TFI International Inc.

Ladies and gentlemen, thank you for standing by. Welcome to TFI International's third quarter 2025 earnings call. At this time, all participant lines 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 this conference call may 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 October 31, 2025. Joining us on the call today are Alain Bédard, Chairman, President, and Chief Executive Officer, and David Saperstein, Chief Financial Officer. I would now like to turn the call over to Alain Bédard. Please go ahead, sir.

Well, thank you for the introduction, operator, and welcome everyone to this morning's call. Last evening, we reported our quarterly results that shows additional progress with operating margins, especially for our US LTL. In fact, across our entire company, the men and women of TFI International double down on our core operating principle, which is setting us up nicely for the eventual rebound in freight volumes. I'm also pleased with our free cash flow performance, as this is always one of our top priorities. At more than $570 million year-to-date, this was slightly above the nine-month results from 2024. We use our strong free cash flow to strategically invest in the long term and, whenever possible, return the excess to shareholders. Speaking of which, as you may have seen in our press release yesterday, our board approved a 4% increase in our quarterly dividend to $0.47 per share, suggesting a yield of close to 2%. Equally important, during and subsequent to the quarter, we repurchased additional shares, which I'll speak to in a moment. and while maintaining a very solid balance sheet. With that, let's review our overall third quarter results. We generated total revenue before fuel surcharge of $1.7 billion, and that compares to $1.9 billion in the year-ago quarter. In aggregate, we produced $153 million of operating income, or a margin of 8.9%. We've recorded an adjusted net income of $99 million as compared to $134 million in the third quarter of 2024, And an adjusted EPS of $1.20 is relative to $1.58 in the year-ago quarter. Rounding out our consolidated results, our net cash from operating activities came in at $255 million, up sequentially, but down from $351 million in the same quarter last year. And finally, our free cash flow from the third quarter was nearly $200 million, also up sequentially. In addition, as I mentioned, this brought our year-end to date free cash flow to just over 570 million. So overall, when I look at our consolidated performance, first and foremost, I recognize the hard work of our team with everyone across our segments working to make the most out of a subdued freight environment, and most importantly, setting us to capitalize on the next cycle. How do they do this? Well, they focus on long-held core operating principle, ensuring that quality of revenue and aiming for constantly improving efficiencies. Additionally, as we make meaningful progress on service improvement in USLTL, it's gratifying to see the team recognized in this regard by leading third-party customer research firms. So we very much appreciate their hard work. Now let's take a closer look at each of our three business segments, beginning with LTL. This quarter, our LTL operation represented 40% of segmented revenue before fuel surcharge, which was down 11% versus a year ago to $687 million. Notably, our US LTL operation showed additional progress on margin for a second quarter in a row, producing a 92.2 OR, which matched the performance of a year earlier. Total LTL operating income of 78 million was up sequentially from the second quarter, but compared to 96 million a year earlier. Our combined operating ratio for LTL was 88.8, and that's also improved sequentially, in fact, for the second quarter in a row, but still compared to 87.3 in the prior year third quarter. Our return investor capital for LTL was 11.9. Turning to truckload, it was 39% of segmented revenue before fuel surcharge at $684 million, which compared to $723 million in the year-ago quarter, with tariff impacts on steel and other commodities still waiting on freight volumes. Operating income of $53 million compares to $70 million last year, and our truckload R came at 92.3 versus 90.6. Lastly, our truckload return investor capital was 6% for the quarter. Our third and final segment to discuss is logistics, which produced $368 million of revenue before fuel surcharge, or 21% of segmented revenue, and this compared to $426 million in the third quarter of 2024. Operating income came in at $31 million versus $49 million last year, and this represents a margin of 8.4 versus 11.4. Our logistic return on invested capital was 14.6. So next, I'll move on to our balance sheet, which remains very strong, benefiting from the free cash flow I mentioned of nearly $200 million during the quarter and more than $570 million year to date, which is stronger than last year. We end up September with a funded debt to EBITDA ratio of 2.4 times. From this position of strength, we're able to not only pay our dividend, which I mentioned the board agreed to raise today, but we also repurchased a total of 67 million worth of shares during the quarter. That brought our total return of capital to shareholders to more than 100 million during the third quarter alone. As I mentioned at the outset, this is one of our key business principles to return excess cash to shareholders whenever possible. And I should add that subsequent to Q3, we also have repurchased an additional 17 million worth of share as we continue to effectively reduce our share counts. So before we turn to Q&A, I'll provide a four-quarter outlook. We expect four-quarter adjusted diluted EPS to be in the range of 80 to 90 cents. And we now expect full-year net capex, excluding real estate, to be $100 to $175 million compared to $200 million earlier. Similar to last quarter, I'll note that our outlook assumes no significant change, either positive or negative, in the actual operating environment. And with that, David and I would be happy to take questions. If you could please open the lines.

Thank you, Monsieur Bédard. Ladies and gentlemen, if you do have any questions at this time, as stated, please press star 1 on your touchtone phone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by 2. And if you're using a speakerphone, you will need to lift the handset first before pressing any keys. And out of consideration to other callers on the line today and time allotted, we ask again that you please limit yourself to one question, one follow-up, and get back into the queue. Thank you. Your first question will be from Ravi Shankar at Morgan Stanley. Please go ahead, Ravi.

Great. Thanks. Morning, Alain and David. So, Alain, I would love your overall thoughts on the state of the LTL market today. Obviously, macro still remains pretty depressed, but you guys are taking idiosyncratic actions as well. So if you just could address kind of where do you think volumes are going, what do you think the pricing environment is like, that would be great.

