Q1 2025 TFI International Inc Earnings Call
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These we advise that this 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.
I would also like to remind everyone that this conference call is being recorded on April 24, 2025.
Joining us on today's call are Alain Bedard, Chairman, President and Chief Executive Officer, and David Saperstein, Chief Financial Officer.
David Saperstein: I'll now turn the call over to Alain Bedard, the school head sir.
Alain Bedard: All right. Well, thank you. Thank for that operator and we appreciate everyone being on our call today. After market flows yesterday, we reported our quarterly results amidst continued economic uncertainty and the resulting slowdown in freight volume across the industry.
Alain Bedard: Despite cyclical challenges, we're pleased to have again generated strong free cash law of over 190 million, which as you've heard me say many times is a primary focus of ours.
Alain Bedard: Over time, if this recastlet allows us to maintain a strong balance sheet and strategically invest in both organic growth and attractive M&A, while returning excess capital to shareholders whenever possible.
Alain Bedard: Taking a look at our consolidated results, we generated total revenue before fuel search hours of 1.7 billion up from 1.6 billion a year earlier, supported by the Daski acquisition a year ago this month. . . .
Alain Bedard: Our cash generated by operating activity came in at 194 million down margin lead from 201 million in the first quarter of 2024.
Alain Bedard: Our free cash flow, as I mentioned, was a solid 192 million, which was up meaningfully from 137 million benefiting from favorable working capital, strong management of capital expenditures, and of course the hard work of our talented team members. Thank you very much.
Alain Bedard: across the organization who continue to focus on operational excellence, especially during slower times for the industry.
Alain Bedard: On next, provide an overview of first quarter resolve for each of our three business segment, beginning with LTL.
Alain Bedard: L.T.L. was 39% of segmented revenue before fuel surcharge, which was down 13% over year to 679 million, operating income of 47 million compares to 85 million in the year earlier period with margin reflecting typical Q1C's minority consistent with what we saw the prior year.
Alain Bedard: The LTL operating ratio came in at 93.1 versus 89.2 in the first quarter of 2024, and our LTL return
Alain Bedard: Turning to Trotlow, we generated 666 millions of revenue before fuel surcharge, or 38% of the segmented total, and this was up from 398 million a year earlier due to the Dasky acquisition.
Alain Bedard: Operating income for Cracklow was 49 million up from 41 million in the prior year period.
Alain Bedard: Our truck Odoar was 93.7 relative to 89.6 a year earlier, and our industrial and market are exposed to tariff related uncertainty, which was evident during first quarter before the April 2nd announcement.
Alain Bedard: However, we saw improvement in our Canadian ore while specialized was in line with normal seasonality. Our return of invested capital for Trottole was 6.7%. [inaudible]
Alain Bedard: Rapping up the business segment overview, logistics is 22% of segmented revenue before fuel surcharge, or $385 million for the quarter, down from $442 million in the first quarter of 2024.
Alain Bedard: Logistics operating come with $31 million compared to $40 million per year, and that's an operating margin of 8.1% versus 9.1, while our return invested capital was 17%.
Alain Bedard: Moving right along, the solid free cashflow of 192 million during the first quarter help us maintain our strong balance sheet, which is always a focus of ours. We ended March with a funded debt-to-bid ratio of 2.21. Thank you for your time, and I'll see you in the next video.
Alain Bedard: During the quarter, we repurchased 56 million word of shares, which combined with the dividend payout equates to $94 million of excess cash returned to our shoulders during the quarter, which has always been an important objective of ours.
Alain Bedard: Lastly, turning to our business outlook for the second quarter of 2025, we currently expect CPS in the range of $1.25 to $1.40 based on trends we've seen so far in Q2 and assuming no major change in the macro environment.
Alain Bedard: In addition, for the four-year, we expect CapEx to be approximately 200 million. And with that offered, David and I would be happy to take question if you could please open the lines.
Speaker Change: Thank you and we will now begin the question and answer session. To ask a question you may press star followed by the number one on your telephone keypad. If you're using a speakerphone please pick up your handset before pressing any keys.
Alain Bedard: To ignore your question, you may press a store followed by the number two. [inaudible]
Speaker Change: With that, our first question comes from the line of Ravi Shanker with Morgan Stanley . Please go ahead.
Christy McGarvey: Hey, great. Good morning. This is Christy McGarvey. I'm for Ravi.
Speaker Change: To keep you guys very helpful, appreciate that. Can you just unpack a little bit more high end low end of that? I know it's not a massive range, but just how you guys are thinking about that. And then any thoughts on full year, clearly macro visibility is quite limited, but any sort of scenario analysis you guys are thinking through, particularly, you know, on the recession side of things if that comes to fruition, has been my performance.
Speaker Change: Yeah well what I could say is that guys because of all this uncertainty the best we could do is to provide a quarterly you know kind of guidance okay which we just stated between $1.25
Speaker Change: maybe at the higher edge of $1.40, with what we know today.
Speaker Change: I mean, you have to understand that, you know, when you look at our specialized truckload in North America, we've been...
Speaker Change: Really affected because our end customers are sitting on the fans waiting to see where this is going to all go, right? Where are we going to go with that? [inaudible]
Speaker Change: So this is why it's very difficult for us to predict, okay, the year until we have a much clearer picture of what's going to happen with those tariffs. We know that there's lots of discussion going on. [inaudible]
We also confirm reduced traffic.
Speaker Change: Right? Because we're not using our trucks to the full extent because the volumes are not where they should normally be. So this is why our Capix now are going down from 300 on a normal yearly basis to about 200 million. Right? And you look at our Q1, our Capix was minimal. Right? Right?
Speaker Change: It's always the same. Last year was more, but we'll have the next three quarters. We're going to be going back with more capex to get that $200 million range for the full year. [inaudible]
Speaker Change: Very helpful, appreciate that. And if I could just ask one more, maybe just digging in on the US LTL a bit more. Can you just parse out to the extent you can, you know, how much of some of the your rear pressure we're seeing and operating income is. [inaudible]
Speaker Change: In using credit versus, you know, the market, maybe being a bit more challenging and, you know, if it is, it is some credit kind of any update thoughts on the trajectory of or improvement there. Thank you very much.
Speaker Change: You know what, if you look at a Q1 result, which are very disappointing, I mean...
Speaker Change: You know, we had a very difficult month of January , very difficult month of February , but we made some change in the leadership at that time. Mids February , we made some changes because, I mean, we were not heading in the right direction. [inaudible]
Speaker Change: What I could say is that when I look at April, when I look at March, I mean, I can see some very important change.
Speaker Change: The morale of the troop has never been so good. I mean, the guys are working hard and under the leadership of Cal and Chris and Keith. [inaudible]
Major Accounts, where we lose money, right? [inaudible]
Speaker Change: So, I feel really good, the guys now are very well focused. [inaudible]
Speaker Change: And that's also based on what we're seeing so far in April . We see a change over there. The guys are really working hard on the cross side at the same time on the revenue side.
to head this company in the right direction. [inaudible]
Speaker Change: You know, I've always said that there's no reason why this company cannot be a sudden ninety-war and we've not done that so far. I understand. I get that after four years of buying the company. [inaudible]
Speaker Change: But I think that we're on the right track with this leadership, the plan that these guys are working on. I feel really good. Thank you very much.
Speaker Change: Yeah, and Christian, I would just add that when you look at Q1s or in the USLTL, it's 160 basis points of deterioration relative to Q4, which is exactly the same as the seasonal deterioration last year, Q4 to Q1. So you can think about this quarter as the same.
