Q4 2024 Mullen Group Ltd Earnings Call
Thank you for standing by this is the conference operator, welcome to the Mullen Group limited year end and fourth quarter 'twenty 'twenty four earnings conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.
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Speaker Change: I would now like to turn the conference over to Murray K Mullen Chair Senior Executive Officer and President. Please go ahead.
Speaker Change: Yeah. Thank you you're welcome to Mullen group's quarterly conference call.
Speaker Change: We will provide shareholders and interested investors with an overview of our Q4 2024 financial results and in addition, we will discuss the main drivers impacting these results our expectations for 2020 five.
Speaker Change: And we'll close with a Q&A session now before I commence today's review I'll remind everyone that our presentation does contain forward looking statements that are based upon current expectations and are subject to a number of risks on risks and uncertainties and as such actual results may differ materially for further.
Speaker Change: For information identifying the risks uncertainties and assumptions. These can be found in the disclosure documents, which are filed on SEDAR bus and it W. W. Dot Mullen hyphen group Dot com. So with me. This morning, I am joined in October by our Carson Urlacher, Who's our senior financial officer, and he's going to be speaking this morning and online.
Speaker Change: As Richard Maloney, our senior operating officer, Joanna Scott, our senior corporate officer.
Now.
Speaker Change: Let's start I'm going to start with the 2024 financial operating performance and really there are three topics that I want to talk touch on this morning.
Speaker Change: Before I turn the call over to you and for Q&A.
Speaker Change: So let me begin by talking about the macro environment that we've had to migrate through this last quarter.
Speaker Change: In fact, all throughout the whole year, which is along with discussing what has changed year over year.
Speaker Change: Then I'll turn it over to Carson or like her he'll provide an update on Q4 financial results.
Speaker Change: And for those of you that are interested in detail we've posted the 'twenty 'twenty four annual financial report online. It's a detailed 125 page report covering all aspects of the results and our balance sheet and it's both on our website, which is www dot Mullen heightened grouped I'll comment on SEDAR plus.
Speaker Change: Then I will close with a discussion on the macro environment as we see it and how the results could be impacted now let me just I'll just kind of go off topic for just stand off strip for like two seconds, where they go.
Speaker Change: Now the markets are difficult, but let me let me just summarize what I.
Speaker Change: Forget about the last quarter of the last year, Let me give me what we've done.
Speaker Change: The last three years do you know that in the last three years, we've generated two two and two $2 billion 2 billion to 2 billion, that's 6 billion.
Speaker Change: And during that time, we've created we've generated.
Speaker Change: Obi door.
Speaker Change: Operating income before depreciation and amortization of nearly $1 billion in those three years through every market that you could imagine so really we've got.
Speaker Change: Are pretty stable.
Speaker Change: Business. These days that are we've we've changed over a number of years and that's what we got the last three years kind of prove the stability of our performance.
Speaker Change: And what we had to do at corporate offices, we had to backfill because the market isn't giving us a whole bunch in 'twenty 'twenty four but.
Speaker Change: That's basically just go off script on that for a little bit just to summarize it for you to say this is who we are today, that's the new Mullen group.
Speaker Change: So let me start by reiterating what I think should be obvious to everyone. By now you know we're mired in a no growth economy here in Canada capital investment is not anywhere near it should be.
Speaker Change: And in the transportation and warehousing industry, there remain lingering issues associated with the inventory rebalancing by shippers and excess capacity that was built up during the 'twenty two 'twenty three freight Romero.
Speaker Change: So 'twenty 'twenty four started this year and it ended that way, which is precisely what we anticipated and what we articulated to investors throughout the year in other words really nothing changed in Q4. The markets. We serve are challenging there was no growth. It was certainly competitive and the costs remain elevated do inflation on the legacy issues.
Speaker Change: Associated with facility lease costs that had to be signed at the peak of the market et cetera. So quite simply there was no free rides in 2024.
Speaker Change: Now within that backdrop, how did Marlin do you know how did we fare so anticipating that the macro environment might be challenging we've been pretty steady on that for quite some time accompanied by the lack of new capital projects to replace the major pipeline construction work in 2023.
Speaker Change: We plan to corporate office to backfill, what the market would not provide to our business units, we simply reverted to what we've always done and what we're good at and that's acquisitions and this is the number one reason why we held our financial results flat through 2024, including Q4, so not only did we hold our own but we I think we.
Speaker Change: Also positioned for a bright future by investing in some really good opportunities.
Ben: You know Ben.
Ben: What I'm, what I'm really proud of is not the five acquisitions, we completed last year, but it really was that stellar performance of about 39 legacy business units. They did a great job. They did not have an easy market. They managed went through what I can only describe as challenging condition. So I got to say thank you team your hard work and disciplined cost management issue.
Ben: Rooms are really big reason why Mullen group performed as well as we did throughout 2024 now.
Ben: I also fully expect that we can continue to benefit from all this hard work in 2025, so keep your foot on the pedal team.
Ben: So I don't know four operating segments do last quarter, well investors know that the organization has been built up over 30 years by investing in verticals within the economy that we believed offered the most stability and growth potential.
Ben: But here's what we really focused on Canada business, we invest in generate free cash from this perspective alone. It is evident that our performance over many years.
Ben: And on some years were not good and some are not so good but this validates that this strategic approach to investing your money in our success as a successful formula Here's the proof.
Ben: We've returned over $1 5 billion to shareholders over the years.
Ben: And I believe with much more to come because of our past decisions and investments in our business is built around an extent this extensive network of great business units.
Ben: Operator by passionate and professional management teams.
Ben: And corporate office, we maintain a healthy balance sheet that we can add new investments as opportunities arise Carson will speak about that in his presentation.
Ben: High on the list of great verticals within the portfolio of really good solid business units. That's all right with is our <unk> segment.
Ben: Uh Huh earlier, you heard me speak about the challenging market conditions, but L. T O. So a little bit different it is generally speaking very steady.
Ben: In the fourth quarter was no different segment revenues were somewhat flat.
Ben: And this is with fuel surcharge revenues being down year over year by $5 3 million and that's only because the price of fuel is down. So are you like you lose $5 3 million from fuel surcharge revenues in the quarter.
Ben: Most impressive was a nearly 1% improvement in operating margin.
Ben: The segments not only resilient as it still offers what we think is the best opportunity for margin improvement.
Ben: As we continue to invest in technology better yield management improved lane density and we think that comes from tuck in acquisitions.
Ben: Now what about the all in W segment, while we saw revenues improved by 14, 3%.
Ben: And that was mainly due to the acquisition of container world early in the air and the solid performance by our two largest business units in the segment Gleason group and bounced or transportation margins held steady.
Ben: I think as a in itself is a major win.
Ben: And we remain of the view that this segment offers the most growth potential as we build out our national network of warehousing and logistics capabilities.
