Q2 2026 TFI International Inc Earnings Call

July 27, 2026

Speaker #1: Hey ladies and gentlemen, thank you for standing by. Welcome to TFI International's second quarter 2026 earnings call. At this time, all participant lines are in listen-only mode.

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

Speaker #1: Further instructions for entering the queue will be provided at that time. Please be advised that this conference call may 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.

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

Speaker #1: I would now like to turn the conference over to Mr. Alen Bedard. Thank you. Please go ahead.

Speaker #2: Well, thank you, operator, and welcome everyone to our call this afternoon. Within the past hour, TFI International reported stronger-than-expected quarterly results with adjusted diluted EPS of $1.85 exceeding our click range of $1.50 to $1.60, and up 38% year over year.

Speaker #2: All three of our business segments grew operating income by double digits, and we again produced solid free cash flow which, as you know, is a long-standing priority of ours.

Speaker #2: Put simply, the investment we made during the recent slowdown, both in internal operation and strategic M&A, are beginning to benefit our performance. We now have a balance and diverse portfolio of operating companies and attractive end markets, which we continue to serve while always maintaining our focus on efficiency and related operating principles.

Speaker #1: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's second quarter 2026 earnings call. At this time, all participant lines 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 #2: And of course, there is no better than the hardworking people of and capitalize on the resulting opportunities. The foundational support for TFI International's thoughtful approach to value creation, both cycle-in and cycle-out, begins with our strong balance sheet, which improved further during the quarter.

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

Speaker #2: We generated more than $200 billion of free cash flow, further supporting our ability to strategically allocate capital and, very importantly, return excess capital to shareholders whenever possible, including close to $40 billion in quarterly dividend paid during the quarter.

Speaker #1: I would now like to turn the conference over to Mr. Alain Bédard. Thank you. Please go ahead.

Speaker #2: Well, thank you operator, and welcome everyone to our call this afternoon. Within the past hour, TFI International reported stronger-than-expected M&A, are beginning to benefit our performance.

Speaker #2: So let's take a high-level look at our second quarter financial results, starting with the top line. Our total revenue before fuel surcharge of $1.9 billion was up 6% over the past year, while operating income climbed nearly 30% to $220 million.

With adjusted diluted EPS of $1.85, exceeding our flip range of $1.50 to $1.60, and up 38% year-over-year.

Speaker #2: That reflects a margin of 11.6, which was up more than 200 basis points relative to 9.5-figure a year earlier. Also, on a consolidated basis, our net cash from operating activity rose to $256 million, from $247 million.

Income grew by double digits, and we again produced solid free cash flow, which, as you know, is a long-standing priority of ours.

Speaker #2: We now have a balance and diverse portfolio of operating companies and attractive end markets which we continue to serve while always maintaining our focus on efficiency and related operating principles.

Speaker #2: Now, let's dig deeper into each of our three segments, starting with LTL, which was 38% of our segmented revenue before fuel surcharge. We generated $725 million of LTL revenue before fuel surcharge, up 3% year over year.

Speaker #2: And of course, there is no better than the hardworking people of TFI to execute on our plan and capitalize on the resulting opportunities. The foundational support for TFI International's thoughtful approach to value creation, both cycle-in and cycle-out, begins with our strong balance sheet which improved further during the quarter.

Speaker #2: Our LTL adjusted operating ratio was 88.5, and operating income of $86 million was up a very solid 17%, producing a return on invested capital of 12%.

Speaker #2: Now, let's move to our trucking. For which revenue before fuel surcharge came in at $761 million, up 7% the past year, and now representing 40% of our segmented total.

Speaker #2: We generated more than $200 billion of free cash flow further supporting our ability to strategically allocate capital and, very importantly, return excess capital to shareholders whenever possible including close to $40 billion in quarterly dividend paid during the quarter.

Speaker #2: Revenue per truck per week, excluding fuel surcharge, rose 13% year over year. We increased our brokerage revenue by 34% in addition to this. Our operating income of $106 million was up a very robust 50% from the prior year quarter, and our adjusted ORR of 86.1 improved by 400 basis points.

Speaker #2: So let's take a high-level look at our second quarter financial results. Starting with the top line, our total revenue before fuel surcharge of $1.9 billion was up 6% over the past year, while operating income climbed nearly 30% to $220 million.

Speaker #2: Our return on invested capital for the truckload was 6.9. Stepping back, as capacity has come out of the truckload sector, we've worked to reduce our own capital intensity and right-size equipment level, creating significant operating leverage.

Speaker #2: We've also focused on optimizing our business mix and then market exposure, which now includes a attractive mix of flatbed and specialized expertise. Rounding out our segment discussion, logistics before revenue before fuel surcharge was up 10% year over year, to $432 million accounting now for 23% of the segmented total.

Speaker #2: Now, let's dig deeper into each of our three segments, starting with LTL. Which was 38% of our segmented revenue before fuel surcharge. We generated $725 million of LTL revenue before fuel surcharge up 3% year over year.

Speaker #2: Operating income expanded to 32% to $50 million, reflecting an 11.5 margin, which was up nearly 2 percentage points versus the second quarter of 2025, and our return on invested capital was 13.3.

Speaker #2: Our LTL adjusted operating ratio was 88.5, and operating income of $86 million was up a very solid 17%, producing a return on invested capital of 12%.

Speaker #2: So before opening up for Q&A, let me discuss our balance sheet and provide our updated outlook. As I mentioned, we generated just over $200 million in free cash flow during the second quarter of the year, and ended June with a funded debt-to-EBITDA ratio of 2.4, which has improved from 2.5 at the start of the year.

Speaker #2: Now, let's move to our Trucking. For which, revenue before fuel surcharge came in at $761 million, up 7% over the past year, and now representing 40% of our segmented total.

Speaker #2: And lastly, looking ahead for the third quarter results, we expect adjusted EPS of $1.70 to $1.80, which would represent a 50% year over year increase at the high end.

Speaker #2: We also expect year over year adjusted operating ratio improvement of 500 to 600 basis points in the truckload segment, 250 to 350 basis points in the logistics segment, and a comparable operating ratio in the LTL segment.

Speaker #2: Our return on invested capital for the truckload was 6.9%. Stepping back, as capacity has come out of the truckload sector, we've worked to reduce our own capital intensity and right-size equipment levels, creating significant operating leverage.

Speaker #2: For the full year, we continue to expect net cap excluding real estate in the range of $225 to $250 million unchanged from previous expectations, and I'll mention as I do each quarter that our outlook range assumes no significant change either positive or negative in the operating environment.

Speaker #2: We've also focused on optimizing our business mix and market exposure, which now includes an attractive mix of flatbed and specialized expertise. Rounding out our segment discussion, logistics revenue before fuel surcharge was up 10% year over year to $432 million, now accounting for 23% of the segment total.

Speaker #2: And now, operator, if you could please open the line both David and myself would be happy to take questions.

Speaker #2: Operating income expanded a full 32% to $50 million, reflecting an 11.5% margin, which was up nearly 2 percentage points versus the second quarter of 2025. Our return on invested capital was 13.3%.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Could you have a question? Please press star followed by the 1 on your telephone keypad.

Speaker #1: You will hear a prompt that Johanna has been raised, and should you wish to cancel your request, please press star followed by the 2.

Speaker #2: So before opening up for Q&A, let me discuss our balance sheet and provide our updated outlook. As I mentioned, we generated just over $200 million in free cash flow during the second quarter of the year, and ended June with a funded debt to EBITDA ratio of 2.4, which has improved from 2.5 at the start of the year.

Speaker #1: I would like to advise everyone to have a limited one question and one follow-up. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker #1: One moment, please, for your first question. And your first question comes on the line of Scott Group from Wolf Research. Please go ahead.

Speaker #2: And lastly, looking ahead to the third quarter results, we expect adjusted EPS of $1.70 to $1.80, which would represent a 50% year-over-year increase at the end.

Speaker #2: Hey, thanks. Afternoon, Elaine. So I wanted to start on the wanted to start on the LTL business. I'm not sure if I heard right.

Speaker #2: Are you saying sort of a flattish year over year margin in LTL? And if that's right, maybe just talk through what you guys are seeing from a demand standpoint, a service capacity standpoint, and maybe a pricing standpoint.

Speaker #2: We also expect year-over-year adjusted operating ratio improvement of 500 to 600 basis points in the Truckload segment, 250 to 350 basis points in the Logistics segment, and a comparable operating ratio in the LTL segment.

Speaker #3: Yeah. I think, Scott, that the world of truckload has changed tremendously over the last 6 to 9 months. With the what the administration has done in the US, with all these things that they've they've done to help us with reducing the supply.

Speaker #2: For the full year, we continue to expect net capex, excluding real estate, in the range of $225 to $250 million—unchanged from previous expectations. And I'll mention, as I do each quarter, that our outlook ranges assume no significant change, either positive or negative, in the operating environment.

Speaker #3: So that's really the truckload. But I still find that the LTL market in the US, and the same in Canada as well, it's still very soft.

Speaker #3: I mean, there's no big revolution in the demand there. So this is why we're saying that yes, we're conservative, but we want to say that LTL, we don't see a lot of major improvement.

Speaker #2: And now, operator, if you could please open the line, both David and I would be happy to take questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by one on your telephone keypad.

Speaker #3: Versus what we could see on the truckload sector or on the logistics sector.

Speaker #1: You will hear a prompt that Johanna has been raised, and should you wish to cancel your request, please press star followed by the two.

Speaker #2: Okay. And so maybe just to follow up there, I guess you're not seeing spill from truckload into LTL. It doesn't sound like you're seeing that.

Speaker #1: I would like to advise everyone to limit themselves to one question and one follow-up. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker #2: And then on the truckload side, you're saying you're pretty meaningful improvement. Maybe just talk about the pricing that you're seeing right now on the truckload business.

Speaker #1: One moment, please, for your first question. And your first question comes from the line of Scott Group from Wolfe Research. Please go ahead.

Speaker #2: And any sort of differences between the flatbed and some of the other parts?

Speaker #2: Hey, thanks. Afternoon, Alain. So I wanted to start on the wanted to start on the LTL business. I'm not sure if I heard right.

Speaker #3: Yeah. That's a very good question, Scott. And I'll ask David to talk about that. But for sure, what we see on the pricing side of the truckload is very impressive.

Speaker #2: Are you saying sort of a flattish year-over-year margin in LTL? And if that's right, maybe just talk through what you guys are seeing from a demand standpoint, a service capacity standpoint, and maybe a pricing standpoint.

Speaker #3: I mean, and it's the way we see it is that it's mostly because of the supply constraint, not because the demand is just going through the roof.

Speaker #3: It's just that the supply. Right, David? So maybe you could add to that.

Speaker #3: Yeah. I think, Scott, that the world of truckload has changed tremendously over the last six to nine months. With what the administration has done in the US, with all these things that they've done to help us with reducing the supply.

Speaker #2: Yeah. Yeah, absolutely. Because what we're seeing on the LTL, the reason that the margins are expected to be flat, is because we have too much volume and not enough price.

Speaker #2: And that's what we're working on fixing. Okay? So that's a specific thing. I don't know if that's really to be extrapolated to the market or not.

Speaker #3: So that's really the truckload. But I still find that the LTL market in the US, and the same in Canada as well, is still very soft.

Speaker #2: It's related to us. And of all of the issues to have, it's probably the one that we it's clear what to do. And right?

Speaker #3: I mean, there's no big revolution in the demand there. So this is why we're saying that yes, we're conservative, but we want to say that in LTL, we don't see a lot of major improvement.

Speaker #2: And we know that we just need to raise the price. And we're working on that. On truckload, yeah, the dynamics are really good. So actually, we saw the pricing or the revenue per truck accelerate throughout the quarter.

Speaker #3: Versus what we could see in the truckload sector or in the logistics sector.

Speaker #2: So in April, we were at 11.1% revenue per truck per week. Year over year growth. That increased to 13.3 in May. And it was 14.4 in June.

Speaker #2: Okay, and so maybe just to follow up there, I guess you're not seeing spill from truckload into LTL. It doesn't sound like you're seeing that.

Speaker #2: So the dynamics there are strong. And the LTL issue that we have you'll see, I mean, the shipment count was up 7.5%. In the quarter.

Speaker #2: And then, on the truckload side, you're saying you're seeing pretty meaningful improvement. Maybe just talk about the pricing that you're seeing right now on the truckload business.

Speaker #2: In LTL. It's just that the revenue for shipment before fuel was down 2%.

Speaker #2: Are there any sorts of differences between the flatbed and some of the other parts?

Speaker #3: Yeah. Yeah. But do you know what, Scott? We're very proud of what our truckload guys have been able to accomplish with if you just look back at our Q1 OR in our truckload, we were above 90.

Speaker #3: Yeah, that's a very good question, Scott. I'll ask David to talk about that. But for sure, what we see on the pricing side of the truckload is very impressive.

Speaker #3: Right? We were, I think, a 93 OR in our truckload. And now we're down to an 86.1. Okay? I think that this is quite an accomplishment.

Speaker #3: I mean, the way we see it is that it's mostly because of the supply constraint, not because the demand is just going through the roof.

Speaker #3: It's just that—the supply. Right, David? So maybe you could add to that.

Speaker #3: Okay? And the investment that we made, two years ago, in the US specialized truckload is just starting to pay off now.

Speaker #2: Yeah, absolutely. Because what we're seeing on the LTL, the reason that the margins are expected to be flat is because we have too much volume and not enough price.

Speaker #2: Yeah. Yeah, exactly. Because you see that in the depreciation we talked about this a couple of quarters ago. Well, the depreciation is down double digits now.

Speaker #2: And that's what we're working on fixing, okay? So that's a specific thing. I don't know if that's really to be extrapolated to the market or not.

Speaker #2: It's related to us. And of all the issues to have, it's probably the one where it's clear what to do. Right?

Speaker #2: And the revenue is up. Right? So we're saving a fortune on equipment costs. And the brokerage revenue is up 35%. Year over year.

Speaker #3: So this goes back to the saying, do more with less instead of doing less with more.

Speaker #2: Yeah. Thank you, guys.

Speaker #3: Thanks, Scott.

Speaker #1: Thank you. And your next question comes on the line of Ravi Shankar from Morgan Stanley. Please go ahead.

Speaker #4: Great. Thanks. Afternoon, Alan and David. Maybe if I can just follow up to your last response on LTL. Where you said, obviously, you have too much volume and not enough price.

It's clear what to do, and, right, and we know that we just need to raise the price and we're working on that, um, on truck load. Uh, yeah, the Dynamics are really good. So, so so actually we saw the, the pricing or the revenue for truck, uh, accelerate throughout the quarter. So, in April we were at 11.1% revenue for trucks per week uh year-over-year growth that increased to 13.3 in May and it was 14.4 in June

Speaker #4: David, do you think that is a that's something you can reset in one cycle, or is it a multi-cycle process to get the price where you want it?

So uh the Dynamics there are are strong and the LTL issue that we have. Let's see, I mean the the the the shipment count was up to 7 and a half percent

Speaker #4: And also, if it is a multi-cycle, kind of if you can give a sense of how much you can do kind of this cycle versus the next, etc.?

In the quarter, and in LCL, it's just that the revenue per shipment before fuel was down 2%.

Speaker #3: Yeah. So you know what, Ravi? I mean, the issue is where with pricing is in wins in one sector, per se. Right? So SMB, no.

Speaker #3: Corporate, no. The biggest corporate where we probably made a mistake is 3PL, and it's mostly on our blanket thing there where we got inundated with volume.

But but you know what, Scott, we're very proud of what our truckload guys have been able to accomplish with. You know, if you just look back at our q1 or in our truck, yo we were above 90 right? We were I think a 93 or in our truck node and now we're down to a 96.1. Okay. I think that

Speaker #3: Okay? Because probably we were the cheapest guy in the country. Right? So this is what now our commercial team is working on fixing. Okay?

Speaker #3: Because this is like a no-no. Right? So it's not all over a P4 straight. Okay? SMB and corporate, not an issue. But blanket 3PL has been overwhelmed with volume, and with pricing that probably does not reflect the market.

Uh, you know, this is this is quite an accomplishment, okay? Uh, and you know, the investment that we made, uh, 2 years ago in in the US, specialized structural is just starting to pay off now.

Yeah.

Yeah, exactly. Can you see that? And the depreciation? We talked about this a couple quarters ago. Uh, well the the depreciation is is uh, is down, uh, double digits now,

And, uh, the revenue is up.

Speaker #3: Maybe we were not aware of where the market was going and now we have to react to that. And that's what David was saying.

Speaker #3: That it's probably in all the problems that we can have, I mean, it's probably the one that could be fixed now. Does that take three quarters?

Do more with less, instead of doing less with more.

Thank you guys.

Thanks Scott.

Speaker #3: I don't think so. I mean, our guys are already we know what the issue is. We know that the market is still soft to a sense, but we're very, very cheap right now with our rates in some sectors.

Thank you. And your next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.

Speaker #3: So we're going to be fixing that now. We're fixing that now as we speak.

Speaker #4: Understood. And maybe as a quick follow-up, are you getting any more confidence in the cycle to maybe restore a full year guide?

Speaker #3: Yeah. To restore a full year guide? Look, as things I hope that at some point we'll restore a full year guide. Absolutely. We are starting to get confidence in this truckload cycle.

Uh, great thanks. Uh afternoon Alan David uh, maybe if I can just follow up to your last response on LTL, uh, where you said obviously, uh, you have too much volume and not enough price. Uh, David. Do you think that is a, um, that that's something you can reset in 1 cycle? Or is it a multi-cycle process to get the price where you want it? And also if it is a multicycle, kind of, if you can give a sense of how much uh you can do kind of the cycle versus the next Etc.

Speaker #3: That's for sure. The fact that it's so supply-driven, and therefore has sustained power, is giving us a lot of confidence. And I think that the delta is going to come from getting the LTL to produce to its full potential.

Speaker #3: We're sub-90 this quarter. Right? But we could be a lot more sub-90 if we fix this pricing. And by the way, when we do that, we won't have all the excess costs that we had this quarter.

Speaker #3: This quarter, we were dealing with a lot of excess costs related to the surge in volume, which is not necessarily an ongoing thing. So we'll see.

Yeah. So so you know what? Revy? I mean, the issues where with pricing is is in wins in 1 for 6, right? So SMB, know uh, corporate know uh the biggest corporate where we probably made a mistake is 3pls and it's mostly on our blanket thing there where we got inundated with volume okay because probably we were the cheapest guy in in the country, right? So this is what now our our commercial team is is working on fixing, okay? Because this, this is like a, a no no, right? So it's not all over a p Force rate, okay? SMB and corporate. Not an issue.

Speaker #3: We hope that we come back to a full year guidance soon.

Speaker #4: Very good. Thank you both.

Speaker #1: Thank you. And your next question comes on the line of Jordan Aligre from Goldman Sachs. Please go ahead.

But Blanket 3PL has been overwhelmed with volume, and with pricing that, uh, probably does not reflect the market. Maybe we were not aware of where the market was going, and now we have to react.

Speaker #5: Yeah. Hi. Afternoon. So just sort of curious, coming back to LTL quickly. With the pricing actions that you guys are working on, I mean, would you expect because your tonnage is obviously outgrowing most of the LTL industry.

Speaker #5: Would you expect that to sort of come down a little bit as you sort of work to repair the price? And then on the flatbed side specifically, are there pockets?

To that. And that's what David was saying, that it's probably, you know, of all the problems that we can have, it's probably the one that could be fixed. Now, does that take three quarters? I don't think so. I mean, our guys are already—you know, we know what the issue is. We know that the market is—

It's still soft, to a sense. But, um,

Speaker #5: I know the discussion has been supply tightness, but I'm just curious, are there pockets where demand on flatbed is looking better? And I know you're not giving a full year guide, per se, but just from just because perhaps not as familiar, is there a way to think about seasonality in the truckload slash flatbed business.

