TFI International Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's fourth quarter 2023 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. Callers will be limited to one question and one follow-up. Again, that's one question and a follow-up so that we can get to as many callers as possible. Further instructions for entering the queue will be provided at that time. Please be advised that this conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. Also, I would like to remind everyone that this call is being recorded on Friday, February 9, 2024. I will now turn the call over to Elaine Bedard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead, sir.

Well, thank you, operator, and thank you, everyone, for joining us today. Our results released yesterday after the close reflect strong performance by our talented team, beating our expectation, and once again, we're entering a new year in the strongest position in our company's history. This come despite weaker market demand throughout much of the year and is a testament to our adherence to law-standing operating principles regardless of cyclical freight demand. In particular, I've referred many times to our overarching focus on profitability and cash flow, which is apparent in the four quarter results that will walk us through. It's this profitability and cash flow that permits us to execute on overarching principles of our growth strategy, which involve investing in the business, pursuing attractive M&A opportunities, and consistently returning capital to shoulders and doing all of this even when the market is weak. This approach to the business is apparent in our four quarter results and indeed our performance throughout 2023. In fact, we were able to allocate roughly $2 billion of capital to announce acquisition and share repurchase during the year. Let's turn to four quarter results, which include operating income of just under 200 million compared to 217 million in the year-ago quarter. Our operating margin of 11.8 compares to 13.4 a year earlier. And I should mention that these results include a $23 million reduction in the contribution from asset held for sale. Our adjusted income, 147 million, was down only slightly from 152 million in the fourth quarter of 2022. And adjusted EPS came in at $1.71, down a penny. Given our intense focus on generating LTE cash flow, we're most pleased with our net cash from operating activity, which was 303 million, up sharply from a year ago, 248 million, and bringing our four-year total to just over a billion, again, up over the prior year despite market conditions. Equally important from a strategic standpoint, our free cash flow of 244 million was up significantly over 188 million in the prior year fourth quarter. For the full year 2023, we produced more than $9 per share of free cash flow, which is remarkable given our company size, which is again a reflection of the hard work of our team throughout the year. Now let's dig in deeper into our four business segment, starting with P&C, which represents 7% of our segment revenue before fuel surcharge. The number of package was down 4% with pricing a little softer as well, resulting in a 5% decline in revenue before fuel surcharge. Similarly, our operating income of 35 million was down just slightly from 38 million the prior year, and our margin fell by 70 basis point to 28%. Return on invested capital for P&C was 28.1. We believe this solid performance by our P&C business in spite of the weaker demand environment reflects unique market exposure, and as always, our close attention to cost controls. Next, let's discuss LTL, now 41% of segment revenue before fuel surcharge. Our top line revenue before fuel surcharge was down 3%, while our operating income of 71 million compares to 88 million a year earlier. This includes $7 million net loss on asset held for sale. Digging deeper within LTL, Canadian revenue before fuel surcharge grew 12% year over year, and a 12% increase in shipment benefiting from the STG acquisition in 2023. Return on invested capital for Canadian LTL was 20.1, relative to 24% a year earlier. Regarding our ongoing turnaround at US LTL, the name of the game for us, in addition to all the costs and efficiencies we have discussed over time, is quality of revenue through improved service. This is evidence by our last quarter claim ratio of .5% for US LTL, .5% of revenue, okay, for US LTL, down from .5% a year earlier, and our second to non-Canadian LTL claims ratio of just .1% of revenue. Our revenue before fuel surcharge of 563 million was down from 601 million, in the fourth quarter of 2022, and while volumes were down 5%, we were able to increase revenue per shipment as weight increased by 10%. Operating ratio of 91% compares to 90.4 in a year ago, period, and our return invested capital for US LTL was 15.1 compared to the prior year at 23.8. Next, let's discuss truck load, which is 24% of segment revenue before fuel surcharge. Benefiting from acquisition or volume were slightly higher than a year ago, while rates were weaker. Truck load revenue before fuel surcharge are just under 400 million, was virtually flat with the year ago period, down just a percent, while operating income of 51 million was down relative to 72 million last year, and our operating ratio of 87.3 compares to 86.1. Taking a look within truck load, our specialized exposure remains a plus. We were able to capitalize on self-help opportunities and increase revenue per truck. Benefiting from this, revenue before fuel surcharge are almost entirely flat at 224 million. Our specialized truck load operating ratio was 87, relative to 87.4 in the prior year period, and our return invested capital was 10.3 compared to 13.4. Learning to our Canadian-based conventional truck load business, revenue before fuel surcharge also held almost entirely flat at 78 million. Miles-riven were up slightly, while rates were off about 7%. Our adjusted operating ratio of 89 compares to relative to 81.1 a year ago, and our return invested capital was 12.6, down from 21.3. Let's finish up our business segment review with logistics, which was 28% of segmented revenue before fuel surcharge and turned in remarkably strong performance during the quarter. Revenue before fuel surcharge climbed 24% year over year, while operating income jumped 60% to 55 million. These strong results benefited from our very successful GHT acquisition, along with strong execution by our team, including effective cost control in response to market condition. Our operating ratio was 88.4, while return invested capital was 18.8, versus 21.9 a year earlier. Let's shift gears and discuss our strong balance sheet and liquidity, which we view as a strategic asset. During the fourth quarter, we drove free cash flow of 244 million, as I mentioned, and also completed the private placement of 500 million of fixed rate interest only debt, as I referred to in our last call. As a result, we ended the year with a funded -to-bit ratio of 1.49, and a weighted average interest rate of 4.4 that's entirely fixed, with an overall weighted average duration of 8.3 years. Looking ahead, it's this strong financial foundation that will allow us to continue to make timely and intelligent investments, regardless of the cycle, and especially during time of market weaknesses. An excellent example of our recently announced acquisition of Daski, expected to close during the upcoming second quarter, and one of the 12 announced M&A transactions during 2023. We very much like this highly complimentary acquisition as it scaled our truckload segment into a leading North American provider, while bolstering our capability in the specialized market. Our other major focus this year is the ongoing turnaround of our LTL operation, and longer term, we see the potential opportunity to allow investors to own a separate specialized truckload business, in addition to a very attractive

LTL,

PNC, and logistics business. Another advantage afforded us by a strong financial position is the ability to return excess capital to our shoulders, whenever possible. And we're pleased that during the fourth quarter, our board of directors raised the quarterly dividend by another 14%. So with that, operator, we're ready for Q&A. If you could please open the line. Thank you.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hamster before pressing the star key. As a reminder, participants will be limited to one question and one follow-up. One moment please while we poll for questions. Thank you. Our first question is from Scott Group with Wolf Research. Please proceed with your question.

