Q1 2026 TFI International Inc Earnings Call

April 27, 2026

Speaker #1: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's first quarter 2026 earnings call. At this time, all participants are in listen-only mode.

Speaker #1: Following the presentation, we will conduct a question-and-answer session. Callers will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many callers as possible.

Speaker #1: Instructions for entering the queue will be provided at that time. Please be advised that this conference call will contain statements that are forward-looking in nature and are subject to a number of risks and uncertainties that could cause actual results to differ materially.

Speaker #1: I would also like to remind everyone that this conference call is being recorded on April 27, 2026. Joining us on the call today are Alain Bédard, Chairman, President, and Chief Executive Officer, and David Saperstein, Chief Financial Officer.

Speaker #1: I would now like to turn the call over to Mr. Alain Bédard. Please go ahead, sir.

Speaker #2: Well, thank you for the introduction, Operator, and welcome everyone to today's call. Within the past hour, we reported our quarterly results, including adjusted diluted EPS of $0.69.

Speaker #2: This performance was driven by the tremendous effort of our talented team members and their relentless focus on efficiency and related operating principles. Taking a step back, a long-standing part of our strategy is to maintain a rock-solid balance sheet that allows us to thoughtfully manage through the cycle.

Speaker #2: And after generating more than $800 million of free cash flow last year, which was over $10 per share, we produced another $124 million during the first quarter, which further benefited our financial position.

Speaker #2: Most importantly, this allows us to continue to arch track record strategic capital allocation, investing for the long term regardless of market conditions, while also returning excess capital to shareholders whenever possible.

Speaker #2: To that point, during the quarter, we paid out $38 million in quarterly dividends. Let's take a closer look at our first quarter financial results.

Speaker #2: The total revenue for fuel surcharge of $1.7 billion was consistent with the prior year quarter. Our consolidated operating earning of $97 million represented a 5.7% margin, and our net cash from operating activity came in at $122 million.

Speaker #2: Turning to our business segment performance, we first mentioned that we have streamlined our reporting approach in our quarterly report. In an effort to reduce complexity for our investors and better align with our peer practices.

Speaker #2: Therefore, I'll be primarily speaking to the overall results of each of our three segments, beginning with LTL, which represented 38% of our segmented revenue before fuel surcharge.

Speaker #2: We saw notable improvement during the quarter as weather improved, with shipments per day in March considerably stronger than January and February, and this trend continued into April.

Speaker #2: For the first full quarter, the $656 million of revenue before fuel surcharge was down just 3% year over year, an improvement from the fourth quarter 10% decline.

Speaker #2: Our LTL adjusted operating ratio came in at 95.3, and total operating income of $31 million compares to $47 million one year earlier. Lastly, our return on invested capital for LTL was 11.6, again with notable improvement through the quarter and into April.

Speaker #2: Turning to our Truckload segment, the $673 million of revenue before fuel surcharge was 39% of segmented revenue and grew from $663 million in the prior year's first quarter.

Speaker #2: We were able to grow by 9% of revenue per truck per week, excluding fuel surcharge, while reducing our truck count by 7% as we increased fleet productivity and shed excess equipment.

Speaker #2: In addition, we continue to see rapid sequential growth from data center construction, although this, today, is a small part of overall revenue. Truckload is also a segment for which our past acquisitions, including Daskey, have increased our exposure to industrial truckload, and Marcus, helping us to overcome industry fundamentals recently characterized by tariff and economic uncertainty, as well as industry overcapacity.

Speaker #2: Our quarterly truckload operating income of $56 million was up from $49 million the prior year, and our ROI was 92.7, improved by 100 basis points.

Speaker #2: Lastly, our truckload return on invested capital came in at 6%. To round out our segments, logistics accounted for 23% of segmented revenue at $388 million, which was up slightly from the prior year figure of $385 million, and also up 8% sequentially.

Speaker #2: Our logistics operating income of $34 million was also up year over year from $31 million, and was up from the December quarter as well.

Speaker #2: This equates to a margin of 8.9%, which was also up both year over year and sequentially. Our logistics return on invested capital was 12.4%.

Speaker #2: Moving on to our balance sheet, our strong financial foundation continues to benefit from our free cash flow. Another $124 million during the quarter, as I mentioned, and we ended up the month of March with our funded debt to EBITDA ratio at 2.6.

Speaker #2: Wrapping up my remarks in terms of our updated outlook for the second quarter of 2026, we expect adjusted diluted EPS to be in the range of $1.50 to $1.60, and net capex excluding real estate for the full year—we're expecting a range of $225 million to $250 million, unchanged from previous expectations.

Speaker #2: As always, our outlook range assumed no significant change, either positive or negative, in the operating environment. And with that, Operator, David and I would be happy to take questions if you could please open the lines.

Speaker #3: Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, you may press the star followed by the number one on your telephone keypad, and to withdraw your question, please press star two.

Speaker #3: And your first question comes from the line of Ravi Shankar with Morgan Stanley. y. Please go ahead.

Speaker #4: Great, thanks everyone. Alain, obviously a lot has changed since your previous call with the cycle and the current environment. We'd just love to get a sense of what you're seeing up there in terms of the TL market opening up, direct impacts on you, security, and LTL, etc.

Speaker #2: Yeah, that's a very good question, Ravi. So, what we're seeing really in the truckload sector is that it's the offer that's been reduced, right?

Speaker #2: With everything that's going on in the US, with this new administration, the tightening of CDL, okay, the closing of all those driving schools, right, that didn't make any sense, I mean, the offer has been reduced month after month, and now, slowly, okay, we're getting closer to a balance in the industry where for a long time, this industry was very unbalanced, where the offer was way more than the demand.

Speaker #2: Now, if you look at our truckload operation in Canada and in the US, I mean, we're focused on the industrial freight, right? We're not a carrier of retail freight in our truckload world.

Speaker #2: We are really industrial, and we feel really, really good about where the U.S. is going, and even Canada, where the future is for our flatbed operation or specialty truckload, okay, etc., etc.

Speaker #2: We're starting to see a change with customers now asking, 'Hey, can you help me?' Customers are saying, 'Can we be partners?' Because it's always the same story.

Speaker #2: When the markets start to tighten up, shippers want to be partners with truckers, right? So we're seeing that, and we're very happy with what's going on.

Speaker #2: The investment we've made in Daskey, two years ago, has been average so far. We were really busy investing in technology, in financial systems, and all that—consolidation.

Speaker #2: But we're starting to see a little bit of light in the tunnel in terms of the demand, in terms of the future of North America — U.S. and Canada.

Speaker #2: So I feel really, really good about where we're at. Now, if you talk about our LTL in North America, I would say that it's been a long time since we had some organic growth in that sector.

Speaker #2: And I would say that what we're seeing now is slowly, we've probably going to show up at least no negative, okay, growth in Q2 in our LTL.

Speaker #2: We believe that organic in our LTL could grow maybe a few points, right, which is going to be a first. I'm really happy with the commercial team that we have in the US right now, led by our guy Chris Drakus—in Canada as well.

Speaker #2: So, I mean, we have way more stability in our commercial team. Our service is slowly, again, improving. Customers are starting to see us maybe in a different way—like, 'Okay, finally, these guys are getting their act together.' We're not perfect.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Callers will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many callers as possible. Further instructions for entering the queue will be provided at that time. Please be advised that this conference call will contain statements that are forward-looking in nature and is 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 27 April 2026.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a Q&A session. Callers will be limited to one question and one follow-up. Again, that's one question and one follow-up so that we can get to as many callers as possible. Further instructions for entering the queue will be provided at that time. Please be advised that this conference call will contain statements that are forward-looking in nature and is 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 27 April 2026.

Speaker #2: We're far from that yet, but we are improving. I mean, if you remember the master report for the first time, okay, we've shown an improvement, okay?

Speaker #2: So, I mean, I feel in a long time—I mean, the last two, three years have been very difficult for us at TFI. But I think that finally, we're going to turn the corner, turn the page on a very difficult '23, '24, and '25—even '25 being the worst of the three.

Operator: Joining us on the call today are Alain Bédard, Chairman, President, and Chief Executive Officer, and David Saperstein, Chief Financial Officer. I would now like to turn the call over to Mr. Alain Bédard. Please go ahead, sir.

Speaker #2: And I think that '26 is the transition year to a much better future for us in the quarters to come.

Speaker #4: That's incredibly helpful, and I hope you're right about that. But maybe a quick follow-up. You said light at the end of the tunnel—do you have confidence in what the full year is shaping up to be?

Alain Bédard: Well, thank you for the introduction, operator, and welcome everyone to today's call. Within the past hour, we reported our quarterly results, including adjusted diluted EPS of $0.69. This performance was driven by the tremendous effort of our talented team members and their relentless focus on efficiency and related operating principles. Taking a step back, a long-standing part of our strategy is to maintain a rock-solid balance sheet that allows us to thoughtfully manage through the cycle. After generating more than $800 million of free cash flow last year, which was over $10 per share, we produced another $124 million during Q1, which further benefited our financial position.

Speaker #4: And when do you think you might restore for your guidance there?

Speaker #2: You know what, Ravi? Until we have a deal signed between Canada, US, and Mexico, we can't come up with a full year guidance. I mean, it's too unstable right now.

Speaker #2: So until we have that, and hopefully, we'll have that by the end of the summer, okay? And also, with more experience for where this market is going—I mean, we have a fuel situation with what's going on in Iran. I mean, this free trade agreement between North America.

Speaker #2: So this is why David and myself, we feel good about giving a guidance for Q2, but not the rest of the year. There are too many things that we're not sure about. We feel good about where we are, and we feel good about where we should be heading.

Alain Bédard: Most importantly, this allows us to continue to our track record of strategic capital allocation, investing for the long term regardless of market conditions, while also returning excess capital to shareholders whenever possible. To that point, during the quarter, we paid out $38 million in quarterly dividends. Let's take a closer look at our Q1 financial results. Total revenue before fuel surcharge of $1.7 billion was consistent with the prior year quarter. Our consolidated operating earnings of $97 million represented a 5.7% margin, and our net cash from operating activities came in at $122 million. Turning to our business segment performance, I'll first mention that we have streamlined our reporting approach in our quarterly report in an effort to reduce complexity for our investors and better align with our peer practices.

Speaker #2: But it's still too early in the game to come up with a year number, right? So this is why I think that $1.50, $1.60, I think it would be a great accomplishment because it would be better than last year because if you look at my Q1, I'm worse than last year on EPS, right?

Speaker #2: So this has got to change. So I think that Q2 is, for the first time in a long time, okay, that will show better numbers than the prior year, at least.

Speaker #4: Awesome. Thanks, Alain.

Speaker #2: Pleasure, Ravi.

Speaker #3: And the next question comes from Scott Group with Wolf Research. Please go ahead.

Speaker #5: Hey, thanks. Afternoon. So, Alain, you mentioned inflecting to hopefully some growth in LTL. Are you still providing a breakout—U.S. versus Canadian LTL? And are you seeing growth in both the U.S. and Canada within that comment?

Speaker #5: And I know, maybe just along those lines, any thoughts on the margin outlook for the LTL segment for Q2?

Alain Bédard: Therefore, I'll be primarily speaking to the overall results of each of our three segments, beginning with LTL, which represent 38% of our segmented revenue before fuel surcharge. We saw a notable improvement during the quarter as weather improved, with shipments per day in March considerably stronger than January and February, and this trend continued into April. For the first full quarter, the $656 million of revenue before fuel surcharge was down just 3% year over year, an improvement from the Q4 10% decline. Our LTL adjusted operating ratio came in at 95.3, and total operating income of $31 million compares to $47 million one year earlier. Lastly, our return on invested capital for LTL was 11.6, again with notable improvement through the quarter and into April.

Speaker #2: So, here's the deal, Scott. I mean, no, we don't have 'Great US and Canada' anymore because more and more what we're saying, the same as our truckload and our logistics, we are a North American player.

Speaker #2: But what I can tell you, though, in terms of organic growth, we're seeing as we speak, okay? Organic growth in the US, year over year, in April.

Speaker #2: And what we've seen so far, on the Canadian side, we're starting to see also some improvement there. So that's why we feel pretty good that organically, in our sectors, truckload the same, okay?

Speaker #2: Logistics, the same. We feel that we're going to show some organic growth in Q2 2026 versus 2025.

Speaker #5: Okay. And then maybe just—I asked for LTL, but maybe you could sort of walk through the canal and how you're thinking about the margin assumptions in order to get to the guide for Q2.

Alain Bédard: Turning to our Truckload segment, the $673 million of revenue before fuel surcharge was 39% of segment revenue and grew from $663 million in the prior-year Q1. We were able to grow by 9% our revenue per truck per week, excluding fuel surcharge, while reducing our truck count 7% as we increase fleet productivity and shed excess equipment. In addition, we continue to see rapid sequential growth from data center construction, although this today is a small part of overall revenue. Truckload is also a segment for which our past acquisition, including Daseke, have increased our exposure to industrial truckload end markets, helping us to overcome industry fundamentals recently characterized by tariff and economic uncertainty, as well as our industry overcapacity.

Speaker #5: Maybe that'd be helpful.

Speaker #2: Okay, well, that's a very good question. So that's why I'll leave it to David, our CFO. He's the numbers guy.

Speaker #5: Hi, Scott. So for TFI as a whole, we expect OR improvement of 400 to 500 basis points. And so, taking it through the segments, I'm talking about sequentially from Q1 to Q2.

Speaker #5: So, LTL, we expect 600 to 700 basis points of sequential improvement, Q1 to Q2. Truckload, 200 to 300 basis points. And logistics, 75 to 125.

Speaker #5: Basis points of improvement. Just, I mean, that's a really big LTL number. Any additional color there? Is fuel a big help, or is pricing getting a lot better?