We're very, very cheap right now with our rates, in some sectors. So we're going to be fixing that. Now, we're fixing that now, as we speak.

Understood, and maybe it's a quick follow-up. Uh, are you getting any more confidence in the cycle to maybe restore a full-year guide?

uh,

Yeah, it's a restored full year, guys. Look, as things, um...

Speaker #5: Three Q to four Q. Thank you.

Speaker #2: Yeah.

Speaker #3: So I mean, when you think about the flatbed thing there, Jordan, okay, we are highly involved in wind and wind is growing. Okay? We're also highly involved in data center and everything that is industrial.

You know, I hope that at some point we'll restore it before your guy. Um, absolutely. We are starting to get confidence in this truck. Looks like that's for sure. The fact that it's those supplies driven, um...

Speaker #3: Now, what we've been able to see our senior EVP has been able to do with our flatbed operation is to create within the old DASKI organization some niche carriers.

Speaker #3: So I'll give you the example of what Steve and his team have done with one of our carriers that's called SPD on the West Coast, where these guys were running 200 trucks and the old saying, "Jack of all trades, master of none." Now, these guys are a niche carrier for the aerospace business.

And uh, and therefore have some staying power. Um, is uh, give us a lot of confidence and I think that the uh, the the Delta is going to come from getting the LTL to produce to its full potential for some 90 this quarter, right? But we can be a lot more submerged uh, if we fix this pricing and by the way, when we do that, we won't have all the excess cost that we have this quarter, this quarter we we are dealing with a lot of excess costs related to The Surge in volume, uh, which is not necessarily an ongoing thing. So we'll see if we hope that we come back to a full year guidance soon.

Very good. Thank you both.

Speaker #3: So with Boeing and with Bombardier and with others, okay, now we see some growth there. I'm sure you're familiar with Boeing. Those guys I mean, they're quite busy.

Thank you. Our next question comes from the line of Jordan Alliger from Goldman Sachs. Please go ahead.

Speaker #3: And we're piggyback made a niche carrier of SPD. So these are sectors like the aerospace, the wind, the data center, okay, that we see a lot of opportunities still too.

Speaker #3: Okay? So our TSH group, which specializes in steel, okay, those guys are up like revenue-wise I would say 20, 25 percent year over year.

Yeah. Hi afternoon. Um, so just sort of curious coming back to LTL, uh, quickly. Um, you know, with the pricing actions that you guys are working on, I mean, would you expect because your, your tonnage is obviously out growing, you know, most of the LTL industry? Uh, would you expect that to sort of come down a little bit as you sort of uh work to repair the price? And then on the flatbed side specifically um,

Speaker #3: Okay? So steel is we're very busy with that. So a lot of steel probably goes into the data center or I don't know where it's going, but it's we're really very busy with that.

Hey are, are there Pockets? I know every you know the the discussion has been, you know, supplied tightness but I'm just curious are there Pockets. Uh where Demand on flatbed uh is is looking better.

Speaker #3: But on the other side, if you think about drywall, okay, we're a significant player in that business. But drywall is maybe not the best business you want to be in right now because not a lot of people are building homes.

And I know you're not giving a full-year guide per se, but just because, um, perhaps I'm not as familiar, is there a way to think about seasonality in the truckload flatbed business from Q3 to Q4? Thank you.

Yeah.

Speaker #3: Right? So it's kind of a mix. But I mean, what our team has been able to do, okay, is kind of having within the specialty truckload, our business unique being more specialized in their world.

Speaker #3: Okay? Instead of if I take the other example of Lone Star, which is something that's happening now out of Texas, I mean, those guys are good with wind.

Speaker #3: They're good with data center. They're good at moving everything that nobody wants to move because it's too big or it's too heavy. Okay? So now we said, "You know what?

Speaker #3: The over-the-road operation within NOSA, that doesn't fit you. So what we'll do, we'll move that to those specialists within SFI, okay, our truckload division, Wiley." Okay?

Speaker #3: Wiley is our the king of the over-the-road for us. Right? So this is what's happening on the truckload side. Now, the first part of your question was, David, I don't remember exactly.

The old—that the organization, some nice carriers. So I'll give you an example of what Steve and his team have done with one of our carriers. That's called SPD on the West Coast, where these guys were running 200 trucks, and you know the old saying, jack of all trades, master of none. Now, these guys are, in this carrier, for the aerospace, okay, business? So, with Boeing and with Bombardier and with others, okay? Now, we see some growth there. I'm sure you're familiar with Boeing. Those guys, I mean, they're quite busy, and we're piggybacking on Boeing, but now we've made a nice carve of SPD.

Speaker #2: Can you repeat the first part?

Speaker #3: Yeah.

Speaker #5: Oh, yeah. Well, I was just curious on the less-than truckload side, given the price actions, repair actions you're taking, your volume is strong. I'm just curious how that might look from here a little bit.

Speaker #3: Yeah. Yeah. Yeah. Yeah. For sure. Volume is going to come down a bit because as you know, the minute you start to get back to closer to market, okay, if we get too close to market, because we still have to improve our service door.

Speaker #3: I mean, the guys are working on that, but like David was saying, we incur way too many costs in our Q2 operation because of this huge surge in volume, but also our service side.

So these are sectors like the Aerospace, the wind, the data center, okay? That we see a lot of opportunities still to. Okay. So our TSH uh Group which specializes in steel. Okay, those guys are they're off like Revenue wise. I would say 20 25% year-over-year. Okay. So steel is, we're very busy with that. So a lot of people that goes into the data center or I don't know where it's going but it's we're really very busy with that. Uh but on the other side, if you think about drywall, okay? We're a significant player in that in that business. But right away is

Speaker #3: Right? So now we're fixing price, but we're also fixing our service because our service was improving big time just before we got this crazy weather in Q1, okay, and at the same time, this huge surge of volume mid Q1 into Q2.

Maybe not the best business you want to be in right now, because not a lot of people are building homes, right?

So, it's kind of a mix.

But I mean, what—what our team has been able to do, okay, is...

Speaker #3: So now it's very clear what the mandate is for Cal and his team and we'll get there. But for sure, I mean, we'll have to drop a little a few shipments to get there.

Speaker #5: Got it.

Speaker #1: Thank you. And your next question comes from the line of Ken Hoekster from Bank of America. Please go ahead.

Speaker #5: Hey, great. Good afternoon. Elaine, can you talk maybe a little bit about the truckload pricing? Are you touching it all right now, given the improvement is just maybe given the mix of how much is contract, how much takes time?

Kind of having within the specialty truck load, our business unique business unit being more specialized in their world, okay? And instead of, if I take the, the other example, loan stock, which is something that's happening now, out of Texas. I mean, those guys are good with wins. They're good with data center. They're good at moving everything that nobody wants to move because it's too big or it's too heavy. Okay. So now we said, you know what, the over the road operation within Noah. That doesn't fit you. So, what we'll do, we'll move that to those Specialists within within csfi. Okay, our truck division widely. Okay, you know, while he is our

Speaker #5: Just want to see where you are in the marketplace and able to reprice that.

Speaker #2: Yeah. Yeah. So on that, David, I mean, I think that we're not a big player on the spot market, okay? I don't remember exactly the split between contract and on the US side, it's about 25% spot.

The king of the over-the-road for us, right? So this is what's happening on the truckload side. Now, the first part of your question was, David? I don't remember exactly. Can you repeat the first part?

Speaker #3: 25% spot.

Speaker #2: Yeah.

Speaker #3: But for sure, I mean, we are really I mean, you know all the shippers are. I mean, the market is going down. Contract or no contract, they will sit down and try to bring prices down.

Speaker #3: Right? So the market is going up right now. So yes, we have agreement, but we have to sit down with customers because at the same time that the market is moving up and our contract is too far away from the market, then we have to sit down.

Speaker #3: And we did that. We did that. I mean, we did that with some major customers and they understand. I mean, now it's a different situation and we're not the business of hauling freight just to for the pleasure of hauling freight.

Oh yeah. Well, I was just curious on the less than truckload side given the price actions repair actions. You're taking, you know, your volume is strong. Just curious how that might look from here a little bit. Yeah, yeah, yeah, yeah for sure volume is going to come down a bit because as you know, the minute you start to to to get back to closer to Market, okay? If we get too close to Market because we still have to improve our service work, I mean the guys are working on that. But like David was saying we include way too many costs in our to, to operation because of this. Huge surge in volume but also our service side, right? So, so now we're fixing price but also fixing our service, because our service was improving big time.

Just before we got this.

Speaker #3: We're in business to service customers so that our shoulders make money. Right?

Speaker #2: Yeah. And I really want to stress that you have two things going on in our truckload. One, we're exposed to the right-end market. Yes.

Crazy weather in Q1, okay? And at the same time, if you show the volume mid-Q1 and 222. So now it's very clear what the mandate is for Cal and his team, and we'll get there. But for sure, I mean, we will have to drop a little, a few shipments to get there.

Speaker #2: Two, the market's turning because of the supply. Yes. But the last thing, and this is unique to us, is that we've dropped our depreciation by 12 and a half million dollars in this quarter alone.

Got it.

Thank you. And your next question comes from the line of Ken Hoexter from Bank of America. Please go ahead.

Speaker #2: And yet, the organic revenue is higher than it was last year. So we're truly getting an enormous benefit to the bottom line as a result of that.

Speaker #2: And that's really specific to the work that the team has done over the past year, making sure that our trucks are being deployed in the right places, trucks that are not being deployed.

Hey great. Good afternoon. Um, alen can you talk maybe a little bit about uh the the truckload pricing. Are you touching it? All right. Now you know given the the Improvement is is, you know, just maybe given the mix of how much is contract, how much takes time? Just want to see where you are in, in, in the marketplace and able to repress that.

Speaker #2: We move them, and then we broker out what we don't want to do ourselves.

Speaker #3: That's it. Because Ken, don't forget, we bought Dashkey in '24. In '24, we were stuck with the Dashkey CAPEX. These guys like to buy trucks and trailers.

Speaker #3: So we had way too much CAPEX in '24. Then we get to '25, it's too early in the game, so we still bought too much equipment in '25 versus what the market, okay, could bear.

Speaker #3: So now, after a year and a half of experience with Steve and the team, now we are adjusting our asset base to the business that we want, the business that's highly profitable.

Speaker #3: That's why we're in '86 OR. Right? And we're saying, "You know what? Those customers maybe we could broker the freight to some good carriers that want to work for us."

Uh, we have to sit down with customers because at the same time that the market is moving up in our contract is too far away from the market, then we have to sit down and we did that, we did that. I mean, we did that with some major customers and they understand, I mean, now it's a different situation and

You know, we're not in the business of hauling freight just to

Speaker #5: Great. And then if I can thanks for that. And if I can get a follow-up on capacity on both sides, maybe talk a little bit about how much capacity you have utilization on miles per tractor and then in the LTL with shipments up 8%.

For the pleasure of holding freight, we're in business to service customers so that our shareholders make money, right?

Speaker #5: Talk about what excess capacity you have now. You've changed your management there with Cal. Are you focused more on culling that 3PL business, more on price?

Yeah, and I really want to stress that you have two things going on in our shop. One, work goes to the right end market—yes, to the market turning because of the supply. Yes.

Speaker #5: How do we think about usage of that capacity as we move forward? Thanks.

But the but the last thing and this is unique to us, is it? We've dropped our depreciation by 12 and a half million dollars in this quarter alone.

Speaker #3: Yeah.

Speaker #2: So on the first one, I'll answer that. We report revenue per truck, not miles per truck. And the reason for that is that some of our business, we bill by the mile, but some of the specializers bill by the day, for example.

And yet, the organic revenue is higher than it was last year.

So we're truly.

you know, getting uh,

Speaker #2: It's not so much by the move. So it's not so much of a mileage thing. So revenue per tractor is what we report. And that's up 13%.

Speaker #2: And as I mentioned earlier, it was increasing as the quarter went on. We exited the quarter around '14 and a half. So and then in terms of capacity, I mean, we're at capacity.

In in, in, in enormous benefits to the bottom line, as a result of, of, of that and that's really specific to the work that the team has done over the past year, making sure that our trucks are being deployed. In the right places trucks, that are not being deployed, we move them. And then we we broke her out. Uh, what we don't want to do ourselves,

Speaker #2: We have to reduce our volume in the LTL because we've had to because it went up so quickly that we had to spend money in ways that we wouldn't normally spend money.

Speaker #2: Lots of overtime, lots of third-party carriers to help us out in the pinch. All of these things that you do when you volume increases 10, 12, 13 percent overnight.

That's it because, you know, can't don't forget, we bought Dashi in 24, in 24. We were stuck with the Dashi capex, like these guys like to buy trucks and trailers. So we had way too many too much capex and 24. Then we get to 25. It's it's too early in the game. So we still, you know, about too much equipment in 25 of experience with Steve and and teams. Now we are adjusting our asset base

Speaker #2: And so if you ask us where we are in capacity, well, we don't have any capacity. We're raising price in order on the brokers in order to bring down that rate of growth.

Speaker #5: Great. Thank you very much. Appreciate it.

To the business that we want the business. That's highly profitable. That's why we're in 86 of our right and and we're saying you know what those customers? Maybe we could broker the freight to know, some some good carriers that uh, you know, want to work for us.

Speaker #1: Thank you. And your next question comes from the line of Fortress Bracklin from RBC Capital Markets. Please go ahead.

Speaker #2: Yeah. Thanks very much. Good afternoon, David. Good afternoon, Elaine. I'd like to start on pricing, but more on a more conceptual longer-term kind of way to look at it.

Speaker #2: And I'm just curious, when you look at the drivers of pricing, you mentioned supply-driven by whether it's the non-domicile ELD or CLDs or the English language proficiency or even the Montgomery ruling, these things seem like it's not in the past in past cycles where it's something that can be easily or quickly reversed.

Great. And and then if I can, thanks for that and and if I can get a follow-up on on capacity on both sides, maybe talk a little bit about how much capacity you have utilization on miles per tractor and then in the LTL with shipments up 8%, you know, talk about what excess capacity you have. Now, you've changed your management there with Cal are, are you focused more on calling that 3pl business more on price? How do we think about usage of that capacity as we move forward? Thanks.

Speaker #2: I know, Elaine, you've been in this business a long time, looking back at previous cycles where pricing has come up. Do you feel like this has more stickiness?

Speaker #2: Can this can the pricing here hold for longer given the type of drivers that have caused that pricing to go higher and can it be sustainable?

Speaker #3: Well, you're absolutely right, Walter. I mean, in a normal trucking environment, I mean, guys used to make a lot of money when the demand was high, okay?

Yeah, so on on the, on the first 1, I'll I'll answer that. We we report Revenue per truck, not miles per truck and the reason for that is that some of our business. We build on the mile, but some of the specialized build like by the day, for example, um, it's not so much by the move, so it's not so much of a mileage, I think so Revenue per per per tractor. Is what we what we report and that's up 13%. And, as I mentioned earlier, it was, uh, uh, it was, uh, uh, increasing as the quarter went on, we did it the quarter around 14 and a half. Um, so then in terms of capacity, I mean, we we we have, we're at capacity, we have to reduce

Speaker #3: But demand high doesn't last. I mean, it can last a month, could last a year, could last 18 months. And then you go back to you got too many trucks because now the demand is falling.

Speaker #3: What I like about this which I've never seen before in 30 years being a trucker, okay, is now it's the supply. Right? And I was just reading about what the administration wants to do in the US is that they have a particular group of drivers that they're saying now, "Okay, so we had the CDL, the illegals, English proficiency, like you just said, but now there's also focusing on another group of drivers that according to the US administration, are dangerous, are not safe, etc., etc." So to me, on the US side, I think that this move that we're seeing now on the truckload sector, which is not the same with LTL or PNC, I mean, for truckload, I mean, I think that this is more of a permanent thing than we've ever seen before.

Our volume in the LTL because we've had to because it went up so quickly that we had to spend money on in ways that we wouldn't normally spend money lots of overtime. Lots of third-party, you know, uh, uh, carriers to help us out in a pinch, you know, all all of these things that you do when, you know, your volume increases, uh, uh, you know, 10 12 13% overnight, and and and, and so, if you ask us where we are in capacity, well we don't have any capacity. We're we're raising price in order on the brokers.

In order to bring down that rate of growth,

Great, thank you very much. I appreciate it.

Thank you. And your next question comes from the line of Walter Spracklin from RBC Capital Markets. Please go ahead.

Speaker #3: So this is why Walter, it's a reflection of what our guys have been able to do in this market, even if the demand is not crazy in the truckload specialized truckload sector.

Yeah, thanks very much, uh, good afternoon. David good. Um I'd like to start on on pricing but more on a more conceptual longer term kind of way to look at it and I'm just curious when you look at the drivers of pricing you mentioned Supply driven. By whether it's the non-domicile uh ELD or CDs or the uh or or the English language proficiency or even the Montgomery ruling these things seem like it's not.

Speaker #3: But those guys were smart enough to take advantage of the situation that we're going through right now and that's why from a '93 OR, which was really bad in Q1, okay, now we're down to an '86 OR, and we just said, in our presentation, that we believe that our Q3, okay, year over year, we're going to see again another major improvement, okay, in our truckload sector.

Has more stickiness. Can this can the pricing here hold for longer. Given the type of drivers that is that have caused caused that pricing to go higher and and canopy sustainable.

Speaker #3: Some also in our logistic, not so much in our LTL for now because, like David is saying, okay, we have to attack, okay, some issues that we have in the US right now, US LTL, and the guys will do their job.

Speaker #3: right? And I was just reading about what the administration wants to do in the US is that they have a particular group of drivers that they're saying now, "Okay, so we had the CDL, the illegals, English proficiency, like you just said, but now they're also focusing on another group of drivers that, according to the US administration, are dangerous, are not safe, etc., etc." So to me, on the US side, I think that this move that we're seeing now on the truckload sector, which is not the same with LTL or PNC, I mean, for truckload, I mean, I think that this is more of a permanent thing than we've ever seen before.

Speaker #3: So I think that it's way more permanent, the situation like you were describing, Walter, than ever before. And this is typical of the US market.

Well, you're absolutely right Walter. I mean, in a normal Trucking environment, I mean, guys used to be a lot of money when the demand was high, okay. But the man hi doesn't last. I mean, he did last a month could last a year. Could last 18 months and then you go back to you got too many trucks because now that the man is falling that what I like about this? Which I've never seen before in 30 years being a trucker. Okay? Is now it's the Supply, right? And and I was just reading about

Speaker #3: On the Canadian side, we have a little bit of that, but not so much because as you know, the Canadian government now is asking the truckers the employers of owner-ops or whatever to issue a T4A.

Speaker #3: So now these illegal guys in Canada now have a T4A. So they have to report that as revenue and now they have to pay tax so that's how also we're starting to see okay, some major improvement on the Canadian side because the driver ink fiasco is starting to become less.

Speaker #3: So this is why Walter it's a reflection of what our guys have been able to do in this market, even if the demand is not crazy in the truckload, specialized truckload sector.

Speaker #3: It's still there, but it's not as bad as it used to be.

Speaker #2: Yeah. And then the only thing I would add to that is that the brokers are now very careful about wanting the broker loads to well-capitalize areas.

Speaker #3: But those guys were smart enough to take advantage of the situation that we're going through right now and that's why from a 93 OR, which was really bad in Q1, okay, now we're down to an 86 OR.

Speaker #2: Carriers. That are serious about safety. And they're spending the money on that. So the whole industry is being cleaned up in a way that's going to result in better safety and for sure normal rules being followed.