Speaker Change: as last quarter. But we've made changes and we're seeing those changes.
Start to show some green shoes.
Great, really appreciate the thoughts. Thank you.
Thank you.
Your next question.
Speaker Change: Oh, sorry. Your next question comes from the line of Jordan Alliger with Goldman Sachs, please go ahead.
Jordan Alligar: Yeah, hi, just to follow up LTL questions. One, can you maybe perhaps...
Update some of the operational improvement efficiency plans.
Jordan Alligar: that you guys have talked about in the past, whether it be technology or other efforts.
Yeah.
Jordan Alligar: Very good questions, Jordan. In terms of technology, we've made a lot of progress within T-Force rate over time. So,
Jordan Alligar: One of the last leg that we're working on right now is we've implemented Optum for our line-all planning. Okay, so we're not done with this...
Jordan Alligar: Improvement and Technology on Our Lionel, but at the same time, okay, we're looking at something similar, probably Optum for our P&D. So we're going to be starting, okay, this project of Optum P&D Operation in Canada first, okay. And then we'll move that to the US. Let's move that to the US.
Jordan Alligar: Sometimes in 25. So that's going to be, you know, helping us in do a better job on the planning and on the execution of our P&D operation and the connection between Lionel and P&D at that time. Okay, we'll help us.
Do a better planning for the Lionel.
Jordan Alligar: That's number one. Number two is that our software for pricing and master file management that's been a rock in our shoe for so long. Okay, we've started to implement the implementation of that. Thank you very much.
Jordan Alligar: Early 25, okay, and this is moving along, it's taking us a little bit more time, okay, but during the course of 25, we should be done with that. Now, for sure, our pricing department right now because our sales focus...
Jordan Alligar: Okay, is growth now? Okay, with our team, our pricing guys are very busy going back to the sales team, with a pricing proposal for customers because we've adjusted our approach to customer in the sense that we have to go back to the small median size account. Thank you for your time.
Jordan Alligar: And these guys, they represent about 2% of our volume more today than they were just three months ago. So we are growing those small and medium sized accounts. And for sure, that requires better pricing, better price.
David Saperstein: Okay, strategy for our pricing department, which these guys are working on. Anything you'd like to add on that, David? You know?
Good.
Thank you.
Speaker Change: And your next question comes from the line of Walter Spracklin with RBC capital markets. Please go ahead.
Walters Fracklin: Yeah, thanks very much. And a good morning. You mentioned uncertainty in your, in macro uncertainty in your outlaw, in that giving a little bit of. [inaudible]
Speaker Change: That are a result of that uncertainty and any color around that and a little bit on as well on your market share. [inaudible]
Speaker Change: Do you see any of those shifting by any of that customer adjustments is leading to them moving to lower price competitors? Are you losing share or are they just...
Yeah.
Speaker Change: You know what Walter? Very good question. You know, think about if you are a US farmer right now, you don't feel pretty good because your main customer China is just saying we don't want your product. So...
Speaker Change: One of our customers are industrial base. So our customers are manufacturing tractors, they're manufacturing agricultural equipment, etc. Those guys don't sell a lot because their customer, the farmer, are insecure right now. They don't know what's going to happen, right? So that's just one small example of what we're going through right now in our US truckload operation, our specialty truckload, which is a lot of it is flatbed. [inaudible]
Speaker Change: Our industrial-based customers are just waiting, okay, because their customers don't know what's gonna happen, right? So this is, if you look at our miles, okay, Q1, in industrial sector, in our flatbed operation, in Q1, we were down, you know, like 10 to 15%, depending on the week.
Speaker Change: Today, in April, still a lot of insecurity or instability, but now we're down to about high single digit, eight, nine percent, still down year over year. Now the only good thing that we're seeing so far is the rate per mile has improved.
Speaker Change: Okay, it's strange to say that in a difficult environment normally, okay, you would say that the rate promo will also be under pressure, but we're not saying that we see our rate promo improving since.
Speaker Change: I would say probably mid-March, that we're starting to see improvement year-round on the rate per mile. But the activity is down. So that's what we're seeing. In terms of...
Speaker Change: of what the market is doing. We don't see pressure on rates. Would it be either in Canada or in the U.S.?
Speaker Change: Specialty Truck Load Operation, and also now their minds are down, so we have way too many trucks, way too many trailers, and it affects also our depreciation, but that will be corrected during the Q2 and Q3 of 25, because as I said, we are lowering our capex. [inaudible]
Speaker Change: to a normal level based on the activity level that we have today. Anything else that we may add on that, David? Good.
Speaker Change: Just a final question here on the M&A. Can you update on what you're kind of budgeting in terms of any total tuck-in M&A for the year and just any comment on?
Speaker Change: You know, there was some activity here this morning with NR being taken up by UPS and you're having markets just any update on whether there's opportunities that are popping up now and it is something that you're actively looking at. [inaudible]
Speaker Change: You know what, Walter? I mean, on the enemy side, we just close to a very small deal in Q2. Okay, that, I mean, very small transaction. Okay, that's a very small transaction.
Benny is more mine back TFI, which we did. [inaudible]
Speaker Change: into one, which we're also back another half a million shares in April , okay? And cautiously, this is going to be the M&A for us in 25 because we're buying something that we know that is very undervalued, okay? Because, you know, we have we have to turn this. [inaudible]
Speaker Change: USLTR ship around to bring that confidence, okay, and we'll do it. [inaudible]
Speaker Change: But in the meantime, okay, nothing major for us in 25. [inaudible]
Speaker Change: Okay, the two small days that we've done and the buying back-up TFI stock. I mean, we want to keep our leverage.
Okay, in a conservative fashion. [inaudible]
Speaker Change: We don't want leverage to go higher than 2.5, which we've always said. [inaudible]
So right now we're at 2.2. [inaudible]
Speaker Change: So, I mean, this is where Q2 and Q3, we can come up with 75 cents of EPS. This is why when we look at the trend of April , we feel pretty good about the $1.25 to $1.40, which is going to help bring our leverage down, hopefully in the next few quarters. Thank you very much.
Thank you very much for the time.
Walter, Roger Walter.
Speaker Change: And your next question comes from the line of Ariel Rosa with City Group, please go ahead.
Speaker Change: Hi, good morning. Alain and Dave, thanks for taking the call. This has been more at City On For Ari. Wanted to just ask, if you could share some thoughts on your USLTO OR Outlook for 2Q and 4-year 25, and similarly your EPS Outlook for maybe 4-year 25, considering the 2 Q1 25 and 140.
Yeah, yeah, so. So.
Speaker Change: You know, based on our forecast right now, we believe that sequentially Q2 should improve by about 200 basis point, right? So we're 99, so we should go down to 97. But on top of that, we believe that there's also another at least 100 basis point of improvement. And we're going to go down to 97.
From...
Speaker Change: Better market, okay, better, better freight, et cetera, et cetera, and also better cost management on costs on the P&D side.
And on the line, I'll cite to a certain degree.
Speaker Change: 92, 93, something like that by the end of 25, right?
Speaker Change: So, that's the trend that the guys are working on, and let me tell you that the morale at T-Force rate...
It's never been as good as what it is today. [inaudible]
Speaker Change: We've made some changes and the leadership, so our friend Keith had used to run all of T-Force Rate. Now he's focused only on the operating side of it. [inaudible]
Speaker Change: Chris, one of our EVPs at TFI is helping on the commercial side. And Cal, one of our senior EVP, is taken over everything else, which is finance IT fleet.
