has always got price increases, et cetera, et cetera. But there could be some concern where a few players are adding so much capacity that maybe if the market is not growing, okay, there could be pressure on rates.

Speaker Change: So, this is why when I talk to my guys, guys, we have to be lean, we have to be on a diet, okay? We have to reduce our cost because if something happens to the quality of revenue on this market, although it's never happened, if you look at the last 10 years, I mean, this industry, the USLTL has always been...

Alain Bedard: Okay, we have to reduce our costs because if something happens to the quality of revenue in this market, although it's never happened, if you look at the last 10 years, this industry, the USLTL, has always been... God, price increases, et cetera, et cetera, et cetera. But there could be some concern where a few players are adding so much capacity that maybe, if the market is not growing, there could be pressure on rates. So how do you win in that kind of environment?

Alain Bdard: Alain Bdard, Alain Bdard

Alain Bedard: So how do you win, how do you win with that kind of an environment? Well, we have to become in the US like we are in Canada, because in Canada, we have to have a lot of competition with some guys that don't like to make money, okay? Like, if you're later owned by Canada Post, the focus there is not to make money. So we have those guys here. We have other guys in Canada that trucking is a sideline for them. So they're not really focused about making money in the trucking segment. So we have that kind of competition in Canada, and we are successful.

Alain Bedard: Well, we have to become like we are in Canada in the US because, in Canada, we have a lot of competition with some guys that don't like to make money. Okay. Like Pure Later, owned by Canada Post, the focus there isn't on making money. So we have those guys here.

Alain Bdard: So how do you win with that kind of environment? Well we have to become in the US like we are in Canada, because in Canada we have a lot of competition.

Speaker Change: with some guys that don't like to make money.

Speaker Change: Okay, like Führer-Leder, owned by Canada Post, the focus there is not to make money. So we have those guys here. We have other guys in Canada that trucking is a sideline for them. So they're not really focused about making money in the trucking segment.

Alain Bedard: We have other guys in Canada that trucking is a sideline for them, so they're not really focused on making money in their trucking segment. So we have that kind of competition in Canada, and we are successful. If ever this happens in the U.S., I think it will be short-term, okay? But it still could be. It still could be happening.

Speaker Change: So, we have that kind of competition in Canada and we are successful.

Alain Bedard: If ever this happens in the US, I think it will be short term, okay? But it still could be, it still could be happening. And that's why I'm, when I'm talking to Bob McGonagall and Keith, let's go on a diet. We have to reduce costs. So our IT costs at T-Force rate are way too high, but don't forget.

Speaker Change: If ever this happens in the U.S., I think it will be short term, but it still could be happening and that's why when I'm talking to Bob McGonigal and Keith, I say, guys, let's go on a diet. We have to reduce costs.

Alain Bedard: And that's why when I'm talking to Bob McGonigal and Keith, I say, guys, let's go on a diet. We have to reduce carbs. That's the only way that we're going to break this 90. Okay, hopefully, the market will help us. But if it doesn't, I mean, we have to be really better. So I think the costs at the T-Force rate are way too high. But don't forget, until a year ago, we were stuck with the TSA moving away from UPS. So but that's behind us. Okay, but we have old tools, and old software that we are replacing. Okay, I get that.

Speaker Change: That's the only way that we're going to break this 90, okay? Hopefully the market will help us.

Speaker Change: But if it doesn't, I mean, we have to be really better. So our IT costs at T-Force rates are way too high.

Alain Bedard: I mean, this is until a year ago, we were stuck with the TSA moving away from UPS, but that's behind us now, okay? But we have all tools, all software, so that we are replacing. Okay, I get that. But this got to, you know, this got to end at one point so that we could start reducing. Sorry to manage the freight, okay? We have to be a single digit as percent of revenue. Right now we're not. We are single digit in Canada. We were not in the US.

Speaker Change: but don't forget I mean this is until a year ago we were stuck with the TSA moving away from UPS so but that's behind us now.

Speaker Change: Okay, but we have old tools, old software so that we are replacing. Okay, I get that. But this got to, you know, this got to end at one point so that we can start reducing our costs. Sorry.

Alain Bedard: But this has got to end at some point so that we can start reducing our costs. To manage the freight, okay, we have to be a single digit as a percent of revenue. Right now, we're not. We are a single digit in Canada. We weren't in the U.S.

Speaker Change: to manage the freight.

Speaker Change: Okay, we have to be a single digit as a percent of revenue. Right now, we're not. We are single digit in Canada. We were not in the U.S. So we have too many staff, too many people in the offices, and that's got to be reduced with better tools, better technology, and that's where we're going.

Alain Bedard: So we have too many staff, too many people in the offices, and that's got to be reduced with better tools, better technology, and that's where we're going. You know, if this market gets softer, if there are some pricing issues because some players are adding too much capacity, you will just have to adjust.

Alain Bedard: So we have too many staff, too many people in the offices, and that's got to be reduced with better tools, better technology, and that's what we're going. Now, you know, if this market gets softer, if there's some pricing issues, because some players are adding too much capacity, I mean, we'll just have to adjust. So you're not necessarily seeing it, but you're concerned it could happen. It may happen.

Speaker Change: Tell them if this market gets softer, if there's some pricing issues because some players are adding too much capacity.

Alain Bedard: So you're not necessarily seeing it, but you're concerned it could happen, it may happen. I mean, but at the end of the day, we don't control what's going on in the market, right? So this is why I'm saying to my guys, guys, what I'm seeing, okay, when I see adding doors, adding doors, I see, oh, huge investment, okay, and the market is not growing. So guys, hey, let's speed up the diet. Yeah, okay, that all makes sense. Thank you for the time, Alain.

Speaker Change: And you will just have to adjust.

Speaker Change: So you're not necessarily seeing it, but you're concerned it could happen.

Alain Bedard: I mean, by the end of the day, we don't control what's going on in the market, right? So this is my, me when I'm saying to my guys, guys, when I'm seeing, okay, when I see adding doors, adding doors, I see, oh, huge investment, okay, and the market is not growing.

Speaker Change: It may happen. I mean, but at the end of the day, we don't control what's going on on the market, right? So this is why me what I'm saying to my guys, guys

Speaker Change: What I'm seeing, okay, when I see adding doors, adding doors, I see, ooh, huge investment, okay, and the market is not growing. So, guys, hey, let's speed up the diet.

Alain Bedard: So guys, hey, let's speed up the diet.

Alain Bedard: Yeah, okay, that all makes sense.

Tom Waterwoods: Thank you for the time, Alain.

Tom Waterwoods: Thank you, dumb. And next question will be from Brian Ossenbeck, that's JP Morgan. Please go ahead.

Brian Ossenbeck: Thank you, Tom. And the next question will be from Brian Ossenbeck at J.P. Morgan. Please go ahead.

Speaker Change: Yeah, okay, that all makes sense. Thank you for the time, Alain.

Thomas Wadewitz: Thank you, Tom.

Thomas Wadewitz: And the next question will be from Brian Ossenbeck at J.P. Morgan. Please go ahead.

Brian Ossenbeck: Hey, good morning, Alain. Morning, Brian, to ask another keyboard straight question, but maybe more on the footprint. I think you said that you were looking at potentially M&A in T.O. for next year. I don't know if that would be for the U.S. and if you can stand on that because you still have a pretty big real estate footprint. There's still some more terminals out there from WRC that could be sold, so maybe you can elaborate a little bit more on that.

Alain Bedard: Hey, good morning, Alain. Good morning, Brian. Thank you. Thank you. [inaudible] Another T-Force freight question, but maybe more on... print. I think you said that you were looking for M&A in LTO for next year. I don't know if that would be for the U.S. and if you can expand on that.

Brian Ossenbeck: Hey, good morning, Alain.

Alain: Morning Brian . Good morning.

Alain: Ask.

Brian Ossenbeck: Another T-Force freight question, but maybe more on the footprint. I think you said that you were looking at potentially M&A in LTO for next year. I don't know if that would be for the U.S. and if you can expand on that because

Alain Bedard: We still have pretty big real estate. Terminals out there. Investitures, or potentially some M&A. You know what, Brian? I think that, you know, TFI in Canada, we're second to none in LTL. And we cannot be the number one guy in the US. I don't think it's possible.

Speaker Change: You know, you still have a pretty big real estate footprint.

Speaker Change: There's still some more terminals out there from YRC that could be sold so maybe you can elaborate a little bit more on on that bigger picture what you think the network could look like in a couple years time and

Brian Ossenbeck: Bigger picture, what you think the network could look like in a couple years' time and what are some of the bigger changes we should be focused on there potentially, whether it's investitures or potentially some M&A. Yeah, you know what, Brian, I think that TFI in Canada, we're second to none in LTL. I mean, and we cannot be the number one guy in the U.S. I don't think it's possible, but I don't want to be the number six, or number seven, or number eight in terms of volume. So, for sure, at one point, we have to take action on the U.S.

Speaker Change: You know, what are some of the bigger changes we should be focused on there potentially, whether it's investitures or potentially some M&A?

Speaker Change: Yeah.

Brian Ossenbeck: You know what, Brian , I think that, you know, TFI in Canada, we're second to none in LTL. I mean, and we cannot be the number one guy in the U.S. I don't think it's possible.

Brian Ossenbeck: But I don't want to be the number six or number seven or number eight in terms of volume. So, for sure, at one point,

Alain Bedard: But I don't want to be number six or number seven or number eight in terms of volume. So, for sure, at one point. Okay, we have to take action on the US LTL market because I still believe... Even with what I just said to Tom about this little bit of a concern I have with this capacity, you know. But I still think that USLTL is the best place to be.

Alain Bedard: LTL market because I still believe, even with what I just said to Tom about this little bit of a concern I have with this capacity maybe. But I still think that the U.S. LTL is the best place to be. Okay, so this is why, and I said to Tom, this may be short term, maybe just maybe a year, two years, but I think long term. Okay, we have to be a larger player in the U.S. LTL market. So this is why once we close 24, once our leverage is down to, let's say, 175. When we reduce our debt by 5,600 million, like it's the plan, I think that by year end of 25, I mean, we're well positioned to do more into the U.S.

Brian Ossenbeck: Okay, we have to take action on the U.S. LTL market because I still believe...

Brian Ossenbeck: Even with what I just said to Tom about this little bit of a concern I have with this capacity maybe, you know.

Alain Bedard: Okay, so this is why, and I said to Tom, this may be short term, maybe it's just gonna be a year, two years, but I think long term, okay, we have to be a larger player in the USLTL market. So this is why. Once we close 24, once our leverage is down to, let's say, 175, once we reduce our debt by 500, 600 million, like it's the plan. I think that by year-end of 25, we're well-positioned to do more, okay, into the U.S. LTL. Now, at the same time, also, we've said logistics in the U.S. is going really, really well, and we have other opportunities to keep building on that base. So this is why the two sectors...

Brian Ossenbeck: But I still think that the USLTL is the best place to be, okay? So this is why, and I said to Tom, this may be short term, maybe it's just gonna be a year, two years, but I think long term, okay, we have to be a larger player in the USLTL market. So this is why

Brian Ossenbeck: Once we close 24, once our leverage is down to, let's say, 175, once we reduce our debt by $500 million, $600 million, like it's the plan.

Brian Ossenbeck: I think that by year-end of 25, I mean, we're well-positioned to do more, okay, into the USLT, hopefully.

Alain Bedard: LTL hopefully. Now, at the same time, also, we've said logistics in the U.S. we are doing really, really well. And we have other opportunities to keep building on that base. So this is why the two sectors, okay, that we're going to be really focused with something that could be interesting for our shoulders is those two sectors.

Brian Ossenbeck: Now, at the same time also, we've said logistics in the U.S., we are doing really, really well. And we have other opportunities to keep building on that base. So this is why the two sectors.

Alain Bedard: Okay, that we're going to be really focused on something that could be interesting for our shoulders in those two sectors. On the truckload side, I mean, 25 is the year where we're going to be digesting all of the Dasky operation in terms of reducing IT, shedding admin costs, etc., etc. So I don't see anything of size for us in 25 on the truckload side.

Brian Ossenbeck: Okay, that we're going to be really focused with something that could be interesting for our shoulders is those two sectors.

Alain Bedard: On the Trotload side, I mean, 25 is the year where we're going to be digesting all of the desk operation in terms of reducing IT, you know, shedding and min costs, etc., etc. So I don't see anything up size for us in 25 on the Trotload side, but also the idea, and I'm going back to what we said when we bought that key, is that down the road, when we have a certain size, it makes sense to have two two organizations, right? Not today because the size, our size is too small, I think. So we need to beef up a little bit in 25, 26, because at the end of the day, we want TFI to be more of a pure play down the road, okay, being a, let's see, an LTL logistics company on one side and on another side, the Trotload sector, which is mostly specialty Trotload.

Brian Ossenbeck: On the trotload side, I mean, 25 is the year where we're going to be digesting.

