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.

Hey, thanks. Afternoon, Alain. So I wanted to start on the LTL business. I'm not sure if I heard right. Are you saying sort of a flattish... and if that's right, maybe just talk through what you guys are seeing from a demand standpoint, a service capacity standpoint and maybe a pricing standpoint.

Yeah, I think, Scott, that the world truckload has changed tremendously over the last six to nine months with what the administration has done in the U.S. with with all these things that they've done to help us with reducing the supply. So that's really the trouble, but I still find that the LTL market in the U.S., and the same in Canada as well, it's still very soft. I mean, there's no big revolution in the demand there. So this is why we're saying that, you know, yes, we're conservative, okay, but we want to say that LTL... we don't see a lot of major improvement okay versus what we could see on the truckload sector or on the logistics sector okay and um so maybe just to follow up there like I guess you're not seeing

Bill from Truckload, Intel TL. It doesn't sound like you're seeing that. And then on the Truckload side, you're saying a pretty meaningful improvement. Maybe just talk about the pricing that you're seeing right now on the Truckload business and any sort of differences between the flatbed and some of the other parts.

Yeah, that's a very good question, Scott. And I'll ask David to talk about that. But For sure, what we see on the pricing side of the truckload is very impressive. I mean, you know, and it's, the way we see it is that it's mostly because of the supply constraint, not because the demand is just going through the roof, it's just the supply. Right, David? So maybe you could add to that.

Yeah, absolutely. Because what we're seeing on DLTL, the reason that the margins are expected to be flat is because we have too much volume. And that's what we're working on fixing, okay? So that's a specific thing. I don't know if that's really to be extrapolated to the market or not. It's related to us. And of all of the issues to have, it's probably, you know, the one that we – it's clear what to do, right? And we know that we just need to raise the price, and we're working on that. On truck loans, yeah, the dynamics are really good. So actually, we saw the pricing or the revenue for trucks accelerate throughout the quarter. So in April, we were at 11.1% revenue for trucks per week, year-over-year growth. They increased to 13.3% in May, and it was 14.4% in June.

So the dynamics there are strong.

and the LTL issue that we have, we'll see. I mean, the shipment count was up 7.5% in the quarter in LTL. It's just that the revenue for shipment before fuel was down 2%. Yeah, yeah.

But you know what, Scott? We're very proud of what our truckload guys have been able to accomplish with. You know, if you just look back at our Q1 OR in our truckload, we were above 90, right? We were, I think, a 93 OR in our truckload. and now we're down to an 86.1, okay? I think that, you know, this is quite an accomplishment, okay? And, you know, the investment that we made two years ago in the U.S. specialized truckload is just starting to pay off now. Yeah.

Yeah, again, because you see that in the depreciation. We talked about this a couple quarters ago. Well, the depreciation is down double digits now. And the revenue is up. So we're saving a fortune on equipment costs.

And the brokerage revenue is up 35% year over year. So this goes back to the saying, do more with less instead of doing less with more. Thank you, guys. Thanks, Scott.

Thank you. And your next question comes from the line of Ravi Shankar from Morgan Stanley. Please go ahead.

Great. Thanks, Alfred and Alain and David. Maybe if I can just follow up to your last response on LTL where you said, obviously, you have too much volume and not enough price. David, do you think that's something you can reset in one cycle, or is it a multi-cycle process to get the price where you want it? And also, if it is multi-cycle, can you give a sense of how much you can do this cycle versus the next, etc.? ?

Yeah, so you know what, Ravi, I mean, the issue we have with pricing is in one sector, per se, right? So SMB, no. Corporate, no. The biggest corporate where we probably made a mistake is 3DL, and it's mostly on our blanket thing there where we got inundated with volume, okay, because probably we were the cheapest guy in the country, right? Yeah. So this is what now our commercial team is working on fixing, okay? Because this is like a no-no, right? So it's not all over a P4 straight, okay? SMB and corporate, not an issue. But Blanket 3PL has been overwhelmed with volume and with pricing that probably does not reflect the market. Maybe we were... Thank you for joining us. We're very, very cheap right now with our rates in some sectors, so we're going to be fixing that now. We're fixing that now as we speak.

Understood. And maybe as a quick follow-up, are you getting any more confidence in the cycle to maybe restore a full year guide?

Yeah, to restore a full year guide? Look, as things, you know, I hope that at some point we'll restore a full year guide. Absolutely. We are starting to get confidence in the structural cycle, that's for sure. The fact that it's so supply driven and therefore has sustained power gives us a lot of confidence. And I think that the delta is going to come from getting the LTLs to produce to its full potential.

We're sub-90 this quarter, right?

But we could be a lot more sub-90 if we fix this pricing. And by the way, when we do that, we won't have all the excess costs that we had this quarter. This quarter, we were getting a lot of excess costs related to the surge in volume, which is not necessarily an ongoing thing. So we'll see. We hope that we come back to a four-year guidance soon.

Very good. Thank you both.