Speaker Change: and the operation for sure working with kids. So I feel pretty good where we're at with this change in leadership and also the focus on growing those small rings inside the count that killed us in Q3 and in Q4. [inaudible]
Speaker Change: In terms of profitability, and so the guys are on the right track. They're focused on the right thing, and I think that we're going to start to see some improvement there. [inaudible]
Speaker Change: It's the other way around. We're replacing the big account, the corporate account with the small account, which is completely opposite of what we were doing in Q3 and in Q4 of last year. [inaudible]
Speaker Change: Great, great, thank you for that. Yes, and it sounds like it's up to percent sequentially. Can you, yes, in more detail.
Speaker Change: And are there any other customer segments similar to SMB that could be at risk of customer attrition and what you might be doing to reinforce customer retention in those segments?
Speaker Change: Yeah, so one of the first things that the new team has done is that, let's say that you go with a GRI of 5%, and you have an account that runs an 80 pipe of water and the guy just walked. [inaudible]
Speaker Change: Right? Because he's an 85 war and you had 5% and the market is soft, so the guy walks, so you lose an 85 war account. No.
Speaker Change: So what the new team has said is that this is a little bit stupid in this kind of an environment. Okay, so instead of going with a GRI of 5% on an 85, you know, ORR account, how about if we just go with 1% or 2% so that we don't lose this business, right?
Speaker Change: And we don't end up with a major turn which happened to us in Q3 and in Q4.
And we just hacked smart. All right.
Speaker Change: And then by keeping those accounts and growing the small medium size account because our pricing is more a reflection of the profitability of the account instead of being just stupid and going ahead with a 5% global. And don't forget that all the large accounts will always negotiate that 5% down to 1 or 2% anyway, right?
Speaker Change: So, let's be more smart, and let's be more focused on keeping those small guys and drawing that, which is completely the opposite of...
Speaker Change: Sadly, we did in Q3 and Q4 last year, right? [inaudible]
Speaker Change: So, in terms of, excuse me, better pricing for those small guys? For sure, our pricing department, you know, there's some things that, you know, they've been addressed like the wait for shipment. So if you look at our trend, a wait for shipment is about stable at about 1200 pounds. [inaudible]
Which is...
Acceptable, bye! Bye!
Speaker Change: You know, we would prefer to get closer to 1300, so this is where we made some some small adjustment.
Speaker Change: And at the same time, our GFP, which is terrible. I mean, what we've done there, I mean, we've lost revenue like there's no tomorrow. Okay, we've refocused our sales team, our local sales team to be part of the solution instead of being part of the problem. So that's also another area. Thank you.
Speaker Change: of major change in the approach of our sales team under this new leadership is Jiffy. We have to stop degrading the revenue on that and we have to start recapturing growth because if you go back in time. [inaudible]
Speaker Change: Okay, let's say in 22, GFB's revenue was $100 billion in the quarter. And now we're down, David, we're down to what? $13.33? $13.33? But I won't know that this is the first quarter in a long time. $13.33? $13.33? $13.33? $13.33?
Speaker Change: We're a GSP as flat sequentially. Yeah, well, we need to grow for sure. We're starting to see.
Speaker Change: Yeah, a little bit of the benefit of this refocus, since you won. Yeah, because that's a fantastic product that we have in, and I mean nobody has that, except now UPS announced that they will have their kind of similar product, but I mean, this is a great product for our customer. It's just like...
Speaker Change: I mean, we have to do a better job in selling it, and I think that the refocusing, okay, under this sales leadership shakeup, it's going to help us.
Great, thanks very much.
Speaker Change: And here next question comes from the line of Konark Gupta which goes to Ben, please go ahead.
Conor Coupta: Thanks, Alberta Morning, Alain Davids. I hope you are doing well. Good morning.
Speaker Change: So, Alain, you talked about, and thanks for sharing the guidance, or Q2, actually, it helps, obviously. But in terms of the T-Force, you mentioned the leadership changes in McFab, but Keith Calcris.
Speaker Change: Um, you know, I understand, you know, leadership changes are important, but what I'm trying to figure out is, you know, how, how quickly the employee morale is changing but just, you know. [inaudible]
Speaker Change: Some genius at the top, what wasn't just about the top, you know, like, or is there something else structurally in the business, the unions or some of their employees down the value chain where. [inaudible]
Speaker Change: There's an issue in terms of culture or moral. Is there a low-handy fruit that you can resolve with more changes down the road in this business? [inaudible]
Speaker Change: You know what, for an art? I mean, it's got to start with the top, right? So the approach that now we have under Cal and Chris is that we want to build the company, right? We want to grow this divorce rate. [inaudible]
Speaker Change: So, and you can't just squeeze cars and keep losing top line because this is not the way that you're going to grow and have shoulders that's going to be happy with what's going on, right? Thank you.
So, the start of this new team is that...
Speaker Change: Guys, let's rule up our sleeve, and let's focus on growing this company again, instead of just backpedaling in reducing volume every month, every quarters, okay? And trying to get more money from a $85,000,000, when already, a $85,000,000 is great within T-force rate. [inaudible]
So...
Speaker Change: You're right, Konark, that at some terminal levels, for sure down the road, we have to make some changes already. We already start to make some changes. I know then certain terminals. [inaudible]
Okay, we've made some changes. Thank you.
Now, as I said...
Speaker Change: The last two or three quarters on the call, we have financial information by terminal. Okay, so we know which terminals cost are great and we know which terminal costs are an issue, right? So now the guys are really focused and now, like I said, keep...
Speaker Change: Job is not being running the full T-Force rate. He's focused on operation with his regional VPs and get this cost.
Okay, better everywhere. [inaudible]
Speaker Change: At the same time on the commercial side, our friend Chris is motivating the sales team, focus on guys we have to grow the small medium size account because we need to have a bigger share of our portfolio of business with the small account. [inaudible]
Versus the 3PL or Versus the Corporate Account.
Speaker Change: We also need to refocus on GFB because now we've been working for years. [inaudible]
Speaker Change: Okay, on the GFP, and like I said, we've been going down every quarter, and David just added that for the first time, we stopped going down. Okay, now, okay guys, this is the floor, and now we have to start creeping up again, right?
Speaker Change: So, we have a product that is second to none, that nobody has. So, there's no reason why we, you know, we've lost revenue. The focus was not there. [inaudible]
Speaker Change: So, the morale is great. The guys they see that it's not just a cost game, it's a global growth in terms of growing the top line at the same time doing a better job on cost.
Speaker Change: That makes a lot of sense, Alain. Thanks so much. And if I can follow up with respect to the competitive landscape in the USLPL market, are you noticing any big changes there like we can clearly see some of the data points?
Speaker Change: We try flagging some of the competitors like Sia, and they're ramping up volumes, we're wanting to down for the market overall.
Speaker Change: I use seeing any changes in terms of, you know, like with your culture and moral and pooling, there's an opportunity to kind of regain some of the market share that you may have lost. Or you did not use any market share at all. Like, you know, what's the dollar market that was soft and you held your market share. [inaudible]
No, no, we've lost work. [inaudible]
Speaker Change: Chair. Okay. So this is why another leg on that chair is the quality of our service.
Speaker Change: So, we've talked a lot about Miss Pickup. So, the goal is like in Canada. In Canada, Miss Pickup does not exist for us.