Ben: Combining first class warehousing with intermodal capabilities and our final mile delivery network. That's how we're going to provide customers with a valuable end to end solution to meet their logistics needs.
Speaker Change: F&I segment.
Speaker Change: That's on the other hand, we had a tough quarter. This was not unexpected though primarily due to the completion of the major pipeline projects in Western Canada are projects that were not replace them. We will always have articulated the people you have to build the pipelines there.
Speaker Change: Then you drill to fill the.
Speaker Change: The drill to fill has not happened yet, but the pipeline work is done the next stage will be the you got to fill the lines and that's what natural gas and with crude oil. So we also exited a decided to exit some business lines such as drilling services group and that was only due to one thing the high cost to replace capital equipment and.
Speaker Change: We didn't think it was worth the deploying new capital into so we exited the businesses.
Speaker Change: Plus we chose not to invest in our new acquisitions in this vertical due to the lack of quality opportunities. So as a result revenues were down year over year in the fourth quarter by $18 7 million or 15, 3%.
Speaker Change: These revenue declines were virtually all due to pre made pipeline business unit and is the principal reason segment I'll be dog declined by $8 4 million now Unfortunately from Ali group and perhaps even Canadians.
Speaker Change: Is the fact that capital intensive projects came to a virtual halt in 'twenty 'twenty. Four however, the reigning business units as segment were essentially flat year over year.
Speaker Change: U S fee U S. A three PL and international Logistics segment, you know actually we generated the same results in Q4.
Speaker Change: As the prior year period and to me. That's the first signal that we've seen to suggest that the U S. Logistic market has stabilized margins.
Speaker Change: Margins remained under pressure due to competitive markets, but this too could change as revenues improved primarily due to the fixed cost nature of the SNA expenses holistic, which by the way is our only but currently the only business unit in the segment.
Speaker Change: So in summary, I'd say no real surprises the markets remain competitive we streamline businesses where needed.
Speaker Change: Our business units did a great job given the market conditions and our corporate office, we were busy looking at opportunities. We found a couple of nice gems that we believe fit nicely in the group, but I'll tell you we passed on all the big acquisitions could be because what we believe are structural changes occurring in the transportation warehousing industries and if we're correct in our analysis. This <unk>.
Speaker Change: Why is it competitive conditions will remain for an extended period. So it will be ultra cautious until we sign see signs of stabilization.
Speaker Change: But I want to make it clear.
Speaker Change: That being realistic about the current market conditions does not mean that the markets will not eventually improve.
Speaker Change: When Ramon remains the only unknown doors senior executives and when the market starts rewarding the industry for the capital invested we will be there to invest and do acquire more on this in the outlook section.
Speaker Change: Now one more talk I'll talk about a topic I'll talk about this morning and that safety.
Speaker Change: You don't want a Tuesday, we held our annual safety award presentation with all our business units, our director of Hs <unk> and risk management, Randy Mercy. He he hosted the meeting providing everyone with a detailed report on our safety statistics the statistics for the entire group and we benchmark every single business unit and.
Speaker Change: And I'll tell you. This you do not want to be the leader of our Bu that comes in with a poor safety results, but it is more than just about statistics. It's a vocal culture annually. We recognize the best of the best with our Grand Prize Safety Award, we affectionately call up the bear and the winter gets to host the bear at their office for the next year.
Speaker Change: This year I'm delighted to report that our Grimshaw trucking business a business. We've invested in nearly 30 years ago is this year's recipient of the bear well dumb teen Grimshaw celebrate your accomplishments and keep everybody safe out there. So Carson I'm going to now turn it over to you for more on our fourth quarter financial analysis.
Speaker Change: Rob.
Carson Urlacher: Perfect. Thank you Mary and welcome everyone I will provide some of the additional highlights from the fourth quarter. The details of which are fully explained in our and annual financial review.
So as Mary mentioned, we were stuck in a no growth economy.
So one of the main reasons, we were able to achieve the results that I'm about to summarize was a result of one factor and that's due to acquisitions overall, our fourth quarter results continue to highlight our ability to consistently generate free cash and yet another competitive operating environment.
Carson Urlacher: Revenues in the fourth quarter were approximately 500 million.
Carson Urlacher: Virtually flat compared to the prior year with.
Carson Urlacher: With respect to OE BDA, we generated $85 million in the quarter and $332 2 million for 2024 in terms of cash which is what we focus on we generated cash flow from operating activities before noncash working capital items of $92 9 million in the fourth quarter.
Carson Urlacher: And approximately $340 million for 2020 for this cash generation continues to be in excess of our requirements, including our interest payments our cash taxes Capex and are these commitments.
Carson Urlacher: This really comes as no surprise, though given our acquisition strategy that Murray articulated earlier, which is to invest in businesses that generate free cash.
Carson Urlacher: I'll go through the results by segment shortly but the overall theme is as follows.
Carson Urlacher: Top line revenues were flat compared to the prior year as incremental revenues from acquisitions offset the lack of capital investment in Canada. The continued softness in freight demand and lower fuel surcharge revenue.
Carson Urlacher: Operating margins improved due to a combination of our tuck in acquisition strategy from the niche markets that we serve and from recognizing a positive variance in foreign exchange on U S. Dollar cash balances held in the corporate office.
Carson Urlacher: So despite completing five acquisitions in 2024, we continue to maintain a strong balance sheet, which I will highlight shortly in.
Carson Urlacher: In the fourth quarter revenue per working day remained consistent to the prior year period at $8 1 million, we generated <unk> of $85 million, an increase of $5 8 million compared to the prior year with acquisitions, adding $6 million of incremental Hawaii BDA.
Carson Urlacher: Operating margin improved to 17% as compared to 15, 9% last year, despite more competitive pricing conditions in certain markets and a reduction in higher margin specialized business.
Carson Urlacher: Direct operating expenses as a percentage of consolidated revenues decreased by 0.7% as our business units did a great job adapting to current market conditions and controlling costs.
Carson Urlacher: <unk> expenses as a percentage of consolidated revenues decreased by half a point due to the positive variance in foreign exchange being somewhat offset by inflationary pressures and from higher SG&A cost experience that container world.
Carson Urlacher: Now, let's take a look at how we performed by segment.
Carson Urlacher: First our largest segment revenues in the <unk> segment were $189 4 million.
Carson Urlacher: A slight decline from last year due to $5 3 million of lower fuel surcharge revenue and from Demarketing unprofitable business.
Carson Urlacher: Acquisitions virtually offset these two revenue declines.
Carson Urlacher: <unk> was $31 4 million up $1 5 million from last year. Despite lower segment revenue operating margins improved by nearly one point or 1% to 16, 6% due to our tuck in acquisition strategy into our existing network driving greater lane density.
Carson Urlacher: Our second largest segment is our El N. W segment revenues in the El N. W segment were $160 9 million up $20 1 million from last year acquisitions added $39 million of incremental revenue, which was somewhat offset by lower revenue generated from our existing business units due to a lack of capital investment in Canada.