Brian Ossenbeck: All of the Dasky operation in terms of reducing IT, you know, shedding admin costs, etc, etc. So, I don't see anything of size for us in 2025 on the truckload side.

Alain Bedard: But also, the idea, and I'm going back to what we said when we bought Dasky, is that down the road, when we have a certain size, it makes sense to have two organizations, right? Not today, because our size is too small, I think. So we need to beef up a little bit in 25, 26. Because at the end of the day, we want TFI to be more of a pure play down the road.

Brian Ossenbeck: But also, the idea, and I'm going back to what we said when we bought Dasky, is that down the road, when we have a certain size,

Brian Ossenbeck: It makes sense to have two organizations, right? Not today, because our size is too small, I think.

Brian Ossenbeck: So we need to beef up a little bit in 25, 26.

Brian Ossenbeck: Because at the end of the day, we want TFI to be more of a pure play down the road.

Alain Bedard: UK being an LTL logistics company on one side and, on the other side, the truckload sector, which is mostly specialty truckload. I would say that our truckload is 85% specialty truckload, which is way more resilient than the van. And you can see that when you look at my peers' results, great companies are coming up with results right now that are difficult, right? Unknown Executive, Alain Bedard, David Saperstein, Benjamin Mok, TFI Intl, Unknown Executive, Alain Bedard, David Saperstein, Benoit Poirier, James Monigan, Ken Hoexter, Yeah, some of those terminals, maybe maybe you're through that But it sounds like, Unknown Speaker...bigger.

Brian Ossenbeck: Okay, being, let's see, an LTL logistics company on one side, and on another side, the truckload sector, which is mostly specialty truckload.

Alain Bedard: I would say that our Trotload is what, 85% specialty Trotload, which is way more resilient than the van. And you could see that when you look at my peers' results, great companies are coming out with results right now that are difficult, right?

Brian Ossenbeck: I would say that our truckload is what, 85% specialty truckload, which is way more resilient than the van world.

Brian Ossenbeck: And you can see that when you look at my peers' results.

Speaker Change: are difficult, right?

Brian Ossenbeck: Just to follow up real quickly, then in terms of the people who are straight footprint, I thought you're still trying to maybe consolidate or rationalize some of those terminals. Maybe you're through that already, but it sounds like you actually want to get bigger over time. So is that just more different markets that you like to be in, different lanes you want to fill out? How should you think about that, when at least the current book sounds like you still want to shrink that first perhaps, or maybe I'm, oh yeah, it's reading that. Brian, for sure. I mean, right now we're doing a deal with one of our peers with one terminal, so we're selling one terminal to one of our peers. Why is that?

Speaker Change: Just to follow up real quickly then, in terms of the

Speaker Change: T4 Straight Footprint. I thought you were still trying to maybe consolidate or rationalize.

Speaker Change: Yeah, some of those terminals, maybe, maybe you're, you're through that already, but it sounds like you actually want to get bigger over, over time. So is that just more different markets that you'd like to, to be in different lanes you want to fill out? How should we think about that when at least the current book sounds like?

Alain Bedard: So is that, different markets that you like to be in, different lanes you want to fill out. Unknown Executive, Alain Bedard, David Saperstein, Benoit Poirier, Kevin Chiang, Alain Bedard, Brian, for sure. I mean, right now, we're doing a deal with one of our peers for one terminal. So we're selling one terminal to one of our peers. Why is that? Because it makes sense for us.

Speaker Change: You still want to shrink that first, perhaps, or maybe I'm misreading that.

Speaker Change: Brian , for sure. I mean, right now we're doing a deal with one of our peers with One Terminal. So we're selling One Terminal to one of our peers. Why is that? Because it makes sense for us. It's good for them. Okay.

Alain Bedard: Because it makes sense for us, it's good for them. Okay, we're selling one terminal in California, so California right now to a guy that's going to demolish the terminal. Right, so we have about 35% over capacity in our doors today at T-Force rate, so for sure it's way too much, right? So we are reducing, reducing, reducing and caching, so I believe that our real estate will generate probably between 25 to $50 million cash between now and the end of the year, so that's going to be used to fund our small M&A that we're doing in Canada and a little bit in the US. That will also help us reduce our debt, right?

Alain Bedard: It's good for them. Okay. We're selling one terminal in California right now to a guy that's going to demolish it. We have about 35% overcapacity at our doors today at T-Force rates. For sure, it's way too much.

Speaker Change: We're selling one terminal in California, South California right now to a guy that's going to demolish the terminal, right? So we have about 35% over capacity in our doors today at T-force rate. So for sure, it's way too much, right?

Alain Bedard: We are reducing, reducing, reducing, and cashing in. I believe that our real estate will generate probably between $25-50 million in cash between now and the end of the year. That's going to be used to fund our small M&A that we're doing in Canada and a little bit in the U.S. That will also help us reduce our debt, right? So going back to your point, no, we're not adding capacity to our network. As a matter of fact, we are reducing capacity because we know that if we are successful in buying another LTL company, probably these guys will also have overcapacity, maybe, maybe not, it depends on who it's going to be. So this is why. Why wait?

Speaker Change: So we are reducing, reducing, reducing and cashing. So I believe that...

Speaker Change: Our real estate will generate probably between $25 to $50 million cash between now and the end of the year. So that's going to be used to fund our small M&A that we're doing in Canada and a little bit in the U.S.

Alain Bedard: So going back to your point, no, we're not adding capacity to our network; as a matter of fact, we are reducing capacity because we know that if we are successful in buying another LTL company, probably these guys also will have overcapacity, maybe maybe not depends on who it's going to be. So this is why, why wait? Okay, so we're taking action now. So as a matter of fact, we bought one terminal. Okay, well we bought two from the YRC thing there. In Sacramento, we used to have two terminals; now we move into one, and those two terminals are for sale, and one is being sold right now.

Speaker Change: That will also help us reduce our debt, right? So going back to your point, no, we're not adding capacity to our network. As a matter of fact, we are reducing capacity because we know that if we are successful in buying another LTL company...

Speaker Change: Probably these guys also will have overcapacity.

Speaker Change: Maybe, maybe not. Depends on who it's going to be. So this is why, why wait? Okay, so we're taking action now. So as a matter of fact, we bought one terminal. Okay, well we bought two from the YRC thing there.

Alain Bedard: Okay, so we're taking action now. So, as a matter of fact, we bought one terminal, okay, well, we bought two from the YRC thing there. In Sacramento, we used to have two terminals.

Alain Bedard: Now we move into one. And those two terminals are up for sale; one is being sold right now in Lexington, Kentucky.

Speaker Change: In Sacramento, we used to have two terminals, now we move into one, and those two terminals are for sale. One is being sold right now. In Lexington, Kentucky, we move into the YRC terminal.

Alain Bedard: In Lexington, Kentucky, we move into the YRC terminal, and one of the sales that may happen before the year end is our old T-Force rate Lexington terminal is being sold right now, right? So we are taking action to be more close to our capacity in terms of real estate, because we believe that if we are able to do what we want to do, add some LTL revenue into an M&A acquisition, I mean we need to be more leaner in terms of our capacity.

Alain Bedard: And one of the sales that may happen before the year end is our old T-Force Raid Lexington terminal is being sold right now, right? So we are taking action to be more, you know, close to our capacity in terms of real estate because we believe that if we are able to do what we want to do, add some LTL revenue into an M&A acquisition, we need to be more lean in terms of our capacity. Ok, Alain. Thanks for the interview. The next question will be from Jason Seidl at TD Cowan. Please go ahead.

Speaker Change: And one of the sales that may happen before the year-end is our old T-Force rate Lexington terminal is being sold right now, right? So we are taking action.

Speaker Change: to be more, you know, close to our capacity in terms of real estate, because we believe that

Speaker Change: If we are able to do what we want to do, add some LTL revenue into an M&A acquisition, I mean, we need to be more leaner in terms of our capacity.

Brian Ossenbeck: Okay Lane, thanks for the clarification there. I appreciate it. Thank you.

Speaker Change: Okay, Lane. Thanks for the clarification there. I appreciate it.

Jason Seidl: Next question will be from Jason SIDLE at PD Cowan, please go ahead. Thank you, our better. Good morning, Elaine.

Alain: Thank you.

Speaker Change: Next question will be from Jason Seidl at TD Cowen. Please go ahead.

Jason H. Seidl: Thank you, operator. Good morning, Alain. Hey, good morning, Jason. I have two quick things here. One, wanted to focus a little bit on the Dasky side. I think, you know, heading into your earnings print, we were a little concerned given what we saw sort of some weaker pricing in the flatbed market. So yeah, maybe if you could sort of dive into that, you know, was that maybe offset by some strength in your specialty business? You know what, Jason?

Jason Seidl: Hey, good morning, Jason. Two quick things here. One wanted to focus a little bit on the DASKY side. I think heading into your earnings print, we were a little concerned given what we saw: some weaker pricing in the flatbed market. So maybe if you could dive into that, was that maybe offset by some strengths in your specialty business? You know what, Jason, for sure. I mean, if you compare you over a year, a revenue per mile, okay, add in our specialty operation in the US specialty truck load operation, we're down. I mean, we're down, but there's no question about that.

Jason H. Seidl: Thank you, operator. Good morning, Alain.

Alain: Hey, good morning, Jason.

Jason H. Seidl: Two quick things here. One, wanted to focus a little bit on the Dasky side. I think, you know, heading into your earnings print, you know, we were a little concerned given what we saw sort of some weaker pricing in the flatbed market. So yeah, maybe if you could sort of

Speaker Change: Dive into that, you know, was that maybe offset by some some strength in your specialty business?

Alain Bedard: For sure. I mean, if you compare year over year, our revenue per mile in our specialty operation in the US, our specialty truckload operation, we're down. I mean, we're not.

Speaker Change: You know what, Jason? For sure. I mean, if you compare year over year, our revenue per mile in our specialty operation in the U.S., specialty truckload operation, we're down.

Alain Bedard: There's no question about that. We're having price pressure on there. But at the same time, our revenue per truck is up because we do a better job of reducing empty miles and etc. So, I'm really happy with this Dasky acquisition in terms of the operating units. Dasky was a roll-up.

Alain Bedard: We're having price pressure in there, but at the same time, okay, revenue per truck is up because, you know, we do a better job of reducing empty miles, et cetera, et cetera.

Speaker Change: I mean, we're down.

Speaker Change: There's no question about that, we're having price pressure here and there, but at the same time, okay, our revenue per truck is up because, you know, we do a better job of reducing empty miles and et cetera, et cetera. So I'm really happy with this Dashkey acquisition in terms of the operating units.

Alain Bedard: So I'm really happy with this Dasky acquisition in terms of the operating units, and these guys, you know, Dasky was a roll-up, right? The first thing that we're trying to do is to, you know, break all these walls between those operating units within Dasky. So, as we speak, there's a weekly call between all of our flatbed operation in North America, between the US and Canada, so everybody's on the same call, talking about the market, the environment, the opportunities, et cetera, et cetera. So this is why I feel really, really good that even in the soft market, because the market today is softer, we have more pressure on price, on rates per mile today than a year ago. Okay, hopefully this starts to change. Hopefully next year, I don't see that changing this year, but now we do a better job, we're more efficient and we'll continue doing that.

Alain Bedard: The first thing that we're trying to do is to break all these walls between those operating units within Dasky. So, as we speak, there's a weekly call between all of our flatbed operations in North America, between the US and Canada. So, everybody's on the same call talking about the market, the environment, the opportunities, etc. So, this is why I feel really, really good that even in a soft market, because the market today is softer, we have more pressure on price and rates per mile today than a year ago. Hopefully, this starts to change next year, but I don't see that changing this year.

Speaker Change: and these guys, you know.

Speaker Change: Dasky was a roll-up, right, and

Speaker Change: First thing that we're trying to do is to, you know,

Speaker Change: Break all these walls between those operating units within Dasky. So as we speak, there's a weekly call between all of our flatbed operation in North America, between US and Canada. So everybody's on the same call talking about the market, the environment, the opportunities, etc, etc.

Speaker Change: So, this is why I feel really, really good that even in a soft market, because the market today is softer, we have more pressure on price, on rates per mile today than a year ago. Okay. Hopefully, this starts to change, hopefully, next year. I don't see that changing this year.

Alain Bedard: But now we do a better job. We're more efficient, and we'll continue doing that. So it sounds like that 50 cent accretion number is still pretty good to use.

Speaker Change: But now we do a better job. We're more efficient and we'll continue doing that.

Alain Bedard: So it sounds like that 50 cent accretion number is still pretty good to use. Listen, we are conservative. I think that we'll do better than that, but let's be conservative, all right? So, you know, as an example, like I was saying earlier, just the IT costs. I mean, we fell off a chair when we look at the IT costs, the consultants. I mean, all these guys taking advantage of the company. I mean, we're reducing that. You know, Darin Levine, which runs our IT for our specialty truckload within TFI, now is involved with the DASKI Group.

