TFI International Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's second quarter 2024 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 one follow up so that we can get to as many callers as possible. Further instructions for entering the queue will be provided at that time. Please be advised that the 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 conference call is being recorded on Friday, July 26, 2024. I will now turn the conference call over to Alain Bédard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead, sir.

Well, thank you, operator, and welcome everyone to our call today. Our results released yesterday after the close were, again, very solid with a year-over-year increase in both revenue and operating income. In all of our segments, outperforming is still a very lackluster freight environment. Our results reflect the hard work every day of our skilled and dedicated team members, as well as strong management and our many other self-help initiatives that will continue to benefit us going forward. Our overreaching focus as a company is on the long-held operating principle that got us here. We're focused on the details, including quality service that drives volumes. We're focused on on freight quality, maximizing weight and revenue per shipment, and always striving for cost management through greater efficiencies. I believe that especially during weaker freight cycles, it's this adherence to the fundamentals that helps us perform. All the while, we maintain a solid financial position that allows us to seek highly strategic and many opportunities to intelligently invest in the business, and to return excess of capital to shareholders whenever possible. During the second quarter of 2024, our revenue before fuel surcharge was up 27% to $1.96 billion. We generated operating income of $208 million up for $192 million in the second quarter of 2023, with an operating margin of 10.6% relative to 12.4%. We also produced adjusted net income of $146 million up from $139 million a year earlier, along with adjusted EPS of $1.71 up from $1.59 the prior year. Cash flow generation, as you've heard me say in the past, is always a focal point of ours, and during the second quarter, we drove nearly $250 million of net cash from operating activities, well above the year earlier $200 million. We also generated free cash flow of $151 million, which was up from $138 million. Before moving on to consolidated results, I want to summarize how the Dasky acquisition completed April 1st affected our reporting. Dasky added $329 million to second quarter revenue before fuel surcharge and over $23 million to our operating income, both reflected in our truckload business segment. In addition, our consolidated corporate level results reflect a non-recurring restructuring charge of $20 million related to the Dasky acquisition, which I'll touch on in a moment, and which we've adjusted for the consolidated results I just reviewed, specifically adjusted net income and adjusted EPS. Let's talk overall strategy. Our second quarter results, and in particular our robust cash flow generation, even during this slow stretch of North American freight, reflects a number of positive factors. In addition to the hard work of our team and our laser focus on getting the fundamentals of the business right, our financial results should continue to benefit from as I referred to last quarter, the very tangible opportunity to drive even stronger LTL results. We will continue to extract costs while at the same time driving top line expansion through service quality. On both counts, we still have a lot of work to do. Similarly, our recently completed Dasky acquisition brings opportunities on which we've already started executing to reduce costs and improve performance. Now turning to our business segment, we've now aggregated P&C into our LTL. Over time, P&C has become a smaller portion of our overall business, especially following the Dasky acquisition. So we will now report as three segments, and we believe that this move will help simplify and add transparency to investor understanding. All the operational details are still in our quarterly report, and we can discuss anything you'd like during our Q&A. So with that, let's start with LTL, which was 40% of segment revenue before fuel surcharge during the quarter. We drew our revenue before fuel surcharge 1% year over year, while our operating income was up 2%, reflecting a slight increase in our operating margin. So within LTL, starting with U.S.-based operation, our revenue before fuel surcharge was $548 million, essentially flat relative to the prior year period. while our operating income climbed to $51 million, up from $47. Our USLTL tonnage was up 8% and our revenue per shipment was up 7%, reflecting our focus on quality of freight and quality of revenue. Our operating ratio for USLTL was 90.8, 70 basis points better than last year, and our return on invested capital was 15.4%. On the Canadian side of LTL, we generate revenue before fuel surcharge of $144 million, up 12% the past year, with operating income of $35 million, up from $34 million. Our numbers of shipment was up 14%, although weight per shipment and revenue per shipment declined 4.5% and 1.2% respectively. We had NOAA of 75.6% and our return on invested capital for Canadian LTL was 19.1%. Lastly, with LDL, our P&C operation drove $109 million of revenue before fuel surcharge, compared to $116 million the prior year period, with operating income of $24 million relative to $27 last year. We had a return of $77.9 million. Our return invested for P&C was a very strong $24.2 million. Turning to truckload, this business segment was 37% of segment revenue before fuel surcharge. Dasky integration is off to a fast start with a quick reduction in cost resulting to the one-time charge during the quarter. We produced truckload revenue before fuel surcharge of $738 million as compared to $411 million the prior year benefiting from the Dasky acquisition. Our truckload operating income of $83 million was up from $66 million. Also worth noting, our truckload OR came in at an impressive $88.7 million given where we are in the freight cycle. An indication we're executing well and that our unique specialized end market are proving more resilient. Digging deeper into truck load within specialized operation, we produced revenue before fuel surcharge of $665 million up from $335 million largely due to the Dasky acquisition with operating income of $75 million up from $54 million in the prior year period. We saw increased productivity with revenue per truck per week up 2% before fuel surcharge while growing our truck count more than 70% with the acquisition. In addition, our specialized truck load OR was 88.7%, as I mentioned, and our return invested capital came in at 7.3%, which I'll remind you includes only one quarter of contribution from Dasky and therefore should strengthen over the coming year. Turning to the Canadian-based conventional truck load, we produced revenue before fuel surcharge of $76 million, down just slightly from the past year, while our operating income of $8 million compares to $12 million in the year-ago quarter. Our Canadian NOIR was $89.3 million, while our return on investment capital was only $8.9 million. And wrapping up our business segment discussion, logistics was 22% of segmented revenue before fuel surcharge and is performing well. very well. Our revenue before fuel surcharge was up 22% the past year and operating income was up 54%. In the second quarter, our logistics operating margin was 11.4, which is improved from 9.1 a year earlier. And our return invested capital was a very solid 20.5. So let's move on to our liquidity and balance sheet. So during the second quarter, we generated free cash flow of $151 million. That's up from $138 million a year earlier. And we end up June with a funded debt to bid ratio of 2.15. This strong financial position is a key start of our approach to the business that allows us to strategically invest regardless of the economic cycle while also returning capital to shareholders whenever possible. Speaking of investment and returning capital during the second quarter, in addition to DASCI, we made four other smaller acquisitions and another small acquisition subsequent to the quarter. Also in June, our board declared a quarterly dividend that is 14% higher than a year earlier at 40 cents per share that was paid on July 15. Before opening the Q&A, I'll provide a quick review of our full year guidance, which is unchanged. from what we provided on our last call. Specifically, we look for EPS to be in the range of $675 to $7. We expect full-year free cash flow to be in the range of $825 to $900 million, with net capex of $275 million to $300 million. In addition, we still intend to pay down $500 to $600 million of debt this year, and we repaid a little over $100 million in Q2. With that, operator, I'd be happy to take questions. If you could please open the lines.