Alain Bédard: Our quarterly Truckload operating income of $56 million was up from $49 million the prior year, and our OR was 92.7, improved by 100 basis points. Lastly, our Truckload return on invested capital came in at 6%. To round out our segments, Logistics accounted for 23% of segmented revenue at $388 million, which was up slightly from the prior year figure of $385 and also up 8% sequentially. Our Logistics operating income of $34 million was also up year over year from $31 million and was up from the Q4 as well. This equates to a margin of 8.9%, which was also up both year over year and sequentially. Our Logistics return on invested capital was 12.4. Moving on to our balance sheet.

Speaker #5: That's a pretty big.

Speaker #4: So, a couple of points. First of all, Q1 was probably unusually bad because of the weather in the beginning of the quarter. And we're exiting the quarter way better than we entered the quarter.

Speaker #4: So just to give you a little bit of sense across the around that. In January, LTL shipments were down year over year 10%. Okay?

Speaker #4: In March, they were up 8% year over year. In April, it's looking similar to March. So we have a very different situation now than at the beginning of the quarter.

Speaker #4: And that's what's driving a lot of this improvement. And as well as the other things that the team has been working on, fuel is a part of it only where we have real strong density.

Alain Bédard: Our strong financial foundation continues to benefit from our free cash flow. Another $124 million during the quarter, as I mentioned, and we ended the month of March with our funded debt to EBITDA ratio at 2.6. Wrapping up my remarks in terms of our updated outlook for Q2 2026. We expect adjusted diluted EPS to be in the range of $1.50 to $1.60. Net CapEx excluding real estate for the full year, we're expecting a range of $225 million to $250 million, unchanged from previous expectation. As always, our outlook range assume no significant change, either positive or negative, in the operating environment. With that operator, David and I would be happy to take questions. If you could please open the lines.

Speaker #4: But it's really more around the volumes and some of the pricing actions that we will be putting through.

Speaker #2: And also, David, if I may add, don't forget that our GRI, okay, was not in place in late '25. We delayed that, and it was put in place mid-March, right?

Speaker #2: So we have that a little bit of tailwind on that, Scott. Although this is only for about 25% of our shipment, Scott. This is only for about 25% of the shipment, but we're in a penny business, Scott.

Speaker #2: So every penny counts.

Speaker #5: I get it. Thank you, guys. Appreciate it.

Speaker #2: Thank you, Scott.

Speaker #3: And the next question comes from RV Rosa, with TF Group. Please go ahead.

Operator: Thank you. Ladies and gentlemen, 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. To withdraw your question, please press star two. Your first question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Speaker #6: Hey, good afternoon, Alain, David. So, Alain, you mentioned that you were feeling good about sales effort on the LTL side. I was hoping you could talk just more broadly about how the LTL turnaround is progressing and kind of how you think about structural barriers to improving margin there.

Ravi Shanker: Great. Thanks, operator one. Alain, obviously a lot has changed since your previous call with the cycle and the current environment.

Speaker #6: It sounds like a lot of improvement is underway, but I'm just kind of curious how much of that is related to the things that you guys are undertaking versus the broader macro environment maybe turning more favorable.

Alain Bédard: Yep.

Ravi Shanker: Would just love to get a sense of what you're seeing out there in terms of the TL market tightening up, direct impacts on you, secondary on LTL, et cetera.

Speaker #2: Yeah, yeah. So you see, if you look at it, the worst thing that you can have is you try to sell a service, and the service is not there, right?

Alain Bédard: Yeah, that's a very good question, Ravi. What we're seeing really in the truckload sector is that it's the offer that's been reduced, right? With everything that's going on in the US, with this new administration, the tightening of a CDL, okay, the closing of all those driving schools, right? That didn't make any sense. I mean, the offer has been reduced month after month, and now slowly, okay, we're getting closer to a balance in the industry where, you know, for a long time, this industry was very unbalanced, where the offer was way more than the demand. Now, if you look at our truckload operation in Canada and in the US, I mean, we're focused on the industrial freight, right? We're not a carrier of retail freight in our truckload world.

Speaker #2: Because that's what we do. We sell service. We are supposed to pick up freight, and we don't show up. I mean, that's not too good.

Speaker #2: Right? So this is what the operating guys have been working at, okay, missed pickup in if you look at our claims, okay, consolidated that we're at 0.6.

Speaker #2: But if you remember, when we were showing that separate, I mean, U.S. was not that good. So that's another area that we are improving.

Speaker #2: Stability in your sales team also helps you with the customer relationship and all that. So this is like a goodwill thing. So hopefully, macro will start to help us down the road at one point when the market is stronger.

Speaker #2: But in the meantime, okay, we still have lots to do for us to improve our service. And I said in the last conference call that if you look at our US, okay, we still have issues with not the next-day service.

Alain Bédard: We are really industrial, and we feel really good about where the US is going and even Canada, where the future is for our flatbed operation, our specialty truckload, okay, et cetera, et cetera. We're starting to see a change, okay? Customers now are asking for, "Hey, can you help me?" Customers are saying, "Can we be partners?" Because, you know, it's always the same story. When the markets start to tighten up, shippers want to be partners with truckers, right? I mean, we're seeing that. We're very happy with what's going on. You know, the investment we've made in Daseke two years ago has been, you know, average so far.

Speaker #2: We're good at that. But the second and the third-day service, we have some issues. The guys are working on that. And the culture is the culture of the old days of, let's say, fair and I don't really care.

Speaker #2: I mean, we're changing that culture. You're going to say, "Alain, you bought the company five years ago." I mean, five years ago, think about that.

Speaker #2: And we're still, okay, working on changing this culture of we're not a monopoly anymore. Okay? We are an LTL company in North America, and we compete with good peers.

Speaker #2: I mean, we're competing with good companies in North America, so we have to be good. Our service has to be up there, right? In order to get more money.

Speaker #2: Because if you ask me today, price-wise, we are a discounted carrier compared to some of our peers, right? And the reason we are some kind of discounted carrier is because our service is not where it should be.

Alain Bédard: We were really busy investing in technology and financial system and all that consolidation. Now we're starting to see a little bit of light at the end of the tunnel in terms of the demand, in terms of you know, the future of North America, US and Canada. I feel really good about where we're at. Now, if you talk about our LTL in North America, I would say that it's been a long time since we have some organic growth in that sector. I would say that what we're seeing now is slowly we probably gonna show up at least non-negative, okay, growth in Q2 in our LTL. We believe that organically, our LTL could grow maybe a few points, right? Which is gonna be a first.

Speaker #2: And this is the chicken and the egg, right? So, where does this start? Well, it starts with providing an acceptable service comparable to our peers.

Speaker #2: So this is an ongoing thing that our ops guys are doing. And at the same time, also, we're saying to our commercial team, "Guys, let's focus on freight that fits us." I mean, don't give me a customer where I have to run 70 miles to pick up their shipment.

Speaker #2: Because this is not what I want. I want something that is closer to my turnout to improve my density, okay? I want more shipments per stop, okay, to improve my cost per shipment, etc., etc.

Speaker #2: So, it's a team effort. But again, I mean, we're still in a position of working hard to get closer to the service level of our peers.

Alain Bédard: I'm really happy with the commercial team that we have in the US right now, led by our guy, Chris Drakus and Cal as well. I mean, we have way more stability in our commercial team. Our service is slowly again improving. Customers are starting to see us maybe in a different way that, okay, finally, these guys are, you know, getting their act together. We're not perfect. We're far from that yet, but we are improving. I mean, if you remember the Mastio report, for the first time, okay, we've shown an improvement, okay?

Speaker #5: Okay, understood. And just as a follow-up, I wanted to ask about the strength in flatbed rates. It's been pretty remarkable to see some of the public load board data.

Speaker #5: I'm just curious to hear your thoughts on what TFI's ability has been to capitalize on that, particularly in Daskey. And then just broadening it out to the broader business, how you think about what upcycle earnings could look like for Daskey and for the broader business.

Speaker #5: Assume, let's assume for a moment, kind of a benign resolution to USMCA.

Alain Bédard: I mean, I feel in a long time, I mean, the last two or three years have been very difficult for us at TFI, but I think that finally we're gonna turn the corner, turn the page on very difficult 2023, 2024, and 2025, even 2025 being the worst of the three. I think that 2026 is a transition year to a much better future for us in the quarters to come.

Speaker #2: Yeah. Yeah. So listen, guys, I mean, our revenue per mile, it is up at the in our TFI specialty truck, absolutely our revenue per mile is moving up.

Speaker #2: Okay? And we drive more miles per truck per week. Okay? So this is a productivity effort that Steve, the leader of our truckload division, has been able to do.

Speaker #2: Do more with less. Okay? Now, for sure, also, if you look at our market, our focus is more and more into markets where we are more specialists.

Ravi Shanker: That's incredibly helpful, and I hope you're right about that. Maybe as a quick follow-up, you said light at the end of the tunnel. Do you have confidence in what the full year is shaping up to be? When do you think you might restore full year guidance in there?

Speaker #2: So I'll give you the example of Lone Star, which is Texas-based. Today, we run 100 trucks, highly specialized, $70 a mile. Okay? Which is great.

Alain Bédard: You know what, Ravi? Until we have a deal signed between Canada, US, and Mexico, we can't come up with a full year guidance. I mean, it's too unstable right now. Until we have that, and hopefully we'll have that by the end of the summer, okay? Also with more experience where this market is going. I mean, we have a fuel situation with what's going on in Iran. I mean, this free trade agreement between North America. This is why, you know, David and myself, we feel good about giving a guidance for Q2, but not the rest of the year. There's too many things that we're not sure.

Speaker #2: But next to that, in Lone Star, we also run over-the-road at $2.25, $2.40 a mile. So what we're saying is that being jack of all trades, best of none, what we're trying to do with the team there is that, guys, from 100 trucks, we'll move the super specialty truckload to 150.

Speaker #2: But the over-the-road thing there, we're going to move that to someone else. Okay. What we did with SPD on the West Coast, okay, those guys are very strong with Boeing and Boeing is just on fire, right?

Alain Bédard: We feel good about where we are, and we feel good about where we should be heading, but it's still too early in the game to come up with a year number, right? This is why I think that, you know, $1.50, $1.60, I think it would be a great accomplishment because it would be better than last year. Because if you look at my Q1, I'm worse than last year on EPS, right? I think that Q2 is for the first time in a long time, okay, that will show better numbers than the prior year, at least.

Speaker #2: The demand is just through the roof over there at Boeing. So we said, 'Guys, how many trucks do we need to service this high-end customer, that niche customer?'

Speaker #2: We need 75 trucks." That's it. That's all. Okay. Fine. Goodbye. So you used to have 200 trucks. Now you're down to 75. Okay? But we're moving those trucks to Wiley in North Dakota.

Speaker #2: Because Wiley is our big over-the-road truckload guy. And we want Wiley to be 1,000 trucks, right? Not 5, 600, but 1,000. So we're doing all these changes.

Speaker #2: At the same time, we are working on reducing our costs, reducing our asset base. And if you look at our brokerage operation in our truckload sector, last month, revenue-wise, we were up 70%.

Ravi Shanker: Understood. Thanks, Alain.

Alain Bédard: Pleasure, Ravi.

Operator: The next question comes from Scott Group with Wolfe Research. Please go ahead.

Speaker #2: So the goal is to drive more revenue with less steel on the road. So all of that, this is when David was talking about our Q2 forecast versus our Q1.

Scott Group: Hey, thanks. Afternoon. Alain, you mentioned inflecting to hopefully some growth in LTL. Are you still providing breakout US versus Canadian LTL? Are you seeing growth, both US and Canada, within that comment? I know maybe just along those lines, any thoughts on, like, on the margin-

Speaker #2: Okay? We see some improvement in all of our sector, including truckload.

Speaker #5: But Alain, on a week-for-month basis, as I understand, there's an impact there on a like-for-like basis. Can you tell us kind of how contract rates are coming year over year?

Alain Bédard: Yeah.

Scott Group: margin outlook for the LTL segment

Speaker #2: Yeah, I can jump in on that. We're renewing contracts in the U.S. flatbed in the high single digits to low double digits. We also have about 20 to 25 percent spot exposure in the U.S. flatbed.

Alain Bédard: Yeah.

Scott Group: For Q2.

Alain Bédard: Here is the deal, Scott. I mean, no, we don't separate US and Canada anymore because, you know, more and more, what we're saying, the same as our truckload and our logistics, we are a North American player. What I can tell you, though, in terms of organic growth, we're seeing as we speak, okay, organic growth in the US year over year in April and what we've seen so far. On the Canadian side, we're starting to see also some improvement there. That's why we feel pretty good that organically, in our sectors, truckload the same, okay, logistics the same. We feel that we're gonna show some organic growth in Q2 2026 versus 2025. Year over year.

Speaker #2: And those rates are coming higher, but that's not where we're focused, right? We're really focused on the contract area. But we do have some spot exposure in Canada.

Speaker #2: It's not yet seeing those kinds of numbers of renewals; they're more like in the low single digits.

Speaker #5: Okay. Very helpful. Thanks for your time.

Speaker #2: Pleasure.

Speaker #6: And the next question comes from the line of Ken Hexter with Bank of America. Please go ahead.

Speaker #7: Hey, great, Alain and David. Good afternoon and thanks for the details and the outlook. So the historical sequential change in LTL, TL Logistics can, David, I know you gave what you target now in this.

Scott Group: Okay.

Alain Bédard: Yeah.

Scott Group: Maybe just, you know, I asked for LTL, but maybe you could sort of walk, you know, walk through the P&L and how you're thinking about some of the margin assumptions in order to get to the guide for Q2. Maybe that'd be helpful.

Speaker #7: Can you give maybe historical, just given your given combined numbers, so we can kind of understand how that is normal or if it stands out?

Speaker #7: And then maybe talk about the highs and lows in the target, the $1.50, $1.60.

Alain Bédard: Okay. Well, that's a very good question, so that's why I'll leave it to David, our CFO. He's the numbers guy.

Speaker #5: Yeah. So on the historicals, Ken, we've got all of them in the appendix of the presentation on the website. We've got eight quarters of historicals within the presentation.