Speaker #3: And we just said, in our presentation, that we believe that our Q3, okay, year over year, we're going to see again another major improvement, okay, in our truckload sector.

Speaker #3: Yeah. No more cheating.

Speaker #3: Some also in our logistic, not so much in our LTL. For now, because like David is saying, okay, we have to attack, okay, some issues that we have in the US right now, US LTL, and the guys will do their job.

Speaker #2: Fantastic. There you go. Looking at your capital plan for this year, I know you're not seeing any significant changes in growth, but you mentioned on the subsegment area where you have exposure, you are seeing growth.

Speaker #2: Is that causing you at all to revisit your capital plan? I think you had us at 225 to 250 for the year of net capex.

Speaker #3: So I think that it's way more permanent, the situation like you were describing, Walter, than ever before. And this is typical of the US market.

Speaker #2: Is that still the plan, or is there opportunities for you now to invest to take advantage of some of those subsectors?

Speaker #3: Yeah. So far, I mean, we're still in that range, Walter. I mean, for sure, we're seeing a lot of discussion with customers okay, the other thing also, I'd like to point out, Walter, is that now what Steve Brookshire has done is now we have a chief commercial officer for our US truckload operation, Mr. Happy Scott Happy is our chief commercial, which is going to be a big thing for us because if you look at the way Dasty was run it was like a nine sales team and nine of everything.

Speaker #3: It's still there, but it's not as bad as it used to be.

Speaker #2: Yeah. And then the only thing I would add to that is that the brokers are now very careful about wanting the broker loads to well-capitalize areas.

Speaker #3: So now we are consolidating a lot of that and commercial side is under Scott Happy and Scott has got a tremendous experience, okay, in the US.

Speaker #2: Carriers. They're serious about safety. And they're spending the money on that. So the whole industry is being cleaned up in a way that's going to result in better safety and for sure normal rules being followed.

Speaker #3: I mean, he's lived all his life into that world, right? So that's going to help us. I mean, that is for sure having a one commercial team under Scott I mean, we're always seeing the benefit when we talk to our customers.

Speaker #2: Okay. Appreciate the time as always. Thank you.

Speaker #3: Yeah. No more cheating.

Speaker #4: Fantastic. There you go. Looking at your capital plan for this year, I know you're not seeing any significant changes in growth, but you mentioned on the subsegment area where you have exposure, you are seeing growth.

Speaker #3: Walter, it's a pleasure.

Speaker #1: Thank you. And your next question comes from the line of Brian Olsen back from JPMorgan. Please go ahead.

Speaker #2: Hey, good afternoon. Thanks for taking the questions. Maybe I just wanted to understand a little bit better if you can make some changes or have made changes to the LTL commercial team or maybe how it ties in together with operations because I would think that at least with the blanket pricing on 3PLs, you can adjust that relatively quick.

Speaker #4: Is that causing you at all to revisit your capital plan? I think you had us at 225 to 250 for the year of net capex.

Speaker #4: Is that still the plan, or is there opportunities for you now to invest to take advantage of some of those subsectors?

Speaker #2: And it's not the only network you've heard that got a little bit flooded, but maybe just some thoughts on what could be done differently or changes you've already made for the next time.

Speaker #2: Yeah.

Speaker #3: So far, I mean, we're still in that range, Walter. I mean, for sure, we're seeing a lot of discussion with customers okay, the other thing also I'd like to point out, Walter, is that now what Steve Brookshire has done is now we have a chief commercial officer for our US truckload operation, Mr. Happy Scott Happy is our chief commercial, which is going to be a big thing for us because if you look at the way Dasty was run it was like a nine sales team and nine of everything.

Speaker #3: Yeah. Right. Right. Right. So it's the mistake that we encounter is that focus was, "Hey, guys, we need to grow organically and we got overwhelmed because our pricing was too low." Right?

Speaker #3: So we fixed that. One thing I could tell you is that we are implementing a pricing software, the one that most of our peers are using.

Speaker #3: So now we are consolidating a lot of that and commercial side is under Scott Happy and Scott has got a tremendous experience okay, in the US.

Speaker #3: So we are getting rid of the old UPS freight pricing. We've also through our finance team now getting our finance team involved through AI, okay, to help those guys make the right decision by lane, by customers, etc., etc.

Speaker #3: So maybe David, you could get a little bit more details on that.

Speaker #2: Yeah, absolutely. It's very interesting. I mean, we now have tools where we're taking spreadsheets which have an entire month of shipments so the spreadsheets have about 500,000 lines.

Speaker #4: Okay. Appreciate the time as always. Thank you.

Speaker #3: Walter, it's a pleasure.

Speaker #1: Thank you. And your next question comes from the line of Brian Olsen back from JP Morgan. Please go ahead.

Speaker #2: And tons of columns, tons of data. And we're able to really isolate very specifically the problematic lanes, very specifically the problematic freight, the terminals, the customers.

Speaker #4: Hey, good afternoon. Thanks for taking the questions. Maybe I just wanted to understand a little bit better if you can make some changes or have made changes to the LTL commercial team or maybe how it ties in together with operations because I would think that at least with the blanket pricing on 3PLs, you can adjust that relatively quick.

Speaker #2: And so and then we're using that to help our pricing team go in and be real surgical and move faster. So we're able to treat large amounts of data in ways that we haven't been able to in the past and be much more surgical with the pricing actions that we're taking.

Speaker #4: And it's not the only network you've heard that got a little bit flooded, but maybe just some thoughts on what could be done differently or changes you've already made for the next time.

Speaker #2: Okay. I appreciate that. Just to kind of a clean-up question, you talked a couple of times in the release about this incremental accident reserve.

Speaker #2: It's like 10.5 million in the quarter. Does this recur? Is this a prior period adjustment? Because I think when we look at the corporate line, that certainly stood out this quarter.

Speaker #3: So we fixed that. One thing I could tell you is that we are implementing a pricing software, the one that most of our peers are using.

Speaker #3: Yeah. Yeah. It's not recurring. That's for sure. I mean, we sure hope not. No. No. No. Every quarter, we go through and we assess very clearly where our reserves need to be and we'll make adjustments to various files and we don't it seems like some people wait till year-end to do that.

Speaker #3: We don't do that. We do it every single quarter. But also, David, if you could just add to that, I mean, the approach that through Brandon and the new team okay, versus the old way that we used to do it until about a year ago.

Speaker #3: So maybe David, you could get a little bit more details on that.

Speaker #2: Yeah, absolutely. It's very interesting. I mean, we now have tools where we're taking spreadsheets which have an entire month of shipment. So the spreadsheets have about 500,000 lines.

Speaker #3: So by trying to settle okay, ASAP okay, and I mean, this is also a part of the change.

Speaker #2: And tons of columns, tons of data. And we're able to really isolate very specifically the problematic lanes, very specifically the problematic freight, the terminals, the customers.

Speaker #2: Yeah, that's actually very interesting. So from a business perspective, what you want to do is be very forthcoming and very aggressive with settling matters quickly.

Speaker #2: And so what we've done over the last couple of years is built a Miami-based legal team of in-house lawyers who are managing all of our claims and are working with the external lawyers.

Speaker #2: And really driving it because the external lawyer doesn't always have your interests in mind given how they get compensated by the hour. Whereas us, our interest is getting it done.

Speaker #2: And what's interesting about that is that when you start settling things fast, right, your actuarial reserves actually need to go up because the actuarial assessment is not looking at the fundamentals of what's happening.

Speaker #4: Okay. I appreciate that. Just to kind of a clean-up question, you talked a couple of times in the release about this incremental accident reserve.

Speaker #4: It's like 10.5 million in the quarter. Does this recur? Is this a prior period adjustment? Because I think when we look at the corporate line, that certainly stood out this quarter.

Speaker #2: It's just saying, "Whoa, you guys have a ton of spend this quarter."

Speaker #3: Yeah. We did have a ton of spend. But the reason we had a ton of spend was that we took care of a bunch of things that are not going to come back to bite us at down the road.

Speaker #2: Yeah. Yeah. It's not recurring. That's for sure. I mean, we sure hope not.

Speaker #3: And so over so right now we're in that lump where the actuarial reserves are actually a little coming in high because of this settlement.

Speaker #3: No.

Speaker #2: No. No, every quarter we go through and we assess very clearly where our reserves need to be and we'll make adjustments to various files and we don't it seems like some people wait till year-end to do that.

Speaker #3: But of course, when that then translates into less spend down the road, those reserves are going to come back and it's a little more into the opposite direction.

Speaker #2: We don't do that. We do it every single quarter.

Speaker #2: Yeah. And also maybe a few words on settling on the slide. What we're doing.

Speaker #3: But also, David, if you could just add to that, I mean, the approach that through Brandon and the new team okay, versus the old way that we used to do it until about a year ago.

Speaker #3: Yes. Yes. Absolutely. We do that with our internal team as well as an external provider. In terms of when there's an accident, we dispatch somebody immediately to the scene.

Speaker #3: So by trying to settle okay, ASAP okay, and I mean, this is also part of the change.

Speaker #3: With authority to settle on the spot. And so we've had a lot of success with that and it's yeah. It's an important part of our strategy.

Speaker #2: Yeah, So from a business perspective, what you want to do is be very forthcoming and very aggressive with settling matters quickly. And so what we've done over the last couple of years is build a Miami-based legal team of in-house lawyers who are managing all of our claims and are working with the external lawyers.

Speaker #2: Yeah. Because the problem by claim grows with time. I mean, over time, it's not going to get any better. It's just going to get more expensive.

Speaker #2: And really driving it because the external lawyer doesn't always have your interests in mind given how they get compensated by the hour. Whereas us, our interest is getting it done.

Speaker #2: So this is why we change completely the approach there is if it's a minor thing for sure. If it's major, okay, nobody's going to solve on the spot.

Speaker #2: But if it's a minor thing that could turn over time after a year or two, something like way more expensive, so we went like David says with our own team and with also an external provider to try to sell as much as we can on the spot right away before the lawyers comes in, before whoever okay, and I don't remember how many cases we settled.

Speaker #2: It's just saying, "Whoa, you guys had a ton of spend this quarter."

Speaker #3: Yeah, we did have a ton of spend. But the reason why we had a ton of spend was that we took care of a bunch of things that are not going to come back to bite us at down the road.

Speaker #3: And so over so right now we're in that lump where the actuarial reserves are actually coming in high because of this settlement. But of course, when that then translates into less spend down the road, those reserves are going to come back and it'll unwind.

Speaker #3: It was about 200.

Speaker #2: 200, On the spot. So I mean, over time, this is for sure is going to help reduce our cost of claims.

Speaker #1: So just to understand, it seems like even doing this for a couple of years, at least have the team in Miami doing it, but you feel like you've sort of hit an inflection in cleaning up some of the stuff.

Speaker #3: In the opposite direction. And also maybe a few words on settling on the spot. What we're doing?

Speaker #1: And so now quarterly is going to be more of a, I don't know, standard practice. Seems like it still could be a little bit bumpy just based on the activity.

Speaker #2: Yes. Yes, absolutely. We do that with our internal team as well as an external provider. In terms of when there's an accident, we dispatch somebody immediately to the scene with authority to settle on the spot.

Speaker #2: No. I think that this quarter's reserve increase in reserve is exceptional. We do not expect these types of movements every quarter.

Speaker #2: And so we've had a lot of success with that and it's yeah. It's an important part of our strategy.

Speaker #1: Okay. All right. Thanks for all the details. Appreciate it.

Speaker #4: Thank you. And your next question comes on the line of Jason Sato from TD Cowen. Please go ahead.

Speaker #3: Yeah, because the problem by claim grows with time. I mean, over time, it's not going to get any better. It's just going to get more expensive.

Speaker #2: Thank you, operator. Elaine, David, afternoon, gentlemen.

Speaker #3: Good afternoon.

Speaker #2: I wanted to get a clarification question in first. I think you said that in terms of your spot TL exposure, it was at 25%.

Speaker #3: So this is why we change completely the approach there is if it's a minor thing, for sure. If it's major, okay, nobody's going to solve on the spot.

Speaker #2: I was wondering if that includes all the heavy haul because it seemed a bit higher than I thought it would be. I think Dasky Legacy was about 5%.

Speaker #3: But if it's a minor thing that could turn over time after a year or two, something like way more expensive, so we went like David says with our own team and with also an external provider to try to sell as much as we can on the spot right away before the lawyers comes in, before whoever okay, and I don't remember how many cases we settled.

Speaker #3: No. That's the US flatback. It's 25%. The heavy haul and the legacy specialized in Canada is very, very negligible spot.

Speaker #2: No.

Speaker #3: Right? There's none. So when we talk about.

Speaker #2: That's what I thought.

Speaker #3: It's like the over-the-road, Jason, the over-the-road flatbed, not the special, highly specialized tank, okay, or dumps or whatever. It's really the over-the-road thing. The regular flatbed, if you want to.

Speaker #2: It was about 200.

Speaker #3: 200, On the spot. So I mean, over time, this is for sure is going to help reduce our cost of claims.

Speaker #2: Okay. On my next one's more of a macro question. Elaine, did you guys see sort of any pull forward into June and maybe talk about the July trend that you're seeing out there?

Speaker #4: So just to understand, it seems like you've been doing this for a couple of years, at least have the team in Miami doing it.

Speaker #4: But you feel like you've sort of hit an inflection in cleaning up some of the stuff. And so now quarterly is going to be more of a, I don't know, standard practice.

Speaker #3: So far, I mean, what we're seeing in July okay, or in June, I mean, I think that if you look back, David, a month of June, I mean, this was a great month in June.

Speaker #4: Seems like it still could be a little bit bumpy just based on the activity.

Speaker #2: No, I think that this quarter's reserve increase in reserve is exceptional. We do not expect these types of movements every quarter.

Speaker #3: I mean, May was a little bit soft. June was great. April was great. July, even with the vacation that we have with our customers, vacation we have with our own employees, drivers, and all that, I mean, so far what we're seeing is that it's quite surprising what we're seeing so far.

Speaker #4: Okay. All right. Thanks for all the details. Appreciate it.

Speaker #1: Thank you. And your next question comes on the line of Jason Sato from TD Cowen. Please go ahead.

Speaker #2: Yeah. Exactly. I mean, in July, right now, up until today, in July, the revenue per truck in the truckload it was in June. And then what we're seeing in the LTL is what we expect, right, which is that the revenue per shipment is down less, right, it wasn't down 2%, it was down less.

Speaker #5: Thank you, operator. Alain, David, afternoon, gentlemen.

Speaker #3: Good afternoon.

Speaker #5: I wanted to get a clarification question in first. I think you said that in terms of your spot TL exposure, it was at 25%.

Speaker #5: I was wondering if that includes all the heavy haul because it seemed a bit higher than I thought it would be. I think Dasky Legacy was about 5%.

Speaker #3: No, that's the US flatback. It's 25%. The heavy haul and the legacy specialized in Canada, negligible spot. Right? There's none. So when we talk about.

Speaker #2: And then also the shipment counts coming down. So we're starting to see the effect of that price increase that we're putting through, right, work through in the way that we expect it to.

Speaker #3: Yeah. And this is with the 3PL, okay, so corporate and SMB, I mean, it's steady for us. Volume-wise and price-wise.

Speaker #5: That's what I thought.

Speaker #3: It's like the over-the-road, Jason, the over-the-road flatbed, not the special highly specialized tank okay or dumps or whatever. It's really the over-the-road thing. The regular flatbed, if you want to.

Speaker #2: Yeah. Makes sense. Gentlemen, appreciate the time. Good quarter.

Speaker #3: Thank you, Jason.

Speaker #5: Okay. My next one's more of a macro question. Alain, did you guys see sort of any pull forward into June and maybe talk about the July trends that you're seeing out there?

Speaker #4: Thank you. And your next question comes on the line of Connor Crypto from Scotiabank Capital. Please go ahead.

Speaker #2: Good afternoon, Elaine and David. So my first question is on the LTL. I'm just trying to understand the move from Q2 to Q3. For the second quarter, the LTL operating ratio was, I think, 88.5%, which is, I think, better than the midpoint of what you were expecting heading in.

Speaker #3: So far, I mean, what we're seeing in July okay or in June, I mean, I think that if you look back, David, a month of June, I mean, this was a great month in June.

Speaker #2: Now, you're saying flat in Q3, which probably means about 88.8%. Now, if you had high 3PL volumes and higher costs in Q2 and working to address that in Q3, why is that Q3 operating ratio not improving sequentially from Q2?

Speaker #2: I mean, is there is it because it's going to take time to resolve those things, or is there some other noise in Q3?

Speaker #2: Yeah, exactly. I mean, in July, right now, up until today, in July, the revenue per truck in the truckload is 14.5%, which is the same as it was in June.

Speaker #3: Okay. So far, there's one thing that you got to keep in mind is USD versus Canadian dollars. Right? So our Canadian profit now are discounted at it's at $1.40, okay, versus the average of Q2.

Speaker #2: And then what we're seeing in the LTL is what we expect, right, which is that the revenue per shipment is down less, right? It wasn't down 2%.

Speaker #3: So that's a little bit of an issue, okay, the other thing also part of our forecast is what's going to happen with fuel. So for sure, there's no question about that, that the only area us where it's really a tailwind fuel is the Canadian LTL and P&C.

Speaker #2: It was down less. And then also the shipment counts coming down. So we're starting to see the effect of that price increase that we're putting through, right, work through in the way that we expect it to.

Speaker #3: Yeah. And this is with the 3PL okay. So corporate and SMB, I mean, it's steady. Volume-wise and price-wise.

Speaker #3: I mean, truckload is never a tailwind for us in US LTL. It's never a tailwind or logistics. So for sure, not knowing where we're going, okay, with fuel, this is why our Canadian folks okay, when they give us their forecast, they went with maybe a little bit conservative on fuel versus what it is today, right?

Speaker #2: Yeah.

Speaker #5: Makes sense. Gentlemen, appreciate the time. Good quarter.

Speaker #3: Thank you, Jason.

Speaker #1: Thank you. And your next question comes on the line of Connor Crypto from Scotiabank Capital. Please go ahead.

Speaker #6: Good afternoon, Alain and David. So my first question is on the LTL. I'm just trying to understand the move from Q2 to Q3. For the second quarter, the LTL operating ratio was, I think, 88.5%, which is, I think, better than the midpoint of what you were expecting heading in.

Speaker #3: So now we're again above $5 US a gallon. But that's why our Canadian folks are being very cautious about where this is going to go.

Speaker #3: So you got USD, okay, so what is USD versus CAD? One penny difference affects on us, David.

Speaker #6: Now, you're saying flat in Q3, which probably means about 88.8%. Now, if you had high 3PL volumes and higher costs in Q2 and working to address that in Q3, why is that Q3 operating ratio not improving sequentially from Q2?

Speaker #2: Yeah. One penny is about a cent of EPI, okay?

Speaker #3: Yeah. It's about one to one now.

Speaker #2: Okay. No, thanks for that explanation.

Speaker #6: I mean, is there is it because it's going to take time to resolve those things, or is there some other noise in Q3?

Speaker #3: By the way, Connor, make sure that understanding that those margin improvements that we put in the press release and we mentioned, those are year-over-year numbers.

Speaker #3: Okay. So far, there's one thing that you got to keep in mind is USD versus Canadian dollars. Right? So our Canadian profit now are discounted at it's at $1.40.

Speaker #2: Yes, absolutely. I mean, I think Q3 LTL, you're being flat also somewhat means sequentially flat. Given you had 88.8 and 88.5. So no, that's a good explanation.

Speaker #3: Okay? Versus the average of Q2. So that's a little bit of an issue okay? The other thing also part of our forecast is what's going to happen with fuel.