Yeah, well, you know, very good question, Ravi. You know, I think that like, you know, most of our peers so far, I mean, we're off to a very slow start in Q4, you know, with all kinds of reasons. I mean, we have, you know, this special situation in the U.S. with the government shutdown and things like that. So, I mean, we anticipate that probably, you know, in our guidance, what we have in there is you know, Q4 versus Q3, okay, we'll probably see a deterioration of the OR between 200 to 300 basis point, okay, because of this slow environment, slow volume environment. Now, going into 26, we're starting to have a feeling that after three years of very, very hard, difficult freight recession, we believe that finally all the You know, the effect of that big, beautiful bills and the fact that the consumer will probably get some tax refund, et cetera, et cetera. The investment, okay, that will probably take place in the industrial sector in the U.S., we feel way, way, way better about 26 than what we went through about 25. Now, what we were able to do with T-Force Freight, I think it's a confirmation that the new team is really all hands on deck. We've been working on our costs. We've also been working and improving our service. That's been confirmed by the famous report that we are improving. We still have a lot of work to do, but still we're heading in the right direction. And I'm very happy with the team, with what the guys are working on right now. You know, we're looking at 26. We need to do some major investment in AI, okay, to help us reduce our costs and be more efficient, provide a better service. So in that regard, we have some projects that should take place in 26. So, I mean, Q4, 25, difficult all over for us, I believe. But I think that finally the sun is going to start coming up in 26.

Understood. That's really helpful. I just got to give you very quickly address that as well. But if you can just talk about the progress you made with kind of fixing some of the internal initiatives in the LTL business, how far along are you and kind of what do you think are the next few steps we can expect in the next quarter or two?

Yeah. Well, one of the first thing that we did, Ravi, with Cal and his team there is we fixed the small and medium-sized business where we were way, we've lost too much of that in 24. And when Cal took it over with Chris and the rest of the team there, they said, well, we definitely need to change that, right? So what you see there, okay, in Q3 and also the improvement in Q2, some of that is the improved quality of revenue, quality of freight that we do. So that's basically step number one. Step number two is you know, we were a little bit too relaxed on some aspect of our business. So, for instance, our approach with Temp Account was, you know, you deliver the freight and hope to get paid, okay, when an account does not exist with you. Well, I don't think no one is doing that, right? So, we were an exception in the U.S. We fixed that in Q2, and for the rest of the year. So now if you order at T-Force Freight and you have a ship and we don't know who's going to be paying the bill, so we hold on to the freight until we know who actually is going to be paying that bill. So that's also another improvement that because of past procedures, we were losing a lot of dollars because of that negligence of our process at the time. Now, also, we've hired a guy, okay, to run our fleet management team. And I'll give you just a small example. Last meeting we had the other day in Dallas, it used to be that a truck, a T-43, get into a shop and that truck is stuck there for 85 hours. Well, now we're down to about 45 hours. It's still too much. but that helps okay the cost because now the truck is available so you don't have to rent a truck for five days or six days because now instead of being stuck there for like two weeks now the truck is stuck there for now a week right so these are all these small details that Cal and the team there are looking at. You know, we have a new team also that's focusing on claims because our claim ratio at 0.7% of revenue is not good. I mean, it's never been good. So we have to do something. If you look at our claim ratio in Canada, we're always in that 0.2% of revenue, which is normal, right? but we're at 0.7. So now we have a team that focus on that day in, day out, and trying to get that 0.7 down to a more normal level, right? So these are all small things that the guys are doing. And we'll be announcing also, Ravi, very soon, probably next week, that now within T-force rate, we have one executive that's going to be a chief commercial officer for all of our LTL operation in the U.S. So, again, this is because our focus is on, you know, quality of revenue, growing the number of shipments, and this is what I think that we will start to see in 26.

Very helpful. Thank you, Alain. Pleasure, Ravi.

Next question will be from Jordan Alliger from Goldman Sachs. Please go ahead, Jordan.

Hi. Yeah, thanks. Maybe just following up on that, sounds like real progress is being made, which is great. So, you know, hopefully next year will be better in terms of the underlying demand. So in the context of that, you know, how do you think now that sort of maybe it's getting to that point, How do you think either incremental margins or where LTL-OR in the U.S. could ultimately get to? I mean, do you have any updated thoughts on that? Because clearly what you've done, you know, has improved the company versus the last time we had strength in the LTL market. Yeah.

Yeah. Yeah, absolutely, Jordan. And, you know, we – If you look at our US LTL versus our Canadian LTL, I mean, in Canada, we have a deep bench, and we've been at it for a long time. In the US, I mean, don't forget, we're in that business since we bought UPS Freight, and now we're beefing up our talent team, you know? And that's going to help go through that period that hopefully is going to be some tailwind for the LTL industry in general. And we'll be, I think, well positioned to take advantage of that. But the focus at TFI with every business unit has always been do more with less, okay? And this is why, like I said earlier to Ravi, is we are really focused in 26 what kind of implementation we could do with the new AI tools that are available to be in a position to do a better job, provide better service at a better cost for all of our customers. And there, I'm not just talking about T-force rate or LTL. I'm talking about our package in Canada, our PNC business in Canada. I'm talking also about our truckload operation in the U.S., This is really going to be a big focus of ours in 26 because now, contrary to 24, this AI thing there is really something that's going to change a lot of stuff. I mean, we know that down the road, I don't know if it's 10 years from now, okay, you'll be probably able to drive a truck with other driver, right? So when you think about that, you know all the edge that a non-union carrier has versus a union carrier, well, that edge down the road, will probably disappear, right? It's like, you know, but this is 10, 15 years from now, I don't know. But one thing is for sure is that us, we are embracing AI big time. We'll be investing on that. That's a big focus of ours in 26. This market has been difficult for us for the last three years. Okay, hopefully the market turns in 26. We don't control that. But what we can control is our cost and our focus. And this is something that, you know, I'm reviewing the plan for 26 as we speak next two weeks. So it's a big focus of ours, Jordan.

