NYSE:TFII TFI International Q4 2024 Earnings Report $82.23 +2.05 (+2.56%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$82.40 +0.17 (+0.21%) As of 05/2/2025 04:46 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast TFI International EPS ResultsActual EPS$1.19Consensus EPS $1.59Beat/MissMissed by -$0.40One Year Ago EPSN/ATFI International Revenue ResultsActual Revenue$2.08 billionExpected Revenue$1.54 billionBeat/MissBeat by +$539.95 millionYoY Revenue GrowthN/ATFI International Announcement DetailsQuarterQ4 2024Date2/19/2025TimeAfter Market ClosesConference Call DateThursday, February 20, 2025Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress ReleaseAnnual Report (40-F)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by TFI International Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 20, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Fourth Quarter twenty twenty four Results Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Operator00:00:31Please be advised that this conference call will remain will contain statements that are forward looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. I would also like to remind everyone that this conference call is being recorded on 02/20/2024. I will now turn the conference over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir. Alain BedardChairman, President and Chief Executive Officer at TFI International00:01:01Well, thank you for the introduction operator and thank you everyone for joining our call. So yesterday after market close, we reported quarterly results reflecting the industry wide slump in freight volumes as well as the ongoing effort by our team to make the most of the challenging conditions. We again produced strong free cash flow of more than $200,000,000 during the quarter. This brought our full year total to more than $750,000,000 the third year in a row that we've achieved this mark despite the prolonged weak stretch for the industry. This directly reflects our long withstanding focus on optimizing free cash flow, so that we can strategically invest in the business, consider attractive M and A and return excess capital to shareholders. Alain BedardChairman, President and Chief Executive Officer at TFI International00:01:55We did all three during the fourth quarter, while also reducing our debt to further strengthen our balance sheet. With that, let's have a look at our consolidated results. For the fourth quarter, our total revenue before fuel surcharge grew 9% over the corresponding prior year period to $1,800,000,000 which benefited from our acquisition of Daseke last April. However, operating income of $160,000,000 was down from $198,000,000 reflecting an operating margin of $8,800,000 versus $11,800,000 previous year. We did have unusually high accidents related expense that were about $9,000,000 higher than prior year period. Alain BedardChairman, President and Chief Executive Officer at TFI International00:02:40Our adjusted net income of $102,000,000 was down from $148,000,000 the prior year and adjusted EPS of $1.19 compares to $1.71 I would also note that the impact of foreign exchange fluctuation, which during the quarter reduced reported EPS by $0.03 as every 1p fluctuation of Canadian dollar per U. S. Dollar tends to impact either positively or negatively our annual EPS by about 0.02 So again, we produce solid cash flow, as I mentioned, specifically $262,000,000 of cash from operating activity and free cash flow of $2.00 $8,000,000 However, both were down from the prior year figures of $3.00 $3,000,000 and $244,000,000 respectively. I want to again call out that our ability to produce very respectable cash flow during a prolonged slump for the industry is a direct reflection of our team's effort to focus on the details of the business regardless of market condition. This includes concentrating on quality of freight and other efficiencies. Alain BedardChairman, President and Chief Executive Officer at TFI International00:03:52Let's now turn to a review of our three business segments, beginning with LTL, which was 40% of segmented revenue before fuel surcharge during the fourth quarter. LTL revenue before fuel surcharge of $737 was off 10% and operating income of $70,000,000 which had an $8,000,000 impact from higher accident related costs versus the prior year period was up 34%. Our adjusted LTL operating ratio was 90.3 as compared to 86.1 a year earlier and return invested capital was 16.3. So next up is our truckload, 38% of segmented revenue before fuel surcharge at $693,000,000 which was up from $399,000,000 in the prior year period benefiting from the Daseke acquisition. Truckload operating income came in at $60,000,000 which was up from $51,000,000 We produced an OAR of $91,500,000 relative to $87,300,000 a year earlier and our return invested capital was 8.4%. Alain BedardChairman, President and Chief Executive Officer at TFI International00:05:01Our third business segment to review is logistics, which was was 22% of segmented revenue before fuel surcharge or $410,000,000 for the fourth quarter, down from $472,000,000 the prior year. Operating income of $43,000,000 was down from $55,000,000 This equate to a logistics operating margin of $10,500,000 relative to $11,600,000 last year and return on invested capital was $17,100,000 Turning to our balance sheet, during the quarter, we again benefited from our solid free cash flow of more than 200,000,000 We reduced debt by $156,000,000 and as a result ended the year with a funded debt to EBITDA ratio of 2.11. In addition to locating capital to debt reduction, we also rep We also repurchased $42,400,000 worth of shares during the quarter and you'll recall that in October, the renewal of TFI International Nomercos issuers bid for or NCIB was approved for an additional year. So before I wrap up, as you may have seen in our press release, we plan to redomicile TFI from Canada to The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:06:25To better align with our shareholder base and commercial presence. With that, operator, if you could please begin the Q and A portion of the call and I'll be happy to take questions. Operator00:06:38Thank you. And again, in order to ensure that everyone has a chance to participate, Your first question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead. Ravi ShankerManaging Director at Morgan Stanley00:07:06Great. Thanks. Good morning, Alana. So when you think of where we are on Ravi ShankerManaging Director at Morgan Stanley00:07:10a cycle now and where we ultimately go to, let's say $8 of normalized EPS, how much of the path from where we are today to that level do you think is idiosyncratic actions that you guys can take versus waiting for the cycle recovery? Alain BedardChairman, President and Chief Executive Officer at TFI International00:07:26Very good question, Ravi. And you know what, I think that we still have a lot of work to do on costs. If you look at our T Force rate, our costs are still too high. We're getting also killed because our volume keeps dropping. Our shipment count is down 6% year over year. Alain BedardChairman, President and Chief Executive Officer at TFI International00:07:46Although our weight per shipment is about the same, it's still very difficult environment. We still have a lot of work to do at T Force rate on the fleet side to reduce our costs. We're on the right track there. Our average age of a fleet of trucks at T Force rate is four point two years, which is getting close to normal versus the average age that we have in Canada, which is a little bit higher. But then if I look at my maintenance cost per mile in U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:08:13S. Versus Canada, I mean, there's still a big discrepancy between the two. So we still have a lot of work to do on costs at the T Force rate. The same is true also of our Daseke acquisition. If you look at the trend since we bought Daseke in April, I mean Q2 was okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:08:33And then we had issues with revenue per miles that keep dropping because the freight recession is still with us. And even in Q1 of twenty twenty five, we're still seeing a very pressure on rates, although it's quite stabilized, but the number of miles are down and our costs also are too high. Daseke, we were trying to have a lot of equipment and these equipment are specialized equipment. They're used not very often and let's say wind equipment, wind is out of wind, right. So it's not very popular right now. Alain BedardChairman, President and Chief Executive Officer at TFI International00:09:12So we have to reduce our asset base at DESKI to reduce our costs, to reduce our depreciation expenses, to reduce our interest costs as well. So we still have a lot of work to do to get to to me on the cost side with no market improvement, we have to be closer to a seven to a 7.25 EPS in a normalized cost environment. If you look at our logistics, I mean we're down $12,000,000 quarter over quarter year over year in Q4. This is just volume. I mean, the truck manufacturers volumes are down about 20%. Alain BedardChairman, President and Chief Executive Officer at TFI International00:09:51This will continue probably Q1, Q2, Q3 of '20 '5. When we talk to our customer, they see a pickup by the end of twenty five. So that is also not helping us in the early days of '25, but this is just volume and it will come back. So to make a long story short of a big question is that we still have a lot of work to do on The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:22Operation to become lean and mean. If I compare that with our Canadian operation, I mean we still have a lot of work to do in The U. Ravi ShankerManaging Director at Morgan Stanley00:10:31S. Got Ravi ShankerManaging Director at Morgan Stanley00:10:32it. That's really helpful. And apologies if Ravi ShankerManaging Director at Morgan Stanley00:10:33I missed this, but did you give us a formal 2025 guidance? Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:39No, I mean, we're like our peers. I mean, it's really a very difficult start of the year. It's very foggy. So it's difficult for us. What I could say is that what we've seen so far in Q1, we're still in a very deep freight recession. Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:56The volumes are not there. So it's going to be a difficult '25, I think, again. We thought when we made our plan in October of twenty twenty four for 2025, we never anticipated this kind of situation, which is still difficult in terms of volumes, both truckload and LTL. Ravi ShankerManaging Director at Morgan Stanley00:11:26Great. Thanks, Alan. Alain BedardChairman, President and Chief Executive Officer at TFI International00:11:28Pleasure, Ravi. Operator00:11:30And your next question comes from the line of Jordan Allager with Goldman Sachs. Please go ahead. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:11:37Yes. Just to come back to U. S. LTL margins deterioration in the quarter, would you say that's I know you talked about cost as well, but is it primarily revenue? And then can you maybe go into a little bit more color on some of the specific steps TFI is going to take to work on U. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:11:57S. LTL margins in 2025 regardless of the volume environment? Alain BedardChairman, President and Chief Executive Officer at TFI International00:12:02Yes. You see the problem that we have Jordan is this, is that right now, okay, we're losing the small and medium size, okay, customers, which have the best margin, right. And some of that has been replaced, okay, by let's say 3PL and corporate account, which doesn't bring the same margin and this was really accelerated in Q4. So that's part of the issues that we have is sales, okay. We have to be way more aggressive on the small and medium sized account. Alain BedardChairman, President and Chief Executive Officer at TFI International00:12:39So this is problem number one for us. If you look at T Force rate today, okay, is revenue. Problem number two is cost. So we've been working steadily on costs since we bought this company and we've invested a ton of capital to improve our asset, to improve our training, etcetera, etcetera. But at the same time, okay, our volume, okay, keeps coming down, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:07So it's like you're chasing your tail, like a dog chasing his tail, okay. So this got to stop. So we are at a floor of around 20,000 shipments. The mission that we give to our sales force is to try to grow organically, but also to try to improve the density. So what I mean by density and I'm like a guy that's always repeating the same thing. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:29If you look at our Canadian operation, density is second to none. I mean, it's just fantastic. That's why we're doing so well. In The U. S, our density is the ship. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:38I mean, it's really bad. So we have to improve the density. So there's two ways to improve density, right. Approach number one is to try to do it organically and that's what we've been trying to do for three years since we bought the company, three, four years. Option number two, okay, is down the road, okay, you got to do what we've done in Canada, you got to do some M and A, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:14:08So if you can't get the density from organically your sales team, then you have to focus down the road, okay, in trying to find a target something that fits you, okay, that could help you improve your density at one point, right. So this is why we've been saying that one solution down the road, okay, for T Force rate on sales and revenue, it will have to go through M and A at one point. But in the meantime, let's say during the course of 2025 and 2026, our focus has to be trying to grow it organically, okay, with the people we have and the sales, the revenue and try to squeeze, okay, the cost of our, let's say, fleet operation. What we've done so far that's good at T Force Freight is our line haul. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:15:03So now we're using a software that's really good, which is called Optum, which is used by some of my peers. And now we are implementing Optum in Canada for PND. Okay. And we're also start to look at implementing that PND tools, it could be Optum or another one in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:15:24Again to improve the management of our costs on PND side. So it's like a two avenue for us. We got to keep working on the costs and do more with less, okay. But at the same time, the mission to our team, sales team is to grow organically and to improve our density. And over time down the road, let's say within eight, twelve months, twenty four months, whatever, when we're ready, when we can find the right fit, okay, is to add M and A like we do in Canada all the time. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:15:57Just as a quick follow-up then sort of I know things are still a little certainly challenging to start the year, but in that sort of let's say no help from the macro or zero volume growth environment. Any sense for where your LTL OR could get to in The U. S. In 2025 or directionally where you think it could get to coming off the '97 or so in the fourth? Alain BedardChairman, President and Chief Executive Officer at TFI International00:16:22Well, what we know Jordan is that Q1 is going to be a very difficult quarter, right? Very difficult quarter. But I still believe that we've been running this company since we bought it in in the neighborhood of ninety one, ninety two, ninety three, ninety four OR. Q4 was a disaster for us. I mean, we didn't do a good job in managing our labor costs. Alain BedardChairman, President and Chief Executive Officer at TFI International00:16:46We had too many issues with accidents and claim. If you look at my claim ratio, I went all the way to 0.9% of revenue, which is just unacceptable, right. So this company even in this kind of freight environment, we have to be able to run that between a 93 and a 95 OR. I've been saying since we bought the company that we'll get to a sub-ninety OR. But right now, okay, at the level of shipments that we have at 20,000, if our sales team does not help us in trying to grow this density, improve this density and grow the shipments count and working just on a cost within 25 with this kind of freight environment, I think that overall, we should think that it's difficult to say because again, it's very foggy Q1, Q2 with everything that's going on. Alain BedardChairman, President and Chief Executive Officer at TFI International00:17:39But I mean to me is we got to be able to live in a '93 to a '95 or even in 2025 with this kind of difficult environment. But Q1 extremely difficult because of all kinds of reasons, okay. But for the year 2025 even with what we know today, we should be able to play in that '93 to '95. So which is way, way above the target that we've have of being sub-ninety OR, right. But density is the name of the game and we've been trying with the sales team to have those guys understand that we need to drive less miles, we need to pick up more freight per stop. Alain BedardChairman, President and Chief Executive Officer at TFI International00:18:24It's been quite difficult. Okay. It seems like difficult to do in this kind of an environment. But it's the only way that we're going to bring this company to a sub-nine OR because at 20,000 shipments a day, when you run a national network in The U. S, you are small. Alain BedardChairman, President and Chief Executive Officer at TFI International00:18:48In my mind to run, just look at the shipments count that we do in Canada. In Canada, we do close to 10,000 shipments a day. And we do only 20,000 in The U. S. So I mean in Canada with 10,000 shipments a day, we have huge density. Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:05That's why our costs are so good. In The U. S, our costs are not good because our density is way too low. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:19:14Right. Thanks so much. Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:16Thank you, Jordan. Operator00:19:18And your next question comes from the line of Ken Hoexter with Bank of America. Please go ahead. Ken HoexterManaging Director at Bank of America00:19:25Hey, great. Good morning, Elaine. So a lot happened, it seemed like in the numbers in the LTL, length of haul dropped a couple hundred miles. You added trucks. You mentioned an $8,000,000 charge in there. Ken HoexterManaging Director at Bank of America00:19:40Maybe talk about what's going on at the LTL, so we can understand the dynamic and the speed that things are changing and it looked like GP revenue is really shifting down very quick. So a lot of dynamics going on here, maybe walk through what changed so quickly? Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:55Yes. Well, GFP has been not doing well since I would say a year and a half ago when our partner on GFP, UPS said, I mean, those customer we can't service those guys because they are not honest and they play games etcetera, etcetera. So we have to drop, okay, all those reseller that UPS didn't want us to service. So and it's now we're down to basically not much in terms of revenue versus where we were two years ago. And we've changed the commission structure to our sales team to try to make this thing grow again. Alain BedardChairman, President and Chief Executive Officer at TFI International00:20:35But so far, we don't have any results. Okay. So that's GFP. But on the asset side, what we have done, if you look at my personal costs, year over year, I went from 40% to 44%. And this is because of all these changes, okay, in terms of our service, in terms of not managing the labor costs in the right way and also the mix of the revenue, which has deteriorated a little bit. Alain BedardChairman, President and Chief Executive Officer at TFI International00:21:07Okay. Our weight per shipment is about the same, but the revenue per 100 weight is down. Why? Because we're replacing small and medium size account shipments with great margin versus a 3PL and a corporate account with less good margin, right. So this is what's happening there and this is where I say that our sales team has to pull its own weight and start helping us in to try to grow this better business. Alain BedardChairman, President and Chief Executive Officer at TFI International00:21:39Okay. But at the same time also, okay, we also have to manage better the claim costs and this is big for us because we're at 0.9% of revenue, which is completely unacceptable. If you look at our Canadian operation, okay, we used to be at 0.2%, we're at 0.3% in Q4. You look at the best in class in The U. S, the guys are at 0.2% or 0.3% or something like that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:22:04So as we're at 0.9. Also our accidents reserve had to be adjusted with the actuarial, which we took another hit. So globally it's a lot of bad news for us in Q4, okay. But the guys, they're rolling up their sleeve and we're attacking and we understand that the market is not going to help us again in 'twenty five. I mean we still think that we're going to be in the freight recession. Alain BedardChairman, President and Chief Executive Officer at TFI International00:22:34We don't see anything changing over the course of 'twenty five and this is why when I look at the plan that we have for 'twenty five running in the '93 to a '95 OR for all of 2025 would be probably the best that we could do with the low density that we have, okay. And without any M and A in 2025, I don't think that we'll have any M and A in 2025 to help us improve the density. Okay. So with that in mind, this is where we stand there, Ken. Ken HoexterManaging Director at Bank of America00:23:06Thanks. But just to clarify, you added 500 trucks over it. You grew the fleet significantly, but why did the length of haul drop 400 miles? What did you just change business? Alain BedardChairman, President and Chief Executive Officer at TFI International00:23:16Is that the mid No, no, no, because you have to look at the active trucks again. Okay. The active trucks at LTL is about 3,000 to 100 trucks. The total trucks is about 4,000 trucks because we're bringing new trucks in and we're not selling the old trucks. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:23:35We have about I don't remember exactly the count. Okay. But we have a lot of old trucks that we're selling now because the active fleet of UPS or the T Force Freight LTL is about 3,200. So there's no movement. You have to look at the active fleet. Ken HoexterManaging Director at Bank of America00:23:56Okay. And then just to redomicile any tax implications on that, is that just moving headquarters? Where are you going to be moving? Is there any follow on implications for that? Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:08You know what, Ken, I think this is an evolution of TFI. So if you look at five years ago, we listed TFI into the New York Stock Exchange and we were able to do that through what they call an MGDS, okay, exception, right. But this exception will disappear the minute that our shares that are owned by U. S. Shareholders, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:33The minute that we go above 50%, then this is not going to work. So we have to go to the SEC and then we have also to be U. S. GAAP. So it's part of an evolution. Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:45Okay. But at the end of the day, if you look at TFI today, okay, for Ed office, we have people working in Canada, we have also people working in The U. S. We have people in Montreal, in Toronto, Calgary, we have people in Chicago, we have people in Minneapolis. So we are all over the place in North America with our Ed Office crew. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:09So to me it's just like an evolution, okay, because our business is now today about 70% U. S. Domestic, 25% Canadian domestic and about 3% or 4% or 5% trans border. So it's just and with the next M and A, okay, we just announced a small transaction in our MD and A. With that and with the possibility of us doing some more M and A in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:35S, like we said at one point we will invest $3,000,000,000 to $4,000,000,000 It's going to be in The U. S, it's not going to be in Canada. So our revenue will creep up to about $80.25. So it's just an evolution, but we're not moving at office. We're not moving people from, let's say, Toronto to, I don't know, Chicago. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:54No, no, no. Every member of the TFI and office is staying where they're at. So that's why we call TFI, TFI international is because we're Canadian and U. S. Ken HoexterManaging Director at Bank of America00:26:10Got it. Appreciate the time. Thanks, Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:13Pleasure, Ken. Operator00:26:15And your next question comes from the line of Walter Spracklin with RBC Capital Markets. Please go ahead. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:22Yes. Thanks very much. Good morning, Lee. Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:25Good morning, guys. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:26Guys. So maybe just to clarify on the redomicile, you will not be delisting in Canada, is that right? Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:32No. No. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:33Okay. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:34And will it be a full reincorporation or into The U. S? Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:40That, you know, Walter, because we're only in the early days, right? So we still have a lot of work to do on that. We have we must get a shareholder approval of that. So to me in a simple way, I mean it's just like TFI International today is a Canadian Corp. Tomorrow once the shareholder approve it, it's going to be a U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:01S. Corp. So that's the way I understand it. So there's no big story except the fact that now by being a U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:11Corp, on the Daseke acquisition, for example, one of our business unit deals a lot with DOD, the Department of Defense, the U. S. Department of Defense. And because we are a foreign owner, okay, that creates a little bit of issues for us. Okay, well, that's no big deal. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:30We can live with that. But the fact that now you are a U. S. Corp that will help us, okay. So there's a few things like that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:38You could be part of some index in The U. S. Because now you are U. S. Domicile. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:43But at the end of the day, like I said to our Board member yesterday, it's an evolution of TFI. If you look back five years ago, we had no U. S. Shareholder. I mean, we were just Canadian, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:57Today, just under 50%, forty nine point nine % of our shoulder summer of twenty twenty four were U. S. Okay. And 4% or 5% were, I think European or Japanese or something like that and 45% were Canadian. So it's an evolution. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:28:16Got it. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:28:16Okay. And then my second question really is just on M and A. And you mentioned densification is a big objective and M and A can certainly help with that. This is a tough environment, so arguably sellers are in a tough spot. Could you get could you look at bolt on or accelerating your bolt on tuck in acquisitions to a more significant pace to take advantage of potentially lower than normal acquisition multiples to achieve that density, so that when things turn you're building off a larger base? Alain BedardChairman, President and Chief Executive Officer at TFI International00:28:54Yes, you're right, Walter. I mean, for sure. But there's always the question, you've been with me for a long time, Walter, right? You know us really well. And me, my saying has always been you buy in bad news and you sell in good news. Alain BedardChairman, President and Chief Executive Officer at TFI International00:29:09But it's been bad news for TFI for the last two years, right? Since 2022 when our EPS hit $8 I mean, it's just been bad. I mean, we went to 6 something 6 point 1 5 dollars and now this year we're at 5.75 So with that in mind and all this, everything that's going on in 2025 with the fog that we nobody knows where we're going really. So a lot of people could be scared and say, hey, don't do anything crazy, don't spend $1,000,000,000 or whatever. But I think that you have to be bold, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:29:48We have a very strong team in Canada and we're also building a much stronger team in U. S. In our specialty truckload with Steve Brookshaw and with Bob McConaugold at T Force Freight U. S. And also with Rick Ashi in our logistics, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:05So that you may be right, Walter, maybe it's not going to be in '26, it could be maybe in '25, okay. But it's always to try to balance, okay, between being bold and trying to do something sooner than later, okay, because you may end up being ahead of the curve, okay, in terms of the market improving. Me, I really believe that The U. S. Is the best place to be in the world in terms of business. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:37And I feel really good about this U. S. Economy. And I feel really that those guys, okay, will do a great job, the new administration. So I mean to me it's time to invest in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:51S. But then on the other side, I've got guys saying, oh, it's a you got to be careful, your debt is at 2.1, your leverage at 2.1. So this is why we're trying to reduce our debt by about $500,000,000 at at least 500,000,000 during the course of 2025. So it's a balance, Walter, it's a balance and we want to get the Q1 behind us because to me Q1 is going to be very difficult when I look at my specialty truckload in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:31:24When I look at our U. S. LTL, it's going to be a very difficult Q1 and maybe also Q2 because with what's going on, we still don't know what are going to be the rules, right? So as of March, the new administration will talk about tariff. As of April 1, there will be a report by the treasury that's going to say whatever I don't know. Alain BedardChairman, President and Chief Executive Officer at TFI International00:31:50So I think that the rules will be clearer starting the summer of twenty twenty five into the fall of twenty twenty five. But with all this in security, if you are bold maybe it's the right time to do a deal. So we'll see. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:32:05Okay. That's great. I appreciate Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:32:06the color, I like. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:08Thank you, Walter. Operator00:32:11And your next question comes from the line of Brian Ossenbeck with JPMorgan. Please go ahead. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:19Hey, good morning. Thanks for taking the question. Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:21Good morning, Brian. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:23Good morning. Just wanted to ask if you could give a little more detail as to why you think you're seeing some of this mix shift in T Force rate And maybe how much you can quantify just how much more if you go you're doing versus SMB? Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:37Is this competition, this the challenge? Is it service level? Is it kind of all the above? Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:44I think it's all of the above. I think it's just a difficult environment, okay. Everybody is looking for freight. The perception is that through the master report is that okay, T Force rate is cheap, but the service is average or maybe not as good as the average of my peers. So I mean we have to fight and it's the focus of us. Alain BedardChairman, President and Chief Executive Officer at TFI International00:33:12I mean there's no other issues. Now this is what these sales guys have to do. I mean we've been working at it for three years and we've not been very successful. The only success we had on the quality of freight is the average weight, which was really low, now is a little bit better at 1,200. That's the only success that we have so far. Alain BedardChairman, President and Chief Executive Officer at TFI International00:33:34We're trying to work with these guys, say, hey, your responsibility is to bring some freight. And so far, it's been difficult. So like I was saying to the team two days ago, the T Force Freight team is that guys, I mean, I understand that we have this freight environment, but we have to have probably better people, better leaders. I don't know. It's the ball is in their court, but it's tough. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:34:09So looking at Daseke, it looked like at least on our math it may be fairly profitable during the quarter. You made some comments that specialized TL was pretty tough. You have extra equipment laying around. So just wanted to see if there was a path to better profitability or is that something you have to wait more for the cycle to turn around. So I guess a similar question there. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:34:34How much of that is really in your control versus what the broader economy gives you? Alain BedardChairman, President and Chief Executive Officer at TFI International00:34:39Yes. So the revenue per mile, okay, if you look at our revenue per mile Q2, Q3 and Q4, it keeps coming down. Okay. So it's really not good. Our revenue per truck, because we have increased the number of miles stayed about steady. Alain BedardChairman, President and Chief Executive Officer at TFI International00:34:57So more miles that we did per truck Q3, Q4 versus Q2, but less revenue per mile. Okay, because the freight is scarce, right. So this is up to the end of twenty twenty four. Going into 2025, okay, rate per mile has got some stability, but because of everything that went on with the storm and this and that, so number of miles went down in January. And the killer that we have over there is that we have way too much capital invested, trucks and trailers invested in that company. Alain BedardChairman, President and Chief Executive Officer at TFI International00:35:34And why is that? Because when we acquired Daseke, they had committed to buy a large number of trucks, which we could not walk away. So that's what we did in Q2, and Q3 and Q4 is we had to take on these trucks that we have been ordered, okay. So now we have way too many trucks in a very difficult environment. So during the course of early twenty twenty five, we have to start unloading those excess trucks that we have, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:36:08And then we'll have probably a better result in terms of our depreciation expense, which is just crazy, okay, with the revenue we have. In terms of customer, in terms of activity, okay, we're still in a freight recession in the specialty truckload. We are still not active like we should be in a normal environment, but it's been going on for two, three years, right. So if you look at my peers in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:36:36In the van world, okay, it's really difficult. I mean us, if you look at my OR in Q4, I'm above 90 for the first time ever, okay. First time ever the specialty truckload OR is above 90. I think we're 91 something, because Daseke is like you said probably running like a 98 or right and the rest of our operation is running sub 90 or right because Daseke and the existing business that we had before we bought Daseke, it's about fiftyfifty. So legacy TFI specialty truckloads about the same size as Daseke in terms of revenue. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:20But in terms of profitability is day and night, right? So you're right, Daseke in Q4 did help us because if you look at my year over year improvement, top line is through the roof, but bottom line is a meager just a few million dollars. So that tells you that we didn't do too well, okay, in Q4 with our U. S. Operation, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:49But this is a different environment. T Force is a big rock in my shoe. No question about it. DESKI and our U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:59Specialty truckload, this is something that we will be able to fix on the cost side, on the equipment side during the course of twenty twenty five. And if market condition improve that should help us. But if market does not improve, I mean at least on the cost side with our specialty truckload, we have a path forward by shedding equipment, by improving our costs, improving our overhead as well. Okay. So our overhead will come down during the course of 2025. Alain BedardChairman, President and Chief Executive Officer at TFI International00:38:34So I feel that Q1 is going to be difficult for specialty truckload as well. Okay. But I think that we will bring the ore down sub 90 within the next Q2, Q3 and Q4. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:38:51Okay. Thanks very much, Lynn. Appreciate it. Alain BedardChairman, President and Chief Executive Officer at TFI International00:38:55Pleasure, Ryan. Operator00:38:57And your next question comes from the line of Scott Group with Wolfe Research. Please go ahead. Scott GroupMD & Senior Analyst at Wolfe Research00:39:05Hey, thanks. My connection is not great. Hopefully, you can hear me, Elaine. Alain BedardChairman, President and Chief Executive Officer at TFI International00:39:09Yes. No problem, Scott. Scott GroupMD & Senior Analyst at Wolfe Research00:39:11Okay, great. I know can't ask, but any more color on the LTL lymphopologist such a dramatic change? And then you've mentioned a few times tough Q1, like do you think T Force is profitable? And then one more guidance kind of question, I know you're not giving specific guidance yet, but as you look at it today, do you think you'll grow consolidated earnings this year? Alain BedardChairman, President and Chief Executive Officer at TFI International00:39:36Tough question, Scott. So far what we know with everything that's going on, okay, we did about five seventy five of EPS in 2024. With everything that we know so far, same environment, everything the same. I think that 5.75 to $6 which is what we've done this year. It's still a very, very difficult environment. Alain BedardChairman, President and Chief Executive Officer at TFI International00:40:01And I would say probably first six months of 2025 will be more difficult than the first six months of 2024. Okay. And I think that the last six months should get better once we understand the new rules of the North American market. Now in terms of are we going to be profitable at T Force rate, it's very difficult right now. So the month of January was not good for us. Alain BedardChairman, President and Chief Executive Officer at TFI International00:40:32February still tough. We believe that the sum of Q1 that's why we've asked our guys to give us a re forecast for Q1. It's tough for me to answer, but one thing is for sure is that we're not going to be better than the 97 OR in our Q1, right. So going back to your question about the average length of all for T Force Freight, to me maybe I'm wrong, but in my mind the average length of haul okay at T Force Freight is basically about the same. So I know Ken was saying that the length of haul has changed big time, but I don't know if it's a mistake, but in my mind it's about the same. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:17So what I'll do Scott on that, I'll ask David to get back to you just to make sure that we all talk the same thing on that. Scott GroupMD & Senior Analyst at Wolfe Research00:41:25Okay. Yes, I mean it almost looked like a typo in the press release because it was down so much. So maybe that's right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:31It could be because to me it's like I said to Ken, number of trucks you got to look at the active trucks in IMD and A, okay, because it's about the same. But in terms of length of all, I mean, in my mind, it's basically the same. I mean, we have not changed the company. It's about the same. We're about the same as let's say, ABF. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:54ABF is about 1,100 miles. We are about the same. Scott GroupMD & Senior Analyst at Wolfe Research00:41:59Okay. And then on the strategic side, when you were talking about LTL M and A, I think in your answer, you said like down the road like five times, like it seems like it could be helpful now. Is this you not ready or you're not able to find a partner? And then just separately on the redomicile, does that what does that mean if anything for the idea of a spin at some point? Alain BedardChairman, President and Chief Executive Officer at TFI International00:42:26Yes. Okay. So like I said, Scott, I mean, my philosophy okay, has always been you buy on bad news, you sell on good news. So it's been bad for TFR last two years, right. It's been bad for the industry in general and it's been bad for us as well. Alain BedardChairman, President and Chief Executive Officer at TFI International00:42:45But we also did some M and A. So we bought Daseke in those bad time. We bought JHT, which is going to be a great asset and we're also buying another one that's going to be under the GHT umbrella in April. So we're still active in the good tuck ins, reasonable price, etcetera, etcetera. But in terms of The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:09S. LTL M and A, in order to do something, you got to do something of size because the problem we have us is that we're way too small, way too small. 20,000 shipments is the ship. It's bad. I mean you cannot have it's difficult. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:23If you want to be a national player in The U. S. With 20,000 shipments, it's too small. Just think about we do 10,000 in Canada. I mean Canada is one tenth of The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:35S. So it doesn't make any sense. So, but I think the timing is right, but you have to be bold, right. And it also depends on our investors, okay? It also depends on the Board. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:50So me, I'm the CEO, okay? And for sure, I'm making some proposal, okay? But sometimes you got board members or people that could say, Alain, are you crazy? I mean, your leverage is 2.1%. It's very foggy. Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:08Nobody knows where we're going. Okay. Your earnings in Q4 are down like 30%. Okay, are you crazy? I mean, why would you do a deal upsize, right? Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:20So me, I'm saying, well, guys, yeah, you got this, this is one side of the coin. The other side of the coin is you got to be bold, you got to do it now when everything is bad because when everything is bad, one day things will get better. So if you wait for things to get better, you're going to have to pay more. So it's a balance like I said earlier. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:46And that's why I'm saying down the road. Okay. But maybe the road is not going to be too long like I was talking with Walter. We'll Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:59see. Scott GroupMD & Senior Analyst at Wolfe Research00:45:01And the spin idea? Alain BedardChairman, President and Chief Executive Officer at TFI International00:45:03Oh, the spin. The spin, like I said earlier, Scott, we need size. So if you look at our market cap today, when we talk to our investors, large investors of TFI, they like the idea of the spin, but they say you're too small. You're too small. So if you're a $12,000,000,000 market cap guy and you split the company in two and one is let's see six and the other one is six, dollars two point six, dollars two point six is small. Alain BedardChairman, President and Chief Executive Officer at TFI International00:45:34So we think that your idea is really good. It makes a lot of sense, but try to get a little bit bigger. So let's say, if you do a deal and your market cap is 15, okay, because you're buying something good at a reasonable price, then it makes it easier to do, number one. Number two, it takes time. So in the meantime, what we're doing Scott, we're not sitting on our hands, okay, we're getting ready, Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:46:03So we have to work on systems, right. So because when you do the split, you don't want to be stuck with a TSA, a transition agreement for three years like we had with with UPS, right. So we're making some moves on the real estate side too. We're making some move on the asset side. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:46:26So let's say we have trucks that are, let's say in business A, but they should be in business B, because what we used to do in Canada is to have a global portfolio of all asset mixed up between truckload and LTL. So now we're all going to the split. So we're not sitting on our hands, we're getting ready, okay, to do that. But it's still in the cards absolutely because it makes a lot of sense. The return invested capital of our truckload operation is single digit in Q4, single digit eight point something if I remember. Alain BedardChairman, President and Chief Executive Officer at TFI International00:47:00I mean and then the rest of our business in very difficult environment, terrible environment for us logistics, okay, LTL, I mean we're running 15%, seventeen %, eighteen % return on invested capital. So it's not the same. So it's got to be separate at one point. Scott GroupMD & Senior Analyst at Wolfe Research00:47:21Thank you guys. Appreciate it. Alain BedardChairman, President and Chief Executive Officer at TFI International00:47:23Pleasure Scott. Operator00:47:25And your next question comes from the line of Bruce Chan with Stifel. Please go ahead. Bruce ChanDirector at Stifel Financial Corp00:47:32Yes. Thanks, operator, and good morning, Elaine. Good morning, Bruce. Yes, great to speak with you. You made some comments about the sales team earlier in the call, the opportunity in SMB, which I think makes a lot of sense. Bruce ChanDirector at Stifel Financial Corp00:47:48But you've also been trying for three years at this. You've had a lot of competitors in the space targeting this type Bruce ChanDirector at Stifel Financial Corp00:47:54of business. Bruce ChanDirector at Stifel Financial Corp00:47:55So question is how does the supply win in these RFPs? Are you just going to keep slogging it out? Do you need to hire more? Do you need to change incentives especially without improving your service first? Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:07Yes. I think we did all of that, Danny. We changed incentive. Okay. We've changed people. Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:14Okay. The focus is still the same. And we've not been able to have the results, right. So, we are working on our service. We have improved service at T Force rate absolutely. Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:31Right now, if you look at my missed pickup, I still have way too many. I've got about a little shy of 400 a day that we miss pickup, but we used to be double that, right. So we are improving. Now for sure, the master report is not helping us in the perception of T Force rate. Why is that? Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:51Because we came to know that sadly Mastio was trying to get in touch with us and they couldn't get in touch with us for four years. So they were using information that is stale from 2020. So maybe this report is not accurate because we never provided them the right information for them to really get a true picture of T Force rate services, right. So hopefully down the road now that we have a communication, they will talk to customers that we service and maybe hopefully that perception that T Force rate services is not good will improve. And I think the service reality wise has improved, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:49:42Now our sales team are fighting that, okay. And are fighting our peers that have better service. And in a difficult environment, okay, where freight is not easy to find, the service is key, right. So if the customer has the perception that your service is not as good as the other guy and the price is about the same. Well, the customer is not stupid. Alain BedardChairman, President and Chief Executive Officer at TFI International00:50:09He's going to go with the other guy, right? So we have to change this perception of service and we also have to work on improving our service at the same time. And we also have to educate our sales team that guys, I mean, our service is improving guys and you got to fight, you got to fight, right. And so far, if I look at my corporate and 3PL, we're about flat, okay, in '24 year over year. So far in '25, we're down a little bit on corporate, but above flat on 3PL. Alain BedardChairman, President and Chief Executive Officer at TFI International00:50:46But we're down on again on small medium sized account, which is the most profitable business that you can have. So I mean, so we're trying organically, okay, to improve that, because that would help us with our density. And like I said earlier in the call, down the road, okay, and that's what we've done in Canada. That's what we've done in Canada for years and years and years is that we beef up our density through M and A, okay, through M and A. So we continue to do that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:51:17And in Canada, we run either union or non union, right. So we got a union network and we also have a non union network. And we beef up density in all these two networks all the time. And this is now after trying for three years, okay, to grow organically and it's not working, okay. So we keep pushing our sales team to grow this thing, but we are now understand that we have to do something, okay, down the road on M and A, either to build a non union network on the side or to try to grow with some regional unionized LTL to beef up T Force rate. Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:04I mean, but don't forget our approach us on M and A is always the same is that if we do some M and A, we keep business separate, right. We don't like merger. We're not big fan of merger, okay. We don't do that, right. So we work together. Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:23So let's say we own another company. I mean, we will work the two companies will work together, but there's no combination, there's no merger. We hate that because, yes, the accountant will tell you that you could save a lot of money, but at the end of the day, it's false. So we keep the two like we do in Canada, right. Bruce ChanDirector at Stifel Financial Corp00:52:44Okay. That's a really helpful color. And then just a really quick follow-up on that M and A point. Is the thought still that an asset light operation makes the most sense or are you kind of broadening up the search a little bit? Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:59Well, asset light is always the best. So if you look at our Canadian LTL, it's really, really light. Why is that? Because we are heavy intermodal. We are also heavy with third party PND. Alain BedardChairman, President and Chief Executive Officer at TFI International00:53:15So for sure, I mean, if we have an option to buy an asset light at a reasonable price, okay, we'll jump on that one first. Now, we also understand that there's not that many asset light operation, okay, in The U. S. On the LTL side. So then, okay, we look at an asset operation. Alain BedardChairman, President and Chief Executive Officer at TFI International00:53:38So about a year ago, we bought $100,000,000 revenue asset company non union in The U. S. Okay. So this is our first, okay, of maybe more to come on that side. Now this company, the beauty of this company is that they're also big in the trans border between U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:01S. And Canada, right, which has got better yield, better yield than U. S. Domestic or better yield than Canadian domestic. So this is a first for us a year ago and down the road, okay, this is an area that we'll be trying to grow and maybe if we can find a good brother to T Force Freight, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:27I mean, that's also something that we're going to be looking at. If we can find a good brother, a good fit, but without merging, I mean, guys never say that TFI wants to buy a company and merge it with A or B or C. We don't do that. Bruce ChanDirector at Stifel Financial Corp00:54:44Okay, great. Appreciate the time. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:47Pleasure. Operator00:54:50And your next question comes from the line of Tom Latavic with UBS. Please go ahead. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:54:58Yes. Good morning, Elaine. Alain BedardChairman, President and Chief Executive Officer at TFI International00:55:00Good morning, Tom. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:03I wanted to get a sense, I know we've had quite a bit of discussion on U. S. LTL. I think we've had for the last couple of years the real framework of idiosyncratic drivers for improvement in U. S. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:16LTL and that you had a fair bit of control. It feels like we're kind of waiting for the market to improve and you really need a better freight backdrop to see things get better in U. S. LTL. Do you think that's fair that that's really the most important lever for U. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:36S. LTL to get better or there's still levers that are kind of meaningful enough that you can push in your control in U. S. LTL? Alain BedardChairman, President and Chief Executive Officer at TFI International00:55:47No, I think so, Tom. I think that we still have a lot of work to do on the cost side. I think fleet, okay, is a big problem for us since day one, because we had old charge, now we have a normal fleet, but our cost is too high. So we're starting to see some improvement because we have a new leader, okay, that oversees our fleet management now. And this is something that should help us during the course of 2025 and beyond. Alain BedardChairman, President and Chief Executive Officer at TFI International00:56:16That's number one. Number two is like I said earlier on the call, the P and D software that we're using dates back about twenty years, right. So it was good twenty years ago. Okay. So now in 2025, we're going to be updating that through either a system, which is the software that we're using now for our line oil, which helped us big time. Alain BedardChairman, President and Chief Executive Officer at TFI International00:56:41Okay. So our line oil cost today, even if we put more freight on the road versus rail, our line oil cost per pound or per shipment is less today than it was three years ago with better service, because the rail is the rail, right. So we put less stuff on the rail, more on the road costs about the same and services better. But on the P and D side, we have a big job to do there, because we could save a lot of money. So to me, it's really the next big focus. Alain BedardChairman, President and Chief Executive Officer at TFI International00:57:12So fleet, we have the tools, we have the software, we have a better leader now, we should that should help us in 2025. PND, it's going to take probably all year, okay, to get this new software tested, implemented, maybe 2025 into 2026. The other thing also that we are implementing now is also has been a cancer for us billing, master file of customers and all that. So we are implementing as we speak and it's going to take all the way until the summer of twenty twenty five, a software that's been used by one of our peers. So it's been tested by those guys and that's what we are implementing now. Alain BedardChairman, President and Chief Executive Officer at TFI International00:58:02So that's going to help us build customer properly, okay, have a better control about what's going on, better visibility about what's going on, etcetera, etcetera. So that's also another lever during the course of 2025 that should help us on the cost side. Now, if market starts to turn, if this economy starts to get better, if this freight recession disappear, let's say '25 even better. But for us in 2025, we have to stop, okay, the degradation of volume, okay, and slowly improve it as much as we can. And we have a big job to do on costs on fleet still on PND and on billing customer properties, so they can pay us properly. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:58:56Right. Okay. What about there hasn't been much discussion on competitive environment, but if you take a step back, a number of the bigger players have added terminals and recycle the yellow terminals, if you will, expanded and are focused on growth. So do you think that's potentially contributing to some of the pressure on shipments that other players who have added terminals are taking business and that's contributing to the pretty significant cycle pressures and lower shipment counts that might be hard to see, but do you think that's a factor too? Alain BedardChairman, President and Chief Executive Officer at TFI International00:59:39Economy 101, Tom, tells you that if you offer more, okay, you'll get less, right. So if you offer more freight capacity, you'll get less money. To me, it's basically the rule of economy. So by adding capacity to the LTL environment, for sure down the road you're going to be putting pressure unless the market starts to grow, okay. And if there's growth maybe not so much, but if still a very weak market for sure. Alain BedardChairman, President and Chief Executive Officer at TFI International01:00:19What by adding capacity, you're putting pressure down the road on rates. The shippers sees that, they know that and they will RFP the business and then you're stuck with fixed costs and there's a fight for freight. Okay. So this is basic economy. So this is why us our approach has always been guys don't add capacity, don't do that, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:00:43So this is why us down the road, what we're trying to do is through some M and A, through some education, guys, if you add capacity, you'll make less money. It's very simple. You have to understand, just look at the price of oil, add capacity, add more oil, price of oil goes down, right. It's just basic rules. So us in Canada, why we're so good is, we're not adding capacity. Alain BedardChairman, President and Chief Executive Officer at TFI International01:01:12We're shrinking, shrinking, shrinking and making more or at least protecting. If you look at my LTLOR, okay, I used to be 79, I think in last year and I'm an 80 something now, eighty, eighty point something, right. So we are protecting our margin. So you're right. I mean, there could be some pressure down the road. Alain BedardChairman, President and Chief Executive Officer at TFI International01:01:37Hopefully, our peers understand that and don't offer too much capacity because LTL, The U. S. LTL is the best place to be in North America today. Best place to be because it's more it's not like the truckload where every Tom, Dick and Harry could be a truckload guy tomorrow. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:00So just to make sure I understand your comments, so you did not it wasn't clear that there was like a worsening of competitive pressures in 4Q. You don't really think that was the issue was more broader market, but you might be concerned about pressures in the future. Is that I guess is that the way you're seeing it? Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:18Yes. Q4, it's hard to say. Okay. Maybe. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:23I don't know. But one thing is for sure, long term, when you add capacity and the market is not growing, you're going to end up with price pressure. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:33Okay. Makes sense. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:34Thank you Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:34for the timeline. Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:36Pleasure, Tom. Operator01:02:40Thank you. And your next question comes from the line of Benoit Poirier. Please go ahead. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:02:47Yes. Good morning, Elaine. Just in terms of your first question, yes. With respect to free cash flow, obviously, you were able to pull close to $800,000,000 in 2024. I would be curious given all the comments that you provided, how should we be thinking in terms of free cash flow generation for 2025 and maybe a little bit more color around CapEx given the investment needed for DesaiQ that you've committed for? Alain BedardChairman, President and Chief Executive Officer at TFI International01:03:17Yes. So I think based on what we know so far, okay, Benoit, is TFI will pay its dividend, TFI will reimburse, okay, about $400,000,000 to $500,000,000 of debt during 2025. TFI will also invest about US200 million dollars in M and A. So if you do the sum above that, I mean, it's basically about the same of because our CapEx will be reduced. Why is that? Alain BedardChairman, President and Chief Executive Officer at TFI International01:03:53Because when you do when you drive less miles in your truckload operation, okay, well, you can extend the life of the truck, right. So our CapEx will be less in 2025 than they were in 2024 because of that depressed truckload environment. The same is true of our LTL. So LTL for this year, we're buying 400 trucks, U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:04:20LTL I'm talking here, instead of buying 500 or 600 trucks in '24 and in '23, right? Because our average age, okay, is 4.2 now at The U. S. LTL. So globally, our CapEx TFI net CapEx will probably less $50,000,000 to $100,000,000 year over year. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:04:48Okay. That's great. And in terms of M and A, just for the follow-up, you gave a very good color on the timing. It seems to be most unlikely in 2025. I'm just wondering how much it's pushed to the right given maybe the financial situation? Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:05:07And do you feel you need to further integrate UPS Freight and Daseke before pulling the trigger on the larger one? And obviously, when we look at the past, you've been quite good monetizing some assets, think about Hartland Express, Waste Management. So is it something that might be in the cards down the road? Alain BedardChairman, President and Chief Executive Officer at TFI International01:05:31Monetizing asset, no, except on the real estate side, Benoit. And in terms of T Force rate, I mean, we have a plan and M and A will just help T Force Freight down the road, I think. So we will not stop an M and A transaction because we're not happy with what's going on at T Force Freight. I'm not happy at all with what's going on over there. The guys are working hard, but we need results, right? Alain BedardChairman, President and Chief Executive Officer at TFI International01:05:59So M and A could be part of that solution, helping them on the density side at one point maybe. And on the DSKY side, I mean, we are really busy in reducing overhead costs over there. We have way too much assets. So this is killing us on depreciation expenses because we have probably in the neighborhood of 400 trucks too many, okay, because we were stuck buying the commitment that Daseke's prior owners made and we got all these trucks in 2024 and now, okay, we have to start unloading, okay, the older trucks, okay, in a depressed environment. So what the guys have been doing is, what they're saying is that, Arlene, the market is so bad, I don't want to sell it now. Alain BedardChairman, President and Chief Executive Officer at TFI International01:06:51I just want to wait till this market gets better. So this is today, right? So me, I'm saying now, hey guys, I mean, do we see The U. S. Market pre owned trucks getting better? Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:05Okay. Not really. Well, okay. So let's start unloading the trucks. And that's what we're doing now. Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:14And the beauty of Daseke is that we're not losing money when we're selling trucks even in a very depressed pre owned market compared to when we are selling old UPS or T Force freight trucks, okay, because they've been so the fleet has been so poorly managed that if you look at my disposal of equipment in Q4, I've lost money, right. Not much, but I still lost money, right. But on Daseke, when I sell equipment at Daseke, I don't overall, I don't lose money. So I said guys, now is the time. I don't know when this market is going to get better. Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:54We know because we owe all the new trucks for PACCAR and freight that the production is down 20%, okay, in Q4. It's going to be down 20% in Q1, Q2 and Q3 probably and picking up again in Q4. Q4 '20 '20 '5 according to our forecast on the truck, I mean, for the first time, they will do a better job in Q4 twenty twenty five than in Q4 twenty twenty five than Q4 twenty twenty four for the first time. So I mean, it's a global situation. But M and A, like I said many, many times, you buy in bad news, you sell in good news, it's all bad, it's been bad for years and years. Alain BedardChairman, President and Chief Executive Officer at TFI International01:08:39It's just like we have to be bold, we have to find the right target, we have to do the right deal at the right price. And that's been the success of TFI over the last twenty five to thirty years is by the right price at the right time. We bought Daseke a year ago in April. Q2 was okay, three and four not so good. But I feel really good with Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:06Brookshaw and his team. We're going to we have a lot of work to do on reducing our overhead costs, reducing our asset base so that we could bring our expense depreciation expense down. We're going to turn this ship around. I mean, running a 90 OR in specialized truckload, it's not acceptable. Okay, everybody knows that. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:28I mean, we're not a van guy, we are a specialty. So we got to bring this OR down and we're going to get sub 90 for sure during the course of 2025 even in a difficult still difficult market. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:09:46Thank you very much for the time, Alain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:49Pleasure, Benoit. Operator01:09:52And your next question comes from the line of Daniel Impreza with Stephens. Please go ahead. Daniel ImbroManaging Director at Stephens Inc01:09:59Hey, good morning, Alain. Thanks for taking the questions. Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:02Good morning. Daniel ImbroManaging Director at Stephens Inc01:10:03Elaine, I want to start maybe back on The U. S. LTL service side. You mentioned a few times the claims ratio is unacceptably high at 0.9. Ken HoexterManaging Director at Bank of America01:10:11Yes. Daniel ImbroManaging Director at Stephens Inc01:10:11To previous answer, Daniel ImbroManaging Director at Stephens Inc01:10:12you said some other things are getting better, but this has been softening for a couple quarters. We'd love to hear some of the investments you're making to actually improve this claims ratio going forward. And could you provide any other update on like on time deliveries, any other service metrics that have been a headwind on The U. S. LTL side and maybe what you're doing to improve those? Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:29Yes. So on the claims side, here's the story, okay. So the reason we're at 0.9 is that we used to break so much stuff that we have a store in Richmond that was selling the stuff that we were breaking. But now we break less stuff, so we don't have this revenue that goes against the expense. I mean that is the story right now, which to me is okay, fine. Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:54But at the end of the day, okay, our claim will come down back, will come back down again, okay, in the next quarters. And what we're doing about that is again is working with the customer, working with the operators and we know what to do. It's just like the story is that, well, the benefit that we had by selling all the stuff that we were breaking, I mean, that is gone. The store is closed. We don't have that anymore. Alain BedardChairman, President and Chief Executive Officer at TFI International01:11:27And now we're just expensing, okay, the stuff that we're breaking now, okay, or losing now. So, okay, fine. That being said, what is the plan to bring the 0.9 down to more acceptable level? So we're going back to the source and we should do a better job on that, right. So the guys are all sensibilized that, hey, this is not acceptable, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:11:54This affects our service, affects our customer relationship. Nobody likes to have stuff broken. Nobody likes to have stuff lost, right, even if you pay for it. So that is where we're going on that. And what was your next second question? Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:11I forgot. Daniel ImbroManaging Director at Stephens Inc01:12:13Any other update on the on time deliveries or other service metrics that have been kind of elusive? Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:18Yes, yes, yes. Well, the on time delivery, we are improving, absolutely. But we'll never be a 99.9% guys. So the goal is to be something around 98%. When we bought the company, we were more like a 90%, ninety one %, ninety two % and we had all the excuse in the world to be at 90%, ninety one %, ninety two %. Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:41Right now, we're more like a 95%, ninety six % in range, if you exclude everything that's going on with weather issues. So we have improved. We're still probably not to the level our peers are, okay, but we are improving. And I just gave the specific on missed pickup. I mean, our missed pickup is down 50% versus what it was like a year or two years ago. Alain BedardChairman, President and Chief Executive Officer at TFI International01:13:07So our service is improving. Absolutely. Daniel ImbroManaging Director at Stephens Inc01:13:13Got it. And then as a follow-up, I want to ask a longer term maybe strategic one on The U. S. Held sales side. It's been a few years now. Daniel ImbroManaging Director at Stephens Inc01:13:19You mentioned it's been a challenging three years of owning the T Force asset. Whether we think about the ability to cut cost or add density, I guess how much of those differences in The U. S. Versus Canada are maybe more structural than you appreciated when you bought this business as you've learned? And when we think about where OR can get to, maybe 93%, ninety five % is this year, but has anything changed? Daniel ImbroManaging Director at Stephens Inc01:13:39Like where can this business go over time as you better appreciate the headwinds and just the challenges of The U. S. Market? Alain BedardChairman, President and Chief Executive Officer at TFI International01:13:47You know what, the market in Canada is not different than the one in The U. S. And vice versa. What's different is the level of issues when we bought UPS freight, okay. So we could never even with all the due deal that we've done, we knew that the fleet was not up to par. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:08We knew that the real estate was not up to par. But the system, the financial system, we were not aware because these were UPS's system, okay. So they were connected to the UPS environment. So we didn't know anything about that. And the tools for LTL because the tools per package at UPS are probably fantastic because these guys do a fantastic job over there. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:34But the tools for LTL were poor. Okay. So this is something that is taking us way more time than we thought. So I've talked about the LYNOL. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:45So LYNOL, now we have Optum, which is helping us big time. The fleet, now we have Ceteris that's been implemented a year ago. We had to change leadership. Now we have a new leadership. So Ceteris and the tool and the new leadership will help us reduce maintenance costs. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:03Billing and Master File management, it's been a nightmare for us, okay, from day one. Now we are implementing a software that has been used by one of our peers. By the end of summer, this should be done with. So it's much worse, okay, than we thought when we bought the company, okay. But we're going to get over it. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:27I mean, we know what to do, Okay. The U. S. Market is not that different than the Canadian market. The basic rule, okay, why are we so good and successful in Canada is because our density is second to none. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:43We drive in The U. S. Right now for our P and D 10 miles between each and every stop. This is not acceptable. I mean, we drive less than five miles in Canada. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:52Why is that? Because we've educated our sales team, everybody in our Canadian operation that we want the driver to drive less miles and pick up more freight. That's the culture we have in Canada. In The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:06That culture did not exist. Okay. And we've been trying working with the sales team to understand, guys, we need more freight close to our terminal. We need more freight per pickup. So it's what we call density that helps us reduce costs, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:23By doing that, okay, you're way more efficient. So what we're trying to do for the first three, four years, four or five years that we bought the company is trying to do it organically. And we've not been successful so far. The only success we have is we move the rate, not the rate, but the weight per stop, the weight per stop, the weight per stop, the weight per shipment, okay, from let's say less than 1,100 pounds to about 1,200 pounds that has been a success. But besides that, we have not done anything on density. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:56So this is why I'm saying that down the road, okay, you try organically to improve your density. But at one point and that's been the success of Canada, M and A has been the success that we encounter in Canada, both union and non union, okay, is to grow a network that through M and A you build your density. Daniel ImbroManaging Director at Stephens Inc01:17:20Great. Daniel ImbroManaging Director at Stephens Inc01:17:20I appreciate all the color. Best of luck, Glenn. Alain BedardChairman, President and Chief Executive Officer at TFI International01:17:23Pleasure. Operator01:17:25And your next question comes from the line of Ariel Rosa with Citigroup. Please go ahead. Ari RosaSenior Analyst at Citigroup01:17:33Ben Moore on for Ari. Morning, Alain. Thanks for taking our question. Back to the small, medium business, is it losing accounts in lanes or is it keeping accounts in lanes, but just losing volumes? Just to try to understand the ease of winning back that business when you improve service. Ari RosaSenior Analyst at Citigroup01:17:51And are there other higher margin customer segments you could focus on to offset in case small and medium business is still low in 2Q and you're at risk of OR being close to that 97 for 2Q? Alain BedardChairman, President and Chief Executive Officer at TFI International01:18:04Yes. No, I think that it's just like the focus of our sales team has not been good, okay. So the reason that we lose, okay, is because our churn is too high, right? So we look at the churn, normal churn in an LTL environment could be 5%, ten %. But when your trend is way more than that, which is the case at T Force rate, then it takes you lose more than what you gain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:18:38So the net is minus, right. So you got to stop the churn, you got to stop what you're losing, okay. So that you could have a positive when you had the loss because you will always have loss, okay. So that because there is you always have churn, but you have to have less loss than what you can bring in. And so far, okay, on 3PL and corporate, okay, we're fine. Alain BedardChairman, President and Chief Executive Officer at TFI International01:19:05The problem is that with small, medium sized account, we lose more than what we gain, right, in terms of customer and also in terms of lane. So it's just like guys roll up your sleeve and you got to be more aggressive, so that we stop losing more than what we're gaining. Ari RosaSenior Analyst at Citigroup01:19:24Okay, great. Appreciate that. Maybe just as a follow on from your Investor Day a few years ago, you were great in providing estimates and OR improvement, for example, 50 or 100 basis points. Just to understand the magnitude of the, I think, five or so actions you're implementing now, the sales culture to maximize shipments per stop, the PND software would be number two, billing system number three, four, you've talked to level visibility and compensation tied to that, which needs time to gain traction. And then five would be the line haul in sourcing. Ari RosaSenior Analyst at Citigroup01:20:05Can you provide sort of rough estimates on OR improvement basis points ranges for these? Alain BedardChairman, President and Chief Executive Officer at TFI International01:20:13Yes. So on P and D, it's too early. I don't know. Okay. So this is difficult to say on fleet. Alain BedardChairman, President and Chief Executive Officer at TFI International01:20:22On fleet, in my mind, okay, if I look at the plan, what we're trying to do, I think fleet year over year, same miles, same everything. Our cost has to come down between $20,000,000 to $35,000,000 year over year, that's fleet. In terms of billing, bad debt, claims and this and that, to me, I mean, this is another $10,000,000 to $15,000,000 that we just throw money out the door. We pick up freight, we deliver freight and we don't know who we have to build because it's not clear. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:21:04We accept an order and our people are just saying, well, I think it's A, no, it's B. So we bill A and then after six months A is not paying because he says it's not me. Okay. So then you go back to B and B says no, it's not me because it was not clear the day that you took the order. So we have that because of all the software, old tools that we have that did not control that process, which will happen during the course of 2025 until from now until the summer July, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:21:39So on the Lino side, I think we're probably doing a great job. We're probably at 95% of what the optimum, the best that we could do on that. Our objective has been to move more freight on the road versus rail to improve service and we've done that. So we run a lot of teams now, okay, running our line alls. So we're doing a better job on that. Alain BedardChairman, President and Chief Executive Officer at TFI International01:22:05So on line all, I don't see that so much. So it's basically the P and D, although P and D, I cannot put a number on it, it's too early. And fleet and also bad debt and billing customer properly. So these are the kind of leverage. Density, it's a push we've been pushing with no results so far. Alain BedardChairman, President and Chief Executive Officer at TFI International01:22:30So again 25%, we'll keep pushing on that. And that's why I'm saying down the road, we're going to have to do something on M and A to help us improve, okay, that density. Because again, we buy a company, there's no merger, but we work together, right. So like we do in Canada, if I take the example of Canpar, Loomis, so what we're saying is that these zip codes are Canpar, let's say in Toronto and these zip codes are Lumis. So we're not merging the company, but in these zip codes, okay, Canpar is delivering both Canpar and Lumis stuff, but the companies are not combined, but we work together. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:10So we improve the density by doing that in those zip code because now Canpar delivers freight for Canpar and freight for, okay, Loomis. And then in a different region of Toronto, for example, it's going to be, let's say, a Loomis territory where Loomis is going to deliver both Canpar and Loomis freight, right. But we don't merge the company. No, no, no, no, no. We don't do that. Ari RosaSenior Analyst at Citigroup01:23:38Great. Thanks so much, Alain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:40My pleasure. Operator01:23:43Thank you. And your next question comes from the line of Kanar Gupta with Scotiabank. Please go ahead. Konark GuptaEquity Research Analyst at Scotiabank01:23:50Good morning, Alain. Thanks for the question. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:52Good morning, Alain. Konark GuptaEquity Research Analyst at Scotiabank01:23:53It's been a long call, so I'll keep it pretty short hopefully. I know you're not guiding here for '25, but I think you're alluding to some pressures and headwinds in the specialty truckload, the T4s and maybe GHT, right, for the better part of the 2025. Konark GuptaEquity Research Analyst at Scotiabank01:24:10In terms of the remaining operating segments, right, the Canadian LTL, Canadian truckload, package and courier, etcetera. Do you see those segments, like maybe offsetting the headwinds in the remaining segments perhaps? So I mean, like perhaps this looks like a flattish year from earnings perspective? Alain BedardChairman, President and Chief Executive Officer at TFI International01:24:28Yes. I feel pretty good about our logistics. Okay. So our logistics are going to do well except for GHT the first probably nine months. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:24:38We're going to be behind last year because of but logistics, I feel really good. P and C, I mean the team there, Mike and Chris, they've done a fantastic job. If you look at my Q4, well you could say well because of the Canada Post strike, yes, a bit, But don't forget that we're mostly B2B us, right. So I feel good about Canadian LTL. I mean the Kindersley acquisition will turn into a good OR environment because right now it's a drag on our Canadian OR. Alain BedardChairman, President and Chief Executive Officer at TFI International01:25:11So the Canadian truckload, the driver ink is killing us, okay. So it continues, but I think that the federal government now is taking action, reducing the permit, the work permit and all that. So maybe this is going to help us. So the big rock in my shoe, okay, and it's been like that for a few years is T Force rate and we're working out on it. Specialty truckload in Canada, we're doing well, doing really well. Alain BedardChairman, President and Chief Executive Officer at TFI International01:25:40Specialty truckload in The U. S, we will do better in 2025. We have a rough start of 2025. We got too much trucks, too much assets that we're stuck with because of commitment of the previous management team there that we had to take on. And then also the revenue per mile has been difficult for us in Q3 and in Q4. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:06So far in Q1 revenue per truck is okay. The revenue per mile is okay. The revenue per truck is down because the miles are down because of weather issues that will disappear during the course of the year. The freight is still not the greatest environment, okay. Hopefully with the new administration in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:29S, things will start to accelerate this freight demand. So yes, Gunnar, I feel really good about certain part of my business. My biggest problem is really T Force Freight U. S. I mean, it's been that for four years. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:47That's the only reason that I keep up at night, okay, is really T Force Freight U. S. Konark GuptaEquity Research Analyst at Scotiabank01:26:54Okay, that's helpful color. Thanks, Helane. And then maybe just quick follow-up on B domiciling. Any timelines you want to kind of suggest here in terms of the application process, the shareholder approval and when this thing can be wrapped up? Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:07I think your timeline is between nine and twelve months. And again, okay, if I may add to that, Kunal, I mean, we have today within the TFI head office, we have employees in Canada and in The U. S, we have employees in Montreal, Toronto, Calgary, Chicago, Miami, etcetera, etcetera. And it's not because the domicile of T4, TFI International will move from Canada to The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:34We're not moving people. We're not moving people from Canada to The U. S. I mean, we're not doing that. We're not stupid. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:41I mean, so I mean, it's business as usual. Okay. And us at TFI, we hire the best talent where the talent is. So if the talent is in Chicago, we hire in Chicago. If the talent is in Toronto, we hire in Toronto, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:57So that is always been the nature. It's just like by doing that now we become a U. S. Domicile, but every responsibility of TFI in office remains where the responsibility is today. Konark GuptaEquity Research Analyst at Scotiabank01:28:16Right. Makes sense. Thanks so much for the time, Ale. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International01:28:21It's a pleasure, Konrad. Operator01:28:24And your next question comes from the line of Kevin Chang with CIBC. Please go ahead. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:28:30Hey, Elaine. I'll leave it to one and I appreciate all the color you provided on this call. I think in answer to an earlier question you said, absent any, I guess, revenue recovery, you saw Pat at least get into seven or 7.25 EPS with your self help levers. I know you're refraining from providing guidance, but when we think of that level of earnings growth without a macro recovery, do you have a sense of how long you can get there? It sounds like you have a lot of irons on the fire for 2025. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:29:00So is that something we can think of as at least a North Star for 2026 as you kind of work through some of these initiatives or is it longer than that, shorter than that? Alain BedardChairman, President and Chief Executive Officer at TFI International01:29:11No, for sure, Kevin. It is going to take us some time. I mean, you know the cost issue that we have at T Force rate is still a drag because our volume are too low. Our volumes are too low. So, you know at 20,000 shipments a day, it's just very difficult. Alain BedardChairman, President and Chief Executive Officer at TFI International01:29:28But we have levers that we're going to be working on. Now in terms of our logistics, I mean, it's a little bit of a market condition as soon as, okay, this JHT situation corrects itself by the end of the year, Okay. We're going to be doing about $200,000,000 of OE with our logistic division. Now this year will probably be down to $150,000,000 1 hundred and 60 million dollars because of what's going on with the truck manufacturing. I think our Canadian operation will do as good as they did in 2025 and 2024. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:06Okay. It's really we need major improvement because if you look at my T Force rate Q4 year over year, I'm down like $30,000,000 I mean this is like a nightmare for me. So I mean we have to take the bull by the horn now. Okay, Q1 because of everything that I've said, because of all the fog and all this, we can't we don't know where we're going to end up with Q1. So far, very difficult for our T Force rate and and our U. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:39S. Specialty truckload operation. I think that truckload operation will improve during the course of the year and we have a big job to do at T Force rate U. S. LTL. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:30:53That's helpful color. I'll leave it there and best of luck as you get through '25 here. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:58Oh, yes. We're going to need a lot of work, but you know what they're all saying, the harder you work, the luckier you can get. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:31:05I hear you. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:07Okay, Kevin. Operator01:31:09Thank you. And your next question comes from the line of Cameron Doerksen with National Financial. Please go ahead. Cameron DoerksenAnalyst at National Bank01:31:16Yes, thanks. Good morning. I'll stick to one question as well. And you kind of mentioned earlier in the call just around uncertainty around tariffs and what that might mean for volumes. Just wondering if you can just talk a little bit about your cross border exposure. Cameron DoerksenAnalyst at National Bank01:31:31I know you've got a decent amount of automotive work. I'm not sure how much of that is cross border. Just any, I guess, additional color you can provide on where you see the risks might be if we have some sort of big blanket tariffs applied to Canadian imports into The U. S? Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:46Yes. Good question, Cameron. I mean, we all a lot of aluminum us, okay. So for sure aluminum is going to be part of the tariff. I mean, Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:56Trump has already said that aluminum tariff is going to be 25%. So we know that, okay. But we live through that also in 2018, right. So I don't think that this is going to affect the volume for aluminum, but we don't know. When we talk to customers, I mean, they feel good. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:18Well, we don't know, right. This is why I'm saying we are going through some fog right now because I think that by the summer we'll know. But right now we don't know. Steel, we believe that Canada produce a lot of steel for The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:34Market. Some of it is specialized. So I don't see issues too much with that. We haul some of that. Some of it is more like commodity steel, which like a STELCO, for example. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:47So that could be a problem, okay, with tariff. So this is mostly affects Ontario. It will affect us a little bit, but the problem is always the domino effect of all these truckers that are holding this product that we don't us today that now are out of work. Could they start to rock the ship and attack some of our customers that we service today. So it's still difficult to say, right? Alain BedardChairman, President and Chief Executive Officer at TFI International01:33:18But because we're mostly a specialty truckload guy, it's not as easy as a van kind of world, right. So what we know so far, Cameron, we shouldn't be doing too bad. Now the trans border revenue is about 4% of global TFI revenue, 4%. So it's big, but it's not that big, right. So we'll have to see. Alain BedardChairman, President and Chief Executive Officer at TFI International01:33:49That's why we cannot provide guidance. I mean, even in my U. S. Peers, okay, are having a tough time give guidance because of all this unknown is inflation coming back in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:01Or in Canada. Okay. Who knows? The interest rates, are they going to stay high like they are in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:09The ten year U. S. Bond is 4.5 or above that. So that's high, right. So is this going to say Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:17Trump wants interest rates to come down, but so far it's not happening, right? So all of this is creating a lot of issues and not knowing where we're going. But to me is, it's foggy, but it's going to clear up. It's going to clear up. I think it's going to clear up in the summer and then we know the rules and then we'll just adjust. Cameron DoerksenAnalyst at National Bank01:34:43Okay. That makes sense. Appreciate the time. Thanks very much. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:47Pleasure Cameron. Operator01:34:50Thank you. And that is the end of our question and answer session. I would like to turn it back to Alain Binard for closing remarks. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:58Okay. It's all right. Well, thank you very much, operator, and we appreciate everyone who's joining today's call. And I want to thank you for your interest in TFI International. So I look forward to providing additional updates as we move through the New Year. Alain BedardChairman, President and Chief Executive Officer at TFI International01:35:12And please, if you have any additional questions, be sure to reach out. Enjoy the day, everyone, and thank you again. Bye. Operator01:35:20Thank you, Elaine. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.Read moreParticipantsExecutivesAlain BedardChairman, President and Chief Executive OfficerAnalystsRavi ShankerManaging Director at Morgan StanleyJordan AlligerVP & Equity Research Analyst at Goldman SachsKen HoexterManaging Director at Bank of AmericaWalter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital MarketsBrian OssenbeckMD - Senior Analyst, Transportation at JP MorganScott GroupMD & Senior Analyst at Wolfe ResearchBruce ChanDirector at Stifel Financial CorpTom WadewitzSenior Equity Research Analyst at UBS Securities LLCBenoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins SecuritiesDaniel ImbroManaging Director at Stephens IncAri RosaSenior Analyst at CitigroupKonark GuptaEquity Research Analyst at ScotiabankKevin ChangFinancial Services Representative at CIBC Capital MarketsCameron DoerksenAnalyst at National BankPowered by Conference Call Audio Live Call not available Earnings Conference CallTFI International Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress ReleaseAnnual report(40-F) TFI International Earnings HeadlinesROSEN, RECOGNIZED INVESTOR COUNSEL, Encourages TFI International Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action – TFIIMay 3 at 9:07 AM | globenewswire.comTFII INVESTOR ALERT: Bronstein, Gewirtz & Grossman LLC Announces that TFI International Inc. Investors with Substantial Losses Have Opportunity to Lead Class Action LawsuitMay 2 at 4:00 PM | globenewswire.comGold Alert: The Truth About Fort Knox Is ComingOwning physical gold isn’t the best way to profit. I’ve found a better way to invest in gold—one that’s already performing nearly twice as well as gold this year and looks ready to go much higher. If you wait for the news to hit, you’ll already be too late.May 4, 2025 | Golden Portfolio (Ad)Class Action Filed Against TFI International Inc. (TFII) - May 13, 2025 Deadline to Join – Contact Levi & KorsinskyMay 2 at 2:03 PM | globenewswire.comShareholders of TFI International Inc. Should Contact Levi & Korsinsky Before May 13, 2025 to Discuss Your Rights - TFIIMay 2 at 5:45 AM | prnewswire.comTFI International (NYSE:TFII) Hits New 52-Week Low Following Analyst DowngradeMay 2 at 2:47 AM | americanbankingnews.comSee More TFI International Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TFI International? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TFI International and other key companies, straight to your email. Email Address About TFI InternationalTFI International (NYSE:TFII), together with its subsidiaries, provides transportation and logistics services in the United States and Canada. The company operates through Package and Courier, Less-Than-Truckload (LTL), Truckload (TL), and Logistics segments. The Package and Courier segment engages in the pickup, transport, and delivery of items in North America. The LTL segment is involved in the pickup, consolidation, transportation, and delivery of smaller loads. The TL segment offers expedited transportation, flatbed, tank, container, and dedicated services. This segment also carries full loads directly from the customer to the destination using a closed van or specialized equipment. The Logistics segment provides asset-light logistics services, including brokerage, freight forwarding, and transportation management, as well as small package parcel delivery. As of December 31, 2023, it operates 11,455 trucks, 34,599 trailers, and 7,504 independent contractors. The company was formerly known as TransForce Inc. and changed its name to TFI International Inc. in December 2016. 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PresentationSkip to Participants Operator00:00:00Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Fourth Quarter twenty twenty four Results Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Operator00:00:31Please be advised that this conference call will remain will contain statements that are forward looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. I would also like to remind everyone that this conference call is being recorded on 02/20/2024. I will now turn the conference over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir. Alain BedardChairman, President and Chief Executive Officer at TFI International00:01:01Well, thank you for the introduction operator and thank you everyone for joining our call. So yesterday after market close, we reported quarterly results reflecting the industry wide slump in freight volumes as well as the ongoing effort by our team to make the most of the challenging conditions. We again produced strong free cash flow of more than $200,000,000 during the quarter. This brought our full year total to more than $750,000,000 the third year in a row that we've achieved this mark despite the prolonged weak stretch for the industry. This directly reflects our long withstanding focus on optimizing free cash flow, so that we can strategically invest in the business, consider attractive M and A and return excess capital to shareholders. Alain BedardChairman, President and Chief Executive Officer at TFI International00:01:55We did all three during the fourth quarter, while also reducing our debt to further strengthen our balance sheet. With that, let's have a look at our consolidated results. For the fourth quarter, our total revenue before fuel surcharge grew 9% over the corresponding prior year period to $1,800,000,000 which benefited from our acquisition of Daseke last April. However, operating income of $160,000,000 was down from $198,000,000 reflecting an operating margin of $8,800,000 versus $11,800,000 previous year. We did have unusually high accidents related expense that were about $9,000,000 higher than prior year period. Alain BedardChairman, President and Chief Executive Officer at TFI International00:02:40Our adjusted net income of $102,000,000 was down from $148,000,000 the prior year and adjusted EPS of $1.19 compares to $1.71 I would also note that the impact of foreign exchange fluctuation, which during the quarter reduced reported EPS by $0.03 as every 1p fluctuation of Canadian dollar per U. S. Dollar tends to impact either positively or negatively our annual EPS by about 0.02 So again, we produce solid cash flow, as I mentioned, specifically $262,000,000 of cash from operating activity and free cash flow of $2.00 $8,000,000 However, both were down from the prior year figures of $3.00 $3,000,000 and $244,000,000 respectively. I want to again call out that our ability to produce very respectable cash flow during a prolonged slump for the industry is a direct reflection of our team's effort to focus on the details of the business regardless of market condition. This includes concentrating on quality of freight and other efficiencies. Alain BedardChairman, President and Chief Executive Officer at TFI International00:03:52Let's now turn to a review of our three business segments, beginning with LTL, which was 40% of segmented revenue before fuel surcharge during the fourth quarter. LTL revenue before fuel surcharge of $737 was off 10% and operating income of $70,000,000 which had an $8,000,000 impact from higher accident related costs versus the prior year period was up 34%. Our adjusted LTL operating ratio was 90.3 as compared to 86.1 a year earlier and return invested capital was 16.3. So next up is our truckload, 38% of segmented revenue before fuel surcharge at $693,000,000 which was up from $399,000,000 in the prior year period benefiting from the Daseke acquisition. Truckload operating income came in at $60,000,000 which was up from $51,000,000 We produced an OAR of $91,500,000 relative to $87,300,000 a year earlier and our return invested capital was 8.4%. Alain BedardChairman, President and Chief Executive Officer at TFI International00:05:01Our third business segment to review is logistics, which was was 22% of segmented revenue before fuel surcharge or $410,000,000 for the fourth quarter, down from $472,000,000 the prior year. Operating income of $43,000,000 was down from $55,000,000 This equate to a logistics operating margin of $10,500,000 relative to $11,600,000 last year and return on invested capital was $17,100,000 Turning to our balance sheet, during the quarter, we again benefited from our solid free cash flow of more than 200,000,000 We reduced debt by $156,000,000 and as a result ended the year with a funded debt to EBITDA ratio of 2.11. In addition to locating capital to debt reduction, we also rep We also repurchased $42,400,000 worth of shares during the quarter and you'll recall that in October, the renewal of TFI International Nomercos issuers bid for or NCIB was approved for an additional year. So before I wrap up, as you may have seen in our press release, we plan to redomicile TFI from Canada to The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:06:25To better align with our shareholder base and commercial presence. With that, operator, if you could please begin the Q and A portion of the call and I'll be happy to take questions. Operator00:06:38Thank you. And again, in order to ensure that everyone has a chance to participate, Your first question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead. Ravi ShankerManaging Director at Morgan Stanley00:07:06Great. Thanks. Good morning, Alana. So when you think of where we are on Ravi ShankerManaging Director at Morgan Stanley00:07:10a cycle now and where we ultimately go to, let's say $8 of normalized EPS, how much of the path from where we are today to that level do you think is idiosyncratic actions that you guys can take versus waiting for the cycle recovery? Alain BedardChairman, President and Chief Executive Officer at TFI International00:07:26Very good question, Ravi. And you know what, I think that we still have a lot of work to do on costs. If you look at our T Force rate, our costs are still too high. We're getting also killed because our volume keeps dropping. Our shipment count is down 6% year over year. Alain BedardChairman, President and Chief Executive Officer at TFI International00:07:46Although our weight per shipment is about the same, it's still very difficult environment. We still have a lot of work to do at T Force rate on the fleet side to reduce our costs. We're on the right track there. Our average age of a fleet of trucks at T Force rate is four point two years, which is getting close to normal versus the average age that we have in Canada, which is a little bit higher. But then if I look at my maintenance cost per mile in U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:08:13S. Versus Canada, I mean, there's still a big discrepancy between the two. So we still have a lot of work to do on costs at the T Force rate. The same is true also of our Daseke acquisition. If you look at the trend since we bought Daseke in April, I mean Q2 was okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:08:33And then we had issues with revenue per miles that keep dropping because the freight recession is still with us. And even in Q1 of twenty twenty five, we're still seeing a very pressure on rates, although it's quite stabilized, but the number of miles are down and our costs also are too high. Daseke, we were trying to have a lot of equipment and these equipment are specialized equipment. They're used not very often and let's say wind equipment, wind is out of wind, right. So it's not very popular right now. Alain BedardChairman, President and Chief Executive Officer at TFI International00:09:12So we have to reduce our asset base at DESKI to reduce our costs, to reduce our depreciation expenses, to reduce our interest costs as well. So we still have a lot of work to do to get to to me on the cost side with no market improvement, we have to be closer to a seven to a 7.25 EPS in a normalized cost environment. If you look at our logistics, I mean we're down $12,000,000 quarter over quarter year over year in Q4. This is just volume. I mean, the truck manufacturers volumes are down about 20%. Alain BedardChairman, President and Chief Executive Officer at TFI International00:09:51This will continue probably Q1, Q2, Q3 of '20 '5. When we talk to our customer, they see a pickup by the end of twenty five. So that is also not helping us in the early days of '25, but this is just volume and it will come back. So to make a long story short of a big question is that we still have a lot of work to do on The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:22Operation to become lean and mean. If I compare that with our Canadian operation, I mean we still have a lot of work to do in The U. Ravi ShankerManaging Director at Morgan Stanley00:10:31S. Got Ravi ShankerManaging Director at Morgan Stanley00:10:32it. That's really helpful. And apologies if Ravi ShankerManaging Director at Morgan Stanley00:10:33I missed this, but did you give us a formal 2025 guidance? Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:39No, I mean, we're like our peers. I mean, it's really a very difficult start of the year. It's very foggy. So it's difficult for us. What I could say is that what we've seen so far in Q1, we're still in a very deep freight recession. Alain BedardChairman, President and Chief Executive Officer at TFI International00:10:56The volumes are not there. So it's going to be a difficult '25, I think, again. We thought when we made our plan in October of twenty twenty four for 2025, we never anticipated this kind of situation, which is still difficult in terms of volumes, both truckload and LTL. Ravi ShankerManaging Director at Morgan Stanley00:11:26Great. Thanks, Alan. Alain BedardChairman, President and Chief Executive Officer at TFI International00:11:28Pleasure, Ravi. Operator00:11:30And your next question comes from the line of Jordan Allager with Goldman Sachs. Please go ahead. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:11:37Yes. Just to come back to U. S. LTL margins deterioration in the quarter, would you say that's I know you talked about cost as well, but is it primarily revenue? And then can you maybe go into a little bit more color on some of the specific steps TFI is going to take to work on U. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:11:57S. LTL margins in 2025 regardless of the volume environment? Alain BedardChairman, President and Chief Executive Officer at TFI International00:12:02Yes. You see the problem that we have Jordan is this, is that right now, okay, we're losing the small and medium size, okay, customers, which have the best margin, right. And some of that has been replaced, okay, by let's say 3PL and corporate account, which doesn't bring the same margin and this was really accelerated in Q4. So that's part of the issues that we have is sales, okay. We have to be way more aggressive on the small and medium sized account. Alain BedardChairman, President and Chief Executive Officer at TFI International00:12:39So this is problem number one for us. If you look at T Force rate today, okay, is revenue. Problem number two is cost. So we've been working steadily on costs since we bought this company and we've invested a ton of capital to improve our asset, to improve our training, etcetera, etcetera. But at the same time, okay, our volume, okay, keeps coming down, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:07So it's like you're chasing your tail, like a dog chasing his tail, okay. So this got to stop. So we are at a floor of around 20,000 shipments. The mission that we give to our sales force is to try to grow organically, but also to try to improve the density. So what I mean by density and I'm like a guy that's always repeating the same thing. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:29If you look at our Canadian operation, density is second to none. I mean, it's just fantastic. That's why we're doing so well. In The U. S, our density is the ship. Alain BedardChairman, President and Chief Executive Officer at TFI International00:13:38I mean, it's really bad. So we have to improve the density. So there's two ways to improve density, right. Approach number one is to try to do it organically and that's what we've been trying to do for three years since we bought the company, three, four years. Option number two, okay, is down the road, okay, you got to do what we've done in Canada, you got to do some M and A, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:14:08So if you can't get the density from organically your sales team, then you have to focus down the road, okay, in trying to find a target something that fits you, okay, that could help you improve your density at one point, right. So this is why we've been saying that one solution down the road, okay, for T Force rate on sales and revenue, it will have to go through M and A at one point. But in the meantime, let's say during the course of 2025 and 2026, our focus has to be trying to grow it organically, okay, with the people we have and the sales, the revenue and try to squeeze, okay, the cost of our, let's say, fleet operation. What we've done so far that's good at T Force Freight is our line haul. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:15:03So now we're using a software that's really good, which is called Optum, which is used by some of my peers. And now we are implementing Optum in Canada for PND. Okay. And we're also start to look at implementing that PND tools, it could be Optum or another one in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:15:24Again to improve the management of our costs on PND side. So it's like a two avenue for us. We got to keep working on the costs and do more with less, okay. But at the same time, the mission to our team, sales team is to grow organically and to improve our density. And over time down the road, let's say within eight, twelve months, twenty four months, whatever, when we're ready, when we can find the right fit, okay, is to add M and A like we do in Canada all the time. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:15:57Just as a quick follow-up then sort of I know things are still a little certainly challenging to start the year, but in that sort of let's say no help from the macro or zero volume growth environment. Any sense for where your LTL OR could get to in The U. S. In 2025 or directionally where you think it could get to coming off the '97 or so in the fourth? Alain BedardChairman, President and Chief Executive Officer at TFI International00:16:22Well, what we know Jordan is that Q1 is going to be a very difficult quarter, right? Very difficult quarter. But I still believe that we've been running this company since we bought it in in the neighborhood of ninety one, ninety two, ninety three, ninety four OR. Q4 was a disaster for us. I mean, we didn't do a good job in managing our labor costs. Alain BedardChairman, President and Chief Executive Officer at TFI International00:16:46We had too many issues with accidents and claim. If you look at my claim ratio, I went all the way to 0.9% of revenue, which is just unacceptable, right. So this company even in this kind of freight environment, we have to be able to run that between a 93 and a 95 OR. I've been saying since we bought the company that we'll get to a sub-ninety OR. But right now, okay, at the level of shipments that we have at 20,000, if our sales team does not help us in trying to grow this density, improve this density and grow the shipments count and working just on a cost within 25 with this kind of freight environment, I think that overall, we should think that it's difficult to say because again, it's very foggy Q1, Q2 with everything that's going on. Alain BedardChairman, President and Chief Executive Officer at TFI International00:17:39But I mean to me is we got to be able to live in a '93 to a '95 or even in 2025 with this kind of difficult environment. But Q1 extremely difficult because of all kinds of reasons, okay. But for the year 2025 even with what we know today, we should be able to play in that '93 to '95. So which is way, way above the target that we've have of being sub-ninety OR, right. But density is the name of the game and we've been trying with the sales team to have those guys understand that we need to drive less miles, we need to pick up more freight per stop. Alain BedardChairman, President and Chief Executive Officer at TFI International00:18:24It's been quite difficult. Okay. It seems like difficult to do in this kind of an environment. But it's the only way that we're going to bring this company to a sub-nine OR because at 20,000 shipments a day, when you run a national network in The U. S, you are small. Alain BedardChairman, President and Chief Executive Officer at TFI International00:18:48In my mind to run, just look at the shipments count that we do in Canada. In Canada, we do close to 10,000 shipments a day. And we do only 20,000 in The U. S. So I mean in Canada with 10,000 shipments a day, we have huge density. Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:05That's why our costs are so good. In The U. S, our costs are not good because our density is way too low. Jordan AlligerVP & Equity Research Analyst at Goldman Sachs00:19:14Right. Thanks so much. Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:16Thank you, Jordan. Operator00:19:18And your next question comes from the line of Ken Hoexter with Bank of America. Please go ahead. Ken HoexterManaging Director at Bank of America00:19:25Hey, great. Good morning, Elaine. So a lot happened, it seemed like in the numbers in the LTL, length of haul dropped a couple hundred miles. You added trucks. You mentioned an $8,000,000 charge in there. Ken HoexterManaging Director at Bank of America00:19:40Maybe talk about what's going on at the LTL, so we can understand the dynamic and the speed that things are changing and it looked like GP revenue is really shifting down very quick. So a lot of dynamics going on here, maybe walk through what changed so quickly? Alain BedardChairman, President and Chief Executive Officer at TFI International00:19:55Yes. Well, GFP has been not doing well since I would say a year and a half ago when our partner on GFP, UPS said, I mean, those customer we can't service those guys because they are not honest and they play games etcetera, etcetera. So we have to drop, okay, all those reseller that UPS didn't want us to service. So and it's now we're down to basically not much in terms of revenue versus where we were two years ago. And we've changed the commission structure to our sales team to try to make this thing grow again. Alain BedardChairman, President and Chief Executive Officer at TFI International00:20:35But so far, we don't have any results. Okay. So that's GFP. But on the asset side, what we have done, if you look at my personal costs, year over year, I went from 40% to 44%. And this is because of all these changes, okay, in terms of our service, in terms of not managing the labor costs in the right way and also the mix of the revenue, which has deteriorated a little bit. Alain BedardChairman, President and Chief Executive Officer at TFI International00:21:07Okay. Our weight per shipment is about the same, but the revenue per 100 weight is down. Why? Because we're replacing small and medium size account shipments with great margin versus a 3PL and a corporate account with less good margin, right. So this is what's happening there and this is where I say that our sales team has to pull its own weight and start helping us in to try to grow this better business. Alain BedardChairman, President and Chief Executive Officer at TFI International00:21:39Okay. But at the same time also, okay, we also have to manage better the claim costs and this is big for us because we're at 0.9% of revenue, which is completely unacceptable. If you look at our Canadian operation, okay, we used to be at 0.2%, we're at 0.3% in Q4. You look at the best in class in The U. S, the guys are at 0.2% or 0.3% or something like that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:22:04So as we're at 0.9. Also our accidents reserve had to be adjusted with the actuarial, which we took another hit. So globally it's a lot of bad news for us in Q4, okay. But the guys, they're rolling up their sleeve and we're attacking and we understand that the market is not going to help us again in 'twenty five. I mean we still think that we're going to be in the freight recession. Alain BedardChairman, President and Chief Executive Officer at TFI International00:22:34We don't see anything changing over the course of 'twenty five and this is why when I look at the plan that we have for 'twenty five running in the '93 to a '95 OR for all of 2025 would be probably the best that we could do with the low density that we have, okay. And without any M and A in 2025, I don't think that we'll have any M and A in 2025 to help us improve the density. Okay. So with that in mind, this is where we stand there, Ken. Ken HoexterManaging Director at Bank of America00:23:06Thanks. But just to clarify, you added 500 trucks over it. You grew the fleet significantly, but why did the length of haul drop 400 miles? What did you just change business? Alain BedardChairman, President and Chief Executive Officer at TFI International00:23:16Is that the mid No, no, no, because you have to look at the active trucks again. Okay. The active trucks at LTL is about 3,000 to 100 trucks. The total trucks is about 4,000 trucks because we're bringing new trucks in and we're not selling the old trucks. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:23:35We have about I don't remember exactly the count. Okay. But we have a lot of old trucks that we're selling now because the active fleet of UPS or the T Force Freight LTL is about 3,200. So there's no movement. You have to look at the active fleet. Ken HoexterManaging Director at Bank of America00:23:56Okay. And then just to redomicile any tax implications on that, is that just moving headquarters? Where are you going to be moving? Is there any follow on implications for that? Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:08You know what, Ken, I think this is an evolution of TFI. So if you look at five years ago, we listed TFI into the New York Stock Exchange and we were able to do that through what they call an MGDS, okay, exception, right. But this exception will disappear the minute that our shares that are owned by U. S. Shareholders, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:33The minute that we go above 50%, then this is not going to work. So we have to go to the SEC and then we have also to be U. S. GAAP. So it's part of an evolution. Alain BedardChairman, President and Chief Executive Officer at TFI International00:24:45Okay. But at the end of the day, if you look at TFI today, okay, for Ed office, we have people working in Canada, we have also people working in The U. S. We have people in Montreal, in Toronto, Calgary, we have people in Chicago, we have people in Minneapolis. So we are all over the place in North America with our Ed Office crew. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:09So to me it's just like an evolution, okay, because our business is now today about 70% U. S. Domestic, 25% Canadian domestic and about 3% or 4% or 5% trans border. So it's just and with the next M and A, okay, we just announced a small transaction in our MD and A. With that and with the possibility of us doing some more M and A in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:35S, like we said at one point we will invest $3,000,000,000 to $4,000,000,000 It's going to be in The U. S, it's not going to be in Canada. So our revenue will creep up to about $80.25. So it's just an evolution, but we're not moving at office. We're not moving people from, let's say, Toronto to, I don't know, Chicago. Alain BedardChairman, President and Chief Executive Officer at TFI International00:25:54No, no, no. Every member of the TFI and office is staying where they're at. So that's why we call TFI, TFI international is because we're Canadian and U. S. Ken HoexterManaging Director at Bank of America00:26:10Got it. Appreciate the time. Thanks, Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:13Pleasure, Ken. Operator00:26:15And your next question comes from the line of Walter Spracklin with RBC Capital Markets. Please go ahead. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:22Yes. Thanks very much. Good morning, Lee. Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:25Good morning, guys. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:26Guys. So maybe just to clarify on the redomicile, you will not be delisting in Canada, is that right? Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:32No. No. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:33Okay. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:26:34And will it be a full reincorporation or into The U. S? Alain BedardChairman, President and Chief Executive Officer at TFI International00:26:40That, you know, Walter, because we're only in the early days, right? So we still have a lot of work to do on that. We have we must get a shareholder approval of that. So to me in a simple way, I mean it's just like TFI International today is a Canadian Corp. Tomorrow once the shareholder approve it, it's going to be a U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:01S. Corp. So that's the way I understand it. So there's no big story except the fact that now by being a U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:11Corp, on the Daseke acquisition, for example, one of our business unit deals a lot with DOD, the Department of Defense, the U. S. Department of Defense. And because we are a foreign owner, okay, that creates a little bit of issues for us. Okay, well, that's no big deal. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:30We can live with that. But the fact that now you are a U. S. Corp that will help us, okay. So there's a few things like that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:38You could be part of some index in The U. S. Because now you are U. S. Domicile. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:43But at the end of the day, like I said to our Board member yesterday, it's an evolution of TFI. If you look back five years ago, we had no U. S. Shareholder. I mean, we were just Canadian, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:27:57Today, just under 50%, forty nine point nine % of our shoulder summer of twenty twenty four were U. S. Okay. And 4% or 5% were, I think European or Japanese or something like that and 45% were Canadian. So it's an evolution. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:28:16Got it. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:28:16Okay. And then my second question really is just on M and A. And you mentioned densification is a big objective and M and A can certainly help with that. This is a tough environment, so arguably sellers are in a tough spot. Could you get could you look at bolt on or accelerating your bolt on tuck in acquisitions to a more significant pace to take advantage of potentially lower than normal acquisition multiples to achieve that density, so that when things turn you're building off a larger base? Alain BedardChairman, President and Chief Executive Officer at TFI International00:28:54Yes, you're right, Walter. I mean, for sure. But there's always the question, you've been with me for a long time, Walter, right? You know us really well. And me, my saying has always been you buy in bad news and you sell in good news. Alain BedardChairman, President and Chief Executive Officer at TFI International00:29:09But it's been bad news for TFI for the last two years, right? Since 2022 when our EPS hit $8 I mean, it's just been bad. I mean, we went to 6 something 6 point 1 5 dollars and now this year we're at 5.75 So with that in mind and all this, everything that's going on in 2025 with the fog that we nobody knows where we're going really. So a lot of people could be scared and say, hey, don't do anything crazy, don't spend $1,000,000,000 or whatever. But I think that you have to be bold, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:29:48We have a very strong team in Canada and we're also building a much stronger team in U. S. In our specialty truckload with Steve Brookshaw and with Bob McConaugold at T Force Freight U. S. And also with Rick Ashi in our logistics, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:05So that you may be right, Walter, maybe it's not going to be in '26, it could be maybe in '25, okay. But it's always to try to balance, okay, between being bold and trying to do something sooner than later, okay, because you may end up being ahead of the curve, okay, in terms of the market improving. Me, I really believe that The U. S. Is the best place to be in the world in terms of business. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:37And I feel really good about this U. S. Economy. And I feel really that those guys, okay, will do a great job, the new administration. So I mean to me it's time to invest in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:30:51S. But then on the other side, I've got guys saying, oh, it's a you got to be careful, your debt is at 2.1, your leverage at 2.1. So this is why we're trying to reduce our debt by about $500,000,000 at at least 500,000,000 during the course of 2025. So it's a balance, Walter, it's a balance and we want to get the Q1 behind us because to me Q1 is going to be very difficult when I look at my specialty truckload in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:31:24When I look at our U. S. LTL, it's going to be a very difficult Q1 and maybe also Q2 because with what's going on, we still don't know what are going to be the rules, right? So as of March, the new administration will talk about tariff. As of April 1, there will be a report by the treasury that's going to say whatever I don't know. Alain BedardChairman, President and Chief Executive Officer at TFI International00:31:50So I think that the rules will be clearer starting the summer of twenty twenty five into the fall of twenty twenty five. But with all this in security, if you are bold maybe it's the right time to do a deal. So we'll see. Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:32:05Okay. That's great. I appreciate Walter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital Markets00:32:06the color, I like. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:08Thank you, Walter. Operator00:32:11And your next question comes from the line of Brian Ossenbeck with JPMorgan. Please go ahead. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:19Hey, good morning. Thanks for taking the question. Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:21Good morning, Brian. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:23Good morning. Just wanted to ask if you could give a little more detail as to why you think you're seeing some of this mix shift in T Force rate And maybe how much you can quantify just how much more if you go you're doing versus SMB? Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:32:37Is this competition, this the challenge? Is it service level? Is it kind of all the above? Alain BedardChairman, President and Chief Executive Officer at TFI International00:32:44I think it's all of the above. I think it's just a difficult environment, okay. Everybody is looking for freight. The perception is that through the master report is that okay, T Force rate is cheap, but the service is average or maybe not as good as the average of my peers. So I mean we have to fight and it's the focus of us. Alain BedardChairman, President and Chief Executive Officer at TFI International00:33:12I mean there's no other issues. Now this is what these sales guys have to do. I mean we've been working at it for three years and we've not been very successful. The only success we had on the quality of freight is the average weight, which was really low, now is a little bit better at 1,200. That's the only success that we have so far. Alain BedardChairman, President and Chief Executive Officer at TFI International00:33:34We're trying to work with these guys, say, hey, your responsibility is to bring some freight. And so far, it's been difficult. So like I was saying to the team two days ago, the T Force Freight team is that guys, I mean, I understand that we have this freight environment, but we have to have probably better people, better leaders. I don't know. It's the ball is in their court, but it's tough. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:34:09So looking at Daseke, it looked like at least on our math it may be fairly profitable during the quarter. You made some comments that specialized TL was pretty tough. You have extra equipment laying around. So just wanted to see if there was a path to better profitability or is that something you have to wait more for the cycle to turn around. So I guess a similar question there. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:34:34How much of that is really in your control versus what the broader economy gives you? Alain BedardChairman, President and Chief Executive Officer at TFI International00:34:39Yes. So the revenue per mile, okay, if you look at our revenue per mile Q2, Q3 and Q4, it keeps coming down. Okay. So it's really not good. Our revenue per truck, because we have increased the number of miles stayed about steady. Alain BedardChairman, President and Chief Executive Officer at TFI International00:34:57So more miles that we did per truck Q3, Q4 versus Q2, but less revenue per mile. Okay, because the freight is scarce, right. So this is up to the end of twenty twenty four. Going into 2025, okay, rate per mile has got some stability, but because of everything that went on with the storm and this and that, so number of miles went down in January. And the killer that we have over there is that we have way too much capital invested, trucks and trailers invested in that company. Alain BedardChairman, President and Chief Executive Officer at TFI International00:35:34And why is that? Because when we acquired Daseke, they had committed to buy a large number of trucks, which we could not walk away. So that's what we did in Q2, and Q3 and Q4 is we had to take on these trucks that we have been ordered, okay. So now we have way too many trucks in a very difficult environment. So during the course of early twenty twenty five, we have to start unloading those excess trucks that we have, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:36:08And then we'll have probably a better result in terms of our depreciation expense, which is just crazy, okay, with the revenue we have. In terms of customer, in terms of activity, okay, we're still in a freight recession in the specialty truckload. We are still not active like we should be in a normal environment, but it's been going on for two, three years, right. So if you look at my peers in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:36:36In the van world, okay, it's really difficult. I mean us, if you look at my OR in Q4, I'm above 90 for the first time ever, okay. First time ever the specialty truckload OR is above 90. I think we're 91 something, because Daseke is like you said probably running like a 98 or right and the rest of our operation is running sub 90 or right because Daseke and the existing business that we had before we bought Daseke, it's about fiftyfifty. So legacy TFI specialty truckloads about the same size as Daseke in terms of revenue. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:20But in terms of profitability is day and night, right? So you're right, Daseke in Q4 did help us because if you look at my year over year improvement, top line is through the roof, but bottom line is a meager just a few million dollars. So that tells you that we didn't do too well, okay, in Q4 with our U. S. Operation, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:49But this is a different environment. T Force is a big rock in my shoe. No question about it. DESKI and our U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International00:37:59Specialty truckload, this is something that we will be able to fix on the cost side, on the equipment side during the course of twenty twenty five. And if market condition improve that should help us. But if market does not improve, I mean at least on the cost side with our specialty truckload, we have a path forward by shedding equipment, by improving our costs, improving our overhead as well. Okay. So our overhead will come down during the course of 2025. Alain BedardChairman, President and Chief Executive Officer at TFI International00:38:34So I feel that Q1 is going to be difficult for specialty truckload as well. Okay. But I think that we will bring the ore down sub 90 within the next Q2, Q3 and Q4. Brian OssenbeckMD - Senior Analyst, Transportation at JP Morgan00:38:51Okay. Thanks very much, Lynn. Appreciate it. Alain BedardChairman, President and Chief Executive Officer at TFI International00:38:55Pleasure, Ryan. Operator00:38:57And your next question comes from the line of Scott Group with Wolfe Research. Please go ahead. Scott GroupMD & Senior Analyst at Wolfe Research00:39:05Hey, thanks. My connection is not great. Hopefully, you can hear me, Elaine. Alain BedardChairman, President and Chief Executive Officer at TFI International00:39:09Yes. No problem, Scott. Scott GroupMD & Senior Analyst at Wolfe Research00:39:11Okay, great. I know can't ask, but any more color on the LTL lymphopologist such a dramatic change? And then you've mentioned a few times tough Q1, like do you think T Force is profitable? And then one more guidance kind of question, I know you're not giving specific guidance yet, but as you look at it today, do you think you'll grow consolidated earnings this year? Alain BedardChairman, President and Chief Executive Officer at TFI International00:39:36Tough question, Scott. So far what we know with everything that's going on, okay, we did about five seventy five of EPS in 2024. With everything that we know so far, same environment, everything the same. I think that 5.75 to $6 which is what we've done this year. It's still a very, very difficult environment. Alain BedardChairman, President and Chief Executive Officer at TFI International00:40:01And I would say probably first six months of 2025 will be more difficult than the first six months of 2024. Okay. And I think that the last six months should get better once we understand the new rules of the North American market. Now in terms of are we going to be profitable at T Force rate, it's very difficult right now. So the month of January was not good for us. Alain BedardChairman, President and Chief Executive Officer at TFI International00:40:32February still tough. We believe that the sum of Q1 that's why we've asked our guys to give us a re forecast for Q1. It's tough for me to answer, but one thing is for sure is that we're not going to be better than the 97 OR in our Q1, right. So going back to your question about the average length of all for T Force Freight, to me maybe I'm wrong, but in my mind the average length of haul okay at T Force Freight is basically about the same. So I know Ken was saying that the length of haul has changed big time, but I don't know if it's a mistake, but in my mind it's about the same. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:17So what I'll do Scott on that, I'll ask David to get back to you just to make sure that we all talk the same thing on that. Scott GroupMD & Senior Analyst at Wolfe Research00:41:25Okay. Yes, I mean it almost looked like a typo in the press release because it was down so much. So maybe that's right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:31It could be because to me it's like I said to Ken, number of trucks you got to look at the active trucks in IMD and A, okay, because it's about the same. But in terms of length of all, I mean, in my mind, it's basically the same. I mean, we have not changed the company. It's about the same. We're about the same as let's say, ABF. Alain BedardChairman, President and Chief Executive Officer at TFI International00:41:54ABF is about 1,100 miles. We are about the same. Scott GroupMD & Senior Analyst at Wolfe Research00:41:59Okay. And then on the strategic side, when you were talking about LTL M and A, I think in your answer, you said like down the road like five times, like it seems like it could be helpful now. Is this you not ready or you're not able to find a partner? And then just separately on the redomicile, does that what does that mean if anything for the idea of a spin at some point? Alain BedardChairman, President and Chief Executive Officer at TFI International00:42:26Yes. Okay. So like I said, Scott, I mean, my philosophy okay, has always been you buy on bad news, you sell on good news. So it's been bad for TFR last two years, right. It's been bad for the industry in general and it's been bad for us as well. Alain BedardChairman, President and Chief Executive Officer at TFI International00:42:45But we also did some M and A. So we bought Daseke in those bad time. We bought JHT, which is going to be a great asset and we're also buying another one that's going to be under the GHT umbrella in April. So we're still active in the good tuck ins, reasonable price, etcetera, etcetera. But in terms of The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:09S. LTL M and A, in order to do something, you got to do something of size because the problem we have us is that we're way too small, way too small. 20,000 shipments is the ship. It's bad. I mean you cannot have it's difficult. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:23If you want to be a national player in The U. S. With 20,000 shipments, it's too small. Just think about we do 10,000 in Canada. I mean Canada is one tenth of The U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:35S. So it doesn't make any sense. So, but I think the timing is right, but you have to be bold, right. And it also depends on our investors, okay? It also depends on the Board. Alain BedardChairman, President and Chief Executive Officer at TFI International00:43:50So me, I'm the CEO, okay? And for sure, I'm making some proposal, okay? But sometimes you got board members or people that could say, Alain, are you crazy? I mean, your leverage is 2.1%. It's very foggy. Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:08Nobody knows where we're going. Okay. Your earnings in Q4 are down like 30%. Okay, are you crazy? I mean, why would you do a deal upsize, right? Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:20So me, I'm saying, well, guys, yeah, you got this, this is one side of the coin. The other side of the coin is you got to be bold, you got to do it now when everything is bad because when everything is bad, one day things will get better. So if you wait for things to get better, you're going to have to pay more. So it's a balance like I said earlier. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:46And that's why I'm saying down the road. Okay. But maybe the road is not going to be too long like I was talking with Walter. We'll Alain BedardChairman, President and Chief Executive Officer at TFI International00:44:59see. Scott GroupMD & Senior Analyst at Wolfe Research00:45:01And the spin idea? Alain BedardChairman, President and Chief Executive Officer at TFI International00:45:03Oh, the spin. The spin, like I said earlier, Scott, we need size. So if you look at our market cap today, when we talk to our investors, large investors of TFI, they like the idea of the spin, but they say you're too small. You're too small. So if you're a $12,000,000,000 market cap guy and you split the company in two and one is let's see six and the other one is six, dollars two point six, dollars two point six is small. Alain BedardChairman, President and Chief Executive Officer at TFI International00:45:34So we think that your idea is really good. It makes a lot of sense, but try to get a little bit bigger. So let's say, if you do a deal and your market cap is 15, okay, because you're buying something good at a reasonable price, then it makes it easier to do, number one. Number two, it takes time. So in the meantime, what we're doing Scott, we're not sitting on our hands, okay, we're getting ready, Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:46:03So we have to work on systems, right. So because when you do the split, you don't want to be stuck with a TSA, a transition agreement for three years like we had with with UPS, right. So we're making some moves on the real estate side too. We're making some move on the asset side. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:46:26So let's say we have trucks that are, let's say in business A, but they should be in business B, because what we used to do in Canada is to have a global portfolio of all asset mixed up between truckload and LTL. So now we're all going to the split. So we're not sitting on our hands, we're getting ready, okay, to do that. But it's still in the cards absolutely because it makes a lot of sense. The return invested capital of our truckload operation is single digit in Q4, single digit eight point something if I remember. Alain BedardChairman, President and Chief Executive Officer at TFI International00:47:00I mean and then the rest of our business in very difficult environment, terrible environment for us logistics, okay, LTL, I mean we're running 15%, seventeen %, eighteen % return on invested capital. So it's not the same. So it's got to be separate at one point. Scott GroupMD & Senior Analyst at Wolfe Research00:47:21Thank you guys. Appreciate it. Alain BedardChairman, President and Chief Executive Officer at TFI International00:47:23Pleasure Scott. Operator00:47:25And your next question comes from the line of Bruce Chan with Stifel. Please go ahead. Bruce ChanDirector at Stifel Financial Corp00:47:32Yes. Thanks, operator, and good morning, Elaine. Good morning, Bruce. Yes, great to speak with you. You made some comments about the sales team earlier in the call, the opportunity in SMB, which I think makes a lot of sense. Bruce ChanDirector at Stifel Financial Corp00:47:48But you've also been trying for three years at this. You've had a lot of competitors in the space targeting this type Bruce ChanDirector at Stifel Financial Corp00:47:54of business. Bruce ChanDirector at Stifel Financial Corp00:47:55So question is how does the supply win in these RFPs? Are you just going to keep slogging it out? Do you need to hire more? Do you need to change incentives especially without improving your service first? Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:07Yes. I think we did all of that, Danny. We changed incentive. Okay. We've changed people. Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:14Okay. The focus is still the same. And we've not been able to have the results, right. So, we are working on our service. We have improved service at T Force rate absolutely. Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:31Right now, if you look at my missed pickup, I still have way too many. I've got about a little shy of 400 a day that we miss pickup, but we used to be double that, right. So we are improving. Now for sure, the master report is not helping us in the perception of T Force rate. Why is that? Alain BedardChairman, President and Chief Executive Officer at TFI International00:48:51Because we came to know that sadly Mastio was trying to get in touch with us and they couldn't get in touch with us for four years. So they were using information that is stale from 2020. So maybe this report is not accurate because we never provided them the right information for them to really get a true picture of T Force rate services, right. So hopefully down the road now that we have a communication, they will talk to customers that we service and maybe hopefully that perception that T Force rate services is not good will improve. And I think the service reality wise has improved, right. Alain BedardChairman, President and Chief Executive Officer at TFI International00:49:42Now our sales team are fighting that, okay. And are fighting our peers that have better service. And in a difficult environment, okay, where freight is not easy to find, the service is key, right. So if the customer has the perception that your service is not as good as the other guy and the price is about the same. Well, the customer is not stupid. Alain BedardChairman, President and Chief Executive Officer at TFI International00:50:09He's going to go with the other guy, right? So we have to change this perception of service and we also have to work on improving our service at the same time. And we also have to educate our sales team that guys, I mean, our service is improving guys and you got to fight, you got to fight, right. And so far, if I look at my corporate and 3PL, we're about flat, okay, in '24 year over year. So far in '25, we're down a little bit on corporate, but above flat on 3PL. Alain BedardChairman, President and Chief Executive Officer at TFI International00:50:46But we're down on again on small medium sized account, which is the most profitable business that you can have. So I mean, so we're trying organically, okay, to improve that, because that would help us with our density. And like I said earlier in the call, down the road, okay, and that's what we've done in Canada. That's what we've done in Canada for years and years and years is that we beef up our density through M and A, okay, through M and A. So we continue to do that. Alain BedardChairman, President and Chief Executive Officer at TFI International00:51:17And in Canada, we run either union or non union, right. So we got a union network and we also have a non union network. And we beef up density in all these two networks all the time. And this is now after trying for three years, okay, to grow organically and it's not working, okay. So we keep pushing our sales team to grow this thing, but we are now understand that we have to do something, okay, down the road on M and A, either to build a non union network on the side or to try to grow with some regional unionized LTL to beef up T Force rate. Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:04I mean, but don't forget our approach us on M and A is always the same is that if we do some M and A, we keep business separate, right. We don't like merger. We're not big fan of merger, okay. We don't do that, right. So we work together. Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:23So let's say we own another company. I mean, we will work the two companies will work together, but there's no combination, there's no merger. We hate that because, yes, the accountant will tell you that you could save a lot of money, but at the end of the day, it's false. So we keep the two like we do in Canada, right. Bruce ChanDirector at Stifel Financial Corp00:52:44Okay. That's a really helpful color. And then just a really quick follow-up on that M and A point. Is the thought still that an asset light operation makes the most sense or are you kind of broadening up the search a little bit? Alain BedardChairman, President and Chief Executive Officer at TFI International00:52:59Well, asset light is always the best. So if you look at our Canadian LTL, it's really, really light. Why is that? Because we are heavy intermodal. We are also heavy with third party PND. Alain BedardChairman, President and Chief Executive Officer at TFI International00:53:15So for sure, I mean, if we have an option to buy an asset light at a reasonable price, okay, we'll jump on that one first. Now, we also understand that there's not that many asset light operation, okay, in The U. S. On the LTL side. So then, okay, we look at an asset operation. Alain BedardChairman, President and Chief Executive Officer at TFI International00:53:38So about a year ago, we bought $100,000,000 revenue asset company non union in The U. S. Okay. So this is our first, okay, of maybe more to come on that side. Now this company, the beauty of this company is that they're also big in the trans border between U. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:01S. And Canada, right, which has got better yield, better yield than U. S. Domestic or better yield than Canadian domestic. So this is a first for us a year ago and down the road, okay, this is an area that we'll be trying to grow and maybe if we can find a good brother to T Force Freight, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:27I mean, that's also something that we're going to be looking at. If we can find a good brother, a good fit, but without merging, I mean, guys never say that TFI wants to buy a company and merge it with A or B or C. We don't do that. Bruce ChanDirector at Stifel Financial Corp00:54:44Okay, great. Appreciate the time. Alain BedardChairman, President and Chief Executive Officer at TFI International00:54:47Pleasure. Operator00:54:50And your next question comes from the line of Tom Latavic with UBS. Please go ahead. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:54:58Yes. Good morning, Elaine. Alain BedardChairman, President and Chief Executive Officer at TFI International00:55:00Good morning, Tom. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:03I wanted to get a sense, I know we've had quite a bit of discussion on U. S. LTL. I think we've had for the last couple of years the real framework of idiosyncratic drivers for improvement in U. S. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:16LTL and that you had a fair bit of control. It feels like we're kind of waiting for the market to improve and you really need a better freight backdrop to see things get better in U. S. LTL. Do you think that's fair that that's really the most important lever for U. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:55:36S. LTL to get better or there's still levers that are kind of meaningful enough that you can push in your control in U. S. LTL? Alain BedardChairman, President and Chief Executive Officer at TFI International00:55:47No, I think so, Tom. I think that we still have a lot of work to do on the cost side. I think fleet, okay, is a big problem for us since day one, because we had old charge, now we have a normal fleet, but our cost is too high. So we're starting to see some improvement because we have a new leader, okay, that oversees our fleet management now. And this is something that should help us during the course of 2025 and beyond. Alain BedardChairman, President and Chief Executive Officer at TFI International00:56:16That's number one. Number two is like I said earlier on the call, the P and D software that we're using dates back about twenty years, right. So it was good twenty years ago. Okay. So now in 2025, we're going to be updating that through either a system, which is the software that we're using now for our line oil, which helped us big time. Alain BedardChairman, President and Chief Executive Officer at TFI International00:56:41Okay. So our line oil cost today, even if we put more freight on the road versus rail, our line oil cost per pound or per shipment is less today than it was three years ago with better service, because the rail is the rail, right. So we put less stuff on the rail, more on the road costs about the same and services better. But on the P and D side, we have a big job to do there, because we could save a lot of money. So to me, it's really the next big focus. Alain BedardChairman, President and Chief Executive Officer at TFI International00:57:12So fleet, we have the tools, we have the software, we have a better leader now, we should that should help us in 2025. PND, it's going to take probably all year, okay, to get this new software tested, implemented, maybe 2025 into 2026. The other thing also that we are implementing now is also has been a cancer for us billing, master file of customers and all that. So we are implementing as we speak and it's going to take all the way until the summer of twenty twenty five, a software that's been used by one of our peers. So it's been tested by those guys and that's what we are implementing now. Alain BedardChairman, President and Chief Executive Officer at TFI International00:58:02So that's going to help us build customer properly, okay, have a better control about what's going on, better visibility about what's going on, etcetera, etcetera. So that's also another lever during the course of 2025 that should help us on the cost side. Now, if market starts to turn, if this economy starts to get better, if this freight recession disappear, let's say '25 even better. But for us in 2025, we have to stop, okay, the degradation of volume, okay, and slowly improve it as much as we can. And we have a big job to do on costs on fleet still on PND and on billing customer properties, so they can pay us properly. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC00:58:56Right. Okay. What about there hasn't been much discussion on competitive environment, but if you take a step back, a number of the bigger players have added terminals and recycle the yellow terminals, if you will, expanded and are focused on growth. So do you think that's potentially contributing to some of the pressure on shipments that other players who have added terminals are taking business and that's contributing to the pretty significant cycle pressures and lower shipment counts that might be hard to see, but do you think that's a factor too? Alain BedardChairman, President and Chief Executive Officer at TFI International00:59:39Economy 101, Tom, tells you that if you offer more, okay, you'll get less, right. So if you offer more freight capacity, you'll get less money. To me, it's basically the rule of economy. So by adding capacity to the LTL environment, for sure down the road you're going to be putting pressure unless the market starts to grow, okay. And if there's growth maybe not so much, but if still a very weak market for sure. Alain BedardChairman, President and Chief Executive Officer at TFI International01:00:19What by adding capacity, you're putting pressure down the road on rates. The shippers sees that, they know that and they will RFP the business and then you're stuck with fixed costs and there's a fight for freight. Okay. So this is basic economy. So this is why us our approach has always been guys don't add capacity, don't do that, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:00:43So this is why us down the road, what we're trying to do is through some M and A, through some education, guys, if you add capacity, you'll make less money. It's very simple. You have to understand, just look at the price of oil, add capacity, add more oil, price of oil goes down, right. It's just basic rules. So us in Canada, why we're so good is, we're not adding capacity. Alain BedardChairman, President and Chief Executive Officer at TFI International01:01:12We're shrinking, shrinking, shrinking and making more or at least protecting. If you look at my LTLOR, okay, I used to be 79, I think in last year and I'm an 80 something now, eighty, eighty point something, right. So we are protecting our margin. So you're right. I mean, there could be some pressure down the road. Alain BedardChairman, President and Chief Executive Officer at TFI International01:01:37Hopefully, our peers understand that and don't offer too much capacity because LTL, The U. S. LTL is the best place to be in North America today. Best place to be because it's more it's not like the truckload where every Tom, Dick and Harry could be a truckload guy tomorrow. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:00So just to make sure I understand your comments, so you did not it wasn't clear that there was like a worsening of competitive pressures in 4Q. You don't really think that was the issue was more broader market, but you might be concerned about pressures in the future. Is that I guess is that the way you're seeing it? Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:18Yes. Q4, it's hard to say. Okay. Maybe. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:23I don't know. But one thing is for sure, long term, when you add capacity and the market is not growing, you're going to end up with price pressure. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:33Okay. Makes sense. Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:34Thank you Tom WadewitzSenior Equity Research Analyst at UBS Securities LLC01:02:34for the timeline. Alain BedardChairman, President and Chief Executive Officer at TFI International01:02:36Pleasure, Tom. Operator01:02:40Thank you. And your next question comes from the line of Benoit Poirier. Please go ahead. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:02:47Yes. Good morning, Elaine. Just in terms of your first question, yes. With respect to free cash flow, obviously, you were able to pull close to $800,000,000 in 2024. I would be curious given all the comments that you provided, how should we be thinking in terms of free cash flow generation for 2025 and maybe a little bit more color around CapEx given the investment needed for DesaiQ that you've committed for? Alain BedardChairman, President and Chief Executive Officer at TFI International01:03:17Yes. So I think based on what we know so far, okay, Benoit, is TFI will pay its dividend, TFI will reimburse, okay, about $400,000,000 to $500,000,000 of debt during 2025. TFI will also invest about US200 million dollars in M and A. So if you do the sum above that, I mean, it's basically about the same of because our CapEx will be reduced. Why is that? Alain BedardChairman, President and Chief Executive Officer at TFI International01:03:53Because when you do when you drive less miles in your truckload operation, okay, well, you can extend the life of the truck, right. So our CapEx will be less in 2025 than they were in 2024 because of that depressed truckload environment. The same is true of our LTL. So LTL for this year, we're buying 400 trucks, U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:04:20LTL I'm talking here, instead of buying 500 or 600 trucks in '24 and in '23, right? Because our average age, okay, is 4.2 now at The U. S. LTL. So globally, our CapEx TFI net CapEx will probably less $50,000,000 to $100,000,000 year over year. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:04:48Okay. That's great. And in terms of M and A, just for the follow-up, you gave a very good color on the timing. It seems to be most unlikely in 2025. I'm just wondering how much it's pushed to the right given maybe the financial situation? Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:05:07And do you feel you need to further integrate UPS Freight and Daseke before pulling the trigger on the larger one? And obviously, when we look at the past, you've been quite good monetizing some assets, think about Hartland Express, Waste Management. So is it something that might be in the cards down the road? Alain BedardChairman, President and Chief Executive Officer at TFI International01:05:31Monetizing asset, no, except on the real estate side, Benoit. And in terms of T Force rate, I mean, we have a plan and M and A will just help T Force Freight down the road, I think. So we will not stop an M and A transaction because we're not happy with what's going on at T Force Freight. I'm not happy at all with what's going on over there. The guys are working hard, but we need results, right? Alain BedardChairman, President and Chief Executive Officer at TFI International01:05:59So M and A could be part of that solution, helping them on the density side at one point maybe. And on the DSKY side, I mean, we are really busy in reducing overhead costs over there. We have way too much assets. So this is killing us on depreciation expenses because we have probably in the neighborhood of 400 trucks too many, okay, because we were stuck buying the commitment that Daseke's prior owners made and we got all these trucks in 2024 and now, okay, we have to start unloading, okay, the older trucks, okay, in a depressed environment. So what the guys have been doing is, what they're saying is that, Arlene, the market is so bad, I don't want to sell it now. Alain BedardChairman, President and Chief Executive Officer at TFI International01:06:51I just want to wait till this market gets better. So this is today, right? So me, I'm saying now, hey guys, I mean, do we see The U. S. Market pre owned trucks getting better? Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:05Okay. Not really. Well, okay. So let's start unloading the trucks. And that's what we're doing now. Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:14And the beauty of Daseke is that we're not losing money when we're selling trucks even in a very depressed pre owned market compared to when we are selling old UPS or T Force freight trucks, okay, because they've been so the fleet has been so poorly managed that if you look at my disposal of equipment in Q4, I've lost money, right. Not much, but I still lost money, right. But on Daseke, when I sell equipment at Daseke, I don't overall, I don't lose money. So I said guys, now is the time. I don't know when this market is going to get better. Alain BedardChairman, President and Chief Executive Officer at TFI International01:07:54We know because we owe all the new trucks for PACCAR and freight that the production is down 20%, okay, in Q4. It's going to be down 20% in Q1, Q2 and Q3 probably and picking up again in Q4. Q4 '20 '20 '5 according to our forecast on the truck, I mean, for the first time, they will do a better job in Q4 twenty twenty five than in Q4 twenty twenty five than Q4 twenty twenty four for the first time. So I mean, it's a global situation. But M and A, like I said many, many times, you buy in bad news, you sell in good news, it's all bad, it's been bad for years and years. Alain BedardChairman, President and Chief Executive Officer at TFI International01:08:39It's just like we have to be bold, we have to find the right target, we have to do the right deal at the right price. And that's been the success of TFI over the last twenty five to thirty years is by the right price at the right time. We bought Daseke a year ago in April. Q2 was okay, three and four not so good. But I feel really good with Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:06Brookshaw and his team. We're going to we have a lot of work to do on reducing our overhead costs, reducing our asset base so that we could bring our expense depreciation expense down. We're going to turn this ship around. I mean, running a 90 OR in specialized truckload, it's not acceptable. Okay, everybody knows that. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:28I mean, we're not a van guy, we are a specialty. So we got to bring this OR down and we're going to get sub 90 for sure during the course of 2025 even in a difficult still difficult market. Benoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins Securities01:09:46Thank you very much for the time, Alain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:09:49Pleasure, Benoit. Operator01:09:52And your next question comes from the line of Daniel Impreza with Stephens. Please go ahead. Daniel ImbroManaging Director at Stephens Inc01:09:59Hey, good morning, Alain. Thanks for taking the questions. Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:02Good morning. Daniel ImbroManaging Director at Stephens Inc01:10:03Elaine, I want to start maybe back on The U. S. LTL service side. You mentioned a few times the claims ratio is unacceptably high at 0.9. Ken HoexterManaging Director at Bank of America01:10:11Yes. Daniel ImbroManaging Director at Stephens Inc01:10:11To previous answer, Daniel ImbroManaging Director at Stephens Inc01:10:12you said some other things are getting better, but this has been softening for a couple quarters. We'd love to hear some of the investments you're making to actually improve this claims ratio going forward. And could you provide any other update on like on time deliveries, any other service metrics that have been a headwind on The U. S. LTL side and maybe what you're doing to improve those? Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:29Yes. So on the claims side, here's the story, okay. So the reason we're at 0.9 is that we used to break so much stuff that we have a store in Richmond that was selling the stuff that we were breaking. But now we break less stuff, so we don't have this revenue that goes against the expense. I mean that is the story right now, which to me is okay, fine. Alain BedardChairman, President and Chief Executive Officer at TFI International01:10:54But at the end of the day, okay, our claim will come down back, will come back down again, okay, in the next quarters. And what we're doing about that is again is working with the customer, working with the operators and we know what to do. It's just like the story is that, well, the benefit that we had by selling all the stuff that we were breaking, I mean, that is gone. The store is closed. We don't have that anymore. Alain BedardChairman, President and Chief Executive Officer at TFI International01:11:27And now we're just expensing, okay, the stuff that we're breaking now, okay, or losing now. So, okay, fine. That being said, what is the plan to bring the 0.9 down to more acceptable level? So we're going back to the source and we should do a better job on that, right. So the guys are all sensibilized that, hey, this is not acceptable, okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:11:54This affects our service, affects our customer relationship. Nobody likes to have stuff broken. Nobody likes to have stuff lost, right, even if you pay for it. So that is where we're going on that. And what was your next second question? Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:11I forgot. Daniel ImbroManaging Director at Stephens Inc01:12:13Any other update on the on time deliveries or other service metrics that have been kind of elusive? Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:18Yes, yes, yes. Well, the on time delivery, we are improving, absolutely. But we'll never be a 99.9% guys. So the goal is to be something around 98%. When we bought the company, we were more like a 90%, ninety one %, ninety two % and we had all the excuse in the world to be at 90%, ninety one %, ninety two %. Alain BedardChairman, President and Chief Executive Officer at TFI International01:12:41Right now, we're more like a 95%, ninety six % in range, if you exclude everything that's going on with weather issues. So we have improved. We're still probably not to the level our peers are, okay, but we are improving. And I just gave the specific on missed pickup. I mean, our missed pickup is down 50% versus what it was like a year or two years ago. Alain BedardChairman, President and Chief Executive Officer at TFI International01:13:07So our service is improving. Absolutely. Daniel ImbroManaging Director at Stephens Inc01:13:13Got it. And then as a follow-up, I want to ask a longer term maybe strategic one on The U. S. Held sales side. It's been a few years now. Daniel ImbroManaging Director at Stephens Inc01:13:19You mentioned it's been a challenging three years of owning the T Force asset. Whether we think about the ability to cut cost or add density, I guess how much of those differences in The U. S. Versus Canada are maybe more structural than you appreciated when you bought this business as you've learned? And when we think about where OR can get to, maybe 93%, ninety five % is this year, but has anything changed? Daniel ImbroManaging Director at Stephens Inc01:13:39Like where can this business go over time as you better appreciate the headwinds and just the challenges of The U. S. Market? Alain BedardChairman, President and Chief Executive Officer at TFI International01:13:47You know what, the market in Canada is not different than the one in The U. S. And vice versa. What's different is the level of issues when we bought UPS freight, okay. So we could never even with all the due deal that we've done, we knew that the fleet was not up to par. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:08We knew that the real estate was not up to par. But the system, the financial system, we were not aware because these were UPS's system, okay. So they were connected to the UPS environment. So we didn't know anything about that. And the tools for LTL because the tools per package at UPS are probably fantastic because these guys do a fantastic job over there. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:34But the tools for LTL were poor. Okay. So this is something that is taking us way more time than we thought. So I've talked about the LYNOL. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:14:45So LYNOL, now we have Optum, which is helping us big time. The fleet, now we have Ceteris that's been implemented a year ago. We had to change leadership. Now we have a new leadership. So Ceteris and the tool and the new leadership will help us reduce maintenance costs. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:03Billing and Master File management, it's been a nightmare for us, okay, from day one. Now we are implementing a software that has been used by one of our peers. By the end of summer, this should be done with. So it's much worse, okay, than we thought when we bought the company, okay. But we're going to get over it. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:27I mean, we know what to do, Okay. The U. S. Market is not that different than the Canadian market. The basic rule, okay, why are we so good and successful in Canada is because our density is second to none. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:43We drive in The U. S. Right now for our P and D 10 miles between each and every stop. This is not acceptable. I mean, we drive less than five miles in Canada. Alain BedardChairman, President and Chief Executive Officer at TFI International01:15:52Why is that? Because we've educated our sales team, everybody in our Canadian operation that we want the driver to drive less miles and pick up more freight. That's the culture we have in Canada. In The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:06That culture did not exist. Okay. And we've been trying working with the sales team to understand, guys, we need more freight close to our terminal. We need more freight per pickup. So it's what we call density that helps us reduce costs, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:23By doing that, okay, you're way more efficient. So what we're trying to do for the first three, four years, four or five years that we bought the company is trying to do it organically. And we've not been successful so far. The only success we have is we move the rate, not the rate, but the weight per stop, the weight per stop, the weight per stop, the weight per shipment, okay, from let's say less than 1,100 pounds to about 1,200 pounds that has been a success. But besides that, we have not done anything on density. Alain BedardChairman, President and Chief Executive Officer at TFI International01:16:56So this is why I'm saying that down the road, okay, you try organically to improve your density. But at one point and that's been the success of Canada, M and A has been the success that we encounter in Canada, both union and non union, okay, is to grow a network that through M and A you build your density. Daniel ImbroManaging Director at Stephens Inc01:17:20Great. Daniel ImbroManaging Director at Stephens Inc01:17:20I appreciate all the color. Best of luck, Glenn. Alain BedardChairman, President and Chief Executive Officer at TFI International01:17:23Pleasure. Operator01:17:25And your next question comes from the line of Ariel Rosa with Citigroup. Please go ahead. Ari RosaSenior Analyst at Citigroup01:17:33Ben Moore on for Ari. Morning, Alain. Thanks for taking our question. Back to the small, medium business, is it losing accounts in lanes or is it keeping accounts in lanes, but just losing volumes? Just to try to understand the ease of winning back that business when you improve service. Ari RosaSenior Analyst at Citigroup01:17:51And are there other higher margin customer segments you could focus on to offset in case small and medium business is still low in 2Q and you're at risk of OR being close to that 97 for 2Q? Alain BedardChairman, President and Chief Executive Officer at TFI International01:18:04Yes. No, I think that it's just like the focus of our sales team has not been good, okay. So the reason that we lose, okay, is because our churn is too high, right? So we look at the churn, normal churn in an LTL environment could be 5%, ten %. But when your trend is way more than that, which is the case at T Force rate, then it takes you lose more than what you gain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:18:38So the net is minus, right. So you got to stop the churn, you got to stop what you're losing, okay. So that you could have a positive when you had the loss because you will always have loss, okay. So that because there is you always have churn, but you have to have less loss than what you can bring in. And so far, okay, on 3PL and corporate, okay, we're fine. Alain BedardChairman, President and Chief Executive Officer at TFI International01:19:05The problem is that with small, medium sized account, we lose more than what we gain, right, in terms of customer and also in terms of lane. So it's just like guys roll up your sleeve and you got to be more aggressive, so that we stop losing more than what we're gaining. Ari RosaSenior Analyst at Citigroup01:19:24Okay, great. Appreciate that. Maybe just as a follow on from your Investor Day a few years ago, you were great in providing estimates and OR improvement, for example, 50 or 100 basis points. Just to understand the magnitude of the, I think, five or so actions you're implementing now, the sales culture to maximize shipments per stop, the PND software would be number two, billing system number three, four, you've talked to level visibility and compensation tied to that, which needs time to gain traction. And then five would be the line haul in sourcing. Ari RosaSenior Analyst at Citigroup01:20:05Can you provide sort of rough estimates on OR improvement basis points ranges for these? Alain BedardChairman, President and Chief Executive Officer at TFI International01:20:13Yes. So on P and D, it's too early. I don't know. Okay. So this is difficult to say on fleet. Alain BedardChairman, President and Chief Executive Officer at TFI International01:20:22On fleet, in my mind, okay, if I look at the plan, what we're trying to do, I think fleet year over year, same miles, same everything. Our cost has to come down between $20,000,000 to $35,000,000 year over year, that's fleet. In terms of billing, bad debt, claims and this and that, to me, I mean, this is another $10,000,000 to $15,000,000 that we just throw money out the door. We pick up freight, we deliver freight and we don't know who we have to build because it's not clear. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:21:04We accept an order and our people are just saying, well, I think it's A, no, it's B. So we bill A and then after six months A is not paying because he says it's not me. Okay. So then you go back to B and B says no, it's not me because it was not clear the day that you took the order. So we have that because of all the software, old tools that we have that did not control that process, which will happen during the course of 2025 until from now until the summer July, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:21:39So on the Lino side, I think we're probably doing a great job. We're probably at 95% of what the optimum, the best that we could do on that. Our objective has been to move more freight on the road versus rail to improve service and we've done that. So we run a lot of teams now, okay, running our line alls. So we're doing a better job on that. Alain BedardChairman, President and Chief Executive Officer at TFI International01:22:05So on line all, I don't see that so much. So it's basically the P and D, although P and D, I cannot put a number on it, it's too early. And fleet and also bad debt and billing customer properly. So these are the kind of leverage. Density, it's a push we've been pushing with no results so far. Alain BedardChairman, President and Chief Executive Officer at TFI International01:22:30So again 25%, we'll keep pushing on that. And that's why I'm saying down the road, we're going to have to do something on M and A to help us improve, okay, that density. Because again, we buy a company, there's no merger, but we work together, right. So like we do in Canada, if I take the example of Canpar, Loomis, so what we're saying is that these zip codes are Canpar, let's say in Toronto and these zip codes are Lumis. So we're not merging the company, but in these zip codes, okay, Canpar is delivering both Canpar and Lumis stuff, but the companies are not combined, but we work together. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:10So we improve the density by doing that in those zip code because now Canpar delivers freight for Canpar and freight for, okay, Loomis. And then in a different region of Toronto, for example, it's going to be, let's say, a Loomis territory where Loomis is going to deliver both Canpar and Loomis freight, right. But we don't merge the company. No, no, no, no, no. We don't do that. Ari RosaSenior Analyst at Citigroup01:23:38Great. Thanks so much, Alain. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:40My pleasure. Operator01:23:43Thank you. And your next question comes from the line of Kanar Gupta with Scotiabank. Please go ahead. Konark GuptaEquity Research Analyst at Scotiabank01:23:50Good morning, Alain. Thanks for the question. Alain BedardChairman, President and Chief Executive Officer at TFI International01:23:52Good morning, Alain. Konark GuptaEquity Research Analyst at Scotiabank01:23:53It's been a long call, so I'll keep it pretty short hopefully. I know you're not guiding here for '25, but I think you're alluding to some pressures and headwinds in the specialty truckload, the T4s and maybe GHT, right, for the better part of the 2025. Konark GuptaEquity Research Analyst at Scotiabank01:24:10In terms of the remaining operating segments, right, the Canadian LTL, Canadian truckload, package and courier, etcetera. Do you see those segments, like maybe offsetting the headwinds in the remaining segments perhaps? So I mean, like perhaps this looks like a flattish year from earnings perspective? Alain BedardChairman, President and Chief Executive Officer at TFI International01:24:28Yes. I feel pretty good about our logistics. Okay. So our logistics are going to do well except for GHT the first probably nine months. Okay. Alain BedardChairman, President and Chief Executive Officer at TFI International01:24:38We're going to be behind last year because of but logistics, I feel really good. P and C, I mean the team there, Mike and Chris, they've done a fantastic job. If you look at my Q4, well you could say well because of the Canada Post strike, yes, a bit, But don't forget that we're mostly B2B us, right. So I feel good about Canadian LTL. I mean the Kindersley acquisition will turn into a good OR environment because right now it's a drag on our Canadian OR. Alain BedardChairman, President and Chief Executive Officer at TFI International01:25:11So the Canadian truckload, the driver ink is killing us, okay. So it continues, but I think that the federal government now is taking action, reducing the permit, the work permit and all that. So maybe this is going to help us. So the big rock in my shoe, okay, and it's been like that for a few years is T Force rate and we're working out on it. Specialty truckload in Canada, we're doing well, doing really well. Alain BedardChairman, President and Chief Executive Officer at TFI International01:25:40Specialty truckload in The U. S, we will do better in 2025. We have a rough start of 2025. We got too much trucks, too much assets that we're stuck with because of commitment of the previous management team there that we had to take on. And then also the revenue per mile has been difficult for us in Q3 and in Q4. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:06So far in Q1 revenue per truck is okay. The revenue per mile is okay. The revenue per truck is down because the miles are down because of weather issues that will disappear during the course of the year. The freight is still not the greatest environment, okay. Hopefully with the new administration in The U. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:29S, things will start to accelerate this freight demand. So yes, Gunnar, I feel really good about certain part of my business. My biggest problem is really T Force Freight U. S. I mean, it's been that for four years. Alain BedardChairman, President and Chief Executive Officer at TFI International01:26:47That's the only reason that I keep up at night, okay, is really T Force Freight U. S. Konark GuptaEquity Research Analyst at Scotiabank01:26:54Okay, that's helpful color. Thanks, Helane. And then maybe just quick follow-up on B domiciling. Any timelines you want to kind of suggest here in terms of the application process, the shareholder approval and when this thing can be wrapped up? Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:07I think your timeline is between nine and twelve months. And again, okay, if I may add to that, Kunal, I mean, we have today within the TFI head office, we have employees in Canada and in The U. S, we have employees in Montreal, Toronto, Calgary, Chicago, Miami, etcetera, etcetera. And it's not because the domicile of T4, TFI International will move from Canada to The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:34We're not moving people. We're not moving people from Canada to The U. S. I mean, we're not doing that. We're not stupid. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:41I mean, so I mean, it's business as usual. Okay. And us at TFI, we hire the best talent where the talent is. So if the talent is in Chicago, we hire in Chicago. If the talent is in Toronto, we hire in Toronto, right. Alain BedardChairman, President and Chief Executive Officer at TFI International01:27:57So that is always been the nature. It's just like by doing that now we become a U. S. Domicile, but every responsibility of TFI in office remains where the responsibility is today. Konark GuptaEquity Research Analyst at Scotiabank01:28:16Right. Makes sense. Thanks so much for the time, Ale. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International01:28:21It's a pleasure, Konrad. Operator01:28:24And your next question comes from the line of Kevin Chang with CIBC. Please go ahead. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:28:30Hey, Elaine. I'll leave it to one and I appreciate all the color you provided on this call. I think in answer to an earlier question you said, absent any, I guess, revenue recovery, you saw Pat at least get into seven or 7.25 EPS with your self help levers. I know you're refraining from providing guidance, but when we think of that level of earnings growth without a macro recovery, do you have a sense of how long you can get there? It sounds like you have a lot of irons on the fire for 2025. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:29:00So is that something we can think of as at least a North Star for 2026 as you kind of work through some of these initiatives or is it longer than that, shorter than that? Alain BedardChairman, President and Chief Executive Officer at TFI International01:29:11No, for sure, Kevin. It is going to take us some time. I mean, you know the cost issue that we have at T Force rate is still a drag because our volume are too low. Our volumes are too low. So, you know at 20,000 shipments a day, it's just very difficult. Alain BedardChairman, President and Chief Executive Officer at TFI International01:29:28But we have levers that we're going to be working on. Now in terms of our logistics, I mean, it's a little bit of a market condition as soon as, okay, this JHT situation corrects itself by the end of the year, Okay. We're going to be doing about $200,000,000 of OE with our logistic division. Now this year will probably be down to $150,000,000 1 hundred and 60 million dollars because of what's going on with the truck manufacturing. I think our Canadian operation will do as good as they did in 2025 and 2024. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:06Okay. It's really we need major improvement because if you look at my T Force rate Q4 year over year, I'm down like $30,000,000 I mean this is like a nightmare for me. So I mean we have to take the bull by the horn now. Okay, Q1 because of everything that I've said, because of all the fog and all this, we can't we don't know where we're going to end up with Q1. So far, very difficult for our T Force rate and and our U. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:39S. Specialty truckload operation. I think that truckload operation will improve during the course of the year and we have a big job to do at T Force rate U. S. LTL. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:30:53That's helpful color. I'll leave it there and best of luck as you get through '25 here. Alain BedardChairman, President and Chief Executive Officer at TFI International01:30:58Oh, yes. We're going to need a lot of work, but you know what they're all saying, the harder you work, the luckier you can get. Kevin ChangFinancial Services Representative at CIBC Capital Markets01:31:05I hear you. Thank you. Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:07Okay, Kevin. Operator01:31:09Thank you. And your next question comes from the line of Cameron Doerksen with National Financial. Please go ahead. Cameron DoerksenAnalyst at National Bank01:31:16Yes, thanks. Good morning. I'll stick to one question as well. And you kind of mentioned earlier in the call just around uncertainty around tariffs and what that might mean for volumes. Just wondering if you can just talk a little bit about your cross border exposure. Cameron DoerksenAnalyst at National Bank01:31:31I know you've got a decent amount of automotive work. I'm not sure how much of that is cross border. Just any, I guess, additional color you can provide on where you see the risks might be if we have some sort of big blanket tariffs applied to Canadian imports into The U. S? Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:46Yes. Good question, Cameron. I mean, we all a lot of aluminum us, okay. So for sure aluminum is going to be part of the tariff. I mean, Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:31:56Trump has already said that aluminum tariff is going to be 25%. So we know that, okay. But we live through that also in 2018, right. So I don't think that this is going to affect the volume for aluminum, but we don't know. When we talk to customers, I mean, they feel good. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:18Well, we don't know, right. This is why I'm saying we are going through some fog right now because I think that by the summer we'll know. But right now we don't know. Steel, we believe that Canada produce a lot of steel for The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:34Market. Some of it is specialized. So I don't see issues too much with that. We haul some of that. Some of it is more like commodity steel, which like a STELCO, for example. Alain BedardChairman, President and Chief Executive Officer at TFI International01:32:47So that could be a problem, okay, with tariff. So this is mostly affects Ontario. It will affect us a little bit, but the problem is always the domino effect of all these truckers that are holding this product that we don't us today that now are out of work. Could they start to rock the ship and attack some of our customers that we service today. So it's still difficult to say, right? Alain BedardChairman, President and Chief Executive Officer at TFI International01:33:18But because we're mostly a specialty truckload guy, it's not as easy as a van kind of world, right. So what we know so far, Cameron, we shouldn't be doing too bad. Now the trans border revenue is about 4% of global TFI revenue, 4%. So it's big, but it's not that big, right. So we'll have to see. Alain BedardChairman, President and Chief Executive Officer at TFI International01:33:49That's why we cannot provide guidance. I mean, even in my U. S. Peers, okay, are having a tough time give guidance because of all this unknown is inflation coming back in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:01Or in Canada. Okay. Who knows? The interest rates, are they going to stay high like they are in The U. S. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:09The ten year U. S. Bond is 4.5 or above that. So that's high, right. So is this going to say Mr. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:17Trump wants interest rates to come down, but so far it's not happening, right? So all of this is creating a lot of issues and not knowing where we're going. But to me is, it's foggy, but it's going to clear up. It's going to clear up. I think it's going to clear up in the summer and then we know the rules and then we'll just adjust. Cameron DoerksenAnalyst at National Bank01:34:43Okay. That makes sense. Appreciate the time. Thanks very much. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:47Pleasure Cameron. Operator01:34:50Thank you. And that is the end of our question and answer session. I would like to turn it back to Alain Binard for closing remarks. Alain BedardChairman, President and Chief Executive Officer at TFI International01:34:58Okay. It's all right. Well, thank you very much, operator, and we appreciate everyone who's joining today's call. And I want to thank you for your interest in TFI International. So I look forward to providing additional updates as we move through the New Year. Alain BedardChairman, President and Chief Executive Officer at TFI International01:35:12And please, if you have any additional questions, be sure to reach out. Enjoy the day, everyone, and thank you again. Bye. Operator01:35:20Thank you, Elaine. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.Read moreParticipantsExecutivesAlain BedardChairman, President and Chief Executive OfficerAnalystsRavi ShankerManaging Director at Morgan StanleyJordan AlligerVP & Equity Research Analyst at Goldman SachsKen HoexterManaging Director at Bank of AmericaWalter SpracklinCanadian Equity Research Managment and Co-Head of Global Industrials Research at RBC Capital MarketsBrian OssenbeckMD - Senior Analyst, Transportation at JP MorganScott GroupMD & Senior Analyst at Wolfe ResearchBruce ChanDirector at Stifel Financial CorpTom WadewitzSenior Equity Research Analyst at UBS Securities LLCBenoit PoirierVP & Industrial Products analyst at Desjardins Securities at Desjardins SecuritiesDaniel ImbroManaging Director at Stephens IncAri RosaSenior Analyst at CitigroupKonark GuptaEquity Research Analyst at ScotiabankKevin ChangFinancial Services Representative at CIBC Capital MarketsCameron DoerksenAnalyst at National BankPowered by