Speaker #2: And if we can help us, I know you guys are not disclosing your regional operating ratios, but from trend perspective, is the US LTL operating ratio likely to make a bigger move?

Speaker #3: So for sure, there's no question about that, that the only area us where it's really a tailwind fuel is the Canadian LTL and PNC.

Speaker #2: A bigger and better move in the next coming quarters compared to your Canadian operating ratio because that's where you're seeing service improvements? Is that fair?

Speaker #3: I mean, truckload is never a tailwind for us. And US LTL is never a tailwind or logistics. So for sure, not knowing where we're going okay with fuel, this is why our Canadian folks okay when they give us their forecast, they went with maybe a little bit conservative on fuel versus what it is today.

Speaker #3: Yeah. Yeah. Absolutely, Connor. I mean, the biggest bang for the buck is on a US LTL. I mean, on the Canadian side, we are running very, very lean and mean and very efficiently compared to the only peers we have in Canada.

Speaker #3: I mean, when we compare ourselves to the only peers we know about. I mean, yeah. So it's really the US where I mean, we still have a lot of work to do, okay, to get to where we have to be.

Speaker #3: Right? So now we're again above $5 US a gallon. But that's why our Canadian folks are being very cautious about where this is going to go.

Speaker #2: Okay. And then just to put that into context, Elaine, how far are you from mid-80s on that? Is it like a year away, or it's more like six months away in the US?

Speaker #3: So you got USD okay? So what is USD versus CAD? One penny difference affects on us, David. Yeah, one penny is about a cent of EPF.

Speaker #3: Okay. Yeah. It's about one to one though.

Speaker #3: I mean, hey, Connor, I've been at it with the team for five years. And I mean, every year we have a different kind of an issue and we're just saying when is this going to happen, right?

Speaker #6: Okay. No, thanks for the explanation.

Speaker #3: By the way, Connor, make sure the understanding that those margin improvements that we put in the press release and we mentioned, those are year-over-year numbers.

Speaker #3: So if you would talk to Cal, that is exactly what he's going to tell you. But we fixed a lot of things, okay, I think that we're getting close to the end, right, because once our commercial team is way better, okay, we have stability in our commercial team now, which never happened before.

Speaker #6: Yes, absolutely. I mean, I think Q3 LTL, you're being flat also somewhat means sequentially flat. Given you had 88.8 and 88.5. So no, that's a good explanation.

Speaker #6: And if we can help us I know you guys are not disclosing your regional operating ratios, but from trend perspective, is the US LTL operating ratio likely to make a bigger move?

Speaker #3: Our operating team we definitely need some improvement there and we're working on that. Our fleet, okay, in terms of the asset and in terms of the management of our fleet, I mean, it's major improvement.

Speaker #6: A bigger and better move in the next coming quarters compared to your Canadian operating ratio? Because that's where you're seeing service improvements. Is that fair?

Speaker #3: So I mean, we're heading in the right direction. But I mean, we fell, okay, into 1Q2, okay, but now we're back on our feet and we're going to be correcting that, okay, in the next quarter.

Speaker #3: Yeah.

Speaker #2: Yeah, absolutely, Connor. I mean, the biggest bang for the buck is on a US LTL. I mean, on the Canadian side, we are running very, very lean and mean and very efficiently compared to the only peers we have in Canada.

Speaker #3: It's been much easier for Connor to turn around a truckload operation because if you look back, okay, and you look at Dastgirt today, I mean, the SFI truckload in the US, I mean, it's day and night versus what these guys were doing two years ago.

Speaker #2: I mean, when we compare ourselves to the only peers we know about.

Speaker #3: I mean, yeah. So it's really the US where I mean, we still have a lot of work to do okay to get to where we have to be.

Speaker #6: Okay. And then just to put that into context, Alain, how far are you from mid-80s on that? Is it like a year away, or it's more like six months away in the US?

Speaker #3: Much easier to turn around, okay, a truckload division versus a big network, okay, that was probably not very important to the previous owner, okay, so this is why the tools, the fleet, the real estate, the morale, the management team was probably not priority for them.

Speaker #3: But it is for us.

Speaker #3: So if you would talk to Cal, that is exactly what he's going to tell you. But we fixed a lot of things. Okay? I think that we're getting close to the end, right?

Speaker #2: Okay. No, that's a very good answer. Thanks so much, Elaine and David, all the best.

Speaker #3: Thank you.

Speaker #1: Thank you. And your next question comes on the line of Tom Waterwitz from UBS Financial. Please go ahead.

Speaker #3: Because once our commercial team is way better okay, we have stability in our commercial team now, which never happened before. Our operating team, we definitely need some improvement there.

Speaker #4: Yeah. Good afternoon. Let's see. Wanted to ask a little bit more on LTL and the brokerage fees. There are the three PLPs. How much of the book in LTL is with three PL?

Speaker #4: Is that 30%? Is it bigger or smaller than that? And then I think in terms of just maybe if we look to, let's say, 2027, how do you think these two big businesses you have, so LTL and truckload develop?

Speaker #3: And we're working on that. Our fleet okay, in terms of the asset and in terms of the management of our fleet, I mean, it's major improvement.

Speaker #3: So I mean, we're heading in the right direction. But I mean, we fell okay into one Q2 okay, but now we're back on our feet and we're going to be correcting that okay in the next quarter.

Speaker #4: It seems like you are seeing a lot of really good news in truckload this year. Is there kind of more significant runway or a similar improvement in 27, or is that kind of more moderate?

Speaker #4: And then LTL, just from a, I think, margin and pricing perspective, it's taken a bit longer, but is that kind of a, I don't know, any ways to think about the delta and the improvement you could experience in 27 in LTL?

Speaker #3: It's been much easier for Connor to turn around a truckload operation because if you look back okay, and you look at Dastgirt today, I mean, the SFI truckload in the US, I mean, it's day and night versus what these guys were doing two years ago.

Speaker #4: So I guess a couple of questions within that. Thank you.

Speaker #2: Yeah.

Speaker #3: Okay. You know what, Tom? On the truckload side, we're just starting. We're just starting. Right? So we're just starting in the sense that what we've done with SPD, now SPD is focused on, okay, one business, okay?

Speaker #3: Much easier to turn around okay a truckload division versus a big network okay that was probably not very important to the previous owner. Okay?

Speaker #3: We're doing the same thing with Lone Star. Okay? So Lone Star, your focus is going to be let's say the wind, the data center, everything that is big and heavy and long, etc., etc.

Speaker #3: So this is why the tools, the fleet, the real estate, the morale, the management team was probably not priority for them. But it is for us.

Speaker #3: Next is we're going to be working with another division, okay, that we're going to do the same thing. And then we're going to attack another one, okay, of our division.

Speaker #6: Okay. No, that's a very good answer. Thanks so much, Alain and David. All the best.

Speaker #3: Thank you.

Speaker #3: So this is an ongoing process, okay, and it's not going to end in 26. It's probably going to go all the way to probably summer of 27, maybe Q1.

Speaker #1: Thank you. And your next question comes on the line of Tom Waterwitz from UBS Financial. Please go ahead.

Speaker #7: Yeah, good afternoon. Let's see. Wanted to ask a little bit more on LTL and the brokerage fees. There are the three PLPs. How much of the book in LTL is with three PL?

Speaker #3: By Q1 of 27, we should be done. Okay? And then we have one company that's called SFI, okay, with one leader of commercial, which is our friend Scott Hobby, okay, one TMS, okay, which is the McLeod system, that now it's going to be implemented over with one finance system, which is our Infineon system, okay, with one fleet management, which is called MEER, so with one visibility so we're also implementing Salesforce for Mr. Hobby and his sales team.

Speaker #7: Is that 30%? Is it bigger or smaller than that? And then I think in terms of just maybe if we look to, let's say, 2027, how do you think these two big businesses you have, so LTL and truckload develop?

Speaker #7: It seems like you are seeing a lot of really good news in truckload this year. Is there kind of more significant runway or a similar improvement in '27, or is that kind of more moderate?

Speaker #3: So it's going to be one company versus when we bought Dastgirt was more like nine companies that were all over the place. Now, this is truckload.

Speaker #7: And then LTL, just from a, I think, margin and pricing perspective, it's taken a bit longer, but is that kind of a any ways to think about the delta and the improvement you could experience in '27 in LTL?

Speaker #3: So what you see in '86 or right now, we're going to do better than that in 27. If the market is about the same and the same is true of this supply constraint, yes, we'll do better.

Speaker #7: So I guess a couple of questions within that. Thank you.

Speaker #6: Yeah.

Speaker #3: Can we get to, let's say, an 80 to an 82R, 83R? I think so. Okay? If market stays about the same as the supply is not changing, okay, I think so.

Speaker #3: Okay? We're doing the same thing with Low-Star. Okay? So Low-Star, your focus is going to be let's say the wind, the data center, everything that is big and heavy and long, etc., etc.

Speaker #3: I mean, we still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing like David was saying. I think 35%, okay, with good margin.

Speaker #3: Next is we're going to be working with another division. Okay? That we're going to do the same thing. And then we're going to attack another one.

Speaker #3: And we are protecting ourselves, okay? We use carriers that are professional that we deal with them on a day-to-day basis. We don't deal with fly-by-nights that so this is really our truckload operation on the LTL side, okay, we're working on improving, okay, like we said, T4 straight, but at the same time, okay, we have a very small non-union LTL business today in the US.

Speaker #3: Okay? Of our division. So this is an ongoing process. Okay? And it's not going to end in '26. It's probably going to go all the way to probably summer of '27, maybe Q1.

Speaker #3: By Q1 of '27, we should be done. Okay? And then we have one company that's called SFI, okay, with one leader of commercial, which is our friend Scott Hobby, okay, one TMS, okay, which is the McLeod system, that now it's going to be implemented over with one finance system, which is our Infineon system, okay, with one fleet management, which is called Mere.

Speaker #3: Very small. 1,000 shipments a day, 1,300 shipments a day, which is peanuts, right? But I mean, we are working to build that up, okay, over the next few years.

Speaker #3: And do the same thing as we do in Canada. So in Canada, we run union or we run non-union, right? So we run both.

Speaker #3: So with one visibilities we're also implementing Salesforce for Mr. Hobby and his sales team. So it's going to be one company versus when we bought Dastgirt was more like nine companies that were all over the place.

Speaker #3: And this is what will also be focused on is trying to beef up that non-union LTL slowly with small and we don't want to be in states where there's no density.

Speaker #3: Now, this is truckload. So what you see in '86 or right now, are we going to do better than that in '27? If the market is about the same and the same is true of this supply constraint, yes, we'll do better.

Speaker #3: So when you build from scratch, the advantage you have is you pick the states. So where we want to be? Well, we want to be in Texas.

Speaker #3: Can we get to, let's say, an 80 to an 82R, 83R? I think so. Okay? If market stays about the same as the supply is not changing, okay, I think so.

Speaker #3: That's for sure. We want to be in California. That's for sure. We want to be in Ohio. We want to be in Michigan. We want to be in New York.

Speaker #3: We want to be in the Carolinas. Okay? So this is the beauty when you build from scratch. And with 1,000 shipments, that's what you would call that, build from scratch, right?

Speaker #3: I mean, we still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing like David was saying, I think 35%.

Speaker #3: Whereas with T4 straight, we have a huge network, okay, and we have to live with what we've got and we're working on improving it every day.

Speaker #3: Okay? With good margin. And we are protecting okay, ourselves. Okay? We use carriers that are professional that we deal with them on a day-to-day basis.

Speaker #4: And any thoughts on just mix of three PL within your LTL today? How large it is?

Speaker #3: We don't deal with fly-by-nights that so this is really our truckload operation on the LTL side. Okay? We're working on improving okay, like we said, keep us straight.

Speaker #3: Yeah. It's over a third. It's ballooned to over a third. Yeah. As the volumes increase.

Speaker #4: So do you I mean, that's pretty sizable. It's not a typical, but do you think that there's a significant loss of shipments as you price up?

Speaker #3: But at the same time, okay, we have a very small non-union LTL business today in the US. Very small. 1,000 shipments a day, 1,300 shipments a day, which is peanuts.

Speaker #4: Is it because I think the three PLs do tend to be they shift things around as you're pricing changes, I guess, as you saw by having low prices?

Speaker #3: Well, if you talk about the three PLs, the CSP, the customer-specific pricing, no. Okay, Tom? They don't move around because what you give them is a specific pricing for a specific customer.

Speaker #3: Right? But I mean, we are working to build that up, okay, over the next few years. And do the same thing as we do in Canada.

Speaker #3: So in Canada, we run union or we run non-union. Right? So we run both. And this is what will also be focused on is trying to beef up that non-union LTL slowly okay, with small and we don't want to be in states where there's no density.

Speaker #3: So that is way more stickier than the blanket. The blanket, you're right, okay, when you get the shipment, it's probably because you're the cheapest guy in town, okay, and this is where okay, we're working on changing the mix, okay, until a few years ago, blanket was probably like 80 to 85 of the shipment that we're getting from the three PL.

Speaker #3: So when you build from scratch, the advantage you have is you pick the states. So where we want to be? Well, we want to be in Texas.

Speaker #3: Now, if I remember correctly, our CSP, customer-specific, we're at 45, 55 is blanket, and this is where we got overwhelmed with volume, and this is what we're fixing.

Speaker #3: That's for sure. We want to be in California. That's for sure. We want to be in Ohio. We want to be in Michigan. We want to be in New York.

Speaker #3: Now, one thing is for sure is that 33% with three PL is too much and the approach has been with Cal and the rest of the team is you want to use maybe the blanket as a lock leader when you are in a soft period.

Speaker #3: We want to be in the Carolinas. Okay? So this is the beauty when you build from scratch. And with 1,000 shipments, that's what you would call that build from scratch.

Speaker #3: Right? Whereas with T4 straight, we have a huge network. Okay? And we have to live with what we've got and we're working on improving it every day.

Speaker #3: Let's say December, January, and February, so that you don't have to lay off your workers you could maybe use some of those three PL blanket shipments to keep your employees at work and then you don't have to rehire people when you become busier, let's say, in February and March.

Speaker #7: And any thoughts on just mix of three PL within your LTL today? How large it is?

Speaker #3: Yeah. It's over a third. It's ballooned to over a third. Yeah. As the volumes increase.

Speaker #7: So do you I mean, that's pretty sizable. It's not a typical, but do you think that there's a significant loss of shipments as you price up?

Speaker #4: Right. Okay. Thank you.

Speaker #3: Pleasure.

Speaker #7: Is it because I think the three PLs do tend to be they shift things around as your pricing changes. I guess as you saw by having low prices.

Speaker #1: Thank you. And your next question comes from the line of Kevin Shang. From CIBC, please go ahead.

Speaker #2: Thanks for taking my question. Elaine and David, I'll keep it to one. Just when I think back to your Canadian truckload segment, during the last peak, we saw ORs below 80% there.

Speaker #3: So that is way more stickier than the blanket. The blanket, you're right. Okay? When you get the shipment, it's probably because you're the cheapest guy in town.

Speaker #2: And now you're having the drivers ink model getting tackled more aggressively by the federal government. Just wondering within your Canadian TL segment, do you think margins can achieve a higher peak than you saw in the last cycle given that cycle also saw the driver ink headwinds?

Speaker #3: Okay? And this is where okay, we're working on changing the mix. Okay? Until a few years ago, blanket was probably like 80 to 85 of the shipment that we're getting from the three PL.

Speaker #3: It's still early, Kevin, but I would say that if you look at the problem we have is that some sector of the Canadian truckload are still very weak, like steel.

Speaker #3: Now, if I remember correctly, our CSP, customer-specific, we're at 45, 55 is blanket. And this is where we got overwhelmed with volume. And this is what we're fixing.

Speaker #3: Right? As you know, I mean, steel is on the Canadian side because of the tariff. Steel is an issue. The other thing also that is an issue still in Canada is forest products, right?

Speaker #3: Lumber, plywood, etc., etc. So because of those weaknesses, okay, in some sector, because we still don't have a deal with the US, right, so this is why we're seeing major improvement, okay, on the Canadian side.

Speaker #3: But can we see more? Maybe if driver ink continues to disappear, okay, the problem we have is that we have some sector on the Canadian truckload side steel, forest products, that are being affected, okay, because of we don't have a deal with the US.

Speaker #3: And then you don't have to rehire people when you become busier, let's say, in February and March.

Speaker #7: Right. Okay. Thank you.

Speaker #3: Pleasure.

Speaker #1: Thank you. And your next question comes on the line of Kevin Shang. From CIBC, please go ahead.

Speaker #3: So far. Aluminum, okay, we have lots of tariff on aluminum, but aluminum, it's not an issue because right now, I mean, if you look at the situation in Qatar, that the probably supply 10% of all the aluminum in the world, and those guys are out, okay, so this is why our guys the aluminum from BC, although BC is small for aluminum, but Quebec is big.

Speaker #2: Thanks for taking my question, Alain. And David, I'll keep it to one. Just when I think back to your Canadian truckload segment, during the last peak, we saw ORs below 80% there.

Speaker #2: And now you're having the drivers ink model getting tackled more aggressively by the federal government. Just wondering within your Canadian TL segment, do you think margins can achieve a higher peak than you saw on the last cycle given that cycle also saw the driver ink headwinds?

Speaker #3: I mean, this is like flying out the door. I mean, really, really busy with that. But the issue is steel and forest products.

Speaker #3: It's still early, Kevin, but I would say that if you look at the problem we have is that some sector of the Canadian truckload are still very weak, like steel.

Speaker #2: Okay. I'll keep it to one. Thank you for the caller there.

Speaker #3: Pleasure, Kevin.

Speaker #1: Thank you. And your next question comes from the line of Pascal Majors from Stevens. Please go ahead.

Speaker #3: Right? As you know, steel is on the Canadian side because of the tariff. Steel is an issue. The other thing also that is an issue still in Canada is forest products.

Speaker #5: Yeah. Good evening and thank you for taking my questions. The follow-up on Tom's question about where you think there might be opportunity in your larger businesses to really continue to deliver significant growth in the next year.

Speaker #3: Right? Lumber, plywood, etc., etc. So because of those weaknesses okay, in some sector, because we still don't have a deal with the US, right, so this is why we're seeing major improvement.

Speaker #5: Where are the places that are most likely to show acquisitive or M&A growth in the next year? Do you have a sense of that?

Speaker #5: Any walkthrough of how you feel on that side of business would be helpful. Thank you.

Speaker #3: You mean excuse me, but you mean does he mean on M&A side?

Speaker #5: Yeah. What segments would grow through M&A?

Speaker #3: Okay? On the Canadian side. But can we see more maybe if driving continues to disappear? Okay? The problem we have is that we have some sector on the Canadian truckload side steel forest products that are being affected.

Speaker #3: Okay. Well, what we like in M&A for sure, I mean, and then you've seen it with the VASCI acquisition, is that if we could find something of size that fits well in our specialty truckload, absolutely.

Speaker #3: But between you and me, like I said, a small non-union LTL, okay, that could be added to our small non-union LTL that we have today.

Speaker #3: Okay? Because of we don't have a deal with the US. So far. Aluminum, okay, we have lots of tariff on aluminum, but aluminum it's not an issue because right now, I mean, if you look at the situation in Qatar, that the probably supply 10% of all the aluminum in the world and those guys are out.

Speaker #3: Let's say a 200 million dollar LTL that would be a great fit for us to start with to build that network. And logistics, I mean, us with big fan of logistics.

Speaker #3: I mean, we love logistics. We love to make money. And if you exclude the intangible, okay, I mean, we do really, really, really, really well with our investment in logistics.

Speaker #3: Okay? So this is why our guys the aluminum from BC, although BC is small for aluminum, but Quebec is big. I mean, this is like flying out the door.