Okay, great. I mean, I guess suffice it to say, I mean, without necessarily putting a number then and a timeframe, I would suspect, given what you've done, when we do get to a positive volume environment, you'd expect fairly quick reaction to the operating ratio to the improvement.

Yeah, yeah, for sure. Because don't forget, you know what, George, if you look at what we were able to do, okay, with sadly 10% less top line, okay, in our US LTL. And we maintain the same war as the previous year at 92.2. So that tells you the heavy lifting that our guys are doing today, okay, and becoming more process-oriented. I'll give you another example. Shippers load and count. So you get a trailer, and the load and count is from the shipper. But if you don't check, maybe there's a mistake. But we were too relaxed on that. So now Cal and the team says, no more, no more. We get full trailers from the shipper. We have to check. Okay, and if there's a shortage, well, we have to tell the customer right away and not wait and get a claim three months down the road because there was a shortage.

I mean, this is just being professional in our business, right?

Got it. Thank you very much.

Next question will be from Scott Group at Wolf Research. Please go ahead, Scott.

Hey, thanks. Uh, good morning. So I wanted to see if we can dig into the fourth quarter guidance a little bit. So it's, I think I heard you say lane that the U S LTL margins two to 300 basis points worse. It's, it's sort of hard to get all the way to that, to, to your guidance and less like the, I guess the rest of the business is doing, uh, particularly bad, uh, badly. Um, maybe I don't know you or David, maybe just walk us through some of like the, the, segment expectations that could be helpful?

You know what, Scott? That's a very good question. So I've got David next to me. He's the CFO, so I think I'm going to let that to David. He's the numbers guy.

Yeah. Hi, Scott. So, yeah, embedded in that guidance is a US LTL OR and Q4 of 96, specialized truckload between 93 and 94. and logistics also between 93 and 94. And that logistics piece is down substantially. When you run the numbers on what that suggests year over year, operating income contribution and logistics is down by about half.

Right. And logistics, Scott, I mean, as you know, we move all the trucks that are being manufactured in North America for Packard and Freightliner. So these guys are done like forty percent. So that's a huge effect on us. And also globally, our logistics operation in the US is also down. The Canadian ones are on plan doing better. But in the US, we're also down. We're running about ninety two percent of plan right now. So this is this is what we are showing there. I mean, like this, I'll give you another example. Because of government shutdown, DOD is dead, Department of Defense. I mean, one of our division, 30% of the revenue comes from the Department of Defense, right? So this is out of our control. The same thing with the OEM, okay, selling less trucks. This is something that is out of our control, but we know it's short term. It could be two quarters, three quarters. I mean, those guys will be selling trucks you know, soon. And that's why we're also keeping the staff. We're keeping the team because, you know, we'll be suffering for a few quarters because of that situation. Okay. But we know that this rate is going to come back. And this is the same thing with our truckload operation that service the Department of Defense. I mean, we know that this shutdown will stop at one point.

Yeah. And then in terms of rounding out the rest, PNC and Canadian LTL, we see those in the 82, 83 range and Canadian truckload around 90. Okay.

Very helpful. And then, Elaine, it feels like on the US LTL side, one of the messages in the last year or so is we got to get service better before we can start focusing on price. Where are we in terms of the ability to start getting a little bit more focused on price. And then maybe just with that, you know, it feels like we're seeing some stabilization in the GFP business. Is there any potential to start growing that business again?

Yeah. Yeah. Yeah. You're absolutely right, Scott. GFP finally is, we got some stability and now we can start growing again because the business we get from GFP comes mostly from the small and medium sized account. So once that you start growing, growing back this small and medium-sized account, normally you should have a benefit to your GFP. In terms of the service, what I would say is that right now about 21% of our line-all miles are on the rail versus 30% or 35% like it used to be. So for sure our four-day service has improved tremendously, right, because we use less rail today than we were using about a year ago. So that's number one. Next day service, we're up to par. I mean, if we compare our next day service to our peers, I mean, we're there. Where we still have issues is second day and third day service. And the guys are working actively on that. We are improving. We're not where we should be. But that is really the goal is to get this up to our peers on the second and third day service. And then slowly in 26, and I think we'll get there, we can start being seen as a professional carrier that respect, okay, the commitment that they give to customers and get, you know, a price that is closer to the market versus right now we're still a discounter, okay, versus the market.

Yeah. And, you know, to follow up on what Mr. Brar said on service, I think one of your peers pointed out that we were the most improved carrier in MassTO in this year's survey. And I can tell you that that's underpinned by real data that we're seeing. So our small, medium-sized revenue or small, medium-sized percent of revenues is higher than it was last year. We're at 27.4 relative to 26.7 last year this quarter. Then on service, We've improved 340 basis points in terms of our on-time. Our missed pickups year over year, they're down 60%. And then our reschedules are down 34%.

So these are facts, Scott.

So, I mean, this is going to help us, like you've asked the question, to get better profitability from the top line. And more freight.

And more freight, sure. Better retention.

Yep.

Less turnover.

Less turnover. Less turnover. Makes sense. Thank you, guys. Appreciate the time. Sure. Pleasure, Scott.

Next question will be from Walter Sprackman at RBC Capital Markets. Please go ahead, Walter.