Carson Urlacher: From shippers electing to keep a tight rein on inventory levels.
Carson Urlacher: Well the EBITDA was $33 2 million up $4 1 million from the prior year with container world, adding $5 4 million of incremental or IBD, while our other business units experienced a slight decline in <unk> due to more competitive operating conditions operating margins remained virtually flat at a respectable 26.
Carson Urlacher: <unk> percent as compared to the prior year.
Carson Urlacher: Moving to the F&I segment revenues were down $18 7 million, a $203 8 million driven by a $11 $1 million reduction in revenue from pre made pipeline.
Carson Urlacher: Due to the completion of both T M X and coastal gasoline pipeline projects. We also experienced lower demand for civil construction services in northern Manitoba for.
Carson Urlacher: Or smoke contractors business unit.
Carson Urlacher: Oh I V D was down $8 4 million to $16 2 million on lower OE BDA being recognized at premade pipeline.
Carson Urlacher: Lower OE OE BDA was also experienced within our drilling related services business units, including our rig moving moving divisions and okay drilling experience certain windup costs operating margins.
Carson Urlacher: Margins decreased by four 5% to 15, 6% due to the reduction of higher margin business and from slightly higher SG&A costs.
Carson Urlacher: And our non asset based U S. Three PL segment revenues were essentially flat at $47 5 million from last year as the industry continues to experience lower freight demand for full truckload shipments and lower pricing per shipment.
Carson Urlacher: Oh, IBD, a improved by $1 1 million and operating margin on a net revenue basis was 28, 2% compared to nine 8% in 2023.
Carson Urlacher: The increase in operating margin was primarily driven by lower ethanol expenses as a percentage of segment revenue.
Carson Urlacher: So that's a wrap on our fourth quarter commentary, but let's have a quick look at the balance sheet going into 2025.
Carson Urlacher: We closed a $400 million 10 year private placement debt financing in 2024, and we use some of those funds to repay some previous notes that matured in October.
Carson Urlacher: We ended 2024 with approximately $126 million of cash on hand.
Carson Urlacher: We also have access to $525 million of Undrawn, Undrawn bank credit facilities, providing us with ample liquidity.
Carson Urlacher: In terms of our debt covenants, we effectively have one main covenant, which is total net debt to operating cash flow.
Carson Urlacher: Our total net debt to operating cash flow covenant on our new 2024 notes is 2.24 to one and a two five to one on our 2014 notes.
Carson Urlacher: <unk> total net debt under this covenant is calculated differently under the 24 note 2020, or the 2014 node agreement compared to the 2024 note agreement.
Carson Urlacher: Under the New 2024 note agreement lease liabilities with respect to real property is excluded from that while our $125 million of convertible debentures is now included as debt for covenant calculation purposes.
Carson Urlacher: The $125 million of debentures is now included as debt under the new notes given that the mature prior to when the 2024 notes become due in 'twenty 34.
Carson Urlacher: So in summary, our balance sheet is once again, well structured and positions us to make long term strategic investment decisions and to be able to look for new acquisition opportunities that inevitably generate free cash.
Carson Urlacher: So with that Murray I will pass the conference Yeah, Hey, Thanks cars excellent analysis again and as I mentioned earlier are the 'twenty 'twenty four annual financial review, it's loaded with graphs and it's got details about our company about the business we have in our past performance. So with Carson's presentation, we're officially bringing 2024 to a close.
Carson Urlacher: It wasn't stellar by any metric, but it wasn't bad given the changes occurring in the markets. So now we move to focus on the future.
Carson Urlacher: We're going to start we've got a great portfolio of business units, we have a balance sheet to adjust to any market outcome.
Carson Urlacher: And the market I'll just leave you with this market might not growing twenty-five, but MTL count on let me now turn it to the outlook portion of today's call.
Carson Urlacher: So on the third quarter conference call and this is what I said I outlined my rationale as to why I was of the view that the economy in the markets, where most likely not going to change in the short term.
Carson Urlacher: Demand was okay. It was stable, but really not growing and there was just way too much on disciplined supply.
Carson Urlacher: And I was of the view that we should stay focused on margin not growth led the competition come to their senses and looking at all of the economic data looking at all the results from our peers and our own results. It appears this analysis was pretty accurate.
Carson Urlacher: So we also highlighted our strategy and at least in the short term.
Carson Urlacher: No, let's stay focused on margin versus market share and take a very very thoughtful approach to acquisitions, which we did so okay that was last quarter. What about 2025 has anything changed since we announced our 2025 business plan and budget.
Carson Urlacher: What do we see that would signal a change for the better.
Carson Urlacher: Well it certainly isn't Mr. Trump it seems that we have now entered a period of heightened uncertainty, which is never good for capital investment our planning and since we have no idea how this will ultimately unfold.
Carson Urlacher:
Speaker Change: There'll be no change to our strategy, we will maintain a very disciplined approach to the business and most importantly, our balance sheet. Our acquisitions. That's a founding principle of our business model has been for 30 years.
Carson Urlacher: Must meet three criteria.
Carson Urlacher: The target must be a good fit in our company.
Carson Urlacher: I'm not wavering on that it's got to be a good fit the price must allow for Marlin shareholders receive a return on their investment and you need to find synergies those are our three criteria for doing an acquisition in our organization.
Carson Urlacher: So we're choosing to maintain our 2025 outlook, that's articulated and the twenty-five business plan, we released that on December nine 2004.
Carson Urlacher: And although the first quarter is probably going to be soft just like it was last year given all this uncertainty and.
Carson Urlacher: People don't know what to do and we're just taking a wait and see approach to current trade discussions, but let's be clear on one point.
Carson Urlacher: We think theres heightened risks the problem is we don't know what the risk is well.
Carson Urlacher: We'll know more as the details emerge until then we just simply stay the course and manage our business for the long term listen to our customers.
Carson Urlacher: Visits are customers that'll be impacted.
Carson Urlacher: If at all.
Carson Urlacher: Then we will adjust and will adapt as required.
Carson Urlacher: I suspect, although admittedly I have no reason to basis all other than logic.
Carson Urlacher: There will be tariffs most likely reciprocal by both countries and there'll be some change to the Canada U S trade flow.
Carson Urlacher: You shouldn't in itself really negatively impact mullen too much because we've really deemphasize this segment of the market for many years.
Carson Urlacher: And our U S domestic business on the other hand, our holistic group.
Carson Urlacher: That they're poised to grow along with the U S economy economy, and we've had some good meetings with them there.
Carson Urlacher: They're.
Carson Urlacher: Theres some good enthusiasm happening in the U S and our holistic poised to take advantage of that.