Speaker #3: So if we could have the chance to put our hands like we did in December, we bought a fantastic. But it's small. It's only 150 million dollars revenue.

Speaker #3: I mean, really, really busy with that. But the issue is steel and forest products.

Speaker #3: But it's highly profitable. And we have a solid team there that's going to grow. But it's still small. It's only 150 US. Right? So I mean, you say, well, I mean, this is all.

Speaker #2: Okay. I'll keep it to one. Thank you for the color there.

Speaker #3: Pleasure, Kevin.

Speaker #1: Thank you. And your next question comes on the line of Pascal Majors from Stevens. Please go ahead.

Speaker #3: I mean, yeah, absolutely. Because TFR's blood is growth to acquisition. Yes, we like to grow organically, but M&A has been the success story of TFI.

Speaker #5: Yeah. Good evening. And thank you for taking my questions. The follow-up on Tom's question about where you think there might be opportunity in your larger businesses to really continue to deliver significant growth in the next year.

Speaker #5: Where are the places that are most likely to show acquisitive or M&A growth in the next year? Do you have a sense of that?

Speaker #3: And with the huge free cash flow that we generate, okay, our leverage is down to 2.4. If we don't do anything upsize, our leverage is going to come down to close to 2.

Speaker #5: Any walkthrough of how you feel on that side of the business would be helpful. Thank you.

Speaker #3: You mean excuse me, but you mean does he mean on M&A side?

Speaker #3: By year-end. Right? Why is that? Well, because we generate so much cash. Right? So we're very well positioned solid balance sheet huge free cash flow.

Speaker #5: Yeah. What segments would grow through M&A?

Speaker #3: So and we're on the hunt for sure. I mean, yeah.

Speaker #3: But between you and me, like I said, a small non-union LTL, okay, that could be added to our small non-union LTL that we have today.

Speaker #5: Thank you.

Speaker #1: Thank you. And your next question comes from the line of Aria Rosa from CT Group. Please go ahead.

Speaker #3: Let's say a 200 million dollar LTL that would be a great fit for us to start with to build that network. And logistics. I mean, us with big fan of logistics.

Speaker #6: Hey, good afternoon, Elaine, David. Just very quickly, a point of clarification. For the US LTL business, does the third quarter guide assume deterioration in the OR there?

Speaker #3: I mean, we love logistics. We love to make money. And if you exclude the intangible, okay, I mean, we do really, really, really, really well with our investment in logistics.

Speaker #6: And then continuing on Bascom's question, Elaine, you're usually very good about giving us your thoughts on kind of the M&A landscape and how it might have changed and where there might be value.

Speaker #3: So if we could have the chance that to put our hands like we did in December, we bought a fantastic. But it's small. It's only 150 million dollars revenue.

Speaker #6: Maybe you could speak about what you're seeing there. Thank you.

Speaker #5: Yeah. So on the Q3

Speaker #3: for our US LTL, no. I mean, they will improve the profitability of the company. There's no doubt about that. We're just Q2. And in terms of M&A, I mean, I've always said you buy and buy news and you sell good news.

Speaker #3: But it's highly profitable. And we have a solid team there that's going to grow. But it's still small. It's only 150 US. Right? So I mean, you say, well, I mean, this is all yeah, absolutely.

Speaker #3: So that's why we invested 1.8 billion dollars over the last three years. So now people are starting to think that, oh, now times will be better.

Speaker #3: Because TFI's blood is growth to acquisition. Yes, we like to grow organically, but M&A has been the success story of TFI. And with the huge free cash flow that we generate, okay, our leverage is down to 2.4.

Speaker #3: Right? So then M&A could be more expensive. Right? So this is why when you have the M&A market more expensive, what's important is the fit.

Speaker #3: Okay? How does that fit you? So if you have a target that profitability, let's say, is 10 million, okay, and instead of paying five times, you have to pay six times because the market is.

Speaker #3: If we don't do anything of size, our leverage is going to come down to close to 2. By year-end. Right? Why is that? Well, because we generate so much cash.

Speaker #3: Right? So we're very well positioned okay, solid balance sheet. Huge free cash flow. So and we're on the hunt. For sure. I mean, yeah.

Speaker #3: So what are you going to do with that 10? If the 10 is after two years going to be 10 and a half, maybe it's not the best deal.

Speaker #3: But if you think that the 10 will become 15 or 18, well, then that's a great deal. Right? Even if you have to pay a little bit more.

Speaker #5: Thank you.

Speaker #1: Thank you. And your next question comes on the line of Aria Rosa from CT Group. Please go ahead.

Speaker #3: So this is that balance, okay, that we have to look at. But never forget that one of the easiest things to buy is your own stock.

Speaker #6: Hey. Good afternoon, Alain, David. Just very quickly, a point of clarification. For the US LTL business, does the third quarter guide assume deterioration in the OR there?

Speaker #3: Right? So that's also the thing that we have to look at. Right? So if I'm buying TFI, I know what I'm buying. I mean, we've built TFI over the last three years.

Speaker #6: And then continuing on Bascom's question, Alain, you're usually very good about giving us your thoughts on kind of the M&A landscape and how it might have changed and where there might be value.

Speaker #3: So we know TFI. Right? So that's always the balance between buying an opportunity or buying TFI or just reducing your leverage.

Speaker #6: Maybe you could speak about what you're seeing there. Thank you.

Speaker #5: Yeah. So on the Q3

Speaker #6: Okay. Very helpful. And just quickly, I'm curious this probably seems a little bit out of left field, but could we get your thoughts on kind of autonomous trucks and the development there and any opportunities to maybe leverage that in linehaul operations?

Speaker #3: So that's why we invested 1.8 billion dollars over the last three years. So now people are starting to think that, oh, now times will be better.

Speaker #6: Or do you see that as still being kind of far down the road? Thanks.

Speaker #3: Right? So then M&A could be more expensive. Right? So this is why when you have the M&A market more expensive, what's important is the fit.

Speaker #3: No, no, no, no. As a matter of fact, I mean, we are talking okay, right now, about that. Okay, we're talking so maybe David, you could give us a little bit more insight on that?

Speaker #5: Yeah, absolutely. It's actually exactly for our linehaul as a first step, but we're very eager to roll this out. So we are talking with one of the major providers of this autonomous truck technology.

Speaker #3: Okay? How does that fit you? So if you have a target that's profitability, let's say, is 10 million, okay, and instead of paying five times, you have to pay six times because the market is.

Speaker #5: And it was a surprise to us because this has moved a lot faster than we thought. So this particular company has driven millions of miles on real roads.

Speaker #3: So what are you going to do with that 10? If the 10 is after two years going to be 10 and a half, maybe it's not the best deal.

Speaker #5: All around the southern part of the US, we're expanding from the west to the east. And they've gotten into zero accidents. And that's an incredible fact.

Speaker #3: But if you think that the 10 will become 15 or 18, well, then that's a great deal. Right? Even if you have to pay a little bit more.

Speaker #5: So you look at this and you say, okay, there's a bit of an upfront cost. And then there's a cost per mile. But what you benefit from is, first of all, it's like a team.

Speaker #3: So this is that balance, okay, that we have to look at. But never forget that one of the easiest things to buy is your own stock.

Speaker #3: Right? So that's also the thing that we have to look at. Right? So if I'm buying TFI, I know what I'm buying. I mean, we've built TFI over the last three years.

Speaker #5: So it can drive day and night. There's no hours of service. Second of all, it drives the truck way better. There's no idling. There's no acceleration.

Speaker #3: So we know TFI. Right? So that's always the balance between buying an opportunity or buying TFI or just reducing your leverage.

Speaker #5: There's no braking. It's all very measured. And so you get better utilization out of the truck. And third of all, there's no accidents. And so there's the reliability of knowing that the truck is going to be able to be driven.

Speaker #5: You don't have to deal with the driver turnover and the reality of people not showing up to work and whatnot. So it's very, very, very exciting.

Speaker #5: So we're rolling it out in the US LTL on the linehaul, in a first instance, the way the business model works is we broker to them.

Speaker #6: Or do you see that as still being kind of far down the road? Thanks.

Speaker #3: No, no, no, no. As a matter of fact, I mean, we are talking okay, right now, about that. Okay? We're talking so maybe David, you could give us a little bit more insight on that?

Speaker #5: Immediately. So they operate the truck. We get used to loading their vehicle, having it be in our yard. We sort of work in that way.

Speaker #5: But we broker it to them and they deal with the operations.

Speaker #5: Yeah. Absolutely. It's actually exactly for our linehaul as a first step, but we're very eager to roll this out. So we are talking with one of the major providers of this autonomous truck technology.

Speaker #3: But purchase transportation.

Speaker #5: It's PT. But then as soon as next year, we're going to be able to buy the technology, which gets put into new trucks. And then we'll build this out.

Speaker #5: And it was a surprise to us, but this has moved a lot faster than we thought. So this particular company has driven millions of miles on real roads.

Speaker #5: And if it works, we'll roll it out beyond the linehaul in the LTL. There's tons of applications in this for us.

Speaker #6: Got it. It sounds like starting small, but opportunity to scale if it works. Anything on timeline in terms of what that could look like, getting the scale?

Speaker #5: All around the southern part of the US, we're expanding from the west to the east. And they've gotten into zero accidents. And that's an incredible fact.

Speaker #5: Well, the brokerage is happening this year. To them. I expect that it'll go well. And then we'll be owning some of this technology next year.

Speaker #5: So you look at this and you say, okay, there's a bit of an upfront cost. And then there's a cost per mile. But what you benefit from is, first of all, it's like a team.

Speaker #5: And then we'll just see how quickly we can scale it. So it's too hard to say right now how quickly. But we're the dynamics of no accidents, better utilization on the truck.

Speaker #5: So it can drive day and night. There's no hours of service. Second of all, it drives the truck way better. There's no idling. There's no acceleration.

Speaker #5: It's basically a team. All of the things that we discussed. This is really, really interesting. And then it's extremely interesting to think about as this gets rolled out broadly through our industry, what that means for consolidation.

Speaker #5: There's no braking. It's all very measured. And so you get better utilization on the truck. And third of all, there's no accidents. And so there's the reliability of knowing that the truck is going to be able to be driven.

Speaker #5: Among the well-capitalized truckers. Right? That's very interesting to think through. I think that what it means is that you're going to have a lot of a lot more consolidation and large capitalized players who can afford this technology are going to be dominating it.

Speaker #5: You don't have to deal with the driver turnover and the reality of people not showing up to work and whatnot. So it's very, very, very exciting.

Speaker #5: So we're rolling it out in the US LTL on the linehaul. In a first instance, the way the business model works is we broker to them.

Speaker #5: And trucking probably looks a little bit more like the rail in that way.

Speaker #5: Immediately. So they operate the truck. We get used to loading their vehicle, having it be in our yard. We sort of work in that way.

Speaker #3: Yep.

Speaker #6: Very interesting indeed. Thank you for the time.

Speaker #3: Yeah. We are definitely embracing that technology. That's for sure.

Speaker #5: But we broker it to them and they deal with the operations. But it's PT. But then as soon as next year, we're going to be able to buy the technology, which gets put into new trucks.

Speaker #7: Hello. And your next question comes on the line of Cameron Dorksen from National Bank. Please go ahead.

Speaker #5: And then we'll build this out. And if it works, we'll roll it out beyond the linehaul in the LTL. There's tons of applications in this for us.

Speaker #6: Yeah. Thanks, good evening. I guess I wanted to just ask a little bit about the logistics. The operating ratio improvement that you've indicated for Q3.

Speaker #6: Obviously, on a year-by-year basis, you've had some acquired businesses there that are helping that. I'm just wondering how much the maybe an expected improvement in the truck-moving business is impacting the Q3 year-over-year.

Speaker #6: Got it. So it sounds like starting small, but opportunity to scale if it works. Anything on timeline in terms of what that could look like, getting the scale?

Speaker #6: Is that more of a Q4 into 2027 when we'll see kind of those volumes pick up just based on, I guess, the production plans for some of the truck OEMs?

Speaker #5: Well, the brokerage is happening this year. To them. I expect that it'll go well. And then we'll be owning some of this technology next year.

Speaker #6: Yeah. So what we're seeing on the truck-moving business is that if you go back to '25, okay, and '26, it's like the reverse. So the first six months of '26 was way lighter than the first six months of '25.

Speaker #5: And then we'll just see how quickly we can scale it. So it's too hard to say right now how quickly. But we're the dynamics of no accidents, better utilization on the truck.

Speaker #6: And the last six months of '25 are very light compared to what we anticipate to be the last six months of '26. Right? So it's like the reverse.

Speaker #6: Right? So for sure, our truck-moving business is going to be very, very, very busy in the last six months of '26. And into '27.

Speaker #6: Right? But is it, I guess, are you seeing that are you seeing that yet? Or is it, I guess, maybe more so in Q4?

Speaker #5: And trucking probably looks a little bit more like the rail in that way. Yep.

Speaker #6: Okay.

Speaker #3: Oh, yeah. No, no. We're seeing that in Q3, Cameron.

Speaker #5: Yeah.

Speaker #6: Okay. Okay. That's good.

Speaker #6: Very interesting indeed. Thank you for the time.

Speaker #5: Even towards the end of Q2.

Speaker #3: Oh, yeah.

Speaker #3: Yeah. We are definitely embracing that technology. That's for sure.

Speaker #5: Yep.

Speaker #6: Okay. Okay. No, that's helpful. I'll leave it at one question. Thanks very much.

Speaker #3: Thank you, Cameron.

Speaker #7: Hello. And your next question comes on the line of Cameron Dorksen from National Bank. Please go ahead.

Speaker #7: Thank you. And your next question comes on the line of Ben Walpere from New Jordan. Please go ahead.

Speaker #6: Yeah. Thanks, good evening. I guess I wanted to just ask a little bit about the logistics. The operating ratio improvement that you've indicated for Q3.

Speaker #8: Yeah. Thank you very much. Maybe Elaine, I appreciate the caller about flat LTL expectation for Q3 with some improvement. But any thoughts whether the tighter market for TL could eventually help the LTL market at one point?

Speaker #8: And when would you expect the pricing action to kick in more material manner?

Speaker #6: Is that more of a Q4 into 2027 when we'll see kind of those volumes pick up just based on, I guess, the production plans for some of the truck OEMs?

Speaker #3: Yeah. You know what, Benoit? We were talking to one of our peers in the industry. And he was telling us he's in the LTL business.

Speaker #3: And he was telling us that he's already starting to see shipments moving from truckload back to LTL. I mean, us, I would say us, we have not seen that.

Speaker #6: And the last six months of '25 are very light compared to what we anticipate to be the last six months of '26. Right? So it's like the reverse.

Speaker #3: Okay? But this is what this guy from the industry was telling us last week. Right? So I think that the fact that the truckload guys are getting busier because the supply has been reduced, reduced, reduced, then they just say, "You know what?

Speaker #6: Right? So for sure, our truck-moving business is going to be very, very, very busy in the last six months of '26. And into '27.

Speaker #3: This LTL shipments, it's too big of a hassle." Okay? I'm going back to just your trucker. Right? So this is a transition that is probably starting as we speak.

Speaker #6: Right? But is it, I guess, are you seeing that are you seeing that yet? Or is it I guess, maybe more so in Q4?

Speaker #6: Okay.

Speaker #3: Okay? But this is affecting the van guys. Okay? To the LTL, this is not affecting us in our specialized truckload operation because we don't really move LTL shipment in our specialty truckload sector.

Speaker #3: Oh, yeah. No, no. We're seeing that in Q3, Cameron.

Speaker #5: Yeah.

Speaker #6: Okay. Okay. That's good.

Speaker #5: Even towards the end of Q2.

Speaker #3: Oh, yeah.

Speaker #5: Yep.

Speaker #6: Okay. Okay. No, that's helpful. I'll leave it at one question. Thanks very much.

Speaker #3: Thank you, Cameron.

Speaker #7: Thank you. And your next question comes on the line of Ben Walpere from New Jordan. Please go ahead.

Speaker #8: Okay. That's great, caller. And maybe just in terms of follow-up, there was some more talks today about the renewed liability risk after the legal case with against CH Robinson.

Speaker #8: Yeah. Thank you very much. Maybe Alain, I appreciate the caller about flat LTL expectation for Q3 with some improvement. But any thoughts whether the tighter market for TL could eventually help the LTL market at one point?

Speaker #8: So I don't know if you have any thoughts on what could there could be some any potential impact on your brokerage Elaine?

Speaker #5: Yeah. Yeah. What I would say on that is, first of all, remember, most of our logistics is not brokerage. Okay? So our logistics segment has some brokerage.

Speaker #8: And when would you expect the pricing action to kick in more material manner?

Speaker #3: Yeah. You know what, Benoit? We were talking to one of our peers in the industry. And he was telling us he's in the LTL business.

Speaker #5: But it's a lot of niche asset-light businesses that what they have in common is that they're asset-light. Has nothing to do with brokerage. Last mile, truck-moving business, value-added warehousing, etc.

Speaker #3: And he was telling us that he's already starting to see shipments moving from truckload back to LTL. I mean, us, I would say us, we have not seen that.

Speaker #5: As it relates to brokerage, yeah, for sure. I mean, listen, we have very serious safety review process for our carriers. And we're looking at exactly if anything, what we need to enhance in that regard.

Speaker #5: But we're already operating at a adequate level. What I would say, though, is that as soon as Montgomery came out, as soon as the judgment came out, not the one against the broker that came out just a couple of when the Supreme Court ruled, as soon as that happened, we started getting calls like crazy from all these small brokers we had never heard of.

Speaker #3: This LTL shipments, it's too big of a hassle. Okay? I'm going back to just pure trucking." Right? So this is a transition that is probably starting as we speak.

Speaker #5: Right? And they were calling us and trying to book loads with us. Why? Because those were probably the ones that were feeding the fly-by-night carriers.

Speaker #5: And it's too dangerous now to do that. And I think that with this judgment that we've seen, it's only going to increase the level of diligence that brokers are going to do on their carriers.

Speaker #8: Okay. That's great, caller. And maybe just in terms of follow-up, there was some more talks today about the renewed liability risk after the legal case with against CH Robinson.

Speaker #5: Right? And so it's going to become unquestionable. You're going to have to work with a well-capitalized, professional, auditable, safe carrier. And so I think this is going to benefit folks like us and also some of the major truckload carriers who are doing everything they can on safety.

Speaker #8: So I don't know if you have any thoughts on what could there could be some any potential impact on your brokerage business, Alain?

Speaker #5: Yeah.

Speaker #6: Yeah.

Speaker #5: What I would say on that is, first of all, remember, most of our logistics is not brokerage. Okay? So our logistics segment has some brokerage.

Speaker #5: But it's a lot of niche asset-light businesses that what they have in common is that they're asset-light. Has nothing to do with brokerage. Last value-added warehousing, etc.

Speaker #3: And.

Speaker #8: That's well perceived, ed, Benoit, that

Speaker #3: at the end of the day, I mean, I think the shipment also it could be a wake-up call for the shippers to say, "You know what?

Speaker #3: Why would I deal with a guy that's got no money?" And use risk. Right? So I mean, this is all things that are helping like David was saying earlier, clean up our industry of all the bad actors that have been there for so long.

Speaker #8: That's great, caller. Gentlemen, thank you very much.

Speaker #3: Pleasure, Benoit.

Speaker #7: Thank you. And your next question comes on the line of Bruce Chan from Stifel. Please go ahead.

Speaker #9: Hey, good evening, chats. Just want to follow up on some of your comments around forestry products and Canadian steel. Obviously, we've had a lot of variability, let's call it, in the trade situation.

