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.