Yeah, thanks very much, Alberta. Good morning, everyone. And on 2026, you said the sun is coming up and you've been very pragmatic, very, very clear about when you see things that are poor and when you things that are turning. And so that's very interesting for you to say and to hear you say. And I'm just curious, is that a commentary on price? Is it a commentary on demand? And specifically, are you seeing any real evidence either from the CDL restrictions and English language proficiency? requirements that are that are now being mandated is that are you seeing that impact today on price? And are you seeing any light at the end of the tunnel in terms of overall demand as you go into twenty twenty six?

Okay, so Walter, let me a little bit more specific when I see the sun coming out. It's mostly the U. S. I think Canada. Okay, because we still don't have a deal with the U. S. It's going to be probably the same in 26 like we have been going through in 25, right? But on the US side, if you look at our truckload operation in the US, our velocity is down. Our miles are down, but our revenue per mile is up until now, right? So what we're starting to see is maybe a little bit of contraction in the offer. And that could be, like you just said, Walter, this thing about the CDL, okay, those permits are not being renewed, okay, the same is true of the English proficiency thing. The early stage, okay, but I believe that, okay, this is going to help us correct the imbalance between the offer and the demand, okay? Also, the fact that you know, the truck sales are down like 40%. That's also something that tells you that some capacity is running out of the system, right? Now, for us Canadians, I'm sure you saw what Champagne was saying about his new budget that he's going to be talking about soon, okay? Hopefully, in Canada, we'll have something similar with those driver ink thing there, okay, where Finally, we were able to convince the federal government to say, if you're a trucker, you have to issue either a T4 as an employee or a T4A as a subcontractor. Right, Walter? So the Canadian finally also could be of help for us in 26. Maybe not on the volume, but the offer could reduce. As a matter of fact, we just saw one of the driver ink up for sale. OK, I mean, we're not going to buy a driver in company, but just to say that those guys are starting to feel, whoa, things are changing in Canada. So I think that globally, the Canadian situation is going to be difficult in 26 because we don't have a deal with the U.S. yet. I think we'll have one, but we don't have one yet. Maybe it's going to go all the way to the summer 26. But I think that the U.S., Okay, that's going to change. That's going to change with all the benefit of this OBB, the big beautiful bill, and everything that's going on, the reinvestment, okay, trying to bring those jobs back. All of this, to me, is, guys, let's get ready, okay? I think after three years of a freight recession that's been really, really bad, we're starting to see some capacity out. As a matter of fact, David, we have one of our peers in Alabama, 500 trucks,

The guy is out. Bankruptcies, yeah, exactly. We're seeing those come across our desk more and more now.

Exactly. We also have a freight guy, a freight broker, closing shops.

As you become a bit more optimistic on 26, does that change at all your strategy on M&A? Do you pull that forward at all? Is it contingent on

the seller just curious your update on what you and I'm talking not not the tuck-ins I mean a larger platform acquisition yeah yeah so so you know what this this takes time right and we've been at it for quite a while and you know because we don't have a deal what we're doing is we're buying back TFI right so that's what we've been doing I think that in 26 hopefully we could have You know, it's always difficult to do a deal when, you know, the target doesn't want to sell, right? This is not easy to do, right? So, you know, sometimes you're better off to say, you know what, let's wait, okay, and let's work on a different file where at least you got a seller that's motivated, right? So, to me, I'm still convinced that 26, probably mid-26, later into 26, We could do something of size. We have the capacity, we have the potential, we have the target, okay, to do that. But there again, I mean, TFI stock is so cheap that when we talk to our board, they say, hey, Alain, why would you invest $1, $2, $3 billion? Why don't you just buy back TFI? And we've been doing that slowly, but now things could change with this macro environment, and maybe it's best to... You know, put the buyback on hold for now, although we have our board and the TSX approved the renewal of our NCIB. But maybe put that on hold for now, depending on the stock valuation, and get ready for the next step, the next chapter of our life on M&A.

Thank you very much for the call, as always, on it. Thank you, Walter.

Next question will be from Jason Seidel at TD Cowan.

Please go ahead, Jason.

Thank you, Operator. Elaine, David, good morning. Getting back to your comments about a potential trade deal with the U.S., and I share your hopes that it's sooner versus later, but if it is later, have you given any thoughts to maybe some further cost reductions that you might have to take, given that you saw CN out there the other day laying off about 400 people?

Yeah. Well, you know what, Jason?

I don't know that. What I could tell you, though, is that because we're embracing AI, I think that with this tool, we'll be in a position to do more with less. I think that to do some layoff right now of quality people that are part of our team. The same story is true of our logistics, right? So as I was saying, Jason, about our truck moving operation, we know that this is just a few quarters. So we are suffering because we're keeping our people, right? Because these are good people. They're doing a good job. So we'll be suffering on that. And we are still suffering on the Canadian side in our truckload sector. As an example, steel, okay, well, steel is dead for us. But we are a big steel holder. So what do you do? I mean, now we have those trucks parked and we have those drivers, you know, you know, at home because that's the only thing we could do. But then we have to protect our staff because the problem is when this business gets back on track, you don't want to have to be, you know, re-hire drivers and at the same time also re-hire the staff. So this is why by investing more in technology through this AI thing there, I mean, we'll be able to be better positioned to be fast, to react much faster to market condition.

Well, Alain, as the follow-up there, as we think about JHT, can you give us some numbers in terms of how much of a drag it's placing on the margins at logistics? And in terms of the AI, how quickly do you think some of your investments are going to bear fruit that we can see as we move throughout 2026?