Hey, thanks. Good morning. Elaine. Morning Scott. It's Friday morning, so I may have missed it. Did you guys provide any, did you provide any earnings guidance than you typically do?

No, Scott. We have not provided any guidance. Okay, so what we'll do is, we'll do that after Q1. As you know, we're looking at this Daski acquisition. So this is why we were very cautious in terms of talking about 2024 with this major acquisition. But what I could say is that for sure, when we come up with our guidance, let's say sometimes in April, this year we did about $6.18 EPS, diluted EPS in 24. What we could say that our EPS guidance will not start with a six, we'll probably start with something like a seven somewhere. But because of we're very cautious about Q1 and the Daski acquisition. So this is why we prefer to, and like most of our peers, okay, just stay silent right now for 2024 guidance. We'll happily give more guidance, okay, for 24 after we come up with a Q1.

Okay, fair enough. And then I'm guessing there's gonna be a bunch of questions on LTL, but we haven't heard from you since the Daski acquisition. Maybe just sort of talk through the rationale of that deal, sort of what you see in terms of the margin potential and how that fits in with some of the stuff you talked about in the release regarding potential spend.

You know what, Scott, we're very happy with this transaction at Daski. I mean, when I looked at all the different business you need that these guys are operating today, I mean, we're very happy. I mean, these guys run a pretty, pretty good operation. I'm talking the operation. If you exclude the office cost, okay, which is a very high burden for the Daski numbers, if you exclude that, I mean, these guys are running a pretty good operation in 23 when you look at market condition. I mean, if you look at our global specialty truckload OR in Q4, we're running an 87 OR, us, okay, in a very difficult environment, right? Okay, you know, our Canadian van business is running an 89 OR in Q4, again, in a very difficult market environment. Just look at our peers in the US and you will understand that. I would say that these guys running the show with their business unit, the guy that runs the operation like the Lone Star, the Boyd and the RMG and all these guys, you know, they run pretty close to what we do. Now it doesn't show because, you know, at office is a big burden on the results of the company. I'm very, very happy with this acquisition that's gonna close in Q2. And these guys will all even help us on our own US operation because now it's giving us size. And like we said publicly, you know, Scott, we believe, okay, that down the road, okay, this conglomerate discount at TFI that we see today, if we do, okay, like we were just talking about, trying to have, you know, TFI into two business units instead of one, I think that this will also create some very interesting issues for our shoulders, you know, down the road. So Daski helps us create size, okay, in our US truckload operation, specialized truckload. We don't wanna be in the van world. A year and a half ago, we sold CFI to Heartland, okay, because, you know, we didn't wanna be in the van, but we really like specialty truckload, the flatbed operation, the tank and all that. We do really well. And we believe that the US and Canada down the road, 24, 25, 26, a lot of investment will be done in infrastructure, road, buildings, schools, et cetera, et cetera. And for sure, that will help the Daski operation and our own Canadian specialty truckload. So I think our timing is really good. Like our timing of selling CFI was really opportunistic. Okay, I think that this one is also in the same league.

Our next question is from James Monaghan with Wells Fargo. Please proceed with your question.

Hey guys, just wanted to ask one of the questions on the US LTO today. Just can we hear a sense of what you're expecting in terms of like OR improvement across the coming year and just given the sense that there is some uncertainty understanding what you might be able to get in like more flattish volume environment versus a place where maybe volumes improve more significantly?

Yeah, well, you know what, James, we said it. I mean, the 24 plan for us is to deliver the 88 OR, right? We're 91 OR right now, Q4. This is not acceptable for sure. I mean, the guys have worked hard because you have to understand where we were three years ago, two years ago. Okay, 91, okay, is acceptable, okay. But 24, 91 is not acceptable. And our plan is to be an 88 OR for 24. Also part of our plan, okay, is stop shedding volume, right? So if you look at our Q4, volume is down again, 4%, right? Year to date, we're down 13% and Q4, we're down 4%. So we took action in terms of improving our service, okay, like I mentioned on the script there. Our claim ratio is down like there's no tomorrow. We're at .5% of revenue, so that helps the customer experience with us. We made a major improvement in our asset base, our fleet, in terms of training, our drivers, et cetera, et cetera. So we believe that we can deliver in 24, something like an 88 OR and stop losing volume, okay. The market has been under pressure in 23, yes. The YRC is gone, okay, that helped the market, but still. As we are working on improving our service, reducing our costs and being more efficient, and our goal, like I said many, many times, for 24 is to run an 88 OR globally for USLTL.

Got it. At this point, do you think you'll be growing shipments in 2024 based off of where you are now?

Well, I don't think that this will come in Q1, Q2. I think that we have a change in leadership, okay, of our sales team. We have refocused our people there. So we believe that this company should be running by the end of 24, 24,000 shipments a day, right, to 25,000 shipments a day, which is very low compared to when we bought the company. When we bought UPS Freight, they were doing about 32,000 shipments a day. Now, like we said before, a third of those shipments didn't make any sense, right. So we had to do a lot of cleanup over the years and we were afraid that don't fit, afraid that was not for us, but that is mostly done, 99% done now. So now it's time for us to start growing again with the market by improving our service. We have more line-hulls now on the road than ever, right. So we use less rail. So our road service is way better than rail. So that's gonna slowly help us improve because when we bought the company, a lot of the lane-hull was done on rail. So now slowly we're moving less on rail and more on road that will help improve our service. The fact that our equipment is in much better shape, our average age is about a little over four years down compared to seven and a half, eight years average when we bought the company, we had to make some major investment there. Same thing also with our terminals, same thing with our training of our people. So, and don't forget that for two and a half years, we were also very focused on our TSA moving away from UPS. Now this is done. I mean, in April of 24,

this

is gonna be the three-year anniversary of our acquisition of UPS Ray. So we're done, okay, with our TSA with UPS. So that helps us, okay, focus more of our IT resources into building the IT of the future instead of the IT of the 1960s.

Thank you very much. You're welcome. Our next question is from Ravi Shankar with Morgan Stanley. Please proceed with your question.

Great, thanks, morning Alan. If I can just push you a little bit on the guidance commentary or lack thereof, I completely understand that the, there's very little visibility on macro, but at the same time, you have been able to give us several kind of moving parts and targets on the guide for 2024, and you don't have a large USTL business. So what exactly are you kind of, what are the moving parts or kind of what are you waiting for more clarity for before we know what the 24 number is? And also wanted to confirm that the seven handle that you said is an organic number.

