TFI International Inc.

Good

day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's first quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a -and-answer session. Callers will be limited to one question and a 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 can cause actual results to differ materially. Also, I would like to remind everyone that this conference call is being recorded on Friday, April 26, 2024. I will now turn the conference call over to Elaine Bedard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead, sir.

Well, thank you, Operator, and welcome, everyone, to today's call. Our results released yesterday after the close show continued performance to start the new year in the context of a particularly weak freight environment. Our self-help opportunities, along with the continued hard work of our many talented team members, have again helped TFI International deliver solid performance. Especially during weak freight cycles, we sharpen our focus on the long-held operating principle that we, that have helped TFI expand rapidly over the years through organic growth and very strategic M&A, while always maintaining a strong financial foundation through our emphasis on profitability and cash flow. We then use our excess cash to intelligently invest and return excess capital to shareholders when possible, starting with a high-level overview during the first quarter of a year, we produce operating income of $152 million versus $166 million a year earlier, with an operating margin of 9.4 relative to 10.7. Our adjusted net income of $106 million was down from $116 million in the first quarter of 2023, and our adjusted EPS of $1.24 was down from $1.33. We produced just over $200 million in net cash from operating activities versus $232 million last year, and we generated product-free cash flow of $137 million relative to $196 million. Taking a step back, I'd like to point on these results. First, they reflect a solid performance, giving the economic cycle of the USLTL business, which is picking up steam. The ongoing transformation is rooted in our overreaching focus on service quality and revenue per ship. In particular, we saw tonnage inflict positive in the quarter, leading to a 12% increase in revenue per shipment. A second observation is that we see very tangible opportunity ahead to drive much stronger LTL results. There remains much work to do on cost, all while being only in the early innings of our service-driven sustainable top-line improvement program. With that overview, let's take a closer look at each of our four business segments. PNC now represents 6% of our segment revenue before fuel surcharge. As you know, this market is experiencing softer volume across the industry, and our revenue before fuel surcharge was down 8%. Driven primarily by our lower rate per shipment and slightly fewer shipments. Our PNC operating income came in at $18 million, or a margin of 18%, down from $27, or a margin of 24% in the prior year quarter, on lower operating leverage. Our return on investment capital was still a very solid 25.7%. Moving on to LTL, which is 42% of segment revenue before fuel surcharge. We generated revenue before fuel surcharge that was down a percent over the past year, while our operating income, despite lower gain on assets held for sale, actually grew significantly to $67 million, which was up 15%. This reflects a 140 basis point increase in our operating margin. Looking more closely at these strong results, our Canadian LTL revenue before fuel surcharge grew 8% year over year on a 9% increase on shipments, and our claim ratio remained low at 0.2%. Return on investment capital for Canadian LTL was 19.1%. Turning to US LTL, revenue before fuel surcharge of $552 million was down 3% over the past year, with the decline driven by our asset-light operation, GFP. In the core LTL business, we drove tonnage up 7%, weight per shipment up 13%, and revenue per shipment up 12%. In addition, our operating ratio for US LTL improved significantly, significantly up 310 basis point to 92.6, and our return invested capital was 15.2. Truck load is up next, now 24% of segment revenue before fuel surcharge. This market remains weak, and we produced revenue before fuel surcharge of 398 million, which was down 4% year over year, reflecting a decline in miles. With pricing stable and specialized, but under some pressure in the Canadian Inven division. Looking closer within truck load, our specialized segment generated revenue before fuel surcharge of 321 million, which was down 5% with an operating ratio of 89 versus 85 last year. Return invested capital for specialized truck load was 9.5, compared to 14.1. Moving on to the Canadian-based conventional truck load, we slightly grew our revenue before fuel surcharge to 78 million, with an adjusted operating ratio of 91 compared to 81 a year earlier, and our return invested capital was 10.4, down from 21.3. Speaking of truck load, as you know earlier this month, we closed the acquisition of Daski, a business very complimentary to our own, serving many attractive specialized in industrial and markets, and providing us even greater scale. You'll begin to see the Daski contribution in the second quarter, and similar to other acquisition of ours, we see an immediate opportunity to enhance financial results. Rounding out our business segment review, logistics is 27% of segmented revenue before fuel surcharge, and again, produced very strong results this quarter, outperforming the industry. Our revenue before fuel surcharge climbed 24% over the prior year, and our operating income grew 27% to 40 million. Our acquisition last summer of GHT continues to benefit our results, for the quarter our logistics operating ratio was 91, and return invested capital held steady versus the prior year period at just 19%. Moving right along, I'll provide an update on our balance sheet and liquidity. For starters, we generate free cash flow of 137 million during the first quarter. Adding to our liquidity near the end of March, we closed a $500 million term loan at an attractive rate, which transures due March 25 to March 27. We ended the quarter with a funded debt to bid ratio of 1.6. This very solid financial foundation is a core part of our strategy, allowing for smart investment, cycle in, and cycle out. In addition to the post quarter acquisition of Daski, during the March quarter, we completed acquisition of Hercules, a well-run LTL carrier that adds to our cross-border capabilities. We also were proud to declare another dividend during the quarter, with our board director again approving 40 cents per share paid on April 15, a level 14% higher than the prior year quarter. In wrapping up with guidance, today we introduce our 2024 EPS outlook range of $675 to $7, and we expect full year free cash flow in the range of $825 to $900 million, with net capex of $275 to $300 million. We also plan to pay down $500 million to $600 million debt, targeting a fund debt to bid ratio under 1.7 by year end. All right, with that, operator, if you could please open the line, I'd be happy to take questions.

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 would like to remove your question from queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. As a final reminder, we ask that you limit yourself to one question and one follow-up. One moment, please, while we poll for your questions. Our first questions come from the line of Brian Osenbeck with JP Morgan. Please proceed with your questions.

Hey, Lane, good morning. Thanks for taking the question. So maybe you could just start with some of the assumptions under the EPS guidance because I think last quarter you gave us a preview before the Daski acquisition closed. EPS would probably start with a seven, so that's still within the range, but a little bit lighter than that on the lower end. So just wanted to see what it changed and maybe what you saw with Daski initially.