Yeah, I'll give you an example, Jason, about the AI. So when I'm talking to Cal and his team at T4 Straight, I'm saying, you know what, guys, we have to find a solution. If Waymo can run taxi in Austin, Texas without a driver, I mean, how can we not run shunters in our yard without a driver, right? Is there a way, guys, let's wake up and smell the coffee. Let's open our mind that we have to change. And if Waymo is able to run cab in Austin, in a city, okay, why can't we run shunters in a yard, okay, without the drivers? So these are all things that we're looking at, Jason, to be more efficient, right?

So... Sales augmentation as well.

Right.

Right? Increasing the productivity massively of salespeople in terms of prospecting, in terms of identifying... targets that fit, you know, because it's not just names. It's, okay, what's their business look like? How does that fit with our network? The solutions can do a lot of that work and then increase the velocity of the contacts and the outreach and the back and forth. It's remarkable. So that's another important application that we're looking at right now and we're rolling out right now.

Yeah. Yeah. That's some good color. And the margin hit from JHT?

Well, GHD, I mean, the margin of GHD is probably, depending on what you talk about, if you're talking about trucks that move from Mexico to the U.S. or Canada, I mean, the margin is not the same because we use a Mexican partner to move that truck from Mexico into the U.S. or Canada. Also, don't forget that we have experienced drivers in there. We also have a logistics division. So when the volumes are down, our logistics division is very small because the logistics gets the overflow. So right now, there's no overflow. So this is why, and as you know, Jason, you know, in our logistics, the margins are really good, okay, on the overflow. So this is a little bit of a complex story, but what I can tell you is that, you know, GHG is a diamond for us because it's very well run. I mean, the guys, and this is why we're suffering so much right now because the volumes are down, but we probably have 50% too much staff for the volumes we have. But we're keeping those guys Right? Because when the things go back to normal volume with Freightliner and Packard, we want to be there. We want to be there to be able to service them, right?

Makes sense. Gentlemen, appreciate the time.

Always a pleasure, Jason. Thank you. Same.

Next question will be from Conrad Gupta at Scotia Capital.

Please go ahead, Conrad.

Thanks, operator. Good morning, Ali and David. Thanks for taking my question. Ali, you mentioned about AI quite a lot on this call and technology, and I'm pretty sure I think that's the next evolution for you guys and everybody in the industry. I think though you reduced the CapEx guidance for this year, I'm just curious, when you think about the year or years ahead to invest, For technology and for eventual rebound in volumes, I mean, how do you see the capital planning for those things? I mean, should you see a significant increase in CapEx for that?

So on the AI, no. These are licenses. It might be $30 per person per month, $35. It depends on what exactly we're talking about. But these are light, very nimble licenses. tools that we add on, like in sales, you'll add it on to your CRM. So I wouldn't, first of all, that's not going to be CapEx. That would be expense. And it will not be noticeable. We're not building data centers and that kind of thing. We're just customers and adopters of the technologies that are out there. As it relates to regular capex on trucks, there's no question that this is a very, very light year. At the outset of this year, we set out to do 200 million of net capex. Normal for this business would be more around 300, but the volumes are so low, we're driving so few miles, and we had excess equipment from the Dasky acquisition, that we're able to reduce the CapEx without really meaningfully aging the fleet. And so that's fine. But you should think about a more normal net CapEx number for us to be around 300. But that also will take place in a year where there's more normal earnings, right? So free cash flow would be higher than it is this year, even with that increased CapEx.

And the other thing, too, is that our CAPEX has been delayed at T-Force Freight because the supplier was not sure because the trucks, they are assembled in Mexico, right? And all this tariff thing situation, you know, the trucks have been delayed by about three months. So right now we're getting trucks in October and November that were supposed to come in Q3, right? And some of trucks also will come in Q1-26 that were supposed to be part of of uh of 25. so this is why this revised capex that you see is it's exceptional that we're so low in a year like 25. i mean we should if if things come back like we think they will in the us we should get back to a more normal environment okay of activity miles and and freight so for sure we'll be back to normal capex

Makes sense. Thanks for the comment on that. And just quickly to follow up, you mentioned Dasky in terms of access equipment. Where's the integration process on Dasky now? I mean, like, it's been a while, I guess, right? You had Dasky in the system. And I'm sure, like, obviously, the volume is just soft and all that. But, you know, what you can control from a self-help perspective, like, are you fully done there or there's more to do?

You know what, on the desk key, on the financial side, okay, so we're done, okay? By the end of 25, we're done, okay? Fleet management, financial, so they run MIR now, okay, like Contrans. They also run on Infineon for financial, like Contrans, okay, which is our truckload division, right? So this is done. In terms of the day-to-day TMS, okay, there, We're still working on McLeod and TMW, okay, updating those systems and also making sure that we have visibility across all the divisions. Dasky was more of a siloed kind of companies, okay? So that is going to change during the course of 26. Sales is also something that we're working on at our U.S. truckload operation. And, you know, this is something I'm still discussing with my friend, Steve. Okay, how are we going to go about the commercial operation in 26? This is still something that needs to be ironed out. But for sure, we need to invest more on the commercial side of our U.S. specialty truckload because I believe that with everything that's going on in the U.S., we need a sales team that are aggressive because there's going to be more business.

Makes sense. Thanks for the time, Alain and David. Thank you. Pleasure.

Next question will be from Ken Hexter at Bank of America.

Please go ahead, Ken.

Hey, great. Good morning, Elaine and David. Can you address the start in October on volumes relative to the down 7% tonnage in the fourth quarter, 11% shipments?

Yeah. Yeah, I mean, the start to October, we're not in the habit of giving monthly data, as you know. The start to October is soft, like the industry leader pointed out when they reported recently.