So if we have one concern it is certainly the Canadian market and I have to ask whether politicians are going to get their act together and allow business to thrive in this country. Because if you want good long term jobs in Canada, they might start by changing public policy to attract capital back to this country.
Carson Urlacher: Now earlier I spoke about what I believe are structural issues in many parts of the transportation warehousing business I'm happy to say, we've avoided most of those industries, where most of the pain is that the issues are in no particular order of importance.
Carson Urlacher: A lack of demand growth.
Carson Urlacher: It's not that there isn't demand I said theres, a lack of demand growth there's too much capacity.
Carson Urlacher: That was built up during the last cycle.
Carson Urlacher: You've got on disciplined pricing.
Carson Urlacher: Most of that is driven by competition right now that is really pricing for what they call cash flow, but honestly, it's just to pay yesterday's bill so theyre very disciplined.
Carson Urlacher: And then there is the willingness of customers to use unsafe carriers.
Carson Urlacher: But I think this is ultimately going to change because the industry is not generating generating a return on capital too many carriers are struggling today.
Carson Urlacher: We know it because we get the calls.
Carson Urlacher: And my instinct suggests that the industry will have failures in 2025, but we've actually seen some already this year I think there's going to be a lot more in 2025.
Carson Urlacher: This will be the pivot point towards better returns.
Carson Urlacher: We will see a reversion to the mean and by this I mean acceptable returns on capital employed.
Carson Urlacher: And I think we're closer today than we were last year. So this concludes our presentation today I'll turn it over to the conference operator for the Q&A session.
Carson Urlacher: Operator.
Speaker Change: We will now begin the question and answer session.
Carson Urlacher: To join the question queue you May Press Star then one on your telephone keypad.
Carson Urlacher: You'll hear a tone acknowledging your request.
Carson Urlacher: If you were using a speakerphone please pick up your handset before pressing any keys to.
Carson Urlacher: To withdraw your question. Please press Star then two.
Speaker Change: The first question comes from Walter <unk> with RBC capital markets. Please go ahead.
Walter: Thanks, very much a pretty good morning, everyone, I guess, where I'd like to start. The the question is really on your on your outlook, where you said that you kind of see twenty-five as being the same as 24.
Speaker Change: One of your peers in the U S. Knight Swift was a lot more kind of constructive many even framing and is calling it into the to the freight recession is that just because they're in a better marketplace in the U S or is it just a level of optimism bill.
Walter: Built around what indicators, they're seeing.
Walter: Versus what you were seeing just curious as to whether this is something different or is it just you know just optimism versus pessimism pessimism kind of driving their outlook versus yours.
Speaker Change: Well I'll give you my thesis Walter and its mine.
Speaker Change: When we sit and we look at things from a strategic perspective, I always look at two things and.
Speaker Change: And I'm not trying to oversimplify it but it really is this simple.
Speaker Change: I look at demand.
Speaker Change: How does demand look how does the economy look Walter.
Speaker Change: Flat okay.
Or down.
Speaker Change: So we've made an assumption that we think it's going to be about the same.
Speaker Change: I don't see any uptick I don't see the Canadians have more disposable income.
Speaker Change: So we think the demand side is going to be relatively flat.
Speaker Change: Now lets turn to supply.
Speaker Change: We've had too much supply.
Speaker Change: And that's why the prices have been.
Speaker Change: So low.
Speaker Change: And customers have just been taking advantage of that situation.
Speaker Change: <unk> good on them, that's the way business works.
Speaker Change: The industry got customers when there was.
Speaker Change: In 'twenty two 'twenty three when there was a spike in demand now theres excess supply they win but it's going to revert to the mean, so everything that I'm talking about that it's going to be okay is because.
Speaker Change: Our competition's week in their diet.
Speaker Change: So it will be okay.
Speaker Change: We're stable and so I don't think youll see the market improve but.
Speaker Change: Our business units are very well positioned and when customers call and say, hey, I called the other guys, but they're not in business anymore their phone don't work.
Speaker Change: Okay, let's make a fair deal.
Speaker Change: B B.
Speaker Change: But we need to have something that's fair for us too. So that's where I think we'll be OK Walter on same store sales.
Speaker Change: I think well hold our own maybe do a little bit better later in the year as our as the failures rise we'll do better.
Speaker Change: Until then it's just a fistfight.
Speaker Change: Okay No I appreciate that color on in your outlook. This year you put 150 in there for for M&A that you're going to allocate towards M&A I don't think you've done that before Maria and is this because you're you're more often like is this something you see imminent or is it just something.
That you're kind of plugging in there because you've done it in the past I'm just curious as to why you elected to include that in and do we assume it's spread out across the year I'm trying to I'm trying to gauge your $3 50, because of 353 and $50 million in EBITDA.
Speaker Change: Is 150 million in M&A.
Speaker Change: Investment then that could be maybe $30 million of your EBITDA forecast for this year is associated with M&A and you know if you do a deal at the end of the year versus at the beginning of the year. Obviously that 30 is going to vary. So I'm just trying to get a better sense of do we look at your guide as being kind of more 320.
Speaker Change: And then anywhere from zero to $30 million in in acquisitions, depending on when you deploy it is that the right way to look at your guide for this year.
Well I think if you if you assumed.
Speaker Change: Well I think the reason we put in the 150, because they all have installed as we head [laughter].
Speaker Change: So it's just full disclosure is that.
Speaker Change: It had to do it the auditors or all panic because of.
Speaker Change: Tariffs Oh my God the World is going to add no, it's not going to hand, but the auditors.
Speaker Change: I think that all came from them and then said well how do you get to that well, we're not changing our outlook. Because we said look if we're going to get we think we'll get to $3 50, but we got to do acquisitions to get there because we don't think the market will give us $3 50, we think the market will be.
Speaker Change: About the same as last year, just like we I highlighted for three years, we've been doing too well.
Speaker Change: Well.
Speaker Change: B four years, because I don't see any growth in demand.
Speaker Change: So let's assume that we are about the same on same store sales.
Speaker Change: And that's about $3 30, that's about what we did of course, we had $333 35 pick your number and then we do acquisitions and I said, well, we'll probably get to two three and $3 50, but we didn't do any acquisitions out of the gate. It's just the timing so but to get to $3 50.
Speaker Change: Most likely we got to deploy a 150.
Speaker Change: Of all of that dry powder that we've got so yeah, I mean, if you're doing the acquisitions, you've got to deploy capital.
Speaker Change: If we're going to add $300 million of revenue or 200 and you've.
Speaker Change: You got to spend some money so that's the math on it.
Speaker Change: I think the question is where are we going to spend it where.
Speaker Change: Where are we going to invest shareholders money.
Speaker Change: Well, most likely it's not F&I.
Speaker Change:
We've always said we love it.
Speaker Change: LCL business and if we can find tuck in acquisitions, we're doing them.
Speaker Change: Because that's how you drive margin improvement.
Speaker Change: As you get more critical mass and you put your technology in play.