Speaker Change: So it sounds like that 50 cent accretion number is still pretty good to use.

Speaker Change: Patient.

Speaker Change: We are conservative. I think that we'll do better than that, but let's be conservative, all right? So, you know, as an example, like I was saying earlier, just the IT costs. I mean, we fell off a chair when we look at the IT costs, the consultant, I mean, all these guys taking advantage of the company.

Alain Bedard: [inaudible] I mean, we're reducing that. You know, Darren Levine, who runs our IT for our specialty truckload within TFI, now is involved with the Dasky Group. I mean, these guys, like I said, I think earlier, they used to run Oracle Finance, a very expensive Oracle.

Speaker Change: I mean, we're reducing that.

Speaker Change: You know, Darren Levine, which runs our IT for our specialty truck load within TFI, now is involved with the Dasky Group. I mean, these guys, like I said, I think earlier, they used to run Oracle Finance, very expensive Oracle. They pay way more money than us at TFI.

Alain Bedard: I mean, these guys, like I said earlier, they used to run Oracle Finance, very expensive Oracle. They pay way more money than us at TFI, so Oracle will probably disappear within DASKI. And we're going to move all this to Infinium, use saving, and then down the road once everybody's on Infinium, maybe we'll go back to Oracle in two to three years, but it's going to be more of a TFI Oracle, not a DASKI Oracle that costs a fortune. We have to pay Deloitte to support us, which is nonsense.

Alain Bedard: They pay way more money than us at TFI, so Oracle will probably disappear within the. We're in Dasky, and we're going to move all this to Infineon, a huge saving. And then down the road, once everybody's on Infineon, maybe we'll go back to Oracle in two to three years. But it's going to be more of a TFI Oracle, not a Dasky Oracle that costs a fortune. We have to pay Deloitte to support us, which is nonsense.

Speaker Change: So Oracle will probably disappear within...

Speaker Change: We're in Dasky, and we're going to move all this to Infiniium, huge saving, and then down the road, once everybody's on Infiniium, maybe we'll go back to Oracle in two to three years.

Speaker Change: But it's going to be more of a TFI oracle, not a Dasky oracle that costs a fortune. We have to pay Deloitte to support us, which is nonsense.

Alain Bedard: So, we have a lot of work to do on the admin side at the same time. Okay, we have a lot to do within the business unit to be more efficient in talking to one another, right? Eliminating those walls between the business units. That sounds good.

Alain Bedard: So we have a lot of work to do on the admin side. At the same time, we have a lot to do within the business unit to be more efficient in talking to one another, eliminating those walls between the businesses. That sounds good.

Speaker Change: So, we have a lot of work to do on the admin side, at the same time, okay, we have a lot to do within the business unit to be more efficient in talking to one, one with the other, right? Eliminating those walls between the business units.

Alain Bedard: And if I could just follow up on something Walter was asking about the potential Canadian rail strike, I mean, do you guys already have alternatives set up to sort of supplement a line haul? Because I can't remember the last time both Canadian rails went on strike, and this would obviously impact your Canadian LTL line haul, big deal. Yeah, yeah, for sure. We have a plan, Jason. Hopefully, this will not happen.

Jason Seidl: And if I could just follow up on something Walter was asking about on the potential Canadian rail strike. I mean, do you guys already have an alternative setup to sort of supplemental line-off because I can't remember the last time both Canadian rails went on strike, and this would obviously impact your Canadian LTL line-off, big deal. Yeah, for sure we have a plan, Jason. Hopefully, this will not happen. And I think that. I think that the federal government will get in fast because this is going to be terrible for the Canadian economy. So for sure we have plans; for sure we know what to do.

Speaker Change: That sounds good. And if I could just follow up on something Walter was asking about on the potential Canadian rail strike. I mean, do you guys already have alternatives set up to sort of supplement a line haul? Because I can't remember the last time both Canadian rails went on strike, and this would obviously impact your Canadian LTL line haul. Big deal.

Speaker Change: Yeah, yeah, for sure. We have a plan, Jason. Hopefully this will not happen. And I think that

Alain Bedard: And I think that the federal government will get in fast because this is going to be terrible for the Canadian economy. For sure, we have plans. For sure, we know what to do. And so far, between you and me, Jason, fires are more of an issue for us. Flood and fire, okay, is more of an issue than rail strikes and rail accidents. I mean, fires are becoming a big problem. Okay, and Flood, too.

Speaker Change: I think that the federal government will get in fast because this is going to be terrible for the Canadian economy.

Jason H. Seidl: For sure, we have plans. For sure, we know what to do. And so far, between you and me, Jason, fires is more of an issue for us. Flood and fire, okay, is more of an issue than rail. Rail strike.

Alain Bedard: And so far between you and me, Jason fires is more of an issue for us. Flood and fire, okay, is more of an issue than rail, rail strike. I mean fires is becoming a big problem. Okay, and flood, that's two. Yeah, I saw the news up in Jasper; that was pretty bad.

Jason H. Seidl: I mean, fires is becoming a big problem.

Alain Bedard: Yeah, I saw some news up in Jasper that was pretty bad. Well, Alain, I appreciate your time, as always, and have your guys stay safe out there, for sure. Thank you, Jason. Thank you. The next question will be from Kornat Gupta at Scotia Capital. Please go ahead. Good morning, Alain. Good morning, Konark.

Jason H. Seidl: Okay, and Flood, too.

Jason Seidl: Well, Alain, I hope the time is always and have you guys stay safe out there for sure. Thank you, Jason.

Alain Bdard: Alain Bdard, Alain Bdard

Konark Gupta: Thank you. Next question will be from Konark Gupta at Scotia Capital.

Jason H. Seidl: Thank you, Jason.

Speaker Change: Thank you. Next question will be from Kornark Gupta at Scotia Capital. Please go ahead.

Konark Gupta: Please go ahead. Good morning, Alain.

Alain Bedard: Good morning, Konark. Alain, I wanted to ask you on desk. Thanks for sharing some of the details here, and good to see a pretty good quarter from the truckload business despite all the pressure you're seeing in the market. Obviously, desk seems like a progressing.

Konark Gupta: I wanted to ask you about Dasky, thanks for sharing some of the details here and good to see a pretty good quarter from the truckload business despite all the pressure you're seeing in the market. Obviously, Dasky seems like it's progressing well. Can you help us understand, like, what was the exit June OR run rate at Dasky and how do you see the bridge to sub 90 OR there? What are some of the pit stops, and what are some of the key drivers besides IT etc. to get to sub 90?

Konark Gupta: Good morning, Alain.

Speaker Change: Morning, Kunar.

Konark Gupta: Hi, I wanted to ask you on DASCII. Thanks for sharing some of the details here and good to see

Konark Gupta: A pretty good quarter from the truckload business, despite all the pressure you're seeing in the market. Obviously, Desi seems like it's progressing well. Can you help us?

Alain Bedard: Well, can you help us understand like what was the exit June or run rate at desk and how do you see the bridge to some 90 or there like what are some of the pit stops and what are some the key drivers besides IT etc to get to somebody. Yeah, so how would say that if you look at desk keys to two number, okay? So most of our guys are running close to a 90 or so. We have one business unit, one business unit right now that loses money. But by the end of August, they will stop losing money because we're going to shut them down and move whatever good business remains into other business units within the TFI world in the US.

Speaker Change: understand, like, what was the exit June OR run rate at Dasky?

Speaker Change: And how do you see the bridge to sub-90 OR there? Like what are some of the pit stops and what are some of the key drivers besides IT, et cetera, to get to sub-90?

Alain Bedard: So I would say that if you look at Dasky's Q2 number, okay, most of our guys are running close to a 90 OR, so we have one business unit right now that loses money. But by the end of August, they will stop losing money because we're going to shut them down. All right, then move whatever good business remains in two other business units within the TFI world. And then I've got another one that is running a very high OR of 98.

Speaker Change: Yeah.

Speaker Change: So, I would say that if you look at Dasky's Q2 number, okay, so most of our guys are running close to a 90 OR, so we have one business unit right now that loses money.

Speaker Change: But by the end of August , they will stop losing money because we're going to shut them down, right, and move whatever good business remains into other business units within the TFI world and the U.S.

Alain Bedard: And then I've got another one that is running a very high OR of 98, so after we've got rid of that one that loses money, it's going to be the next one. And then I've got another one that's running a 95 OR, so this is why, on average, okay, we are closer to a 92, 91, 92, 93 OR globally. Okay, but we're going to weed out the losers, and we're going to improve the ones that can be improved. But then again, like I said earlier, we need to talk more between the TFI Specialty Truckload business unit.

Speaker Change: And then I've got another one that is running a very high OR of 98, so after we've got rid of that one that loses money, it's going to be the next one.

Alain Bedard: So after we've gotten rid of that one that loses money, it's going to be the next. And then I've got another one that's running a 95 OR, so this is why, on average, we are closer to a 92, 91, 92, 93 OR globally, OK, but we're going to weed out the losers, and we're going to improve the ones that can be improved. But then again, like I said earlier, we need to talk more between the TFI Specialty Tractable Business Union and the European Union.

Speaker Change: And then I've got another one that's running a 95 OR. So this is why on average, okay, we are closer to a 92, 91, 92, 93 OR globally. Okay, but we're going to weed out the losers and we're going to improve the ones that can be improved.

Speaker Change: But then again, like I said earlier, we need to talk more between the TFI Specialty Tractable Business Union. And that's something that I've started already, okay, because there's lots of opportunities.

Alain Bedard: And that's something that I've started already, okay? Because there's lots of opportunities within desk, he have got one or two business unit that are running today sub 90 OR. But even those guys running sub 90 OR, they're, let's say, they're 87, but because market conditions are difficult, normally they should be running an 80, 82, 83 OR. But, as an example, insurance, okay, at desk, he is something that was not done well. So we are improving, okay, our insurance costs, the way it's been done. But I'm stuck with one deal that was signed for three years, so I'm going to have to suffer for another two years because of this deal that doesn't make any sense. But I'm going to have to live with it.

Alain Bedard: And that's something that I started already, okay, because there are lots of opportunities. Within Dasky, I've got one or two business units that are running sub-90 OR today. But even those guys running sub-90 OR, let's say they're 87, but because market conditions are difficult, normally they should be running an 80, 82, or 83 OR.

Speaker Change: Within DASCII, I've got one or two business units that are running today sub-90 OR.

Speaker Change: but even those guys running sub 90 or they're let's say they're 87

Speaker Change: But because market conditions are difficult, normally they should be running an 80, 82, 83 OR.

Alain Bedard: As an example, insurance, okay, at Dasky, is something that was not done well. So we are improving the way our insurance costs are being done, but I'm stuck with one deal that was signed for three years. So I'm gonna have to suffer for another two years because of this deal that doesn't make any sense, but I'm gonna have to live with it. But there's a lot of good stuff within the Dasky group of companies.

Speaker Change: We, as an example, insurance, okay, at Dasky is something that was not done well.

Speaker Change: So we are improving, okay, our insurance costs, the way it's been done.

Speaker Change: But I'm stuck with...

Speaker Change: ...one deal that was signed for three years, so I'm going to have to suffer for another two years because of this deal that...

Alain Bedard: But there's a lot of good stuff within the desk group of companies. So, yeah, you know, we bought this company and we're going to be under 90 who are within, within the year, like I said, of acquisition. And admin cost is what was a big thing. I mean, the old red was costing them a fortune. The end office is costing us a fortune in rent and this and that. IT, like I said earlier. And these are all things on the admin side that would be reducing probably 200, 300 basis points globally. And then sharing best practice, okay.

Speaker Change: Does it make any sense but I'm gonna have to live with but there's a lot of good stuff within the Dasky group of companies

Alain Bedard: So yeah, you know, we bought this company, and we're gonna be under 90 OR within a year, like I said, of acquisition. And admin costs were a big thing. I mean, the overhead was costing them a fortune. The ad office was costing us a fortune in rent and this and that. IT, like I said earlier, and these are all things on the admin side that we're going to be reducing probably 200 to 300 basis points globally. And then sharing best practices, okay, also will help.

Speaker Change: So, yeah, we bought this company and we're going to be under 90 OR within a year, like I said, of acquisition.

Speaker Change: And admin costs was a big thing. I mean, the overhead was costing them a fortune. The head office is costing us a fortune in rent and this and that.

Speaker Change: IT, like I said earlier, and these are all things on the admin side that we're going to be reducing probably 200 to 300 basis points globally.

Speaker Change: And then, sharing best practice, okay?

Alain Bedard: Also will help us. So I feel, I feel really, really good because if you look at what we've done, okay, globally TFI in, in the US and Q2 specialty truck load. I mean, we're running just a sub 89 or right. This is with Daski. Now, you can say, well, last year you were an 85 or. Absolutely, okay. But even our legacy business of TFI, okay, without Daski, in Q2, we're not running an 85 bar. Yeah, we're running probably an 86 and a half. I don't have the numbers close to me because the market is way more difficult this year than a year ago.