Yeah, well, Daski really has nothing to do with that. What we saw is the Q1 has been way, way, way worse than we anticipated it would be, right? Because if you look at our EPS of Q1 versus last year, our EPS is down. Why is that? Well, because the truck load in Q1 was just a disaster. Okay, just look at our peers in the US or our Canadian peers. It's a very, very difficult market right now in the truck load. So this is the reason why instead of coming out with seven, better than seven, now we have to come to maybe more like 675 to seven. Our PNC in Canada has a very disappointed Q1, but we believe that we'll be able to change that over the next few quarters and get back on track to where we are normally. But our PNC business is really small. I mean, when you think about with the Daski acquisition, our PNC is going to represent maybe 4% of our revenue. But PNC is not going to be the issue for us in 24. I mean, we'll get back on track with our PNC. The problem is the market of our truck load. Now on the Canadian side, as I've said many times, I mean, we're fighting the drivering cancer that we have in Canada whereby we have competition from these guys that they don't pay any benefits to their drivers. So that is really killing us. If you look at my OR, I'm down 10 points of OR year over year. So that we don't anticipate that this is going to improve very much unless the market gets way better in terms of the freight environment. On the US side, I mean, we do pretty well. If you compare us with our peers, we do pretty good. But we still anticipate this freight kind of recession will not change probably before 2025. We have an election year in the US. I mean, a lot of our customers are just waiting to see what's going to happen, et cetera, et cetera. So that's why we have to adjust a little bit from, let's say, seven and better to 675 to seven.

Thanks for that, Lane. Appreciate it. So the follow-up would be just on T-Force freight. In that backdrop you just outlined with the freight recession continuing, maybe you can talk about the momentum that seems to be building there, especially with the weight for shipment moving up. Looks like some nice movement in yields and volume and just things moving in the right direction. So can that continue even if you do have that sort of backdrop that you outlined with the broader US freight market?

Well, you see, Ryan, we've been educating ourselves, team, to bring freight that fits the model. So we've been saying, guys, don't bring us freight that average weight is 1075 pounds per shipment like it was. So finally, don't forget, we bought this company three years ago in May. So it took us, let's say, two years just to try to convince these guys that because you're paid by the weight, why would you haul light shipment? I mean, this is stupid, right? But it takes a long time to change this mentality. The pricing also was bad, okay? And that puts us in a very non-competitive when the shipments were heavy. So we had to change that. We had to change the culture. We have to change a lot of things. Now, we're not done because we still drive too many miles between each and every stop. That kills our density compared to what we have in Canada. We still don't pick up enough freight per stop, okay? So this is also part of the major improvement that needs to happen for T-Force freight to come into an 85, 80 to 85 operating ratio down the road, right? So the job is not done. Now, for sure, we understand that the freight environment, even in the LTL, is soft, right? Our focus right now is, like we just said, on these three factors, weight, density, etc., etc. But also at the same time, we are working hard, very hard at reducing the cost. We say that the tiger is always the last to survive in the jungle. And at T-Force freight today, I mean, we're a bunch of fat cows, okay? We are way too fat. We have too many clerks. We have too many... Because our technology is sold, okay? That it takes an army of people to service our customer. And this is something that is ongoing right now, okay? So as an example, we will be improving our freight billing system, our master file, okay, by the end of the year, which is causing us a lot of problems right now with billing our customers, right? We have too many issues with that, and we have too many people at the same time. So this new tool that's supposed to be implemented by year end is going to help us with that. Our new tool on the line, though, because one of the reasons that we're going to be doing better is our services are also improving. So miss pickup is improving. We put more freight on the road, okay, versus let's say a year ago on the line. We use less rail, okay? So rail used to be a big portion of our line. Now the portion of rail is reducing and our own line is picking up speed, you know? So I think that pretty soon we're going to be doing probably like 60% of the line or miles will be our own guys, you know, let's say within a year or two. So in order to, again, improve service. So to me, Brian, I mean, we still have a lot of work to do over there, but we know what to do. That's the beauty is we have to execute, and we're just starting to see a little bit of improvement of our execution.

All right, Dwayne, thanks very much. Appreciate it.

Thank you, Brian. Thank you. Our next questions come from the line of Jordan Allager with Goldman Sachs. Please proceed with your questions.

Hi, morning. Just to sort of follow up a little bit. Morning, Jordan. Morning. You know, I know you mentioned sort of early innings and service improvement. So you get to get a little bit more color on, you know, what you feel you've accomplished and what's next to come to get service. And then even though it's early innings, are you at the service, again, assuming the freight market cooperates, where you can have sustainability in that growth and tonnage after a first quarter that saw an inflection?

Yeah, well, we believe so. And, you know, if you look back, an example of stupidity is missed pickups. So, you know, if you don't monitor that, you can't, you can improve. So this is something that we put in place to make sure that we monitor that. Now we still have about, you know, around 2% of our pickup that we miss

today.

Okay. Now, depending on the terminal, you know, we have better ones, we have ones that are not so good. But, you know, the business of freight starts with a pickup. So if you miss the pickup, you miss the revenue. This is the kind of culture that we are changing, for example, in California, where we can afford to miss pickups. So we're changing that and that improves the service to the customer because then the customer can trust, can have trust in you that you're going to show up and do the pickup. Right. That's number one. Number two is our billing system. And I've been saying that for two years. Okay. It's also a relation with customers. So we are fixing that during the course of 24, finally. Okay. And in terms of the line, you know, if you rail your line, all freight, your freight on the line, all with rail, I mean, don't expect to be, don't expect it's going to be on time. I mean, those guys, they're on time services is maybe not as good as the road. And if you look at my peers in the US, um, I mean, the percentage of freight that's run on the rail is, is way less than, than what we do us today. So this is also something that we are working on to improve and we can't change everything at the same time, but this is an ongoing process in 24 and into 25. So to your question of growing this company, I mean, for sure right now, what we've been able to do is at least grow the weight per shipment, which is, you know, a key to success. I mean, again, if you compare my average weight per shipment to my peers in the US, I'm still way too low versus those guys. If you look at my weight per shipment in Canada, there, we understand the business and our weight per shipment is, is way more than what it is in the US. So that, that is also a trend that we're going to keep running and over the course of the next year or two. So this is why we're probably in the second ending of a nine inning game on, on that T-Force rate LTL business. I mean, we still have to work on the cost. Like I said, you know, our P and D, we still run too many miles. Our density is not as good as should be, you know, we don't pick up enough freight per stop, et cetera, et cetera. So these are all different levers that we have to, you know, put in place, do what we do in Canada. I mean, you know, we run an OR in Canada that is second to none. If you look at my OR in Canada, sure, it went from 75, okay, last year to 81. But you know, an 81 OR in Canada and a very depressed market is not bad. Why? Because we have a density that is second to none. And this is what we're trying also to build in the U S do more or less.