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

Yeah, hi, afternoon. So just sort of curious, coming back to LTL quickly, you know, with the pricing actions that you guys are working on, I mean, would you expect – because your tonnage is obviously outgrowing, you know, most of the LTL industry. Would you expect that to sort of come down a little bit as you sort of work to repair the price? And then on the flatbed side specifically – Are there pockets? I know the discussion has been supply tightness, but I'm just curious, are there pockets where demand on flatbed is looking better? And I know you're not giving a full year guide per se, but just because I'm perhaps not as familiar, is there a way to think about seasonality in the truckload slash flatbed business 3Q to 4Q? Thank you. Yeah.

So, I mean... When you think about the flatbed thing there, Jordan, we are highly involved in wind and wind is growing. We're also highly involved in data center and everything that is industrial.

Now, what we've been able to see our senior EVP has been able to do with our flatbed operation is to create

Within the old BASC organization, some niche carriers. So I'll give you an example of what Steve and his team have done with one of our carriers that's called SPD on the West Coast, where these guys were running 200 trucks and, you know, the old thing, jack of all trades, master of none. Now, these guys are a niche carrier for the aerospace business. So with Boeing and with Bombardier and with others, Okay, now we see some growth there. I'm sure you're familiar with Boeing. Those guys, I mean, they're quite busy, and we're piggyback on Boeing, but now we made a new stereo of SPD. So these are sectors like the aerospace, the wind, the data center, okay, that we see a lot of opportunities. Steel, too. Okay, so our TSH group, which specialize in steel, Okay, those guys are, they're up like revenue-wise, I would say 20, 25% year over year. Okay, so steel is, we're very busy with that. So a lot of steel probably goes into the data center. I don't know where it's going, but we're really very busy with that. But on the other side, if you think about drywall, okay, we're a significant player in that business, but drywall is, Maybe not the best business you want to be in right now because not a lot of people are building homes, right? So, it's kind of a mix. But, I mean, what our team has been able to do, okay, is kind of having, within the specialty truckload, our business unit be more specialized in their world. Okay, instead of, if I take the other example of Lone Star, which is something that's happening now out of Texas, I mean, those guys are good with wind, they're good with data centers, they're good at moving everything that nobody wants to move because it's too big or it's too heavy. Okay, so now we said, you know what, the over-the-road operation within LOSA, that doesn't fit you. So what we'll do, we'll move that to those specialists within CSFI, okay, our truckload division, Wiley. Wiley is the king of the O-Way Road for us. This is what's happening on the truckload side. Now, the first part of your question was, David, I don't remember exactly. Can you repeat the first part?

Yeah, well, I was just curious on the less than truckload side, given the price actions, repair actions you're taking, You know, your volume is strong. I'm just curious how that might look from here a little bit.

Yeah, yeah, yeah. For sure, volume is going to come down a bit because, as you know, the minute you start to get back to closer to market, okay, if we get too close to market, because we still have to improve our service. I mean, the guys are working on that, but, like David was saying, we incur way too many costs in our Q2 operation because of this huge surge of volume. but also our service side, right? So now we're fixing price, but we're also fixing our service because our service was improving big time just before we got this crazy weather in Q1, okay? And at the same time, this huge surge of volume mid Q1 into Q2. So now it's very clear what the mandate is for Cal and his team and we'll get there, but for sure, I mean, we will have to drop a few shipments to get there.

Got it.

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

Hey, great. Good afternoon. Alain, can you talk maybe a little bit about the truckload pricing? Are you touching it all right now, you know, given the improvement is, you know, just maybe given the mix of how much is contract, how much takes time, just want to see where you are in the marketplace and able to replace that.

Yeah, yeah, so... So on that, David, I mean, do you think that we're not a big player on the spot market? No. Okay. I don't remember exactly the split between contract and spot. On the U.S. phone, it's about 25% spot.

25% spot. Yeah. But for sure, I mean, we are ready.

I mean, you know, you know all the shippers are. I mean, the market is going down. Contract or no contract, they will sit down and try to bring prices down. Right? So, the market is going up right now. So, yes, we have agreement, but, you know, we have to sit down with customers because at the same time that the market is moving up and our contract is too far away from the market, then we have to sit down. And we did that. We did that. I mean, we did that with some major customers and they understand. I mean, now it's a different situation and... You know, we're not in the business of hauling freight just for the pleasure of hauling freight. We're in business to serve as customers so that our shoulders make money, right?

And I really want to stress that you have two things going on in our supplement. One, we're exposed to the right-hand market, yes. Two, the market's turning because of the supply, yes. But the last thing, and this is unique to us, is that we've dropped, Our depreciation by $12.5 million in this quarter alone. And yet, the organic revenue is higher than it was last year. So, we're truly getting an enormous benefit to the bottom line as a result of that. And that's really specific to the work that he has done over the past year, making sure that our trucks are being deployed in the right places, trucks that are not being deployed, we move them, and then we broker out what we don't want to do ourselves.

That's it. Because, you know, Ken, don't forget, we bought Daski in 24. In 24, we were stuck with the Daski CapEx, like these guys like to buy trucks and trailers. So we had way too much CapEx in 24. Then we get to 25, it's too early in the game, so we still, you know, bought too much equipment in 25 versus, you know, what the market, okay, could bear. So now, after a year and a half of experience with Steve and team, now we are adjusting our asset base to the business that we want, the business that's highly profitable. That's why we're an 86 owner, right? And we're saying, you know what, those customers, maybe we could broker the freight to some good carriers that want to work for us.

