TFI International Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's fourth quarter 2025 earnings call. At this time, all participant lines are in lesson-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 February 18, 2026. Joining us on the call today are Alain Bidar, Chairman, President and Chief Executive Officer, and David Subberstein, Chief Financial Officer. I would like to turn the call over to Mr. Alan Bedore. Thank you. Please go ahead, sir.

Well, thank you, operator, for the kind introduction and thanks everyone for joining us on today's call. Last evening, we reported our quarterly results showing robust free cash flow driven by international initiatives and the hard work of our team. With overall freight dynamics showing modest signs of stabilization, the men and women of TFI are busy preparing for a potential industry rebound and controlling the controllables. And another focus of ours, which you've heard me emphasis many times, is producing strong free cash flow regardless of the cycle. I'm pleased to say that we generated more than $10 per share of free cash flow in 2025 or $832 million for the year and notably our fourth quarter free cash flow was 25% higher than the year ago figure. At TFI, we view this free cash flow as very important given our strong track record of strategic capital allocation. We intelligently invest for the long term, even during down markets, and whenever possible, return our excess capital to shareholders. As you may recall, during the fourth quarter, Our board again raised our dividend, and over the course of 2025, we continue our track record of opportunistic repurchase, buying back over $225 million of common shares. Now let's turn to the other aspect of our fourth quarter results. Total revenue before fuel surcharge of $1.7 billion, compares to $1.8 a year earlier, and we generated $127 million of operating income, reflecting a margin of 7.6. Our net cash from operating activities improved meaningfully to $282 million, which was up 8% over the prior year quarter. And our free cash flow from the quarter was $259 million, reflecting a 25% year-over-year increase, as I mentioned. Taking a more granular look at our business segment, let's begin with LTL, which represents 39% of our segmented revenue before fuel surcharge. At $661 million, this was down 10% compared to a year earlier. However, we were able to improve our adjusted OR slightly more than expected to $89.9 relative to $90.3 in the year-ago period. Our total LTL operating income was $62 million compared to $70 million a year earlier. We also generated for LTL a return on investor capital of 12.2%. Next up is truckload, which was 40% of its segmented revenue before fuel surcharge at $674 million for the fourth quarter, as compared to $693 million the prior year. While tariff and the general economic uncertainty still affect freight volumes, and excess capacity has been an industry-wide concern, We continue to seek growth opportunity that our network and our infrastructure are particularly well suited for. This includes both data center and the broader economic grid, electric grid, to market in which we've demonstrated recent successes. Our truckload operating income of $48 million compares to $60 million a year earlier, and our OR of 93.2 compares to 91.5. So wrapping up on truckloads, our return invested capital came in at 5.8%. Lastly, in our segmented discussion, logistics was 21% of segmented revenue at $358 million relative to $410 million in the fourth quarter of 2025. Operating income was $31 million versus $43 million last year, and this represents a margin of 8.7% versus the 10.5%. I'll note that despite slightly lower logistics revenue sequentially, we were able to expand our operating margin by 30 basis points over the third quarter. And finally, our logistic return invested capital was 11.8. Shifting gears, our balance sheet is a pillar of our strength, supported by the $830 million of free cash flow we produced during 2025, including more than $250 million during the fourth quarter alone, both figures up year over year. We ended the year with a 2.5 times funded debt to EBITDA ratio. And given this financial foundation, we continue to pay an attractive dividend and repurchase more than 225 million worth of common shares during 2025, as I mentioned previously. We also continue to seek a creative bolt on acquisition opportunities. And I'll conclude with our outlook as we may enter the new year, as we enter the new year. For the first quarter, we looked for adjusted diluted EPS to be in the range of 50 to 60 cents and for the full year 2026, we initially expect net capex excluding real estate to be in the range of 225 to 250 million. As I mentioned in the past, our outlook assumes no significant change either positive or negative in the operating environment. So before we open up the Q&A, you may also have seen our press release yesterday about the latest change to our board of director. So I want to again express my gratitude to my friend André Berard for his more than two decades of service as a director of TFI International, most recently as our lead director. His impact on our board since 2003 has been enormously beneficial to the firm and we all wish him all the very best to his upcoming retirement. I would also like to congratulate Jianjia on her nomination as our new lead director. And now operator, if you could please open the lines for both David and myself, we'll be happy to take questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. And should you wish to cancel your request, please press star followed by the two. I would like to advise everyone to have a limit of one question and one follow-up. And if you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. And your first question comes from the line of Ravi Shankar from Morgan Stanley. Please go ahead.

Hi, this is Nancy on for Ravi. Thanks for taking my question. I was wondering if you could help give some guidelines around the fiscal year guide and potential scenarios to get there and how you're thinking about 2026 as a whole would be great.