Got it. Um, and just, just as a quick follow up, you know, taking all that together, is it still a thought you could do around an 88 OR this year?

Well, when I talked to my guys, okay, they are convinced that they could do it. I had a little bit of concern when I look at, you know, the, the environment and the market right now, you know, I would never anticipated that 24 was going to be so rough in terms of the free environment. I mean, I'm telling you, if you would have asked me six months ago, what do you think about early 24? I would never have said that it would be that bad. I mean, look at the truckload guys, some guys are losing money. I mean, this is, this is probably one of the worst markets we've seen in the last 30 years.

Thank you.

You're welcome. Thank you. Our next questions come from the line of Robby Schenker with Morgan Stanley. Please proceed with your questions.

Uh, thanks. Uh, morning, Alan. Uh, just on that point on the LTL side, how much of that part to 88 OR is macro? So depending on the cycle coming back versus idiosyncratic actions, I mean, best practices from the Canadian operation that they're implementing that idiosyncratic action.

Yeah. Yeah. When we talk about the business, Ravi, we never talk about the market because we don't control the market. So when we say that, we believe that we'll get to an 88 or this is based on market condition that we see right now. I mean, nothing is based on the market that may improve down the road. We don't budget for that because we don't control the market. What we do control is our costs and our efficiency and our activity. And this is what we're trying to do now in terms of the market is let's focus on the freight that fits. Okay. That we can control. Let's focus on heavier freight versus, uh, you know, lighter freight, which is something that slowly we're starting to improve. Let's focus on trying to get more freight per stop. That's something that we can control, you know, when you're having the right discussion with the customer. So, but this 88, okay, that has to be target for us in 24 is based on guys. We have to do a better job in terms of managing our costs, better productivity, getting more weight per shipment. So if you look at, uh, you know, our revenue is about stable, but our shipment count is down. So it helps us on the cost side because we get the same dollars, but we have to do a little bit less work because we pick up less shipments. Right? So this is the trend is, is based on guys. We can't control the market, but we can control our costs and the freight that we pick up and deliver.

Got it. It's helpful. And maybe as a follow up, uh, you said earlier that you're not expecting an inflection in the cycle until 2025. So just to understand is your full year guidance for 24 just based on normal seasonality of a one queue number, or are you, uh, accounting for any improvement at all this year?

No, the way we see it, uh, Ravi is that this is going to be, uh, not a great year in terms of the freight environment.

Okay. Understood. Thanks.

You're welcome. Hey, thank you. Our next question has come from the line of Tom Waterwitz with UBS. Please proceed with your question.

Uh, yeah. Good morning, Elaine. Um, yeah. Um, let's see, there's a lot going on in transports these days. Um, wanted to get your sense on acquisitions. Uh, you know, you've had, uh, you know, very, very good skill at, you know, identifying value and taking out costs and doing acquisitions. Um, historically, I think with T4, so obviously the market backdrop is tough, but it seems like it's been, you know, maybe harder to fix than you might've anticipated, or maybe just takes longer.

Oh yeah.

Um, and, and then, you know, you've got a pretty tough truckload backdrop and, and you've got a big truckload carrier just bought. So I guess the question is, do you consider slowing the pace of acquisitions maybe the next year or two and say, Hey, we've got a lot to digest. And, you know, maybe even takes longer to kind of separate, you know, the truckload businesses or just, just thinking about how that might affect the pacing of what you do on the, you know, I

Very good question, Tom. I mean, the, the UPS freight acquisition was very difficult to do. Number one, because it's a carve out, you know, a carve out is always difficult because, you know, you don't know exactly, okay, uh, the cost that you're going to inherit, et cetera, et cetera. And I have to tell you that, uh, you know, one thing that we were not aware is that 35% of the and you're right, it's taken us a little bit more time. So it took us two years to unhook from, uh, UPS financial system, you know, so it's a carve out is always difficult to do. Okay. So, but we are, you know, right now we're completely out of the UPS environment, right? So we are standalone and we're making progress over there. Now the Daski one, that's a different story because Daski, you know, it's not a carve out. It's a standalone business. Number one, number two is their head office costs was through the roof. Okay. To a run the Daski head office is the cost was about the same as to run TFI head office. Now that cost at Daski has been reduced by 75%. Okay. Over the course of the next year or two. So we're going to be down to very little costs. And the operating companies at Daski, you could say there was about nine business unit that operates. Okay. So these operators, I'm looking at the results for 23, excluding the head office. Okay. Those guys did a pretty good job in the market environment of 23. I'm looking at 24. And if I look only at the operating businesses, these guys are on plan. They're down versus last year. They're down versus 23, but not that much. So it's a little bit, I mean, they're very, you know, it's not like UPS rate versus us in Canada and the Canadian LPL, which was day and night in terms of results. I mean, those guys are not as good as TFI. Okay. But the Delta between the operating units and our operating units is not, it's not 300,000 points of OR. I mean, those guys, you know, not going to be the same thing. Now, the question is, are we going to do something major in 24? You're right, Tom. I mean, we have to keep digesting T force rate and we have to do the same with Daski. I mean, so this is why the M&E side for us 24, tuck-ins, yes, in Canada, easy to do, but nothing major except the Daski transaction. Because as I said on the script there in the call, we're planning on reducing our debt by between five to 600 million in 24 to bring our leverage down to something like 1617. Right now we're about 16. Okay. And we believe that by year end, we're going to be back to 16.

So

by saying that, I mean, there's nothing major of M&E that's going to happen in 24.

Okay. That's really helpful. I just had one follow up on the USLTL. How do we think about the improvement in OR and the sensitivity to freight market versus what's in your control? There are a bunch of things that are in your control, but it also feels like if you're going to get paid a higher price, then it would help to have a tighter freight market. It feels like there's some sensitivity to pricing and freight market within that improvement too. So I don't know. How do you think about this year, next year, how much is in your control on OR improvement in LTL versus how much is freight market sensitive?