Yeah, yeah, yeah. So really Ravi, the big thing for us is what we said when we acquired Daski is that it's gonna be neutral to our EPS in 2024, right? So I just want to make sure, okay, that this is gonna be the case. So let's say we take over April 1st, we come out after two or three weeks, we'll be in a better position to know exactly, okay, is this gonna be EPS neutral? Okay, or is this gonna be like maybe 10, 15 cents for 2024? We said that it's gonna be about 50 cents minimum for 2025, the Daski acquisition. So what I'm saying that this is like our EPS, probably we'll start with a seven, this is organic. This has got nothing to do with Daski because like we said, Daski is neutral, right? So in 2024, right? So the reason is we're looking at market condition, we're looking at our truckload operation that is really suffering not so much on the OR, okay, but on the volume, the top line. Because if you look at my OR, my specialty truckload, even more, I mean, it's a tough line that's killing me, right? Because my OR is very close to what it was in 22, but we lose so much top line. So this is why to give guidance right now for 24, when we look at so far what we've seen in January, it's a tough January. I mean, weather-wise, it's been tough, terrible, okay? So that's why we wanna be cautious like most of our peers, right? And, but what we could say is that we believe that 24 ZPS, diluted ZPS is not gonna be a $6 thing. It's gonna be a minimum of seven now. Now, I mean, we'll quantify that after Q1 because we wanna know also if we are still in a very depressed volume environment, because don't forget, if you look at our PNC again, we have a what, a 71, 72 OR in our Q4, but we lose top line. We lose 4% volume. Now, one of my peers came out in North America with 7% loss of top line volume-wise, right? So if the market is soft, and before giving a guidance, I don't wanna make the mistake that I made in 23 when we were probably a little bit too optimistic about volume and we missed two quarters in a row, the consensus.

Very helpful, Alan, that is understandable. And maybe as a quick follow-up, you mentioned the conglomerate discount earlier in your remarks. Can you just elaborate a little bit more on your thinking there? What does in due course mean? Is that a 2024 event or 2025 event? How are you looking at the separate businesses together or apart?

Yeah, you know what, Ravi, it's not 24, that's for sure. 24 for us is really the year we take over Daski and we deliver on our promise of a T-Force rate running at 88 OR, right? So that's really the focus. But by the fall of 24, we start to get ready for 25, okay? In terms of maybe other deals, okay, significant deals for us. And at the same time, this thing that we call the project SFI, okay, which is separating the truckload from the rest. We believe that this will create a lot of value. We also believe that this project may not be just for TFI maybe some other specialty truckload may join this project to create size, right? So it's an open discussion that we're gonna have with other parties probably late in the fall 24 to be ready to do something into 25, Ravi. Thanks, Alain. But short term, I mean, when you look at, I would say between the end of 25, we should be fixed on that. Understood, thank you, sir. Welcome.

Our next question is from Jordan Allager with Goldman Sachs. Please proceed with your question.

Yeah, hi, morning. Can you maybe talk a little bit morning to the factors that continue to impact US LTL profitability on an adjusted basis year over year, you know, that 50 million or so in EBIT, which is down versus a year ago. And then when you think about the shape of 2024 and all the stuff you're working on in US LTL, you know, when can we return to positive year over year EBIT growth in that division?

Yeah, I think that positive growth year over year in the US LTL will happen in 24, right? So in 23, we had, you know, we had to go through this negotiation with the Teamster contract, which increased our costs per hour by about 7%. You know, we made a lot of progress on the cost side, but we kept losing volume year over year. So I think that this is gonna be a thing in the past. Sometimes in 24, maybe not Q1, Q2, but down the road in Q3, Q4, we believe that finally by improving our service, okay, we'll be able to be in a position where we start growing again. And growing top line will help us grow the bottom line at the same time. The other thing also that is important to notice is our GFP operation in 23 was affected badly as of Q2 by an issue with some customers, okay, that were not really, you know, doing what they were supposed to do. So we addressed that late in 23. So we should be in a better position to start growing our GFP franchise in 24. That will help also our LTL operation, US LTL operation. So it's a question of service, okay. One also of issues we have that we're working on fixing is the customer experience with us when it comes to billing and billing customers. So, you know, for years and years, okay, we were going through a system that was not really probably the best in the world. And we have lots of issues that hinders the relationship we have with customers. So this is also a project that we have for 2024 to finally come up with something that is fair and reasonable for our customer. I mean, this is not something that we encounter in Canada. I don't think that our peers in the US have the same issues as we do with billing customers. And for sure, our churn, because of that, our churn of customers is way too high compared to probably our US peers or what we do in Canada. So this is another thing that the guys are working on. The churn over there at T4's rate in the mind of the previous management team was normal. For us, it's not normal. I mean, our churn is way too high compared to what we do us in Canada or I think what our peers are doing in the US.

Got it. And then just a quick follow-up along all those lines. Can you maybe talk a little bit to, again, on the US LTL? I know revenue per hundred weight, probably due to mix, has been down, but can you talk a little bit about core pricing, contractual renewals, and what sort of magnitude you're getting?

I think pricing is pretty good, guys. What's killing us is the volume. I think our pricing, our revenue per shipment is up, our weight per shipment finally is up, because if you look at our weight per shipment, we're still way behind my peers. I mean, us, we're like hauling feathers compared to what we do in Canada or what my peers are doing in the US. But our weight per shipment is up 10%. Finally, we're able to do that. But we're still way, way, way below my peers' average. Peers' average is probably like 1,500 pounds, and me, I'm still stuck at 11-something. So we're heading in the right direction, but again, you're paid by the 100 pounds on a shipment. The lighter shipment that you haul, the less money you get. So you don't have to be a rocket scientist to understand that. And this is why we've changed the focus of our sales team to try to change the mix. And we're heading in the right direction there. Our revenue per shipment, X-Fuel is up, and that's the way to go. In terms of pricing, I think our peers are very smart. They understand that everybody is in this business to make money, and that's just all freight just for the pleasure of hauling freight. So that's the beauty of that US LPL is that our peers are smart. So we like to compete with peers that are smart because they're about making money.

Thank

you. Welcome. Our next question is from Jason Stidel with TD Cowan. Please proceed with your question.

Thank you, Arbiter. Good morning, Elaine.

Morning, Jason.

Wanted to stay on US LPL for a little bit. Really nice job in the quarter with that claims ratio. Where do you think it can go from there and sort of what has gotten us to drop a whole point off that number?