Speaker Change: I mean, in the US, who are mystic up is 1.7% today. [inaudible]
Okay, of our total shipment.
Speaker Change: It's not good, okay? Now the guy will tell you that two years ago, nobody looked at that. [inaudible]
Speaker Change: A year ago people woke up and they started looking at it, it was like 4%. Now we're down to 1.7. The goal of the team is to bring that down. The goal is to bring that down. The goal is to bring that down.
Speaker Change: Closer to zero, like we do in Canada. That's number one. Number two is the quality of our service, okay? So, you know, you could always say, I'm 98% on time with a list of 45 different excuses. Thank you.
Right? This is the pass. [inaudible]
Us, we look at the reality now.
Speaker Change: And our service is improving in the real term not with all these excuses because we said forget about the excuses because you know we can't we can't. [inaudible]
We can't grow the business if we're not...
Providing the service which we said that we would provide.
Okay, so at the same time, we're moving more freight. We're moving more freight.
Speaker Change: So the rail, you just live based on what these guys will do. So all this is also at the same time for providing comfort.
To our sales team that, hey guys, we're serious.
And be there, walk the top.
Speaker Change: What we're saying to the customer, we will deliver it. So we are improving in real terms, not just in the fantasy land. Okay, we are improving the reality of our service the next day and also on, let's say the multiple day transit time. Okay.
Speaker Change: We're not where we should be, but we are improving, and that's going to help us, Konark.
Speaker Change: With customer, with protecting our customer base, with reducing the churn of our business, because...
Speaker Change: If I compare the trend we have in the US versus the trend we have in Canada, I mean, this is like day and night, okay? Our Canadian, you know, if you look at our results in Canada, we're second to none. Nobody is approaching us at all in Canada, right? Thank you very much.
Speaker Change: About in the US, our service is not up to par, and that's also a reason why we have so much sharing. By fixing the service and improving the service, which is really a big focus of key and is operating team with Cal. [inaudible]
Speaker Change: It's going to help us reduce the churn and start growing the shipment count and this is the goal.
Speaker Change: Oh, I get it for sure. Thanks so much, you'll enable the time and all of that. Thank you
Thank you, Konark.
Speaker Change: And your next question comes from the line of Daniel Imbro, which events please go ahead.
Speaker Change: Hey guys, this is Reed Z on for Daniel. I'm just going to follow up real quick on that last question on service. You've talked a lot about Keith's focusing on operations and improving service in the near term. Can you provide maybe some examples of what Keith and the team are working on to improve that in the near term?
Speaker Change: Well, yes, you know, the line-all, okay, it's an issue, right? So if you load the trailers and, you know, you have a line-all provider, okay, would it be a rail or a third party? That's not delivering the freight on time. Well, everything in that trailer is going to be late. [inaudible]
Okay, so the biggest issue.
Speaker Change: Okay, that we have in the U.S. in terms of service.
Speaker Change: is providing the Lionel service. So this is why we're moving away as much as we can, as fast as we can away from the rail because we have no control on rail. I mean, you know, you give them the freight and you hope that it's going to be there on time.
When it's rolled, when it's us...
Speaker Change: I mean, if we make a mistake, this is something that we can manage and we can't correct. So this is the big thing that the guys are working on. Number one, number two is, like I said...
Speaker Change: Many many times, Miss Pickup is a disaster in a sense that the customer is waiting for you to pick up the freight and you don't show up.
Speaker Change: That doesn't help, okay, your reputation. That doesn't help, okay, the churn into your business. So this is why a major emphasis has been put on miss pickup.
Speaker Change: Okay, and also improving our line-all. The next day service, you know, when the line-all is only 400 miles, which is next day service.
Speaker Change: I mean, we're doing quite well. It's when you have to move with two or three days connection.
Speaker Change: There we need to improve, and one way that we're doing that is we're moving away from Rio as much and as fast as we can. Number one. [inaudible]
Speaker Change: And number two is also the third party that we're using, you know, they have to deliver based on the commitment like we have commitment with customers.
Speaker Change: Got it. Thank you. And on the right side, obviously it's been a little bit challenged for a few quarters here. I assume some of that is from the shift to enterprise in the back half of last year. As you've refocus the company. When do you expect to have visibility to yield flipping positive year-to-year?
Speaker Change: Listen, I mean, what we're seeing so far, okay, in April is there's an improvement in trend, but it's still early in the game, but for sure the focus is there. I mean, we can't we can't do business with an account. [inaudible]
Runs at, you know, 115 OR.
Speaker Change: Because we lost so much medium size account that runs an 85 war. [inaudible]
Speaker Change: Right? So this is nonsense that we went through in Q3 and in Q4, like I said on my last call of Q4, and this has to change, and this is why we made some change.
Speaker Change: in T-Force Rate Leadership. I mean, there's no way. And we have to reduce the trend, and this goes back to the operation. We have to meet commitment that we have with customer. So, we will start to see improvement. And this is why, like I said earlier. Thank you.
Speaker Change: $19.99 in Q1 is really, really bad. OK, bye. Bye.
Speaker Change: We believe that sequentially we will improve 200 basis point just because of the cycle, but we're also going to reduce at least 100 basis point based on quality revenue, reduced churn, better service. Thank you.
Speaker Change: etc. etc. So this is why we feel that we can say to the market on Q2, we believe that this company would deliver between $1.25 to $1.40 of EPS. Okay. This is based on. Thank you very much.
Speaker Change: Better results at T-Force Rate, and also our U.S. Trotload Operations, Special T-Trotload Operations.
Speaker Change: We'll do better in Q2. We are unloading excess assets over there that are penalizing us on depreciation and interest cost. So, so this, this also will help us participate in that $1.20 to $1.25 to $1.40 down the road.
Got it, thank you, Elaine.
Thank you.
Speaker Change: Sure, and the management team, and what we should expect from Desequia in the coming quarters.
Speaker Change: Yeah, well, Benoit Daski is OR and 2-1 is closer to 96 than a 99, right? Thank you.
So that's number one. So.
Speaker Change: It's the level of activity, Benoit, in Q1 that killed us with our specialty trucks loading in the US. Our miles were down, depending on the week up to 15%. Good.
Speaker Change: So just a disaster in terms of the fact also that we had excess trucks and excess trailers, right? But that will correct over 25, the excess assets will correct it over 25.
Now in terms of
Speaker Change: of the culture of the truckload in the US, the specialty truckload in the US. You know, it's not an issue like we had at the T-Force rate a few years ago. The trend, what you'll see us do more in the US. [inaudible]
Speaker Change: is we will drive less miles and have more revenue, right? That's the goal. [inaudible]
Speaker Change: And so, our acid light operation, if you look at the way we report logistics revenue.
So you'll see in our U.S. Special Teach-What-Load operation. Thank you very much.
Speaker Change: We will grow our asset light operation. And probably, let's say the assets side of our business will stay about the same size, less assets, but better revenue, better miles for truck, better revenue for truck. And if I remember correctly, David.
Speaker Change: Okay, our revenue per truck into one is better. Okay, and our US specialty truck load.
We have...
Moore Myers-Bertrock,
Speaker Change: Okay, we're a little bit less of revenue per mile into one, okay, but...
Speaker Change: That is reversed in Q2, where we have better rate per mile in Q2 in our specialty truck load so far. And we have a little bit more miles per truck again in Q2 so far. That is reversed in Q2 so far.
Speaker Change: So the trend is going to improve over time and the desk acquisition, I'm telling you, I mean we have a fantastic operating team there. It's just like...