Thank you, Mr. Bédard. Ladies and gentlemen, as stated, we do ask that you please limit yourself to one question and one follow-up so that we can get to as many callers as possible. Should you have any questions at this time, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. And if you would like to withdraw from the polling process, please press star followed by two. And if you are using your speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions. And your first question will be from Ravi Shankar at Morgan Stanley. Please go ahead.

Thank you. Good morning, Hélène. So we've heard from some of your U.S. trucking peers that they're seeing better seasonality in 2Q, some signs of project business, and some tightening in the market. We see that in the data as well. Would you underwrite that view, and are you getting any more optimistic about the cycle in the back half, or do you think it's still too early?

It's too early, Ravi. I mean, what we're seeing is that it's still more of the same. It's still a very, very difficult market right now. If we look at the U.S., our specialty truck load, I mean, we're still at pressure on race per mile. Although the guys are doing a good job of having the trucks on the road and moving freight around. But I would say that 24 is going to be a difficult year. This is why we have not changed our guidance yet. We still think that the guidance that we provide in Q1 is attainable for the year. But when I look at the global North American market, the U.S. and Canada, I think that Q3 and Q4 will still going to be difficult quarters. 25 may be a different story, hopefully. But what we're seeing right now is our focus is to do more with less, is to be more efficient. If you look at what we've done so far with Dasky on the truckload side, we're attacking costs like there's no tomorrow. That's how we're able to bring an 88 OR combined with our own operating truckload business that was last year an 85 something, 85.7 I think. Now, you know what, Ravi, I think let's be conservative, okay? I hope I'm wrong, right? I hope that things will get better, but I don't have this sense right now.

Understood. And maybe as a follow-up on the LTL side, how are you seeing the environment right now? Obviously, there's some idiosyncratic kind of factors there on the capacity side as well. Do you think the market's tightening enough to support pricing to the cycle, or are you concerned about too much capacity there, maybe kind of loosening the strings a little bit?

No, I think that we will win the war, us, on LTL being more efficient is by reducing our costs. Our costs are way too high. Our ending costs are way too high. Our fleet cost is too high. And for us, our focus at T-Force rate is really, really to be more lean and mean, to be more efficient. For sure, we are implementing new technology within this company in terms of Lino, in terms of billing, MasterFi, and all that. But still, if I look at my IT costs as a percent of revenue, it's way too high. And it's also true of Dasky. I mean, if you look at our IT costs at Dasky, it's twice as much as the TFI truckload IT costs as a percent of revenue. So for us, really... Ravi, the name of the game at our USLPL to break that 90 war once and for all is all about cost. Hopefully, the market stays okay. I mean, the market is not that strong. I mean, if you look at... What's going on right now, I mean, our shipping count is steady, but it's not growing. I mean, what we are able to do is to grow the weight and grow the revenue per shipment. We were able to do that so far, but we still don't have, you know, our costs down in terms of reducing the miles for our P&D, improving our density. We're still not there. We still have a lot of work to do.

Understood. Thank you, Alain. Thank you, Ravi.

And next question will be from Ken Hexter at Bank of America. Please go ahead.

Hey, great. Good morning, Elaine. Good morning, Ken. Just on Ravi's kind of topic on the backdrop, maybe a little bit more on the LTL side. You mentioned it's all about cost, but as you get peers opening more facilities, you had a peer this morning talk about more lightweight volumes that are kind of disrupting their networking. it looked like your revenue per shipment ex-fuel decelerator was down sequentially. Maybe talk about the rate environment on the LTL side.

Yeah, very good question, Ken. And for sure, I mean, we're seeing a lot of RFPs. We're seeing a lot of pressure because the market, like I said earlier, is still soft. I mean, so it's a fact. I mean, we've lost a major player a year ago in the industry, but it seems like... We're back to square one in terms of volume. So this is why my comment is so important, that our focus is to keep what we've got in terms of volume, try to improve it, try to grow it slowly. But for us, the name of the game is we're too fat. I mean, we've got too much cost. If you compare our U.S. costs versus the way we do business in Canada, I mean, we are like... way too fat. So we have to attack the costs. Our IT costs are too high. Our fleet management costs, maintenance costs is too high, et cetera, et cetera. So this is us. This is us. I mean, we have to do the job. Now, the market, is the market going to help us? I don't think so, right? Like, you know, you could hear from some of our peers. You know, if you look at the best player in the U.S., I mean, those guys are doing really well. Why? Because the They're better, way better than us on managing costs, right? So this is what we're trying to do, and that's how we're going to be able to break that glass ceiling that we've been stuck with a 90-something OR. We want to go under this 90 OR, but the way we're going to win in 24 and in 25 is by being lean and mean, reducing our costs, doing a better job, all over the place on our costs. Now, what's also helping us, like I said many times, Ken, is finally in 24, we have financial information by terminal. So for sure, this is going to be huge help. But if you have a manager that sits on his hand, well, that's not going to help us. So these guys have to go and they have to be replaced by a manager that wants to do things and wants to reduce costs and be more efficient. and manage not just delivery of freight, but manage all the costs, the employee costs, the relationship with customers, et cetera, et cetera. So we have a big job to do. Don't forget, we bought T-Force Freight three years ago. We made a lot of improvement there, but we're still running just a 90 OR operation, 90 something, 90.8 in Q2. So we have a long way to go to get to the 85. And for us, I don't see the market 24-25 helping us too much. I think this is all us. We have to do the job.

Yeah. Let me ask a quick follow-up on logistics, right? Which usually, I don't know, would you call that, I mean, solid results there? Would that be an early indication of of some sort of turn or would you look at it and say, wow, that's, that's just benefiting from the weak market or is it even last mile, not even indication of, of the logistics side?

You know, I can, our, our logistics resolve are second to none. I mean, when you look at that, we're very proud of what the guys are doing over there. I mean, and, uh, and they will continue to improve. No, they will continue to improve. And, um, You know, we made a fantastic acquisition a year ago when we bought GHT. I think we have more to come in that sector, probably, hopefully. And for sure, we're in business to make money. We don't like returns of 2%, 3%, 4%, 5%, 6%. So this is why, if you look at our OR, for the first time, we broke the 90%. We've never been under 90 OR in our logistics. For the first time now, we are under 90%. As a matter of fact, even under 89%. so we feel good because like i said on m e side on the us side we are looking at two sectors really only right now it's either an ltl play or a logistics play 425 i mean because i mean we've been busy in 24 with dasky we're also busy okay with small tuck-ins mostly in canada okay because it's easy for us to do a small tuck-ins in canada because we have a bench strength that is second to none so But in 25, we're getting ready. This is why, you know, if you look at my leverage right now, I'm at 2.15, something like that. Our plan is to be, by reimbursing debt, like I mentioned on the call, we're going to be at 175 probably by year end, right? TFI, it's a cash flow machine, a free cash flow machine.