Yeah, well, that's a very good question. So this is why we came out with our, you know, Q1, okay, with 50 to 60 cents. I mean, this is down year over year versus 2025 because, you know, We're still in a transition environment. The freight recession that we've seen since 2023, 4, and 2025 is still persistent as we look at Q1. We're starting to see some very early sign in our truckload sector that maybe things will start to get better during 26. This is very early. the change in the U.S. with the CDL and not renewing some permits as drivers, etc. That may help the truckload industry in general. On the Canadian side, the fact that now every owner-operator or not an employee, but let's say a driver now has to be issued a T4A, which is kind of like a W-2 in the U.S. as an employee. So now he's got to report his income and pay taxes. So we're starting to see some people disappearing in 26. But this is the very early days in the truckload sector. On the LTL side, I mean, we're still in a very difficult environment. And we anticipate that it's still going to be the case for probably 2026 as a whole. On the logistics side, though, I mean, we feel really good that, okay, yes, our Q4 2025 was not as good as the previous year. But in terms of one of our divisions that moves trucks for the most important manufacturer in the U.S., Packard and Freightliner, we think that this is going to start improving by probably Q3 and Q4 going back to normal. On the logistics side, we have a more clear path of the major improvement that we could see during the course of 26. Truckload, early signs that things will probably get better, although nothing is sure. It's very early in 2026, we're just in February. On the LTL side, US, still very soft market. On the Canadian side, Very soft market too, but we do way better in Canada than we do in the U.S. because if you look at our revenue per shipment, the number of shipments are down in Canada the same as the U.S., but we're able to maintain an operating ratio very close to what we were doing, let's say, a year ago. So we have a better control on our costs still in Canada. If you look at our claim ratio, for example, which is unbelievable, We're close to zero in Q4 on the Canadian LTL side, and we're still at 0.9% of revenue on the US side, which is an area that we definitely have to improve during the course of 26. I mean, we had some better quarters in that regard on the claim side, and we need to focus more on that. And this is a big area of focus in terms of improving our service on the US LTL side with our customers. you don't want to break the customer's rate or lose it, right?

Got it. Thank you. That's very helpful. I guess touching on that a bit more, do you guys feel ready for the upcycle that comes within US LTL with the idiosyncratic changes you have made, or is there a lot more work needed within 2026?

No, we're ready. I mean, we are really ready. I mean, in terms of, uh, The management tools that we have today versus, let's say, just two, three years ago, I mean, we are very well equipped. We have financial information by terminal now. We've implemented Optum on our Lionel. We have Optum also implemented, which is a software, on our delivery side. Now we're going to phase two, which is going to be also implemented for the pickup side. So, I mean, we're ready. We have the tools. We are improving our team. On the commercial side, we have way more stability in our sales force than ever. Our friend, Mr. Trakus, has done a fantastic job of creating some stable environment in the sales team, understanding the focus, what these guys need to do. I think that probably for the first time, it's still early in the game, but in Q1, You know, we're probably, for the first time in a long time, show that our shipment count is about equal to the one of the previous year. Very early still, okay? But, you know, if you look at Q4, we were down 10%. We're down 6%, 7% in Canada, but down close to 10% in the U.S. So it would be quite an accomplishment as a first step, okay, to be able to at least maintain the volume that we had in Q125.

Very helpful. Thank you.

You're welcome.

Thank you. And your next question comes from the line of Jordan Allegro from Goldman Sachs. Please go ahead.

Yeah, hi. Good morning. Good morning, Jordan. Yeah, I hear your thoughts around the demand environment. I'm just sort of curious as we roll into or through the first quarter, is there a way you could give some additional color as to perhaps the segment margin-related drivers behind the 50% to 60% sent EPS guide, again, realizing that you're not assuming much change in the operating environment, but maybe give some sense for shape of those margins as we move forward seasonally. Thanks.

Well, that's a very good question, Jordan. So this is why I'll pass it on to David, which is our CFO.

Sure. Hi, Jordan. Hi. So So we're looking at probably around 250 basis points of sequential margin deterioration in the US LTL. And I just want to qualify that by saying that Q1 is unique in the year in that it's very back end weighted to March. And so it's very difficult to get a sense for the trends based on January and the first half of February. And this year, Particularly so, because we lost at least 100 basis points related to weather, which caused us to have a lot of overtime expense, etc. So we anticipate around 250 basis points sequential deterioration, but it's heavily weighted towards March, which of course hasn't occurred yet, and we don't have perfect visibility into. In terms of Canadian LTL, about the same in terms of the sequential move. P&C is 1,000 basis point down and 15% revenue down sequentially, which is normal seasonality for us, Q4 being a peak season in the PNC. Specialty truckload, like Mr. Bidart was saying, we are seeing some early signs of positive things in the truckload. And so we expect to be flat sequentially from Q4 to Q1. in the specialty truckload. The Canadian truckload, a little bit of erosion, maybe 100 basis points, margin deterioration sequentially, and then logistics around 150 basis points.

All right, great. Thank you. And just out of curiosity, I know the weather's had an impact. Are you able to share a little bit more color around, I know March is so important, you know, How's January, February volumes, and is it possible? I know you alluded to it a little bit. Can you still make that up in March on the tonnage side for LTO?

Yeah. Well, listen, January was very, very difficult, both from a volume perspective and from a cost perspective because of the costs associated with the weather and the disruptions. and the inefficiencies that that caused. February, we saw volumes tick up, and that's why Mr. Bernard is making a reference to potentially being flat year over year in volumes. We'll see how the pricing follows as it relates to that, but we can see that the volumes did tick up in Feb. Thank you.

You're welcome, Jordan.

Thank you. And your next question comes from the line of folders, Pat Quinn from RBC Capital Markets. Please go ahead.

