TFI International Inc.

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 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 could cause actual results to differ materially. I would also like to remind everyone that this conference call is being recorded on April 24, 2025. Joining us on today's call are Elaine Bedard, Chairman, President, and Chief Executive Officer, and David Saperstein, Chief Financial Officer. I'll now turn the call over to Elaine Bedard. Please go ahead, sir.

All right. Well, thank you. Thanks for that, operator, and we appreciate everyone being on our call today. After market close yesterday, we reported our quarterly results amidst continued economic uncertainty and the resulting slowdown in freight volume across the industry. Despite cyclical challenges, we're pleased to have again generated strong free cash flow of over 190 million. which, as you've heard me say many times, is a primary focus of ours. Over time, it's this free cash flow that allows us to maintain a strong balance sheet and strategically invest in both organic growth and attractive M&A, while returning excess capital to shareholders whenever possible. Taking a look at our consolidated results, we generated total revenue before fuel surcharge of $1.7 billion, up from $1.6 billion a year earlier, supported by the Dasky acquisition a year ago this month. The industry-wide slump in volumes, however, resulted in operating income of $115 million or an operating margin of 6.7 percent relative to $152 million and a margin of 9.4 in the prior year period. quarterly adjusted net income of $56 million was down from $93 million and adjusted EPS of $0.76 was down from $1.24 a year earlier. Our cash generated by operating activity came in at $194 million down marginally from $201 million in the first quarter of 2024. Our free cash flow, as I mentioned, was a solid 192 million, which was up meaningfully from 137 million benefiting from favorable working capital, strong management of capital expenditures, and of course, the hard work of our talented team members across the organization who continue to focus on operational excellence, especially during slower times for the industry. I'll next provide an overview of first quarter results for each of our three business segments, beginning with LTL. LTL was 39% of segmented revenue before fuel surcharge, which was down 13% year-over-year to $679 million, operating income of $47 million compared to $85 million in the earlier period, with margin reflecting typical Q1 seasonality consistent with what we saw the prior year. The LTL operating ratio came in at 93.1 versus 89.2 in the first quarter of 2024, and our LTL return invested capital was 14.4%. Turning to truck load, we generated $666 million of revenue before fuel surcharge, or 38% of the segmented total, and this was up from $398 million a year earlier due to the Dasky acquisition. Operating income for truckload was $49 million, up from $41 million in the prior year period. Our truckload OR was 93.7 relative to 89.6 a year earlier. And our industrial and market are exposed to tariff-related uncertainty, which was evident during the first quarter before the April 2nd announcement. However, we saw improvement in our Canadian OR while Specialized was in line with normal seasonality. Our return invested capital for truckload was 6.7%. Wrapping up the business segment overview, logistics is 22% of segmented revenue before fuel surcharge, or $385 million for the quarter, down from $442 million in the first quarter of 2024. Logistics operating income was $31 million compared to $40 million the prior year, and that's an operating margin of 8.1% versus 9.1%, while our return invested capital was 17%. Moving right along, the solid free cash flow of $192 million during the first quarter helped us maintain our strong balance sheet, which is always a focus of ours. We ended March with a funded debt-to-bid ratio of 2.21%. During the quarter, we repurchased 56 million worth of shares, which combined with the dividend payout equates to $94 million of excess cash returned to our shoulders during the quarter, which has always been an important objective of ours. Lastly, turning to our business outlook for the second quarter of 2025, We currently expect CPS in the range of $1.25 to $1.40 based on trends we've seen so far in Q2 and assuming no major change in the macro environment. In addition, for the full year, we expect the capex to be approximately $200 million. And with that, Operator David and I would be happy to take questions. If you could please open the lines.

Thank you. And we will now begin the question and answer session. To ask a question, you may press the star followed by the number one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, you may press the star followed by the number two. With that, our first question comes from the line of Ravi Shankar with Morgan Stanley. Please go ahead.