You know what, Jason? When we look at that, I mean, the culture at T4's rate at the time was this 1.5, 2% of revenue was normal. And we said that, no, guys, this is not normal. I mean, if you look at our peers in the US, if you look at what we do in Canada, I mean, in Canada, we're a .1% of revenue, which is acceptable. So what we did is we took some of our Canadian folks, and they work with our US team, and we were able to solve the problem at the source. Right? So this is an experience where our customers' experience dealing with us, at least on the claim side, the experience is way better than it was a year ago. So we're trying to do the same thing also. Like I said earlier on the call, the billing, the way we bill customers, I mean, there's way too many mistakes. We make way too many corrections. And this is something that, in the past, in the mind of the management then, it was acceptable. Okay, we just make mistakes, and we just correct them. Okay, but us, we say, no, no, no, no, no, no, no. That's not the way to do it. So now, software that we use, the tools that we have, the people, because there's been a lot of moving parts with people. We lost people that were there, I'm talking 10 years ago. So this is where we are investing big time in 24 to improve the experience, okay, customers with us on the billing, customer service and all that. And we should see some major improvement during the course of 24. And that will help us grow our business, grow our volume, because if you're a shipper and you say, well, okay, I could deal with ABC, and then I deal with T-Force Freight, and it's a nightmare, because those guys, they bill me wrong, they send me a credit, et cetera. I mean, this is not professional, right? So this is another aspect of improving service with customers that we're working on, over and above the delivering of the freight.

I think if you guys improve ease of use and also your claims ratio, that should also help you in the pricing department going forward as well.

Absolutely.

I wanna jump on a little bit in near term here and then a clarification. So how should we think about the US LTLOR on a sequential basis from four Q to one Q, given that a lot of your peers have called out bad weather in January, and then you mentioned an 88OR for LTL. Is that an exit rate for the year or is that full year total?

No, that's full year, Jason. For sure, Q1 is gonna be a tough quarter for us. I mean, we're not gonna be a sub 90OR in Q1. I don't think so, but I think that for a year, okay, that's the plan. That's the commitment of our team to deliver an 88OR for the year, but not in Q1. Q1 for sure has been terrible.

Gotcha, I appreciate the call, Raleigh.

Pleasure, Jason.

Our next question is from Ken Hoekstra with Bank of America. Please proceed with your question.

Hey, Greg, good morning, Elaine. So obviously significant strides that you've mentioned on the .5% claims, but noted costs are still too high. So how much is still from the legacy UPS expense that rolls off and what is still under your control? And then just you threw out the 10% increase in weight per shipment. You mentioned last quarter, that was something you were very focused on. What do you focus on and how do you change that?

Yeah, that's a very good question, Ken. I mean, like we said, I mean, in terms of the claim, I mean, we have nothing to do with, you know, let's say what happened two, three years ago. So all of this is behind us. I mean, when we took over the company, I mean, we severed the past. And so our claim today is whatever our claim are based on what the operation is today. Now, in terms of future, you know, where we could be and all that, I mean, the company is very well positioned to start growing in terms of volume. I forgot what was your second question, Ken? Oh

no, just the first one was just how much of the legacy UPS expenses? Like what do you still control and what that goes off? So when you talk going from 91.88, this has nothing to do with the cost rolling off in April. Is this just? No, no. Your own internal costs? No. Okay. And then the second one, part of that was was the weight per shipment focus. What- Oh yeah, excuse me. Yeah,

yeah. The weight per shipment is something that we've been working at for day one. Because we said, look at our peers. Nobody is hauling a thousand pound shipment on average. Nobody. So why are we doing that? Well, because our focus has been with the previous owner on retail only, right? So this is what we're trying to change with our sales team and say, guys, I mean, retail is good, but let's try to move more industrial freight like most of our peers are doing. So the target is to slowly get closer to the average weight per shipment that our peers are, because you're paid by the panel, right? So that's number one. And we've said it many, many times also, what we're trying to do is to reduce the time that our drivers are driving between each and every stop, because they have to drive an average of about 10 miles between each and every stop, which is nonsense. We drive less than five miles in Canada between each and every stop, and the density in Canada is not the same as the density in the US. So that's another focus in terms of reducing the cost, okay, of our labor shipping costs, right? So reduce the miles, focus closer to your terminal and stop delivering, let's say, a shipment 70 miles away from your terminal, because this doesn't make any sense. Now, all this takes time, right? So we bought the company about two and a half years ago. We came in there, there was a sales team, the sales leadership has changed, right? A year ago, we started making some changes at the sales leadership. We're beefing up the team now with some members of the TFI team in other sectors. So we should start to see some improvement in 24 in terms of growth. We should also start to see improvement in our service. We're moving more freight on the road, line of road versus rail, okay, and in 23 to improve service at the same time. Our costs also are under control because we have better equipment. Our MPG is comparable to our peers now because our fleet is, you know, it's got a normal age versus two years ago, we had that fleet that was way too old with an MPG that was way too low. So all this is helping us improve service.

Right, and for my quick follow-up on the spin, just wanna understand why you chose to spin the truckload as opposed to the LTL into an independent, given the strides, given the pure plays, just wonder your thought on why not that way.

Yeah, yeah, yeah, because, you know, at the end of the day, I mean, if you look at, you know, what we have, PNC is very small, right? It's only five, $600 million US of revenue ex-fuel. So it's really small. So after truckload is gone, what are we left with? It's really an LTL in the logistics company. And very different than our peers. Just look at our logistics, Ken, in Q4. We came out with an 88 OR. Most of my peers are down like 40, 50%. One of my peers OR is 100. That peers got LTL in logistics. LTL is great, this logistics is running at 100 OR. Us, we run our logistics very efficiently, and we make a lot of money at it. Our return invested capital is through the roof. So I think that the combination of LTL and logistics made a lot of sense if you make money with logistics, right? If your return invested capital is about the same. So if you're running, let's say, your LTL at an 85 OR, okay, with a return invested capital at 25, and your logistics is running a 98 OR with a return invested capital at four, well, that doesn't make any sense to have the two. So I would agree with you that then you do the spinoff of only your LTL. But it's different at TFI because the way we run the logistics, we're about making money, not just volume. So if you look at my Q4, excluding GHT acquisition, I'm flat, okay, on my OE. So my peers are down 30, 40, 50%. One of my peers, like I said, is running 100 OR. We're very different, and our logistics will keep growing again. I mean, for sure, but smart. We're not in the business to do logistics at 2%.

Wonderful, Elaine, appreciate the time. Thank you. Pleasure, Ken.

Our next question is from Walter Spracklin with REC Capital Markets. Please proceed with your question.