Yeah, thanks very much. Good morning, everyone. Good morning. So, Anna, you mentioned some of the improvement that you're seeing, and David just mentioned it as well, in the fundamentals of trucking attributed to some of the CDL and English language privacy testing. Yep. Are you seeing that now build into your pricing, your contract pricing? We see pricing move on the spot side, but are you seeing at all any improvement in pricing on a contracted basis, particularly in US LTL, or if it is differentiated by segment or region, if you could touch on that?

Yeah, that's a very good question also, Walter, because, you know, Spot moves first. When the shippers start to see a movement upward in the spot, they try to get into a long-term agreement with you with those low rates. To answer your questions, yes, spots are up. On the van side, it's also inflation for us on the Lionel for our LTL because some of our LTL is moved by third parties. We saw price moving up in Q1 so far. But on the contract rate, it takes more time. It takes more time, Walter, so that shippers are going after you, commit to long-term pricing at these low rates. And as a trucker, what you normally say is, let's wait, let's wait and see. So for now, no. On the long-term rates, it's still not as good as the spot rate, but we believe that the fact that it's always an offer and demand balance, so the offer is starting to reduce. The demand is still not great. The issue we have for the last few years is that the offer has always been growing because of the 21-22 COVID area where we added so much capacity that now we're stuck with over capacity and now the offer is starting to reduce a little bit and the demand is still not very strong but we anticipate that if the demand starts to go upward and the offer is also being reduced so this is why as 3PL They're starting to see some pressure because the trucker are asking for more money and they can't get that kind of money from the shipper yet. So a little bit of pressure on rates for let's say our 3PL organization. But long term, medium term, for sure the contract rates will start to go up if this trend of reducing the offer and a little bit of increase in the demand continues in 26.

Okay, that's fantastic. I'd like to go back to your guide now and just reflect in some of the inbounds I'm getting in the sense that you delivered much better than your guide for Q4 had been set at 80 to 90. You came in with a buck nine. Can you talk a bit about the different, we could see what we had been forecasting relative to what you came in with, but really internally, where was the area of outperformance and is that area of outperformance now built into your guide for Q1 as well?

But you know what, Walter, like David was saying, the problem that we face is that we are giving guidance on Q1 based on an horrible month of January, right? And very early signs of improvement in February. So this is why we're cautious. I mean, this is what we believe could be delivered by our operation, okay? Hopefully we do better than that, like we did in Q4. But then again, the other problem we have, Walter, until we have a deal between U.S., Canada, and Mexico, which is supposed to come, let's say, in the summer of 26, even if the market, you know, there's a reduction in the offer, the demand is still not very strong. So this is why we have to be very careful until such time that we have a new agreement between the three countries where our customers know what's going to happen in the future, then we're going to feel way better in terms of being able to forecast what can the company deliver in terms of profitability.

Okay. I appreciate the time as always.

It's a pleasure, Walter.

Thank you. And your next question comes from the line of Brian Osenbeck from J.P. Morgan. Please go ahead.

Hey, good morning, Elaine and David. Thanks for taking the question. Good morning.

I just wanted to hear a little bit more about the specialty truckload business. Obviously, heavy industrial there, so assuming not seeing too much of an uptick yet, but we've seen a little bit of life in the PMI, but also wanted to hear a little bit more about the data centers, the electrical grid, the things that probably have maybe a little bit more longer tail to them, but I'm not quite sure how big they are and how fast they're growing at this point. Maybe some more details on the industrial side with those two in focus.

Yeah, yeah. You know what? This is something new for us, right? And this is coming right now, okay? It's our Lone Star operation out of Texas that is really the one being involved in wind. Although wind is going to be quite active in 26 and moving some equipment for the data center. One of our latest acquisition projects is also bidding on some job up north in Michigan and those northern states in the U.S. So that could be a positive for us if these guys were able to win these adventures. So, I mean, we are an industrial carrier, us, in our truckload. We're not a retail guy, okay? We are industrial. And for sure, let's say home building, we start moving in the right direction in that regard. Okay, that's going to help. But in the meantime, this is why we created this job of chief commercial officer for all of our U.S. truckload with Mr. Hoppe that is now in charge of working, okay, all of our network participants in that sector. So we are deeply focused on what is moving now. And what is moving now is where the major investments are in the energy sector and wind, solar, and the data center. So that's our area of focus right now. But hopefully the other sector of the industrial, which is construction material and all that, starts to move in 26. Now, like I said, with this latest acquisition that we've done late in 25, These guys are very good. Hopefully they're successful in those bids and we'll see because this could be a very interesting win for us. So we'll see if these guys are able to get the ball moving on that. So all in all, we started, okay, like we said, we're just seeing a little bit of the early sign of some industrial activity, which is our world. I mean, we're not a van carrier that moves retail freight for, let's say, a Walmart or Amazon. I mean, us, we move steel, we move aluminum, we move building material, et cetera, et cetera. So that's our core. Same in Canada, too. So hopefully, this starts to move. And like you said, there's some movement on PMI. Hopefully, those major investments start to increase. Under the new administration, we're hopeful that this will happen.

All right.

Maybe just to follow up on the TFF, T4 side of things, the weight for shipment looks like it's stabilizing a bit here, talking about getting back to maybe flat tonnage growth here in the quarter, maybe improving from there. Is that service and network dependent, or is that more of a on the economy. I would assume it's more of the former, but just wanted to see how far along you are with those improvements to the point where you can maybe grow a little bit faster than what the market's giving you.

