TFI International Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's second quarter 2026 earnings call. At this time, all participant lines are in 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 as 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 is 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 July 27, 2026. Joining us on the call today are Alain Bedard, Chairman, President, and Chief Executive Officer, and David Saperstein, Chief Financial Officer. I would now like to turn the conference over to Mr. Alain Bedard. Thank you. Please go ahead.

Well, thank you, Alberta, and welcome everyone to our call this afternoon. We in the past hour, TFI International, reported stronger than expected quarterly results with adjusted diluted EPS of $1.85, exceeding our clip range of $1.50 to $1.60, and up 38% year-over-year. All three of our business segments grew operating income by double digits, and we again produced solid free cash flow, which, as you know, is a long-standing priority of ours. Put simply, the investments we made during the recent slowdown, both in internal operations and strategic M&A, are beginning to benefit our performance. We now have a balanced and diverse portfolio of operating companies, and attractive end markets, which we continue to serve while always maintaining our focus on efficiency and related operating principles. And of course, there is no better than the hardworking people of TFI to execute on our plan and capitalize on the resulting opportunities. The foundational support for TFI International's thoughtful approach to value creation, both cycle in and cycle out, begins with our strong We generated more than $200 billion of free cash flow, further supporting our ability to strategically allocate capital, and very importantly, return excess capital to shareholders whenever possible, including close to $40 billion in quarterly dividend pay during the fourth quarter. So let's take a high-level look at our second quarter financial results. Starting with the top line, our total revenue before fuel surcharge of $1.9 billion was up 6% over the past year, while operating income climbed nearly 30% to $220 billion. That reflects a margin of 11.6, which was up more than 200 basis points relative to 9.5 figures a year earlier. also on a consolidated basis, our net cash from operating activity rose to $256 million from $247 million. Now let's dig deeper into each of our three segments starting with LTL, which was 38% of our segmented revenue before fuel surcharge. We generated $725 million of LTL revenue before fuel surcharge, up 3% year over year. Our LTL adjusted operating ratio was 88.5, operating income of 86 million was up a very solid 17%, producing a return on invested capital of 12%. Now let's move to our trust, for which revenue before fuel surcharge came in at 761 million, Up 7% the past year, and now representing 40% of our segmented total. Revenue per truck per week, excluding fuel surcharge, rose 30% year-over-year. We increased our brokerage revenue by 34% in addition to this. Our operating income of $106 billion was up a very robust 50% from the prior year quarter, and our adjusted ORA of 86.1% improved by 400 basis points. Our return on invested capital for the truckload was 6.9. Stepping back, as capacity has come out of the truckload sector, we've worked to reduce our own capital intensity and right-size equipment level, creating significant operating leverage. We've also focused on optimizing our business mix and in-market exposure, which now includes an attractive mix of flatbed and specialized expertise. Rounding out our segment discussion, logistics revenue before fuel surcharge was up 10% year-over-year to $432 million, accounting now for 23% of the segmented total. Operating income expanded at 32% to $50 million, reflecting an 11.5% margin, which was up nearly 2 percentage points versus the second quarter of 2025. and our return on invested capital was 13.3. So before opening up for Q&A, let me discuss our balance sheet and provide our updated outlook. As I mentioned, we generated just over $200 million in free cash flows during the second quarter of the year and ended June with a funded debt to EBITDA ratio of 2.4, which has improved from 2.5 at the start of the year. And lastly, looking ahead for the term quarter results, we expect adjusted EPS of $1.70 to $1.08, which would represent a 50% year-over-year increase at the high end. We also expect year-over-year adjusted operating ratio improvement of 500 to 600 basis points in the truckload segment, 250 to 350 basis points in the logistics segment, and a comparable operating ratio in the LTL segment. For the full year, we continue to expect net capex excluding real estate in the range of $225 to $250 million, unchanged from previous expectations. And I'll mention as I do each quarter that our auto bridge assumed no significant change, either positive or negative, in the operating environment. And now, if you could please open the line. Both David and myself would be happy to take questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star 4521 on your telephone keypad. You will hear a prompt that your hand has been raised. If you wish to cancel your request, please press star followed by the 2. I would like to advise everyone to have a limit of one question and one follow-up. 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 Scott Group from Wolf Research. Please go ahead.