Great. And then if I can, thanks for that. And if I can get a follow-up on capacity on both sides, maybe talk a little bit about how much capacity you have utilization on miles per tractor, and then in the LPL with shipments up 8%, you know, talk about what excess capacity you have now. You've changed your management there with Cal. Are you focused more on culling that 3PL business, more on price? How do we think about usage of that capacity as we move forward? Thanks.

Yeah. On the first one, I'll answer that. We've We report revenue per truck, not miles per truck. And the reason for that is that some of our business we build by the mile, but some of the specialized build, like, by the day, for example. It's not so much by the move. So it's not so much of a mileage, I think. So revenue per tractor is what we report. And that's up 13%. And as I mentioned earlier, it was increasing as the quarter went on. We exceeded the quarter around 14.5%. So, in terms of capacity, I mean, we're at capacity. We have to reduce our volume in the LTL because we had to, because it went up so quickly that we had to spend money in ways that we wouldn't normally spend money. Lots of overtime. Lots of third-party, you know, carriers to help us out in the pitch. You know, all of these things that you do when, you know, your volume increases significantly Great. Thank you very much. Appreciate it. Thank you. And your next question comes from the line of voters from RBC Capital Markets. Please go ahead.

Yeah, thanks very much. Good afternoon, David. Good afternoon, Alain. I'd like to start on pricing, but more in a more conceptual, longer-term kind of way to look at it. And I'm just curious, when you look at the drivers of pricing, you mentioned supply-driven by whether it's the non-nomiciled ELD or CLDs or the English-language proficiency or even the Montgomery Rule, and these things seem like it's not in past cycles where it's something that can be easily or quickly reversed. I know, Alain, you've been in this business a long time, looking back at previous cycles where pricing has come up. Do you feel like this has more stickiness? Can the pricing here hold for longer given the type of drivers that have caused that pricing to go higher, and can it be sustainable?

Well, you're absolutely right. I mean, in a normal trucking environment, I mean, guys used to make a lot of money when the demand was high, okay? But demand high doesn't last. I mean, it could last a month, could last a year, could last 18 months, and then you go back to, you know, you got too many trucks because now the demand is falling. What I like about this, which I've never seen before in 30 years being a trucker, okay, is now it's the supply, right? and I was just reading about what the administration wants to do in the U.S. is that they have a particular group of drivers that they're saying now, okay, so we have the CDL, the illegals, the English proficiency like you just said, but now they're also focusing on another group of drivers that According to the U.S. administration, are dangerous, are not safe, etc., etc. So, to me, on the U.S. side, I think that this move that we're seeing now on the truckload sector, which is not the same with LTL or PNC, I mean, for truckload. I mean, I think that this is more of a permanent thing than we've ever seen before. So, this is why, Walter, it's a reflection of what our guys have been able to do In this market, even if the demand is not crazy in the specialized profitable sector, but those guys were smart enough to take advantage of the situation that we're going through right now, and that's why, you know, from a 93 OR, which was really bad, into one, okay, now we're down to an 86 OR, and You know, we just said in our presentation that we believe that IQ3, okay, year over year, we're going to see, again, another major improvement, okay, in our trust load sector. Some also in our logistics, not so much in our LPL for now, because like David is saying, okay, we have to attack, okay, some issues that we have in the U.S. right now, U.S. LPL. and the guys who are doing the job. So, I think that it's way more permanent, the situation like you were describing, Walter, than ever before. And this is typical of the U.S. market. On the Canadian side, we have a little bit of that, but not so much because, as you know, the Canadian government now is asking the truckers, the employers of owner-ops or whatever, to issue a T4A. So now, Dean's Illegal guys in Canada now have a T4A, so they have to report that as revenue, and now they have to pay tax, so that's all. Also, we're starting to see, okay, some major improvement on the Canadian side, because the bribery in Glasgow is starting to become less. It's still there, but it's not as bad as it used to be.

Yeah, and the only thing I would add to that is that the brokerage, are now very careful about wanting to broker loads to well-capitalized, serious carriers that are serious about safety. And they're spending the money on that. So the whole industry is being cleaned up in a way that's going to result in better safety and for sure normal rules being followed.

Yeah.

A little more cheating. Fantastic.

There you go. Looking at your capital plan for this year, I know you're not seeing any significant changes in growth, but you mentioned on the sub-segment area where you have exposure, you are seeing growth. Is that causing you at all to revisit your capital plan? I think you had us at 225 to 250 for the year of net capex. Is that Is that still the plan or is there opportunities for you now to invest to take advantage of some of those sub-sectors?

Yeah.

So far, I mean, we're still in that range, Walter.

I mean, for sure, we're seeing a lot of discussion with customers. Okay. The other thing also I'd like to point out, Walter, is that now what Steve Brookshaw has done and now we have a chief commercial officer for our U.S. truckload operation. Mr. Hoppy, Scott Hoppy, is our chief commercial, which is going to be a big thing for us because if you look at the way DASKI was run, it was like a nine-set team and nine of everything. So now we are consolidating a lot of that and commercial side is under Scott Hoppy and Scott has got a tremendous experience

In the U.S., I mean, he's lived all his life into that world, right?