Yeah. See, our focus is, if you look at what we do in Canada in terms of our weight per shipment, it's way higher than what we do in the US. Why is that? Because you have to understand that T-Force freight used to be UPS freight, and their focus was retail, like UPS per se. And as we're saying, forget about retail. As much as you can, move away from retail and let's move freight that is based on the industrial base. So this is why our weight per shipment since we bought the company went from about 10.75 to 12 something now, 12.25, 12.50, right? And the push is to continue to move into that sector of industrial LTL versus retail LTL. We understand that a lot of the retail stuff, more and more, will be controlled by the gig economy, by the Amazon and all that. So this is why we're saying to our guys in the US, let's focus on the industrial sector of the economy versus the retail sector of the economy now. The problem, like I just said earlier, is that the industrial economy is slow, is very soft. But this is why it may be a little bit more difficult to do this transition. But that's the focus of ours, is to move away as fast as we can from the retail economy, because we're seeing what's happening with the gig economy, with the Amazon and all the others. Guys, let's change the focus. We've been quite successful so far doing that, but we need to improve more. We have to be closer to 1,400, 1,500-pound shipments. Because don't forget, normally you're paid by the weight. And the cost is not based on the weight. The cost is based on the movement, right? So you move a pallet that's 1,000 pounds or move a pallet that's 1,500 pounds, the cost is about the same. Maybe different on the linoleum. But I know the issue is always queue before wait.

Yeah, and the service point continues to be very important for us, Brian, and that's how we're looking to grow and move. I mean, it's true that we took a step back on the claims ratio, but the other service metrics are moving in the right direction. I can tell you that in Q4, the missed pickups were We're 1.5% down from 3.3 a year ago. Reschedules at 8% down from 12 a year ago. On time is flat around 91. And then we've continued to increase our small, medium-sized shippers as a percent of total. It's around 28% of total revenue. That's up from 25 a year ago.

Yeah. Okay, great. Thanks.

Very helpful. Appreciate it.

Thank you. And your next question comes from the line of Jason Seidel from TD Coven. Please go ahead.

Thanks, operator. Morning, Elaine. Morning, Jason. I wanted to touch base a little bit on the data center comments, and I think you called it out in a previous release, and you guys typically don't do that. Maybe you can dig a little bit deeper and let us know sort of how big you think this can get for TFI.

Well, you know what, Jason? Like I said, I mean, right now before this acquisition that we did late 25, I mean, we were only servicing the data center world. Okay. Through our Texas operation at Lone Star. Okay. And you know, this is, this is something new for those guys. It's like, it's something new for the industry in general. So, because these guys used to be big with wind and energy in Texas. So, so now we're saying, okay, this is great, but how about data center? So let's, So we are kind of very close to what's this builder, Bechtel. So we're trying to work very closely with those guys. But now with this new acquisition that we just made late in the year, those guys that are operating more like in the Michigan area, those guys are also very close to a builder there that's been awarded two data centers, one for Meta, one for Google. And hopefully we could continue to work for this builder to support him in those two data centers. So this could be a win for us if ever our team is successful out there. So this is what we're trying to do is build some kind of a recipe partnering with the builder of those centers like the Lone Star guys are with Bechtel and our guys up north are with a different builder. This is what we're trying to do. And then, you know, once this data center has been completely built, they will need servicing, right? So that's also something that we're trying to get into and to grow that business. We have lots of experience in Texas with Lone Star in moving very expensive products Like we did a move for one of the energy company, Chronicle Phillips, that was valued at about, just doing the move, if I remember correctly, it was like close to a million dollars just to move this kind of equipment. So these guys are really good at what they're doing. And it's just like, okay, guys, so good for wind, good for energy, for the oil sector and all that. But data center is the new thing. So let's get up and running on that.

And the approach is to approach this as a consolidated group, right? And we have one of the larger flatbed fleets in the U.S., over a billion dollars of U.S. flatbed revenue. And we're going to market for the large customers as one so that they are able to get that nationwide service. And so it's around the energy. It's around the construction. It's also around the high value. A lot of the materials are high-value, need to be on time, and so we have that skill set with the DOD top-secret work that we do high-value freight as well.

That makes sense, David. And my follow-up, Alain, you touched on continuing to do acquisitions. There's been a lot of articles out that 2026 could be a big M&A year for the logistics group in general. talk a little bit more about that. I mean, are you still targeting a larger acquisition this year, or is that going to be something that's more of a 27, 28 event?

You know, Jason, in order to do a deal of large size, you know, you've got to be patient. And like I've always said, you make your money in the buying, never in the selling. So the price has to make sense and all that. So for sure, I mean, we could – do something of size the end of 26 into 27. But there again, I'm looking at what's going on with everything that's going on in the market right now with on the parcel side and even on the LTL side. So you'll probably see us, you know, do some in 26, do some kind of smaller deals. Okay, like the one we just did late into into four. We just did one small deal in Minnesota to add to our Transport America division. Okay, that makes a lot of sense. We may be doing some smaller deals in the LTL world in the U.S. So large deals take time, right? And we have to be very careful. And like I said earlier, until we have a deal between the three countries, okay, a NAFTA kind of deal, right? Until we have that, it's very difficult to do a deal of size because you don't know what the rule is going to be. So this is why I'm saying it's impossible to do something now. Maybe possible by the end of 26, but probably more like 27. And in the meantime, because of our free cash flow generation, we'll keep continuing to do smaller deals where the risk is different. now because of too much unknown on the deal between the three major partners in the world, which is U.S., Canada, and Mexico.