Yeah, thanks very much. Good morning, Elaine. Good morning, Walter. So going back to the spin, and you mentioned the conglomerate discount, and I know in the past you've kind of talked about your PNC in Canada as having been

already

consolidated, not a lot of room for you to grow by acquisition. It's a really premium asset, and I bet would fit nicely into a lot of other organizations that would see it as strategic. Is that something in that conglomerate discount kind of avenue that you would, it's obviously, we put something out on that, but love to hear your thoughts on how you see the PNC division in Canada.

Well, like you just said, Walter, the problem we have with our PNC is that it's so good, and except organically, we can't grow it. I mean, there's nothing really of size that we could do in Canada.

Right,

so we can't buy ABC, we could buy, there's not much we could do on M&A on PNC. So if you go back to the waste in 2014, 15, we could not grow the waste at the time. We had a fantastic business that was called Matreq, and we couldn't grow it. And people said, well, this is probably worth a lay five, four, 500 million, and then we said, no. We're gonna sell it. And we sold it to GFL for 800 million at the time. So if you look at our PNC, it's a diamond. It produces a ton of free cash flow. It's a gem. The problem we have is same as the waste. Our waste business at the time was also a gem, right? But same story is we can't grow, right? Except organically. So for sure right now, Walter, our plan is to keep growing organically our PNC. We're trying to do, we're having some discussion with players right now to try to do more for them, okay, versus what the situation is. But our real focus is, like I said on the call for 24 is, our USLT out. We have to deliver that famous 88 OR. And we have to do this Daski deal and get ready for 25 because we believe that this will create a lot of value for our shoulders if we could strike this deal in 25. And we also believe that maybe this spinoff is not just gonna be about the TFI assets. Maybe other assets will be part of that deal, okay? Because we have a value proposition that is second to none to other parties if they wanna join us, right? So now going back to your question about PNC, this is why at the end of the day, we'll have to make a decision down the road, Walter, but it's not gonna be 24 because I'm too busy in 24 with everything that we're doing and our team the same. But our PNC team, they're really focused. I think that in 24, we will start growing organically. It's not easy, okay? In 24, if you look at my Q4, my volume is down, what, three, 4% again, quarter over quarter. The market is soft. Hopefully 24 things will start to get better.

Okay, and then my follow-up question is on your reference to the next deal. How much of that is when you're ready as opposed to when there's an opportunity? You always mentioned there's a bunch of larger players that you're always in talks with. Could it be that the timing works and this is a 24 deal or is it possible that this happens in 25 and maybe not at all, depending on if it's things that are outside of your control in timing. Just help me understand a little bit how that will play out this larger kind of LTL logistics acquisition in a potentially 25 framework.

But you know what, Walter? The big difference between when we bought UPS Freight and when we're buying Daski. UPS Freight was a very difficult deal to do because it was a carve-out and the company was not making any money. The OR was about 110. The fleet was a disaster, et cetera, et cetera. Daski is a different story. I mean, Daski will run a sub-90 OR within six to 12 months in my mind, okay? The operating groups there are very, very, very good. I mean, there's a few things that we'll work with them to fix, but in general, this is an easy transaction for us compared to UPS Freight, which was a very complex one. So with that in mind, okay, what I'm saying is that once we do Daski early in Q2, if something comes along before the end of 24, that makes sense, okay? Financially, even before we do the spin-off, we are in position to do it. Why? Because Daski is not a big rock in our shoe. They run a very, very good operation, okay? And I think that to bring those guys to a sub-90 OR it's not gonna take five years, okay? It will be very short, same market condition as we have today, right? If market condition freight changes in 24 late or into 25, that's gonna make it much easier, even that. So to answer your question, yes, we're doing Daski. Yes, we're working on this spin-off, but if a good opportunity comes along late 24 into the LTL or into the logistics world in the US, we're in. Excellent, thanks

very much for the time, appreciate it. Pleasure,

Walter.

Our next question is from Jason Seidel with TD Cowan. Please proceed with your question.

Hey, Apar, hey, thanks for taking my follow-up. Along those lines, you made a comment about potentially growing your specialty truckload a little bit before a potential spin. I guess two questions. Geographically, where would you be looking to do that? Number one, number two, what types of specialty do you think would be additive to make that a more attractive asset on the spin? And three, would it have to be done before a potential exiting of the P&C business, or could you do it, do you need to do it after?

Well, Jason, you know what? First of all, it's gotta be US. Because in Canada, there's not much in terms of size, right? So it's gotta be US. What we like in specialty is we're a big fan of tanks, we're a big fan of flatbed and dump operation, right? So that is really our focus. We're not big fan of reefer, okay? So this is really our focus. And if you look at Daski, I mean, that's a perfect fit for us, right? And in terms of, do we have to do P&C? Yes, no, no, no, no. I mean, P&C in my mind is maybe something may happen down the road, you know? But right now our focus is really, like I just explained, is let's deliver our US LTL, let's do the Daski deal. And if an opportunity comes along, okay, in late 24 into LTL or logistics in the US, we're ready to look at it. Why is that? Because Daski is not the same difficulty for us as UPS rate was. UPS was a lot of work, it's a carve out, it's complex, it's big, et cetera, et cetera. Daski, to me, it's small, it's $1.5 billion revenue, 1.6, 1.5 in the US, 100 in Canada. And the operation is very well run. There's a few things that will work with the boys over there. But to me, I mean, it's day and night versus the UPS rate deal in terms of complexity, in terms of difficulty to bring the order under 90.

It makes sense, Elaine. Thank you for the time again.

Pleasure, Jason.

Our next question is from Tom Wadowitz with UBS. Please proceed with your question.

Yeah, great. Good morning, Elaine. Wanted to, I know you've gotten a bunch on US LTL, but I wanted to ask another one on that. You've had, I mean, obviously the yellow situation provided a lift. I think the way that kind of flowed through to you was initially good, but then maybe a little bit disappointing on the tonnage and keeping the shipment. Yes, yes. And then you're showing improvement in service with the cargo claims ratio down a lot. So I guess I just want to get your sense of how much visibility you have to the improvement and to things being on track. The 880R is that 90% cost driven and you have a lot of conviction, or is it 50-50 with revenue and you still could have some kind of volatility around the shipments and the pricing performance? So just, I guess some more thoughts on the trajectory on US LTL.