So that's going to help us. I mean, that is for sure having one commercial team on this side. I mean, we're already seeing the benefit when we talk to our customers.

Okay. Appreciate the time as always. Thank you.

You're welcome. It's very good.

Thank you, and your next question comes in the line of Brian Olsen back from J.P. Morgan. Please go ahead.

Hey, good afternoon. Thanks for taking the questions. I just wanted to understand a little bit better if you can make some changes, have any changes to the LTL commercial team, or maybe how it ties in together with operations, because I would think that at least with the blanket pricing on 3PLs, you can adjust that relatively quick, and It's not the only network you've heard of that got a little bit flooded, but maybe just some thoughts on what could be done differently or changes you've already made for next time.

Yeah, right, right, right. So, you know, it's the mistake that we encounter is that, you know, focus was, hey, guys, we need to grow organically and We got overwhelmed because our pricing was too low. So we fixed that. One thing I could tell you is that we are implementing a pricing software, the one that most of our peers are using. So we are getting rid of the old UPS grade pricing. We've also, through our finance team now, getting our finance team involved through AI to help those guys Make the Right Decision by Lane, by Customers, etc., etc. So maybe, David, you could look at more details on that.

Yeah, absolutely. It's very interesting. I mean, we now have tools where we're taking spreadsheets which have an entire month of shipment. So these spreadsheets have about 500,000 lines and tons of columns, tons of data, and we're able to really isolate it. Very specifically the problematic lanes, very specifically the problematic freight, the terminals, the customers. And then we're using that to help our pricing team go in and be real surgical and move faster. So we're able to treat large amounts of data in ways that we haven't been able to in the past and be much more surgically. The pricing options that we're taking.

Okay. I appreciate that. Just to kind of a cleanup question, you talked a couple times in the release about this incremental accident reserve. It's like $10.5 million in the quarter. Does this recur? Is this a prior period adjustment? Because I think when we look at the corporate line, that certainly stood out.

It's not recurring, that's for sure. I sure hope not. Every quarter we go through and we assess very clearly where our reserves need to be and we'll make adjustments to various files. It seems like some people wait until year-end to do that. We don't do that. We do it every single quarter. But also, David, if you could just add to that

The approach through Brandon and the new team versus the old way that we used to do it a year ago. So by trying to settle ASAP, this is also part of the change.

Yeah, that's actually very interesting. So from a business perspective, what you want to do is be very... for coming and very aggressive with settling matters quickly. And so what we've done over the last couple of years is built a Miami-based legal team of in-house lawyers who are managing all of our claims and are working with the external lawyers and really driving it because the external lawyers doesn't always have your interest in mind because somehow they get compensated by the hour whereas our interest is getting it done. And what's interesting about that is that when you start settling things back, right, your actuarial reserves actually need to go up because the actuarial assessment is not looking at the fundamentals of what's happening. It's just saying, whoa, you've got a ton of spend this year. Yeah, we did have a ton of spend, but the reason we had a ton of spend was that we took care of a bunch of things that are not going to come back to bite us down the road. And so right now we're in that lump where the actual reserves are actually a little coming in high because of those settlements. But, of course, when that then translates into less spend down the road, those reserves are going to come back and it will unwind in the opposite direction.

Yeah.

And also maybe a few words on spending on the spot. Yes. Yes, absolutely. We do that with... Our internal team as well as an external provider in terms of when there's an accident, we dispatch somebody immediately to the scene with authority to settle on the spot. And so we've had a lot of success with that. And it's an important part of our strategy.

Yeah, because, you know, the... The problem between grows with time. I mean, over time, it's not going to get any better. It's just going to get more expensive. So this is why we changed completely the approach there. If it's a minor thing, for sure, if it's major, okay, nobody's going to solve it on the spot. But if it's a minor thing that could turn over time after a year or two, something like way more expensive, So we went, like David says, with our own team and we're also an external provider to try to sell as much as we can on the spot right away before the lawyers come in, before whoever, okay? And now I don't remember how many cases we settled. About 200. 200, okay, on the spot. So, I mean, over time, this is for sure going to come. reduce our costs of claims.

So, just to understand, it seems like you've been doing this for a couple years, at least had the team in Miami doing it, but you feel like you've sort of hit an inflection in cleaning up some of the stuff, and so quarterly it's going to be more of a, I don't know, standard practice. Seems like it still could be a little bit bumpy just based on the activity.

No, I think that this quarter's reserve

Increase in reserve is exceptional.

We do not expect these types of movements every quarter.

Okay. All right. Thanks for all the details. Appreciate it.

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

Thank you, Robert. Alain, David, afternoon, gentlemen. Good afternoon. I wanted to get a clarification question in first. I think you said that in terms of your spot TL exposure was at 25%. I was wondering if that includes, you know, all the heavy haul because it seems a bit higher than I thought it would be. I think like Dasky Legacy was about 5%.