Speaker Change: You know, we have, like I said, to Steve at TFI, Steve Brooksha, as you see, we have very good truckers there. It's just like we have to transform these guys as very good business guy.
It's all about making money.
Speaker Change: It's all about the bottom line. Yes, we are in business to service customer, but we service customer if we make money. If we don't make money, I mean, what's the sense of servicing customers? So, for example, one of our business...
Wiley.
Speaker Change: Okay, those guys are big into a sector of the industry where... [inaudible]
Speaker Change: You know, we look at the number of trucks we have there. We have 150 trucks, 600 trailers, 600 trailers. Why do we have 600 trailers?
Speaker Change: Well, that's, that's asking, right? So we have way too many trailers and even 150 trucks for that segment of our business we have 50 too many trucks, right? Because we are hauling a product that is.
Speaker Change: You know, difficult to haul where you could be subject to claim, okay? And you know, guys, we can't hold that for two points to the bottom line.
Speaker Change: You know, might as well put our capital into, let's say, a bank, okay, we're going to get 4% dividend. Why would you invest capital for that? So for sure in that division, the 600 trailer will go down to 300 during the course of 25. Okay, it may be down to 200.
Speaker Change: And the number of trucks will go down from 150 to 100. Where it makes sense. So that's a little bit of a change. Where Steve is working hard with the team there. Yeah.
Speaker Change: To turn a trucker's business into a business, right? A trucking company into a business about making money. So...
Speaker Change: So we said a 96 or R in a in Daski and two one, it's not acceptable. Everybody knows that. I mean, you know.
Speaker Change: Four points to the bottom line. No, okay, so the guys know. [inaudible]
Speaker Change: Hey, specialty truck low. I mean, look at our van world in Canada running a 9 UR. Okay, if you exclude the gain of on asset. Yeah.
Speaker Change: A 90 war in Canada, where we are competing with the driver ain't <expletive> !
Speaker Change: And those guys are able to get to a 91, and our specialty is 94, not acceptable.
Speaker Change: Okay, nobody. Daski is 96 something, right? So we know what to do. We'll keep working at it and for sure.
I mean, we see...
Speaker Change: Until that tariff on certainty and fog, whatever you call it, okay, for sure it will be under pressure in terms of...
Speaker Change: of Miles in terms of volume. But I think that in six months, three months, six months, okay, well I'm a better visibility and then people will start buying again in the industrial sector that is core to us. [inaudible]
Speaker Change: And this is the way that the economy is moving, and that's why we want this exposure. [inaudible]
Yep.
Absolutely.
Speaker Change: That's great color, and just in terms of follow-up quickly, guys, we've seen a lot of headlines about cargo volume that is expected to be down to significant cleans as second half.
Speaker Change: Given the reduced imports from China, so comments from the ports and RFs.
Speaker Change: Could be down somewhere, 10 to 20%. So I understand that it's pretty foggy out there, but any thoughts about how this could impact TFI and whether this could make the typical sick and <expletive> pickup, maybe a little bit less pronounced that it has been historically. Let's move on to the next slide.
Speaker Change: Yeah, well that's a very good question and we know that the poor activity will be less because there's less ship coming from Asia to the US in Q2. We know that. But if you go back to what we're saying Benoit about our specialty truckload, what we're moving has got nothing to do with Asia.
Speaker Change: It's industrial activity in the U.S. That may be affected a little bit. Okay.
Speaker Change: It's more like the retail stuff that probably will be affected. Thank you very much.
Speaker Change: And until that they fix this terrorist situation with Asia, I mean, there could be some pressure in Q2 and in Q3.
But in our specialty truckload, [inaudible]
I mean...
Speaker Change: When we talk to our customer, okay, that's not the reason why they're slow. The reason they're slow is that nobody knows. If you're a farmer in the US today and you're a crop, you don't know who's gonna buy your crop because the Chinese are saying, you know what, we're gonna buy from Brazil. We're not buying from the US anymore, right? [inaudible]
Speaker Change: Then you're not going to buy a tractor, you're not going to buy a combine, you're not going to do anything until you have better visibility. [inaudible]
Speaker Change: So this is what's affecting our volume today when we talk to Yellow Hyron, okay? All this construction material where you have interest rate that are quite high still in the US. [inaudible]
Speaker Change: I know Mr. Trump wants them lowered, but so far, I mean, they're still high, right? So it affects construction. Construction is us. I mean, we're moving building material, we're moving all of this related to industrial activity. [inaudible]
Speaker Change: It does not affect whatever China shifts to the US that much for us. [inaudible]
Speaker Change: Maybe a little bit on RLTL side, but not that I know of Benoit. But for sure, I mean... [inaudible]
Q2 could be...
Speaker Change: For our world, okay, more difficult in the US based on the number of ships. [inaudible]
Speaker Change: That are not coming to the US because of what's going on. Yeah, and I think the best way to try and qualify that is to look at page four of the MDNA where we actually list out our end markets by percentage of revenue. You can see the retail's 19%. The remainder are various.
Speaker Change: Mostly industrial in markets, and so that can help people get it a sense.
Speaker Change: And also, if I may add, if you look at that, the automotive is mostly US, okay?
Speaker Change: So in the automotive, we have GHD moving trucks, okay? We have contracts with, you know, I would say that 90% of our automotive revenue is US-based. So it's not Canadian-based, etc., etc., it's mostly US-based.
Speaker Change: You know, stuff that we do at TA dedicated for some customers that we have there. [inaudible] you know, you know,
Speaker Change: Everything that we move from GHT is mostly for the US market out of Canada. Canada is a small plant and a little bit of Mexico as well, but it's mostly for the US domestic market. [inaudible]
Okay, that's very good color. Thanks for the time.
Thank you, Benoit.
Speaker Change: Your next question comes from the line of Scott Group with Wolf Research. Please go ahead.
Speaker Change: Hey, thanks. Good morning. Just a quick follow-up on specialty truckload. Well, to that 94-a-wire in Q1, how do you think about the progression there into Q2 and the guide and maybe back half of the year?
Speaker Change: David, embedded in the guide is a 91-92 for specialized in Q2.
Do you think, is there more? [inaudible]
Speaker Change: Self-help there with respect to Dasky, or sort of improvement beyond that, sort of going to be more dependent on.
Psycho Intrugged. Yes.
Speaker Change: Yeah, Scott, no, first, for sure, there's some improvement on the desk, on the financial side. I mean, all the admin and the IT system, the safety, which is a big issue for us.
because of all the claims. [inaudible]
Speaker Change: Okay, of accidents, et cetera, et cetera. So there's a huge focus on that in the part of...
Speaker Change: The guys over there, the culture that an accident is the problem of the insurance company. Well, it's our problem, so safety first. Thank you very much.
So these are all changes that should help us. [inaudible]
Speaker Change: Also, we have a business unit that did not perform really, really well into one. [inaudible]
Speaker Change: We're, you know, it's, we're in our last leg, okay, with that business. If we can't fix it, we're just gonna have to do something else with it. [inaudible]
Speaker Change: And it's not part of Daski, right? So the only business unit that we made some changes that was part of Daski was Bulldog, without which was very small that we shut it down. [inaudible]
Speaker Change: So, overall, I mean, we know what to do there. The other thing, as I said, Scott, many times, we have way too much asset in that business, thanks to Deski's previous management team, where they were a big fan of buying trucks.
Speaker Change: So today we have way too many trucks for the volume.