David Saperstein: Hi, Scott. For TFI as a whole, we expect OR improvement of 400 to 500 basis points. Taking it through the segments, I'm talking about sequentially from Q1 to Q2. LTL, we expect 600 to 700 basis points of sequential improvement, Q1 to Q2. Truckload, 200 to 300 basis points. Logistics, 75 to 125 basis points of improvement.

Speaker #5: So, I'll just ask folks to look at that. In terms of the range, the high, what could drive the high, the low? I mean, it's a pretty tight range.

Speaker #5: It's 10 cents, right? There's a lot of moving parts. I don't know, Mr. Bdard, if you'd like to comment on what could drive where we land within the range.

Speaker #2: It's what we feel, again, that is reasonable and attainable, okay, right now based on—because, don't forget, there's lots of instability right now, right?

Scott Group: Just to. I mean, that's a really big LTL number. Just any additional color there. Is fuel a big help or is pricing getting a lot better? It's a pretty big.

Speaker #2: So this is based on what we've seen so far in April. This is based on when we talked to our three top guys, or three senior EVPs, about how they see the quarter.

David Saperstein: A couple of points. First of all, Q1 was probably unusually bad because of the weather in the beginning of the quarter. We're exiting the quarter way better than we entered the quarter. Just to give you a little bit of sense across that, around that. In January, LTL shipments were down 10% year over year, okay? In March, they were up 8% year over year. April is looking similar to March. We had a very different situation now than in the beginning of the quarter, and that's what's driving a lot of this improvement. As well as the other things that the team has been working on.

Speaker #2: We asked those guys to re-forecast, okay, so that we can give you guys that kind of guidance, okay? So these are fresh off the press, revised numbers from our guys.

Speaker #2: So, I mean, we could be wrong, okay? But we feel pretty confident based on what we've seen so far, and the trend.

Speaker #5: So if I could just follow up on that. So, I mean, just given right now, right, up 8% both March and April in LTL, how did—I presume you're talking about?

Speaker #5: Or shipments. And then.

Speaker #2: No, that's shipment numbers.

Speaker #5: Shipments. And then that's not just catching up from the weather. That's actual economic turn. I just want to understand the feeling behind that and same on truckload, your ability to kind of capture that, share back real time.

David Saperstein: Fuel is a part of it, only where we have real strong density. It's really more around the volumes and some of the pricing actions that we will be putting through.

Speaker #5: Thanks.

Speaker #2: Well, it's an interesting question, right? Is it catch up from freight that didn't move in January that's driving that? Possibly. But I'm not sure that that would continue all the way into April.

Alain Bédard: Also, David, if I may add, don't forget that our GRI, okay, was not in place in late 2025. We delayed that, and it was put in place mid-March, right? So we have that. A little bit of tailwind on that, Scott.

Speaker #2: I mean, when I look at the LTL shipment count, it was down 10 in Jan. It was flat year over year in Feb. And then like I said, we're on 8% in March and looking similar.

Speaker #2: In April, so now the important piece is to press on the revenue per shipment and make sure that, because we were a little bit late on the GRI relative to peers.

David Saperstein: Yep.

Alain Bédard: Although this is only.

Scott Group: Thank you, guys. Appreciate it.

Alain Bédard: for about 25% of our shipment. Scott? This is only for about 25% of the shipment, but, you know, we're in the penny business, Scott, so every penny counts.

Speaker #2: We're also a little bit low relative to peers on the GRI at only 3.9%, so maybe some work to be done there. In terms of truckload, like Mr. Bdard was saying, there's been a lot of good work that was done last year taking excess trucks out of the system.

Scott Group: I get it. Thank you, guys. Appreciate it.

Alain Bédard: Thank you, Scott.

Operator: The next question comes from Ariel Rosa with Citigroup. Please go ahead.

Speaker #2: And so, when you look at the KPIs of our truckload today, you can see that revenue per truck per week ex-fuel was up 8.6%.

Ariel Rosa: Hey, good afternoon, Alain and David. So Alain, you mentioned that you were feeling good about the sales effort on the LTL side. I was hoping you could talk just more broadly about how the LTL turnaround is progressing and kind of how you think about the structural barriers to improving margins there. It sounds like a lot of improvement is underway, but just kind of curious how much of that is related to things that you guys are undertaking versus the broader macro environment may be turning more favorable.

Speaker #2: And truck count was down 7.1%. We did the same amount of revenue with 7% fewer trucks. And you see that in the DNA. Right?

Speaker #2: The DNA is down, I think, three and a half million dollars year over year, but actually on a like-for-like, if you exclude M&A, it's down 5 million dollars.

Speaker #2: And then, on top of that, we've got brokerage up another 7%. And that trend is continuing in April. So this is the direction that the segment is going.

Alain Bédard: Yeah. You see, Ari, if you look at the worst thing that you can have is you try to sell a service and the service is not there, right? Because that's what we do, us. We sell a service. We are supposed to pick up the freight, and we don't show up. I mean, that's not too good, right? This is what the operating guys have been working at, okay? Missed pickup. If you look at our claims, okay, consolidated, we're at 0.6. But if you remember when we were showing that separate, I mean, US was not that good. That's another area that we are improving. Stability in your sales team also helps you, okay, with the customer relationship and all that. This is like a goodwill thing.

Speaker #2: And we haven't really seen the impact of this pricing yet, right? Because these renewals are taking place now.

Speaker #7: Wonderful. Appreciate that. Thanks, David. Thanks, Alain.

Speaker #6: Thank you. And the next question comes from the line of Walter Stracklin with RBC Capital Markets. Please go ahead.

Speaker #8: Yeah, thanks very much. Good afternoon, Alain. Good afternoon, David. I want to perhaps just ask a couple of kind of modeling questions here. The tax rate has been pretty low here in the last couple of quarters.

Alain Bédard: Hopefully macro will start to help us down the road at one point when the market, you know, is stronger. In the meantime, okay, we still have lots to do for us to improve our service. I said in last conference call that if you look at our US, okay, we still have issues with not the next day service, we're good at that, but the second and the third day service, we have some issues. The guys are working on that. The culture of you know the old days of laissez-faire and I don't really care. I mean, we're changing that culture. You're gonna say, "Alain, you bought the company five years ago." I mean, five years ago, think about that.

Speaker #8: What tax rate should we kind of assume for the rest of this year? And does that hold for next year? And this is a second question here.

Speaker #8: I know you're not giving guidance for the full year, but historically—I mean, putting last year aside, obviously—but historically, summer trucking is better than second-quarter trucking.

Speaker #8: And you tend to have a better OR and better EPS. In the third quarter, all else equal. Is there anything, if there's no change in underlying conditions, no change in tariffs, just looking on a straight line, is it fair to say that summer sort of Q3 EPS seasonally does tend to be better than Q2?

Alain Bédard: We're still working on changing this culture of we're not a monopoly anymore, okay? We are an LTL company in North America, and we compete with good peers. I mean, we're competing with good companies in North America, so we have to be good. Our service has to be up there, right? In order to get more money. Because if you ask me today, price-wise, we are a discounted carrier compared to some of our peers, right? The reason we are some kind of a discounted carrier is because our service is not where it should be. This is the chicken and the egg, right? Where does this starts? Well, it starts with providing the acceptable service comparable to our peers. This is an ongoing thing that our ops guys are doing.

Speaker #8: And should we at least pencil that in for this year?

Speaker #2: Yeah. So you know what, Walter? David, I'll let you answer the tax thing there, and then I'll take the rest—the second question.

Speaker #5: Okay, sounds good. Yeah. On the tax, we have a permanent tax benefit, which is related to our financing structure, and that increased a little bit as we increased the size of that financing structure through additional M&A.

Speaker #5: And so that's a permanent benefit. But when profit before tax came down in Q1 quite a bit, so the rate looks very low, right?

Speaker #5: Because we have a fixed benefit and less profit before tax, what I would model going forward is something more in the maybe 24% range.

Alain Bédard: At the same time, also, we're saying to our commercial team, "Guys, let's focus on freight that fits us." I mean, don't give me a customer where I have to run 70mi to pick up the shipment, because this is not what I want. I want something that is closer to my terminal to improve my density, okay? I want more shipment per stop, okay? To improve my cost per shipment, et cetera, et cetera. So it's a team effort. But again, I mean, we're still in a position of working hard to get closer to the service level of our peers.

Speaker #5: And that should be directionally where we land over the course of the rest of the year.

Speaker #2: And then, Walter, on your question, I mean, although we don't give guidance, okay, on Q3 and Q4 for '26, but what I could say is this.

Speaker #2: I mean, our logistics sector is going to do probably a lot better, okay? I mean, one of our major contributors to our logistics is we move trucks.

Speaker #2: Right? For Packard and DTNA. And we just signed a deal also with Volvo, okay? So we started Volvo late in this year. So we all about 70% of all trucks manufactured in North America right now.

Ariel Rosa: Okay. Understood. Just as a follow on, I wanted to ask about the strength in flatbed rates. It's been pretty remarkable to see some of the public load board data. I'm just curious to hear your thoughts on, like, what has TFI's ability been to capitalize on that, particularly in Daseke. Just broadening it out to the broader business, how you think about what upcycle earnings could look like, both for Daseke and for the broader business. Let's assume for a moment kind of a benign resolution to USMCA.

Speaker #2: So, if you read what the OEMs are saying, I could tell you that we're very busy so far in Q2. And so, logistics and also the acquisition we did late last year—we didn't have that.

Speaker #2: So those guys are doing great. We are involved in the data center construction. So we are partnered with the construction company in Michigan with four data centers.

Alain Bédard: Listen guys, I mean, our revenue per mile is up in our TFI specialty truckload. Absolutely, our revenue per mile is moving up, okay? We drive more miles per truck per week, okay? This is a productivity effort that Steve, the leader of our truckload division, has been able to do, is do more with less. Okay? Now, for sure, if you look at our market, our focus is more and more into markets where we are more specialists. I'll give you the example of Lone Star, which is Texas-based. Today, we run 100 trucks, highly specialized, $7 to $8 a mile, okay? Which is great. Next to that, in Lone Star, we also run over the road at $2.25 to $4 a mile.

Speaker #2: So this is something new for us. So I feel really good about '26 in our logistics. Truckload, like David was saying, the renewal rates are really helping us.

Speaker #2: And thanks to the US administration, with these guys they took the bull by the horn with all these illegal and unsafe drivers. So this is really helping the industry.

Speaker #2: In general. And hopefully, the industry will stop chasing drivers and chase rates. Instead of always keeping chasing drivers. Hopefully, we learn from that after three years of being famine.

Speaker #2: On rates. So in our LTL, I mean, Cal and the team, they are working, and finally, on the commercial side, we have stability. So to answer your question, Q3 normally—okay, because it’s summer, costs are less—we probably should see better.

Speaker #2: And I feel pretty good. But we can't really give guidance because there's so much instability, Walter, in the world right now, okay? So that's why we say we stay cautious while we know that we have a lot of good stuff on the go with our team, right?

Alain Bédard: What we're saying is that, you know, being jack of all trades, master of none, what we're trying to do with the team there is that, guys, you know, from 100 trucks, we'll move the super specialty truckload to 150. The over the road thing there, we're gonna move that to someone else. Okay. What we did with SPD on the West Coast, okay? Those guys are very strong with Boeing, and Boeing is just on fire, right? The demand is just through the roof over there at Boeing. We said, "Guys, how many trucks do we need to service this high-end customer, that niche customer?" "We need 75 trucks." "That's it? That's all. Okay, fine. Goodbye." You used to have 200 trucks, now you're down to 75, okay?

Speaker #2: Our team is all pumped up, and after three years of a very, very difficult environment for us.

Speaker #5: Appreciate the time. Thank you.

Speaker #2: Pleasure, Walter.

Speaker #6: And the next question comes from the line of Jason Seidel with 2D Cowan. Please go ahead.

Speaker #9: Thanks, operator. Hey, Alain. Hey, David. I wanted to talk a little bit Alain about a comment you made that you guys are still discounted in terms of the LTL pricing versus your peers.

Alain Bédard: We're moving those trucks to Willy's in North Dakota because Willy's is our big over the road truckload guy, and we want Willy's to be 1,000 trucks, right? Not 500, 600, but 1,000. We're doing all these changes at the same time that we are working on reducing our costs, reducing our asset base. If you look at our brokerage operation in our truckload sector, last month, revenue-wise, we were up 7% to 8%. The goal is to drive more revenue with less steel in the road. All of that, this is when David was talking about our Q2 forecast versus our Q1, okay? We see some improvement in all of our sectors, including truckload.

Speaker #9: Where do you think the service level needs to go? It sounds like you're finding your next day a bit of a second and third day that you're looking at.

Speaker #9: So, where do you think it needs to go? And are you going to still give investors sort of updates, so we can sort of keep track of that progress?

Speaker #7: Yeah, yeah. That's a good point, Jason, because we know where we stand, okay? Although it's not published. But this is something, David, that we'll have to look at.

Speaker #7: But what I could tell you though, Jason, is that on the next-day service, okay, we're on par with our peers in the four-day service.

Speaker #7: And this is where the guys are working on second and third day. And I said the same story on the previous call. And this is where we lack, okay, the care we still have issues with shipping that's supposed to go to A, and they're going to B because they've not been scanned.

Ariel Rosa: Like on a like for like basis, 'cause I understand there's a mix impact there, but on a like for like basis, can you tell us kind of how contract rates are comping year over year?

Speaker #7: I mean, it's a global—when you look at EFI, our Canadian LTL, over time, has built one step at a time, right? So if you look at one of my best peers, OD, they were built one step at a time over a long period of time.

David Saperstein: Yeah.

Alain Bédard: Yeah.

David Saperstein: Maybe, I can jump in on that.

Alain Bédard: Go ahead, David.