Yep. No, yeah, I was just wondering if it was just an indication of the market. Now, I get you're doing a great job. Just if it's telling you... No, I don't think it's the market.

I don't think... Hey, Ken, I don't think it's the market. I don't think it's the market. I think it's our guys that are doing a fantastic job. But we'll see. I mean, when our PS comes up, I mean, we'll have a better understanding. Wonderful. Thanks a lot. Appreciate the thoughts and the time. Thank you, Ken.

Thank you. Next question will be from Walter Sprackland at RBC Capital Markets. Please go ahead.

Yeah, thanks very much, Operator. Alan, good morning. Good morning, Walter. If you could touch a little bit on your trends toward your target of a US LTL 88. You referenced it earlier in the call. I'm just noticing you're at about a 92 year to date in your US LTL. Yeah, yeah. You know, 85-ish for the rest of the year to hit the 88. Is that still an achievable target? Can you talk about what will cause you to do that step down?

No, no, no, Walter. I mean, for sure, for the year 88, as I see it right now, it's impossible. What we're trying to do between now and the end of the year is to break the 90, okay, in Q2 and Q4, right? You know, when we look at our plan in the fall of 23, when I listened to our guys, our team, we thought that we would grow our shipment count at the same time as reduced costs. So what we're seeing is we're not growing our shipment counts. I mean, our shipment counts is steady-eddy, about the same, okay? And we anticipate that probably by year-end, I mean, we're still maybe going to grow the shipment count a little bit, but not much. So really, the name of the game to break the 90 OR is going to be all costs for us, reduction of our costs in the Q3 and in Q4 to finally break this 90, which has been... you know, a difficult task for us to do, you know. And going into 25, though, if market conditions stays about the same as 24, I think that we'll be able to be on a yearly basis, okay, under the 90 bar. But if you look at what we have done so far after six months, like you said, we're 92. So I believe that with our costs, control and implementation of better productivity will be probably in same market condition in 25. We'll be able to show after six months of 25 under 90. Okay. If we keep working at attacking our costs.

Okay. That's great. And just on the followup to the macro, just a few, uh, small questions here. Like you mentioned, you don't, you're not calling for an upturn. Um, I'm curious if you would at least, do you see it as a bottoming? I know a few of your peers have said they believe at least it's not getting worse and whether an upturn comes or not may be delayed, but at least it's bottoming. And then are you seeing any positive or negative impact from shipper diversions that are avoiding the Canadian rail strike? I know CN and CP have called out some diversions away from their lanes in worrying about a strike. Is that impacting you at all, either positive or negative?

You know what, Walter? When they started talking about a strike in Canada two months ago, yes, we saw a little bit of that. But you know what? Us, we run a lot of stuff on the rail, right? So it's a positive on one side, but it's also a negative on the other side because if you look at an intermodal LTL, The minute these guys start to talk about strike, I mean, they start moving our LTL that's today run on the rail. They move it on the road. So for us, it's not that good to have a strike with the rail guys. I mean, hopefully these guys could settle and get this thing behind us. Now, in terms of have we hit the bottom – that's probably right. I mean, can we see this thing getting worse? I don't think so. But I don't see that major improvement in 24. I think it's going to be more the same, okay, for the rest of the year. And hopefully, okay, things will start improving. Now, don't forget, there's also a U.S. election in November, right? So depending on who takes over, if it's, you know, It could also change things in 2025. So we don't know that. But us, I mean, we are really focused on what we can do ourselves, which is we can't control the market. The market is the market, so we can't control the market. But what we can control is our costs, and we're trying to be way better. Okay, if you look at our US LTL, we have a lot of work to do there. If you look at our Canadian LTL, we're doing quite well. If you look at our PNC, I mean, yes, we had a little bit of a soft patch in Q1, but we are improving in Q2, and we'll keep improving in Q3 and 4 and into 25. You know, if you look at our specialty truck load, I'm really proud of what Steve Brookshire has done with his team, you know, with Dasky's team there. I mean, like I said on Q1's call, the Dasky thing there, I mean, we're going to run Dasky sub-90 OR within a year. and I'm still very confident about that. I mean, the guys are doing a good job. And like I said, just the simple IT costs, I mean, we're going to have to cut the IT costs of Dasky in half to be comparable to our costs to run the business, right? So we got a lot of opportunities, and for sure it takes a little bit of time, but I feel really good about what's going on right now. When I look at my peers in the truckload sector in the U.S., I mean, I think everybody is suffering big time. Is that going to change for the rest of the year? I don't think so. Is that going to be better in 2025? I think so. Why? Because it's been going on for more than two years right now. So this thing has to break at one point.

Okay. I appreciate the color, Alain, as always. Thank you.

Thank you, Walter.

Our next question will be from Tom Wadowitz at UBS. Please go ahead.

Yeah, good morning, Alain. Morning, Tom. Morning. I wanted to ask you a little more on USLTL. What's the mandate for salespeople in USLTL right now? I mean, you've talked about, you know, kind of bad mix of shipments, too much distance between pickups. You know, you've talked about maybe like heavier weight per shipment. When I look at the numbers, it looked like you did see some sequential growth in shipments, but some decline in revenue per shipment. So I guess I'm just wondering, yeah, is it focused on better mix? Is it hey, we'll give up a little price to get more shipments? Or what's the focus you got for the salespeople in USLTL right now?