Okay, we have way too many trailers, so this...
Speaker Change: Excess asset will come out of our books, will reduce our depreciation and at the same time we're going ahead with smart topics.
Speaker Change: On our truckload, again going back to the philosophy that the buzz between asset light and asset, okay, in our specialty truckload in the US has to change. Imbro, Brian Ossenbeck,
Okay.
Speaker Change: And this is one also of our goal, is to improve or increase, I would say, the asset light revenue, okay, and keep the asset side revenue about stable, but the growth has to go to our asset light operation. Thank you very much.
Speaker Change: And maybe just last quick one. I saw a few weeks ago, UPS announced an expanded version of their own GFP business, maybe on some bigger size shipments. Is there any impact to you from UPS making a bigger push into GFP? Yeah.
Speaker Change: No, not at all, Scott, not at all. I mean, they've always been in that position, okay? They've always been there, okay? And it's never been big for them. And probably they're trying to grow it, okay? But at the same time, us, we didn't do our job.
Speaker Change: I mean, you know, when you look at that, I mean...
Speaker Change: Now, we're going to be doing our job on GFP, and we're going to roll that business again, because for sure, if you're UPS and you look at what T-Force Raid has done over the course of the last four years, you see, what are these guys doing, right? Thank you.
Speaker Change: But we had some issues with some customer that our partner, UPS, doesn't want to deal with some resellers, so that's one of the reasons why our revenue drops so much. [inaudible]
Speaker Change: But there's also a fact that we didn't do our job, right? So now, the morale is through the roof over there. The guys are really up and running and
Speaker Change: Like David was saying, for the first time we were flat, quarter of a quarter on GFB. But for sure, our focus is to grow this business again. And there's no reason why we shouldn't be able to grow that because we have a product that is second to none. For small shipping that could be available with UPS. Thank you very much.
Speaker Change: Quality of service, so there's no question about the quality of service at UPS, okay? So, I mean guys, let's sell it. Let's move. All right.
Thank you guys, appreciate it.
Thanks, Scott.
Speaker Change: And your next question comes from the line of Ken Hoexter with Bank of America, please go ahead.
Speaker Change: Hey, Alain and David, thanks for taking my question. This is Adam Roskowski, offer Ken Hexter.
Speaker Change: I guess going back to USLTL, how much time do you think before you start seeing material improvement in the claims ratio? Is that 0.9% of this quarter flat and a little worse year over year? Anything that's happening right now that's started to move many more on that? I guess I asked because...
Speaker Change: It sounds like the small business share you were winning is being done more or less at price. So just any kind of thoughts on the service side.
Speaker Change: No, I would say that, but on the claims side, okay, for sure we're at 0.9% of revenue, which is terrible.
Bye.
Speaker Change: And there's a lag, okay, there's a lag, so when I talk to the team there, they say, you know what, we'll do a better job in Q2. We're still paying, okay, for mistakes or issues that we're not addressed in 24, right? [inaudible]
Speaker Change: So there's a lag, so you should see us improving .9 is completely unacceptable. If you look at our Canadian operation, if I remember correctly, we're about .2.
Speaker Change: Okay, which is best in class. I mean, if you look at our US fears, best in class are about 0.2. And this is the goal. This is where we have to be. But, you know, we used to be in a way better position at T-Force Rate if you go back maybe a year, a year and a half ago. Okay.
We win as low as 0.4.5. We win as low as 0.4.5.
Speaker Change: Now, we're back to an unacceptable level, 0.9. You should see us improve during the course of...
Speaker Change: of 25. In terms of the new business that we're bringing in, okay, the small meeting size, it's not based on price.
Speaker Change: Our price is competitive, our price reflects the market, and we're not trying to gain shipments on the back of...
Speaker Change: And we've replaced that with Guy's major account that are sloping you.
OK.
Speaker Change: And you lose money with those guys. So this is a major change.
Speaker Change: Okay, of the sales team there under the management of Chris and Kyle.
and on the commercial side.
Speaker Change: And you should see some benefit, okay. Like I said earlier, cyclicality, we shouldn't prove 200 basis point from the disastrous 99. [inaudible]
Speaker Change: And then we believe that our improvement also will also reduce another 100 basis point.
To closer to a 96.
Speaker Change: OR in Q2, and walking closer slowly to at least a 90 OR at one point and then break that famous glass ceiling for us that's been the 90 OR. [inaudible]
Speaker Change: Thanks for the color. I guess then just on maybe the pace of contractual pricing renewals. I mean, you previously noted pricing at the lower service end of the USLTL space has been competitive. So, any update on just the kind of quarterly contractual pricing renewals run rate, particularly as you have started to make these shifts over these past couple of months.
Speaker Change: I think that's everything is normal on that side. David, what we're seeing. The renewals are taking place in the mid-single digits. The problem is our revenue per shipment is down because the mix has deteriorated in the way that we've described with the shift from SMB to larger customers. We're going to have a lot of money. We're going to have a lot of money. We're going to have a lot of money.
But the renewals are in the mid-singles.
Got it, thanks for the time.
Pleasure.
Brian Osenbeck: And your next question comes from the line of Brian Ossenbeck with J.P. Morgan. Take his go ahead. Let's go ahead.
Hey, good morning, guys. Thanks for taking the question.
Speaker Change: Pretty significantly just across the board, so maybe you can help you give a little bit of answer there and you can help elaborate with a little bit more of maybe milestones for service improvements or is this going to be you know better density and then a for better service with some of the information you got with the terminals. Yeah, I'm.
Speaker Change: You know, maybe you can help provide some, I don't know, cutovers from the systems or perspectives from the actual operations they would help kind of catalyze.
Speaker Change: This service gain or this share gain rather is opposed to, you know, just looking from the outside and thinking, well, this just looks like more competition in a pretty tough market. So anything there would be helpful.
Speaker Change: Well, you know, when you look back at this company, T-Force Rate, I mean, we add issues with mix everywhere, right? So, if you look at our Lionel,
Okay, our mix was... [inaudible]
Speaker Change: Way too much rail miles versus truck miles. So we've been addressing that to improve the service.
Speaker Change: The other thing also that was not good in the mix was the small minion size account versus the 3PL versus the corporate account. Okay, that was...
Speaker Change: Our mix is not normal, right, because we went the easy way with the 3PL and the corporate account, et cetera, et cetera.
Instead of, so the mix that we have today, is not normal.
Speaker Change: So, let's see that the normal mix of small medium size account is 45% of your business, we're not there at all. [inaudible]
Speaker Change: So that's why we're having a tough time. So our peers probably have better mixed in us. Okay?
Speaker Change: I would say, and this is why for us, okay, it's got to be a focus of rebalancing the mix on the line-up, okay, like I've talked earlier, and at the same time also, the trend that we were going in 24 was really, really bad because we were just...
Speaker Change: Making the balance even worse than what it was, okay, prime. Bye.
We have to improve that density.
Speaker Change: So, again, is, well, everybody wants to improve density, but my density, because this is where I'm situated, maybe it's not the same as one of my periods which is 40 miles away from me, right? So, it's just having the right focus...
Speaker Change: And we've been working at it for a long time, but on the sales side, okay, we went the opposite way of improving. We went the wrong way. Now we're correcting that on the sales side. [inaudible]
Speaker Change: And on the upside, I mean, miss pickup, we're doing a better job today than a year ago, but we're still not doing the job that we're supposed to do, right?