Alain Bedard: So I feel really, really good because if you look at what we've done, okay, global ETFI in the U.S. for Q2 specialty truck load, I mean, we're running just a sub-89 OR. This is with Dasky. Now, you're going to say, well, last year you were an 85 OR.

Speaker Change: Also will help us.

Speaker Change: So I feel I feel really really good because if you look at what we've done, okay, global ETFI in In the US NQ2 specialty truck load. I mean right we're running just a sub 89 OR

Speaker Change: This is Witt Dasky. Now, you're going to say, well, last year you were in 85 OR.

Alain Bedard: Absolutely. But even our legacy business of TFI, without Dasky, in Q2, we're not running an 85 OR. We're running probably an 86 and a half.

Speaker Change: Absolutely. Okay, but even our legacy

Speaker Change: Okay, without DESCII, in Q2, we're not running an 85 bar, yeah, we're running probably an 86 and a half, I don't have the numbers close to me.

Alain Bedard: I don't have the numbers close to me because the market is way more difficult this year than a year ago. So this is why when you add Dasky's with one quarter only and we're able to combine the two into one and come up with an 88 OR, I say, Mr. Brookshaw and your team, you guys have done a fantastic job. That's great, Alain. I think it seems like you guys are on a very, very good path with that.

Konark Gupta: So this is why, when you add Daski, okay, with one quarter only. And we're able to combine the two into one and come up with an 88, or I see Mr. Brooks and your team. You guys have done a fantastic job. That's that's great. Good oil, and I think it seems like you guys are on a very, very good path on Daski for sure.

Speaker Change: because the market is way more difficult this year than a year ago. So this is why when you add Dasky, okay, with one quarter only, and we're able to combine the two into one and come up with an 88 OR, I say Mr. Brookshaw and your team, you guys have done a fantastic job.

Speaker Change: That's great, Alain. I think it seems like you guys are on a very good path on that ski for sure.

Alain Bedard: Okay, and just a quick follow-up on the LTL side. I know you laid the groundwork with some factors about how the rates could evolve and you know what you are probably planning to do on the cost side. I want to ask you about the competitive dynamic here that could unfold over the next year or two. You know, one of the biggest, actually the biggest LTL player in the market, is looking to divest its freight business, FedEx.

Konark Gupta: Okay, and just a quick follow-up on the LTL side. I know you laid the ground with some factors about, you know, how the rates could evolve. And, you know, what you're probably planning to do on the cost side, I want to ask you about the competitive dynamic here that could unfold over the next year or two. You know, one of the biggest and actually the biggest LTL player in the market is looking to divest the great business FedEx. I want to know how you perceive that as a competitive dynamic change situation if, at all, it happens.

Speaker Change: Okay, and just a quick follow up on the LTL side, I know you laid the ground with some factors about how the rates could evolve and what you're probably planning to do on the cost side. I wanna ask you about the competitive dynamic here that could unfold over the next year or two. One of the biggest actually.

Alain Bedard: I wanted to know how you perceive that as a competitive dynamic change situation if at all it has happened. Well, you know what, Gunnar, if this happens at FedEx, I mean, we would be the happiest guys in the world. I mean, I think that would be great for the market. I think that this is a great company, FedEx Freight. And being standalone, I think it would be fantastic.

Speaker Change: The biggest LDL player in the market is looking to divest the freight business FedEx. I wanted to know how do you perceive that as a competitive dynamic change situation if at all it happens?

Alain Bedard: Well, you know what, if this happens at FedEx, I mean, we would be the apios guy in the world. I mean, I think that would be great for the market. I think that this is a great company, FedEx Freight, and being standalone, I think it would be fantastic. We have a relationship with them. We work with them into areas of BC, mostly the Vancouver area. We also work with them in Saskatchewan. We're having discussion with them if we can try, if we can help them elsewhere in Canada. So I think that having this spin off, if ever it happens, I think it's going to be good for the market overall.

Speaker Change: Well, you know what, Gunnar, if this happens at FedEx, I mean, we would be the happiest guy in the world. I mean, I think that would be great for the market.

Speaker Change: I think that this is a great company, FedEx Freight.

Speaker Change: and being standalone. I think it would be fantastic. We have a relationship with them. We work with them in two areas of BC, mostly the Vancouver area. We also work with them in Saskatchewan.

Alain Bedard: We have a relationship with them, and we work with them in two areas of BC, mostly in the Vancouver area. We also work with them in Saskatchewan, and we're having discussions with them about whether we can help them elsewhere in Canada. So I think that having this spin-off, if it ever happens, I think it's going to be good for the market overall, and I think it's going to be really good for us as TFI. It makes sense. Perfect. Thanks so much, Alain.

Speaker Change: We're having discussion with them if we could try if we can help them elsewhere in Canada. So I think that having this spinoff, if ever it happens, I think it's going to be good for the market overall. And I think it's going to be really good for us as TFI.

Konark Gupta: And I think it's going to be really good for us as TFI. Makes sense. Perfect.

Alain Bedard: Good luck. Thank you. Thank you. The next question will be from Jordan Alliger at Goldman Sachs. Please go ahead.

Konark Gupta: Thanks so much, Elaine. Good luck. Thank you.

Speaker Change: Makes sense. Perfect. Thanks so much, Alain. Good luck. Thank you.

Jordan Eleger: Next question will be from Jordan Eleger at Goldman Sachs. Please go ahead.

Speaker Change: Thank you. Thank you, Gunnar.

Speaker Change: The next question will be from Jordan Alliger at Goldman Sachs. Please go ahead.

Jordan Eleger: Yeah, bye. And the staff, Bob, question on LPL. I know Alain. In the past, you talked a lot about service on LPL. And I don't know if I've heard as much about it today. Service being like a critical cog, getting that revenue per 100 way to some point and flex positive. So can you maybe talk a little bit about LPL service where you are, and thank you.

Jordan Alliger: Yeah, I got it. [inaudible] on LPL. I know Alain in the past.

Jordan Ellinger: Yeah, hi. Just a follow-up question on LPL. I know, Alain, in the past,

Alain Bedard: You talked a lot about service on LTL, and I don't know if I've heard as much about it today, service being like a critical cog, getting that revenue per hundred way to at some point become positive. So can you maybe talk a little bit about LTL service where you are? And thank you. Yeah, yeah, that's a very good question. Because without service, it's difficult for you to grow your business. It's also difficult for you to guard and protect them.

Jordan Ellinger: You talked a lot about service on LTL, and I don't know if I've heard as much about it today, service being like a critical cog, getting that revenue per hundred way to at some point inflect positive. So can you maybe talk a little bit about LTL service, where you are, and thank you.

Alain Bedard: Yeah, that's a very good question because, without service, it's difficult for you to grow the business. It's also difficult for you to guard and protect. So absolutely, you know, this is a balance between cost and service. So what we've been trying to do is improve the service at the same time reducing costs. And for sure, when you take the culture of a company that's been really lazy and not being focused like some of my peers are in terms of cost and service, it doesn't change overnight. Right? So what we've been able to do is to change the culture that, guys, we can improve service and reduce cost at the same time.

Speaker Change: Yeah, that's a very good question because without service, it's difficult for you to grow the business. It's also difficult for you to guard and protect.

Alain Bedard: So Absolutely. This is a balance between cost and service. What we've been trying to do is improve the service at the same time as reducing costs. For sure, when you take the culture of a company that's been really lazy and not as focused as some of my peers are in terms of cost and service, it doesn't change overnight. What we've been able to do is to change the culture so that we can improve service and reduce costs at the same time. Where we've been very successful is on the line. Why?

Speaker Change: Absolutely. You know, this is a balance between cost and service. So what we've been trying to do is improve the service at the same time reducing costs. And for sure, when you take the culture of a company that's been really lazy and not being focused...

Speaker Change: Like some of my peers are in terms of cost and service.

Speaker Change: It doesn't change overnight, right? So what we've been able to do is to change the culture that guys, we can improve service and reduce costs at the same time. So

Alain Bedard: So where we've been very successful is on the line. Why? Because we were able to move away from rail to a certain degree. Okay. So 4% of our miles today are not really more. They are on the road with our own people. So that improves the service. So, yeah, you're scared because all costs of the road are going to be more than the rail. Well, we were able to do that at a kind of a break even. So, guys, and say, guys, we've improved service, and there's not been an effect on cost. Okay. So we have not moved cost up.

Alain Bedard: Because we were able to move away, they are not on the rail anymore; they are on the road with our own people. So that improves the service. So yeah, you're scared because all the costs of the road are going to be more than the rail. Well, we were able to do that at a kind of break even. So guys, guys, we've improved service, and there's not been an effect on costs. Okay, so we have not moved costs up. Those 4% miles now make a lot of sense; they're on the road.

Speaker Change: Where we've been very successful is on the line haul. Why? Because we were able to move away from rail to a certain degree. Okay, so 4% of our miles today

Speaker Change: are not on rail anymore, they are on the road, with our own people.

Speaker Change: So that improves the service. So yeah, you're scared because, oh, cost of the road is going to be more than the rail.

Speaker Change: Well, we were able to do that at a kind of a breakeven. So guys say, guys, we've improved service and there's not been an effect on cost. Okay, so we have not moved costs up. Those 4% miles now makes a lot of sense. They're on the road.

Alain Bedard: Those 4% miles now makes a lot of sense. They're on the road on the P and D side. Well, there again, what we're trying to do is, okay, reduce the miss pickup because are you, are you crazy? Well, you can't miss a pickup because then you miss the opportunity of the revenue. So the culture there was, well, you know, I got to bring back my guys, okay, or we're not set up because if you think about an LTL company, what the focus is on delivery, right? Because that's the first thing you do in the morning.

Alain Bedard: On the P&D side, what we're trying to do is reduce the missed pickup because you can't miss a pickup because then you miss the opportunity for revenue. The culture there was, I got to bring back my guys, or we're not set up because if you think about an LTL company, the focus is on delivery because that's the first thing you do in the morning. The guy leaves and does his delivery, and then, if he has time left, then he does the pickup.

Speaker Change: On the P&D side, well, there again, what we're trying to do is, okay, reduce the missed pickup because are you crazy? You can't miss a pickup because...

Speaker Change: Then you miss the opportunity of the revenue. So the culture there was, well, you know.

Speaker Change: I've got to bring back my guys, okay, or we're not set up because if you think about an LTL company, the focus is on delivery, right? Because that's the first thing you do in the morning. The guy leaves and does his delivery. And then if he has time left, then he does the pickup.

Alain Bedard: The guy leaves and does his delivery. And then, if he has time left, then he does the pickup.

Alain Bedard: And me, what we are doing in Canada is changing this philosophy. The Canadian philosophy is that yes, we have to deliver the freight in the morning, but your role number one is to pick up the freight. Why?

Alain Bedard: And me, what we are doing in Canada is we change this philosophy. The Canadian philosophy is that yes, we have to deliver the freight in the morning. But your role number one is to pick up freight. Why? Because if you don't pick up freight, then you don't have the revenue. So we're changing that culture also on our USLT. That guys, no priority. Number one is to pick up everything that we can, but we have to make sure that we also deliver the freight. So there's a balance there between service and cost, right? But again, we have better tools today to manage all this.

Speaker Change: And me, what we are doing in Canada is we change this philosophy.

Speaker Change: The Canadian philosophy is that yes, we have to deliver the freight in the morning, but your role number one is to pick up freight.

Alain Bedard: Because if you don't pick up freight, then you don't have revenue. So we're changing that culture also in our US LTL, guys, priority number one is to pick up everything that we can, but we have to make sure that we also deliver the freight. So there's a balance there between service and cost, right? But again, we have better tools today to manage all this.

Speaker Change: Why? Because if you don't pick up freight, then you don't have the revenue.

Speaker Change: So we're changing that culture also on our US LTLs that guys

Speaker Change: No, no, priority number one is to pick up everything that we can, but we have to make sure that we also deliver the freight.

Speaker Change: So, there's a balance there between service and cost, right? But again, we have better tools today to manage all this and, you know, with financial information, we have better managers, dispatcher has to be involved, and it's a team effort, right?

Alain Bedard: And, you know, with financial information, we have better managers, dispatchers have to be involved, and it's a team effort, right? So we are improving service, definitely. And at the same time, we are reducing costs. But not enough.

Alain Bedard: And, you know, with financial information, we have better managers. The spatula has to be involved. And it's a team effort, right? So we are improving service, definitely. And at the same time, we are reducing costs, but not enough.

Speaker Change: So, we are improving service, definitely, and at the same time, we are reducing costs. But not enough. And like I said, a lot of our reduced costs has to come from admin.