Yeah, yeah. So the focus is, number one, is, guys, we have to move the weight per shipment up because we're paid by the weight, right? So when we bought UPS Rate, these guys were hauling average weight 1,075. So now we're just a little bit above 1,200. But if you look at my peers, the average is probably 1,500. So rule number one, guys, is that we have to slowly get more into the industrial freight versus the retail freight. Okay, fine. So let's see target number one. Target number two for these guys is, you know what, guys? To pick up a shipment, okay, let's try to pick up more shipment per stop versus what we're doing now. So when you have a discussion with a customer, let's talk about getting more shipment from this guy when we go there and pick up freight. Okay, target number three is us. We have what we call within T-Force Freight a GFP, Ground Freight Pricing. We are the only one that has a partnership with our friend UPS. And then when we have a small shipment, small weight, okay, instead of trying to haul that freight or say we don't want to haul that freight within T-force rate, Mr. Customer, we have a solution for you, right? This is GFP. Now, if you look at my GFP, okay, it's been a year that we went through a lot of issues with GFP because, you know, there was some customers that were cheating the system at UPS. These guys got cut off. We had to cut them off, blah, blah, blah. So our revenue at GFP is down big time. But now all these issues have been resolved between us and our partner, and now we're ready to go and start growing that. So third mandate for our sales guy, wake up, guys. Smell the coffee. It's early in the morning. Let's sell GFP because we are the only one that can offer to a shipper a solution that is way more efficient for them and for us and for UPS. So let's try to grow that. And then last is let's focus on customers that are close by our terminal. Let's not try to get a shipment, okay, outbound from a guy that's 85 miles away from our terminal. Let's try to grow business around the terminal as much as possible so that we reduce our P&D miles. So far, okay, we've done a little bit of that, but where we are doing a much better job is on our line haul. So our line now is less on rail, more on road, and we have a better service for sure. And we'll keep growing that so that our sales team, when they talk to a customer, service is less and less of an issue. So if you compare that to three years ago versus today, our service is much improved, and that is what we have to keep doing. So that's the mandate for our sales team.

Okay. Yeah, that's very helpful. Just one quick follow-up. I think people are trying to get their arms around what's happening with the pricing dynamic in US LTL, right? And I think there's the underlying assumption that there's discipline, but it just seems like you wonder because the market's a little soft. And do you think that there's some pressure developing on price in US LTL? Or do you think it's just like, hey, this is normal and freight's a little bit soft and you know, there's still good discipline in the market?

You know what, Tom? That's a very, very good question because, you know, for sure, when we look at guys adding doors, adding capacity, then we say, oh, that doesn't look too good. But we can't control that, right? We can't control what some of our peers are doing. So this is why when I talk to my guys, guys, we have to be lean. We have to be on a diet, okay? We have to reduce our costs because... If something happens to the quality of revenue on this market, although it's never happened, if you look at the last 10 years, I mean, this industry, the USLTL has always got price increases, et cetera, et cetera. But there could be some concern where a few players are adding so much capacity that maybe if the market is not growing, okay, there could be pressure on rates. So how do you win with that kind of environment? Well, we have to become in the U.S. like we are in Canada. Because in Canada, we have a lot of competition with some guys that don't like to make money. Like Pure Later, owned by Canada Post, the focus there is not to make money. So we have those guys here. We have other guys in Canada that trucking is a sideline for them. So they're not really focused about making money in the trucking segment. So we have that kind of competition in Canada, and we are successful. If ever this happens in the U.S., I think it will be short-term, okay? But it still could be happening, and that's why when I'm talking to Bob McGonigal and Keith, I say, guys, let's go on a diet. We have to reduce costs. That's the only way that we're going to break this 90, okay? Hopefully the market will help us. But if it doesn't, I mean, we have to be really better. So our IT costs at T-Force rates are way too high. But don't forget, I mean, this is until a year ago, we were stuck with the TSA moving away from UPS. But that's behind us now, okay? But we have old tools, old software so that we are replacing. Okay, I get that. But this has got to end at one point so that we can start reducing our costs. To manage the freight, we have to be a single digit as a percent of revenue. Right now, we are single digit in Canada. We were not in the U.S., so we have too many staff, too many people in the offices, and that's got to be reduced with better tools, better technology, and that's where we're going. Now, if this market gets softer, if there's some pricing issues because some players are adding too much capacity, I mean, you will just have to adjust.

So you're not necessarily seeing it, but you're concerned it could happen. It may happen.

I mean, but at the end of the day, we don't control what's going on on the market, right? So this is me, what I'm saying to my guys. Guys, what I'm seeing, okay, when I see adding doors, adding doors, I see, ooh, huge investment, okay, and the market is not growing. So... Guys, hey, let's speed up the diet.

Yeah, okay, that all makes sense. Thank you for the time, Elaine.

Thank you, Tom.

And next question will be from Brian Assenbeck at J.P. Morgan. Please go ahead.

Hey, good morning, Elaine.

Good morning, Brian. I wanted to ask another T-force freight question, but maybe more on the I think you said that you were looking at potentially M&A in LTO for next year. I don't know if that would be for the U.S. and if you can expand on that because you still have a pretty big real estate footprint. There's still some more terminals out there from YRC that could be sold. So maybe you can elaborate a little bit more on that. Bigger picture, what you think the network could look like in a couple years' time and What are some of the bigger changes we should be focused on there potentially, whether it's divestitures or potentially some M&A?

Yeah. You know what, Brian? I think that TFI in Canada, we're second to none in LTL. And we cannot be the number one guy in the U.S. I don't think it's possible. But I don't want to be the number six or number seven or number eight in terms of volume. So for sure, at one point, we have to take action on the US LTL market because I still believe, even with what I just said to Tom about this little bit of a concern I have with this capacity maybe, but I still think that the US LTL is the best place to be. So this is why, and I said to Tom, this may be short term, maybe a year, two years, but I think long term, we have to be a larger player in the US LTL market. So this is why once we close 24, once our leverage is down to, let's say, 175, once we reduce our debt by $500 million, $600 million, like it's the plan, I think that by year-end of 25, I mean, we're well-positioned to do more into the US LTA, hopefully. Now, at the same time, also, we've said logistics in the US, we... we are doing really, really well. And we have other opportunities to keep building on that base. So this is why the two sectors, okay, that we're going to be really focused with something that could be interesting for our shoulders is those two sectors. On the truckload side, I mean, 25 is the year where we're going to be digesting all of the Dasky operation in terms of reducing IT, you know, shedding admin costs, et cetera, et cetera. So I don't see anything of size for us in 25 on the truckload side. But also the idea, and I'm going back to what we said when we bought Dasky, is that down the road when we have a certain size, it makes sense to have two organizations, right? Not today because our size is too small, I think. So we need to beef up a little bit in 25, 26, because at the end of the day, we want TFI to be more of a pure play down the road, being, let's say, an LTL logistics company on one side, and on another side, the truckload sector, which is mostly specialty truckload. I would say that our truckload is, what, 85% specialty truckload, which is way more resilient than the van world. And you could see that when you look at my peers' results. Great companies are coming out with results right now that are difficult, right?

Just to follow up real quickly then, in terms of the T4 straight footprint, I thought you were still trying to maybe consolidate or rationalize Some of those terminals, maybe you're through that already, but it sounds like you actually want to get bigger over time. So is that just more different markets that you like to be in, different lanes you want to fill out? How should we think about that when at least the current book sounds like you still want to shrink that first, perhaps? Or maybe I'm misreading that.