Speaker Change: But I would tell you depending I'm being coy.
Speaker Change: Coy right now, but it really depends on Canada's response to how we're going to be competitive with the Americans, If Canada doesn't get its act together.
Speaker Change: And by this I mean, the politicians and Canadians to say, we got to invest and get capital coming into Canada, we're going to turn our attention to the U S.
Speaker Change: Which implies our U S segment U S.
Speaker Change: Business.
Speaker Change: So I don't know for sure, but I can tell you.
Speaker Change: Uh huh.
Speaker Change: Canada get your act together on behalf of our shareholders I'm going to put our money to work in the U S.
Speaker Change: So where we think if they if they're going to when we got to follow the money.
Speaker Change: So I think a lot has to do with public policy Walter and <unk>.
Speaker Change: They better start.
Speaker Change: The better start bringing getting capital employed in Canada again, if we want to get this economy to grow.
Speaker Change: Nothing to do with me I'm, just pointing out the obvious.
Speaker Change: Okay, and then you mentioned the two what are the two that you mentioned was on revenue.
Speaker Change: And like you mentioned kind of there over the last few years on revenue and you're there.
Speaker Change: Do you think youre going to get there in a different way this year in the sense that.
Speaker Change: You know we've seen us in a very volatile you mentioned, it's really contingent on capital deployment, whether it happens or not.
Speaker Change: Do you have an assumption you know when you say things are going to be the same kind of same store basis does that applied at the divisional level, where you know are you expecting your masonite to be the same your old T. L to be the same or do you just see okay. That's tonight might be down and that'll be offset by L. T. L. Growing is there is.
Speaker Change: Is it flat across the board or is there more is there more variance within the divisions that make up your your your your guide for this year. The 2.2 of this year.
Speaker Change: It was our first take on that is is that kind of each segment will be flat.
Speaker Change: Last year, I mean, you won't have any negative draw on the F&I side. This because the pipeline business went from doing very very well to doing nothing right. So okay, you're not going to it's not going to go down. This year. So same store it'll be about the same and then.
Speaker Change: The real issue is on the F&I side.
Speaker Change: Is.
Speaker Change: Just drilling activity come back to fill those pipelines as those pipelines, particularly the natural gas pipeline out to kitimat do they have to fill that line it comes into production.
Speaker Change: The line is there.
Speaker Change: But the plant has not done so theres no sense, you can't ship the can't ship the gas through the line until the plant is done so it really goes back to that Walter but.
Speaker Change: We're hearing reasonable having.
Speaker Change: Having reasonable discussions with customers right now.
Speaker Change: That drilling activity will be okay.
Speaker Change: This year, because they've got to fill so that implies that are you.
Speaker Change: Our ethanol segment should be reasonable should be flat.
Speaker Change: Maybe maybe up a little bit, but let's let's call that flat.
Speaker Change:
Speaker Change: And.
Speaker Change: L T L. It's not going to change we did a couple of little tuck ins, but it'll be about the same in <unk>.
Speaker Change: And the logistics warehousing I don't see significant change on that either so.
Speaker Change: I'd say most of them are going to be about the same as 2024, Okay. That's great I appreciate the color as always thank you very much. Thanks Tom.
David Ocampo: The next question is from David Ocampo with core Mark Securities. Please go ahead.
David Ocampo: Thanks, Good morning, everyone.
David Ocampo: I just want to circle back on one of your last comments there on capital deployment, if you guys win.
David Ocampo: To direct that more to the U S. If Canada doesn't get their act together.
David Ocampo: I look at your your strategy. So far it's mostly just been asset light to the three PL business that you guys do that so are you thinking something more of the same in terms of capital deployment. If you do start to deploy more assets down in the U S or are you thinking something on the asset side, which would probably require a lot more scale than you've deployed in the past.
David Ocampo: I think.
David Ocampo: David that's all under discussion right now.
Speaker Change: You know when we're going to present, our thesis to the board I've been reluctant on it but you know when things change you got to change and.
David Ocampo: It's pretty evident with the Trump administration that you know.
Speaker Change: Well, there's two things.
Speaker Change: Number one its pretty evident Canada's losing the capital investment game already just look at our Canadian dollar.
Speaker Change: It's worth nothing.
Speaker Change:
Speaker Change: And then if the Trump administration accomplishes, what they want which is they win and we lose.
Speaker Change: Got to follow the money so.
Speaker Change: We're looking at that very very closely David I don't know for sure yet but.
Speaker Change: I hope to change my thought.
Speaker Change: Canada is not a place to deploy capital.
Speaker Change: You know I'm not going to deploy it here, it's no different than in 2012 from our from a strategic standpoint, the rules changed on in the energy space. We were once dominant in the energy business F&I oilfield service.
Speaker Change: Well it changed and we pivoted away from it.
Speaker Change: I hope I don't have to pivot away from Canada, but I've got to do what's best for our shareholders and are pivoting away as required.
Our shareholders should know I'm going to do what's best for them.
Speaker Change: Okay. That's very helpful color and then just circling back on the $150 million of M&A that you're guiding to this year the files that youre seeing across your desk today or are they mostly fixer uppers, where.
Speaker Change: They may be on the brink of bankruptcy or are they well run companies.
Speaker Change: Well, we thought last year they were on that they were going to be on the breakup of bankruptcy, which is why we didn't buy them.
Speaker Change: Ah and.
Speaker Change: Now.
Speaker Change: Truthfully. So many are getting into such bad shape, David I don't know if I want them.
Speaker Change: I think he would just let the market play itself out.
Speaker Change: And then what we'll do is we'll pick up the pieces and just add.
Speaker Change: Which is why of course I mean, if you look at it we increased our Capex. This year, we did significantly over last year for our business units.
Speaker Change: Because we think.
Speaker Change: Now is the time for us to get ready for when that market shifts some customers call and say can your services.
Speaker Change: Right now they've got too many choices, but that may change in 'twenty five that's my thesis.
Speaker Change:
Speaker Change: Check me in later this year.
Speaker Change: Okay got you and then just on that point on the Capex I mean in the F&I outlook section I think you guys called out some robotic work that you may look to do this year just curious how much of that $100 million of Capex is allocated to us and I and what types of returns on capital are you guys looking to achieve there since I think this is.
Speaker Change: The vision that hasn't received months long in recent years.
Speaker Change: It wasn't a whole bunch of us.
Speaker Change: It would have been about $20 million in total roughly a would've been.
Speaker Change: Kind of what we've allocated to that segment a lot of it is.
Speaker Change: Like we mentioned that specialized type of.
Speaker Change: Equipment, with robotics, and and zero entry into a into tank cleaning that's a new technology and so on are involved group with a new well because we're looking at our disposal well business that we have on that that's exceptional margin. So each segment.
Speaker Change: The return on capital thresholds.