Alain Bedard: And like I said, a lot of our reduced costs have to come from admin. Okay, our admin cost is too high, but that's got nothing to do with the operation. Right. So our labor cost per shipment is better. Okay. And we continue to improve that. But that's also a team effort.

Alain Bedard: And like I said, a lot of our reduced costs has to come from admin. Okay, our admin cost is too high, but that's got nothing to do with the operation, right? So our labor cost for Shipman is better. Okay, and we continue to improve that, but that's also a team effort. So we need our salespeople to understand that we need more freight per stop. We need to travel less miles to pick up freight because we don't want to go 90 miles away from our terminals to do a one pickup, etc., etc.

Speaker Change #100: Okay, our admin cost is too high, but that's got nothing to do with the operation.

Speaker Change #100: So our labor cost per shipment is better, and we continue to improve that.

Alain Bedard: So we need our salespeople to understand that we need more freight per stop. We need to travel fewer miles to pick up freight because we don't want to go 90 miles away from our terminals to do one pickup, etc., etc. So it's a global effort. But Jordan, I mean, service is priority number one, okay? Because you can't grow a business without service. Great. Thank you. Welcome. The next question will be from Daniel Imbro at Stevens. Please go ahead.

Speaker Change #100: But that's also a team effort, so we need our sales people to understand that we need more freight per stop.

Speaker Change #100: We need to travel less miles to pick up freight because we don't want to go 90 miles away from our terminals to do one pickup, etc., etc. So it's a global effort.

Jordan Eleger: So, so it's a global effort, but Jordan, I mean, service is priority number one. Okay, because you can't grow the business without the service.

Speaker Change #100: But, Jordan, I mean, service is priority number one, okay, because you can't grow the business without the service.

Jordan Eleger: Right, thank you. Welcome.

Jordan Ellinger: Great, thank you.

Daniel Imbro: Thank you.

Daniel Imbro: Next question will be from Daniel Imbro at Stevens.

Jordan Ellinger: Welcome.

Daniel Imbro: Please go ahead. Yep. Hey, thanks. More than thanks. Thank you. Our question.

Jordan Ellinger: Thank you. Next question will be from Daniel Imbro at Stevens. Please go ahead.

Daniel Imbro: Yep. Hey, thanks. Good morning.

Daniel Imbro: Alain, I want to point out again, follow up on us LPL. You talked about being lean and obviously showing up in EBIT. Fishermen kind of up sequentially despite the revenue for shipment being down. I don't understand the back half outlook. So is your expectation that this mixed headwind continues on the US LPL for revenue for shipment, but that you can just offset it by finding more efficiencies and being leaner in the back half of the revenue. So even for shipment could keep growing. Yep, absolutely, because you know what? We don't control the market, and I think that the market has been soft in '24, and I don't see it getting stronger.

Alain Bedard: Thanks for taking our question. Alain, I want to follow up on USLTL. You talked about being lean, and obviously that's showing up in EBIT per shipment kind of up sequentially, despite revenue per shipment being down. I just want to understand the back half outlook. So is your expectation that this mixed headwind continues on the USLTL for revenue per shipment but that you can just offset it by finding more efficiencies and being leaner in the back half so EBIT per shipment could keep growing? Yeah, absolutely.

Daniel Imbro: Yep. Hey, thanks. Good morning. Thanks for answering our question.

Daniel Imbro: Alain, I want to follow up on USLTL. You talked about being lean and obviously that's showing up in EBIT per shipment kind of up sequentially despite the revenue per shipment being down. I just want to understand the back half outlook. So is your expectation that this mixed headwind continues?

Speaker Change #102: on the US LTL for revenue per shipment, but that you can just offset it by finding more efficiencies and being leaner in the back half so revenue, so EBIT per shipment could keep growing.

Alain Bedard: Because you know what? We don't control the market. And I think that the market has been soft for 24 hours. And I don't see it getting stronger. So the only way, the only way that we can be successful is if we have to do the job ourselves at a cost, right?

Alain: Yeah, absolutely. Because you know what, we don't control the market. And I think that the market has been soft in 24. And I don't see it getting stronger. So the only way, the only way that we can be successful is we have to do the job ourselves on the cost side.

Alain Bedard: So the only way, the only way that we can be successful is we have to do the job ourselves on the cost side. Right, so I'm saying the same thing again and again. I mean, the admin cost of T-force rate is like 500 basis points too much compared to what we do in Canada. So this, this got to be a focus of ours; our IT cost is about two, three times more than what we have as an IT cost in Canada. So that's the focus now. Don't forget IT. We could not really work on IT because until a year, until let's say summer of last year, we were stuck with a lot of spend on IT because we had to walk away from UPS on the TSA, but that's behind us now.

Alain Bedard: So I'm saying the same thing again and again. I mean, the admin costs of T-Force are like 500 basis points too much compared to what we do in Canada. So this, this has to be a focus of ours. Our IT costs are... are about two, three times more than what we have as an IT cost in Canada.

Alain: I'm saying the same thing again and again. The admin cost of T-Force rate is like 500 basis point too much compared to what we do in Canada. So, this has got to be a focus of ours. Our IT cost is...

Alain: is about two or three times more than what we have as an IT cross in Canada, so that's the focus now. Don't forget, IT, we could not really work on IT because until a year, until...

Alain Bedard: So that's the focus now. Don't forget IT. We could not really work on IT because until a year, until, let's say, the summer of last year, we were stuck with a lot of spending on IT because we had to walk away from UPS on the TSA. But that's behind us now.

Alain: Let's say summer of last year, we were stuck with a lot of spend on IT because we had to walk away from UPS on the TSA. But that's behind us now, so we have to keep reducing this cost.

Alain Bedard: So we have to keep reducing this cost.

Alain Bedard: So we have to keep reducing this cost. So, the market, is the market going to help us in 2.3 and 2.4? Hopefully, but I'm not sure about that. What I can be sure of is that Bob and Keith...

Alain Bedard: So the market is the market going to help us in two, three, two, four. Hopefully, but I'm not sure about that.

Alain: So, the market, is the market going to help us in 2.3 and 2.4? Hopefully, but I'm not sure about that.

Daniel Imbro: When I can be sure of is that Bob and Keith, okay, and the 13, they have to be focused on doing more with less. Yep, that makes a lot of sense.

Alain Bedard: Okay, and the 13. They have to be focused on doing more with less. Now, that makes a lot of sense. And maybe to follow up more directly on LTO pricing, if we strip out this mix noise, I guess, first, should that mix headwind continue to worsen in the back half? It sounds like yes, but when do you think that will turn the corner when you look at business? And if you exclude mix, I guess, how are contracts like for like repricing today?

Alain: What I can be sure of is that Bob and Keith, okay, and their team

Speaker Change #103: They have to be focused on doing more with less.

Daniel Imbro: Maybe to follow up more directly on LTO pricing. If we strip out this mix noise, I guess first. Should that mix headwind continue to worsen in the back half? It sounds like yes.

Speaker Change #103: Yep.

Speaker Change #104: That makes a lot of sense. And maybe to follow up more directly on LTO pricing, if we strip out this mixed north, I guess first,

Daniel Imbro: When do you think that will turn the corner when you look at business? And if you exclude mix, I guess how are contracts like-for-like repricing today? Are they still pricing at a similar level of increased exit mix shift as they have been in the last few quarters? Yeah, I think the pricing is not so bad right now. It's okay. I mean, it's not very strong. But then again, I mean, I don't foresee Q3 and 4 in terms of the market condition to improve. Are they going to get better? I don't think so. Are they going to get worse?

Speaker Change #105: Should that mix headwind continue to worsen in the back half? It sounds like yes. When do you think that will turn the corner when you look at business? And if you exclude mix, I guess, how are contracts like for like repricing today? Or are they still pricing at a similar level of increase excess mix shift as they have been the last few quarters?

Alain Bedard: Are they still pricing at a similar level of increased excess mix shift as they have been in the last few quarters? Yeah, yeah, I think the pricing is not so bad right now. It's okay. I mean, it's not very strong.

Speaker Change #106: Yeah, I think the pricing is not so bad right now. It's okay. I mean, it's not very strong. But then again, I mean, I don't foresee Q3 and Q4.

Alain Bedard: But then again, I mean, I don't foresee Q3 and Q4 in terms of the market conditions improving. Are they going to get better? I don't think so. Are they going to get worse? I don't think so.

Speaker Change #107: In terms of the market condition to improve.

Daniel Imbro: I don't think so.

Speaker Change #106: Are they going to get better? I don't think so. Are they going to get worse? I don't think so. I think it's going to be more steady-headed. Us, the only way we're going to break this 90 OR, once and for all, we have to grow our GFP, which is an asset that nobody has, and also we have to reduce our costs.

Alain Bedard: I think it's going to be more steady and heady. For us, the only way we're going to break this 90 OR once and for all, we have to grow our GFP, which is an asset that nobody has. And also, we have to reduce. That's the only way we're going to break this 90, for color. Best of luck. The next question will be from Benoit Poirier at Desjardins Capital Market.

Daniel Imbro: I think it's going to be more steady, Eddie.

Alain Bedard: Us, the only way we're going to break this 90 OR, once and for all, we have to grow our GFP, which is an asset that nobody has. And also we have to reduce. Jack Coss, that's the only way we're gonna break this night, you are. Hope we'll call it. That's what.

Speaker Change #106: That's the only way we're going to break this 90 OR.

Daniel Imbro: That's your Daniel.

Speaker Change #106: Helpful color. Thanks a lot.

Benoit Poirier: Next question will be from Benoit Poirier at the Jordan Capital Market.

Speaker Change #106: [inaudible]

Speaker Change #106: Next question will be from Benoit Poirier at Desjardins Capital Market. Please go ahead.

Benoit Poirier: Please go ahead. Hey, good morning, Alain, and congrats for the strong execution overall.

Benoit Poirier: Hey, good morning, Alain, and congratulations on the strong execution overall. Thank you, Benoit. Yeah, just looking at your comments with respect to M&A skewed toward logistics and also LTL in 2025. Could you maybe remind us about your comfort level in terms of leverage? And what are the kinds of M&A and low that you would be looking for in 2025? Good question, Benoit.

Benoit Poirier: Hey, good morning, Alain, and congrats for the strong execution overall.

Alain Bedard: Thank you, Benoit. Yeah, just looking at your comments with respect to MNA. Any skewed toward logistic and also LTL in 2025.

Alain: Thank you, Benoit.

Benoit Poirier: Just looking at your comments with respect to M&A skewed toward logistic and also LTL in 2025, could you maybe remind us about your comfort level in terms of leverage and what are kind of the M&A and LOPE that you would be looking in 2025?

Alain Bedard: Could you maybe remind us about your comfort level in terms of leverage and what are kind of the MNA and love that you would be looking in 2025? Good question, Benoit. So if we don't do anything of size, okay, let's say until Q3 of 25, our leverage is gonna be under one. Okay, so we're gonna end up a year probably at 175. And after three quarters of 25, our forecast is that we're probably gonna be at between 0.5 and 0.75. So this is why it's never gonna happen. This is why something of size will happen now.

Alain Bedard: So, if we don't do anything of size, okay, let's say until Q3 of 25, our leverage is going to be under 1. Okay, so we're going to end up the year probably at 175 and after three quarters of 25, our forecast is that we're probably going to be at between 0.5 and 0.75. So this is why it's never going to happen.

Speaker Change #109: Good question, Benoit. So if we don't do anything of size, okay, let's say until Q3 of 25, our leverage is going to be under 1.

Speaker Change #109: Okay, so we're going to end up the year probably at 175, and after three quarters of 25, our forecast is that we're probably going to be at between 0.5 and 0.75. So this is why it's never going to happen.

Alain Bedard: This is why something of size will happen. Now, we bought Dasky for $1.1 billion last year. Well, no, not last year, but this year.

Alain Bedard: We bought Daski for 1.1 billion last year. Well, no, last year this year. Okay, we made the deal last year, but it's this year. So I think that for TFI easily we could do a deal between 2 and 3 billion dollars of cost for TFI. And I think that you've noted about a year ago, and your note is that, I mean, you can't stop TFI. Why is that on MNA because they generate so much cash, right? And you're right. That is the proof. The proof is in the pudding right now, right? So we bought this company for 1.1 billion.

Speaker Change #109: This is why something of size will happen now. We bought Dasky for 1.1 billion last year. Well, no, last year, this year. Okay, we made the deal last year, but it's this year.

Alain Bedard: Okay, we made the deal last year, but it's this year. So I think that for TFI, easily, we could do a deal between two and $3 billion in costs for TFI, and and I think that you noted about a year ago, and your note is that, I mean, you can't stop TFI. Why is that in M&A? Because they generate so much cash, right?

Speaker Change #109: So, I think that for TFI, easily we could do a deal between two and three billion dollars of costs for TFI.

Speaker Change #111: And I think that you've noted about a year ago, and your note is that, I mean, you can't stop TFI. Why is that? On M&A, because they generate so much cash, right? And you were right.