Right, for sure. I mean, right now we're doing a deal with one of our peers with one terminal. So we're selling one terminal to one of our peers. Why is that? Because it makes sense for us. It's good for them. Okay. We're selling one terminal in California, South California right now, to a guy that's going to demolish the terminal. So we have about 35% overcapacity in our doors today at T4 straight. So for sure it's way too much, right? So, we are reducing, reducing, reducing and cashing. So, I believe that our real estate will generate probably between $25 to $50 million cash between now and the end of the year. So, that's going to be used to fund our small M&A that we're doing in Canada and a little bit in the U.S. That will also help us reduce our debt, right? Going back to your point, no, we're not adding capacity to our network. As a matter of fact, we are reducing capacity because we know that if we are successful in buying another LTL company, probably these guys also will have overcapacity. Maybe, maybe not. Depends on who it's going to be. So this is why, why wait? Okay, so we're taking action now. So as a matter of fact, we bought one terminal yesterday. Okay, well, we bought two from the YRC thing there. In Sacramento, we used to have two terminals. Now we move into one, and those two terminals are up for sale. One is being sold right now. In Lexington, Kentucky, we move into the YRC terminal, and one of the sales that may happen before the year end is our old T-force rate Lexington terminal is being sold right now. So we are taking action. to be more close to our capacity in terms of real estate because we believe that if we are able to do what we want to do, add some LTL revenue into an M&A acquisition, I mean, we need to be more leaner in terms of our capacity.

Okay, Lane. Thanks for the clarification there. I appreciate it. Thank you.

Next question will be from Jason Seidel at TD Cowen. Please go ahead.

Thank you, operator. Good morning, Elaine. Hey, good morning, Jason. Two quick things here. One, I wanted to focus a little bit on the Dasky side. I think, you know, heading into your earnings print, you know, we were a little concerned given what we saw sort of some weaker pricing in the flatbed market. So maybe if you could sort of dive into that, you know, was that maybe offset by some strength in your specialty business?

You know what, Jason? For sure. I mean, if you compare year over year, our revenue per mile, okay, in our specialty operation in the U.S., specialty truckload operation, we're down. I mean, we're down. There's no question about that. We're having price pressure in there. But at the same time, okay, our revenue per truck is up because, you know, we do a better job reducing empty miles and etc etc so I'm really happy with this Daski acquisition in terms of the operating units and these guys you know Daski was a roll-up right and first thing that we're trying to do is to you know break all these walls between those operating units within Daski so As we speak, there's a weekly call between all of our flatbed operation in North America, between U.S. and Canada. So everybody's on the same call talking about the market, the environment, the opportunities, et cetera, et cetera. So this is why I feel really, really good that even in a soft market, because the market today is softer. We have more pressure on price, on rates per mile today than a year ago. Okay, hopefully this starts to change hopefully next year. I don't see that changing this year. But now we do a better job. We're more efficient and we'll continue doing that.

So it sounds like that $0.50 accretion number is still pretty good to use.

Jason, we are conservative. I think that we'll do better than that, but let's be conservative, all right? So, you know, as an example, like I was saying earlier, just the IT costs. I mean, we fell off a chair when we look at the IT costs. The consultant, I mean, all these guys taking advantage of the company. I mean, we're reducing that. You know, Darren Levine, which runs our IT for our specialty truckload within TFI, now is involved with the Dasky Group. I mean, these guys, like I said, I think earlier, they used to run Oracle Finance, very expensive Oracle. They pay way more money than us at TFI. So Oracle will probably disappear within Dasky. And we're going to move all this to Infineon, huge saving. And then down the road, once everybody's on Infineon, maybe we'll go back to Oracle in two to three years. But it's going to be more of a TFI Oracle, not a Dasky Oracle that costs a fortune. We have to pay Deloitte to support us, which is nonsense. So we have a lot of work to do on the admin side. At the same time, okay, we have a lot to do within the business unit to be more efficient in talking to one with the other, right? Eliminating those walls between the business units.

That sounds good. And if I could just follow up on something Walter was asking about on the potential Canadian rail strike. I mean, do you guys already have alternatives set up to sort of supplement a line all? Because I can't remember the last time both Canadian rails went on strike, and this would obviously impact your Canadian LTL line haul a big deal.

Yeah, for sure, we have a plan, Jason. Hopefully, this will not happen, and I think that the federal government will get in fast, because this is going to be terrible for the Canadian economy. For sure, we have plans. For sure, we know what to do. And so far, between you and me, Jason, fires is more of an issue for us. Flood and fire, okay, is more of an issue than rail, rail strike. I mean, fires is becoming a big problem, okay, and flood too.

Yeah, I saw news up in Jasper that was pretty bad. Well, Elaine, I appreciate the time as always and have your guys stay safe out there for sure.

Thank you, Jason.

Thank you. Next question will be from Kornat Gupta at Scotia Capital.

Please go ahead.

Good morning, Elaine. Morning, Kornat.

Elaine, I wanted to ask you on Daski. Thanks for sharing some of the details here and good to see you. A pretty good quarter from the truckload business, despite all the pressure you're seeing in the market. Obviously, Dasky seems like it's progressing well. Can you help us understand what was the exit June OR run rate at Dasky? And how do you see the bridge to sub 90 OR there? Like what are some of the pit stops and what are some of the key drivers besides IT, et cetera, to get to sub 90?

Yeah. So I would say that if you look at Dasky's Q2 number, okay, so most of our guys are running close to a 90 OR. So we have one business unit right now that loses money. But by the end of August, they will stop losing money because we're going to shut them down and move whatever good business remains into other business units within the TFI world in the U.S. And then I've got another one that is running a very high OR of 98. So after we've got rid of that one that loses money, it's going to be the next one. And then I've got another one that's running a 95 OR. So this is why on average, okay, we are closer to a 92, 91, 92, 93 OR globally. Okay. But we're going to weed out the losers and we're going to improve the ones that can be improved. But then again, like I said earlier, we need to talk more between the TFI specialty truckload business union. And that's something that I've, started already, okay, because there's lots of opportunities. Within Dasky, I've got one or two business units that are running today sub-90 OR, but even those guys running sub-90 OR, let's say they're 87, but because market conditions are difficult, normally they should be running an 80, 82, 83 OR. But as an example, insurance companies, Okay, Adaski is something that was not done well. So we are improving, okay, our insurance costs, the way it's been done. But I'm stuck with one deal that was signed for three years. So I'm going to have to suffer for another two years because of this deal that doesn't make any sense, but I'm going to have to live with it. But there's a lot of good stuff within the Dasky group of companies. So, yeah, we bought this company, and we're going to be under 90 OR within a year, like I said, of acquisition. And admin costs was a big thing. I mean, the overhead was costing them a fortune. The head office is costing us a fortune in rent and this and that. IT, like I said earlier, and these are all things on the admin side that we're going to be reducing probably 200 to 300 basis points globally. And then sharing best practice, okay, also will help us. So I feel really, really good because if you look at what we've done, okay, global ETFI in the US and Q2 specialty truckload, I mean, we're running just a sub 89 OR. This is with Dasky. Now, you're going to say, well, last year you were an 85R. Absolutely. But even our legacy business of TFI, without Dasky, in Q2, we're not running an 85R. We're running probably an 86.5. I don't have the numbers close to me because the market is way more difficult this year than a year ago. So this is why when you add Dasky with one quarter only, And we're able to combine the two into one and come up with an 88 OR. I said, Mr. Brookshaw and your team, you guys have done a fantastic job.