David Saperstein: We're renewing contracts in the US flatbed in the high single digits to low double digits. We also have about 25% spot exposure in the US flatbed, and those rates are coming in higher, but that's not where we're focused, right? We're really focused on the contract area, but we do have some spot exposure. Canada is not yet seeing that, those kinds of numbers. The renewals there are more like in the low single digits.

Speaker #7: Us, we jumped into UPS Freight and the real estate was abandoned. The fleet was abandoned. The IT was abandoned. A lot of things were abandoned because UPS—for them, it was not really important.

Speaker #7: Their parcel business was the key. Their LTL was just an afterthought, right? So it takes us way more time than I thought. Way more time.

Speaker #7: But we're going to get there. And the service is the key, because if you don't provide the service that is equal to your peers, you get penalized, okay?

Ariel Rosa: Okay. Very helpful. Thanks for the time.

David Saperstein: Pleasure.

Operator: The next question comes from the line of Ken Hoexter with Bank of America. Please go ahead.

Speaker #7: You get switched over. Now, for sure, in a difficult environment, okay, in a soft market, you suffer way more than versus a, let's say, a strong market.

Ken Hoexter: Hey. Great, Alain and David. Good afternoon, and thanks for the details on the outlook. The historical sequential change in LTL, TL logistics. Dave, I know you gave what you target now in this. Can you give maybe historical, just given your combined numbers so we can kind of understand how that is normal or as it stands out? Then maybe talk about the highs, lows in the target, $150, $160.

Speaker #7: So the shippers will close at night more if your service is not up to par in a very strong market. But we've not been in a strong market for three years.

Speaker #7: So now we're getting ready to have a better market, but no, no, no. We're still working on improving our service so that we can move closer to our peers in terms of the revenue per shipment, right?

David Saperstein: Yeah. On the historicals, Ken, we've got all of the in the appendix of the presentation on the website. We've got 8 quarters of historicals with the new presentation. I'll just, you know, ask folks to look at that. You know, in terms of the range, the high end, you know, what could drive the high, the low, I mean, it's a pretty tight range. It's $0.10, right? There's a lot of moving parts. I don't know, Mr. Bédard, if you'd like to comment on what could drive, you know, where we land within the range.

Speaker #5: Now, Alain, I totally get that. And let's keep our fingers crossed for a better market. I wanted to follow up on something you mentioned.

Speaker #5: You talked a little bit about, obviously, the steps the administration here in the States is taking to combat some of the very questionable capacity that has flooded the market over the last couple of years.

Speaker #5: What's going on up in Canada? And what do you think needs to be done going forward to help out with capacity up there?

Speaker #2: Well, you know what? The Canadian, with the new Prime Minister, does not sleep at the wheel like the previous one. They took action, okay?

Alain Bédard: It's what we feel, Ken, that is reasonable and attainable, okay, right now, based on what we've seen so far. Because don't forget, there's lots of instability right now, right? This is based on what we've seen so far in April. This is based on when we talked to our three top guys, our three senior EVPs, about how they see the quarter. We asked those guys to reforecast, okay, so that we can give you guys that kind of guidance. Okay? These are fresh off the press, revised number from our guys. I mean, we could be wrong, okay? We feel pretty confident based on what we've seen so far and the trend.

Speaker #2: In 2011, okay, they started not to issue any employment record for known operator. So these driver-in guys took advantage of that. And that loophole has been closed as of December 25.

Speaker #2: So now, if you're a driver-inc, your employer has to issue you an employment—what do they call that—certificate that tells you your earnings, etc., etc.

Speaker #2: So now you cannot cheat the tax, right? So we see an effect, okay? Not as strong as what we see in the US because the US, they took really the bull by the horn.

Speaker #2: It's not the same approach, right? The Canadian approach is more slow and, okay, fine—after 10 years of complaining, they start to do something.

Ken Hoexter: If I could just follow up on that. I mean, just given right now, right up 8%, both March and April in LTL tonnage, I presume you're talking about or shipments. Then-

Speaker #2: But we're starting to see a little bit of that effect because those driver-inks don't pay any taxes, right? So they can offer a customer that doesn't care a much better deal than us.

Alain Bédard: Shipments. No, that's shipment numbers.

David Saperstein: Shipments. No, that's shipment numbers.

Ken Hoexter: Okay. Shipments. That's not just catching up from the weather, that's actual economic turn? I just wanna understand the feeling behind that, and same on truckload, your ability to kind of capture that share back real time. Thanks.

Speaker #2: But now, as of December 25, the employer had to issue kind of what we call—it's like a W-2 in the US, or W-9, okay?

David Saperstein: Well, it's always an interesting question, right? Is it catch up from freight that didn't move in January that's driving that? Possibly, but I'm not sure that would continue all the way into April. I mean, when I look at the LTL shipment count, down 10 in Jan, it was flat year over year in Feb. Like I said, we're on 8% in March and looking similar in April. The important piece is to press on the revenue per shipment and make sure that, because we were a little bit late on the GRI relative to peers, we were also a little bit low relative to peers on the GRI at only 3.9%.

Speaker #2: This is the state of your earnings, okay? And now, you're stuck with paying taxes because this information has been sent to CRA, the Canadian tax government.

Speaker #2: Right? But it's much slower than what we've seen in the US. I mean, the US is really very active, very active. And there's a safety reason there, okay?

Speaker #2: Those drivers are not safe. Their equipment is not safe. So it's got to be resolved. And us as an industry, we have to stop chasing drivers and talking about, "We have a shortage of drivers." Well, if you ask Exxon or Chevron, there's a shortage of oil.

Speaker #2: What do they do? Well, they just raise the price. They don't try to chase for oil. Stupidly.

David Saperstein: Maybe some work to be done there. In terms of truckload, listen, like Mr. Bouchard was saying, there's been a lot of good work that was done last year taking excess trucks out of the system. When you look at the KPIs of our truckload today, you can see that revenue per truck per week ex fuel was up 8.6%, and truck count was down 7.1%. We did the same amount of revenue with 7% less trucks. You see that in the D&A, right? The D&A is down, I think $3.5 million year over year, but actually on a like for like, if you exclude M&A, it's down $5 million.

Speaker #5: Alain, great color as always. Appreciate the time.

Speaker #2: Pleasure, Jason.

Speaker #3: And the next question comes from Alain. Jordan Alliger with Goldman Sachs, you go ahead.

Speaker #8: Yeah. Hi. Afternoon.

Speaker #5: Hey, Jordan.

Speaker #8: So, hey. So, sort of a question. Now that you've sort of streamlined, or restreamlined, the segments into the three broader categories, I was wondering, Alain, if you could maybe give some sense on this revamped basis and how you're looking at it—perhaps tying it to long-term margin targets—as to where you think these segments, in a normalized world, should be at.

Speaker #8: Thanks.

Speaker #2: Well, in a normal environment, okay, I don't see us running LTL with an OR that is 90 OR. Okay, right now, we were at 95 in Q1. Okay, based on what David just talked about, how do we see Q2? Probably above 90 OR. Okay?

J. Bruce Chan: Yeah.

Ken Hoexter: Yeah.

J. Bruce Chan: On top of that, we've got brokerage up another 7% and that trend is continuing into April. This is the direction that the segment is going, and we haven't really seen the impact of this pricing yet, right? Because all these renewals are taking place now.

David Saperstein: On top of that, we've got brokerage up another 7% and that trend is continuing into April. This is the direction that the segment is going, and we haven't really seen the impact of this pricing yet, right? Because all these renewals are taking place now.

Speaker #2: But in a normal environment, you have to run an LTL division between an 80 to an 85 OR, okay? So that's our goal. In North America, LTL.

Ken Hoexter: Wonderful. Appreciate that. Thanks, David. Thanks, Alain.

Speaker #2: So for sure, okay, the edge that we have is our Canadian operation. Everybody knows that. It's always been a gold standard, right? And our U.S. operation has never been a gold standard.

Alain Bédard: It's a pleasure.

Operator: Thank you. The next question comes from the line of Walter Spracklin with RBC Capital Markets. Please, go ahead.

Walter Spracklin: Yeah, thanks very much. Good afternoon, Alain. Good afternoon, David. I wanna-

Speaker #2: This is why it's a unified operation under CalNow, and we believe that our U.S. operation, over time, will get closer to our gold standard that we run in Canada.

Alain Bédard: Good afternoon.

Walter Spracklin: Perhaps just ask a couple kind of modeling questions here. Tax rate has been pretty low here in the last couple of quarters. What tax rate should we kind of assume for the rest of this year, and does that hold for next year? I know you're not giving guidance for full year, but historically, even putting last year aside obviously, but historically, summer trucking is better than Q2 trucking, and you tend to have a better OR and better EPS in Q3, all else equal.

Speaker #2: Right? So to say that an 80 to an 85 OR in a normal environment in our LTL, that's where we have to be. The truckload sector, I mean, we don't run van for retail guys.

Speaker #2: Right? We don't run vans for Amazon or Walmart. We don't do that. So our customers are industrial. We are a specialty. So our drivers are not just driving a truck.

Speaker #2: They also operate something, right? So, if it's a tanker, they operate the unloading of the tanker. If it's a flatbed, they operate with the tarp and things like that.

Walter Spracklin: Is there anything if there's no change in underlying conditions, no change in tariffs, just looking on a straight line, you know, is it fair to say that summer sort of Q3 EPS seasonally does tend to be better than Q2? Should we at least pencil that in, for this year?

Speaker #2: The strapping and all that. So it's not just the driver; he's also an operator. So this is why you can't run with a 90 OR—that doesn't make any sense.

Speaker #2: So if you look at our Q1, okay, we're running a 92-something OR, which is terrible. Okay? So our goal is to be under 90 OR very soon.

Alain Bédard: Yeah. You know what, Walter? David, I'll let you answer the tax thing there, and then, I'll take the rest. The second question.

David Saperstein: Okay. Sounds good. Yeah. On the tax, we have a permanent tax benefit, which was related to our financing structure. That increased a little bit as we increased the size of that financing structure through additional M&A. That's a permanent benefit, but when profit before tax came down in Q1 quite a bit, so the rate looks very low, right? Because we have a fixed benefit and less profit before tax. What I would model going forward is something more in the maybe 24% range. That should be directionally where we land over the course of the rest of the year.

Speaker #2: Okay? But in a normal environment, where should we be? Well, we have to be between, let's say, an 82 to an 86 OR in a specialty truckload.

Speaker #2: But more importantly, Jordan, it's the return on invested capital, okay? Which is the problem that we have. Right now, we're at 6%, which is terrible.

Speaker #2: No, in a normal year, we should be between 10 and 15. Now, this is where we're heading to. In our LTL, we have to be above 20.

Speaker #2: The same with our logistics sector. Above 20% return on invested capital, right? Our logistics, we've always run at about a 90 OR. That's where we're at now.

Speaker #2: We're very close to that. Where should we be in a normal environment with the quality of our logistics? Okay? Where we're heading, it's got to be between an 86 and an 88 in a normal environment, maybe 85 in a good year.

Alain Bédard: Yeah. Then Walter, on your question, I mean, although we don't give guidance, okay, on Q3 and Q4 for 2026, but what I could say is this. I mean, our logistics sector is gonna do probably a lot better, okay? I mean, one of our major contributor to our logistics is we move trucks, right? For PACCAR and DTNA, and we just signed a deal also with Volvo, okay? We start Volvo late this year. We haul about 70% of all the trucks manufactured in North America right now. If you read what the OEMs are saying, and I could tell you that we're very busy so far in Q2. Logistics and also the acquisition we did late last year, we didn't have that, so those guys are doing great.

Speaker #2: Okay? But this is where we have to be in a normal environment. So if you do the sum of all that, TFI is not a $90 OR company.

Speaker #2: I mean, that's what we'll probably be in Q2, around a 90 OR. But in a normal environment, TFI is not a 90 OR. Where we're heading with the quality of our people and our market, in a normal environment, it's more like an 85 OR.

Speaker #2: Right? Globally, 85 to 87. Right?

Speaker #5: Got it. Thank you very much.

Speaker #3: And next question comes from the line of Ryan Ossenberg with JPMorgan. Please go ahead.

Speaker #9: Hey, thanks for taking the question. Just to come back to the GRI, I know you said it was late and low, at least in the US.

Alain Bédard: We are involved in the data center construction, so we are partnered with the construction company in Michigan with four data centers. This is something new for us. I feel really good about, you know, 2026 in our logistics. Truckload, like David was saying, the renewal rates are really helping us. Thanks to the US administration with these guys, you know, they took the bull by the horn with all these illegal and unsafe drivers. This is really helping the industry in general. Hopefully, the industry will stop chasing drivers and chase rates instead of always chasing drivers. Hopefully, we learn from that after three years of being like famine on rates.

Speaker #9: How did that work out? It sounded like perhaps there's another action coming, just based on what you were talking about earlier. And are you starting to see some weight per shipment improve there as well?

Speaker #9: So maybe you can talk about the price and mix trend in US LTL.

Speaker #2: Yeah, yeah. Well, you know what? Go ahead, David. I'll let you go with that.

Speaker #8: Oh, yeah. Yeah. Let's see. So the pricing actions that are taking place next are specific—specific accounts, specific freight that is below where it needs to be because the volumes have improved.

Speaker #8: And so now we have to be more selective. And so that's the work that's being done right now, and will sort of develop over time.

Alain Bédard: In our LTL, I mean, Cal and the team there are working, and finally, on the commercial side, we have stability. To answer your question, Q3 normally, okay, because it's summer, costs are less. We probably should see better, and I feel pretty good, but we can't really give guidance because there's so much instability, Walter, in the world right now, okay? We say cautious, but we know that we have a lot of good stuff on the go with our team, right? Our team is, you know, all pumped up and after three years of, you know, very difficult environment for us.

Speaker #8: In terms of weight per shipment, it didn’t move too much when you look at the quarter, right? We’re kind of year-over-year, kind of flat.

Speaker #8: And that's true in the U.S. as well.