Yeah, makes sense. Alain, you mentioned smaller deals on the LTL side. Would this be like buying cartage agents?

No, I would say it's probably – I'll give you an example. You buy a small Texas regional guy as an example, okay? or you buy a regional guy in the Northeast, which is close to Ontario, Quebec, right? So that's what I'm saying by smaller deals. So it's not a national carrier. It could be a strong regional guy that covers one state like Texas or cover two or three states in the Northeast. This is more, okay, what we are trying to do right now because A large deal in the US LTL for us, it's not possible right now.

Makes sense. Appreciate the time as always, gentlemen.

Pleasure, Jason.

Thank you.

Thank you. And your next question comes from the line of Tom from UBS. Please go ahead.

Yeah, good morning. So I wanted to, yeah, good morning, Elaine.

Good morning, David. wanted to try to drill down a little bit on the non-domiciled CDL impact and how to look at that in your business, right? So, you know, truckloads is an extremely large market where we expect a supply-side benefit, but, you know, the benefit might be different in drive-in versus specialty in flatbeds. So do you have a sense of, you know, kind of how much non-domiciled CDL has impacted specialty flatbed you were mentioning, you know, some of the skill sets are a little more unique in specialty. And I'm just trying to get a sense of like, well, you know, is this really going to cause capacity to come out in dry van? And then there's maybe less pricing impact to you. I know, you know, there's some somewhat fungible, but just trying to get a little more sense of kind of how you would see the driver impact and whether you think there is a lot of activity and supply in specialty that's actually non-domiciled. Thanks. Yeah.

You know what, this is a really good question because so far, we see way more on the van side than on the specialty truck load side because what you just said, I mean, the specialty, let's say on a flatbed or on a tanker operation, there's more than just driving the truck, right? Whereas the van, you just pick up a trailer and you drive, right? So it's much easier. than to tarp a load on a flatbed. So I don't know that, Tom, so far. It's very hard to put a finger on what the effect of that's going to be. But one thing is for sure is that we'll probably not see as much benefit as the van because for us it's probably less of an issue for our world. but it's a little bit like a domino effect right so once the spot moves okay on the van it starts to move on the reefer we see also some movement on the price on the flatbed side the over year it's starting to move so I don't know if exactly is Is it because the supply is constrained or is it the demand that's more? My feeling would be more like not the demand because the demand in my mind is still very soft and weak, excluding the data center thing there or the energy sector. But I think it's an issue of the supply that's starting to constrain because our revenue per mile, although we still have some of our division that are not doing well on the revenue per mile basis because of market condition, But overall, okay, our revenue per mile is improving. I mean, in Q1, okay, I think we're going to start to see those improvements, you know, because we did not improve in Q4. That's for sure. I mean, I've never seen a specialty truckload OR at 93, which is worse than my van 91 OR in Canada. This is not acceptable. Absolutely not. But there's market condition to that. So we should see some improvement there. And is it because of the demand or is it because of the supply? I think it's a little bit the supply. Demand will probably improve over the course of 26, 27. And CDL, is that helping us as much in the specialty world versus specialty truckload world than the van world? I think that probably it's a huge more benefit to the van world versus the specialty. But we're still getting I think improvement because our revenue per mile is improving year-over-year as of now.

Okay. That's great. Thank you. And then quick one for David, or one or two for David. I want to make sure I understand your comments on US LTL and 1Q. So if you see flat year-over-year shipments, then that would imply, I want to say, like 3% to 4% growth in shipments per day, 1Q versus 4Q. So that would be kind of a meaningful improvement. I don't know if you were saying kind of flat shipment sequential or year-over-year. And if you're saying flat year-over-year, what might be driving the kind of the improvement in activity? Thanks.

Well, it would be potentially flat year-over-year. Again, hard to say what's going to happen in March. But the comment was with regard to year-over-year. What's driving the improvement is the sales team, the service, and all of the things that we've been working on over the course of the past year. Now, the revenue per shipment may not be positive, right? And that's why, you know, we're looking at, you know, we'll see where the revenue per shipment is relative to year over year, but there is pricing pressure out there. And so that's going to be the offset to, you know, what could be a strong volumes or stronger volumes, um, you know, as it relates to, uh, to the profitability contribution.

And, and a hundred basis point comment on weather impact. That's a full quarter impact. Uh, yeah.

Yeah. We're estimating that, that we've lost like five to $6 million already on the weather. just through extra overtime and just inefficiencies and cleaning up the dock and, you know, all that cost.

Yeah, versus a normal environment. Because, Tom, see, the issue of the weather, we always have weather in Q1. So this is not, you know, something that we normally talk about. But this year, it's special because it affected our big market, which is Northeast, Midwest, and Texas, right? so if it if the weather is an issue in idaho or in utah but not not too big for us right but when it affects chicago when it affects dallas when it affects new york i mean this is this is really really difficult because you know dallas we were shut down for three days because of the ice so what david is talking about five six minutes this is over and above what we consider to be a normal environment of weather. I mean, this is, we're not saying that, oh, because we had, no, no, no. This is exceptional for this year because weather was really bad in our major sector, okay, for, excuse me, T-force freight.