That's great. I think it seems like you guys are on a very good path on that ski for sure. Okay, and just a quick follow up on the LTL side. I know you laid the ground with some factors about how the rates could evolve and what you're probably planning to do on the cost side. I want to ask you about the competitive dynamic here that could unfold over the next year or two. One of the biggest, actually, the biggest LTL player in the market is looking to divest the freight business, FedEx. I wanted to know how do you perceive that as a competitive dynamic change situation, if at all it happens?

Well, you know what, Gunnar, if this happens at FedEx, I mean, we would be the happiest guy in the world. I mean, I think that would be great for the market. I think that this is a great company, FedEx Freight. And being standalone, I think it would be fantastic. We have a relationship with them. We work with them in two areas of BC, mostly the Vancouver area. We also work with them in Saskatchewan. We're having discussion with them if we can help them elsewhere in Canada. Uh, so I think that having this spinoff, if ever it happens, I think it's going to be good for the market overall. And I think it's, it's going to be really good for us as TFI.

Makes sense. Perfect. Thanks so much, Elaine. Good luck. Thank you.

Thank you. Thank you.

The next question will be from Jordan Allager at Goldman Sachs. Please go ahead.

Yeah. Hi. Um, just, uh, question again on LTL. I know, Elaine, in the past, you talked a lot about service on LTL, and I don't know if I've heard as much about it today. Service being like a critical cog, getting that revenue per hundred way to at some point inflect positive. So can you maybe talk a little bit about LTL service, where you are, and thank you.

Yeah. Yeah, that's a very good question because without service, it's difficult for you to grow the business. It's also difficult for you to guard and protect. So absolutely, you know, this is a balance between cost and service. So what we've been trying to do is improve the service at the same time reducing cost. And for sure, when you take the culture of a company that's been really lazy and not being focused on like some of my peers are in terms of cost and service, it doesn't change overnight, right? So what we've been able to do is to change the culture that, guys, we can improve service and reduce costs at the same time. So where we've been very successful is on the line. Why? Because we were able to move away from rail to a certain degree. Okay, so 4% of our miles today are not on rail anymore. They are on the road. with our own people. So that improves the service. So, yeah, you're scared because, oh, cost of the road is going to be more than the rail. Well, we were able to do that at a kind of a break-even. So guys say, guys, we've improved service and there's not been an effect on cost. Okay, so we have not moved cost up. Those 4% miles now makes a lot of sense. They're on the road. On the P&D side, well, there again, what we're trying to do is, okay, reduce the missed pickup because are you crazy? You can't miss a pickup because then you miss the opportunity of the revenue. So the culture there was, well, you know, I got to bring back my guys, okay, or we're not set up because if you think about an LTL company, what the – The focus is on delivery, right? Because that's the first thing you do in the morning. The guy leaves and does his delivery. And then if he has time left, then he does the pickup. And me, what we are doing in Canada is we change this philosophy. The Canadian philosophy is that, yes, we have to deliver the freight in the morning, but your role number one is to pick up freight. Why? Because if you don't pick up freight, then you don't have the revenue. So we're changing that culture also on our USLTLs that, guys, no, no, priority number one is to pick up everything that we can, but we have to make sure that we also deliver the freight. So there's a balance there between service and cost, right? But, again, we have better tools today to manage all this, and, you know, with financial information, we have better managers, dispatcher has to be involved, and it's a team effort, right? So we are improving service, definitely, and at the same time, we are reducing costs, but not enough. And like I said, a lot of our reduced costs has to come from admin, okay? Our admin cost is too high, but that's got nothing to do with the operation, right? So our labor cost per shipment is better, okay, and we continue to improve that. But that's also a team effort. So we need our salespeople to understand that we need more freight per stop. We need to travel less miles to pick up freight because we don't want to go 90 miles away from our terminals to do one pickup, et cetera, et cetera. So it's a global effort. But, Jordan, I mean, service is priority number one, okay, because you can't grow the business without the service.

Great. Thank you. You're welcome.

Thank you. Next question will be from Daniel Imbrow at Stevens.

Please go ahead.

Yep. Hey, thanks. Good morning. Thanks for taking our question. Elaine, I want to again follow up on USLTL. You talked about being lean and obviously that's showing up in EBIT per shipment kind of up sequentially despite the revenue per shipment being down. I just want to understand the back half outlook. So is your expectation that this mixed headwind continues on the US LTL for revenue per shipment, but that you can just offset it by finding more efficiencies and being leaner in the back half so EBIT per shipment could keep growing?

Yeah, absolutely. Because you know what? We don't control the market. And I think that the market has been soft in 24 and I don't see it getting stronger. So the only way, the only way that we can be successful is we have to do the job ourselves on the cost side, right? So I'm saying the same thing again and again. I mean, the admin cost of T-Force rate is like 500 basis point too much compared to what we do in Canada. So this has got to be a focus of ours. Our IT cost is about two or three times more than what we have as an IT cost in Canada. So that's the focus now. Don't forget, IT, we could not really work on IT because until a year, until let's say summer of last year, we were stuck with a lot of spend on IT because we had to walk away from UPS on the TSA, but that's behind us now. So we have to keep reducing this cost. So is the market going to help us in 2.3 and 2.4? Hopefully, but I'm not sure about that. What I can be sure of is that Bob and Keith and their team, they have to be focused on doing more with less.

That makes a lot of sense. And maybe to follow up more directly on LTO pricing, if we strip out this mixed noise, I guess first, should that mixed headwind continue to worsen in the back half? It sounds like yes. When do you think that will turn the corner when you look at business? And if you exclude mixed, I guess how are contracts like-for-like repricing today? Are they still pricing at a similar level of increased excess mixed shift as they have been the last few quarters?