Speaker Change: Every segment has got to meet the return on cash flow return on capital thresholds.
Speaker Change: 15, plus.
Speaker Change: Or else you don't don't call me.
Speaker Change: Last year, we told everybody tighten up you don't need capital you need to tighten up your business. This year the last year. They tightened up this year, we're saying Okay. You tighten up you did your job now we'll look at given your new capital to get you to get market share.
Speaker Change: And what's the timeline on that 15% return threshold I mean, if you had <unk>.
$15 million EBITDA to your business.
Speaker Change: It doesn't imply that a.
Speaker Change: Our turnover 30 does take a little bit like if that means we look at the life of the Capex and we say, it's got to turn 15% a year.
Speaker Change: Ross, we're not guessing the money that's minimal.
Speaker Change: Okay got you that makes lots of time.
Speaker Change: The next question is from Kevin Chiang with CIBC. Please go ahead.
Kevin Chiang: Our marine team thanks for taking my questions here.
Speaker Change: Maybe if I could ask a walter's question a different way.
Kevin Chiang: When I think of some of the optimism that seems to be.
Kevin Chiang: The U S carriers as they get through earnings season.
Kevin Chiang: Yes.
Kevin Chiang: Demand driven and maybe more along the lines that.
Kevin Chiang: Exactly what the path.
Kevin Chiang: Yeah.
Kevin Chiang: Good.
Kevin Chiang: 2024, and hope that we'll see that in 2025, so that's and improve the bidding season as we get into maybe the mid of this year to the back half of the year.
Kevin Chiang: Definitely blocked out of the equation. It sounds like you are optimistic as well.
Kevin Chiang: In terms of some of that capacity exiting.
Kevin Chiang: <unk> always been conservative in your outlook that youre seeing in the bidding season.
Kevin Chiang: Reflect some of the known some of that normalization of supply the 90 that will take that as upside or what do you think.
Kevin Chiang: Maybe a little bit behind what the carriers are seeing and maybe that's more of a 2020. Thanks Lloyd.
As for 2025, how it is going to play out down there.
Kevin Chiang: So in the U S. They seemed to be more optimistic.
Kevin Chiang: We have will help us.
Kevin Chiang: So the thesis right now as Kevin is that what we have we.
Kevin Chiang: We have a footprint in the U S with our U S retail business, our holistic group and they do about $185 million, a year business with us and they generate.
Kevin Chiang: They don't generate high margin at very very low margin and that's a lot of revenue, but not a lot of margin.
Kevin Chiang: But it's all cast because they have no capex. So we still generate a return on our investment.
Kevin Chiang: But.
Kevin Chiang: The thing that we're getting out of what we're hearing from them is there's real optimism from U S shippers and U S players on the demand side.
Kevin Chiang: So.
Kevin Chiang: That there's a real excitement down that on the demand side.
Kevin Chiang: At the same time.
Kevin Chiang: Kevin what we're seeing is.
Kevin Chiang: Theres still failures happening so youre, having increased in demand at the same time you were having a decrease in supply that's why the U S carriers are relatively optimistic in Canada.
Speaker Change: We see no increase in demand, but we do see some failure. So it's not gonna be you can't be quite as optimistic under that scenario is if I was a had.
Speaker Change: It had a bigger exposure in the U S. So we're looking very very seriously at.
Speaker Change: The U S market as deploying.
Speaker Change: Our next round of capital.
Speaker Change:
Speaker Change: That's on our plate.
Speaker Change: <unk>.
Speaker Change: Just just alerting our shareholders is that hey that things have changed and we're going to go where the capital goes we're going to put your capital work.
Speaker Change: Where capital is going because thats, where we see opportunity.
Speaker Change:
Speaker Change: I know David Press, you a little bit.
Speaker Change: Maybe you know what that strategy might look like so yes, so really what I am telling you is I am highlighting.
Speaker Change: That's on our radar we have to have a bigger exposure in the U S market, we're too heavily where like Canada, where two heavy Canadian and.
Speaker Change: In a no growth in Canada is not growing so.
Speaker Change: Okay, we kind of look outside of the borders.
Speaker Change: Hmm.
Speaker Change: You mentioned, some uncertainty just relate to trade off.
Speaker Change: Maybe I'll begin a broader economy.
Speaker Change: How does that variable play a role in how are you.
Speaker Change: Think about M&A.
Speaker Change: Transactions are a little more difficult.
Speaker Change: Looks like trade would impact some of the targets, you're looking at or or.
Speaker Change: When I look at it and correct me about that.
Speaker Change: Some of the deals with them.
Speaker Change: Tuck in acquisitions.
Speaker Change: From your perspective, how you might value those types of targets.
Speaker Change: Targets.
Speaker Change: But trade uncertainty I should say.
Speaker Change: The valuation.
Speaker Change: Right.
Speaker Change: I don't see the valuation.
Speaker Change: Valuations are a little higher in the U S but.
Speaker Change: Really theres better opportunities.
Speaker Change: Maybe better offer a better chance that youre going to have.
Speaker Change: Better returns down there over this next cycle.
Speaker Change: Uh huh.
Speaker Change: But thus far we've been very reluctant and passed on those but I think we're now we're just highlighting that we got to take a look at it.
You know that's our response.
Speaker Change: To the <unk>.
Speaker Change: Change in the macro environment and the potential.
Speaker Change: <unk> administration in the U S. Their viewpoint.
Speaker Change: They're set that the U S wants to win well, okay, if theyre going to win.
Speaker Change: Not everybody can win.
Speaker Change: Yeah.
Speaker Change: And if the U S wins, we're going to look like it's that.
Speaker Change: Not all types of rising right now so.
Kevin Chiang: We're just highlighting Kevin we don't know for sure I can't get specific but I can highlight to you.
Kevin Chiang: We we are going to be probably growing on the U S.
Kevin Chiang: PL site this year.
Kevin Chiang: That's where we're going to be really focusing some of that capex, yes, we're going to focus capex on our tuck ins on LTE L. Because as I said, that's how we drive margin improvement.
Kevin Chiang: You layer in revenue don't take all the costs.
Kevin Chiang: But in the U S ours would not be there wouldnt be synergy per se there would be opportunity for growth.
Kevin Chiang: Alright, great wears it by doing something to Canada.
Speaker Change: Probably I.
Speaker Change: One and one and you end up not having as many people and not as many terminals and that's how you drive margin, but in the U S. We do it because we see.
Speaker Change: Growth opportunity that's the only reason, we would put capital to work down there.
Speaker Change: Okay.
Speaker Change: Great color I appreciate.
Speaker Change: All the details you provided thank you very much best of luck as you execute on your 2025.
Speaker Change: I appreciate it we look forward to chatting again on the year.
Speaker Change: Thank you.
Speaker Change: The next question is from Qunar Gupta with Scotiabank. Please go ahead.
Qunar Gupta: Thanks, operator, and good morning.