Alain Bedard: And you were right. That, that is the proof. The proof is in the pudding right now, right? So we bought this company for $1.1 billion. And in Q2, we reduced our debt by $100 million, and we will reduce our debt for the year by about $500 to $600 million and bring the leverage down to $175. I think TFI is probably one of the best stories that's not known is how big TFI is on pre-cash, and what's the opportunity that creates with a free cash flow machine like TFI, right?

Speaker Change #110: That is the proof. The proof is in the pudding right now, right? So we bought this company for $1.1 billion.

Alain Bedard: And in Q2, we reduced our debt by 100 million. And we reduced our debt for the year by about 5 to 600 million and bring the leverage down to 175. I think TFI is probably one of the best stories that's not known is how big TFI is on the free cash flow. And what's the opportunity that creates with a free cash flow machine like TFI? So this is why I think that if you look at the end of 25, because what we're talking about is probably more like in the summer of 25 to the fall of 25, if we are successful because MNA, you can try, but we've been very good at that.

Speaker Change #112: And in Q2, we reduce our debt by $100 million, and we will reduce our debt for the year by about $500 to $600 million, and bring the leverage down to $175.

Speaker Change #113: I think TFI is probably one of the best stories that's not known is how big TFI is on the pre-cash flow.

Speaker Change #114: And what's the opportunity that creates with a free cash flow machine like TFI?

Alain Bedard: So this is why I think that if we look at the end of 2025, because what we're talking about is probably more like the summer of 2025 to the fall of 2025, if we are successful, because M&A, you can try, but we've been very good at that, but until you get the deal done, you're never sure that the deal's gonna get done, right? So we feel good that we're going to be very well positioned by late 25 to do a deal of size that could be up to $3 billion. And if there's also part of that in paper, well, then it could be maybe up to four or five billion dollars.

Speaker Change #114: So, this is why I think that if you look at...

Speaker Change #114: because what we're talking about is probably more like in the summer of 25 to the fall of 25 if we are successful.

Alain Bedard: But until you get the deal done, you're never sure that the deal is going to get done, right? So we feel good that we're going to be very well positioned late 25 to do a deal of size that could be up to $3 billion. And if ever there's also part of that in paper, well then it could be maybe up to $4 or $5 billion. We'll see.

Speaker Change #115: you can try but you know we've been very good at that but you know until you get the deal done

Speaker Change #115: You're never sure that the deal is going to get done, right?

Speaker Change #115: So, we feel good that we are going to be very well positioned late 2025 to do a deal of size that could be, you know, up to $3 billion.

Speaker Change #115: And if ever there's also part of that in paper, well then it could be maybe up to four or five billion dollars. We'll see.

Alain Bedard: We'll see. Okay, that's a great caller. And just in terms of follow-up questions, you made great comments about the overall market environment and also some comments about our expectations for US LTL. When looking at 2025, I know it's still early, but how much should be, do you need the economy to be supportive in order to achieve $9 US of EPS next year? I'm just curious about any key levers or moving parts, including the $0.50 of EPS accretion from best. Yeah. Well, there's one thing that's easy to say, Benoit, is that when our leverage goes down, my interest costs also go down. So if you look at Q2, my interest costs went through the roof. Right?

Benoit Poirier: Okay, that's great scholar. And just in terms of follow-up questions, you make great comments about the overall market environment and also some comments about our expectation for USLTL. When looking at 2025, I know it's still early, but how much do you need the economy to be supportive in order to achieve $9 US of EPS next year? I'm just curious about any key levers or moving parts, including the 50 cents of EPS accretion from this. Thank you. Yeah. Well, there's one thing that's easy to say, Benoit, is that when, when our leverage goes down, my interest cost also goes down.

Collar: Okay, that's great caller. And just in terms of follow up question, you make great comments about the overall market environment.

Speaker Change #117: and also some comments about our expectation for US LTL. When looking at the 2025, I know it's still early, but

Speaker Change #118: How much do you need the economy to be supportive in order to achieve $9 U.S. of EPS next year? I'm just curious about any key levers or moving parts, including the $0.50 of EPS accretion from DESECI.

Speaker Change #119: Yeah, well, there's one thing that's easy to say, Benoit, is that when our leverage goes down, my interest cost also goes down. So if you look at Q2, my interest cost went through the roof.

Alain Bedard: So if you look at Q2, my interest cost went through the roof. Right. Okay. So, so one easy thing that's going to happen without doing anything. Right. By reimbursing the debt. Okay. So if we reimburse five, six hundred million dollars, okay, that will not exist. Next year, that's already after tax 20, 25 million dollars, and we'll continue to reduce that. So overall in 25, if we don't do anything of size, we're probably going to generate 40 million dollars after tax. Okay. Just on reduced interest. Right. So that's very easy to do because the only thing we have to do is pay down the debt, right, with our free cash flow.

Alain Bedard: Okay. So one easy thing that's going to happen without doing anything, right, by repaying the debt, okay? So if we reimburse $500, $600 million, okay, that will not exist next year, that's already after tax $20, $25 million, and we'll continue to reduce that. So overall, in 25, if we don't do anything of size, we're probably going to generate $40 million after tax, OK, just on reduced interest, right? So that's very easy to do because the only thing we have to do is pay down the debt with our free cash.

Speaker Change #120: All right.

Speaker Change #121: Okay, so one easy thing that's going to happen without doing anything, right, by reimbursing the debt, okay.

Speaker Change #121: So if we reimburse five, six hundred million dollars, okay, that will not exist next year, that's already after-tax twenty, twenty-five million dollars, and we'll continue to reducing that. So overall in twenty-five, if we don't do anything of size,

Speaker Change #121: We're probably going to generate $40 million after tax, okay, just on reduced interest, right?

Speaker Change #121: So that's very easy to do because the only thing we have to do is pay down the debt with our free cash flow.

Alain Bedard: So, so that's going to help us. I think that our spec of the special key truck load by moving our friend, Daski from, let's see, a 95 or 93 to 95 or they were back down to under 90. Well, we said 50 cents for 25 for the contribution for Daski. I think we'll do better than that. Okay. From what I'm seeing. Now, if the market is helping us, well, maybe it could be better than 50 cents, or maybe it's going to be like 70 cents. 75 cents or to $1. But don't forget that if you look at my other special teach truck load, I mean normally in a good year, we used to run special teach truck load at TFI around 80 or okay.

Alain Bedard: So that's going to help us. I think that our specialty truckload, by moving our friend Dasky from a $95 OR $93 to $95 OR, they were back down to under $90. Well, we said $0.50 for $25 for the contribution for Dasky. But I think we'll do better than that, from what I'm seeing. Now, if the market is helping us, well, maybe it could be better than $0.50, or maybe it's going to be like $0.75 or even $1. But don't forget that if you look at my other specialty truckload.

Speaker Change #121: So that's going to help us.

Speaker Change #122: I think that our specialty truckload, by moving our friend Dasky from a, let's say a 95 OR, okay, 93 to 95 OR, they were back down to under 90. Well, we said 50 cents for 25.

Speaker Change #122: for the contribution for Dashie. I think we'll do better than that. Okay, from what I'm seeing. Now, if the market is helping us, well, maybe it could be better than 50 cents, or maybe it's going to be like 75 cents or to a dollar. But don't forget that if you look at

Alain Bedard: I mean, normally, in a good year, we used to run specialty truckloads at TFI around 80 OR. Okay, now we're at 88 OR. So if we go back to more of a normal market, the 88 OR will come down to 83 OR. And if the market is really good, we'll probably go down to 80, maybe under 80 OR. Now that we have Dasky in the family, because we have less competition now. And then you look at our T-Force rate.

Speaker Change #123: My other specialty, truckload.

Speaker Change #123: I mean, normally, in a good year, we used to run specialty truckload at TFI around 80 OR. Okay, now we're in 88 OR. So if we go back to more of a normal market, the 88 OR will come down to 83 OR. And if the market is really good, we'll probably go down to 80, maybe sub 80 OR.

Alain Bedard: Now we're an 88 or so. If we go back to more of a normal market, the 88 or will come down to 83 or, and if the market is really good, we'll probably go down to 80, maybe some 80 or now that we have Daski in the family. Because we have less competition now, right? And then you look at our T for straight. The market stays the same; market does not really improve too much. But us, we're so fat on the car side, the admin car side, the IT cars, I mean, and all that. To me, we have to reduce all the admin cars between now and a year from now, at least by 200 basis points.

Speaker Change #123: So now that we have Dasky in the family, because we have less competition now, right?

Speaker Change #123: And then you look at our T-Force rate. The market stays the same. The market does not really improve too much. But us, we're so fat on the cost side, the admin cost side, the IT cost, I mean, and all that.

Alain Bedard: The market stays the same; the market does not really improve too much. But us, we're so fat on the cost side, the admin cost side, the IT cost, I mean, and all that. To me, we have to reduce all the admin costs between now and a year from now, at least by 200%. Right?

Speaker Change #123: To me, we have to reduce all the admin costs between now and a year from now, at least by 200 basis points.

Alain Bedard: So this is all going to flow to the bottom line. And this is the way that we're going to get not $7 EPS, like we will probably hit this year, 24, we have to do better than that, even if the market is not too supportive in 20- That's a very good caller, Alain. Merci. Thank you. Pleasure, Benoit.

Alain Bedard: So this is all going to flow to the bottom line, and this is the way that we're going to get not $7 EPS, like we will probably it in this year, 24. I mean, we have to do better than that. Even if the market is not too supportive in 25.

Speaker Change #123: So this is all going to flow to the bottom line and this is the way that we're going to get not $7 EPS like we will probably hit in this year, 24.

Speaker Change #123: I mean, we have to do better than that, even if the market is not too supportive in 25.

Benoit Poirier: That's a very good call early. Merci. Thank you.

Speaker Change #123: That's a very good caller, Alain. Merci. Thank you.

Benoit Poirier: Pleasure, Ben. Thank you.

Cameron Doerksen: Thank you. The next question will be from Cameron Doerksen at National Bank Financial. Please go ahead.

Cameron Derksen: Next question will be from Cameron Derksen at National Bank Financial. Please go ahead.

Alain: Pleasure, Benoit.

Speaker Change #124: Thank you. Next question will be from Cameron Doerksen at National Bank Financial. Please go ahead.

Cameron Derksen: Yeah, thanks.

Alain Bedard: Yeah, thanks. Good morning. Morning, Cameron. So I want to come back just to the logistics segment, obviously a segment that's doing quite well. I just wondered if you could talk a little bit about the trends and kind of the individual businesses within logistics. I mean, it's a bit of a grab bag of different businesses in there.

Cameron Derksen: Good morning. Morning, Cameron. So I want to come back just to the logistics segment. You obviously have a segment that's doing quite well. I just wanted if you could talk a little bit about the trends and kind of the individual businesses with logistics. I mean, it's a bit of a grab bag of different businesses in there, and obviously some of the 3PL businesses are doing, you know, it's a tough market. But just any color you can provide on how some of the other businesses are doing in there. And then, you know, what's the key driver here of the...

Alain Bedard: And obviously, some of the 3PL businesses are doing, you know, it's a tough market, but any color you can provide on how some of the other businesses are doing there. And then, you know, what's the key driver here of the, Yeah, so within our logistics, Cameron, okay, sector number one is our last mile operation. Okay. So the last mile operation is US and Canada. It's a combination of both countries.

Cameron Doerksen: Yeah, thanks. Good morning.

Speaker Change #126: Morning, Cameron.

Cameron Doerksen: So I want to come back just to the logistics segment, you know, obviously a segment that's doing quite well. I just wondered if you could talk a little bit about the trends and kind of the individual businesses within logistics. I mean, it's a bit of a grab bag of different businesses in there. And you obviously, some of the 3PL businesses are doing, you know, it's a tough market, but just any color you can provide on how some of the other businesses are doing in there. And then, you know, what's the key driver here of the improvement?

Alain Bedard: Yeah, so within our logistic Cameron, okay? Sector number one is our last mile operation, okay? So last mile operation is US and Canada; it's a combination of both countries, and those guys are really, really doing well, right? So those guys are sub 85 more, right? Because we're not stupid. Well, we're not in business to practice delivery, right? So we service customers; we reduce our costs; we're very lean and mean. So that's number one. Then number two is we have our brokerage operation, okay, which the biggest player in there is our T-Force Worldwide operation. Now these guys have suffered big time, okay?

Cameron Doerksen: Yeah, so within our logistic, Cameron, sector number one is our last mile operation, okay? So last mile operation is U.S. and Canada, it's a combination of both countries.

Alain Bedard: And those guys are really, really doing well, right? So those guys are sub-85 award winners, right? Because we're not stupid.

Cameron Doerksen: And those guys are really, really doing well, right? So those guys are sub 85 award, right? Because we're not stupid. We're not in business to practice delivery, right? So we service customers, we reduce our costs, we're very lean and mean.