No, that's the U.S. flat bet. It's 25%. The Heavy Hall and the Legacy Specialized in Canada is a very negligible spot. No. There's none. So when we talk about...

It's like the over-the-road, Jason, the over-the-road flatbed, not the highly specialized pinch or cake or drums or whatever. It's really the over-the-road thing. The regular flatbed, if you want to call it that.

Okay, well, my next one's more of a macro question. Alain, did you guys see sort of any pull forward into June and maybe talk about the July trend that you're seeing out there?

So far, I mean, what we're seeing in July, okay, or in June, I mean, I think that... If you look back, David, at the month of June, I mean, this was a great month of June.

I mean, May was a little bit soft. June was great. April was great.

July, even with the vacation that we have with our customers, vacation we have with our own employees, drivers and all that, I mean, so far what we're seeing is that it's quite surprising what we're seeing so far.

Yeah, exactly. I mean, in July, right now, up until today, in July, The revenue for truck in the truck load is 14.5%, which is the same as it was in June. And then what we're seeing in the LTL is what we expect, right? Which is that the revenue for shipment is down less, right? It wasn't down 2%, it was down less. and then also the shipping accounts coming down. So we're trying to see the effect of that price increase that we're putting through and work through in the way that we expect it to. And this is with the 3PL.

Okay, so corporate and SMV, I mean, it's steady for us.

Volume-wise and price-wise.

Makes sense. Gentlemen, appreciate the time. Good work. Thank you, Jason.

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

Good afternoon, Alain and David. So my first question is on the LTL. I'm just trying to understand the move from Q2 to Q3. For the second quarter, the LTL operating ratio was, I think, 88.5%, which is, I think, better than the midpoint of what you were expecting heading in. Now you're saying flat in Q3, which probably means about 88.8%. Now, if you had high CPL volumes and higher costs in Q2 and working to address that in Q3, why is that Q3 operating ratio not improving sequentially from Q2? I mean, is it because it's going to take time to resolve those things, or is there some other noise in Q3? Okay, so...

There's one thing that you got to keep in mind is USD versus Canadian dollars, right? So our Canadian profit now are discounted at $10.40 versus the average of Q2. So that's a little bit of an issue, okay? The other thing also part of our forecast is what's going to happen with fuel. For sure, there's no question about that, that the only area of us where it's really a tailwind fuel is the Canadian LTL and PSE. I mean, truckload is never a tailwind for us, and US LTL is never a tailwind, or logistics. So, for sure, not knowing where we're going, okay, with fuel, this is why our Canadian folks Okay, when they gave us their forecast, they went with, you know, maybe a little bit conservative on fuel versus what it is today, right? So now we're again above $5 US a gallon, but that's why our Canadian folks are being very, you know, cautious about where this is going to go. So you've got USD, okay, so what is USD versus CAD?

One thing, difference... Attention on us, David. Yeah, one penny is about a cent a DPI. Okay. Yeah. It's about one to one, though.

Thanks, sir, for that explanation.

By the way, make sure that those margin improvements that we put in the press release and we mentioned, those are year-over-year numbers.

Yes, absolutely. I mean, I think Your Q3 LPL, you're being flat, also somewhat means you're sequentially flat, given you had 88.8 and 88.5. So that's a good explanation. And if you can help us, I know you guys are not disclosing your regional operating ratios, but from a trend perspective, Is the U.S. LTL offering ratio likely to make a bigger move, a bigger and better move in the next coming quarters compared to your Canadian offering ratio? Because, you know, that's where you're seeing service improvements. Is that fair?

Yeah, absolutely. I mean, the biggest bang for the buck is on the U.S. LTL. I mean, on the Canadian side, wow. We are running very, very lean and mean and very efficiently compared to the only peers we have in Canada. I mean, when we compare ourselves to the only peers we know about, I mean, yeah. So, it's really the U.S. where, I mean, we still have a lot of work to do, okay, to get to where we have to be.

Okay, and then just to put that into context, Alain, How far are you from mid-80s on that? Is it like a year away or it's more like six months away?

I mean, I've been at it with the team for five years. And I mean, every year we have a different kind of an issue and we're just saying, when is this going to happen, right? So if you would start to count, that is exactly what he's going to tell you. but we fixed a lot of things, okay? I think that we're getting close to the end, right? Because, you know, once our commercial team is like way better, okay? We have stability in our commercial team now, which never happened before. Our operating team, we definitely need some improvement there and we're working on that. Thank you very much. to turn around a truckload operation. Because if you look back, okay, and you look at that seat today, I mean, the SFI truckload in the U.S., I mean, it's day and night versus what, you know, these guys were doing two years ago. Much easier to turn around, okay, a truckload division versus a big network, okay, that was probably not very important to the previous owners. Okay, so this is why the tools, the fleet, the real estate, the morale, the management team was probably, you know, not priority for that. But it is for us.

Okay, no, that's a very good answer. Thanks so much, Alain and David. All the best. Thank you.

Thank you. And your next question comes from the line of Tom Watowitz from UBS Financial.