Speaker #9: All right, thanks, David. Maybe just to follow up on that real quick, anything into April for weight per shipment, as you've given out some information on that already.

Speaker #9: And then we'd love to hear a little bit more about the acquisition you guys just did. I think it's a fairly good size at 2% of consolidated revenue.

Speaker #9: So maybe give us a sense in terms of what you're seeing as you integrate it, and for the rest of the year. Thank you.

Walter Spracklin: Appreciate the time. Thank you.

Speaker #5: Yeah, I don't have the weight per shipment in front of me, but I do have LTL revenue per shipment in April, and that's flat.

Alain Bédard: Pleasure, Walter.

Operator: The next question comes from the line of Jason Seidl with TD Cowen. Please go ahead.

Jason Seidl: Thanks, operator. Hey, Alain. Hey, David.

Speaker #5: Which is much improved over March, because in March it was down low single digits. So we're flat on revenue per shipment in April, with 6% more shipments.

Alain Bédard: Hi, Jason.

Jason Seidl: Wanted to talk a little bit, Alain, about a comment you made that you guys are still discounted in terms of the LTL pricing versus your peers.

Alain Bédard: Yeah.

Jason Seidl: Where do you think the service level needs to go? It sounds like you're finding your next day, but it's the second and third day that you're looking at. Where do you think it needs to go? Are you gonna still give investors sort of updates so we can sort of keep track of that progress?

Speaker #2: And the next question of our friend, David, was about the acquisition that we—yeah.

Speaker #5: The one in logistics, Brian? Is that—it's the one? Yeah. Hey, listen. It's a great value-added kind of logistics, niche-y business. It's similar to, in concept, it's similar to the JHT acquisition, meaning niche, good barriers to entry, and these guys are basically providing value-added warehousing, kitting, sub-assembly in the auto sector—entrepreneurial—and we're able to grow this into different adjacent areas, like even into some data centers, some battery plants. We're looking at expanding this into the trucking OEMs.

Alain Bédard: Yeah, that's a good point, Jason, because we know where we stand, okay? Although it's not published, this is something, David, that we'll have to look at. What I could tell you, though, Jason, is that on the next day service, okay, we're on par with our peers and the four-day service. This is where the guys are working on second and third day. I said the same story on the previous call. This is where we lack, okay, the you know the care, okay? We still have issues with shipment that's supposed to go to A and they're going to B because they've not been scanned. I mean, it's a global.

Alain Bédard: You know, when you look at TFI, our Canadian LTL over time has built one step at a time, right? So if you look at one of my best peer, OD, they were built one step at a time over a long period of time. Us, we jump into UPS Freight and, you know, it, the real estate was abandoned, the fleet was abandoned, the IT was abandoned, a lot of things were abandoned because UPS, for them, it was not really important. Their parcel business was the key, their LTL was just an afterthought, right? So it takes us way more time than I thought, you know, way more time. But we're gonna get there, and the service is the key because if you don't provide a service that is equal to your peers, you get penalized, okay? You get switched over.

Speaker #5: So it's just another example. It's really the kind of business that we like in our logistics. I mean, we don't do a ton of brokerage in our logistics.

Speaker #5: It's—we do have some, but what we really like are these niche, really value-added providers that provide great service and great returns, which, by the way, are completely uncorrelated with the rest of the business.

Speaker #5: And provide a nice portfolio element to the earnings profile as well.

Speaker #2: Yeah. So, if I may add, guys, I mean, these guys are solution providers to our customer, right? So they come in, and they say they have a great engineering department that comes in and provides a solution that could be good for a year, good for two years, on a project.

Alain Bédard: Now, for sure, in a difficult environment, okay, in a soft market, you suffer way more than versus, let's say, a strong market. The shippers will close an eye more if your service is not up to par in a very strong market. We've not been in a strong market for three years. Now we're getting ready to have a better market, but no, no, we're still working on improving our service so that we can move closer to our peers in terms of the revenue per shipment, right?

Speaker #2: So this is really a good thing. And now, like David is saying, we're talking to our truck OEM, which we moved our trucks. Right?

Speaker #2: So we're talking, to give an example, about a company that wants to open up a battery plant for storage. Right? Not for the cars, but for storage.

Speaker #2: So we are involved with those guys on that in the U.S. So that division is, I would say, David, what, 85% U.S. and 10-15% Canadian?

Jason Seidl: No, Alain, I totally get that, and let's keep our fingers crossed for a better market. Wanted to follow up on something you mentioned. You talked a little bit about, obviously, the steps the administration here in the States is taking to, you know, combat some of the very questionable capacity that has flooded the market over the last couple of years.

Speaker #2: Of revenue-wise? Yeah. So the split—so it's really US-based.

Alain Bédard: Mm-hmm. Yeah.

Speaker #9: Okay, very helpful. Thanks very much, guys.

Jason Seidl: You know, what's going on up in Canada, and what do you think needs to be done going forward to help out with capacity up there?

Speaker #3: And the next question comes from the line of Pam Radovitz with UBS. Please go ahead.

Alain Bédard: Well, you know, the Canadian with the new prime minister that's not asleep at the wheel like the previous one, they took action, okay? In 2011, okay, they've decided not to issue any employment record for an owner-operator. These Driver Inc. guys took advantage of that, and that loophole has been closed as of 25 December. Now if you're a Driver Inc, your employer has to issue you an employment, what they call that? Certificate that tells you your earnings, et cetera, et cetera. Now you cannot cheat the tax, right? We see an effect, okay? Not as strong as what we see in the US, because US, they took really the bull by the horn. It's not the same approach, right?

Speaker #10: Yeah, good afternoon. Good evening. Let's see. You've, I think, had a lot of helpful responses to the questions, Alain, and it's great to see the improvement in demand and the traction you have.

Speaker #10: How do you think about where you're at on, I guess, quality of shipments? If I look back to what happened with indices focused on US LTL, you kind of had a lot of shipments in the system, and that came down maybe more than you thought.

Speaker #10: Right? There was probably a purposeful move out of shipments. And now you've got the service improvement. How do you think about the shipments per day you're at in the US network, and the kind of quality of the shipments you have?

Speaker #10: Is that kind of on the right track? And what you're getting is good quality? I think it relates to some of the other questions you've had.

Speaker #10: And then maybe, additional to that, is how long is the lag between service and really getting more on price, right? Because your industry leaders get, call it, 4–5 percent revenue per hundredweight.

Alain Bédard: The Canadian approach is more slow and, okay, fine, after 10 years of complaining, they start to do something. We're starting to see a little bit of that effect because those Driver Inc. don't pay any taxes, right? They can offer a customer that doesn't care a much better deal than us. Now, as of December 2025, the employer had to issue kind of what we call T4s, it's like a W-2 in the US or a W-9, okay? This is the statement of your earnings, okay? You're stuck with paying taxes because this information has been sent to CRA, the Canadian tax government, right? But it's much slower than what we've seen in the US. I mean, the US is really very active. You know what? There's a safety reason there, okay?

Speaker #10: That's not something you can do. I think it was really high service, but I guess a couple of components on just kind of where you're at in US LTL.

Speaker #2: Yeah, yeah. You know what? The commercial team has done, as an example, with our 3PL, what we gave those guys—let's say a year ago—was mostly blanket rates.

Speaker #2: Which is the worst that you could do, right? Because then you give the guy a blanket rate. I mean, they will use you when you're the cheapest and lowest guy in the world.

Speaker #2: Right? So we said, "This doesn't make any sense." So we have to move closer to CSP—customer-specific pricing. Okay, so this is stickier because it's customer-specific to a 3PL customer.

Alain Bédard: Those drivers are not safe. Their equipment is not safe. You know, it's gotta be resolved. Us as an industry, we have to stop chasing drivers and talking about we have a shortage of drivers. Well, if you ask Exxon or Chevron, there's a shortage of oil, what do they do? Well, they just raise the price. They don't try to chase for oil stupidly.

Speaker #2: Okay? And what we see now, okay, is that our 3PL business is way more acceptable in terms of volume, in terms of pricing, and in terms of stickiness than the system we had before.

Speaker #2: On the other side, the corporate account—okay, we made a lot of changes there with two big retailers that want to squeeze you 45 times a day on the rates.

David Saperstein: Alain, great color as always. Appreciate the time.

Jason Seidl: Alain, great color as always. Appreciate the time.

Alain Bédard: Pleasure, Jason.

Operator: The next question comes from the line of Jordan Alliger with Goldman Sachs. Please go ahead.

Speaker #2: So we just said, "I'm sorry." Okay? We can't afford to service you because we can't make money with you guys. We can't run business with 115 OR.

Jordan Alliger: Yeah. Hi. Afternoon.

Alain Bédard: Hey, Jordan.

Jordan Alliger: Hi. Sort of question, now that you've streamlined or re-streamlined the segments into the three broader categories, I was wondering, Alain, if you could maybe give some sense on this revamped basis and how you're looking at it, perhaps medium- to long-term margin targets as to where you think these segments in a normalized world, you know, should be at. Thanks.

Speaker #2: So, at the same time that we're moving our SMB to where they should have been at the time, our corporate shipments are about flat.

Speaker #2: Why is that? Because we got rid of two retail guys that were very important to us about a year and a half ago. And now, they are kind of still with us, but very negligible in terms of the size.

Alain Bédard: Well, in a normal environment, okay, I don't see us running an LTL with an OR that is 90 OR. Okay. Right now we were at 95 in Q1, okay. Based on what David just talked about, how do we see Q2, probably a sub 90 OR. Okay. In a normal environment, you have to run an LTL division between 80 to 85 OR. Okay. That's our goal in North America LTL. For sure, okay, the edge that we have is our Canadian operation. Everybody knows that has always been, you know, a gold standard, right? Our US operation has never been a gold standard. This is why it's a unified operation under Cal now.

Speaker #2: If you look at the mix between SMB, corporate, government, and 3PL, okay, we feel good about the mix that we have today. Now, that doesn't mean that we're not pushing on SMB, okay, absolutely.

Speaker #2: We're still pushing on that, because there are some niche areas in that trade that fit us better than anyone else, right? And this is the goal: to get that freight that fits us better than anyone else.

Speaker #2: In our industry, right? So this is the focus that we have with our guys. Not a game, a price game is just get the right price, but something that fits us.

Alain Bédard: We believe that our US operation over time will get closer to our gold standard that we run in Canada, right? To say that an 80 to an 85 OR in a normal environment in our LTL, we, that's where we have to be. The truckload sector, I mean, we don't run van for retail guys, right? We don't run van for Amazon or Walmart. We don't do that. Our customers are industrial. We are a specialty. Our drivers are not just driving a truck, they also operate something, right? If it's a tanker, they operate the unloading of the tanker. If it's a flatbed, they operate with the tarp and things like that, the strapping and all that. It's not just the driver, he's also an operator. This is why you cannot run, okay, with a 90 OR.

Speaker #2: Right? So sometimes a shipment that is worth $300 for my peers, okay, fits me way better than them. So these are the kinds of shipments that I want.

Speaker #2: Right? So this is all these tools that we've been using, and slowly, because we have some stability in our sales force, then we can build with the strategy with those guys.

Speaker #2: So the leader that we have in our commercial now is a strategic player that comes out with all these kinds of, I wouldn't—promotion is not the right word—but strategic approaches to the market.

Speaker #2: So, as an example, one area that we're pushing more and more is transporter freight between the US and Canada, and vice versa. Right? So, we are a large player in Canada.

Speaker #2: And we know that the profitability of transborder shipment is way better than domestic U.S. or domestic Canadian shipment. But until a year ago, the focus—we kept talking about it, but it didn't walk the talk.

Alain Bédard: That doesn't make any sense. If you look at our Q1, okay, we're running a what? A 92% OR, which is terrible. Okay. Our goal is to be under 90% OR very soon. Okay. But in a normal environment, where should we be? Well, we have to be between, let's say, 82% to 86% OR in our specialty truckload. But more importantly, hey, Jordan, is the return on invested capital, okay, which is the problem that we have. Right now we're at 6%, which is terrible. In a normal year, we should be between 10 and 15. Now, this is where we're heading to. In our LTL, we have to be above 20%. The same with our logistics sector, above 20% return on invested capital, right? Our logistics, we've always run at about a 90% OR.

Speaker #2: So now, okay, we see also on the transporter side, okay, way more focus on growing that highly profitable business.

Speaker #10: Right. Okay. That makes a lot of sense. What about a lag between service improvement and price? I don't know if you want to say kind of what your revenue was in the quarter year over year, or how you think that progresses.

Speaker #10: But is price really starting to come through, or is that something where you say, 'Hey, that's another lever to come in the future that we're seeing nice traction on shipments?' Price comes next year, or price comes a couple of quarters out? Just how should we think about that element of the equation?

Speaker #10: Thanks.

Speaker #2: Hard to say, Tom. I mean, we’re not there. We’re not there to say that you guys, we’re going to get more dollars, okay, from our customer because our service is up to par to our peers.

Alain Bédard: That's where we're at now. We're very close to that. Where should we be in a normal environment with the quality of our logistics? Okay, where we're heading, it's got to be between 86 and 88 normal environment. Maybe 85 is a good year. This is where we have to be in a normal environment. If you do the sum of all that, TFI is not a 90 OR company. I mean, that's where we'll probably be in Q2, around 90 OR. In a normal environment, TFI is not a 90 OR. Where we're heading with the quality of our people and our market, end market, in a normal environment, it's more like an 85 OR, right? Globally. 85 to 87.

Speaker #2: We're not there yet. So right now, where we are there, though, is that through the stability of our commercial team, to the focus that these guys were able to bring, volume is organically growing, okay, compared to where we were, let's say, a year ago.

Speaker #2: That we can say. And we know, because we have experience, that the more that your service is closer to your peers, then your revenue per shipment, unless you're stupid—okay—will be closer to your peers.

Speaker #2: Okay? We're not there yet, Tom. I mean, we're slowly, at least, creating some kind of organic growth, which we've never done, right? On the US LTL.