You know what, Tom, my experience with revenue, growing revenue at T4 has not been too good, right? So if you look at our track record for two and a half years, I mean, we were never able to grow revenue over there. Why? Because our churn is too high, because our service was not up to par to our peers, et cetera, et cetera. So this is what, when we talk about a 880R, it's going to be like 80% today based on how good can we shrink costs today, right? So we're going to have to get to the 300 basis point versus what we are today at Q4. Now, we've made some changes, okay? We've improved our claims, okay, like we said. We are improving our line all, okay, just in time, because we do more on the road than on the rail, versus, let's say, two years ago or a year ago. But still, okay, we have to improve the customer experience dealing with us on billing, okay, where there's too many mistakes, like I said earlier on the call. So this is an ongoing process in Q24. Our sales team also has to be more focused on the freight we need, not the freight that's there, okay, that we don't need. So it's, again, a cultural change that, guys, okay, retail freight is good, industrial freight is better, because it's heavier, we get more money. Close customers to our terminal is better, right, than customers that are 100 miles away from our terminal. All this kind of education of our sales team and focusing on the right thing, and also reducing the churn, okay, with our customers. Our churn is too high. So these are all things that during the course of 24, we have to make some major improvement. Like we said on the script and our press release, we were successful on claim, okay, because that was a major issue of dealing with deforested freight is claim is a disaster. So that's been fixed, okay, and we're doing well on that. Now, we have to improve, continuously improve our service, and this is gotta be the goal. But if you ask me today, okay, to get the idea to our, okay, how are you gonna get to there? I would say 80% of that will be saving money, being more efficient, doing more with less. And hopefully our sales team and our sales leadership start to deliver some growth year over year in terms of the shipment count.

Right, okay, maybe just a couple more quick ones on that. So if you look at, so you're saying volume up, I think, for shipments in second half is, would you, in USLTO, would you also expect revenue per hundred weight to be up in second half, so the pricing lever too? And then just wondered if you could give a little more kind of detail on how much of line haul is outsourced to rail, like where you were before, and maybe where you are today, thank you.

Yeah, yeah, so right now, what I could say, Tom, is that we're doing our own line haul for about 56 or 57% of all miles. So rail is doing probably like 35, and third parties are doing the rest. In terms of trying to be, where are we gonna be in 24? Really the goal on the revenue per hundred weight is to improve that. I mean, our revenue per hundred weight is down a bit. We think that the market condition will support some growth in there. If I look at my peers, those guys are up. Us, we're down a bit because our weight was also up at the same time. Our revenue per shipment is up year over year. We believe that market condition in 24 for the industry in general in the US will be positive. So we'll be in a position, again, to improve the quality of our revenue. But again, I mean, if the service is there, okay, like my peers, their service is up to par, right? It's easy to get more money. It's easier, not easy, but it's easier to get price increase from customer. It's not the situation that T-force rate, right? So we are working on improving service, and once you improve service, then you're in a way better position to start moving rates up, okay, versus market. I'm convinced that T-force rate today versus my peers, same shipment, same destination, et cetera, et cetera, same weight, et cetera. We have to give a discount to a customer because our service is not comparable, but we're gonna get closer in 24 with everything that we're doing.

So, right, makes a lot of sense. Thank you for the time,

Lane. Pleasure,

Tom. Our next question is from Brian Optenbeck with JP Morgan. Please proceed with your question.

Hey, Lane, good morning. Thanks for taking the questions. So, just wanna talk on that service point. You gave the context of the year of your improvements. Can you talk about how that trended through last year and how recent those improvements were? Because it sounds like it might have been more recent events because that probably has implications in terms of how fast you can improve pricing, how much customers trust the level of service. So maybe to get a little bit more context around that.

Yeah, no, what happened, Brian, is that these are improvements that happened during the course of 23. If you look at the claim, I mean, it's something that we just woke up one morning and said, hey, I mean, our claim ratio has improved so much. This is something that we should talk about. And this is why for the first time, we're talking about it in our press release, right? But this is something that we started proving about a year and a half ago when we saw that there was really a need, a major need for improving. In terms of the line-all, what we're talking about, okay, this is something that we started about three, four months ago, okay, when we talked to our union contract and all that, we said, guys, you know what, in order to improve service, we wanna drive more miles on the road for sure, that will create some kind of jobs, et cetera, et cetera. So that is something that we really started, let's say in the fall of 23, and we'll keep doing that to improve service. In terms of the major rock that I've got in my shoe over there, which is billing, et cetera, et cetera, this is something we've just hired new folks in our pricing billing department, we'll say like six months ago, this guy took it over, and that's gonna be part of our improvement for 24. There, we have seen some improvement, okay, because of all the measures that we put in place, manual measures, okay, to improve the way we bill customer, to try to eliminate as much as possible mistakes and all that, and credits, and rebuilding and all that. But I mean, in terms of the system, this is 24 where we're gonna have to move into a much better tool for our people to be able to bill customer in an efficient way so that there's no more mistakes. I mean, this is, you know what, right, this is something I've never seen in my life, how bad of a system that we have, how many mistakes we make. I mean, I think that for 20, let's say 22,000 shipments, we will probably issue like 35,000 invoices because we bill, we credit, we rebuild, I mean, it's just a nightmare. And this is not something new, this has been going on for years and years and years, but it's never been addressed.

Right, so on the other side of USL2, one of the big things going into this year, I think was just getting the terminal level information down to the service center managers and everything on

the dots

and whatnot. So I'm gonna keep talking about that as much, so maybe this can

give

us a sense in terms of how that's progressing. And if you're starting to see that, it's gonna take a little while to get moving as well.

Very good question. I mean, yes, I think that's a good question. We have financial information now at the terminal level, okay, in 24, this is something new. Okay, so I'm meeting the guys next week and I'll know more. I was in one of our terminal in Alabama two weeks ago, talked to the manager there. Yes, we're doing better now. And then for sure, Ryan, that's something I forgot to talk about, but you're absolutely right. I mean, this is also gonna help us because now we're providing them the financial information so that they could start making a difference in terms of managing costs better, okay, managing labor costs better, et cetera, et cetera. That's something new though. I mean, we're just doing that now. Okay, we'll take some time. Some managers will make it. Maybe some managers will say, you know what, this is not for me. And then we'll have to replace some of the managers by, but a manager at the T-Force terminal in 24 now has got to manage costs, manage employees, and manage the fleet, manage the service, et cetera, et cetera. He's got to be a real manager.

Got it. Thanks very much, Ryan, appreciate it.

Pleasure. Our next question is from Konar Gupta with Scotia Capital. Please proceed with your question.

Thanks, operator. Good morning,

LA. Good morning,

Konar.