Please go ahead. Yeah, good afternoon. Let's see. I wanted to ask a little bit more on LTL and the brokerage piece, or the 3PL piece. How much of the book in LTL is with 3PL? Is that, you know, 30%? Is it bigger or smaller than that? And then I think in terms of just, like... Maybe if we look to, let's say, 2027, how do you think these two big businesses you have, so LTL and Truckload, develop? It seems like, you know, you are seeing a lot of really good news in Truckload this year. Is there kind of more significant runway or a similar improvement in 2027, or is that kind of more moderate? And then LTL, just from, you know, from a, I think, margin and, you know, pricing perspective, it's taken a bit longer, but is that kind of a, Any ways to think about the delta and the improvement you could experience in 27 in LTL? So I guess a couple questions within that. Thank you.

Yeah. Okay. You know what, Tom? On the trust load side, we're just starting. We're just starting, right? So we're just starting in the sense that, you know, what we've done with SPD, now SPD is focused on, okay, one business, okay? We're doing the same thing with Lone Star, okay? So Lone Star, your focus is going to be Let's say the wind, the dive center, everything that is big and heavy and long, etc., etc. Next is we're going to be working with another of our divisions, okay, that we're going to do the same thing. And then we're going to attack another one, okay, of our division. So this is an ongoing process, okay. and it's not going to end in 26. It's probably going to go all the way to probably summer of 27, maybe Q1, but Q1 of 27, we should be done, okay? And then we have one company that's called SFI, okay, with one leader of commercial, which is our friend Scott Hoppe, okay, one TMS, okay, which is the McLeod system that now is are going to be implemented all over with one finance system, which is our insurance system, okay, with one fleet management, which is called MIR. So with one visibility, so we're also implementing Salesforce for Mr. Huffy and his sales team. So it's going to be one company versus when we bought Desky, it was more like nine companies that were all over the place. Now, this is truckload. So what you see in 86 who are right now, Are we going to do better than that in 27? If the market is about the same, and the same is true of this supply constraint, yes, we'll do better. Can we get to, let's say, an 80 to an 82 OR, 83 OR? I think so. If market stays about the same and the supply is not changing, I think so. I mean, we still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing, like David was saying, I think 35%, okay, with good margins. And we are protecting, okay, ourselves, okay? We use, you know, carriers that are professional, that we deal with them on a day-to-day basis.

We don't deal with fly-by-nights that, you know.

So, this is really our truckload operation. On the LTL side... We're working on improving, like we said, key force rate. But at the same time, we have a very small non-union LPL business today in the U.S. Very small. 1,000 shipments a day, 1,300 shipments a day, which is peanuts, right? But, I mean, we are working to build that up over the next few years. and do the same thing as we do in Canada. So in Canada, we run union or we run non-union, right? So we run both. And this is what we'll also be focused on is trying to beef up that non-union LTL slowly, okay, with small... And we don't want to be in states where there's no density. So when you build from scratch, the advantage you have is you pick the states So where do we want to be? Well, we want to be in Texas.

That's for sure.

We want to be in California. That's for sure. We want to be in Ohio. We want to be in Michigan. We want to be in New York. We want to be in the Carolinas. Okay? So this is the beauty when you build from scratch. And with a thousand shipments, that's what you would call that, build from scratch, right? Whereas with T-Force Raid, we have a huge network. Okay? And... We have to live with what we've got, and we're working on improving it every day.

Any thoughts on just, like, mix of 3PL within your LTL today? How large it is?

It's over a third. It's ballooned to over a third.

Yeah.

As the volume increases.

So do you, I mean, it's pretty sizable. It's not atypical, but do you think that there's a Thank you for joining us.

When you get the shipment, it's probably because you're the cheapest guy in town, okay? And this is where, okay, we're working on changing the mix, okay? Until a few years ago, blanket was probably like 80 to 85 of the shipment that we're getting from the 3PL. Now, if I remember correctly, our CSP customer specific, we're at 45, 55 is blanket, and this is where we got overwhelmed with volume, and this is what we're fixing. Now, one thing is for sure is that 33% with 3PL is too much. And the approach has been with Tal and the rest of the team is you want to use maybe the blanket as a lock leader when you are in a soft period. Let's say December, January, and February so that you don't have to lay off your workers. You could maybe use some of those 3PL Blanket Shipments to keep your employees at work, and then you don't have to re-hire people when you become busier, let's say, in February and March.

Right. Okay. Thank you.

Pleasure.

Okay. Your next question comes from the line of Kevin Schnell. from CIBC. Please go ahead.

Thanks for taking my question, Alain and David. I'll keep it to one. When I think back to your Canadian truckload segment during the last peak, we saw ORs below 80% there, and now you're having the Driver's Inc. model getting tackled more aggressively by the federal government. Just wondering within your Canadian TL segment, do you think margins can achieve a higher peak than that he saw in the last cycle, given that cycle also saw the driver Inc. headwinds?