Speaker #2: David was explaining, okay, on the shipment count. But on the pricing, we're not there. That's an opportunity in the future. That I could say.

Jordan Alliger: Got it.

Alain Bédard: Right?

Jordan Alliger: Got it. Thank you very much.

Operator: The next question comes from the line of Brian Ossenbeck with J.P. Morgan. Please go ahead.

Speaker #10: Right. Okay. Makes sense. Thank you.

Speaker #2: You're welcome, Tom.

Speaker #1: And the next question comes from the line of Conor Gupta with Koshab Capital. Please go ahead.

Brian Ossenbeck: Hey, thanks for taking the question. Just to come back to the GRI, I know you said it was late and low, at least in the US. How did that-

Speaker #11: Good afternoon, Alain and David. So, Alain, maybe I wanted to ask you first on the demand side. I think a lot of people are talking about—obviously—the trucking rates are going up a lot.

Alain Bédard: Yeah.

David Saperstein: Work out? Sounded like perhaps there's another action coming just based on what you're talking about earlier. Are you starting to see some weight per shipment improve there, as well? Maybe you can talk about the price and mix trends in US LTL.

Brian Ossenbeck: Work out? Sounded like perhaps there's another action coming just based on what you're talking about earlier. Are you starting to see some weight per shipment improve there, as well? Maybe you can talk about the price and mix trends in US LTL.

Speaker #11: Fuel prices have surged as well. And clearly, the truck rates, combined with the fuel prices, are what the shippers see at the end. In this environment, I mean, what do you see from a demand perspective?

Alain Bédard: Yeah.

David Saperstein: Uh-

Alain Bédard: Well, you know what? Go ahead, David. I'll let you go with that.

David Saperstein: Listen, the pricing actions that are taking place next are specific. Specific accounts, specific freight that is below where it needs to be because the volumes have improved, and so now we have to be more selective. That's the work that's being done right now, and we'll sort of develop you know over time. In terms of weight per shipment, it didn't move too much when you look at this quarter, right? We're kind of year over year, kind of flat. That's true in the US as well.

Speaker #11: I mean, I'm curious to know because I know you said you're a discounted carrier in some respects, and US LTL, so maybe it's not such a big issue for you.

Speaker #11: But at some point, there’s some price elasticity, perhaps. I’m just trying to see—what are you seeing from that perspective? Where do you see shippers becoming more sensitive or less sensitive now?

Speaker #10: Well, for sure. I mean, right now, it's a double whammy for the shippers, right? So they get the pressure of the fuel surcharge, right?

Speaker #10: Which is huge. And at the same time, on the US side—mostly on the US side—they get the offer that's been reduced tremendously by this new administration that is doing their job in terms of getting rid of all these unsafe and unqualified drivers in the US.

Brian Ossenbeck: All right. Thanks, David. Maybe just to follow up on that real quick, anything into April for weight per shipment, as you've given out some information on that already, and then we'd love to hear a little bit more about the acquisition you guys just did. I think it's fairly good size at 2% of consolidated revenue. So maybe give us a sense in terms of what you're expecting from that here, into the next quarter as you integrate it and for the rest of the year. Thank you.

Speaker #10: So, I mean, for sure, it's difficult. But don't forget that all of this that's going on right now—the volumes are not growing. Right?

Speaker #10: It's the offers that are less and less and less, right? So what we've seen so far is that, hey, listen, I mean, the market is adjusting.

David Saperstein: Yeah. I don't have the weight per shipment in front of me, but I do have LTL revenue per shipment in April, and that's flat, which is much improved over March, because in March, it was down low single digits. We're flat revenue per shipment in April with 6% more shipments.

Speaker #10: Okay? To higher rates, to the fuel surcharge. And everybody is thinking that this thing there in Iran, hopefully, will get settled at one point.

Speaker #10: It's an economic war right now, right? Because they're not really shooting at each other. But, I mean, it's a financial thing there, and it's going to get resolved at one point.

Alain Bédard: The next question of our friend David was about,

Speaker #10: Right? Is it in a month? Is it in two months? And this fuel surcharge will start to disappear slowly over time. But at the same time, okay, we hopefully—we believe us—that because of our business focus on industrial, okay, not retail, on the truckload side, I'm talking here, this is going to start—the demand is going to start to grow at the same time that maybe fuel will start to drop, fuel surcharge will start to drop, rates will keep flat or going up.

David Saperstein: The acquisition.

Alain Bédard: the acquisition that we. Yeah.

David Saperstein: The one in logistics, Brian? Is that

Brian Ossenbeck: Yeah, that was the one.

David Saperstein: It's the one? Yeah. I mean, listen, it's a great value-added kind of logistics niche-y business. It's similar to the JHT acquisition in concept, meaning yeah, niche good barriers to entry. These guys are basically providing value-added warehousing, kitting, sub-assembly in the auto sector, entrepreneurial, and we're able to grow this into different adjacent areas, like even into some data centers, some battery plants. We're looking at expanding this into the trucking OEMs. It's just another example. It's really the kind of business that we like in our logistics. I mean, we don't do a ton of brokerage in our logistics. It's...

Speaker #10: And our costs will come down because of fuel surcharge, because at the end of the day, when fuel surcharge is 80% of the base rate, I mean, it's not a good discussion that you have with the customer.

Speaker #10: Right? Nobody likes that. But it is what it is, right?

Speaker #11: That makes sense, Alain. Thanks. And just to follow up, I think we haven't had a lot of discussion today on your M&A opportunities. Can you talk about what's your focus here now, given the market seems to be turning?

Speaker #11: I think you have waited for some time, I think, to pull the trigger, I guess. But your free cash is still good. More earnings power probably means more cash flow.

David Saperstein: We do have some, but what we really like are these niche, really value-added providers that provide great service and great returns, which, by the way, are completely uncorrelated with the rest of the business and provide a nice portfolio element to the earnings profile as well.

Speaker #11: So how do you see capital allocation? Maybe heading into 2027?

Speaker #10: Yeah, yeah. Well, for sure, the problem we have right now on M&A, Conor, is very simple: everybody is waiting because everybody believes that things will get better.

Speaker #10: So the seller says, "Why would I sell now? Okay, I'm going to wait. I'm going to wait because my numbers, my profitability, will improve over the next 6 to 12 months or 18 months."

Alain Bédard: Sorry, if I may add, guys. I mean, these guys are a solution provider to our customer, right? They come in, and they say they have a great engineering department that comes in and provide a solution that could be good for a year, good for two years on a project. So this is really a good thing. Now, like David is saying, we're talking to our truck OEM, which we moved their trucks, right? We're talking to, as an example, a company that wants to open up a battery plant for storage, right? Not for the cars, but for storage. We are involved with those guys on that in the US. That division is, I would say, David, 85% US and 10, 15 percent-

Speaker #10: So, because we are having serious discussion on some nice tokens, but everything is on hold right now because everybody says, 'Oh, things will get better.' So we wait.

Speaker #10: Now, for us, in the meantime, okay, what myself and David—we're going to be doing—is very simple. If the price is acceptable to us, we'll do the buyback.

Speaker #10: If not, we'll just reduce the debt, reduce the leverage. So, I mean, like you said, Conor, with the huge free cash flow that we're going to generate—I mean, Q1 was an exception because we pay fuel short-term and our customers pay us on average about 40 days.

Speaker #10: So this is why our free cash flow took a beating in Q1. But when the fuel situation gets normal, I mean, this cash flow is going to get back to the usual numbers that we see—$700, $800 million of cash flow.

David Saperstein: Yeah.

Alain Bédard: -Canadian, uh-

David Saperstein: Yeah.

Alain Bédard: -Canadian, uh-

David Saperstein: Yep.

Alain Bédard: Revenue-wise. Yeah.

Speaker #10: We're going to work on reducing the debt. The dividend—I mean, we grow the dividend every year. We've grown that, what, two pennies a quarter.

David Saperstein: Yep.

Alain Bédard: The split. It's really US-based.

Brian Ossenbeck: Okay. Very helpful. Thanks very much, guys.

Speaker #10: Last year. So yes, maybe a little bit of dividend growth, but really, it's going to be focused on reducing our leverage because we believe that interest rates are not coming down anytime soon in the US, unless maybe a new president of the Fed changes his mind.

Operator: The next question comes from the line of Tom Wadewitz with UBS. Please go ahead.

Tom Wadewitz: Yeah. Good afternoon, good evening. Let's see. You've, I think, had a lot of helpful responses to the questions. Alain Bédard, and it's, you know, great to see the improvement in demand and traction you have. How do you think about where you're at on, I guess, quality of shipments? If I look back to what happened. This is focused on US LTL. You know, you kinda had a lot of shipments in the system, and that came down maybe more than you thought, right? There was some probably purposeful move out of shipments, and now you got the service improvement. How do you think about the, like, shipments per day you're at in US network and kind of quality of the shipments you have?

Speaker #10: And in Canada, we're worried that because of inflation, maybe the interest rate will start to go up. So we said, 'You know what? Let's reduce our debt level, and if I remember—David, correct me if I'm wrong—but I think our leverage goes down under 2 if we don't do anything major in 2026 in terms of M&A, besides what we've done so far.' Yep.

Speaker #10: Yep. Yep. And on that, Conor, we love—well, we make the best of whatever situation the market gives us. And the market gave us, over the last three years, a very, very difficult cycle.

Tom Wadewitz: Is that, you know, kind of on the right track and what you're getting is good quality? You know, I think it relates to some of the other questions you've had.

Alain Bédard: Yeah.

Tom Wadewitz: Maybe additional to that is, like, how long is the lag between service and really getting, you know, more on price, right? Because you're

Speaker #10: And during those last three years, we deployed more capital than we ever have in any three-year period. So when we look at 2023, 2024, 2025, and the first quarter, we've deployed $2.5 billion in investments—$1.8 billion of that was M&A.

Alain Bédard: Yeah.

Tom Wadewitz: You know, the industry leaders get, call it, 4% to 5% revenue per hundredweight. You know, that's something you can, you know, do I think with really high service. I guess a couple components on just kinda where you're at in US LTL.

Speaker #10: And $620 million of that was buybacks. And so we feel very good about that timing. We're optimistic that now, in this environment, we're going to start to see the returns.

Alain Bédard: Yeah. You know what the commercial team has done, as an example, you know, with our 3PL, you know, what we gave those guys, let's say a year ago, was mostly blanket rates, which is the worst that you could do, right? Because then you give the guy a blanket rate that means they will use you when you're the cheapest and lowest guy in the world, right? We said, "This doesn't make any sense." We have to move closer to CSP, customer-specific pricing, okay? This is stickier because it's customer specific to a 3PL customer, okay?

Speaker #10: On those investments, we'll use cash flows to delever a little bit and get ready for the future.

Speaker #11: That's great. I appreciate the time, as always. Thank you.

Speaker #10: Thank you, Conor.

Speaker #1: And the next question comes from the line of Manuel Fourier with Davidson. Please go ahead.

Speaker #12: Hey, good afternoon, David. Good afternoon, Alain. Thanks for the update on capital allocation and the update on M&A, too. I'm just curious—what about the potential for maybe a more transformative deal? And is anything required on U.S. LTL to add density in order to get to a normalized OR of 80 to 85 percent, as you mentioned before?

Alain Bédard: What we see now, okay, is that our 3PL business is way more acceptable in terms of volume, in terms of pricing, and in terms of stickiness than the system we had before. On the other side, the corporate account, okay, we made a lot of changes there with two big retailers that want to squeeze you 45 times a day on the rates. We just said, "I'm sorry, okay, we can't afford to service you because we can't make money with you guys. You know, we can't run business with 150 in the red." At the same time that we're moving our SMB to where they should have been at the time, and our corporate, okay, shipments is about flat. Why is that?

Speaker #10: You know, Benoit, it takes two to dance, right? So far, in the discussion that we had with one of our targets, it didn't work, right?

Speaker #10: It didn't work. But if you go back in time, it took us five years — I've been working five years to convince UPS to sell UPS rate. It took me two years to convince DHL to sell DHL Canada.

Alain Bédard: Because we got rid of two retail guys, okay, that were very important to us about a year and a half ago, and now they are kind of still with us, but very, you know, negligible in terms of the size. If you look at the mix between SMB, corporate, government, and 3PL, okay, we feel good about the mix that we have today. Now, that doesn't mean that we're not pushing on SMB. Okay? Absolutely, we're still pushing on that because there is some niche areas that create that fits us better than anyone else, right? This is the goal, is to get that fit, that freight that fits us better than anyone else in our industry, right? This is the focus that we have with our guys. Not a game, a price game.

Speaker #10: So, I mean, we're very—how would you say that? I mean, we're used to people saying no to us, okay? But we don't let go when we believe that, for the shoulder—the target—and our shoulder, a deal would be beneficial.

Speaker #10: Right? So, right now, it's still a no. It's still no, no, no, no, no. You do something else. Call someone else. Don't bother me.

Speaker #10: But it's still the best deal that we could do in a lot of deals that we're looking at. But right now, it's difficult, right?

Speaker #10: So, like David was saying, we're going to be busy this year in 2026. We still have a lot of good stuff to go. I mean, Desky was about two years ago.

Speaker #10: We still have a lot of work to do there on working with those guys to turn good truckers into good businessmen. And the difference being, good truckers like to serve the customer and hope that they'll make money.

Alain Bédard: It's just to get the right price, but something that fits us, right? Sometimes a shipment that is worth $300 for my peers, okay, fits me way better than them. This is the kind of shipments that I want, right? This is all these tools that we've been using, and slowly, because we have some stability in our sales force, then we can build the strategy with those guys. The leader that we have in our commercial now is a strategic player that comes out with all these kinds of, Promotion is not the right word, but strategic approach to the market. As an example, one area that we're pushing more and more is transborder freight between US and Canada and vice versa, right?

Speaker #10: Good businessmen are focused on making money, servicing customers well. It's not the same, right? So this is the kind of TFI education on truckers that we try to do.