Speaker Change: Hum.
Speaker Change: I don't want to beat the dead horse here, but you know the M&A team is pretty relevant this year.
Speaker Change: Sorry about.
Speaker Change: The Canadian market macro wise, it's not giving enough growth obviously so.
Speaker Change: I'm trying to understand.
Speaker Change: Philosophy around the M&A, obviously I asked him to lead the U S market is stronger market than you might have to focus on that but if I look at the public companies than to Kevin's question. Obviously, you know the multiples in the LDL market and the logistics market in the U S are quite high at.
Speaker Change: At least four public comps.
Speaker Change: For truckload companies out there they are more reasonable I guess right. So I mean looking at your sort of.
Speaker Change: Pennsylvania approach to M&A typically would you say you would be more attracted let's say if you're doing an acquisition would you be more willing to do truckload as opposed to be lessened dropping out in the U S.
Speaker Change: Uh huh.
Speaker Change: Well first of all I can tell you if we when we go to the U S and won't be in the <unk> space, because you could never get big enough down there. So we won't even like if you can't get big enough to be a player.
Speaker Change: We just don't waste your time, so we wouldn't do that we will be looking at other verticals that are that you know.
Speaker Change: We identified that we think theres opportunity so that's.
Speaker Change: That's what we're going to look at.
Speaker Change: Can't say any more than that.
Speaker Change: But I got to say.
Speaker Change: Every acquisition, we're looking at today has to have some.
Speaker Change: Some leverage to the U S market because.
Speaker Change: We just you can't just stay in Canada anymore, it more corner.
Speaker Change: On the valuation side yeah.
Speaker Change: Valuations are much higher than then.
Speaker Change: Then they are in Canada.
Speaker Change: In the U S.
Speaker Change: And but we got the balance sheet. So we can we're just telling our shareholders, we're going to be able to grow our business, we're going to have a bigger business. In this next in this next cycle.
Speaker Change: What we're highlighting.
Speaker Change: That makes it totally understand what you can comment on this topic, but.
Just like on the same page.
Speaker Change: Not just U S, but across North America, let's say.
Speaker Change: What's your high visibility.
Speaker Change: Plus in ph for the kind of that $50 million of you want to spend on M&A. I mean, do you have visibility to spend like with the in the near term at least you're paying 100, it's more like an opportunistic number or how should we think about.
Speaker Change: I think the timing is difficult at times to try and and measure out their contract.
Speaker Change: Obviously, the sooner that we get an acquisition done.
Speaker Change: The more we're going to meet our 2025 target honestly if it <unk> if it gets pushed back a little bit you know on a rolling 12 months, where we're still going to be.
Speaker Change: In line with the with what were articulating them, but it's very difficult to try and pinpoint when are we going to close.
Speaker Change: Our acquisition.
Speaker Change: Can you can you can reverse.
Speaker Change: Reverse engineered back to that in <unk>, what we said was.
Speaker Change: And our business plan for 'twenty five we think we should get.
Speaker Change: We can do acquisitions to get to.
Speaker Change: $2 2 billion and $3 50.
Speaker Change: That's our goal that's our plan.
Speaker Change: The timing of it depends on when we get deals closed and when we finalize them.
Speaker Change: Right right.
Speaker Change: And then last one for me.
Speaker Change: In case, you know some of these deals M&A transactions don't happen right as you expect.
Speaker Change: Neither cash you might have on the balance sheet I mean would you be more inclined to kind of like do some stuff bigger buybacks or dividend growth.
Speaker Change: If we don't find the acquisition opportunities that meet our thresholds.
Speaker Change: Okay up fit price on synergy.
Speaker Change: We'll buy back stock because we got the balance sheet to do it yet.
Speaker Change: So, but what we're saying is our first priority would be we want to grow.
Speaker Change: If we don't find something we'll buy back stock.
Speaker Change: Okay. That's great color. Thanks, so much appreciate the time thank you.
Speaker Change: Thank you thanks Connor.
Speaker Change: The next question is from Kamran Dorsen with National Bank Financial. Please go ahead.
Kamran Dorsen: Yeah. Thanks, good morning.
Kamran Dorsen: Can I ask you about the I guess going back to the tariff question. I mean, you did mention that you don't really have much in the way of direct exposure I guess the cross border.
Kamran Dorsen: Volumes, so maybe less of a risk there, but thinking about kind of the indirect impacts.
Speaker Change: Whereas the risk for Mylan I mean is it a.
Kamran Dorsen: Is it.
Speaker Change: Pacific industries that might be impacted by a tariff war or is it just more in your view kind of a general economic impact on Canada from a from a tariff war, maybe you can just sort of go into a little more detail, where you see the risks there.
Cameron: Cameron I'm.
Cameron: I'm.
Cameron: I have no insight into direct insight into this any more than anybody else.
Cameron: But.
Cameron: You know what you've got is a tariff it's attacks.
Cameron: And.
Cameron: Tax, whether it's a tariff or a carbon tax or whatever it hurts the consumer.
Cameron: That's why it hurts.
Cameron: And Ah.
Cameron: But governments why do they put taxes in play.
Cameron: I think they put taxes in place to raise money.
Cameron: So I look at it just it's just attacks.
Cameron: In.
Cameron: Depending on the response to that response, you know what goes in will determine how much Canadian scared hit because if you put on reciprocal tariffs Kenny.
Cameron: Kennedy imports everything.
Cameron: I'd be careful of going to the store to find everything just made in Canada you might.
Cameron: You might not get very much. So we're an importer we know it because we moved the damn stuff and we weyerhaeuser.
Cameron: And it all comes from somewhere and that everything is priced in the U S. Dollar. So what I am concerned is concerned about is just the long term effect on on the consumer.
Cameron: That that could.
Cameron: That could hurt our business specific industry wise.
Cameron: There'll be this there'll be that but.
Cameron:
Cameron: You just got to adapt to a cam I don't we don't know for sure, but everybody will adapt and adjust this is not the first time tariffs have been put on trade.
Cameron: This may be the first time that.
Cameron: For a number of Canadians, but it's not the first time, but we're vulnerable because the U S is playing tough right now theyre planned their plan to win I'd like to say Trump doesn't play a win win game, but then I have to change that and I don't know how he does he plays he wants to win and win.
Cameron: He doesn't want you to win and that's the way he negotiates.
Cameron: Do you like it.
Cameron: Only if youre on his team.
Speaker Change: I'm, just telling you that people that our business is down there that we got through holistic group I can tell you they're high Fiving theyre excited because they're getting more business. They are excited about the opportunity.
Cameron: And up here.
Cameron: We're on our heels a bit.
Cameron: Well that's the way it is so we're just being very cautious.
Cameron: Very practical and I'll tell you this.
Cameron: It feels damn good to have a really good balance sheet Carson edge or when we're not sure what's going to happen because our shareholders don't have to worry about the dividend and our people don't have to worry about their jobs.