Speaker #5: Right? And they were calling us and trying to book loads with us. Why? Because those were probably the ones that were feeding the fly-by-night carriers.

Speaker #9: And now there's discussion about new tariffs on Canadian goods in August. Just want to get your thoughts on how that might affect volumes, especially to the extent that anything is baked into guidance, and whether you're expecting or seeing any inventory front-loading at this point.

Speaker #8: Yeah.

Speaker #3: No. We're not seeing any movement exceptional. Okay? Like pre-buying or pre-shipping. Okay? Because of the 30-day implemented implementation deadline. Okay? So we're not seeing that.

Speaker #3: So this is not the same as what we've seen in Q1 '25, where everybody was trying to chase volume into the US prior to tariffs.

Speaker #3: So we're not seeing that. The feedback that we're getting, okay, so far is that I mean, it will be implemented. So we've asked our Canadian folks to look at what it is and so far, I mean, it's used for a Canadian economy.

Speaker #3: And.

Speaker #8: That's well perceived, Benoit, that

Speaker #3: at the end of the day, I mean, I think the shipment also it could be a wake-up call for the shippers to say, "You know what?

Speaker #3: Right? So I think it's 20 billion dollars of export. But for us, I mean, there's no real issue. The biggest issue we have between US and Canada trade is forestry and steel.

Speaker #3: And when we look at those next round of tariffs, I mean, there's no real issues for what TFI is doing, transporter in Canada, US, US, Canada.

Speaker #8: That's great, caller, gentlemen. Thank you very much.

Speaker #3: Pleasure, Benoit.

Speaker #7: Thank you. And your next question comes on the line of Bruce Chan from Stafford. Please go ahead.

Speaker #9: Okay. Very helpful. Thank you.

Speaker #7: Thank you. That answered question and answered session. I'll now hand the call over to Mr. Bedard for any closing remarks.

Speaker #6: Hey, good evening, gents. Just want to follow up on some of your comments around forestry products and Canadian steel. Obviously, we've had a lot of variability, let's call it, in the trade situation.

Speaker #3: Well, thank you again, everyone, for joining us. And of course, for your ongoing interest in TFI International. So as we move through the you posted on our progress.

Speaker #6: And now there's discussion about new tariffs on Canadian goods in August. Just want to get your thoughts on how that might affect volumes, especially to the extent that anything is baked into guidance, and whether you're expecting or seeing any inventory front-loading at this point.

Speaker #3: And we look forward to seeing many of you at upcoming events. Please don't hesitate to reach out if you have any further questions. And I hope that you have a great evening.

Speaker #5: Yeah.

Speaker #3: No. We're not seeing any movement exceptional. Okay? Like pre-buying or pre-shipping. Okay? Because of the 30-day implemented implementation deadline. Okay? So we're not seeing that.

Speaker #3: So thanks again.

Speaker #3: So this is not the same as what we've seen in Q1, '25, where everybody was trying to chase volume into the US prior to tariffs.

Speaker #3: Right? So I think it's 20 billion dollars of export. But for us, I mean, there's no real issue. The biggest issue we have between US and Canada trade is forestry and steel.

Speaker #3: And when we look at those next round of tariffs, I mean, there's no real issues for what TFI is doing, transporter in Canada, US, US, Canada.

Speaker #6: Okay. Very helpful. Thank you.

Speaker #7: Thank you. That answered question and answered session. I'll now hand the call over to Mr. Bedard for any closing remarks.

Speaker #3: Well, thank you again, everyone, for joining us. And of course, for your ongoing interest in TFI International. So as we move through the back half of the year, we will keep you posted on our progress.

Speaker #3: And we look forward to seeing many of you at upcoming events. Please don't hesitate to reach out if you have any further questions. And I hope that you have a great evening.

Speaker #3: So thanks again.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International Q2 2026 earnings call. At this time, all participant lines are in 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 may 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. I would also like to remind everyone that this conference call is being recorded on 27 July 2026.

Operator: Please be advised that this conference call may 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. I would also like to remind everyone that this conference call is being recorded on 27 July 2026. 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 conference over to Mr. Alain Bédard. Thank you. Please go ahead.

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 conference over to Mr. Alain Bédard. Thank you. Please go ahead.

Alain Bédard: Well, thank you, operator, welcome everyone to our call this afternoon. Within the past hour, TFI International reported stronger than expected quarterly results with adjusted diluted EPS of CAD 1.85, exceeding our guided range of CAD 1.50 to CAD 1.60 and up 38% year-over-year. All three of our business segments grew operating income by double digits, and we again produced solid free cash flow, which, as you know, is a longstanding priority of ours. Put simply, the investment we made during the recent slowdown, both in internal operation and strategic M&A, are beginning to benefit our performance. We now have a balanced and diverse portfolio of operating companies in attractive end markets, which we continue to serve while always maintaining our focus on efficiency and related operating principles.

Alain Bédard: Of course, there is no better than the hardworking people of TFI to execute on our plan and capitalize on the resulting opportunities. The foundational support for TFI International's thoughtful approach to value creation, both cycle in and cycle out, begins with our strong balance sheet, which improved further during the quarter. We generated more than CAD 200 million of free cash flow, further supporting our ability to strategically allocate capital and, very importantly, return excess capital to shareholders whenever possible, including close to CAD 40 million in quarterly dividends paid during the quarter. Let's take a high-level look at our Q2 financial results. Starting with the top line, our total revenue before fuel surcharge of CAD 1.9 billion was up 6% over the past year, while operating income climbed nearly 30% to CAD 220 million.

Alain Bédard: That reflects a margin of 11.6%, which was up more than 200 basis points relative to the 9.5% figure a year earlier. Also, on a consolidated basis, our net cash from operating activity rose to CAD 256 million from CAD 247 million. Let's dig deeper into each of our three segments, starting with LTL, which was 38% of our segmented revenue before fuel surcharge. We generated CAD 725 million of LTL revenue before fuel surcharge, up 3% year over year. Our LTL adjusted operating ratio was 88.5%, and operating income of CAD 86 million was up a very solid 17%, producing a return on invested capital of 12%. Let's move to our truckload, for which revenue before fuel surcharge came in at CAD 761 million, up 7% the past year and now representing 40% of our segmented total. Revenue per truck per week, excluding fuel surcharge, rose 13% year over year.

Alain Bédard: Our LTL adjusted operating ratio was 88.5%, and operating income of CAD 86 million was up a very solid 17%, producing a return on invested capital of 12%. Let's move to our truckload, for which revenue before fuel surcharge came in at CAD 761 million, up 7% the past year and now representing 40% of our segmented total. Revenue per truck per week, excluding fuel surcharge, rose 13% year over year.

Alain Bédard: We increased our brokerage revenue by 34% in addition to this. Our operating income of CAD 106 million was up a very robust 50% from the prior year quarter, and our adjusted OR of 86.1% improved by 400 basis points. Our return on invested capital for the truckload was 6.9%. Stepping back, as capacity has come out of the truckload sector, we've worked to reduce our own capital intensity and right-size equipment level, creating significant operating leverage. We've also focused on optimizing our business mix and end market exposure, which now includes an attractive mix of flatbed and specialized expertise. Rounding out our segment discussion, logistics revenue before fuel surcharge was up 10% year over year to CAD 432 million, accounting now for 23% of the segmented total.

Alain Bédard: Operating income expanded a full 32% to CAD 50 million, reflecting an 11.5% margin, which was up nearly two percentage points versus Q2 2025, and our return on invested capital was 13.3%. Before opening up for Q&A, let me discuss our balance sheet and provide our updated outlook. As I mentioned, we generated just over CAD 200 million in free cash flow during Q2 of the year and ended June with a funded debt to EBITDA ratio of 2.4, which has improved from 2.5 at the start of the year. Lastly, looking ahead for Q3 results, we expect adjusted EPS of CAD 1.70 to CAD 1.80, which would represent a 50% year-over-year increase at the high end.

Alain Bédard: We also expect year-over-year adjusted operating ratio improvement of 500 to 600 basis points in the truckload segment, 250 to 350 basis points in the logistics segment, and a comparable operating ratio in the LTL segment. For the full year, we continue to expect net CapEx, excluding real estate, in the range of CAD 225 to CAD 250 million, unchanged from previous expectations. I'll mention, as I do each quarter, that our outlook range assume no significant change, either positive or negative, in the operating environment. Now, operator, if you could please open the line. Both David and myself would be happy to take questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press star followed by the two. I would like to advise everyone to have a limit of one question and one follow-up. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes on the line of Scott Group from Wolfe Research. Please go ahead.

Scott Group: Hey, thanks. Afternoon, Alain.

Alain Bédard: Good afternoon.

Scott Group: I wanted to start on the LTL business. I'm not sure if I heard right, are you saying sort of a flattish year-over-year margin in LTL? If that's right, maybe just talk through what you guys are seeing from a demand standpoint, a service capacity standpoint, and maybe a pricing standpoint.

Alain Bédard: Yeah. I think, Scott, that the world of truckload has changed tremendously over the last six to nine months. With what the administration has done in the US, with all these things that they've done to help us with reducing the supply. That's really the truckload. I still find that the LTL market in the US, and the same in Canada as well, it's still very soft. There's no big revolution in the demand there. This is why we're saying that, yes, we're conservative. We want to say that LTL, we don't see a lot of major improvement versus what we could see on the truckload sector or on the logistics sector.

Scott Group: Okay. Maybe just to follow up there, I guess you're not seeing spill from truckload into LTL. It doesn't sound like you're seeing that. Then on the truckload side, you're saying pretty meaningful improvement. Maybe just talk about the pricing that you're seeing right now on the truckload business and any sort of differences between the flatbed and some of the other parts.

Alain Bédard: Yeah. That's a very good question, Scott, and I'll ask David to talk about that. For sure, what we see on the pricing side of the truckload is very impressive. The way we see it is that it's mostly because of the supply constraint, not because the demand is just going through the roof. It's just that the supply. Right, David? Maybe you could add to that.

David Saperstein: Yeah, absolutely. Because what we're seeing on the LTL, the reason that the margins are expected to be flat is because we have too much volume and not enough price. That's what we're working on fixing. That's a specific thing. I don't know if that's really to be extrapolated to the market or not. It's related to us. Of all of the issues to have, it's probably the one that it's clear what to do. We know that we just need to raise the price, and we're working on that. On truckload, yeah, the dynamics are really good. Actually we saw the pricing or the revenue per truck accelerate throughout the quarter. In April, we were at 11.1% revenue per truck per week year-over-year growth. That increased to 13.3% in May, and it was 14.4% in June. The dynamics there are strong.

David Saperstein: On truckload, yeah, the dynamics are really good. Actually we saw the pricing or the revenue per truck accelerate throughout the quarter. In April, we were at 11.1% revenue per truck per week year-over-year growth. That increased to 13.3% in May, and it was 14.4% in June. The dynamics there are strong. The LTL issue that we have, let's see, I mean, the shipment count was up 7.5%. In the quarter, in LTL. It's just that the revenue percentage before fuel was down 2%.

David Saperstein: The LTL issue that we have, let's see, I mean, the shipment count was up 7.5%. In the quarter, in LTL. It's just that the revenue percentage before fuel was down 2%.

Alain Bédard: Yeah. You know what, Scott? We're very proud of what our truckload guys have been able to accomplish with. If you just look back at our Q1 OR in our truckload, we were above 90, right? We were, I think, a 93 OR in our truckload, and now we're down to an 86.1, okay. I think that this is quite an accomplishment.

David Saperstein: Yeah.

Alain Bédard: Okay. The investment that we made two years ago in the US specialized truckload is just starting to pay off now.

David Saperstein: Yeah. Exactly, because you see that in the depreciation. We talked about this a couple of quarters ago. Well, the depreciation is down double digits now and the revenue is up. Right? We're saving a fortune on equipment cost, and the brokerage revenue is up 35% year over year.

Alain Bédard: This goes back to the saying, do more with less instead of doing less with more.

David Saperstein: Yeah.

Scott Group: Thanks, guys.

Alain Bédard: Thanks, Scott.

Operator: Thank you. Your next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.

Ravi Shanker: Great, thanks. Afternoon, Alain and David. Maybe if I can just follow up to your last response on LTL, where you said, obviously, that you have too much volume and not enough price. David, do you think that's something you can reset in one cycle, or is it a multi-cycle process to get the price where you want it? Also, if it is multi-cycle, if you can give a sense of how much you can do this cycle versus the next, et cetera.

Alain Bédard: Yeah. You know what, Ravi? The issue we have with pricing is in wins in one sector, per se, right? SMB, no. Corporate, no. The biggest culprit where we probably made a mistake is 3PL, and it's mostly on our blanket thing there, where we got inundated with volume, okay, because probably we were the cheapest guy in the country, right? This is what now our commercial team is working on fixing, okay, because this is like a no-no, right? It's not all over at TForce rates, okay. SMB and corporate, not an issue. Blanket 3PL has been overwhelmed with volume and with pricing that probably does not reflect the market. Maybe we were not aware of where the market was going, and now we have to react to that.

Alain Bédard: That's what David was saying, that in all the problems that we can have, it's probably the one that could be fixed now. Does that take three quarters? I don't think so. We know what the issue is. We know that the market is still soft, to a sense, but we're very cheap right now with our rates in some sectors, so we're going to be fixing that now. We're fixing that now as we speak.

Ravi Shanker: Understood. Maybe as a quick follow-up, are you getting any more confidence in the cycle to maybe restore a full-year guide?

David Saperstein: Yeah, to restore a full-year guide. Look, I hope that at some point we'll restore a full-year guide. Absolutely. We are starting to get confidence in this truckload cycle, that's for sure. The fact that it's so supply driven, and therefore has some staying power, gives us a lot of confidence. I think that the delta is going to come from getting the LTL to produce to its full potential. We're sub 90 this quarter, right? We could be a lot more sub 90 if we fix this pricing. By the way, when we do that, we won't have all the excess cost that we had this quarter. This quarter, we were dealing with a lot of excess cost related to the surge in volume, which is not necessarily an ongoing thing. We'll see. We hope that we come back to a full-year guidance soon.

Ravi Shanker: Very good. Thank you both.

Operator: Thank you. Your next question comes from the line of Jordan Alliger from Goldman Sachs. Please go ahead.

Jordan Alliger: Yeah. Hi, afternoon. Just sort of curious, coming back to LTL quickly. With the pricing actions that you guys are working on, because your tonnage is obviously outgrowing most of the LTL industry, would you expect that to sort of come down a little bit as you work to repair the price? Then on the flatbed side, specifically, are there pockets? I know the discussion has been supply tightness, but I'm just curious, are there pockets where demand on flatbed is looking better? I know you're not giving a full-year guide per se, but just because I'm perhaps not as familiar, is there a way to think about seasonality in the truckload/flatbed business Q3 to Q4? Thank you.

Alain Bédard: When you think about the flatbed thing there, Jordan Alliger, we are highly involved in wind, and wind is growing. We're also highly involved in data center and everything that is industrial. What Steve, our senior EVP, has been able to do with our flatbed operation is to create within the old Daseke organization, some niche carriers. I'll give you an example of what Steve and his team have done with one of our carriers that's called SPD on the West Coast, where these guys were running 200 trucks and the old saying, jack of all trades, master of none. These guys are a niche carrier for the aerospace business. With Boeing and with Bombardier and with others, we see some growth there. I'm sure you're familiar with Boeing.

Alain Bédard: Those guys, they're quite busy and we're piggyback on Boeing, we made a niche carrier of SPD. These are sectors like the aerospace, the wind, the data center, that we see a lot of opportunities, steel too. Our TSH group, which specialize in steel, those guys are up, revenue-wise, I would say 20% to 25% year over year. Steel, we're very busy with that. A lot of steel probably goes into the data center or I don't know where it's going, but we're really very busy with that. On the other side, if you think about drywall, we're a significant player in that business. Drywall is maybe not the best business you want to be in right now because not a lot of people are building homes. It's kind of a mix.

Alain Bédard: What our team has been able to do, is kind of having within the specialty truckload, our business unit being more specialized in their world. Instead of, if I take the other example of Lone Star Transportation, which is something that's happening now out of Texas, those guys are good with wind, they're good with data center, they're good at moving everything that nobody wants to move because it's too big or it's too heavy. We said, you know what? The over-the-road operation within Ossa, that doesn't fit you. What we'll do, we'll move that to those specialists within TFI, our truckload division, Wiley. Wiley is the king of the over-the-road for us.

Alain Bédard: This is what's happening on the truckload side. The first part of your question was, David, I don't remember exactly.

David Saperstein: Can you repeat the first part?

Alain Bédard: Yeah.

Jordan Alliger: Oh, yeah. Well, I was just curious on the less than truckload side, given the price actions, repair actions you're taking.

Alain Bédard: Oh, yeah.

Jordan Alliger: Your volume is strong. I'm just curious how that might look from here a little bit.

Alain Bédard: Yeah. For sure. Volume is going to come down a bit because as you know, the minute you start to get back to closer to market, okay, if we get too close to market, because we still have to improve our service. The guys are working on that, but like David was saying, we incur way too many costs in our Q2 operations because of this huge surge in volume, but also our service suffered. Right? Now we're fixing price, but we're also fixing our service because our service was improving big time just before we got this crazy weather in Q1, okay? At the same time, this huge surge of volume mid Q1 into Q2. Now it's very clear what the mandate is for Kal and his team, and we'll get there. For sure, we'll have to drop a few shipments to get there.

Jordan Alliger: Got it.

Operator: Thank you. Your next question comes from the line of Ken Hoexter from Bank of America. Please go ahead.

Ken Hoexter: Hey, great. Good afternoon. Alain, can you talk maybe a little bit about the truckload pricing? Are you touching it all right now, given the improvement is, just maybe given the mix of how much is contract, how much takes time? Just want to see where you are in the marketplace and able to reprice that.

Alain Bédard: Yeah. On that, David, the thing that we're not a big player on the spot market.

David Saperstein: No.

Alain Bédard: Okay. I don't remember exactly the split between contract and-

David Saperstein: On the US side, it's about 25% spot.

Alain Bédard: 25% spot.

David Saperstein: Yeah.

David Saperstein: For sure, we are really. You know how other shippers are. The market is going down, contract or no contract, they will sit down and try to bring prices down, right? The market is going up right now. Yes, we have agreement, but we have to sit down with customers because at the same time that the market is moving up and our contract is too far away from the market, then we have to sit down. We did that. We did that with some major customers, and they understand. Now it's a different situation, and we're not in the business of hauling freight just for the pleasure of hauling freight. We're in business to service customers so that our shareholders make money, right?

Alain Bédard: For sure, we are really. You know how other shippers are. The market is going down, contract or no contract, they will sit down and try to bring prices down, right? The market is going up right now. Yes, we have agreement, but we have to sit down with customers because at the same time that the market is moving up and our contract is too far away from the market, then we have to sit down. We did that. We did that with some major customers, and they understand. Now it's a different situation, and we're not in the business of hauling freight just for the pleasure of hauling freight. We're in business to service customers so that our shareholders make money, right?

David Saperstein: Yeah. I really want to stress that you have two things going on in our truckload. One, we're exposed to the right end market, yes. Two, the market's turning because of the supply, yes. The last thing, and this is unique to us, is that we've dropped our depreciation by CAD 12.5 million in this quarter alone, and yet the organic revenue is higher than it was last year. We're truly getting an enormous benefit to the bottom line as a result of that. That's really specific to the work that the team's done over the past year, making sure that our trucks are being deployed in the right places. Trucks that are not being deployed, we move them, and then we broker out what we don't want to do ourselves.