Yeah. Yeah, I think the pricing is not so bad right now. It's okay. I mean, it's not very strong. But then again, I mean, I don't foresee Q3 and 4 in terms of the market condition to improve. Are they going to get better? I don't think so. Are they going to get worse? I don't think so. I think it's going to be more steady-heady. Us, the only way we're going to break this 90 OR once and for all, we have to grow our GFP, which is... an asset that nobody has. And also, we have to reduce our costs. That's the only way we're going to break this 90-hour.

Helpful comment. That's a lot. Pleasure, Daniel.

Next question will be from Benoit Poirier at Desjardins Capital Market. Please go ahead.

Hey, good morning, Alain, and congrats for the strong execution overall.

Thank you, Benoit.

Yeah, just looking at your comments with respect to M&A skewed toward logistic and also LTL in 2025, could you maybe remind us about your comfort level in terms of leverage and what are kind of the M&A and low that you would be looking in 2025?

Good question, Benoit. So if we don't do anything of size, okay, let's say until Q3 of 25, our leverage is going to be under one. Okay, so we're going to end up the year probably at 175. And after three quarters of 25, our forecast is that we're probably going to be at between 0.5 and 0.75. So this is why it's never going to happen. This is why something of size will happen now. We bought Dasky for $1.1 billion last year. Well, no, last year, this year. Okay, we made the deal last year, but it's this year. So I think that for TFI, easily we could do a deal between $2 and $3 billion of costs for TFI. And I think that you've noted about a year ago, and your note is that I mean, you can't stop TFI. Why is that on M&A? Because they generate so much cash, right? And you were right. That is the proof. The proof is in the pudding right now, right? So we bought this company for $1.1 billion. And in Q2, we reduced our debt by $100 million. And we reduced our debt for the year by about $500 to $600 million and bring the leverage down to $175 million. I think TFI is probably one of the best story that's not known is how big TFI is on the free cash flow. And what's the opportunity that creates with a free cash flow machine like TFI, right? So this is why I think that if you look at the end of 25, because what we're talking about is probably more like in the summer of 25 to the fall of 25, if we are successful, because M&A, You can try, but we've been very good at that. But until you get the deal done, you're never sure that the deal is going to get done, right? So we feel good that we're going to be very well positioned late 2025 to do a deal of size that could be up to $3 billion, right? And if ever there's also a part of that in paper, well, then it could be maybe up to four or $5 billion. We'll see.

Okay. That's great color. And just in terms of follow-up question, you make great comments about the overall market environment. Um, and also some comments about our expectation for USLTL when looking at the 2025, I know it's still early, but, uh, How much do you need the economy to be supportive in order to achieve $9 US of EPS next year? I'm just curious about any key levers or moving parts, including the $0.50 of EPS accretion from DESECI.

Yeah. Yeah. Well, there's one thing that's easy to say, Benoit, is that when our leverage goes down, my interest cost also goes down. So if you look at Q2, my interest cost went through the roof, right? Okay. So one easy thing that's going to happen without doing anything, right, by reimbursing the debt, okay, so if we reimburse $500 million, $600 million, right, okay, that will not exist next year, that's already after tax $20, $25 million, and we'll continue to reducing that. So overall in 25, if we don't do anything of size, we're probably going to generate $40 million after tax, okay, just on reduced interest, right? So that's very easy to do because the only thing we have to do is pay down the debt, right, with our free cash flow. So that's going to help us. I think that our specialty truck load, by moving our friend Dasky from, let's say, a 95 OR, okay, 93 to 95 OR, they were back down to under 90. Well, we said 50 cents for 25 for the contribution for Dasky. I think we'll do better than that, okay, from what I'm seeing. Now, if the market is helping us, well... Maybe it could be better than $0.50 or maybe it's going to be like $0.75 or to $1. But don't forget that if you look at my other specialty truck load, I mean, normally in a good year, we used to run specialty truck load at TFI around 80 OR. Okay, now we're in 88 OR. So if we go back to more of a normal market, The 88 OR will come down to 83 OR, and if the market is really good, we'll probably go down to 80, maybe sub-80 OR. Now that we have Dasky in the family, because we have less competition now, right? And then you look at our T-force rate. The market stays the same. Market does not really improve too much. But us, we're so fat on the cost side, the admin cost side, the IT cost, I mean, and all that. To me, we have to reduce all the admin costs between now and a year from now, at least by 200 basis points, right? So this is all going to flow to the bottom line, and this is the way that we're going to get not $7 EPS, like we will probably hit in this year, 24. I mean, we have to do better than that, even if the market is not too supportive in 25.

That's a very good caller, Alain. Merci. Thank you. Pleasure, Benoit.

Thank you. Next question will be from Cameron Dirksen at National Bank Financial. Please go ahead.

Yeah, thanks. Good morning. Morning, Cameron. So I want to come back just to the logistics segment. Obviously, a segment that's doing quite well. I just wondered if you could talk a little bit about the trends and kind of the individual businesses within logistics. I mean, it's a bit of a grab bag of different businesses in there. And you obviously, some of the 3PL businesses are doing, you know, it's a tough market, but just any color you can provide on how some of the other businesses are doing in there. And then, you know, what's the key driver here of the improvement?

Yeah. So within our logistic, Cameron, okay, sector number one is our last mile operation. Okay. So last mile operation is U.S. and Canada. It's a combination of both countries. And those guys are really, really doing well, right? So those guys are sub-85 OR, right? Because we're not stupid. We're not in business to practice delivery, right? So we service customers. We reduce our costs. We're very lean and mean. So that's number one. Then number Number two is we have our brokerage operation, which the biggest player in there is our T-Force worldwide operation. Now, these guys have suffered big time. So their revenue is down. These guys used to be a $600 million, $700 million company. Now we're down to about $550 million. And also the margin has suffered as well. So that sector is not doing as well as the rest. And the rest of our brokerage operation are also suffering, okay, on the revenue side, but not so much on the profitability side. So revenue is down, profitability is about stable with the rest of our kind of brokerage operation. And the third is what we call our specialty services where we move all kinds of stuff, right? So GHT being the largest player in that sector, okay, but we have, other sector, and this is running a great operation for us. So it's really a combination of those three sectors. So our last mile is doing really, really well. Our equipment moving sector as well, doing well. The only small weakness we have is in our brokerage operation. But when you do the sum of all this, I mean, we keep improving. okay, in terms of profitability. So like I said earlier, for the first time, we broke the 90 UR, right? So we're just a little under 89. We believe that 25 is going to be even better than 24, okay, globally for us. And even 26 is going to be better than 25. When we look at our forecast about our last mile operation, our equipment moving operation, et cetera, et cetera, And the potential of adding into that sector, because we're looking at some small transaction that would beef up this sector, hopefully this year, maybe into next year, we feel good. I mean, if you look at our return on invested capital, it's above 20, like our PNC is above 20. So this is really a sector that we love. But if it's 2% bottom line, we're not a big fan of that. But if we could, you know, get an OE of around 10 points, sure, we'll look into it.