Alain Bedard: We're not in business to practice delivery, right? So we serve customers, we reduce our costs, we're very lean and mean. So that's number one.

Alain Bedard: Then, number two is we have our brokerage operation. Okay. The biggest player in there is our T-Force worldwide operation. Now these guys have suffered big time.

Cameron Doerksen: So that's number one.

Cameron Doerksen: Then, number two is we have our brokerage operation.

Alain Bedard: Okay, so the revenue is down. These guys used to be a six, $700 million company. Now we're down to about 550, and also the margin I've suffered as well. So that sector is not doing as well as the rest, and the rest of our brokerage operation is also suffering, okay, on the revenue side, but not so much on the profitability side. So revenue is down, but profitability is about stable with the rest of our kind of brokerage operation.

Speaker Change #127: Okay, which the biggest player in there is our T-Force worldwide operation. Now, these guys have suffered big time. Okay, so the revenue is down. These guys used to be a $600-$700 million company, now we're down to about $550.

Alain Bedard: So the revenue is down. These guys used to be at $600 million company, now we're down to about $550. And also the margin have suffered as well. So that sector is not doing as well as the rest. And the rest of our brokerage operation are also suffering, okay, on the revenue side, but not so much on the profitability side. So revenues down, profitability is about stable with the rest of our kind of brokerage operation. And the third is what we call our specialty services, where we move all kinds of stuff, right? So JHD being the largest player in that sector, okay, but we have other sector.

Speaker Change #127: and also the margin I've suffered as well.

Speaker Change #127: So, that sector is not doing as well as the rest.

Speaker Change #127: and the rest of our brokerage operation are also suffering, okay, on the revenue side, but not so much on the profitability side. So revenue is down, profitability is about stable with the rest of our kind of brokerage operation.

Alain Bedard: And the third is what we call our Specialty Services, where we move all kinds of stuff, right? So, GHT being the largest player in that sector, okay, but we have other sectors, and this is running a great operation for us. All right, so it's really a combination of those three sectors.

Speaker Change #127: And the third is what we call our...

Speaker Change #127: Specialty Services, where we move all kinds of stuff, right? So GHT being the largest player in that sector, okay, but we have other sectors. And this is running a great operation for us.

Alain Bedard: And this is running a great operation for us, right? So it's really a combination of those three sectors. So our last mile is doing really, really well; our equipment moving sector as well, doing well. The only small weakness we have is in our brokerage operation, but when you do the sum of all this, I mean, we keep improving, okay, in terms of profitability. So, like I said earlier, for the first time, we broke the 90 war, right? So we're just a little under 89. We believe that 25 is going to be even better than 24, okay, globally for us.

Speaker Change #127: [inaudible]

Alain Bedard: So our last mile is doing really, really well. Our equipment moving sector, as well, is doing well. The only small weakness we have is in our brokerage operation.

Alain Bedard: But when you do the sum of all this, I mean, we keep improving, okay, in terms of profitability. So like I said earlier, for the first time, we broke the 90 OR, right? So we're just a little under 89. We believe that 25 is going to be even better than 24, okay, globally for us. And even $26K is going to be better than $25K.

Speaker Change #127: I mean, we keep improving, okay, in terms of profitability. So like I said earlier...

Speaker Change #127: For the first time,

Speaker Change #127: We broke the 90 OR, right? So we're just a little under 89. We believe that 25 is going to be even better than 24. Okay, globally for us.

Alain Bedard: And even 26 is going to be better than 25 when we look at our forecast about our last mile operation, our equipment moving operation, etc., etc. And the potential of having into that sector because we're looking at some small transactions that would beef up this sector. Hopefully this year, maybe into next year. We feel good. I mean, if you look at our return investor capital, it's above 20; like our PNC is above 20. So this is really a sector that we love. But if it's 2% bottom line, we're not big fans of that. But if we could, you know, get a new E of around 10 points, sure we'll look at that.

Alain Bedard: When we look at our forecast about our last mile operation, our equipment moving operation, etc., etc., and the potential of adding into that sector, because we're looking at some small transactions that would beef up this sector, hopefully this year, maybe into next year, we feel good. I mean, if you look at our Return Invested Capital, it's above $20K, like our PNC is above $20K. So this is really a sector that we love. But if it's 2%, by the way, we're not big fans. But if we could, you know, get an OE of around 10 points.

Speaker Change #127: And even 26 is going to be better than 25. When we look at our forecast about our last mile operation, our equipment moving operation, etc., etc.

Speaker Change #127: And the potential of adding into that sector, because we're looking at some small transaction that would beef up.

Speaker Change #127: this sector. Hopefully this year, maybe into next year. We feel good. I mean, if you look at our return on invested capital, it's above 20, like our PNC is above 20. So this is really a sector that we love.

Speaker Change #127: But if it's 2%, by the way, we're not a big fan of that.

Speaker Change #127: But, if we could, you know, get an OE of our own.

Alain Bedard: Ah, sure, we'll look into it. Okay, no, that's really helpful to get that detail. And maybe the second question for me, just more of a curiosity, I'm just, you know, wondering about the decision to move P&C into the LTL segment. I mean, I would have thought it might make more sense to move it into logistics, just given that you already have a package delivery business within logistics. So just wondering about the rationale there. Yeah, you know what, Cameron? Yes, I had never thought about that.

Speaker Change #129: Ten points? Sure, we'll look into it.

Alain Bedard: Okay, no, that's really helpful to get that detail. And maybe the second question for me, just more of a curiosity. I'm just wondering about the decision to move PNC into the LTL segment. I mean, I would have thought it might make more sense to move it into logistics, just given that you already have a package delivery business within logistics. So just wondering about the rationale. Yeah, you know what, Cameron? Yes, I never thought about that. But at the end of the day, the really P and C is a network operation, whereas our last mile operation is not a network.

Speaker Change #128: Okay, now that's that's really helpful to get that detail. And maybe the second question for me, just more of a more of a curiosity, I'm just, you know, wondering about the decision to move P&C into the LTL segment. I mean, I would have thought it might make more sense to move it into logistics, just given that you already have a package delivery business within logistics. So just wondering about the rationale there.

Alain Bedard: But at the end of the day, the PNC is really a network operation, whereas our last mile operation is not a network, right? So we don't run a network in our last mile. Whereas in our PNC, we run a last mile. What am I saying?

Speaker Change #128: Yeah, you know what, Cameron? Yes, I never thought about that. But at the end of the day, really, PNC is a network operation, whereas our last mile operation is not a network. So last mile is in logistics, but it's not a network, right? So we don't run network in our last mile.

Cameron Derksen: So last mile is in logistics, but it's not a network, right? So we don't run network in our last mile. Whereas in our P and C, we run a last mile, a, what am I saying? We run a network, right? So that's why it makes sense to be part of LTL because LTL is also a network. Okay, no, that makes sense. Appreciate the, appreciate the questions. Thanks very much.

Speaker Change #128: whereas in our PNC, we run a last mile, we run a network, right? So that's why it makes sense to be part of LTL because LTL is also a network.

Alain Bedard: We run a network, Right? So that's why it makes sense to be part of LTL because LTL is also an, Okay, no, that makes sense. Appreciate the questions. Thanks very much.

Speaker Change #128: Okay, no, that makes sense. Appreciate the questions. Thanks very much. Okay, Cameron. Pleasure.

Cameron Derksen: Okay, Cameron; pleasure.

Bascome Majors: Thank you.

Bascome Majors: Okay, Cameron. Pleasure. Next question will be from Bascome Majors, Asasqui Hanna, please go ahead. Alain, as you look forward, you've mentioned the potential spinoff that you, Publicly Disclosed about eight months ago, a couple times on the call, you know, how do you feel today, eight months further into both, you know, I guess a few months into integrating Dasky, but eight months further into the cycle about both the fundamental industrial logic and the, you know, call it, Valuation Arbitrage logic of that decision as you look forward and between that and integrating Dasky, do you think those are some of your final big moves for the business before you start to move further into retirement or is these kind of two, three, four, five billion dollar deals that may come up in the next couple years, you think those come under your umbrella as well? Thank you. Yeah, you know what, that's a very good question.

Bascome Majors: Next question will be from Bascome Majors, a Sanskrit henna.

Speaker Change #130: Thank you. Next question will be from Bascome Majors at Susquehanna. Please go ahead.

Bascome Majors: Please go ahead. Alain, as you look forward, you've mentioned the potential spinoff that you publicly disclosed about eight months ago.

Speaker Change #130: Alain, as you look forward, you've mentioned the potential spinoff that you...

Alain Bedard: Yeah, a couple of times on the call.

Bascome Majors: Publicly disclosed about eight months ago, a couple of times on the call, you know, how do you feel today, eight months further into

Alain Bedard: You know, how do you feel today, eight months further into both, you'll, I guess a few months in the integrating desk, but eight months further into the cycle about both the fundamental industrial logic in the, you know, call it a valuation arbitrage logic of that decision, as you look forward, and between that and integrating to ASCII? Do you think those are some of your final big moves for the business before you start to move further into retirement, or is these kind of two, three, four, five billion dollar deals that may come up in the next couple of years?

Speaker Change #131: Both, you know, I guess a few months into integrating Dasky, but eight months further into the cycle about both the fundamental industrial logic and You know call it

Speaker Change #131: Valuation arbitrage logic of that decision as you look forward and

Speaker Change #133: Between that and integrating Dasky, do you think those are some of your final big moves for the business before you start to move further into retirement? Or is these kind of two, three, four, five billion dollar deals?

Alain Bedard: You think those come under your under your umbrella as well. Thank you. Yeah, you know what, that's a very good question, and that's the kind of discussion I had with the board yesterday. I told the guys, listen, I know I have to do this, this deal. Okay, the spinoff down the road. So this is why I said, guys, I'm in at least for another five years. So sorry to say for the guys that want to take over; she was positioned at TFI. Well, I mean, is there at least for another five years because this got to happen under my watch, right?

Alain Bdard: Alain Bdard, Alain Bdard

Alain Bedard: And that's the kind of discussion I had with the board yesterday, and I told the guys, listen, I have to do this deal, the spin-off, down the road. So this is why I said, guys, I'm in at least for another five years. Sorry to say for the guys that want to take over the CEO's position at TFI, Alain is there at least for another five years because this is going to have to happen under my watch. And it's not going to happen now. Why? Because, like you just said, we have to digest ASCII.

Speaker Change #135: I have to do this deal, okay, the spin-off down the road, so this is why I said, guys, I'm in at least for another five years.

Speaker Change #134: Sorry to say, for the guys that want to take over CEO's position at TFI, Alain is there at least for another five years because this is going to have to happen.

Alain Bedard: And it's not going to happen to now. Why? Because, like you just said, we have to digest ASCII. And I think that Steve and his team are doing a fantastic job, and it will take us at least a year. But you know, so 25 will go by, right? And then in 25, if we're successful trying to add revenue, okay, in the sector that we love in North America, then we will be well positioned to do something maybe late 26 into 27. And, you know, that is the timeline. But don't forget that at the same time, Bob and his team at TFI's rate, okay, I have a big job to do, okay, into generating a little bit more revenue, but even more importantly, way more OE than what we're doing now.

Alain Bdard: under my watch.

Alain Bdard: And it's not going to happen now. Why? Because like you just said, we have to digest ASCII.

Alain Bedard: And I think that Steve and his team are doing a fantastic job, and it will take us at least a year, but you know, so 25 will go by, right? Okay, in the sector that we love in North America. Then we will be well positioned to do something maybe late in 26 or early 27, and you know, that is the timeline.

Alain Bdard: Okay, in the sector that we love in North America, then we will be well positioned to do something maybe late 26 into 27.

Alain Bedard: But don't forget that at the same time, Bob and his team at T-Force Freight have a big job to do, okay, of generating a little bit more revenue, but even more importantly, way more OE than what we're doing now. Thank you for that. Pleasure. The next question will be from Kevin Chiang at CIBC. Please go ahead.

Alain Bdard: And, you know, that is the timeline. But don't forget that at the same time, Bob and his team at T-Force Freight, okay, have a big job to do.

Speaker Change #136: Okay, into generating a little bit more revenue, but even more importantly, way more OE than what we're doing now.

Alain Bedard: Thank you for that.

Kevin Chang: Pleasure.

Speaker Change #136: Thank you for that.

Kevin Chang: Next question will be from Kevin Chang at CIBC.

Speaker Change #136: Pleasure.

Kevin Chang: Please go ahead. Hey, hey, Elaine.

Speaker Change #137: Next question will be from Kevin Chiang at CIBC. Please go ahead.

Kevin Chiang: Hey Alain, good morning. Good morning, Kevin. Hey, thanks for squeezing me in here. Maybe just one clarification question. I don't know if you mentioned this earlier, but you talked about a sub-90 OR in US LTL without an improving macro. I know you were initially targeting 88 this year, but that's a little bit more difficult.