So I just want to understand if it'll accelerate, because I guess, David, just to clarify, right, when Elaine said LTL 2 to 300 basis points deterioration, you said 96, which would be a 380 basis point sequential deterioration. I just want to, was there anything... in there that's getting worse, or I didn't know if the volumes were accelerating the downside, just understanding what was in the numbers there.

No, the 96 is what's embedded in the guidance. That's what our current forecast says, and that is driven by our observation of the first month of the quarter. So, yes, October was weaker than it usually is, weaker than expected.

Yeah. You know, Ken, because me, I'm always being optimistic. This is why me, that's the target when I talk to Cal. But, you know, David is the CFO. He's the numbers guy. So sometimes we, you know, we have different perspective. But, you know, you got to trust probably better David because he's the numbers guy.

Okay. And then just following up on that. The logistics, you know, similarly, right, the OR deterioration, you mentioned the JHT, or is that getting more expensive or deteriorating OR because of what's going on in terms of reduced capacity availability from ELP and the CDLs you're talking about? I just want to understand kind of the negative mix. Was it really just on the top line like you're talking about with LTL and the volumes, or is it the cost side kicking in as well?

No, it's not the cost side. It's not like it's harder for us to get capacity. It's a combination of we remember our logistics broker, the brokerage portion of our logistics, most of it's LTL. So if LTL is off to a slow start in Q4, the same is going to be true for LTL brokerage in terms of demand. But the majority of the drag in that segment is coming from the truck moving business and the dynamic that we've talked about in terms of holding on to our people during that period.

And then Alain, I guess just to wrap up. Yeah.

No, I was just going to add, Ken, excuse me, I was just going to add, Ken, that this is, the overhead is killing us at GHD because like David is saying, is we're keeping the staff, we're keeping the team because we know this is short term. So, excuse me, please go ahead.

No, no, exact same issue, right? Which is short term on that because you mentioned the government shutdown. It's surprising because it seemed like a lot of companies were avoiding that thing. We don't really move that stuff, but it sounds like, I guess you're seeing not only direct business where particularly for the DOD customer, but I guess the derivative of that is that kind of having another flow through on other or derivative customers increasing that demand or not necessarily at this point too early.

Yeah. Yeah. Yeah, well, one thing is for sure, Ken, is that everything is slow right now because think about the fact that some people are not being paid or delayed in the payment of their salary. So for sure, the demand is slow right now, and it will correct itself as soon as there's a deal in the US. We don't know when. I think it's going to be soon. And DOD, it's a big part of our specialty truckload. I mean, 30% of our business normally is moving freight for the Department of Defense. So it's just one example that this is why our guidance for Q4 is exceptionally low. This is not normal for us. But it's like a perfect storm where our logistic has been affected badly. Our truckload, the same. And also the fact that in Canada, I mean, it's pretty difficult as we speak, right, because of the trade between the two countries. So it's like a perfect storm for us. But 80 to 90 cents, I mean, EPS for us is not normal. It's exceptionally low, okay? But we have to give guidance that is proper.

Yeah.

One more on that real temporary question, and I don't want to talk about the government shutdown on the post office, but the post office is threatening, I guess, to make drastic changes of changing how many days you get deliveries and things like that. Is that a huge potential for P&C, or is that a cost issue? I just want to understand if that longer term, not just the takeaway of the strike, minimal volumes. I'm thinking bigger picture, long term, does that change the structure for your P&C business?

Well, for sure, Ken. If finally these guys in Ottawa decide to, because you're talking about Canada, right, Ken? Yeah, just Canada, yeah, yeah. Yeah, yeah, you're talking about Canada. So for sure, I mean, I think that the guys in Ottawa now wake up and, you know, they see that things have to change. Things have to change, and we are way more efficient than them, okay? So, you know, whatever change they do, okay, it should help us on the longer term, Ken. Canada yeah okay all right thank you you know what I'll give you an example of what's going on credit cards okay so credit cards from financial institution used to be with Canada Post now it's mostly us right and You know, a year ago, there was another strike. So we did that. Then they went back to Canada Post. Now the discussion we're having with them, this is going to be a permanent change. Because I think the financial institutions are sick and tired of back and forth.

Wonderful. Alain, David, thank you very much for the time. Very good, Ken. Pleasure.

Next question will be from Cameron Dirksen at National Bank Capital Markets. Please go ahead, Cameron.

Yeah, thanks. Good morning. Question on Canadian LTL, you know, shipments down quite a bit there, I think 12%, but revenue per shipment was nicely positive. Just wondering if you could describe, I guess, what you're seeing in the Canadian LTL space. Are you just being more selective in the business that you're chasing there?

No, no, Cameron. It's just our customers, the wait for shipment is down, right? So, I mean, they're less busy. And us, I mean, we're not losing customers, major customers. One that I think of, we've lost one customer that I'm thinking of, yes. Okay, but in general, we're not, there's no churn in customers, unusual. It's just like lower activity, Cameron.

Okay. And just going back to your comments around, I guess, the driver ink, and hopefully this change in the government will actually result in some change as we look ahead to next year. If that does happen, what is the impact on your business? Is this something where you just expect that some of these driver ink carriers will just not be able to be in the market at all, and so there's a volume positive for you, or is it more – just that they're underpricing in the market and this will just lift the pricing across all carriers if they don't have that benefit anymore.