Alain Bédard: That's it. Ken, don't forget, we bought Daseke in 2024. In 2024, we were stuck with the Daseke CapEx. These guys like to buy trucks and trailers. We had way too much CapEx in 2024. We get to 2025, it's too early in the game, we still bought too much equipment in 2025 versus what the market could bear. Now, after a year and a half of experience with Steve and the team, now we are adjusting our asset base to the business that we want, the business that's highly profitable. That's why we're in 86 OR. Right? We're saying, you know what? Those customers, maybe we could broker the freight to some good carriers that want to work for us.

Ken Hoexter: Great. Thanks for that. If I can get a follow-up on capacity on both sides, maybe talk a little bit about how much capacity you have utilization on miles per tractor, and then in the LTL with shipments up 8%, talk about what excess capacity you have now. You've changed your management there with Kal. Are you focused more on culling that 3PL business, more on price? How do we think about usage of that capacity as we move forward? Thanks.

David Saperstein: Yeah. On the first one, I'll answer that. We report revenue per truck, not miles per truck. The reason for that is that some of our business we bill by the mile, but some of the specialized we bill by the day, for example. By the move. It's not so much of a mileage, I think. Revenue per tractor is what we report, and that's up 13%. As I mentioned earlier, it was increasing as the quarter went on. We exited the quarter around 14.5. In terms of capacity, we're at capacity. We have to reduce our volume in the LTL because it went up so quickly that we had to spend money in ways that we wouldn't normally spend money. Lots of overtime, lots of third-party carriers to help us out in a pinch.

David Saperstein: We have to reduce our volume in the LTL because it went up so quickly that we had to spend money in ways that we wouldn't normally spend money. Lots of overtime, lots of third-party carriers to help us out in a pinch. All of these things that you do when your volume increases 10%, 12%, 13% overnight. If you ask us where we are on capacity, Well, we don't have any capacity. We're raising price on the brokers in order to bring down that rate of growth.

David Saperstein: All of these things that you do when your volume increases 10%, 12%, 13% overnight. If you ask us where we are on capacity, Well, we don't have any capacity. We're raising price on the brokers in order to bring down that rate of growth.

Ken Hoexter: Great. Thank you very much. Appreciate it.

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

Walter Spracklin: Thanks very much. Good afternoon, David. Good afternoon, Alain. I'd like to start on pricing, but more in a more conceptual, longer term way to look at it. I'm just curious, when you look at the drivers of pricing, you mentioned supply driven by whether it's the non-domiciled ELD or CDLs or the English language proficiency or even the Montgomery ruling. These things seem like it's not like in past cycles where it's something that can be easily or quickly reversed. I know, Alain, you've been in this business a long time. Looking back at previous cycles where pricing has come up, do you feel like this has more stickiness? Can the pricing here hold for longer given the type of drivers that have caused that pricing to go higher, and can it be sustainable?

Alain Bédard: Well, you're absolutely right, Walter. In a normal trucking environment, guys used to make a lot of money when the demand was high. Okay, demand high doesn't last. It could last a month, could last a year, could last 18 months, then you go back to, you got too many trucks because now the demand is falling. What I like about this, which I've never seen before in 30 years being a trucker, okay, is now it's the supply. Right? I was just reading about what the administration wants to do in the US is that they have a particular group of drivers that they're saying now, okay, so we have the CDL, the illegals, the English proficiency, like you just said, but now they're also focusing on another group of drivers that, according to the US administration, are dangerous, are not safe, et cetera.

Alain Bédard: To me, on the US side, I think that this move that we're seeing now on the truckload sector, which is not the same with LTL or PNC. For truckload, I think that this is more of a permanent thing than we've ever seen before. This is why, Walter, it's a reflection of what our guys have been able to do in this market, even if the demand is not crazy in the truckload, specialized truckload sector. Those guys were smart enough to take advantage of the situation that we're going through right now, that's why from a 93 OR, which was really bad in Q1, okay, now we're down to an 86 OR. We just said in our presentation that we believe that our Q3, okay, year over year, we're going to see again, another major improvement, okay, in our truckload sector.

Alain Bédard: We just said in our presentation that we believe that our Q3, okay, year over year, we're going to see again, another major improvement, okay, in our truckload sector. Some also in our logistics, not so much in our LTL for now, because like David is saying, okay, attack some issues that we have in the US right now, US LTL, the guys will do a job. I think that it's way more permanent, the situation that you were describing, Walter, than ever before, this is typical of the US market.

Alain Bédard: Some also in our logistics, not so much in our LTL for now, because like David is saying, okay, attack some issues that we have in the US right now, US LTL, the guys will do a job. I think that it's way more permanent, the situation that you were describing, Walter, than ever before, this is typical of the US market. On the Canadian side, we have a little bit of that, but not so much because, as you know, the Canadian government now is asking the truckers, the employers of owner ops or whatever, to issue a T4A. Now these illegal guys in Canada now have a T4A. They have to report that as revenue, now they have to pay tax. That's all.

Alain Bédard: On the Canadian side, we have a little bit of that, but not so much because, as you know, the Canadian government now is asking the truckers, the employers of owner ops or whatever, to issue a T4A. Now these illegal guys in Canada now have a T4A. They have to report that as revenue, now they have to pay tax. That's all. We're starting to see some major improvement on the Canadian side because the Driver Inc. fiasco is starting to become less. It's still there, but it's not as bad as it used to be.

Alain Bédard: We're starting to see some major improvement on the Canadian side because the Driver Inc. fiasco is starting to become less. It's still there, but it's not as bad as it used to be.

David Saperstein: Yeah. The only thing I would add to that is that the brokers are now very careful about wanting to broker loads to well-capitalized, serious carriers that are serious about safety, and that are spending the money on that. The whole industry is being cleaned up in a way that's going to result in better safety.

Alain Bédard: For sure

David Saperstein: Normal rules being followed.

Alain Bédard: Yeah. No more cheating.

Walter Spracklin: Fantastic. There you go. Looking at your capital plan for this year, I know you're not seeing any significant changes in growth, but you mentioned on the sub-segment area where you have exposure, you are seeing growth. Is that causing you at all to revisit your capital plan? I think you had us at CAD 225 to CAD 250 for the year of net CapEx. Is that still the plan, or are there opportunities for you now to invest to take advantage of some of those sub-sectors?

Alain Bédard: Yeah. So far, we're still in that range, Walter. For sure, we're seeing a lot of discussion with customers. Okay. The other thing also I'd like to point out, Walter, is that now what Steven Brookshaw has done is now we have a Chief Commercial Officer for our US truckload operation. Mr. Hoppe, Scott Hoppe, is our Chief Commercial, which is going to be a big thing for us because if you look at the way Daseke was run, it was like a nine sales team and nine of everything. Now we are consolidating a lot of that, and commercial side is under Scott Hoppe, and Scott has got a tremendous experience, okay, in the US. He's lived all his life into that world, right? That's going to help us. That is for sure, having a one commercial team under Scott.

Alain Bédard: Now we are consolidating a lot of that, and commercial side is under Scott Hoppe, and Scott has got a tremendous experience, okay, in the US. He's lived all his life into that world, right? That's going to help us. That is for sure, having a one commercial team under Scott. We're already seeing the benefit when we talk to our customers.

Alain Bédard: We're already seeing the benefit when we talk to our customers.

Walter Spracklin: Okay. Appreciate the time, as always. Thank you.

Alain Bédard: Walter, it's a pleasure.

Operator: Thank you. Your next question comes from the line of Brian Ossenbeck from J.P. Morgan. Please go ahead.

Brian Ossenbeck: Hey, good afternoon. Thanks for taking the questions. Maybe just wanted to understand a little bit better if you can make some changes or have made changes to the LTL commercial team or maybe how it ties in together with operations. I would think that at least with the blanket pricing on 3PLs, you can adjust that relatively quick and it's not the.

Alain Bédard: Yeah

Brian Ossenbeck: only network you've heard that got a little bit flooded, but maybe just some thoughts on what could be done differently or changes you've already made for the next time.

Alain Bédard: Yeah. Right. It's the mistake that we encounter, Brian, is that the focus was, "Hey guys, we need to grow organically." We got overwhelmed because our pricing was too low, right? We fixed that. One thing I could tell you is that we are implementing a pricing software, the one that most of our peers are using. We are getting rid of the old UPS freight pricing. We've also, through our finance team now, getting our finance team involved through AI, okay, to help those guys make the right decision by lane, by customers, et cetera. Maybe, David, you could give a little bit more details on that.

David Saperstein: Yeah, absolutely. It's very interesting. We now have tools where we're taking spreadsheets which have an entire month of shipments. These spreadsheets have about 500,000 lines and tons of columns, tons of data. We're able to really isolate very specifically the problematic lanes, very specifically the problematic freight, the terminals, the customers. Then we're using that to help our pricing team go in and be real surgical and move faster. We're able to treat large amounts of data in ways that we haven't been able to in the past and be much more surgical with the pricing actions that we're taking.

Brian Ossenbeck: Okay. I appreciate that. Just kind of a cleanup question. You talked a couple of times in the release about this incremental accident reserve. It's like CAD 10 and a half million in the quarter. Does this recur? Is this a prior period adjustment? I think when we look at the corporate line, that certainly stood out this quarter.

Alain Bédard: Yeah.

David Saperstein: Yeah. It's not recurring, that's for sure.

Alain Bédard: No.

David Saperstein: We sure hope not.

Alain Bédard: No. No.

David Saperstein: Every quarter we go through and we assess very clearly where our reserves need to be, and we'll make adjustments to various files. It seems like some people wait till year-end to do that. We don't do that. We do it every single quarter.

Alain Bédard: David, if you could just add to that, the approach that through Brandon and the new team

David Saperstein: Yeah

Alain Bédard: versus the old way that we used to do it until about a year ago. By trying to settle ASAP, this is also part of the change.

David Saperstein: That's actually, it's very interesting. From a business perspective, what you want to do is be very forthcoming and very aggressive with settling matters quickly. What we've done over the last couple of years is built a Miami-based legal team of in-house lawyers who are managing all of our claims and are working with the external lawyers and really driving it because the external lawyer doesn't always have your interests in mind, given how they get compensated by the hour, whereas us, our interest is getting it done. What's interesting about that is that when you start settling things fast, right, your actuarial reserves actually need to go up because the actuarial assessment is not looking at the fundamentals of what's happening. It's just saying, Whoa, you guys had a ton of spend this quarter.

Alain Bédard: Yeah.

David Saperstein: We did have a ton of spend, the reason we had a ton of spend was that we took care of a bunch of things that are not going to come back to bite us down the road. Right now, we're in that lump where the actuarial reserves are actually a little coming in high because of those settlements. Of course, when that then translates into less spend down the road, those reserves are going to come back and unwind in the opposite direction.

Alain Bédard: Yeah. Also maybe a few words on settling on the spot.

Alain Bédard: Yeah. Also maybe a few words on settling on the spot. What we're doing.

Alain Bédard: What we're doing.

David Saperstein: Yes, absolutely. We do that with our internal team as well as an external provider, in terms of when there's an accident, we dispatch somebody immediately to the scene with authority to settle on the spot. We've had a lot of success with that, and it's an important part of our strategy.

Alain Bédard: Yeah, because the claim grows with time. Over time, it's not going to get any better. It's just going to get more expensive. This is why we changed completely the approach there is if it's a minor thing, for sure, if it's major, okay, nobody's going to solve on the spot. If it's a minor thing that could turn over time after a year or two into something way more expensive. We went, like David says, with our own team and with also an external provider to try to settle as much as we can on the spot right away before the lawyers comes in, before whoever, okay? Now I don't remember how many cases we settled.

David Saperstein: It's about CAD 200.

Alain Bédard: CAD 200, eh?

David Saperstein: Yeah.

Alain Bédard: On the spot. Over time, this is for sure is going to help reduce our cost of claims.

Brian Ossenbeck: Just to understand, it seems like you've been doing this for a couple of years, at least had the team in Miami doing it. You feel like you've sort of hit an inflection in cleaning up some of the stuff, now quarterly is going to be more of a, I don't know, standard practice. Seems like it still could be a little bit bumpy just based on the activity.

David Saperstein: No, I think that this quarter's reserve, increase in reserve is exceptional. We do not expect these types of movements every quarter.

Brian Ossenbeck: Okay. All right. Thanks for all the details. Appreciate it.

Operator: Thank you. Your next question comes from the line of Jason Seidl from KeyBanc. Please go ahead.

Jason Seidl: Thank you, operator. Alain, David, afternoon, gentlemen.

Alain Bédard: Good afternoon.

David Saperstein: Good afternoon.

Jason Seidl: Wanted to get a clarification question in first. I think you said that in terms of your spot TL exposure was at 25%. I was wondering if that includes all the heavy haul, because it seems a bit higher than I thought it would be. I think like Daseke legacy was about 5%.

David Saperstein: No, that's the US flatbed. It's 25%. The heavy haul and the legacy specialized in Canada is very negligible spot.

Alain Bédard: No.

David Saperstein: Right? There's none. When we talk about-

Jason Seidl: That's what I thought.

Alain Bédard: It's like the over-the-road, Jason, the over-the-road flatbed, not the special, highly specialized-

David Saperstein: Right

Alain Bédard: tank, okay, or dumps or whatever. It's really the over-the-road things. The regular flatbed, if you want to call it.

Jason Seidl: Okay. My next one's more of a macro question. Alain, did you guys see sort of any pull forward into June and maybe talk about the July trends that you're seeing out there?

Alain Bédard: Far, what we're seeing in July or in June, I think that if you look back, David, at the month of June, this was a great month of June. May was a little bit soft. June was great. April was great. July, even with the vacation that we have with our customers, vacation we have with our own employees, drivers, and all that, so far what we're seeing is that it's quite surprising what we're seeing so far.

David Saperstein: Yeah, exactly. In July, right now, up until today in July, the revenue for truck in the truckload is 14.5%, which is the same as it was in June.

Alain Bédard: Yeah.

David Saperstein: What we're seeing in the LTL is what we expect, which is that the revenue per shipment is down less. It wasn't down 2%, it was down less. Also the shipment count's coming down. We're starting to see the effect of that pricing that we're putting through work through in the way that we expect it to.

Alain Bédard: Yeah. This is with the 3PL. Corporate and SMB, it's steady as you know us.

David Saperstein: Sure.

Alain Bédard: Volume-wise and price-wise.

David Saperstein: Yeah.

Jason Seidl: Makes sense. Gentlemen, appreciate the time. Good quarter.

Alain Bédard: Thank you, Jason.

Operator: Thank you. Your next question comes on the line of Konark Gupta from Scotiabank. Please go ahead.

Konark Gupta: Good afternoon, Alain and David. My first question is on the LTL. Just trying to understand the move from Q2 to Q3. For the Q2, the LTL operating ratio was, I think, 88.5%, which is, I think, better than the midpoint of what you were expecting heading in. You're saying flat in Q3, which probably means about 88.8%. If you had high 3PL volumes and higher costs in Q2 and working to address that in Q3, why is that Q3 operating ratio not improving sequentially from Q2? Is it because it's going to take time to resolve those things, or is there some other noise in Q3?

Alain Bédard: Okay. Konark, there's one thing that you got to keep in mind is USD versus Canadian dollars. Our Canadian profit now are discounted at, let's say $1.40 versus the average of Q2. That's a little bit of an issue. The other thing also part of our forecast is what's going to happen with fuel. For sure, there's no question about that the only area us where it's really a tailwind fuel is the Canadian LTL and PNC. Truckload is never a tailwind for us, and US LTL is never a tailwind in our logistics. For sure, not knowing where we're going with fuel, this is why our Canadian folks, when they gave us their forecast, they went with maybe a little bit conservative on fuel versus what it is today. Now we're again above $5 US a gallon.

Alain Bédard: Truckload is never a tailwind for us, and US LTL is never a tailwind in our logistics. For sure, not knowing where we're going with fuel, this is why our Canadian folks, when they gave us their forecast, they went with maybe a little bit conservative on fuel versus what it is today. Now we're again above $5 US a gallon. That's why our Canadian folks are being very cautious about where this is going to go. You got USD. What is USD versus CAD? One penny difference, if I'm not mistaken.

Alain Bédard: That's why our Canadian folks are being very cautious about where this is going to go. You got USD. What is USD versus CAD? One penny difference, if I'm not mistaken.

David Saperstein: Yeah. CAD 0.01 is about $0.01 in DPS.

Alain Bédard: Okay.

David Saperstein: Yeah. It's about 1 to 1 though.

Konark Gupta: Thanks for that explanation.

David Saperstein: By the way, Konark.

Konark Gupta: And then-

David Saperstein: Make sure that I'm understanding that those margin improvements that we put in the press release, and we mentioned, those are year-over-year numbers.

Konark Gupta: Yes, absolutely. I think your Q3 LTL year-over-year being flat also somewhat means year sequentially flat, given you had 88.8 and 88.5. No, that's good explanation. If you can help us, I know you guys are not disclosing your regional operating ratios, but from trend perspective, is the US LTL operating ratio likely to make a bigger move, a bigger and better move, in the next coming quarters compared to your Canadian operating ratio? Because that's where you're seeing service improvements. Is that fair?

Alain Bédard: Yeah, absolutely, Konar. The biggest bang for the buck is on the US LTL. On the Canadian side, we are running very lean and mean and very efficiently compared to the only peers we have in Canada. When we compare ourselves to the only peers we know about, yeah. It's really the US where we still have a lot of work to do to get to where we have to be.

Konark Gupta: Okay. Then just to put that into context, Alain, how far are you from mid-80s on that? Is it like a year away or it's more like six months away in the US?

Alain Bédard: Konark, I've been at it with the team for five years. Every year we have a different kind of an issue, and we're just saying, "When is this going to happen?" If you would talk to Kal, that is exactly what he's going to tell you. We fixed a lot of things. Okay. I think that we're getting close to the end, right? Once our commercial team is way better. Okay, we have stability in our commercial team now, which never happened before. Our operating team, we definitely need some improvement there, and we're working on that. Our fleet, okay, in terms of the asset and in terms of the management of our fleet, it's major improvement. We're heading in the right direction.

Alain Bédard: We fell, okay, in Q1, Q2, okay, now we're back on our feet, and we're going to be correcting that, okay, in the next quarter. It's been much easier, Bernard, to turn around a truckload operation. If you look back, okay, and you look at that sheet today, the SFI truckload in the US, it's day and night versus what these guys were doing two years ago. Much easier to turn around, okay, a truckload division versus a big network, okay, that was probably not very important to the previous owner. This is why the tools, the fleet, the real estate, the morale, the management team was probably not priority for them. It is for us.

Konark Gupta: Okay. No, that's a very good answer. Thanks so much, Alain and David. All the best.

Alain Bédard: Thank you.

Operator: Thank you. Your next question comes from the line of Tom Wadewitz from UBS Financial. Please go ahead.

Thomas Wadewitz: Yeah. Good afternoon. Let's see. I wanted to ask a little bit more on LTL and the brokerage piece, or the 3PL piece. How much of the book in LTL is with 3PL? Is that 30%? Is it bigger or smaller than that? I think in terms of just maybe if we look to, let's say, 2027, how do you think these two big businesses you have, so LTL and truckload, develop? It seems like you are seeing a lot of really good news in truckload this year. Is there kind of more significant runway or a similar improvement in 2027, or is that kind of more moderate? LTL, just from a, I think, margin and pricing perspective, it's taken a bit longer, but any ways to think about the delta and the improvement you could experience in 2027 in LTL?

Tom Wadewitz: Yeah. Good afternoon. Let's see. I wanted to ask a little bit more on LTL and the brokerage piece, or the 3PL piece. How much of the book in LTL is with 3PL? Is that 30%? Is it bigger or smaller than that? I think in terms of just maybe if we look to, let's say, 2027, how do you think these two big businesses you have, so LTL and truckload, develop?