Okay, no, that's really helpful to get that detail. And maybe just a second question for me, just more of a curiosity. I'm just, you know, wondering about the decision to move P&C into the LTL segment. I mean, I would have thought it might make more sense to move it into logistics, just given that you already have a package delivery business within logistics. So just wondering about the rationale there.

Yeah, you know what, Cameron? Yes, I never thought about that. But at the end of the day, really, PNC is a network operation, whereas our last mile operation is not a network. So last mile is in logistics, but it's not a network, right? So we don't run network in our last mile. Whereas in our PNC, we run a last mile. What am I saying? We run a network, right? So that's why it makes sense to be part of LTL because LTL is also a network.

Okay, no, that makes sense. Appreciate the questions. Thanks very much.

Okay, Cameron. Pleasure.

Thank you. Next question will be from Bascom Majors at Susquehanna. Please go ahead.

Elaine, as you look forward, you've mentioned the potential spinoff that you publicly disclosed about eight months ago a couple times on the call. How do you feel today, eight months further into – both, you know, I guess a few months into integrating Dasky, but eight months further into the cycle about both the fundamental industrial logic and the, you know, call it valuation arbitrage logic of that decision as you look forward. And between that and integrating Dasky, do you think those are some of your final big moves for the business before you start to move further into retirement? Or is these kind of two, three, four, $5 billion deals That may come up in the next couple of years. You think those come under your umbrella as well. Thank you.

Yeah. You know what? That's a very good question. And that's the kind of discussion I had with the board yesterday. And I told the guys, listen, I have to do this deal, okay, the spinoff down the road. So this is why I said, guys, I'm in at least for another five years. Okay. Sorry to say for the guys that want to take over CEO's position at TFI, Alain is there at least for another five years because this is going to have to happen under my watch, right? And it's not going to happen now. Why? Because like you just said, we have to digest ASCII. And I think that Steve and his team are doing a fantastic job, and it will take us at least a year. But, you know, so 25 will go by, right? And then in 25, if we're successful trying to add revenue, in the sector that we love in North America, then we will be well-positioned to do something maybe late 26 into 27, and that is the timeline. But don't forget that at the same time, Bob and his team at T-Force Freight have a big job to do into generating a little bit more revenue, but even more importantly, way more OE than what we're doing now.

Thank you for that. Pleasure.

Next question will be from Kevin Chang at CIBC. Please go ahead.

Hey, Elaine. Good morning. Good morning, Kevin. Hey, thanks for squeezing me in here. Maybe just one clarification question. I don't know if you mentioned this earlier. You talked about a sub-90 OR and US LTL without the need for an improving macro program. I know you were initially targeting 88 this year. That's a little bit more difficult. Should we be thinking of that being kind of shifted into 2025? Was that kind of the messaging there?

Yeah, absolutely, Kevin. I mean, you know, part of this commitment from our team, okay, to get an 88 OR in 24 was based on cost and also based on improving the shipment scan. The shipment scan is not happening, right? So we are flat. Shipments were flat. We've improved the quality of the shipment, yes. Okay, no doubt about that. And we've also improved the cost to a certain degree, but not enough, right? So what we're saying is that, guys, okay, so let's change the thinking. Let's say the volume will stay about steady or maybe improve a little bit, but that's not going to help us. So we've got to double the effort into be faster in being more efficient and reducing costs. And we've got to be mentally ready to be on a diet, okay, at T-force rate, diet on terms of cost, right? So we've got to do a better job of doing more with less. I mean, we've been doing that in Canada for a long time. If you look at, if we can run Canada with a sub-80 war, like we're doing now, as a matter of fact, we're what, 75 war, I think, in Canada? Yeah. Even with the Kindersley acquisition, that Kindersley, those guys, you know, they were not making a lot of money. But Kindersley in Q2 now is running a 95 OR, which is, wow, from not making money to being a 95 OR after two quarters. I mean, Cal and his team in Canada have done a fantastic job. So I'm just saying that the Canadian LTL team are doing really, really well. And we still have lots of work to do to improve, okay? But in the U.S., I mean, don't forget, more and more Bob, okay, is involved with KEAT and trying to bring this TFI culture of doing more with less. Now we have also Tim involved into the fleet management. I'm feeling really good about this young guy. That's going to help us reduce our maintenance costs even more. Because don't forget, we're making a lot of investment in CapEx for T-Force Freight. But so far, the return has not been where it should be. So we brought, okay, another team member in there that's got the TFI culture. He's a TFI guy. And I feel really good that that's going to help us, you know, be more efficient. The same thing on fuel, right? So... You know, with the fact that now Daski is part of the family, well, we should have a better deal on fuel. And down the road, this should benefit T-Force Freight as well, right? For sure. It's a global effort, you know, with everything that's going on. Okay, this soft market. And if you believe that this soft market will disappear in six months, I hope you're right. But as we're getting ready that it may not happen, right? So, guys, don't hope for the market. Start now.

Every day, be more efficient. Do more with less. That makes sense. And just maybe in your PNC division, just wondering if you're seeing any benefits or disruption from Chinese e-commerce. I mean, there's been a lot of headlines around that the past, I guess, past little bit here. Is that something you're seeing within your PNC network up here in Canada? Yeah.

Not yet, not yet. The biggest issue we have in Canada has always been the same e-commerce guy that's moving more and more of his shipments in-house. And the guys that are serving him, used to serve him, are losing the volume, and now they become very aggressive. So this is why we had a really soft patch in Q1. When we look at our P&C results in Q1, it was a disaster. But don't forget, Q1-24 reflects the decision that was made in the summer of 23, and we made some mistakes there. So Chris took over that, and we're doing a much better job, and we will keep improving Q3 and Q4, but it's a tough market. So if you look at our revenue per shipment in our PNC, we're down a bit. There's more pressure over there. because the biggest e-commerce in Canada is moving freight in-house, and we got some of our peers that are stuck with their pants down.

Right. Right. That makes sense. I'll leave it there. Have a great weekend, Alain. I appreciate you taking my questions.

Thank you.

You're welcome.

Thank you. And at this time, Mr. Bada, we have no other questions. Please proceed.

All right. Thank you very much, operator, and thanks, everyone, for joining us today. We'll keep you updated as we move through the year, and we look forward to our next call. And in the meantime, please don't hesitate to reach out with any additional questions. Enjoy the weekend, and we'll be in touch. Thank you.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.