Yeah, well, we know these guys have been cheating all along and we know that now if they have to issue T4A, the cheating is going to disappear. So, I mean, if you look at the evolution of our OR in Canada, the Canadian truck load. I mean, it's just a disaster because we used to run 80 to 85 OR and now we're running a 90 OR. Why is that? Well, because, you know, we have to be more competitive, et cetera, et cetera. So, this was always unfair competition to us. So, we think that now with these new issues, okay, you're going to start to see some change. Another thing also that's important to notice is the safety record of those guys is not good. So people are starting to understand. So we've got customers now that are stating we don't want to deal with those driver inks anymore, right? So we have one, a paper guy big in Quebec that said, hey, you know what? You have to certify that you're not a driver ink because more and more there's also not just the cost but the safety of these guys. okay, has been questioned now, right? So this is what to me in 26 when I look at Canada, the market's going to be probably a little bit more difficult, but the supply is going to be also much less. So we'll probably be in a better position in 26 than we were in 25 because slowly, Okay, those driver-ings will have to adjust. They will have to adjust the rates. They cannot cheat because right now a driver-ing guy is not paying any taxes. Now he gets a T4A, whoops, Revenue Canada is aware of him. And if he doesn't pay his taxes, then he's going to end up with a little bit of an issue.

Good. That makes a lot of sense. I appreciate the time. Thanks. Pleasure.

Next question will be from Brian Assenbeck at J.P. Morgan. Please go ahead, Brian.

Hey, good morning, Elaine and David. Thanks for taking the questions. Just going back to the MassGeo survey and the big improvement you noted, when do you start to get credit for that? Is that something that you do at once? Obviously, it's continuous, but you get some credit the first time you make a couple big steps, and then They start to give you more volume and then maybe more price later. And then just related to that, I'm trying to understand how you can be pretty good on four-day service and next day, but not necessarily two- to three-day. So what's the part I'm missing there? Thanks.

Okay, Brian. Well, I'll let David talk about the master report. But what I can tell you is that the four-day, okay, where we were able to make some changes is that we moved freight from rail to road. So when you do that, you are in control. So this is why we're doing really well on four-day versus what we used to do. And next day, because we come from the UPS environment where everything was kind of next day, these guys have always been good on next day. So it's just a continuation of what these guys have done all along. The second day and the third day, this has been the issue where we're not acting as being professional. We don't manage. We don't monitor. We just let the other guy do the job. So now it's a focus of ours because this is a big issue because you have a commitment that you give to a customer that is going to be there in three days. But it's not there in three days, it's there in five days. Well, that doesn't work, right? So you got to be, you know, having process in place that you manage that. So this is something where, you know, in the old days, there was no real focus. And now through this new focus of the team, it has been a major focus of ours. And we know that second day and third day, okay, we were not as good as our peers. Right? But we're getting there because we're making a lot of changes and a lot of improvements. So that's the difference between four days, two days, three days, right?

And in terms of how you get credit, in our experience so far, we would expect to see the impact first on volumes, right? So your turnover and your churn comes down. You're able to retain more business that you get. Then you start to get more wallet share from the same customer. Because remember, our customers A lot of the big customers use all of us, right? They use lots of carriers. It's just a question of how much they're allocating to each one. And so you do a good job, start to get a little bit more. So the first place that we would expect to see it is on volume. Pricing will come later. And pricing, frankly, is going to be a little bit of a function of this supply-demand imbalance correcting itself or at least normalizing and the market being a little bit more balanced, right? When the market's more balanced, and our service is improving and we're getting more freight from people, then we can start to see a pricing. The other thing I'll point out on this is that the beauty is that we've made big improvements, but there's still a long way to go, right? We're not best in class yet. We've still got, you know, another hundreds of basis points to improve on time. We can drive our missed pickups. way down further, reschedules way down further, our claims can come down way further. So we're still in the early stages and there's a lot more value for us to create for our customers in the form of better service and ultimately for our shareholders when that plays through to the numbers.

Yeah. And then just the relative Size of the two to three day sounds like that's probably the bigger chunk of the market or the opportunity relative to maybe the four in the next day.

Yes, absolutely. Because I would say that next day for us is about not even 20% of our volume today. And four days is probably about the same. So, I mean, the big chunk of our business is between two and three days. and this is where we are the weakest today and this is where our focus is is guys this is where we have to work on right so we we made some major improvement on the four days there we're good we're good on the next day service fine but let's let's uh do the job on the two and three days and we are improving absolutely okay thanks very much for your time let's go brian

Next question will be from Tom Wadowitz at UBS. Please go ahead, Tom.

Yeah, good morning. So, Elaine, I wanted to get your thoughts on just kind of the size of the terminal network for USLTL and where you would want to be for shipments. I think that was something where, you know, you kind of you inherited some or you bought something that had over 30,000 shipments a day, I don't know, 33, whatever it was. a wind down on kind of your own initiatives and the cycle went down. And I think that has been a component that you're like, well, we can't be a, you know, 90 or mid 80s or our company if we were just way underutilized. So how do you think about where the network is and how much volume is a piece of ultimately getting to the goals? Like maybe how large that gap is, because that seems like a factor that that would ultimately matter as well.

You're absolutely right, Tom. And as a matter of fact, in Q4, we'll probably swap three terminals with one of our peers to readjust the size of our terminal versus those guys. Right? So this is an ongoing thing, okay, that we continue to do. Cash-wise, probably in our Q4, between what we're buying and what we're selling, we should see a net positive between $40 and $50 million U.S. in Q4. But still, even with that, going into 26, I would say that we probably have another $2,000 too many, okay? Now, the challenge that we gave our team is that the network was probably built to support 40,000 shipments a day, and we're doing half of that, right? So organically, it's going to take us some time, but can we go organically from 20,000 shipments a day to 40,000 shipments a day? That takes a long time. So this is for sure. There's more to go. There's more to come into adjusting our... our network to today's reality, and we'll keep doing that. So we're talking to all of our peers all the time. And what's the number of doors that we would need today? Probably more like 5,000 to 6,000 to 7,000 doors. But these doors have to be in the right location, right? So that's the other thing that we're working on in some areas. I'll give you an example. Dallas, I don't have too many doors in Dallas. Because we're doing well in Dallas, and we are increasing our volume in Dallas. Chicago, the same, right? So we got areas that we are growing, okay? Now, you say, well, your volume is down. Yes, because in other areas, we are losing, right? But we were working on balancing the network absolutely like everything else, Tom.