It's still early, Kevin, but I would say that if you look at, you know, the problem we have is that some sector of the Canadian truckload are still very weak, like steel, right? As you know, steel is, on the Canadian side, because of the tariff, steel is an issue. The other thing also that is an issue still in Canada is forest products, right? Lumber, plywood, etc., etc. So, because of those weaknesses, okay, in some sector, because we still don't have a deal with the U.S., right? So, this is why, you know, we're seeing major improvement, okay, on the Canadian side. But can we see more? Maybe If wiring continues to disappear, the problem we have is that we have some sector on the Canadian truckload side, steel, forced products that are being affected because we don't have a deal with the U.S. so far. Aluminum, we have lots of tariff on aluminum, but aluminum, it's not an issue because right now, I mean, If you look at the situation in Qatar, that they probably supply 10% of all the aluminum in the world, and those guys are out. Okay? So this is why our guys, the aluminum from BC, although BC is small for aluminum, but Quebec is big. I mean, this is like flying out the door. I mean, really, really busy with that. But the issue is steel and forest fire.

Okay, I'll keep it to one. Thank you for the call there. Thank you.

Thank you. And your next question comes from the line of Bascom Majors from Stevens. Please go ahead.

Good evening, and thank you for taking my questions. To follow up on Tom's question about where you think there might be opportunity in your larger businesses to really continue to deliver significant growth in the next year, Where are the places that are most likely to show acquisitive or M&A growth in the next year? Do you have a sense of that? Any walkthrough of how you feel on that side of business would be helpful. Thank you.

Excuse me, but does he mean on any side?

Yeah, what segments would we go through?

Okay. Well, what we like in M&A, for sure, and you've seen it with the Basque acquisition, is that if we can find something of size that fits well in our specialty truck load Absolutely. But between you and me, like I said, a small non-union LTL arcade that could, you know, be added to our small non-union LTL that we have today. Let's say a $200 million LTL that would be a great chance for us to start with to build that network. And logistics. I mean, us, we're big fans of logistics. I mean, we love logistics. We love to make money. And You know, if you exclude the intangible, they, I mean, we do really, really, really, really well with our investment in logistics. So if we could have, you know, the chance to put our hands, like we did in December, we bought these fantastic, but it's small. It's only $150 million revenue, but it's highly profitable. And we have a solid team there that's going to grow, but it's still small. It's only $150 U.S., right? So, I mean, you say, well, Alain, this is all? I mean, yeah, absolutely. Because, you know, TFI's love is growth through acquisition. Yes, we like to grow organically, but M&A has been the success story of TFI. And with the huge free cash flow that we generate, okay, you know, our leverage is down to 2.4. If we don't do anything of size... Thank you.

Thank you. And your next question comes from the line of Ari Rosa from Citigroup. Please go ahead.

Hey, good afternoon, Alain, David. Just very quickly a point of clarification. For the US LTL business, does the third quarter guide assume deterioration in the OR there? And then continuing on Bascom's question, Alain, you're usually very good about giving us your thoughts on Thank you. Yeah, so on the Q3 for our USLPL, no.

I mean, they will improve the profitability of the company. There's no doubt about that versus Q2. And in terms of M&A, I mean, I've always said we buy bad news and we sell good news. So that's why we invested $1.8 billion over the last three years. So now, people are starting to think that, oh, now times will be better, right? So, then M&A could be more expensive, right? So this is why, when you have the M&A market more expensive, what's important is the fit. Okay, how does that fit you? So, if you have a target, that profitability, let's say, is 10 million, okay? And instead of paying five times, you have to pay six times because the market is... So what are you going to do with that 10? If the 10 is, after two years, going to be 10 and a half, maybe it's not the best deal. But if you think that the 10 will become 15 or 18, well then, that's a great deal, right? Even if you have to pay a little bit more. So this is that balance. that we have to look at. But never forget that one of the easiest things to buy is your own stock, right? So, that's also the thing that we have to look at, right? So, if I'm buying a TFI, I know what I'm buying. I mean, we've built TFI over the last 30 years, so we know TFI, right? So, that's always, you know, the balance between buying an opportunity or buying TFI or just reducing your leverage.

Okay, very helpful. And just quickly, I'm curious, this probably seems a little bit out of left field, but could we get your thoughts on kind of autonomous trucks and the development there and any opportunities to maybe leverage that in line haul operations? Or do you see that as still being kind of far down the road? Thanks.

No, no, no, no. As a matter of fact, I mean, we are talking, okay, right now about that. Okay, we're talking. So maybe, David, you could give us a little bit more insight on that.

Yeah, absolutely. It's actually exactly for our line of call as a first step, but we're very eager to roll this down. So we are talking with one of the major providers of this autonomous truck technology.

And it was a surprise to us that this has moved a lot faster than we thought. So this

particular company has driven millions of miles on real roads all around the southern part of the U.S. We're expanding from the west to the east. And they've gotten into zero accidents. And that's an incredible, incredible fact. So you look at this and you say, okay, there's a bit of an upfront cost. And then there's a cost per mile. But what you benefit from is, first of all, it's like a team. So it can drive day and night. There's no hours of service. Second of all, it drives the truck way better. There's no idling. There's no acceleration. There's no braking. It's all very measured. And so you get better utilization out of the truck.

And third of all, there's no accidents.