Right, right. Okay, totally makes sense. Thank you for the time. Pleasure, Tom.

Thank you. And your next question comes from the line of Connor Kipta from Scotiabank. Please go ahead.

Good morning, Elaine and David team. Maybe just the first one on the earnings side of things. I mean, as we can look into the back end of 2026, you know, hopefully conditions improve, but is Q4 going to face a tough comp from like the buck nine in EPS, you reported for Q4 of 2025. I mean, if I'm looking sequentially, you have like effectively a drop of 50% in EPS from Q4 to Q1 as guided. And that's a little bit wider than what you typically see, right? So I'm just trying to make sure like we're not missing anything when we are comping or lapping the Q4 2025 and Q4 26.

Okay. So, I think, Conrad, that Q4, okay, 2025 versus 26, I think that we're going to be in a different position, okay, versus this year, versus 25. Reason being that I believe that our logistics will do way better in 426 versus 425 because our customers will be busier. I'm talking about the OEMs, the truck manufacturers. okay and also the fact that we've had it as an acquisition late in Q4-25 a great company in our logistics sector so this is why on the logistics side I think that we're going to do way better okay Q4 versus 25-26 on the truck load side it's still I'm convinced that we're going to do better because I've never seen 93OR. We're taking some action. I'll give you an example. One of our divisions on the West Coast, which we're doing really well with certain accounts like the aerospace. We have Boeing as a customer over there. We have Bombardier as a customer too. So we're doing really, really well with those guys, but we're doing so poorly with some other customers. So we took the bull by the horn and we said, guys, no, no more of that. We have also another division that's from Dasky that is doing really well with one sector of their business, but they're doing really poorly with another sector. So there again, we're going to take action there. So this is why to me, I think that Steve and his team understand that we can't run a specialty truck load with a 93OR. This is completely unacceptable. And we're taking action over and above what we think that we're seeing some early signs of market improving. On the LTL side, like David was saying, I mean, the big focus of Cal and the team there is really to improve our service, okay? And And we are. We are improving our service. So as an example, we move way more freight on the road versus the rail. So the rail miles with anti-force freight are down to about 20%. When we bought UPS freight, these guys were 38% to 40% on the rail. So for sure, you move freight on the rail, you don't know. You don't control the service because this is the rail. Whereas if you do it yourself on the road, well, it's under your control. So we are improving our service as an example, just moving rail to road. Now, like I said earlier, because we move that on a van and the van, okay, world's rate per mile is moving up, like we were talking about, this environment is changing. It's also a little bit of pressure on our costs because where we used to pay, let's say, 220 miles. Now, okay, you could be stuck paying 250 to 270 or 280 a mile, depending on the lane, right? So a little bit of pressure on that for us. But for sure, with better service, I believe that our commercial team with Chris and the rest of the boys there will help us grow for the first time organically in 26, year over year. So this is why you look at what we're saying about Q1. I think it's exceptional what we're seeing because it's still a very tough environment. Our customers don't know what's going to happen in the future because until we have a deal, like I said earlier, between U.S., Canada, and Mexico, a lot of guys are sitting on the fence because don't forget, TFI is a us carrier for about 75 of our revenue but 25 to 30 percent of our revenue is is canadian right so a lot of our canadian customers they don't know okay what the future is and also some of our u.s customers they're facing a tough time uh selling to canada right now so all of that being said uh When we come up with 50 cents in Q1, it looks really bad versus a dollar in Q4, but it's a special environment, okay, and we're cautious.

That's a great learning. And if I can follow up maybe on logistics, I think you mentioned that sequentially speaking, at least, you know, logistics margin expanded from Q3. And I was pleasantly surprised to see that. So any color you can share in terms of what's driving this improvement? I mean, is it early days or is it the mix or is there something else? Like how should we extrapolate this performance at logistics into 26?

Yeah, I think, Kunar, that you see us improving during the course of 26. Like I said, because of this acquisition, okay, that we did, because one of our large customers, the OEMs, are also going to be busier. Our Canadian logistics is doing pretty good. We have a great business there. Our U.S. logistics is under a little bit of pressure with what's going on in the truckload sector in the U.S. where the rates are starting to move up on the spot, so you try to get a a truck, it's a little bit more money and you're stuck with contracted rates with customers and these guys want to extend those contracts and we're saying, oh no, because the market is changing. So on the U.S. side, a little bit more pressure, okay, on our profitability there, maybe for the next few months. But all in all, I feel really good about where we're heading with our logistics. Logistics for us, you know, with this new acquisition and a few things that we're working on, should do better in 26 than in 25, absolutely. The other thing also that's worth mentioning is that if you look at our truckload brokerage operation in the U.S., I mean, the revenue is up, okay, and it will continue to grow. So this is one area of focus of Steve and his team is to grow more of this asset-light operation versus asset heavy operation and get a better mix like we have in Canada so we in Canada we want an hybrid model where we have our own assets okay but we also generate a lot of revenue without any assets when we bought Dasky they were doing some of that but not a lot so the goal during 25 26 and 27 is to grow the share of the asset light operation share of revenue Okay, versus the total revenue of the company. So you're way better positioned to improve your return investor capital because, you know, when you don't buy steel, your capital cost goes down. If the profitability or the revenue remains the same, your return investor capital improves. And this is when we talk to the truckload team. They say, we can't run a single-digit return on investment capital, guys. I mean, if you do that, the future is bleak. So we've got to do something. The market will help us, yes, but we need to help ourselves, too.