Is that an issue on service that if you kind of rationalize or it's not its size of terminal for you, it's not necessarily like reach of the network?

No, it's not an issue for service, Tom. I mean, no. Okay. Okay, great. Thanks for the time. Thank you, Tom.

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

Hey, thank you very much. And thanks, Alain, for the great comments about the impact of regulation both sides of the border. Obviously, you mentioned some color about 2026 being more of a sunny picture, especially on the US LTL. I'm just curious, what kind of OR could you produce in a flat volume environment in 2026? And maybe, another scenario where you see a more bullish stance in terms of volume?

Well, I think if everything stays the same, I think that, you know, in this kind of an environment where the volumes are light, et cetera, et cetera, you know, if you look at our Q2, if you look at our Q3, for sure last year's Q1 was a disaster for us at 99. I mean, I don't think that we'll be in that position. So can we say no volume growth, okay, for 26 versus the same kind of environment, 26, that we've been seeing in 25 with the investment that we're doing in our cost management and all that? So probably a 200 basis point globally improvement, 200 to 300 basis point versus what we are delivering in 25 into 26.

Okay, that's a very great caller. And just with respect to the chief commercial officer role, is it fair to say that the candidate has already been identified and is coming from the outside? And I'm just curious to see how it will change the jobs performed by Carl and the team overall.

No, the guy comes from the family.

Okay.

The guy is within TFI.

Okay. Okay. That's a great caller. Okay. Thanks for the time, Alain.

Pleasure, Benoit. Thank you.

Next question will be from Bruce Chan at Stifel.

Please go ahead, Bruce.

Hey, guys. This is actually Pernella on for Bruce. Appreciate all the color here. So, quick one. Wanted to ask about CapEx. In terms of capex budget from here, how would you expect it to trend going forward? What investments are sort of needed as far as maintenance and potentially growth?

Yeah, so for this year, we've updated our guidance to 150 to 175 net capex for 25. And in normal years, it would be more like 300. And that's all maintenance capex. The way that we think about capex is really about maintaining the fleet that we need. We're not seeking to grow the fleet organically when volumes turn. We just use that opportunity to get more productivity out of our assets, use that opportunity to take the highest paying freight, and we get the operating leverage that way.

All right. Awesome. Thanks, guys.

Pleasure. Thank you.

Next question will be from Ari Rosa at Citigroup. Please go ahead, Ari.

Hey, good morning, Ellen, David. Thank you for taking my question. So I wanted to ask about tariff impacts and what you're seeing there. To what extent do you think tariffs are kind of holding back business, whether it's cross-border or in Canada, versus how much of kind of the volume weakness is related to kind of cyclical factors or kind of underlying economic factors that would be independent of the tariffs? And then to the extent that we get a little bit more tariff clarity, do you see that as a positive or an incremental positive into 2026?

Well, one thing is for sure. If you don't know the rules, everybody sits on the sideline, right? And the problem we have right now is that we don't have a deal. I mean, Mexico or Canada, uh both countries big traders with the us we don't have a deal right so this is why it's so important that in 26 at one point okay there has to be a deal between the three countries right so and in the meantime okay in terms of not knowing where we're going right for sure it's a big effect right if you take the aluminum Okay, I was reading what the president of Rio Tinto is saying. I mean, aluminum is not affecting them, okay, the tariff. Okay? So, but what they're doing is they're shipping some of their aluminum from Canada to Europe. Well, it's affecting me because I don't have any ships, right? But down the road, okay, this is temporary. I mean, for sure. This will change as soon as we have clarity on tariffs finalized all that. I mean, that product will go back to the US. Right. So it's just we need to have a deal between the three countries. And once we have that, whatever it is, OK, then we know what to do and what kind of adjustment will be needed.

And then it's going to be clear sailing.

Yeah, well, let's hope we get some clarity on that in the months ahead. And then just as a follow-up, Ellen, I wanted to ask about how you're thinking about the dynamics between LTL and truckload right now. Do you think there's a lot of LTL volume that's slipped into the truckload market? And obviously, if we get some tightening here because of some of these enforcement actions, how positive of an effect can that have for the LTL market?

Well, that's for sure. I mean, when you think about that, you're a truckload guy, you're stuck, okay? So what do you do? I mean, you try to get the good, heavy 510 pallets of LTL, and you give the shipper a good rate, right? So right now, what's happening in the LTL industry is that there's lots of freight that's been moved to the truckload guys, and this is Good rates, good freight for LTL. So we'll see what happens. When the truckload guys get busier, okay, are they going to walk away from that freight because now, you know, they don't need to do that? Probably. Experience tells us that this is what happens, okay? But we'll probably see that sometimes in 26, hopefully, okay?

But who knows when, right? Okay, appreciate the thoughts.

Thank you. And at this time, Mr. Beda, we have no other questions registered.

Please proceed.

Well, thank you, operator, and we appreciate everyone joining us today. Thank you for your interest in TFI International. We look forward to finishing the year strong, and are confident we'll be entering 26 in a position of strength. I look forward to seeing many of you at several investors' conferences, and we'll be attending before year-end. And as always, please don't hesitate to To reach out with any further questions, have a terrific Halloween and have a great weekend, guys. Thank you.

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