Yeah. So like I said earlier, Tom, we don't control the market. The market is, you know, yellow disappeared, 40,000 shipments disappeared. Now it's been across all the carriers. We don't control the market, but what we can control is the freight that we decide to haul. Okay. So on that, we're going to be making some major improvements during the course of the next few years. So instead of hauling light freight, like we used to do, anything that is light, we love that. No, no, no, no. So we have to change the focus. So this is why, you know, we have to move that 1200 pounds that we have today versus more like 1500 pounds like most of our peers in the US, our average weight is. That's number one. So that's got nothing to do. It's just a matter of picking up the right freight that fits for us. Number two is, and I've said that many times, we have to improve our density because density is the name of the game in the freight environment. So pick up more freight per stop. That has nothing to do with the market. I mean, it's just like you have to have our sales team focus on, okay, we get two shipments from this guy. Can we get five? Can we get three? Can we get four? Okay. And in order to do that, what do we have to do? Right. This culture never existed at the force rate or UPS rate. No, it was should name. Okay. So whatever freight is there, I mean, okay, let's pick it up. No, no, no, no, no, no, no, we got to be focused. Try to get more freight from each and every customer that we already go and pick up freight. Also cut the zip code coverage. I mean, reduce, improve the footprint, reduce the footprint so that very expensive to do pickups or deliver freight at 75 miles away from your terminal because the guy has to drive about two hours to get there. That's not for us. Okay. That's not for us. You know, the way we do it in Canada is that we keep our network very tight and everything that is outside that network, we give that freight to someone else. Now, and we are also unionized and we're doing that in Canada. Now in the U.S. it's a different environment. Okay. We get that for now. So the way to service is just to say, well, I'm sorry. I mean, this zip code, I'm going there only twice a week as an example, in order to be more efficient. But you say it upfront to the customer and that's what we're trying to do. Reduce the miles on the P and D side. And at the same time, like I said, something that we can control is our line. Do less miles with rails because you can't control those guys. I mean, you get it when you get it, right? But when it's your road asset, when it's your own people, that is something that you can control and provide the service that you have committed to the customer. And when the freight is on the rail and it's late, you can say to Mr. Customer, well, I'm sorry, I'm using a rail guy to do the they don't want to listen to that. Right? So this is why these are all part of what we have to do with what we are doing now to improve the service. And when you improve the service, you could get better shipment and better money for your own shipment. Right.

Okay. Thanks for the timeline.

Thank you, Tom. Thank you. Our next questions come from the line of Kevin Chang with CIBC. Please proceed with your questions.

Hi. Good morning, Elaine. Thanks for taking my question here. Maybe if I could just go back to the good morning. Just the guidance. So if I look at Q1 versus the midpoint of your guide, it's about 18% of your EPS you're calling for in the first quarter here. If I go back and I know there's a moving parts and when you go back historically because of your M&A track record, but if I go back to the last, let's say 10 years, that's been about the average about 18% in Q1. And I guess I'm just trying to get a sense of maybe the conservatism in your guidance or maybe what you're building in for certain KPIs. I would have thought you would have seen better momentum as we get through the year, even in a tough freight environment, because Q1 was tough. Just with some of the things you've mentioned already within T4's freight, it sounds like you're doing some stuff in T&C. Maybe you can just frame that a little bit more in terms of where you're seeing some of that momentum and maybe what some of the headwinds could be to maybe offset that, to maybe drive maybe a number not above $7 of EPS this year.

Yeah, you know what, Kevin? You're absolutely right. Q1 is about 18% of our EPS on average, which is about the same. But when we look at the environment, when we look at our peers, what we've seen so far, we're very concerned about this freight environment. So this is why after discussing with our people, our team, said, guys, let's be very conservative so that we don't disappoint and come up again with a miss in the next quarters, because there's so much. When we look at the best truckload guys in the U.S. and the kind of numbers that these guys are coming out with, it's scary. It's scary. So this is why I said, guys, we have to be very prudent. We have to focus on pre-cash low, which is going to be quite good in a very difficult year. And I think that maybe we could do better than $7. But when I look at my peers, what I've seen so far in Q1 from those guys, both on the U.S. and Canadian side, when I look at the environment, when I think about the driving situation in Canada, that's not going to change. I mean, it's just going to get worse. So I said, let's be very careful. So I mean, hopefully, Kevin, we do better than $7. But right now, that's the best that I could say. I mean, I'm sorry, because we said on Q4 that I think that our guidance will be at least starting with a $7. We're not there. I'm sorry, because Q1 was so bad for me. Okay, maybe not so bad for us, because we're so diversified. I mean, our guys are doing such a fantastic job. But when I look at my peers, I'm saying, oh, boy, this is going to be... We thought that 23 was a bad year. But when I looked at the start of 24 with my peers' results, I'm saying, oh, maybe 24 is going to be worse than 23. Who knows? I mean, one quarter is not a year. But I mean, this is why we have to be more under-promised and over-delivered. That's always been the motto of TFI.

I appreciate that, given all the uncertainty that's obviously facing you in the broader transport space. Maybe just my second question on P&C. You talked about the tough Q1 here, but you're taking steps to obviously turn this around, and maybe we'll see something in the next couple of quarters here. I did notice, you know, average weight per shipment, I think it's the lowest I've seen in a long time in the first quarter. You know, the vehicle count is pretty low. Just maybe any color on what's happening there, and maybe what are some of the steps you can do to kind of turn that around?