I appreciate the time, Nicola. Thanks a lot. Pleasure, Gurnar.

Thank you. And your next question comes from the line of Bruce Chan from Stifel. Please go ahead.

Hi. Good morning, gents, and thank you, operator. Lynn, you made some helpful comments around the road to rail shift in LTL. I think that makes a lot of sense for service. Maybe you could also remind us of what percentage of line haul miles are currently outsourced on the LTL side, whether that's to truck or rail. And then, you know, given your fleet investments, do you have any plans to bring that number down this year? Yeah.

Yeah, so what we do is about 20% on the rail, 20%, 22% on the rail, and then we have owner up, okay, and we have third party. So the third party and the owner up, probably our own guys do, if I remember correctly, David, correct me if I'm wrong.

Yeah, our own guys are doing around 55%, 55%. 55%, yeah. Yeah, so it's 45% outsourced.

Yeah, and out of the 45% outsourced, 20% of that, is rail. So 25 is third party. Owner up and third party.

Okay, great. And then just, you know, maybe broad plans, you know, if you're comfortable with that number as far as it suits your model or whether, you know, you plan to bring that down over time.

Listen, I mean, for sure, okay, if you haul, your average length of all is 1,000 miles and more, you have to have some rail. Right? So I cannot answer, is 20 the right number? I would say we're getting close to the right number if the average length of all stays above 1,000 miles. Now, one thing is for sure is the 55%, like David was mentioning with our own guys, that could grow probably closer to 60%, okay? Over time, yes. because you have better control when it's your own people. But the rail at 20%, we're probably close, if we remain at over 1,000 miles, we're probably close to the best that we could do. Now, again, this is going back to the average weight per shipment that we went from 10.75 to 12 something. The average length of all is down a bit, but The discussion I'm having with Cal and the rest of the team is over time. We need to change our approach to the market and reduce over time the average length of all so that we don't touch the product three or four times. We touch the product less. So in order to touch the product less, you have to do less miles. less on the average length of all, right? So it's an evolution, okay, that's going to take place over time. But there again, what I'm saying, if you run over 1,000 miles, you need the rail.

Makes sense. Thank you.

Thank you. And your next question comes from the line of Ken Hoekster from Bank of America. Please go ahead.

Hey, good morning, Elaine and David. So Elaine, maybe just a bit of a contrasting message. So maybe some clarity. You noted a weak environment, but one Q should be flat after a down 7% ton and down 11% shipment quarter. So maybe clarity on what's driving that near 50% EPS downtick in the first quarter. And then you threw in, hey, it's conservative. We could do better. so is it just the weather that's stepping you back? Are there gains in the fourth quarter or any impacts from the fourth quarter acquisitions in there? Maybe just some clarity on it. Thankfully.

Yeah. So David, you want, you want to give some clarity to Ken on that?

Um, yeah, sure. I mean, look, look, Ken, the, in terms of games or anything special in the, in the fourth quarter, the only thing special in the fourth quarter was, uh, tax for about $5 million. Um, Other than that, there was nothing one time in nature. In terms of what's driving the trend of volumes up, it's the work that the team's doing. What may still weigh on the profitability, though, is the revenue per shipment. And so that's why the growth in volume may not be as profitable as otherwise would be. We'll just have to see how that plays out. And then more broadly, it's very, very difficult to, especially at T-Force Freight, to forecast the first quarter because all the money is made in March. That's just the nature of this business. And so when we're looking at a A Jan and Feb that were very difficult with, or at least January, very difficult with the dynamics that we've talked about. There's a lot that's unknown. And so we've done the best that we can. And we are being conservative about what March might be when we put together that guidance.

Okay, and that was flat on shipments or on tonnage? I think you said both.

The shipments, year over year, potentially on shipments.

And then you previously noted, I think, 200 to 300 basis points of margin improvement at LTL in a flattish environment. I think you mentioned if we're starting off flattish in one cube, Does that mean you're looking flattish for the year? Or is it too big a hole? And so that two, 300 basis points for the full year is too big? Or is that still achievable, Elaine, in your outlook? And how about EPS? Are you then looking for it to be at least up on a year-over-year basis?

Yeah. So in terms of the volume, like I said, Ken, I think for the first time, 26 in our US LTL, we should see a little bit of organic growth, okay? on the shipment count, right? On the weight, we believe that it's going to be about flat or up a bit. On the revenue per shipment, like David was saying, okay, right now what we're seeing is a little bit of pressure on the revenue per shipment when we look at Q1 so far. But the team is working to correct that, okay? It's not like we accept that. No, no, no, no, no, no. Cal, we cannot live with $5 less of shipment, whatever it is. I mean, don't forget our GRI, which is small. It's a small number of shipments, right? But we didn't do any. But we're doing one in mid-March. Most of our peers have done theirs earlier than us. And us, we waited. We waited because we want to continue to improve our service so there's less issue with customer when you talk to them about asking for more money. So this is why we're doing that mid-March. Fine. So if we go back to the year in terms of global ETFI, my mind is for sure our plan is we will deliver better OE or EPS in 26 versus 25. Without a doubt, that's our plan. Because like I said, our logistic will definitely improve. That we have visibility. We know where the OEMs are going because we talk to them. We know that it's going to be weak for the first six months, year over year, in 26 versus 25. But the latter part of the year, they're going to do way better in Q3 and in Q4 versus 25. So we are suffering a little bit in that business in Q1 and in Q2, year over year. In our truck load, we've talked a lot about that. I'm convinced that we're not going to deliver a 93 OR in Q1. We are improving our year-over-year basis in Q1 and during the course of the year. And on the LTL side, I mean, we're taking some actions there, improving our service, organic growth, small. I think that we'll do a better job in 26 as we've done now. We've said it clearly, and this is why our guidance is only $0.50 to $0.60, is that we had a difficult start of the year, not just in US LTL, in truckload as well, and logistic because some of our customers are not that busy. So this is what we believe is achievable, and hopefully we do better than that.