Cameron: No makes sense you guys are in a good position on that front for sure.
Cameron: Question, just on the I guess the.
Cameron: Maybe the potential offshoots of all this tension between the U S and Canada that maybe maybe there will be some more investment in capital projects in Canada.
Cameron: We'll see if that actually happens, but you'll be seeking out with some announcements.
Cameron: Not too long ago about two accelerating some capital projects.
Cameron: Maybe specific to that I mean is there a I guess some potential positives here for your your business in D. C from the some of these if they actually do move forward more quickly.
Cameron: Public policy changes.
Cameron: Which means politicians understand that we've got a fast track and make it more pro business friendly.
Cameron: Then we would get more excited about the opportunities in Canada.
Cameron: Okay.
Cameron: It's.
Cameron: The.
Cameron: I'm, hoping public policy change, but you've got to make it more.
Cameron: Finally for more business for our acceptable for capital to come to work and if you do.
Cameron: Great Fantastic those are great jobs.
Cameron: But we've already lost that game camera look at our dollar it's crap.
Cameron: And we've already lost the capital game, So boy I hope they get it right and they get it turned around and turned around fast.
Cameron: That's good for all Canadians and then it would be really good for Mullen group, which is a big provider of services.
Cameron: That's how we win.
Cameron: But we need public policy to get their act together and politicians.
Cameron: Yes, absolutely agreed to hopefully that hopefully that is the case all the rest of my questions were answered so I'll pass the line. Thank you very much.
Speaker Change: Thank you Kevin Kim.
Speaker Change: The next question is from jazz Rubens with TD Cowen. Please go ahead.
Jazz Rubens: Filling in for Tim James Good morning.
Speaker Change: Thanks for taking my questions.
Speaker Change: We have two questions. Firstly, the 2025 guidance implies a slight EBITDA margin percentage declined about 50 to 100 basis points. However market because I think it was up year over year and I think Q4 could you maybe talk about some of the factors that would be causing the year over year compression to weaken slightly in 2025.
Speaker Change: Hmm.
Speaker Change: I would say the margins John Jasmine.
Speaker Change: Fairly consistent to view the take a look at what we've generated over the last number of years, we're kind of in that window.
Speaker Change: You know it.
Speaker Change: Theres nothing really set in stone as to why we would think that that margins will come off.
Speaker Change: In 2025 versus 2024.
Speaker Change: Yeah, they're pretty darn close.
Speaker Change: There's nothing really to read into.
Speaker Change: And to why we would think that margins would come off next year.
Speaker Change: Just sort of if you go to our.
Speaker Change: And of the annual financial review, you'll see our margin.
Speaker Change: We have our our margin graphs in there that Carson does a great job on the operating margin and let me just give it to you I'll just for everybody on the line <unk> in 2019 and 2020, we were at 18, 7% operating margin.
Speaker Change: And then we went down to 21, 2016, 16, 5% 16, 5% 16, seven and the only reason we're down to $16 $65 60, and not 18 $5 18, seven is because we invested in a holistic which has a very low margin. It was $185 million of revenue at a very low margin. If you backed out our U S <unk> business.
Speaker Change: We'd be at 18, five to 18, 7% for 40 years stable, so really margin stayed pretty pretty consistent.
Speaker Change: And to do that we focus on margin we work with our business units and then we do tuck in acquisitions that help us.
Speaker Change: Mitigate some of the cost pressures et cetera, et cetera. So honestly I think margins have stayed pretty consistent for quite a period of time across.
Speaker Change: Most of our business.
Speaker Change: And also the corporate side, yes, they change I mean onetime F&I might be up because pipelines is doing really good or drilling, but generally they are pretty stable.
Speaker Change: Okay, perfect and then could you provide some additional details on the leadership changes and cost saving initiatives that container world as well.
Speaker Change: Are those new or were they expected at the time of acquisition.
Speaker Change: Well you know what.
Speaker Change: When we acquired a container world we knew that the the founder Dennis Christmas He was.
Speaker Change: We are looking to transition out.
Speaker Change: And our philosophy, our model is always to hire from within so that next layer of of individuals that are going to be running. The company are are essentially from within container world they've been there for years.
Speaker Change: And they are ready to take on and then they are excited about the opportunity to.
Speaker Change: Take the company to that next level. So we are our strategy has always been higher from within and they've got a great team there that they're they're looking at ways that they can adapt their business and fit into our network and drive synergies. So I would say that you know with contain.
Speaker Change: The World we are we.
Speaker Change: It's no different than any other acquisition that we do we go in and we took when we take a look and we observe.
And we don't change.
Speaker Change: Change everything on day one.
Speaker Change: We learn from what they do and then overtime.
Speaker Change: We improved margin that's.
Speaker Change: That's our job so our goal for 2025 is to improve their margin by 2%.
Speaker Change: A nice simple goal and and the management team. That's in place. There now is is ready to take.
Speaker Change: Take that one on and fulfill that for 2025.
Speaker Change: Gesture business, it's really in our DNA, it's actually our mission statement.
Speaker Change: As if we acquired companies and strive to improve their performance well, okay. How do we improve our performance while we worked with the people and we show them. How are you going to measure and how everything matters and we are laser focused on being efficient.
Speaker Change: Not every company, we acquire is laser focused on being efficient they have different agendas.
Speaker Change: Our organization you will get laser focused on being efficient or you won't be with us that's simple.
Speaker Change: Okay perfect. Thanks, guys, that's it from us thanks.
Speaker Change: Thank you.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: The next question is from Ben Thompson with <unk> Transportation. Please go ahead.
Speaker Change: Mr. Thompson. Your line is open on our end, perhaps you have it muted on yours.
Speaker Change: I don't think that it will be asking the question.
Speaker Change: We're going to carry on in that case. This concludes the question and answer session I would like to turn the conference back to Mr. Mullen for any closing remarks.
Mr. Mullen: Hey, Thanks folks 24 is over.
Speaker Change: We are 100% laser focused on 25%.
Mr. Mullen: There's going to be challenges, there's going to be opportunity.
Mr. Mullen: And we got the balance sheet, probably the best thing, we did last year as a corporate as a corporate group.
Mr. Mullen: We've got the balance sheet, we didnt waste our bullets on this year shareholders.
Mr. Mullen: On us putting that money to work thank.
Mr. Mullen: Thank you very much for joining us and we will be talking to you in.
Mr. Mullen: April only a few months from now and we'll give you an update on how the year started out well know more about tariffs in April <unk>. Thank you very much. Thank you.
Mr. Mullen: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Mr. Mullen: [music].
Mr. Mullen: Yeah.
Mr. Mullen: Okay.
Mr. Mullen: Okay.
Mr. Mullen: Yeah.
Mr. Mullen: Yes.
Mr. Mullen: [music].