Speaker Change: And on the just on time, yes, on the short haul. [inaudible]
Speaker Change: We're there, but on the long haul, which is a lot of our freight is long haul. [inaudible]
Speaker Change: We're not there, so we have to keep improving that with our hub. [inaudible]
Speaker Change: Okay, with our line-up provider and as much as we can reduce the rail miles as fast as we can so that we are in control of what's going on because when you give that to rail, you have no control.
Bye.
Speaker Change: So, that will also help us reduce the trend. So, when you reduce the trend, you stop losing customer.
Speaker Change: And, losing freight from customer, so that puts less pressure on your sales team, okay? That's always running like a dog that's running to a stale, right? Running in circle, trying to chase a stale. [inaudible]
Speaker Change: All right? So all that, Brian , is part of that global strategic plan that we established with Cal Chris and Keith over there. And like David was saying earlier, I mean, we're going to see some improvement there.
Okay, thanks, Lane, I appreciate that. I'm interested. Thank you.
Speaker Change: Quick question on cross-border activity. I don't think it's necessarily a huge part of your business, but just want to see given all the...
Speaker Change: Volatility, and the headlines on and off again, tariffs if you see a big surge there and then drop and I guess to the extent that you've got any visibility what's embedded in the guidance there for 2Q. Thank you.
Thank you.
Speaker Change: Yeah, very good question, Brian . On the truck to the side, we follow every deed and number of loads that goes to the board. Okay, so what's happening now is that there's no issues with volume. The problem we have is that there's nothing coming back to Canada right now. [inaudible]
Speaker Change: So, it's an issue. The back hall is killing us right now on the truckload side. On the LTL side, yes, we are a big player on the transport parade between US and Canada, we see some softness there, some softness from our partner.
Speaker Change: with TSD. We see some softness from our own operation with T-Force Rate, the US and Canada.
Nothing very important.
Speaker Change: I would say probably we're down about 10-15% so far. Again, this is based on a lot of insecurity.
Speaker Change: A lot of it is based on, I don't know where I'm going, so I'm just waiting to see what's going to happen next.
Speaker Change: So, a little bit on the LTL side, not so much, and on the truckload side, everything that comes from Canada to the US, the float is normal. I mean, aluminum, I mean, I think we're doing more aluminum now than we used to do six months ago. [inaudible]
Bye.
Speaker Change: Steele is down. No question about that. Steele is down out of Ontario, but aluminum out of Quebec, I mean, we're still running like crazy, even with the 25% tariff. And we know why. I mean, uh... I don't know why. I don't know. I don't know. I don't know.
Speaker Change: Canada manufactures what, four million tons a year, US manufactures not even a million tons a year, and the market is...
Speaker Change: Right now from Canada, is 75% of the US, I think. And nothing has changed. And if you remember what the President of Al-Qua was saying, I ain't- I ain't- I ain't- I ain't- I ain't- I ain't-
Speaker Change: Aluminum has to come from Canada, unless there's another market that could be, but Canada is very close to the US. I mean, it's like the car, it's like the automotive industry, it's very, it's like the truck, it's all integrated, right? [inaudible]
So, yeah, make it all I'm sorry, short of your question... [inaudible]
Speaker Change: It's not that significant so far, but we could do better, okay? And this is going back to what David was saying about this sector of our business that relates to industrial, a lot of our customers are sideline waiting to see what's going to happen. Okay.
Brian Osenbeck: Brian , to address your question about how it's taken into consideration in the guide. The guide, as Mr. Bernard said, in his opening remarks.
It's based on...
Brian Osenbeck: The first three weeks of April , and what we've seen in actual results. [inaudible]
Brian Osenbeck: And what we've done is we've extrapolated that, taking into consideration the trend that typically occur between April , May and June .
Brian Osenbeck: And so we've extrapolated that in an appropriate way, taking that into consideration. And so what we're saying is, if things continuing Q2, the way that they started. [inaudible]
Brian Osenbeck: This is what we'll do. And if there's some major change in the macro related to trade, then that'll have an implication up or down.
Yep.
Thanks very much guys.
Thank you, Brian.
Speaker Change: The next question comes from the line of Bruce Chan with Steve, please go ahead. [inaudible]
Speaker Change: Hi, Alain David. This is Matt Byrlast, com for Bruce this morning. Thanks for taking a quick one from us here. Just on the PNC side of the house, US market is getting a bit more competitive on the B to C side.
Speaker Change: I don't be to see the small proportion of the business. Would you be able to give a sense of what percentage that is now, and maybe comment on if you're seeing some increased price competition in that market, or is it stable? Thank you.
Speaker Change: A very good question on package or B2C is growing because our B2B is not growing.
Speaker Change: And for sure, B to C is one stop, one shipment normally, right? So it affects our density, if you want to call it like that. So it's a little bit of a headwind for us, okay. But it...
Speaker Change: If you don't beat them, you have to join them. So this is where we have no other option than to grow our share of B2C versus our B2B in our P&C in Canada.
Now...
Speaker Change: And also the pricing is very aggressive because there's lots of guys that have done okay major investment in Canada on B2C and a lot of this B2C business is managed by the large player which is Amazon in Canada as well. Now. Thank you.
Speaker Change: The thing is, also talking about Amazon, they decided to shut down their Quebec operation. They went with all kinds of small guys.
Speaker Change: Maybe they're talking to a big player to help them. We could see that down the road. We'll have to see that.
Speaker Change: Keep in mind though that because of our density in our PNC and in our LTL in Canada, fuel is a tailwind for us.
Speaker Change: And the Canadian government with Mr. Cardney now in charge, although there's an election at the end of the month, but still, Mr. Cardney decided to get rid of the carbon tax, which is lowering the fuel costs. [inaudible]
In Cannes, except Quebec. Those guys, I mean, I would say lead to the party.
Speaker Change: But that has also an influence on fuel costs for us, so we reduce our fuel cost, but it also reduce our fuel search charge and because of our density, okay, this now is a little bit of a headwind for us. [inaudible]
Speaker Change: But this is something that we're going to have to manage because carbon tax...
in today's environment.
Excellent. Great colors. Thank you.
Welcome.
Speaker Change: And your next question comes from the line of Cameron Doerksen with National Bank Financial Peace Go ahead.
Speaker Change: Yeah, thanks. Good morning. Really just one question from me. I just want to talk a little bit about free cash flow. I mean, you've sort of indicated that you're going to be pretty light on CapEx for 2025. I'm just running, obviously there's a cloudy outlook here with the business, but I'm just wondering if we look at 2024 free cash flow kind of in that $7,800 million range is that? Yeah. Yeah. Yeah. Yeah.
Speaker Change: Could that be a reasonable expectation for 2025 given the fact that you're going to have lower cap ex?
Speaker Change: You know what, Cameron, I think that, you know, maybe David, you could comment on that, but I think that...
Speaker Change: What we will generate in 25, what we know so far, okay, based on what we know, I mean, we should be in the same kind of zip code, okay.
Speaker Change: That's the plan so far. Now, for sure, Q1 free cashflow was through the roof because we have very little capex, right?
Speaker Change: But going into Q2, Q3 and Q4, more CapEx, absolutely, but we'll also generate more cash, right? So this is why, you know, a...
Speaker Change: We've given the guidance based on the visibility that we have at this time for that. And then the other two are our CAPEX and Working Capital.