Yeah, yeah, yeah. The killer is the freight that we all right now on the P&C side is too light, right? So yes, we have less shipments. We have three or 4% less shipment. But the killer is the weight, because like LTL, we're paid by the weight. So it's a little bit of a change, okay, in perspective. And at the same time, you know, Bob McGonigal that used to run our P&C now is working on the US LTL side. Okay. And we have also a new EVP that's in charge of our P&C. And he came with a plan, okay, and the leadership Ken Parloomis, I mean, the guy Jimmy used to run it, you know, you got to drink the Kool-Aid. So our friend Jimmy did not really drink the Kool-Aid. So we decided to retire and went to work for GLS. So now we have a new crew. So Mike Over, that used to run our P4 freight Canada division now is in charge. And he's drinking the Kool-Aid of that new plan of again, being more picky on the freight. And we can't haul feathers, because when you're paid by the pound, feathers are not very heavy, right? So it's a little bit of a change, okay. But don't forget, what we're getting in Q1, okay, is the action that we took in the summer of 2023, because it takes six months to nine months, okay, of decision that you make and the actual result that you get, right? So we've taken action in Q1 that will start to show results more like Q2 and in Q3, okay, because it always takes time to implement customers and pricing and things like that. So that's why I'm saying that Q1 for PNC was not good, right? I mean, our OR is, you know, when you look at the OR of our PNC is 81 or 82, okay. You say, well, 82 is not bad, but we were 75, right? So we got to get back down to under 80. And we have to, you know, change the pattern of our freight there and we'll do that. I mean, we have a plan. It's going to take us probably into Q3 and into Q4 to see the results of that. So, but I feel good about PNC. My biggest problem is really the truck load, okay, that we have. Now Daski is adding to that, but we believe that maybe not in 24, but in 25, this market has to change. And with the Daski acquisition in our specialty truck load, I think we'll be very well positioned. But there again, if you look at my OR on my special T truck load, I run an 89 OR, okay, which is winter, okay, not great. And we used to be an 84, we're now an 89 OR, okay. But when I look at what's going on in the US in the truck load world, I feel good about 89. No, I don't like to be an 89 guy. So now with the Daski acquisition, like I said to Steve Brookshaw, the guy in charge, I mean, those guys have to be as good as us within a year, right.

So,

and the market hopefully improves in 25. And with Daski, we'll be again working on do more with less.

That's all. That's all very great. Caller, thanks for taking my questions, Elaine. Have a great weekend there.

Likewise. Thank you, Kevin.

Thank you. Our next questions come from the line of Walter Sprachlin with RBC Capital Markets. Please proceed with your questions.

Thanks very much, Alberto. Good morning, Elaine. Good

morning,

Walter. Yeah, I guess, you know, going back to some of the self-help and corporate activity that you could look at, and one of the things that you've used about in the past was the spin-off now of the truckload division. I'm just curious, is this something that you want to have Daski fully integrated before you contemplate that? And if so, is a year the typical timeframe that you would see Daski integrated and therefore would contemplate something like a spin-off of the truckload division?

You know what, Walter, we believe that, you know, if this makes sense, spin-off down the road, I think it could be done late 25 into early 26 because Daski, like I said earlier, I mean, the eight, nine business unit there, they operate really well. There's maybe one or two that are subpar, okay, that we're going to have to work on. The head office of Daski was the cancer was those guys were costing a fortune and the results were not there. So, you know, we did some cleanup over there. We've reduced the salaries of Daski head office on the yearly basis of about $12 million plus bennies. Okay, so, I mean, it's going to take us a year to really improve, but it's not UPS rate. I mean, UPS rate was, you know, there was a lot of things to fix there. Daski, if you exclude the head office, I mean, the operation are pretty good. They will be better, okay, but they are pretty good. Now, in the market environment we're going through right now in the U.S., those guys are doing pretty good. Now, for sure, we'll be working with them, okay, to improve, but I think that to say that are you guys would be ready if you have to do, if you want to do something late 25 into 26, I would say absolutely. Yes, we'll be ready.

Got it. Okay, and building in Daski because it's a larger revenue item, it does affect our models quite a bit depending on what kind of OR we're assuming. Is there any, yeah, any indication you can give us given that we haven't had a look at what, how Daski looks within your operation, how it is relative to your existing business, but understanding that it's probably a little less profitable. What kind of operating ratio or margin degradation in the sequential, the Q2, you know, in 2024 should we just get our head wrapped around as we build it into our model and then build the integration synergies after that?

Yeah, so what I could say is that if you look at 23 of Daski's results, if you exclude all the craziness of the head office and all that, you're running 23 Daski at, you know, a low 90 OR, you know, in the neighborhood of 92, 93, 94 OR depending on the quarter. So it's not a disaster. It's not UPS freight where these guys were losing money like crazy. So that is the starting point, okay, that we have over there. So you got some pretty good guys. We got one or two operating companies that are running, you know, under 90 OR, okay, but you got one or two guys that are running closer to 100 OR, right? But I would say that 23 average, okay, you think about 93, 94 OR on average, right? So that's the starting point. Okay, so when we take over, then the head office was the big culprit that was dragging the OR, okay, up or down, I mean, in the worst direction, okay? So those guys, I mean, we're shrinking the head office costs as we speak. So again, you'll see that in our Q2 results, what we could say is that it's not a fixer hopper, okay, like UPS freight was. I mean, we have a good solid base business there. We have good people. We have good teams. And but if I compare with our own US operation, they have some improvement, okay? So, but I mean, we know what to do. And we'll work with the guys.

Okay. Excellent. Thanks very much for the time, LA.

Pleasure, Walter.

Thank you. Our next questions come from the line of Konark Gupta with Scotiacapital. Please proceed with your questions.

Thanks, operator. Morning, LA.

Morning,

Konark. Morning. My question is on US LTL a bit here. You know, like, what you're seeing in your space is that, you know, the weights per shipment are coming down for the industry, right? Obviously, it's a challenging environment, rates are holding up. But for your business, you guys are looking to increase weight, which you have done, obviously, in the last few quarters. So that's great. But you're also looking to, you know, improve the rates at the same time to keep the quality high. So I'm not I'm trying to just kind of understand, you know, how difficult is it to increase your weight, while at the same time, keeping the pricing up, when the industry is kind of losing the weight, you know, like, is it is it more like, you need to be more competitive on pricing to get that more weight for shipment, or you have to go and tweak some other things?

You know, not necessarily. So one of the reasons us we were not big in heavy shipment is because we were stupid. Our pricing was bad, right? So one of the first things that we had to do was to correct our pricing model, which we did about a year ago, right? Because don't forget, we were tied up with the UPS system. So it was difficult for us to have some quality information in that regard. And we took over February of 23, all the financial information. So at that point, we were able to work with the team that we have there to adjust the pricing so that we can be competitive, okay, on heavier shipment. And by doing that, and also by having our sales team focusing on that, instead of focusing on light freight, or retail freight, more industrial freight, then, you know, we were able to slowly move the average weight of our shipment, okay, up closer to our peers. Because like I said, our peers are not holding at a thousand pounds for shipping. I mean, our peers are running 14, 1500 pounds. And this is where we have to be slowly. Now, by doing that, okay, we just have to be competitive to the markets race that are there, right? And that's what we've done. So if you look at our average revenue for shipment is down a little bit, okay, because we have to match market rates for every shipping. But most importantly, is our revenue per shipment. That is to me the key. Because if you move a shipment for $300, or if you move a shipment for $400, and the difference is only the weight, everything else the same. I mean, to move the shipment, you move that on the pallet. I mean, this is this got nothing to do the only, you know, handicap that you could have is that you could have an issue with weight on your line. But in today's market at T force weight, we never have an issue with weight, we have issues with volume, never wait, right? So this is why by moving to have your shipment, that does not affect our costs at all. Okay, but it increase our revenue. And that is, you know, to be more focused on for our sales team to be focused on the game we want of your shipment. And now we are price competitive, okay, with the market. And we want more shipment per stop. And we want ship shippers closer to our market. And that's why, you know, if you compare us with the other major LTL carrier that's public in Canada, I mean, we have different awards. Why is that? Because our density is probably better than than this other guy. It's not the rate because the rate is market, right? Unless you unless you don't know the market, I mean, the rate the market is the market for all of us.