Speaker #10: So M&A is the blood of TFI. So 2026 is probably going to be very quiet. But hey, listen, we're getting ready. We're getting ready.

Speaker #10: But like David was saying, I mean, we made a ton—$1.8 billion of investment. And the last few years, I mean, we were not able to show how good these were because the market was so bad.

Speaker #10: Now, 2026, 2027—hopefully, things are starting to turn. Then we'll be in a position to not come up with a stupid $4 a share of EPS.

Alain Bédard: We are a large player in Canada, and we know that the profitability of a transborder shipment is way better than a domestic US or a domestic Canadian shipment. Until a year ago, the focus. We kept talking about it, but it didn't walk the talk. Now, okay, we see also on the transborder side, okay, way more focus on growing that highly profitable business.

Speaker #10: Right? We'll get closer to where we should be. And hopefully, we can come up with reduced leverage and could strike a good deal once we have a seller that says yes instead of no.

Speaker #12: That's great, Conor. And maybe just in terms of follow-up—Alain, you've seen a lot of trucking cycles over the years. You mentioned potential OR for each segment under a normalized environment.

Tom Wadewitz: Right. Okay. That makes a lot of sense. What about the lag between service improvement and price? Like, I don't know if you wanna say kinda what your revenue per hundredweight was, you know, in the quarter year over year or how you think that progresses. You know, is price really starting to come through, or is that something where you say, "Hey, that's another lever to come in the future that we're seeing nice traction on shipments, price comes next year-

Speaker #12: How fast do you think we could get into a normalized environment, given this cycle and improved fundamentals? Could we see a normalized environment in 2027 or maybe 2028?

Speaker #10: You know what, Benoit? It's hard to predict. But I think that if you look at industrial-free environments in the US or in Canada—I mean, schools, hospitals, roads, bridges, etc., etc.—housing, housing is an issue, right?

Alain Bédard: Yeah.

Tom Wadewitz: lower price comes a couple quarters out, or just how to think about that key element of the equation. Thanks.

Alain Bédard: Yeah.

Tom Wadewitz: lower price comes a couple quarters out, or just how to think about that key element of the equation. Thanks.

Speaker #10: I mean, so we feel pretty good that interest rate is an issue, right? So when interest rate being high is related to inflation being high, so now we have the problem of the fuel, but the problem of the fuel will probably be settled soon.

Alain Bédard: Hard to say, Tom. I mean, we're not there. We're not there to say that, "Guys, we're gonna get more dollars, okay, from our customer because our service is up to par, to our peers." We're not there yet. Right now, where we are there, though, is that through the stability of our commercial team to the focus that these guys were able to bring volume organically growing, okay, compared to where we were, let's say, a year ago. That we can say. We know, okay, because we have experience, that the more that your service is closer to your peers, then your revenue per shipment, unless you're stupid, okay, will be closer to your peers. Okay? We're not there yet, Tom. I mean, we're slowly at least creating some kind of organic growth, which we've never done, right?

Speaker #10: So as soon as we have lower interest rates, this economy will start to boom again. And industrial-free, to me, is the key. I'm always worried with retail-free because of the nature of the bees, the e-commerce—my customers, some of my customers, are brick-and-mortar world.

Speaker #10: They're being squeezed. So when your customer is squeezed, he tries to squeeze you. So this is why I don't want to be stuck with those guys.

Speaker #10: Industrial-free is really the future because this is related to a growing economy. I think the intention of this US administration is to bring back some industrial base into the US.

Alain Bédard: On the US LTL. Like David was explaining, okay, on the shipment count. On the pricing, we're not there. That's an opportunity in the future that I could say.

Speaker #10: They understand that there's a problem. I mean, globalization was good, but if you can't build a ship, you may endure the US while you have a problem, right?

Tom Wadewitz: Right. Okay. Makes sense. Thank you.

Alain Bédard: You're welcome, Tom.

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

Speaker #10: Because the ships are mostly built in Asia right now, so the guys are saying, "Hey, we got to do something about that." So to me, these are all positives to our flatbed division that relate to the industrial, as an example.

Konark Gupta: Good afternoon, Alain and David. Alain, maybe want to ask you first on the demand side. You know, I think a lot of people are talking about obviously the trucking rates are going, you know, up a lot. Fuel prices have surged as well and, you know, clearly, you know, the truck rates, combined with the fuel price is what the shippers see at the end.

Speaker #10: I was talking about Boeing. I mean, Boeing went through a lot of issues with their products, but now, I mean, those guys are flying high.

Speaker #10: And us, we're pretty back on Boeing with our SPD or SFI global logistics division over there in Washington State. So, I mean, these are all things that, when you are piggybacking on the U.S. industrial economy and the direction that this administration wants to go, I feel pretty good.

Alain Bédard: Yeah.

Konark Gupta: You know, in this environment, I mean, what are you seeing from demand perspective? I mean, like, I'm curious to know because I know you said you're a discounted carrier in some respects in US LTL, so maybe it's not such a big an issue for you. But, you know, at some point, I mean, there's some price elasticity perhaps. I'm just trying to see, you know, what are you seeing from that perspective? Where do you see shippers becoming more sensitive or less sensitive now?

Speaker #12: That's great. That's great, Conor, Alain. Thank you very much for the time.

Speaker #10: It's a pleasure.

Alain Bédard: Well, Konark, for sure. I mean, right now it's a double whammy for the shippers, right? They get the pressure of the fuel surcharge, right? Which is huge. And at the same time, on the US side, mostly on the US side, they get the offer that's been reduced tremendously by this new administration that is doing their job in terms of getting rid of all these unsafe and unqualified drivers in the US. I mean, for sure it's difficult. Don't forget that all of this that's going on right now, the volumes are not growing, right? It's the offer that is less and less and less, right?

Speaker #1: And the next question comes from the line of Cameron Dirksen with National Bank. Please go ahead.

Speaker #12: That's a good afternoon, Ned. Just a question on the logistics segment. I mean, obviously, you guys are feeling pretty optimistic about the truck moving portion of that business as the year progresses.

Speaker #12: Can you just talk a little bit about the other couple of major businesses within logistics, what you're seeing there, and what the outlook looks like for the next few quarters?

Speaker #10: Yeah, yeah. Cameron, within our logistics sector, okay, we have the truck movers, okay, guys. We have the specialty guys that David was talking about, that we just acquired late last year.

Speaker #10: And very importantly, is our logistics sector—that is the old dynamic operation that we run, both U.S. and Canada. Highly profitable last-mile operation. And also, we have a small brokerage, $500 million brokerage operation that's called WDT, T4WW Worldwide, okay, that is an LTL play.

Alain Bédard: What we've seen so far is that, hey, listen, I mean, the market is adjusting, okay, to higher rates, to the fuel surcharge, and everybody is thinking that this thing there in Iran hopefully will get settled at one point. It's an economic war right now, right? Because they're not really shooting at each other. But I mean, it's a financial thing there, and it's gonna get resolved at one point, right? Is it in a month? Is it in two months? And this fuel surcharge will start to disappear slowly over time. But at the same time, okay, we believe that because of our business focus on industrial, okay, not retail, on the truckload side I'm talking here, this is gonna start...

Speaker #10: So all these business units, Cameron, are showing good results today. And when we talk to them, they say, "Hey, we'll do better." I mean, the truck movers will do better.

Speaker #10: The other logistics that David was talking about will do better. Our last-mile guys are saying, "You know what? We're working on a solution that will help us reduce our costs." It's an IT solution.

Speaker #10: And hopefully, we'll have that ready for the new year, 2027. So we feel pretty good about where we're heading, guys. So logistics—I mean, if you look at what the guys are doing with close to $400 million of revenue, it's not chicken shit, right?

Alain Bédard: The demand is gonna start to grow at the same time that maybe fuel will start to drop, fuel surcharge will start to drop, rates will keep flat or going up, and our costs will come down because of fuel surcharge. Because you know, at the end of the day, when fuel surcharge is 80% of the base rate, I mean, it's not a good discussion that you have with the customer, right? Nobody likes that, but you know, it is what it is, right?

Speaker #10: And most importantly, what's the bottom line? Well, the bottom line is about 10 points, or close to 10, right? So this is a big area of focus of ours.

Speaker #10: And it's a beautiful business.

Speaker #12: Okay, that's helpful. And just maybe, just a quick—I guess—question on the fuel impact. You mentioned the impact on the free cash flow in the quarter, just the timing of collections.

Konark Gupta: That makes sense, Alain. Thanks. Just a follow-up. I think we haven't had a lot of discussion today on your M&A opportunities. Can you talk about, you know, what's your focus here now, you know, given the market seems to be turning? I think you have waited for some time, you know, I think to pull the trigger, I guess. Your free cash is still good. You know, more earnings power probably means more cash flows. How do you see capital allocation, you know, maybe heading into 2027?

Speaker #12: But was there any positive or negative impact from the big spike in fuel prices during March to the P&L? I mean, obviously, there's a lag between when you collect revenue, but there's also maybe in some of your operations, general operations, maybe the fuel surcharge helped.

Speaker #12: Just know what the net impact was in the first quarter.

Speaker #10: Yeah, yeah. On that, David, I'll let you go with this one.

Speaker #8: Yeah, yeah. The net impact was pretty neutral across TFI in March. It was slightly positive in the LTL because of the density that we have.

Alain Bédard: Well, for sure the problem we have right now on M&A, Konark, is very simple, is that everybody is waiting because everybody believes that things will get better. The seller says, "You know, why would I sell now? Okay, I'm gonna wait. I'm gonna wait because my numbers, my profitability will improve over the next six to 12 months or 18 months." Because we are having serious discussion on some nice tuck-ins, but everything is on hold right now because everybody says, "Oh, things will get better," so we wait. Now, for us, in the meantime, okay, what myself and David, we're gonna be doing is very simple. If the price is acceptable to us, we'll do the buyback. If not, we'll just reduce the debt, reduce the leverage. So I mean, with

Speaker #8: In certain areas of the LTL—and what I mean by that is we're not driving large distances between stops—so we're not burning a lot of fuel.

Speaker #8: But that was offset by a negative, like a loss in the truckload, related to the climbing fuel prices.

Speaker #12: Okay, that's helpful. That's awesome. Thanks very much.

Speaker #10: Good.

Speaker #1: And the next question comes from the line of Bruce Chan with Stifel. Please go ahead.

Speaker #12: Hey, thanks, Doug. Good afternoon, guys. Just wanted to clarify a couple of things. First, I understand the rationale for the reporting consolidation between the different LTL divisions.

Speaker #12: Just curious if there are any changes planned for maybe more operational integration between them now?

Alain Bédard: Like you said, Konark, with the huge free cash flow that we're gonna generate, I mean, Q1 was an exception because we pay fuel short term and our customers pays us on average about 40 days. This is why our free cash flow took a beating in Q1. You know, when fuel situation gets normal, I mean, this cash flow is gonna get back to, you know, the usual numbers that we see, $700 to 800 million of cash. We're gonna work on reducing the debt. The dividend, I mean, we grow that dividend every year. We've grown that, what, 2 pennies a quarter, last year.

Speaker #10: No, there's no difference. Oh, sorry. Please go ahead, Mr. Bédard. Please.

Speaker #12: No, no. I was just going to say the same as you, David. So I’ll let you go. No, there’s no.

Speaker #10: No, there's no change in terms of the way that the business is managed.

Speaker #12: Okay, great. Yeah, that's very clear and very helpful. And then, just a final quick one here. You talked about the data center exposure, which is obviously very exciting.

Speaker #12: You said that it's a small piece of business. Can you maybe just remind us of what that exposure looks like today versus maybe where it was last year?

Alain Bédard: Yes, maybe a little bit of dividend growth, but really it's gonna be focused on reducing our leverage because we believe that interest rates are not coming down anytime soon in the US, unless maybe the new president of the Fed changes mind. In Canada, we're worried that, because of inflation, maybe the interest rate will start to go up. We said, "You know what? Let's reduce our debt level." If I remember, David, correct me if I'm wrong, but I think our leverage goes down under two, if we don't do anything major in 2026 in terms of M&A, besides what we've done so far.

Speaker #10: Yeah. This quarter was $21 million of revenue, which was up from $15 million in Q4 and $8 million in Q1 of last year. That's all in trucks.

Speaker #12: Awesome. Appreciate the time.

Speaker #10: Sure.

Speaker #8: You're welcome.

Speaker #1: And the last question comes from the line of Harrison Bauer with Susquehanna. Pizza za Hut.

Speaker #13: Good evening, Mr. Bedard and David. Thanks for squeezing in here for a question. You highlighted doing more with less in TL. Any sense of how much productivity improvements you can continue to get, or what you need to see in the market before you want to start growing that truck out again?

David Saperstein: Mm-hmm. Yep. Yep. Yep. On that, Konark, we make the best of whatever situation the market gives us. The market gave us over the last three years a very difficult cycle. During those last three years, we deployed more capital than we ever have in any three-year period. When we look at 2023, 2024, 2025, and Q1, we've deployed $2.5 billion in investments. One point eight of that was M&A, and $620 million of that was buybacks. You know, we feel very good about that timing.

Speaker #13: Or are you at that point with how elevated rates are? Thank you.

Speaker #10: Okay, so I think, David, that you've touched on that, right? The revenue per truck and all that, right?

Speaker #8: Yeah. Yeah.

Speaker #10: Over and above that, okay, when I'm talking to the Senior EVP, what I'm saying to Steve is what we need is a better mix, okay, of asset and non-asset revenue, okay?

Speaker #10: So our goal has always been to generate about 65%—I'm talking truckload here, okay?—about 65% of revenue from our asset-based operation, and about 30 to 35% on a non-asset-based operation.

Speaker #10: But when we bought Esky, that was difficult to do, number one, because these guys really love trucks, right? So, they were committed to a ton of CAPEX in '24.