Good morning, LA. Just wanted to understand on Q1, I know you were saying it's tracking a little bit soft due to weather in January, et cetera, but are you expecting EPS flat or up in Q1 versus last year's Q1? And would you say the free cash flow for the full year grows toward $10 per share?

All right, Konar. Okay, so like I said earlier, we don't really want to talk too much about 24 so far, but what I could say is, again, I mean, I think our free cash flow for, we did nine bucks a share this year. The forecast, what I could say is that we believe that our free cash flow for 24 is going to be very good as well, right? We'll give more information when we come up with our Q1, but when you think about that, I mean, nine bucks a share, I mean, this is quite an accomplishment. We believe that we'll be more precise when we get into Q1 numbers, but I think a free cash flow is going to be wow again in 24 based on what we could see now. January for sure has been tough. Are we going to do better in Q1 24 than in Q1 23? I would say yes, okay. Will that be better by a lot? Probably not because January has been quite difficult for us, and if you listen to our peers, I mean, everybody's saying the same. I mean, we had snow in Nashville, our terminal was closed for a few days. I mean, this is never seen, never heard that before. So, you know, TFI is all about cash, right? Like we said many, many, many, many times, that helps us do M&A, buyback shares, et cetera, et cetera. The focus at TFI has always been about cash. Cash is king, and what I could say is I will come up with something more of a guidance at Q1, but if you try to pull a little bit of information from me, I would say that we believe 24 is going to be as good as 23 and maybe even better.

Okay, now that's great, Fadali, and then maybe if I can follow up with all that cash that you expect to generate this year, are you earmarking anything for tuck-ins and buybacks at all?

Yes, yes, tuck-in for sure. We always do tuck-in, right? We always spend or invest at least 200 million to $300 million a year on tuck-ins. So absolutely, I mean, now in terms of buyback, probably not as much as we did last year, but there again, it depends on what the stock price is, right? So if you look at our Q4, we bought back, I think 1.5 million shares, okay, because we look at the reaction after we came out and we saw an opportunity and we said, you know what, we're gonna buy 1.5 million shares, we did that in Q4. So depending on the reaction of the stock, we're always there. Now, you know, with this Daski deal, what I could say that, let's say we closed that in April, I would say that our leverage will be under two at the end of June after the closing of the deal. And then, you know, if nothing major happens, I mean, we'll probably be under 1.5 by the end of the year.

Okay, that's great, appreciate the time, Alain, thanks.

Pleasure,

pleasure, Conard.

Our next question is from Ben Moore with Deutsche Bank. Please continue with your question.

Hi, good morning, Alain. Thanks for taking our questions. Can you talk a bit more about the conditions in which you'll pursue breaking up with the company? Your December statement didn't include much details in terms of how you're thinking about doing that. Now, obviously the market responded favorably to it, but can you talk about conditions in which a split happens or doesn't happen? And what does the breakup do for the LTL business that it's not getting now?

Yeah, yeah, so what we're doing now is really we're studying this project and we believe that it makes a lot of sense because if you look at our return invested capital, right, although our return invested capital for our truck loading Q4 was about 10%, right, which is the lowest within TFI. And now that compares favorably with my peers, though. I mean, if you look at my peers, except for one, that is a big intermodal player, okay, even in Q4 with a 10 point something return invested capital, okay, I'm probably better than everybody except that peer that do a lot on the rail. We believe that this makes a lot of sense to be as a standalone, okay. And even more now with Daski that's gonna give us some size and also that's gonna give us some free cashflow over and above what we have within our truck load operation. So it's really the logic of not being a conglomerate, okay, like we've always been. Now, you have to understand the history because we started really on the Canadian side and in Canada, you cannot be a pure play because if you're a pure play, you're always gonna be small. So we've grown this business in Canada as not being a pure play. So with package, with LTL, with truck load, blah, blah, blah, and then we start moving into the US. We start with truck load first, okay, with TA and CFI, we sold CFI, so now we're more in LTL and in specialty truck load with the Daski acquisition. But still, okay, like one of my peers that did the spin-off, I would say what, two years ago, okay, it makes sense for us to do that sometimes in 25. So we're getting ready for that as of fall of 24 because we believe that there's a huge discount, okay, on TFI shares today because it's a mix. It's a mix of truck load, it's a mix of LTL and logistics. We believe LTL and logistics makes a lot of sense to be together because profitability is there. If you're trying to mix LTL with a return invested capital at 25 and logistics return invested capital at zero, that doesn't make any sense. But that's not the situation at TFI. I mean, our OR in our logistics is running 88. Our OR in LTL today, combined US and Canada, is about 90, 88, 90. We're gonna go down to 88, 85 over time. So I think it makes a lot of sense. Our return invested capital, okay, is great. Now, US LTL is not as good as it used to be because we had to make major investment in the fleet, okay, over a very short period of time. So our return invested capital with improved profitability should get closer, again, to 20. So that's the thinking, that's the logic between, having one company, TFI, that is truck load, LTL, and logistics versus having two business units. One is truck load, specialty truck load, not van. Specialty truck load with an OR that's gonna be on average for five years, like low 80s, okay, with a huge free cash flow. And the same on the other side, huge free cash flow, and an OR in that neighborhood of low 80s.

Thanks, and as a follow-up, beyond the 500 to 700 basis points of initial OR improvement for US LTL that you've discussed in the past, you've also talked about an additional 500 to 1,000 BIPs from mix and density improvement. How much would you estimate you've achieved from that so far as we enter 2024, and what's the cadence of achieving the balance of that over 24 and 25, and are you still targeting an 85 OR in 2025, which means another 300 BIPs from the 88 from 24?

Yeah, yeah, that's a very good question. So what we're saying is 88 for 24, that is really the goal. We said that this company has to be an 85, and probably less than 85 OR over time. Now, for sure, this is based on normal market condition, which we haven't seen in 23. We don't know if we'll see that in 24, but let's say that in 25, we have normal market condition in terms of freight environment. I think that we should be well positioned to be under 88 in 25 in normal market condition. Can we get to 85 over time? I'm convinced. Will that be in 25? I mean, it's still too far away to say that, but I'm still convinced, guys, that this company, there's no reason for us not to be a low 80 OR company over time, over a period of three, four, five years in the normal freight environment.

Great, thanks a lot.

Pleasure. Our next question is from Kevin Chang with CIBC World Market. Please proceed with your question.

Hey, Elaine, thanks for taking my question. I know the call's been going long here. Morning, Kevin. Let me just, the morning. Let me just a clarification question on the 88 OR in US LTL. Are you assuming shipments are, are similar to, let's say the exit rate or the seasonally adjusted rate in the back half of 23, so roughly the 23,000 shipments, or do you assume you can kind of get up to that 24, 25,000 shipments, or is that needed to get to the 88 OR?