Right, no make sense. Thanks for the color there. And then if we can follow up quickly, there's a bit of a competitive landscape change, you know, I think maybe in Canada, but perhaps in the US as well. I think there was a big Canadian player that is going to restructuring recently. Any thoughts on your what kind of opportunities that present to you? Like, is it more like a market share grab opportunity to you? Or would you be interested in some of the assets that you're going to be like truck survivors or lanes?

No, no, the guy that you're talking about is a is a drivering guy. No, he's a guy. He's a drivering. So he's under the protection of the court right now, but he's still running the business. I mean, for sure, he's probably going to have to downsize and do less. But we're still fighting this guy and him and others. Okay, mostly based in Ontario. And those guys, that's why my OR in my truck load, my Canadian truck load is like, it's a disaster. We went now we're running 10 points behind last year in my OR. Why is that? Because of these guys, right, that don't pay benefits to their employees because they run a driving model. So this guy, no, it's not going to help us at all because this guy keeps running. And we'll see, maybe he's going to downsize a bit. But these kind of guys will restart in on a under a different name, whatever. I mean, because their model is so good in cheating the Canadian system. So to the benefit of the customers.

Yeah, no, makes sense. Thanks. Appreciate the time. Thank you.

Pleasure.

Thank you. Our next questions come from the line of Cameron Dworkson with National Bank Financial. Please proceed with your questions.

Yeah, thanks. Good morning. Just to kind of follow up on that, that thought, just on the on the Canadian dry van truckload, I mean, if we don't see, I guess, a change in, I guess, the regulation or whatever you want to call it here, does it still make sense for you to have a Canadian dry van operation? Is that something that maybe you don't want to own anymore?

Yeah, you know what, Cameron, we're asking ourselves the question because we believe that our political leaders will act. Now, it's been years and years and they keep promising, but they don't deliver. So, you know, you're absolutely right. That's the question for us is that do we want to have $200 million of assets in a business that we're competing with guys that are not fair, are not paying any benefits to their employees? And us, our benefits to our employees keep growing because now we have Mr. Trudeau that gave 10 days of sick leave. They gave three times three days of PTO, which these guys don't have to pay for. Right. So it's a very good question. And for sure, you will see our asset base reduce. You will see that because, I mean, if you can't beat them, join them. But us, we cannot join them. I mean, we cannot be a drivering company in Canada because, you know, it's not fair for our employees. It's completely unfair. So we're not going to do that. So you're absolutely right. Down the road, okay, you'll see us shrinking. Now, at the same time, okay, we've got lots of opportunities to buy companies for about the asset price. Why? Because, you know, the small guy with 50 trucks or $40 billion revenue, that guy is dying right now. So there's opportunity maybe to beef up a little bit our truckload division by doing a little bit of small M&As here and there that makes sense in those guys that are in niche maybe. Okay, but overall, our Canadian truckload will shrink because of the driving. Absolutely. And people will lose job, good paying jobs at TFI because of that driving unfair competition.

Okay, that's helpful. And just staying with truckload, just thinking about the specialized business, which obviously is a much larger piece of the business now with ASCII. What are you seeing, I guess, on market conditions there? I mean, it's historically been a little more stable from a market perspective. But, you know, any signs of a bottoming? Any feeling more optimistic, you know, later in the year? Just any thoughts around the market conditions?

Yeah, when we talk to customers right now, I mean, everybody believes that, you know, 24 is going to be, you know, some kind of a steady heavy year, not a great year, but 25 and 26 in the US will be great years. The reason being is that there's a major election in the US, right? And the country is divided 50-50. So, you know, you don't know if it's going to go left or right. So some guys are just waiting to see. As an example, you know, if you take GE Energy, okay, with the windmills, if it's a candidate one, he's against windmills. That business is going to fall, right? If you take the number two guy, well, he likes windmill. He's more green. So that's why we have these kinds of customers are just sitting on the fence, not knowing where the ball is going to drop, left or right. So now the Daski acquisition in my mind is very well timed because we're buying that at a very reasonable price, okay, in a very depressed market, right? So the only, I mean, yes, it could still go down a bit, but the probability of going down a bit is way, way less than the probability over the next two, three years to go up like crazy, right? So that is the intention behind, okay, this transaction. And at the same time, like I said earlier, I think the timing, if we do something like a spin off or whatever in 26, I think that the market condition in 26 is going to probably be maybe not as good as 22, but way better than 23, 24.

Right. Okay. That makes sense. Thanks for the time.

Thank you, Cameron. Thank you. Our next questions come from the line of Ben Moore with Deutsche Bank. Please proceed with your questions.

Hi, Alain. Good morning. Thanks for taking our question back to US LTL. Good morning. Typical LTL industry OR improves from one Q to two Q by about 300 basis points. And it's typically flat two Q to three Q and then rises from three Q to four Q, typically about 200 basis points. Wanted to ask you what are the puts and takes to that as a base case? It looks like you'll need much better than that to get to your guided 88 for 2024. And are you expecting maybe 50 to 100 basis points better each quarter based on your actions, assuming the freight market stays the same and maybe even a little bit better than that into two Q given the weather in one Q?

Yeah. Yeah. So you're absolutely right, Ben. And this is, like I said earlier, I mean, this is a bit of a concern when I talk to my guys at the US LTL and I say, guys, are you still confident? And they are. And that's also part of that, you know, 675 to $7. Okay. Is that, you know, if the market continues to be difficult, okay, like we're seeing now, okay, can we get to the eight? We're still convinced. Okay. But like you said, it's a tough, it's a tough goal. What I could say so far, when I look at April is we are on plan. Okay. But our plan keeps improving during the course of the year. And so again, I mean, we'll see. But I mean, our guys are still convinced we can meet this plan.