Tom Wadewitz: It seems like you are seeing a lot of really good news in truckload this year. Is there kind of more significant runway or a similar improvement in 2027, or is that kind of more moderate? LTL, just from a, I think, margin and pricing perspective, it's taken a bit longer, but any ways to think about the delta and the improvement you could experience in 2027 in LTL? I guess a couple of questions within that. Thank you.

Thomas Wadewitz: I guess a couple of questions within that. Thank you.

Alain Bédard: Yeah. Okay. You know what, Tom? On the truckload side, we're just starting. We're just starting, right? We're just starting in a sense that what we've done with SPD. Now, SPD is focused on, okay, one business. Okay? We're doing the same thing with Lonestar. Okay, Lonestar, your focus is going to be, let's say, the wind, the data center, everything that is big and heavy and long, et cetera. Next, we're going to be working with another of our division, okay? That we're going to do the same thing. Then we're going to attack another one, okay, of our division. This is an ongoing process, okay? It's not going to end in 2026. It's probably going to go all the way to probably summer of 2027, maybe Q1. By Q1 of 2027, we should be done, okay?

Alain Bédard: We have one company that's called SFI, okay, with one leader of commercial, which is our friend, Scott Hoppe. Okay? One TMS, okay, which is the McLeod system, that now it's going to be implemented over with one finance system, which is our Infineon system, okay, with one fleet management, which is called Mir. With one visibility. We're also implementing Salesforce for Mr. Hoppe and his sales team. It's going to be one company versus when we bought Daseke, it was more like nine companies that were all over the place. This is truckload. What you see in 86 OR right now, are we going to do better than that in 2027? If the market is about the same and the same is true of this supply constraint, yes, we'll do better.

Alain Bédard: This is truckload. What you see in 86 OR right now, are we going to do better than that in 2027? If the market is about the same and the same is true of this supply constraint, yes, we'll do better. Can we get to, let's say, an 80 to 82 OR, 83 OR? I think so. Okay. If market stays about the same and the supply is not changing, okay, I think so. We still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing, like David was saying, I think 35%, okay, with good margin.

Alain Bédard: Can we get to, let's say, an 80 to 82 OR, 83 OR? I think so. Okay. If market stays about the same and the supply is not changing, okay, I think so. We still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing, like David was saying, I think 35%, okay, with good margin.

David Saperstein: Yep.

Alain Bédard: We are protecting, okay, ourselves. Okay. We use carriers that are professional, that we deal with them on a day-to-day basis. We don't deal with fly-by-nights. This is really our truckload operation. On the LTL side, okay, we're working on improving, okay, like we said, Q4 straight. At the same time, okay, we have a very small non-union LTL business today in the US. Very small. 1,000 shipments a day, 1,300 shipments a day, which is peanuts, right? We are working to build that up, okay, over the next few years. Do the same thing as we do in Canada. In Canada, we run union or we run non-union, right? We run both.

Alain Bédard: This is what we'll also be focused on, is trying to beef up that non-union LTL slowly, okay. We don't want to be in states where there's no density. When you build from scratch, the advantage you have is you pick the states. Where would we want to be? Well, we want to be in Texas, that's for sure. We want to be in California, that's for sure. We want to be in Ohio, we want to be in Michigan, we want to be in New York, we want to be in the Carolinas, okay? This is the beauty when you build from scratch. With 1,000 shipments, that's what you would call that build from scratch, right?

Alain Bédard: Whereas with TForce Freight, we have a huge network, okay, and we have to live with what we've got, and we're working on improving it every day.

Thomas Wadewitz: Any thoughts on just mix of 3PL within your LTL today? How large it is?

Tom Wadewitz: Any thoughts on just mix of 3PL within your LTL today? How large it is?

Alain Bédard: It's over a third. Ballooned to over a third.

Thomas Wadewitz: Yeah.

David Saperstein: Yeah.

Alain Bédard: As the volumes increase.

Thomas Wadewitz: That's pretty sizable. It's not atypical, do you think that there's a significant loss of shipments as you price up? Because I think the 3PLs shift things around as your pricing changes, I guess as you saw by having low prices.

Tom Wadewitz: That's pretty sizable. It's not atypical, do you think that there's a significant loss of shipments as you price up? Because I think the 3PLs shift things around as your pricing changes, I guess as you saw by having low prices.

Alain Bédard: Well, if you talk about the 3PL, the CSP, the customer specific pricing, no. Okay, Tom, they don't move around because what you give them is a specific pricing for a specific customer. That is way more secure than the blanket. The blanket, you're right. Okay. When you get the shipment, it's probably because you're the cheapest guy in town, okay? This is where, okay, we're working on changing the mix. Okay. Until a few years ago, blanket was probably like 80% to 85% of the shipment that we're getting from the 3PL. Now, if I remember correctly, our CSP, customer specific, we're at 45%, 55% is blanket, this is where we got overwhelmed with volume, and this is what we're fixing. Now, one thing is for sure is that 33% with 3PL is too much.

Alain Bédard: The approach has been with Chao and the rest of the team is, you want to use maybe the blanket as a loss leader when you are in a soft period. Let's say December, January, and February, that you don't have to lay off your workers. You could maybe use some of those 3PL blanket shipments to keep your employees, okay, at work, then you don't have to rehire people when you become busier, let's say, in February and March.

Thomas Wadewitz: Right. Okay. Thank you.

Tom Wadewitz: Right. Okay. Thank you.

Alain Bédard: Pleasure.

Operator: Thank you. Your next question comes from the line of Kevin Chiang from CIBC. Please go ahead.

Kevin Chiang: Thanks for taking my question, Alain and David. I'll keep it to one. Just when I think back to your Canadian truckload segment, during the last peak, we saw ORs below 80% there. Now you're having the Driver Inc. model getting tackled more aggressively by the federal government. Just wondering within a Canadian TL segment, do you think margins can achieve a higher peak than you saw in the last cycle, given that cycle also saw the Driver Inc. headwinds?

Alain Bédard: It's still early, Kevin, I would say that if you look at the problem we have is that some sector of the Canadian truckload are still very weak, like steel, right? As you know, steel is on the Canadian side because of the tariff, steel is an issue. The other thing also that is an issue still in Canada is forest products, right? Lumber, plywood, et cetera. Because of those weaknesses, okay, in some sector, because we still do not have a deal with the US, right? This is why we are seeing major improvement, okay, on the Canadian side.

Alain Bédard: Because of those weaknesses, okay, in some sector, because we still do not have a deal with the US, right? This is why we are seeing major improvement, okay, on the Canadian side.

Alain Bédard: Can we see more? Maybe if Driver Inc. continues to disappear, okay? The problem we have is that we have some sector on the Canadian truckload side, steel, forest products, that are being affected, okay, because of we do not have a deal with the US so far. Aluminum, okay, we have lots of tariff on aluminum, but aluminum, it is not an issue because right now, if you look at the situation in Qatar that they probably supply 10% of all the aluminum in the world, and those guys are out, okay? This is why our guys, the aluminum from BC, although BC is small for aluminum, but Quebec is big.

Alain Bédard: This is like flying out the door. Really busy with that. The issue is steel and forest products.

Kevin Chiang: Okay. I will keep it to one. Thank you for the color there.

Alain Bédard: Pleasure, Kevin.

Operator: Thank you. Your next question comes from the line of Bascome Majors from Stephens. Please go ahead.

Bascome Majors: Yeah. Good evening, thank you for taking my questions. To follow up on Tom's question about where you think there might be opportunity in your larger businesses to really continue to deliver significant growth in the next year. Where are the places that are most likely to show acquisitive or M&A growth in the next year? Do you have a sense of that? Any walkthrough of how you feel on that side of the business would be helpful. Thank you.

Alain Bédard: Excuse me, do you mean on the M&A side?

David Saperstein: Yeah, which segments we would grow through M&A.

Alain Bédard: Well, what we like in M&A for sure, and you've seen it with the Daseke acquisition, is that if we could find something of size that fits well in our specialty truckload, absolutely. Between you and me, like I said, a small non-union LTL, okay, that could be added to our small non-union LTL that we have today. Let's say a CAD 200 million LTL, that would be a great fit for us to start with to build that network. Logistics. We're big fan of logistics. We love logistics. We love to make money and if you exclude the intangible, okay, we do really well with our investment in logistics. If we could have the chance to put our hands, like we did in December, we bought these fantastic, but it's small. It's only, what, CAD 150 million revenue?

David Saperstein: Yes.

Alain Bédard: It's highly profitable, and we have a solid team there that's going to grow. It's still small. It's only USD 150, right? You say, well, Alain, this is all. Yeah, absolutely. Because TFI's blood is growth through acquisition. Yes, we like to grow organically, M&A has been the success story of TFI. With the huge free cash flow that we generate, okay, our leverage is down to 2.4. If we don't do anything of size, our leverage is going to come down to close to 2 by year-end. Right? Why is that? Well, because we generate so much cash, right? We're very well-positioned. Okay? Solid balance sheet, huge free cash flow. We're on the hunt, for sure. Yeah.

Bascome Majors: Thank you.

Operator: Thank you. Your next question comes from the line of Ariel Rosa from Citigroup. Please go ahead.

Ariel Rosa: Hey, good afternoon, Alain, David. Just very quickly, a point of clarification. For the US LTL business, does the Q3 guide assume deterioration in the OR there? Continuing on Bascome's question, Alain, you're usually very good about giving us your thoughts on kind of the M&A landscape and how it might have changed and where there might be value. Maybe you could speak about what you're seeing there. Thank you.

Alain Bédard: Yeah. On the Q3 for our US LTL, no. They will improve the profitability of the company. There's no doubt about that versus Q2. In terms of M&A, I've always said you buy in bad news and you sell in good news. That's why we invested CAD 1.8 billion over the last three years. Now people are starting to think that, Oh, now times will be better, right? Then M&A could be more expensive, right? This is why when you have the M&A market more expensive, what's important is the fit. Okay? How does that fit you? If you have a target that's profitability, let's say is CAD 10 million, okay? Instead of paying five times, you have to pay six times because the market is What are you going to do with that 10?

Alain Bédard: If the CAD 10 is after two years, going to be CAD 10 and a half, maybe it's not the best deal. If you think that the CAD 10 will become 15 or 18, well that's a great deal, right? Even if you have to pay a little bit more. This is that balance, okay, that we have to look at. Never forget that one of the easiest things to buy is your own stock, right? That's also the thing that we have to look at, right? If I'm buying TFI, I know what I'm buying. We've built TFI over the last 30 years, we know TFI, right? That's always the balance between buying an opportunity or buying TFI or just reducing your leverage.

Ariel Rosa: Very helpful. Just quickly, I'm curious, this probably seems a little bit out of left field, but could we get your thoughts on kind of autonomous trucks and the development there, and any opportunities to maybe leverage that in line haul operations? Or do you see that as still being kind of far down the road? Thanks.

Alain Bédard: No. As a matter of fact, we are talking right now about that. We're talking. Maybe, David, you could-

David Saperstein: Yeah.

Alain Bédard: -give us a little bit more insight on that.

David Saperstein: Yeah, absolutely. It's actually exactly for our line haul as a first step, but we're very eager to roll this out. We are talking with one of the major providers of this autonomous truck technology. It was a surprise to us that this has moved a lot faster than we thought. This particular company has driven millions of miles on real roads all around the southern part of the US. We're expanding from the west to the east. They've gotten it into zero accidents. That's an incredible fact. You look at this and you say, there's a bit of an upfront cost, and then there's a cost per mile. What you benefit from is, first of all, it's like a team, so it can drive day and night. There's no hours of service. Second of all, it drives the truck way better.

David Saperstein: There's no idling. There's no acceleration. There's no braking. It's all very measured. You get better utilization out of the truck. Third of all, there's no accidents. There's the reliability of knowing the truck is going to be able to be driven. You don't have to deal with the driver turnover and the reality of people not showing up to work and whatnot. It's very exciting. We're rolling it out in the US LTL on the line haul. In the first instance, the way the business model works is we broker to them immediately. They operate the truck. We get used to loading their vehicle, having it be in our yard. We sort of work in that way, but we broker it to them, and they deal with the operations side.

Alain Bédard: Purchased transportation.

David Saperstein: PT. As soon as next year, we're going to be able to buy the technology, which gets put into new trucks, and then we'll build this out. If it works, we'll roll it out beyond the line haul in the LTL. There's tons of applications in this for us.

Ariel Rosa: Got it. It sounds like starting small, but opportunity to scale, if it works. Anything on timeline in terms of what that could look like getting to scale?

David Saperstein: Well, the brokerage is happening this year to them. I expect that it'll go well, we'll be owning some of this technology next year. We'll just see how quickly we can scale it. It's too hard to say right now how quickly. The dynamics of no accidents, better utilization on the truck, it's basically a team. All of the things that we discussed is really interesting. It's extremely interesting to think about as this gets rolled out broadly through our industry, what that means for consolidation among the well-capitalized truckers. Right? That's very interesting to think through, I think that what it means is that you're going to have a lot more consolidation. Large capitalized players who can afford this technology are going to be dominating it, trucking probably looks a little bit more like the rail in that way.

David Saperstein: That's very interesting to think through, I think that what it means is that you're going to have a lot more consolidation. Large capitalized players who can afford this technology are going to be dominating it, trucking probably looks a little bit more like the rail in that way.

Alain Bédard: Yep.

Ariel Rosa: Very interesting indeed. Thank you for the time.

Alain Bédard: Yeah, we are definitely embracing that technology, that's for sure.

Operator: Hello, your next question comes from the line of Cameron Doerksen from National Bank. Please go ahead.

Cameron Doerksen: Yeah, thanks. Good evening. I guess I wanted to just ask a little bit about the logistics, the operating ratio improvement that you've indicated for Q3. Obviously, on a year-over-year basis, you've had some acquired businesses there that are helping that. I'm just wondering how much the, maybe an expected improvement in the truck moving businesses is impacting the Q3 year-over-year. Is that more of a Q4 into 2027 when we'll see those volumes pick up just based on, I guess, the production plans for some of the truck OEMs?

Alain Bédard: Yeah. What we're seeing on the truck moving business is that if you go back to 2025 and 2026, it's like the reverse. The first six months of 2026 was way lighter than the first six months of 2025. The last six months of 2025 are very light compared to what we anticipate to be the last six months of 2026. Right? It's like the reverse, right? For sure, our truck moving business is going to be very busy in the last six months of 2026 and into 2027. Right?

Cameron Doerksen: Are you seeing that yet?

Alain Bédard: Oh, yeah.

Cameron Doerksen: Maybe more so in Q4? Okay.

Alain Bédard: Oh, yeah. No, we're seeing that in Q3, Cameron. Yeah.

Cameron Doerksen: Okay. That's good.

David Saperstein: Even towards the end of Q2.

Alain Bédard: Oh, yeah.

David Saperstein: Yeah.

Cameron Doerksen: Okay. No, that's helpful. I'll leave it at one question. Thanks very much.

Alain Bédard: Thank you, Cameron.

Operator: Thank you. Your next question comes from the line of Benoit Poirier from Desjardins. Please go ahead.

Benoit Poirier: Yes. Thank you very much. Maybe, Alain, I appreciate the color about flat LTL expectation for Q3 with some improvement, any thoughts whether the tighter market for TL could eventually help the LTL market at one point? When would you expect the pricing action to kick in a more material manner?

Alain Bédard: Yeah. You know what, Benoit, we were talking to one of our peers in the industry, he was telling us, he's in the LTL business, he was telling us that he's already starting to see shippers moving from truckload back to LTL. I would say us, we have not seen that. Okay? This is what this guy from the industry was telling us last week. Right? I think that the fact that the truckload guys are getting busier because the supply has been reduced. They just say, "You know what? These LTL shipments, it's too big of a hassle. I'm going back to just pure truck." This is a transition that is probably starting as we speak. This is affecting the van guys to the LTL.

Alain Bédard: This is not affecting us in our specialized truckload operation because we don't really move LTL shipment in our specialty truckload sector.

Benoit Poirier: Okay. That's great, caller. Maybe just in terms of follow-up, there was some more talks today about the renewed liability risk after the legal case against C.H. Robinson. I don't know if you have any thoughts on what there could be some potential impact on your brokerage business, Alain.

David Saperstein: Yeah. What I would say on that is, first of all, remember, most of our logistics is not brokerage. Our logistics segment has some brokerage, but it's a lot of niche asset-light businesses that what they have in common is that they're asset-light. Has nothing to do with brokerage.

Alain Bédard: Last mile.

David Saperstein: Last mile, truck leasing business, value-added warehousing, et cetera. As it relates to brokerage, yeah, for sure. I mean, listen, we have a very serious safety review process for our carriers, we're looking at exactly, if anything, what we need to enhance in that regard. We're already operating at an adequate level. What I would say, though, is that as soon as Montgomery came out, as soon as the judgment came out, not the one against the broker that came out just a couple, but when the Supreme Court ruled. As soon as that happened, we started getting calls like crazy from all these small brokers we had never heard of. They were calling us and trying to book loads with us. Why? Because those were probably the ones that were feeding the fly-by-night carriers, and it's too dangerous now to do that.

David Saperstein: I think that with this judgment that we've seen, it's only going to increase the level of diligence that brokers are going to do on their carriers. It's going to become unquestionable. You're going to have to work with a well-capitalized, professional, auditable, safe carrier. I think this is going to benefit folks like us and also some of the major truckload carriers who are doing everything they can on safety.

Alain Bédard: And-

Benoit Poirier: That's-

Alain Bédard: Benoit, that at the end of the day, I think the shipper also, it could be a wake-up call for shippers to say, you know what? Why would I deal with a guy that's got no money?

David Saperstein: Yeah.

Alain Bédard: Huge risk.

David Saperstein: Yeah.

Alain Bédard: This is all things that are helping, like David was saying earlier.

David Saperstein: Yeah

Alain Bédard: Our industry of all the bad actors that have been there for so long.

Benoit Poirier: That's great, caller, gentlemen. Thank you very much.

Alain Bédard: Thank you, Benoit.

Operator: Thank you. Your next question comes on the line of Bruce Chan from Stifel. Please go ahead.

Bruce Chan: Hey, good evening, gents. Just want to follow up on some of your comments around forestry products and Canadian steel. Obviously we've had a lot of variability, let's call it, in the trade situation, and now there's discussion about new tariffs on Canadian goods into August. Just want to get your thoughts on how that might affect volumes, especially to the extent that anything is baked into guidance and whether you're expecting or seeing any inventory front-loading at this point.

Alain Bédard: Yeah. No, we're not seeing any movement exceptional, like pre-buying or pre-shipping because of the 30-day implementation deadline. We're not seeing that. This is not the same as what we've seen in Q1 2025, where everybody was trying to chase volume into the US prior to tariff. We're not seeing that. The feedback that we're getting so far is that it will be implemented. We've asked our Canadian folks to look at what it is. So far, it's huge for the Canadian economy. I think it's CAD 20 billion of export. For us, there's no real issue. The biggest issue we have between US and Canada trade is forestry and steel. When we look at those next round of tariff, there's no real issues for what TFI is doing, transporter in Canada, US, Canada.

Bruce Chan: Okay. Very helpful. Thank you.

Operator: Thank you. That ends our question and answer session. I will now hand the call over to Mr. Bédard for any closing remarks.

Alain Bédard: Well, thank you again, everyone, for joining us and, of course, for your ongoing interest in TFI International. As we move through the back half of the year, we will keep you posted on our progress, and we look forward to seeing many of you at upcoming events. Please don't hesitate to reach out if you have any further questions, and I hope that you have a great evening. Thanks again.

Operator: Thank you. This concludes today's call. Thank you for participating. You may all disconnect.

Q2 2026 TFI International Inc Earnings Call

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