Alain Bedard: Good morning. Good morning, Kevin. Hey, hey, thanks for squeezing me in here.

Kevin Chiang: Hey, Alain. Good morning. Morning, Kevin. Hey, thanks for squeezing me in here. Maybe just one clarification question. I don't know if you mentioned this earlier, you know, you talked about a sub-90 OR in US LTL without an improving, without the need for an improving macro. Yeah. I know you were initially targeting 88 this year. That's a little bit more difficult. Should we be thinking of that being kind of shifted into 2025? Was that kind of the messaging there?

Kevin Chang: Maybe just one clarification question. I don't know if you mentioned this earlier. You talked about a sub 90 OR in USLTL without without an improving, without the need for an improving macro. I know you are initially targeting 88 this year; that's a little bit more difficult. Should we be thinking of that being kind of shifted into 2025? Was that kind of the messaging there? Yeah, absolutely, Kevin. I mean, you know, part of this commitment from our team, okay, to get an 88 or R in 24 was based on cost and also based on improving the shipments count.

Alain Bedard: Should we be thinking of that being kind of shifted into 2025? Was that kind of the messaging there? Yeah, absolutely, Kevin. I mean, you know, part of this commitment from our team to get an 88 OR in 24 was based on cost and also based on improving the shipments count. But the shipments count is not happening, right?

Alain: Yeah. Absolutely, Kevin. I mean, you know...

Speaker Change #139: Part of this commitment from our team, okay, to get an 88 OR in 24 was based on cost and also based on improving the shipments count. The shipments count is not happening, right, so we are flat. Shipments were flat. We've improved the quality of the shipment, yes.

Alain Bedard: The shipments count is not happening, right? So we are flat. Shipments were flat. We've improved the quality of the shipment. Yes, okay. No doubt about that. And we've also improved the cost to a certain degree. But not enough. Right, so what we're saying is that guys, okay, so let's change the thinking that let's see the volume will stay about steady or maybe improve a little bit, but that's not going to help us. So we got to double the effort into be faster in being more efficient and reducing costs. And we're going to be mentally ready to be on a diet, okay, at T-Force rate, diet on terms of cost, right?

Alain Bedard: So we are flat; shipments were flat. We've improved the quality of the shipment, yes. Okay, no doubt about that. And we've also improved the cost to a certain degree, but not enough, right? So what we're saying is that guys, okay, so let's change the thinking that let's say the volume will stay about steady or maybe improve a little bit, but not that's not going to help. So we gotta double the effort into being faster and being more efficient.

Speaker Change #140: Okay, no doubt about that. And then we've also improved the cost to a certain degree, but not enough, right? So what we're saying is that guys, okay, so let's change the thinking that, let's say the volume will stay about steady or maybe improve a little bit, but that's not going to help us.

Speaker Change #140: So we've got to double the effort to be faster in being more efficient and reducing costs.

Alain Bedard: And we've got to be mentally ready to be on a diet, okay, at T-Force rate, diet in terms of cost, right? So we've got to do a better job of doing more with less. I mean, we've been doing that in Canada for a long time. If you look at how we can run Canada with a sub-ADR, like we're doing now. As a matter of fact, we're, what, 75 wide, I think, in camp. Even with the Kindersley acquisition, those guys were not making a lot of money.

Speaker Change #140: and and we got to be mentally ready to be on a diet okay at T-Force rate diet on terms of cost right so we got to do a better job of doing more with less

Alain Bedard: So we got to do a better job of doing more with less. I mean, we've been doing that in Canada for a long time.

Alain Bedard: If you look at, if we can run Canada with a sub 80 or like we're doing now. I don't know if I were 75 or I think in Canada, even with the Kinders, the acquisition that Kinders, the those guys, you know, they were not making a lot of money, but Kinders, Lee in Q2 now is running a 95 or which is, wow, from not making money to being a 95 or after two quarters. I mean, Calvin is seeming to have done a fantastic job. So I'm just saying that the Canadian LTL team is doing really, really well, and we still have lots of work to do to improve, okay.

Speaker Change #140: I mean, we've been doing that in Canada for a long time. If you look at, if we can run Canada with a sub-ADR like we're doing now.

Alain Bedard: But Kindersley in Q2 now is running a 95 OR, which is, wow, from not making money to being a 95 OR after two quarters. Cal and his team in Canada have done a fantastic job. I'm just saying that the Canadian LTL team is doing really, really well, and we still have lots of work to do to improve. Okay, but in the U.S., I mean, don't forget, more and more Bob, okay, is involved with Keith and trying to bring this TFI culture of doing more with less. Now we also have Tim.

Speaker Change #140: As a matter of fact, we're, what, 75 wide, I think, in Canada.

Speaker Change #140: Even with the Kindersley acquisition, that Kindersley, those guys, you know...

Speaker Change #140: They were not making a lot of money, but Kindersley in Q2 now is running a 95 OR.

Speaker Change #141: which is, wow.

Speaker Change #141: From not making money to being a 950R after two quarters, I mean, Cal and his team in Canada have done a fantastic job. So, I'm just saying that the Canadian LTL team are doing really, really well, and we still have lots of work to do to improve.

Alain Bedard: But in the US, I mean, don't forget, more and more Bob is involved with Keith and trying to bring this TFI culture of doing more with less. Now we have also Tim involving to the fleet management. I'm, I'm feeling really good about this young guy that's going to help us reduce our maintenance costs even more because don't forget, we're making a lot of investment in CapEx for T force rate, but so far the return has not been where it should be. So we brought, okay, another team member in there to, that's got the TFI culture, he's a TFI guy and I feel really good that that's going to help us, you know, be more efficient.

Speaker Change #141: Okay, but in the U.S.

Speaker Change #142: I mean, don't forget, more and more, Bob O'Keefe is involved with Keith and trying to bring this...

Speaker Change #142: TFI culture of doing more with less. Now we have also Tim.

Alain Bedard: I'm feeling really good about this young guy that's going to help us reduce our maintenance costs even more because, don't forget, we're making a lot of investment in CapEx for T-Force Raid, but so far, the return has not been where it should be. So we brought another team member in there who's got the TFI culture, he's a TFI guy, and I feel really good that that's going to help us be more efficient. The same thing on fuel; with the fact that now Dasky is part of the family, we should have a better deal on fuel, and down the road, this should benefit T-Force Raid as well.

Speaker Change #142: involving to the fleet management. I'm feeling really good about this young guy that's going to help us reduce our maintenance costs even more. Because don't forget we're making a lot of investment in CAPEX for T-Force freight.

Speaker Change #142: But so far the return has not been where it should be.

Speaker Change #142: So, we brought another team member in there that's got the TFI culture, he's a TFI guy.

Speaker Change #142: And I feel really good that that's going to help us, you know, be more efficient. The same thing on fuel, right? So you know, with the fact that now Dasky is part of the family, well, we should have a better deal on fuel and down the road, this should benefit T-Force freight as well, right?

Alain Bedard: The same thing on fuel, right. So, you know, with the fact that now Deski is part of the family, well, we should have a better deal on fuel, and down the road, this should benefit T Force rate as well, right. So, it's a global effort, you know, with everything that's going on, okay, this soft market, and if you believe that this soft market will disappear in six months, I hope you're right. But us, we're getting ready that it may not happen, right. So guys, don't hope for the market. Start now, every day be more efficient, do more and less.

Alain Bedard: So it's a global effort, you know, with everything that's going on, okay, this soft market. And if you believe that this soft market will disappear in six months, I hope you're right. But us, we're getting ready that it may not happen, right?

Speaker Change #143: So it's a global effort, you know, with everything that's going on, okay, this soft market. And if you believe that this soft market will disappear in six months, I hope you're right. But us, we're getting ready that it may not happen, right? So guys, don't hope for the market.

Alain Bedard: So guys, don't hope for the market. Start now. Every day, be more efficient. Do more with less.

Speaker Change #143: Start now.

Kevin Chang: That makes sense.

Alain Bedard: That makes sense. And maybe in your P&C division, just wondering if you're seeing any benefits or disruption from Chinese e-commerce. I mean, there's been a lot of headlines around that in the past, I guess, past little bit here.

Speaker Change #144: Every day, be more efficient. Do more with less.

Kevin Chang: And just maybe in your P and C division, just wondering if you're seeing any benefits or disruption from... from Chinese e-commerce. I mean, there's been a lot of headlines around that the past little bit here. Is that something you're seeing within your P&C network up here in Canada? Not yet, not yet. The biggest issue we have in Canada has always been the same e-commerce guy that's moving more and more of his shipments in-house. And the guys that are serving him used to serve him, okay? We are losing the volume, and now they become very aggressive, right?

Speaker Change #145: That makes sense. And just maybe in your P&C division just wondering if you're seeing any benefits or disruption from

Alain Bedard: Is that is something you're seeing within your PNC network up here in Canada? Not yet. Not yet. The biggest issue we have in Canada has always been the same e-commerce guy that's moving more and more of his shipments in-house, and the guys that are serving him, used to serve him, okay, are losing the volume, and now they're becoming very aggressive, right? So this is why we had a really soft patch in Q1.

Speaker Change #146: Unknown Speaker from Chinese e-commerce. I mean, there's been a lot of headlines around around that the past, I guess, past little bit here. Is that is that something you're seeing within your PNC network up here in Canada?

Speaker Change #147: Not yet, not yet. The biggest issue we have in Canada has always been the same e-commerce guy.

Speaker Change #147: that's moving more and more of his shipments in-house.

Speaker Change #148: Right and and the guys that are serving him

Speaker Change #149: used to serve in, okay, are losing the volume.

Alain Bedard: So this is why we have a really soft patch in Q1. When we look at our P&C results in Q1, it was a disaster. But don't forget, Q1, 24 reflects the decision that was made in the summer of 23, and we made some mistakes there. So Chris took over that, and you know, we're doing a much better job. And we will keep improving Q3 and Q4, but it's a tough market. So if you look at our revenue per shipment in our P&C, we're down a bit, okay? There's more pressure over there, because the biggest e-commerce in Canada is moving in-house, and we got some of our peers that are stuck with their pants down.

Alain Bedard: When we look at our PNC results in Q1, it was a disaster. But don't forget, Q1 24 reflects the decision that was made in the summer of 23, and we made some mistakes there. So Chris took over that, and you know, we're doing a much better job, and we will keep improving in Q3 and Q4. But it's a it's a tough market.

Speaker Change #149: And now they become very aggressive, right? So this is why...

Speaker Change #150: We had a really soft patch in Q1, when we look at our PNC results in Q1, it was a disaster. But don't forget, Q1-24 reflects the decision that was made in the summer of 23, and we made some mistakes there.

Speaker Change #150: So Chris took over that and

Speaker Change #151: We're doing a much better job and we will keep improving Q3 and Q4, but it's a tough market. So if you look at the revenue per shipment in our PNC, we're down a bit. There's more pressure over there because

Alain Bedard: So if you look at the revenue per shipment, in our PNC, we're down a bit. Okay, there's more pressure over there. Because, you know, the biggest e-commerce in Canada is moving freight in house.

Speaker Change #151: The biggest e-commerce in Canada is moving freight in-house and we got some of our peers that are stuck with their pants down.

Kevin Chang: Right, that makes sense.

Alain Bedard: And we have some of our peers that are stuck with their pants down. Right, right? That makes sense. I'll leave it there. Have a great weekend, Alain. I appreciate you taking the time to answer my question. Thank you. You're welcome. Thank you. And at this time, Mr. Bedard, we have no other questions. Please proceed. All right. Thank you very much, Operator, and thanks, everyone, for joining us today. We'll keep you updated as we move through the year, and we look forward to our next call.

Kevin Chang: I'll leave it there. Have a great weekend, Alain. I appreciate you taking my questions. Thank you. You're welcome.

Speaker Change #152: Right. Right. That makes sense. I'll leave it there. Have a great weekend, Alain. I appreciate you taking my questions.

Operator: Thank you. And at this time of Shabbat al, we have no other questions.

Alain: Thank you. You're welcome.

Alain Bedard: Please proceed. All right. Thank you very much, operator, and thanks everyone for joining us today.

Alain: Thank you. And at this time, Mr. Bedard, we have no other questions. Please proceed.

Speaker Change #153: All right. Thank you very much, Operator, and thanks, everyone, for joining us today. We'll keep you updated as we move through the year, and we look forward to our next call. And in the meantime, please don't hesitate to reach out with any additional questions. Enjoy the weekend, and we'll be in touch. Thank you.

Alain Bedard: We'll keep you updated as we move through the year, and we look forward to our next call. And in the meantime, please don't hesitate to reach out with any additional questions.

Alain Bedard: And in the meantime, please don't hesitate to reach out with any additional questions. Enjoy the weekend, and we'll be in touch. Thank you. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your

Operator: Enjoy the weekend. We'll be in touch. Thank you.

Operator: Thank you, sir.

Operator: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.

Speaker Change #154: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.