Appreciate that. And maybe as a follow up, again, on US LTL, you've guided before on a 2024 exit rate of 24,000 to 25,000 shipments a day, and averaging 23 to 24,000 for this year. With one Q at about 22,000, that means two to 3000 of additional shipments per day to get that point. Are these all market share gains? Because we're assuming zero freight market volume inflection. And if so, are you taking market share from smaller regional players given your service improvement?

Yeah, I think on that, I mean, the focus is to also, like I said many times, get more freight by the shippers that we already deal with, right, so that we don't add stops, and we just add freight. Right. So you're absolutely right that we are running about 22. And our goal is to be more like a 24 guy at the end of the year. So when again, our service is improving, so we have customers now that, you know, as one example, a large retailer that we used to do very little business with this guy, but now he sees that our service is improving. So it's not just a matter of us, okay, trying to get more freight is this shipper, you know, wants also to diversify is carrier base. So he says, you know what, now that you guys are doing way better than you used to on the service side, you know, okay, we'll give you more freight. And this is one example of, okay, that something that's going on because we're not trying to chase volume by cutting rates, because this is stupid. What we're trying to do is improve our volume slowly by improving our service. So then we have customers that want to give us more, okay, versus two years ago, when the service was not good. And the only way you could get more freight is by cutting rates to someone else. That's not the goal of TFI. I mean, we're not trying to cut rates to get more freight. What we're trying to do is provide better service. And then the customer sees that because he wants to diversify also is carrier base. He says, okay, guys, we'll give you a little bit more. And this is what we're trying to do to get to 24.

Great. Thanks a lot. Appreciate the time and insights.

You're

welcome. Thank you.

Thank you. Our next questions come from the line of Benoit Apoirier with Desjardins Capital Markets. Please proceed with your questions.

Yeah. Good morning, LA.

Good morning,

Benoit. Yeah. Okay. Just to come back on the USPL and following the comments about the volume and really the focus on putting more weight per shipment, dealing with the same shippers. Any thoughts about your real estate footprint? Whether do you see opportunity to streamline given the kind of volume rebound that you see out there for USPL?

See, Benoit, this is an ongoing thing with us. I mean, as an example, we have a lease in your PA that's going to be switched over to another carrier. We have a terminal that is being sold to another carrier right now. Because we have a network that we use on the real estate side, about 65% of that. So we could say, well, we're going to fill it with growth, with this, with that, but that's going to take time. So this is why we are shrinking our footprint as much as we can, as fast as we can. So as an example, we bought a terminal from YRC. As a matter of fact, we bought two, one in Sacramento, one in Lexington. So the one we bought from YRC in Lexington is way smaller than ours. So we're going to be moving into that new terminal for us in June. But at the same time, we're selling, not to a strategic truckers, but to someone else, the Lexington terminal. So we should be in a position to sell this terminal by, let's say, about $20 million. So we are adjusting our footprint all the time. I mean, you know, TFI, real estate is really one of the key of our success. And we know we still have lots to do. So in Sacramento, for example, we have two terminals, we're moving into one. This is going to be done in about a few weeks. So we're going to be saving probably the first forecast we have about $1 million in Sacramento by having one terminal instead of two. And then we're going to be selling those two terminals. So the question has always been, guys, do more with less, right? On the real estate side, you know, with the trucks, with the MPG, with the idling, everything at TFI is based on that premise. You got to do more with less.

Okay, that's great. And just a quick follow up, Alain. When I look at your leverage ratio buyback, you were not active this quarter, obviously, with the acquisition made last December. But how would you look at the buyback these days? And what kind of leverage would you like to see before stepping in?

Well, you know, buyback for us, it's always been a way to improve, okay, and to give more cash to our shoulders. So it depends on the stock price, right? So for sure, I mean, we've not been active, depending on the reaction, depending on where the market goes. I mean, absolutely, we could reactivate this buyback. Now, as you know, there's been a change in the Canadian with Mr. Trudeau and all these other guys about the capital gain tax. So we anticipate that maybe, you know, the small investors could divest other shares in Canada before that June mark. We anticipate that maybe, we have, we don't have a lot of options outstanding at TFI, but we have about 600, 700,000. So maybe those Canadian guys will take advantage of exercising those options earlier because of that new tax rule. So we may jump in and you know, buyback maybe half a million shares. Our leverage is forecasted to be around two at the end of Q2 and around 1.6, 1.7 at the end of the year. So for sure, I mean, to do buyback at, let's say $150 US or $160 US, we would, you know, sit on the fence for now. But if the stock goes down to, I don't know, let's say 125 US or 135 US, for sure. I mean, we'll be looking at it very closely. Or let's say 180 Canadians, 175 Canadian.

Yeah. Okay. Thank you for the call, Elaine.

Pleasure.

Thank you. Our next question has come from the line of Adam Roszkowski with the Bank of America. Please proceed with your questions.

Hi, Elaine. On for 10 extra today. Thanks for taking my question. So probably if I missed, by quarter you noted, contract renewals trended in US LTL trended about 5%. That was a little below peers. Could you provide an update in one queue? And then any update on just month to date April trends in that business? Thanks.

Yeah, business is doing fine in April. Okay. So it's trending in the right direction. In terms of renewals, absolutely. We could not do as good as our peers. Like I said, because our service is not up to par to our peers. Our best peers, okay, have better service than us. Okay. But we keep improving. So next year, it could be a different story. But for now, I mean, we had to go on a lower basis.

Because

like, again, if you look at our Q1, okay, yes, our revenue per hundred weight is not growing 7%, like some of our peers. But the beauty of what we were able to accomplish though, is that our revenue per per shipment is up big time. Okay, with, you know, some some major improvement on the weight side. So this is more of our focus right now is guys, let's pick up the right freight that fits us, which is heavier freight. Okay.

Yeah,

we were in the business to move rates up as much as we can. But let's be cautious because, you know, we still have some issues to fix, right, on our service. So it's a it's a step by step kind of thing. I mean, you cannot turn the dial from, let's say, 50 to 100 overnight.