David Saperstein: We're optimistic that now in this environment, we're gonna start to see the returns on those investments and we'll use the cash flows to delever a little bit and get ready for the future.

Speaker #10: Okay. So we're stuck with all these CAPEX in '24. Then we get into '25, and we still don't have a clear vision of what's going on.

Speaker #10: So our CAPEX for '25 was, again, still too elevated for the market. But we've corrected that now. So this is why David was saying we deliver way more revenue per truck per week, and also we're starting to get better revenue per mile.

Konark Gupta: That's great. Appreciate the time as always. Thank you.

Alain Bédard: Thank you, Karan.

Operator: The next question comes from the line of Benoit Poirier with Desjardins. Please go ahead.

Benoit Poirier: Hey, good afternoon, Desjardins. Good afternoon, Alain. Thanks for the update on capital allocation and the update on M&A. I'm just curious, what about the potential for maybe a more transformative deal and anything required on US LTL to add density in order to get to a normalized OR of 80 to 85% as you mentioned before?

Speaker #10: So we drive more miles with better revenue per mile. And also, we are growing our asset-light operation in Q1. We've grown that, David, I think it was 7%, right?

Speaker #8: Yeah.

Speaker #10: So that is really the goal, because with peaks and valleys, when you have too many trucks—okay—because you are loaded with trucks for the peak, when the valley comes, you're just turning into a slave.

Alain Bédard: You know, Benoit, that's... It takes two to dance, right? So far, in a discussion that we had with one of our targets, it didn't work, right? It didn't work. You know, if you go back in time, it took us 5 years. I've been working 5 years to convince UPS to sell UPS Freight. Took me 2 years to convince DHL to sell DHL Canada. I mean, we're very... How would you say that? I mean, you know, we're used to people saying no to us, okay? We don't let go when we believe that for the seller, the target, and our seller a deal would be beneficial, right? Right now, it's still a no. It's still no. You do something else, call someone else.

Speaker #10: Because you're stuck with the truck, and that is the problem. Our goal has always been to have the number of trucks based on the valley, or the trough, not the peak, right?

Speaker #10: And then when the market is great, okay, and the guy says, "I need more trucks," whoa, whoa, whoa. Just wait. Because don't forget, if you buy a truck, you're stuck for five years.

Speaker #10: Okay, with that truck. So if the peak is good for another three months, I'm not too sure if this is going to be good for us, right?

Speaker #10: So that is a different approach that we brought to Desky, and this is going to continue over the next few quarters. So the guys come to us with, 'Oh, I need more trucks because I've got more freight.' Oh, you've got more freight for six months or two years?

Alain Bédard: Don't bother me. You know, it's still the best deal that we could do, in a lot of deals that we're looking at. Right now it's difficult, right? Like David was saying, we're gonna be busy this year in 2026. We still have a lot of good stuff to go. I mean, Daseke was bought two years ago. We still have a lot of work to do there on working with those guys to turn good truckers into good businessmen. The difference being good truckers like to service customer and hope that they'll make money. Good businessmen, you know, are focused on making money, servicing customer well. It's not the same, right? This is the kind of TFI education on truckers that we, you know, we try to do.

Speaker #10: Let's be careful. So this is why we need some kind of a mix between asset-light and asset-in the revenue stream.

Speaker #12: Great. Thank you for that, Tyler.

Speaker #1: Thank you. And that concludes our questions and answers session. I would like to hand it back to Mr. Bédard for closing remarks.

Speaker #12: All right. So in closing, I'd like to thank everyone for being on this afternoon's call and for your interest in TFI International. We look forward to keeping you updated on our progress throughout the year and hope to see many of you at upcoming conference events.

Speaker #12: Please don't hesitate to reach out if you have any further questions. I hope you enjoy the evening. Thank you very much.

Alain Bédard: M&A is the blood of TFI. 2026 is probably gonna be very quiet. Hey, listen, we're getting ready. Like David was saying, I mean, we made a ton, $1.8 billion of investment. The last few years, I mean, we were not able to show how good these were because the market was so bad. Now, 2026, 2027, hopefully things are starting to turn, then we'll be in a position to not come up with a stupid $4 a share of EPS, right? We'll get closer to where we should be, and hopefully we can come up with reduced leverage and to strike a good deal once we have a seller that says yes instead of no.

Benoit Poirier: That's great color. Maybe just in terms of follow-up, Alain, you've seen a lot of trucking cycles over the years. You mentioned potential OR for each segment-

Alain Bédard: Mm-hmm. Yep

Benoit Poirier: Under a normalized environment. How fast do you think we could get into a normalized environment, given this cycle and improved fundamental? Could we see a normalized environment in 2027 or maybe 2028?

Alain Bédard: You know what, Benoit, it's hard to predict, but I think that, if you look at, industrial freight environment in the US or in Canada, I mean schools, hospital, road, bridge, et cetera, housing. Housing is an issue, right? I mean, we feel pretty good that, interest rate is an issue, right? Interest rate being high is related to inflation being high. Now we have the problem of the fuel, but the problem of the fuel will probably be settled soon. As soon as, you know, we have lowered interest rates, this economy will start to boom again. Industrial freight to me is the key. I'm always worried with retail freight because of the nature of the beast, the e-commerce.

Alain Bédard: My customers, some of my customers in the brick-and-mortar world, you know, it's they're being squeezed. When your customer is squeezed, he tries to squeeze you, so this is why I don't wanna be stuck with those guys. Industrial freight is really the future because this is related to a growing economy. I think the intention of this US administration is to bring back some industrial base into the US. They understand that there's a problem. I mean, globalization was good, but if you can't build a ship and you're the US, well, you have a problem, right? Because the ships are mostly built in Asia right now.

Alain Bédard: The guys are saying, "Hey, we got to do something about that." To me, these are all positive to our flatbed division that relates to the industrial. As an example, I was talking about Boeing. I mean, Boeing went through a lot of issues, okay, with their products, but now, I mean, those guys are flying high. And us, we're piggyback on Boeing with our SPD or SFI Global Logistics division over there in Washington State. I mean, these are all things that you know, when you are piggyback on the US industrial economy and the direction that this administration wants to go, I feel pretty good.

Benoit Poirier: That's great. That's great color, Alain. Thank you very much for the time.

Alain Bédard: It's a pleasure.

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

Cameron Doerksen: Yeah, thanks. Good afternoon. Just a question on the logistics segment. I mean, obviously you guys are feeling pretty optimistic about the truck moving portion of that business as the year progresses. Can you just talk a little bit about the other couple major businesses within logistics, what you're seeing there and, you know, what the outlook looks like for the next few quarters?

Alain Bédard: You know what, Cameron? Within our logistics sector, okay, we have the truck movers, okay, guys. We have the specialty guys that David was talking about that we just acquired late last year. Very importantly is our logistics sector that is the old Dynamex operation that we run both US and Canada, highly profitable last mile operation. And also we have a small brokerage, $500 million brokerage operation that's called TForce Worldwide, okay, that is an LTL play. So all these business unit, Cameron, are showing good results today. When we talk to them, they say, "Hey, we'll do better." I mean, the truck movers will do better. The other logistics that David was talking about will do better.

Alain Bédard: Our last mile guys are saying, "You know what? You know, we're working on a solution that will help us reduce our costs. It's an IT solution, and hopefully we'll have that ready for the new year, 2027." We feel pretty good about where we're heading, guys. Logistics, I mean, if you look at what the guys are doing with close to $400 million of revenue is not chicken shit, right? Most importantly is what's the bottom line? Well, bottom line is about 10% or close to 10%, right? This is a big area of focus of ours, and it's a beautiful business.

Alain Bédard: Our last mile guys are saying, "You know what? You know, we're working on a solution that will help us reduce our costs. It's an IT solution, and hopefully we'll have that ready for the new year, 2027." We feel pretty good about where we're heading, guys. Logistics, I mean, if you look at what the guys are doing with close to $400 million of revenue is not chicken sh*t, right? Most importantly is what's the bottom line? Well, bottom line is about 10% or close to 10%, right? This is a big area of focus of ours, and it's a beautiful business.

Cameron Doerksen: Okay. That's helpful. Just maybe, I guess, a quick question on the fuel impact. I mean, you mentioned the impact on the free cash flow in the quarter, just the timing of collections. Was there any positive or negative impact from the big spike in fuel prices during March, too, like, the P&L? I mean, obviously there's a lag between when you collect-

Alain Bédard: Yeah.

Cameron Doerksen: The revenue, but there's also maybe in some of your operations, denser operations, maybe the fuel surcharge helped. Just wondering what the net impact was in the Q1.

Alain Bédard: Yeah. Yeah. On that, David, I'll let you go with this one.

David Saperstein: The net impact was pretty neutral overall across TFI in March. It was slightly positive in the LTL because of the density that we have in certain areas of the LTL. What I mean by that is we're not driving large distances between stops, so we're not burning a lot of fuel. That was all offset by a negative, like a loss, in the truckload related to those climbing fuel prices.

Cameron Doerksen: Okay. That's helpful. That's all for me. Thanks very much.

Alain Bédard: Good.

Operator: The next question comes from the line of Bruce Chan with Stifel. Please go ahead.

J. Bruce Chan: Hey, thanks. Good afternoon, guys. Just wanted to clarify a couple things. You know, first, I understand the rationale for the reporting consolidation between the, you know, different LTL divisions. Just curious if there are any changes planned for, you know, maybe more operational integration between them now.

Bruce Chan: Hey, thanks. Good afternoon, guys. Just wanted to clarify a couple things. You know, first, I understand the rationale for the reporting consolidation between the, you know, different LTL divisions. Just curious if there are any changes planned for, you know, maybe more operational integration between them now.

David Saperstein: No, there's no-

Alain Bédard: No.

David Saperstein: Please go ahead, Mr. Bédard, please.

Alain Bédard: No, no. I was just gonna say the same as you, David. I'll let you go.

David Saperstein: Yeah.

Alain Bédard: No.

David Saperstein: No. There's no change in terms of the way that the business is managed.

J. Bruce Chan: Okay. Great. Yeah, that's very clear and very helpful. Then just a kinda final quick one here. You talked about the data center exposure, which is obviously, you know, very exciting. You said that it's a small piece of business. Can you know, maybe just remind us of what that exposure looks like today versus, you know, maybe where it was last year?

Bruce Chan: Okay. Great. Yeah, that's very clear and very helpful. Then just a kinda final quick one here. You talked about the data center exposure, which is obviously, you know, very exciting. You said that it's a small piece of business. Can you know, maybe just remind us of what that exposure looks like today versus, you know, maybe where it was last year?

David Saperstein: Yeah. This quarter it was $21 million of revenue, which was up from $15 million in Q4 and $8 million in Q1 of last year.

J. Bruce Chan: Great.

Bruce Chan: Great.

David Saperstein: That's all in truck.

J. Bruce Chan: Super helpful. Awesome. Appreciate the time.

Bruce Chan: Super helpful. Awesome. Appreciate the time.

Alain Bédard: Sure.

David Saperstein: Sure.

David Saperstein: You're welcome.

Alain Bédard: You're welcome.

Operator: Our last question comes from the line of Harrison Bauer with Susquehanna. Please go ahead.

Harrison Bauer: Good evening, Mr. Bédard and David. Thanks for squeezing me in here for a question. You highlighted doing more with less in TL. Any sense of how much productivity improvements you can continue to get or what you need to see in the market before you wanna start growing that truck count again? Or are you at that point with how elevated rates are? Thank you.

Alain Bédard: Okay. I think, David, that you've touched on that, right? The revenue per truck and all that, right? Yeah. Yeah. Over and above that, okay, when I'm talking to the senior EVP there, Steve, what I'm saying to Steve is what we need is a better mix, okay, of asset and non-asset revenue. Okay? Our goal has always been to generate about 65%. I'm talking truckload here. Okay, about 65% of revenue from our asset-based operation and about 30 to 35% on a non-asset-based operation. When we bought Daseke, that was difficult to do, number one, because these guys, they really love trucks, right? They were committed to a ton of CapEx in 2024. Okay, so we're stuck with all these CapEx in 2024.

Alain Bédard: We get into 25, and, well, we still don't have a clear vision of what's going on. Our CapEx for 25 was, again, still too elevated for the market, but we've corrected that now. This is why, like David was saying, we deliver way more revenue, okay, per truck per week. Okay? And also we're starting to get better revenue per mile. We drive more miles with better revenue per mile. And also we are growing our asset-light operation. In Q1, we've grown that. David, I think it was 7%, right? Yeah. Mm-hmm. 7%.

David Saperstein: Yeah. Mm-hmm. 7%.

Alain Bédard: That is really the goal because, you know, with peaks and valleys, when you have too many trucks, okay, because you are loaded with trucks for the peak, when the valley comes, you just turn into a slave because you're stuck with the truck. That is the problem, okay? Our goal has always been to have the number of trucks based on the valley or the trough, not the peak, right? Then when the market is great, okay, and the guy says, "I need more trucks." Whoa. Just wait because don't forget, if you buy a truck, you're stuck for five years, okay, with that truck. If the peak is good for another three months, not too sure if this is gonna be good for us, right?

Alain Bédard: That is a different approach that we brought to Daseke, okay? This is gonna continue, okay, over the next few quarters. The guys come to us with, "Oh, I need more trucks because I've got more freight." Oh, you got more freight for six months or two years? Let's be careful. This is why we need some kind of a mix between asset-light and asset in the revenues stream.

Harrison Bauer: Great. Thank you for that color.

Operator: Thank you. That concludes your question and answer session. I would like to hand it back to Mr. Bédard for closing remarks.

Alain Bédard: All right. In closing, I'd like to thank everyone for being on this afternoon's call and for your interest in TFI International. We look forward to keeping you updated on our progress throughout the year and hope to see many of you at upcoming conference events. Please don't hesitate to reach out if you have any further questions, and I hope you enjoy the evening. Thank you very much.

Operator: Thank you, presenters. Ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.

Q1 2026 TFI International Inc Earnings Call

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