Speaker Change: Well, so working capital is an interesting one. Working capital provides a release of cash when conditions deteriorate. So as revenue declines,
Speaker Change: And in particular, as fuel price declines, because fuel is the most working capital intensive thing that we have. Because remember, our DSO is 39 days across the company, but we pay the fuel providers in 7 days, okay? So when you have...
Speaker Change: When you have decreasing revenues from lower activity and decreasing fuel, that releases a lot of cash from the working capital, and that's part of what we experienced in his quarter. And then you have the reverse, of course, which we saw, for example, during the pandemic as things ramped up, activity ramped up, fuel prices ramped up, you had a drain. [inaudible]
So, it...
Speaker Change: The way that I would think about working capital is as really an offset to some extent to their earnings. [inaudible]
Speaker Change: Meaning when earnings are climbing higher, typically that's a drain on working capital. And so you'll have increased cash flows from the operations being offset somewhat by working capital needs. And then when conditions deteriorate, it's the reverse. You'll have earnings coming down, partially offset by a release of working capital.
Speaker Change: No, we're in about that because the carbon tax in Canada, okay, being eliminated, fuel cost in Canada has dropped. Yeah, okay. And that's going to help us again because our customer pays us in an average 40 days, 39 days. Yeah. And we pay fuel every week, right? Correct. Yeah.
Speaker Change: OK, in order to make total sense, appreciate the color. Thanks very much.
Pleasure, Cameron.
Speaker Change: And your next question comes from the line of Elliott Alper or T.D. Cowan, please go ahead.
Elliot Alper: Hey, great thanks. Yeah, this is Alia Donford, Jason Seidl, maybe just one on the logistic side. Can you discuss maybe the moving pieces? Yeah, it is.
Within that segment in the first quarter was that... [inaudible]
Speaker Change: Primarily the truck moving business, driving the weakness and should we expect that to persist given the tariffs or...
Elliot Alper: Are there any businesses within that segment helping offset some of the broader weakness?
Elliot Alper: Well, if you look at the OEMs, I mean the OEMs volumes, I mean PACART and Daimler are two major customers.
Elliot Alper: I mean, they produce 20% to 30% less trucks today than they used to a year ago. So for sure, this is affecting our business at GHT big time. So if you look at our revenue in our logistics. Thanks.
Elliot Alper: I mean, the drop in review comes mostly from that, right? [inaudible]
Elliot Alper: On our logistics site in Canada, we're doing really, really well. On our logistics site in the US, a little bit of a weakness. Thank you.
Elliot Alper: into one. What the guys are addressing that, and we believe that if you look at the year 25, excluding
Elliot Alper: The truck moving business at GHD, I mean, we should do really, really well.
I mean...
Elliot Alper: So, the Canadian side, US side will improve new issues. The truck moving according to the discussion we're having with the OEM. In Q4 we should do better Q425 than we did in Q4. . . . .
Elliot Alper: 24, and Q424 was really the first quarter that we started to see a drop in that business, okay? And it continued in Q1, it will continue in Q2 and Q3, and according to our guys...
Elliot Alper: Q4, whoops, for the first time we'll do a better, better revenue in Q4, year over year, 25 versus 24. Now 26,
Elliot Alper: If you listen to the OEM, it's going to be a boom year, okay? To a certain degree, 27, because of all the changes unless Mr. Trump administration makes some changes in the requirement of environmental requirement on the truck manufacturers. Cheers.
Elliot Alper: I mean, 26 is going to be a boom year and 27, maybe more quiet.
We'll see.
I appreciate it, thank you.
Speaker Change: Sorry, your next question comes from the line of Bascome Majors, so it's Skihanna, please go ahead.
Speaker Change: David and Mr. Redarger to hear you guys both on together here today.
About a year ago, Mr. Radar, we talked about...
Speaker Change: What you'd like to accomplish in your role here before you feel like you've done everything you wanted to do, just given everything that's changed in the last, you know, nine, 12 months here, so. Thank you very much.
Alain Bedard: Yeah, yeah. Hey, listen, I mean, like I said, 25, we can't do anything of size on them any, right?
Alain Bedard: We had to walk away from a transaction that was a great transaction for both parties, the seller and us, and we had to walk away because of all this environment, okay? But that doesn't change the plan. The plan is, for sure, if it's not going to be 25, it's got to be 26. Thanks.
Alain Bedard: We need to do another acquisition of size in the U.S.
Alain Bedard: And that's number one. And the spin-off, okay, in our mind, still makes a lot of business sense.
Alain Bedard: But there again, I mean, there's always been a question of size. So when you have a market kept that is now down to six or seven billion US. That's...
Alain Bedard: I mean, any spin-off doesn't make any sense, also in the global environment, so we have to wait. So it's not going to happen in 25. 5.
Alain Bedard: Probably in 26 we'll have to see depending on where we're going, okay? But it makes a lot of sense to have our triplo division. We're going to have to see what we're going to do.
Alain Bedard: Stand alone, okay? Because the return investor capital is not the same, okay? The liquidity is not the same, so it makes a lot of sense and I think everybody agrees. Please.
Alain Bedard: That this is the way to go. It's just the timing. We thought that a year ago, the timing would be within two years, and within two years, it would be like 26. I don't think it's going to happen in 26. I think it's more like maybe a 27 issue. Okay. I don't think it's going to happen. I don't think it's going to happen.
The market. Good.
Alain Bedard: Has been tough for truckload guys. Okay, if you look at our peers, they've been suffering badly, 23, 24, and even 25. Okay, I think it's going to be tough here. Maybe things will start to improve in 26. Thanks.
Alain Bedard: And then it makes lots of sense for us if we have the size. Okay, you don't forget, our truckload operation running today at 93.94 globally with the van world. Thank you.
Alain Bedard: I mean, we don't want to do a spin-off with a 93 OR company. I mean, we've got to bring that ore down to a closer to a 85, which is best in class. [inaudible]
Alain Bedard: Okay, and this is the goal, okay, for 25-26. And after we get to that goal, then maybe it makes sense.
Alain Bedard: But again, if our market cap is still $6 billion at the time, it's going to be tough to do. So there's still a lot of...
Alain Bedard: Thanks to do before we do this kind of spin-off, but we're getting ready for it. I mean, we're taking action. We're getting ready for the spin-off.
Alain Bedard: Okay, every day that we can to be in a position when it's time to say go, I mean we are in a position to go, right?
Alain Bedard: There's some assets that needs to be transferred, there's some technology that needs to be addressed, et cetera, et cetera, which we are working on in order to be ready when the right time comes. [inaudible]
Alain Bedard: And in terms of M&A, of a sizable deal, it's going to have to wait 26, because we have to...
We have to show to the market that uh... [inaudible]
Alain Bedard: You know, we've been talking about T for a straight for four years now. We bought T for a straight four years ago and we used to do okay and in 24, we just did worst. [inaudible]
Right?
So, we got to turn this...
Think Around. No.
Okay, before doing anything of size.
In the US. [inaudible]
Speaker Change: And presenters, I am not showing any further questions at this time. I would like to turn it back to Mr. Alain Bedard for closing remarks.
Speaker Change: All right, well thank you operator and thank you everyone for joining us today and for your ongoing interest in TFI International. So we look forward to keeping you updated as we move through 25. And as always, please reach out if you have any additional questions. Stay safe, enjoy the day, and thank you again. Thank you for joining us today and for your ongoing interest in TFI International.
Speaker Change: Thank you, presenters, and ladies and gentlemen. This concludes today's conference call. Thank you all for joining. You may now, the Skinner. Thank you all for joining today's conference call.