That's helpful. Yeah, I saw that the US LTO claims ratio was up maybe 20 bits from 4Q. I guess first, I guess you'll be targeting sort of, you know, gradual improvements as you're still in early innings of service improvement here. And then one follow up on the, I think you said, 65% sort of network is underutilized right now. So is that implying maybe 35% excess capacity in the LTL network? And how do you look to maybe right side? What are you targeting kind of over the next couple years? What's the normal level of sort of excess that you target? Thanks.

Yeah, normal excess, I would say it's not 35. It should be like 15. Right. So we still have lots of work to do on that. So every time that we are renewing a lease, okay, we're adjusting the size. And then when when it comes to real estate that we own, okay, so we did some swap with other strategic, one of our peers, we did some swap, we are selling terminals, we're adjusting, like I said, as an example, Lexington was switching from 150 doors or 125 doors terminal to more like more of a 60 kind of doors terminal because we don't have the volume. We don't have the volume to sustain 120 door terminal over there.

So this is

ongoing, okay, we've made some major improvements since we bought UPS freight. Okay, but we still have a long way to go. Now, at the same time, you know, once you start slowly growing the volume back, okay, so we are 22,000 today, when we bought the company, we were 32,000 shipments today. So we say, well, by the end of the year, hopefully we'll be to 24. And then we'll start growing that slowly. Okay, not by cutting rates, because this is not solution. By improving service and having our customers saying, well, because you guys are doing a better job now, we could give you more, right? So slowly that gap of 35, by growing slowly the company that will shrink and by all the actions that we're taking in terms of when we renew lease, when the terminal is too big, we're taking action. It's going to take some time to get to maybe a 15%, you know, capacity from 35 could take us two to three to four years, depending on how fast we can go. But we're going to get there.

That's very helpful. Thank you.

Thank you. Our next question is coming from the line of Ben Moore with Deutsche Bank. Please proceed with your questions.

Hi, thanks so much for bringing me back to ask the question. I appreciate the time. Just a couple of follow ups. One is the ground freight pricing, the GFP in the quarter, roughly a soft 67 million, about 14% of your US LTL revenue ex-fuel. I wanted to ask what you're doing to set that back on a growth course. How should we think about that trending through rest of the year, maybe like 15% of US LTL revenue ex-fuel to 20%, 22% as a steady state next year? How should we think about that cadence throughout the year?

Yeah, yeah. So this is a major disappointment for us. I mean, our GFP revenue is down big time. And for sure, there was some issues that we have with some of our customers that were not acting properly because we are a reseller for UPS, right? So everything that doesn't fit us and fits UPS, I mean, we switch it to UPS. And we had some issues with some customers. So that's why this revenue came down big time. And the team is rebuilding that slowly. I mean, for sure, we're not on that at all. But there again, I mean, we have to work with our partner, which is UPS on that. And, you know, it's a five-year contract. We were three years down, we have two years to go. So for sure, we will have to start a discussion with our partner on that regard, because this is a great business for UPS, right? It's also a great business for us, and we would like to grow it. But when you have a partner, it takes two to dance, right?

Got it. Appreciate that. Final question. What's, how do you, how should we think about the timing of the full capture of your volume wins versus your pricing gains as a result of your service improvement? Are you aggressively pursuing price at the same time you're pursuing new business wins, or is there a lag to the pricing? And how much is that lag, like one to three quarters? I'm trying to compare the runway for new business wins versus the runway for pricing gains.

It's all about, you know, you can't, you can't ask more money from a customer if the service is not there. As a matter of fact, if the service is not there, the customer, if he stays with you, will ask for a reduction in rates, right? So the step number one, okay, in order to get better rates from customers is service. And service has never been really good at UPS rate or T-Force rate, and that's what we're working on, okay, right now. So biggest issue, okay, with customers is if you're late, and the reason you're late is because your line all is late, and the reason your line all is late because you use the rail, well, you got a big problem. So how do you solve that? By trying to have the rail to be on time, good luck. So you got to start moving more freight on the road, less freight on the rail. Now you can't do that when your fleet average age is eight years, right? Because you got old trucks, and old trucks, they break down all the time. They're always in the shop. So that's why we put in a program, okay, as soon as we were able to buy the company. But the first year we were delayed because of COVID, because the guy could not deliver, etc., etc. So now our average age of our fleet is getting close to normal at 4.7. Still too old, but we're on the right track. And by year end, we're going to be closer to four than than we are today. Okay, so then putting more freight on the road, also you need the proper trailer to do that. So the mix of 220As, double 20As versus 50Trees, our mix was completely off. So again, we have to change the line of fleet from, let's see, 220As to 50Trees, which we are doing now. As a matter of fact, we're buying 150 trailers 2019 from the bankruptcy of YRC. Those are 50Trees to help us accelerate the transition from 220As to 50Trees on the line of, right? So again, to provide better service. The key is the service. Once you have good service, the customer will give you more freight, okay, if you ask for. And you are in a position to ask for more money, to be closer to the market. Because when your service is bad, let's say the market for this freight is $100, customer will not pay you $100 because your service is so poor. He will try to discount the price because you're bad, right? So by moving service up, you get closer to the market rate. And so this is the direction that we're going at T-Force rate. Because our starting point was so bad, old fleet, poor service, using the rail, okay? And we're changing that slowly and it improves our service. The other thing also that was bad for us is missed pickups. So we didn't really care about missed pickups. No, no, no, no, we do care. Because a pickup is the start of your revenue. If you don't pick it up, you'll never get the revenue. And worse than that, so when you have, let's say, in a city like LA, 150 missed pickup, then the guy shows up the next day. Well, the freight is gone because the customer could not wait. He gave it to someone else. So you got the double whammy of missing the revenue and incurring the costs because you show up there and the freight is gone. So these are all things that you have to work on to improve the quality of service. So, I mean, T-Force rate now is managed by a crew of LTL people. So this is like if you are, you know, a general contractor and you give a plumbing job to an electrician. I mean, the results are not going to be so good. So T-Force rates focus was not leadership with LTL team. Now it is.

I really appreciate the additional color. Thank you for your time.

Pleasure. Thank you. We have reached the end of our question and answer session. I would now like to turn the call back over to Elaine Bedard for any closing remarks.

Well, thank you, operator, and thank you everyone for being on today's call. So we look forward to keeping you updated as we through the year. And please don't hesitate to reach out if you have any additional questions. Have a terrific weekend and stay safe. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.