Yeah, the average shipment for us in 23, in 24, Kevin, is about 23 to 24,000 shipments, right? So we're not gonna do that in Q1, okay, but the average for the year should be in that 23, 24 range.

Okay, that's super helpful. And I know this is nifty, but just on the TL acquisition, you talked about 50 cents of earnings accretion in 25. It does sound like there's a lot of low-hanging fruit. If I just do a quick math, if you drop that OR by like five points, it seems like it could be significantly higher than 50 cents. I'm just wondering, is it conservatism? Is it maybe noise around purchase price accounting? Is it supposed to deal still? Is it just macro? Just wondering maybe the difference between the margin improvement we've talked about and the 50 cents that's in December press release.

Yeah, you know, we're always conservative, Kevin. When we talk about 50 cents in 25, that is to me, that's a minimum. When I look at all these different operations, and when I talk to all this leadership, those guys that run the show there in the nine different business unit, I'm very confident that these guys, over not three years, okay? It's not a complex deal like UPS rate. UPS rate was very difficult to do. Daski is not the same at all. I mean, Daski, we have great operating team in all the business unit. And these guys have done very well in 23 in a difficult market like us. They've done well. Now, when you look at the global of Daski, you know, you say, well, they're not doing that well. Well, the problem is that they have huge costs at an office for consultant, accounting. I mean, they spend a lot of money during the course of 23 and probably prior for people that came in to help them at an office, right? As an example, they've implemented Oracle Finance, same as us. Okay, us, we're doing it ourselves. Over there, they've done it with the consultant that cost them, I don't know if I remember, three, four million dollars. I mean, us at TFI, we've done it ourselves. I mean, we didn't invest in the consultant to help us do that. I mean, we've done it ourselves, right? So that's why I'm saying those guys are, the operating guys are really, really sharp. So if market conditions turn sometimes in 24 late or maybe into 25, you know, there's lots of construction that needs to be done in Canada and in the US. I mean, the infrastructure, the road, the schools, the housing, et cetera, et cetera. So that's why I believe that our timing is fantastic for Daski's acquisition, the same as our timing for selling CFI was great. I mean, we, you know, we were in a good position when we sold CFI, fantastic. I think we're a fantastic position with this acquisition of Daski, step one. And then it positions us well to do, you know, what we want to do in 25 with probably other parties and to do a great specialty truckload public company in the US that's got size, okay, with the TFI asset and maybe other assets.

That makes a ton of sense. Greg called on that to look in 24.

Thank you. Our next question is from Cameron Dorxson with National Bank Financial. Please continue their question.

Yeah, thanks. Good morning. Maybe just two quick ones from me. I guess maybe first on the logistics, you know, you alluded to this a little bit, but, you know, the GHG acquisition looks like it was a real positive in Q4, I'm just wondering about the sustainability of the logistics margins in 2024. And, you know, is there any seasonality in there that either helped Q4 or, you know, maybe the question is really more about what we should expect as far as the sustainability margins in logistics?

Yeah, yeah, yeah. You know what, Cameron, I think that our logistics sustainability is under 90 OR. You know, we've always played in the 90, 91, 92 OR so far. I mean, you saw us at 88 something in Q4. I think you'll see us below 94, 2024. Now, GHG for sure 2024 is gonna be a little bit of a slowest year for them because the build rate, of Packard and Freightliner, Daimler-Chrysler, not Daimler-Chrysler, but Daimler, okay, will be a little bit less in 24, but 25, 26, I mean, GHG is just gonna be booming big time. So to answer your question, I think that the new normal for our logistics is gonna be sub 90 OR, okay? And I would say that 25, 26, it probably will get even better with existing business that we have today.

Okay, perfect. And then just secondly on the conventional, the Canadian conventional truckload, obviously some challenges there on the OR, how much of that was kind of driven by M&A that you did during the year where you're still working through the improvements with those tuck-in acquisitions?

No, Cameron, this is a Canadian problem that we have, right? So we are losing volume, okay, because the market is soft and we have unfair competition with the Driver Inc. situation in Canada. I mean, this is a disaster that we have in Canada and nobody's doing anything about it, right? So I don't know if you guys are familiar with the Driver Inc. thing there, okay, but Driver Inc. is, you know, it's unfair competition to all the regular, you know, company truckloads, trucking company in Canada. So we are suffering, we're losing volume to those guys because it's unfair competition. The Driver Inc., okay, has got probably a 20 to 35 cents advantage minimum versus us because they're not paying any benefits to their drivers.

Right, right. Okay, no, that's a good answer. That's the problem

we have in Canada, hey? Cameron, that's the problem we have in Canada. Now, that will get fixed if volume comes back to a certain degree, but it will be a long-term problem for us, okay, as long as nobody in Ottawa, okay, or in Quebec or Toronto does anything about it.

Right, okay, no, that explains it. Thanks very much. Pleasure, Cameron.

Thank you, our next question is from Benoit Poirier with Desjardins. Please proceed with your question. Hey,

good morning, Alain. Morning, Benoit. Just, yeah, just in terms of capital deployment, you provide good color about the buyback M&A we might see in 2024. I would be curious to hear you about CAPEX, what kind of numbers we should expect, and also in terms of M&A, your appetite to get exposure to plane down the road through M&A, given your focus on cash and asset-like business.

Yeah, yeah, so CAPEX, excluding Daski, should be the same 24 than in 23. So if you look at our CAPEX, we're talking about something in the neighborhood of 300 million, okay? So excluding Daski, we're talking about the same kind of number, right? So, I mean, our free cash flow is gonna be great again, I think, in 24, so like I said earlier, Benoit, I don't think that we're gonna do a lot of buyback, unless there's an opportunity on the stock price. So really the focus is gonna be, you know, do the Daski deal, fine, bring the leverage down back to something like 1.5 by the end of the year, okay? And do maybe some small nice tuck-ins here and there, spend maybe two to 300 million, like we always do. And, you know, if there's a transaction that makes sense for us late in the year or into early 25 in the US, in terms of either LTL or logistics, well, for sure we'll look at it.

Hello,

anything? There are no further questions at this time. I'd like to hand the floor back over to Elaine Badar for any closing comments.

All right, I wanna thank everyone for joining us this morning. We're excited about the year ahead and we're glad you were able to join us today. If you have any follow-up questions, as always, please don't hesitate to reach out. Enjoy the weekend, everyone, and thank you again. Bye.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.