Yeah. And the other thing I would point out on the full year is that in truckload, we've done a lot of work in 2025 to reduce the capital intensity of truckload because we had way too much equipment. And so depreciation expense will be lower in the truckload in 26 than it was in 25. And you can actually already see that if you look at the DNA of truckload just in Q4, it's 3 million lower than it was the year prior and lower as a percentage of revenue as well, right? So there's real efficiency as it relates to the capital there and that's gonna continue into 26 and the impact would probably be higher in 26 than 3 million a quarter.

Yeah, because if I may add, guys, our revenue, if I remember correctly, our revenue per truck in Q4 is better, even with rates per mile that are not that better. So velocity is more.

Yeah. Great. Appreciate the thoughts. Thanks, guys. Thank you.

Thank you. And your last question comes from the line of Cameron Dorkson from National Bank. Please go ahead.

Yeah, thanks. Good morning. I just wanted to, I guess, follow up on M&A. You mentioned a few times the acquisition you closed in Q4, I guess, the Hearn Industrial. I mean, obviously not huge, but you cited it a couple times here as a really great fit. Can you just talk a little bit about that business? Because it looks like in your disclosures that, you know, not a huge from a revenue point of view, but a pretty good margin profile for that business.

Well, you see, I mean, those guys are – doing a great job. I mean, they are entrepreneur. And I think that, uh, what these guys are doing today is great. And I think that the potential for, uh, you know, being part of the TFI family is going to help us, uh, help them and us. Okay. Uh, do even better in the future. So, uh, this is something new for them. I'll give you an example. They don't touch freight. I mean, they do a lot of work in the automotive business, but they don't touch freight, but they have a certain degree in the freight. So that's something new for them, right? So for sure, they are in touch with our GHC division, okay, because these guys have a lot of capacity that could be used to deliver freight for those guys. So there's going to be some great synergies, I think, between members of the family with the truckload sectors and all that uh and for sure these guys are lean and mean operators uh very success successful guys and uh yeah i think it's going to be a great acquisition in our logistics sector a little bit like like the ghe and and the other ones that uh that we've done in the logistics sector okay no that that's helpful maybe uh

just a bigger picture capital allocation question. I mean, you mentioned that, you know, continue to be active with the tuck in acquisitions. Just wondering if you've got kind of a target for leverage at year end. I mean, it's still pretty comfortable here. Great free cashflow still expected in 2026, but just any guess targets there as far as leverage and, you know, this is the capital allocation priorities.

Yeah. So, so capital is always the same thing. You know, if we don't do anything of size, you know, We're going to do probably, I would say, in 2026, $200 to $300 million of M&A in terms of tuck-in. Probably $200 million minimum, maybe up to $300 million. And then we get the dividend and the rest. Okay, we'll just use the cash to pay down debt or, depending on the stock valuation, do some buyback. I mean, we have the possibility of buying back all the way up to 7 million shares. that we're approved to do now again 2.5 leverage it's okay but we would prefer to bring that down to closer to two over time so let's say that we do about the same free cash as we did last year we got the dividend we've got the M&A so then for sure you know we'll be reducing our leverage if we don't do any stock buyback. So leverage, I don't remember the plan, David. So where do we end up? We're closer to 2 than 2.5.

Yeah, no doubt. And the other thing we'll point out, and we actually added this into the MDNA where just under the table where we show the leverage ratio, that leverage ratio is calculated according to the way that our banking covenants are calculated. And it includes two things that you know, some investors may not consider leverage. One is letters of credit. And the second is the book value of earnouts, right, which are subject, of course, to the future performance of target companies. So those numbers are a little bigger than they have been in the past. And so that's why we set them out in the table. And so you can see that and you can work out by backing those out, what, let's say, the real economic leverage of the company is, which is a little lower than is presented in the banking syndicate.

Yeah, with these numbers, David, I think we're at 2.2, right?

Mm-hmm. Okay, no, that's great. Appreciate the time. Thanks.

Pleasure. Cameron.

Thank you. There are no further questions at this time. I will now hand the call back to Alain Bedard for any closing remarks.

Thank you. All right, then. Thank you very much, operator, and thank you, everyone, for being on today's call. We appreciate your interest in TFI International, and we're both confident in our position and enthusiastic about what 2026 will bring. As always, please reach out if you have any additional questions. I look forward to seeing many of you on this year's conference circuit. Enjoy the day, and we'll be in touch. Thank you.

This concludes today's call. Thank you for participating. Give me all this connect.