And so there's the reliability of knowing the truck is going to be able to be driven. You don't have to deal with the drivers running over and the reality of people not showing up to work and whatnot. So it's very, very, very easy to sign up. So we're rolling it out in the US LTL on the line haul. In the first instance, the way the business model works is we broker to them, like immediately. So they operate the truck. We get used to it. You know, loading their vehicle, you know, having it be in our yard. We sort of work in that way, but we broker it for them, and they deal with the operations. But then, as soon as next year, we're going to be able to buy the technology, which is to put in some new trucks, and then we'll build this out. And if it works, we'll roll it out beyond the LiPo and the LTL. There's tons of applications in the spread for us.

Got it. So it sounds like starting small but opportunity to scale if it works. Anything on timeline in terms of what that could look like, getting the scale? Well, the brokerage is happening this year to them.

I expect that it'll go well and then we'll be owning some of this technology next year. And then we'll just see how quickly we can scale it. It's too hard to say right now how quickly.

But we're

The dynamics of no accidents, better utilization on the truck, it's basically a team, all of the things that we discussed is really, really interesting. And it's extremely interesting to think about, as this gets rolled out broadly through our industry, what that means for consolidation among the well-capitalized truckers. That's very interesting to think through, and I think that what it means is that you're going to have a lot of A lot more consolidation and large capitalized players who can afford this technology are going to be dominating it and trucking probably looks a little bit more like the rail in that way.

Yep. Very interesting indeed. Thank you for the time.

Yeah, we are definitely embracing that technology. That's for sure.

Hello, and your next question comes from the line of Cameron Dorkson from National Back. Please go ahead.

Thanks. Good evening. I guess I wanted to just ask a little bit about the logistics, the operating ratio improvement that you've indicated for Q3. Obviously, on a year-over-year basis, you've got some acquired businesses there that are helping that. I'm just wondering how much the expected improvement in the truck-moving businesses is Impacting the Q3 year over year. Is that more of a Q4 into 2027 when we'll see kind of those volumes pick up just based on the production plans for some of the truck OEMs?

Yeah. So what we're seeing on the truck moving business is that if you go back to 25, okay, and 26, it's like the reverse. So the first six months of 26 was way lighter than the first six months of 25. And the last six months of 25, are very light compared to what we anticipate to be the last six months of 26, right? So it's like the reverse, right? So for sure, our truck moving business is going to be very, very, very busy in the last six months of 26 and into 27, right?

Are you seeing that yet, or is it more so in Q4?

No, no, we're seeing that in Q3, Cameron.

Okay, that's good. Oh, yeah. Okay, that's helpful. I'll leave it at one question. Thanks very much.

Thank you, Cameron.

Thank you. And your next question comes from the line of Benoit Ferrer. from Desjardins, please go ahead.

Yes, thank you very much. Maybe, Alain, I appreciate the caller about flat LTL expectation for Q3 with some improvement, but any thoughts whether the tighter market for TL could eventually help the LTL market at one point, and when would you expect the pricing action to kick in a more material manner?

Yeah, you know what, we were talking to one of our peers in the industry and he was telling us, he's in the LTL business, and he was telling us that he's already starting to see, okay, shippers moving from truckload back to LTL. I mean, us, I would say us, we have not seen that, okay, but this is what this guy from the industry was telling us last week, right? So, I think that The fact that the truckload guys are getting busier because the supply has been reduced, reduced, reduced. Then they just say, you know what, these LTL shipments, it's too big of a hassle, okay? I'm going back to just your truckload, right? So this is a transition that is probably starting as we speak, okay? But this is affecting the van guys. Okay, to the LTL, this is not affecting us in our specialized truckload operation because we don't really move LTL shipment in our specialty truckload sector.

That's a great caller. And maybe just in terms of follow-up, there was some more talks today about the renewed liability risk after the legal case against C.H. Robinson. So I don't know if you have any thoughts on what could be, there could be some, any potential impact on your brokerage business, Alain. Yeah.

What I would say on that is, first of all,

Remember, most of our logistics is not brokerage.

Okay? So our logistics segment has some brokerage, but it's a lot of niche asset-light businesses that what they have in common is that they're asset-light. It has nothing to do with brokerage. Last mile, business, value-added warehousing, et cetera. As it relates to brokerage, yeah, for sure, I mean, we have a very serious safety review process for our business. for our carriers, and we're looking at exactly, if anything, what we need to enhance in that regard. But we're already operating at an adequate level. What I would say, though, is that as soon as Montgomery came out, as soon as the judgment came out, not the one against the broker that came out, but when the Supreme Court ruled, As soon as that happened, we started getting calls like crazy from all these small brokers we had never heard of. And they were calling us and trying to book loads with us. Why? Because those were probably the ones that were feeding the fly-by-night carriers. And it's too dangerous, though, to do that. And I think that with this judgment that we've seen, it's only going to increase the level of diligence that brokers are going to do on their carriers. And so it's going to become unquestionable.

You're going to have to work with a well-capitalized, professional, audible, safe carrier.

And so I think this is going to benefit folks like us and also some of the major truckload carriers who are doing everything they can on safety.

and Dave, I've been aware that at the end of the day, I mean, I think the shipper also, it could be a wake-up call for shippers to say, you know what, why would I deal with a guy that's got no money and use risk, right? So, I mean, this is all things that are helping, like David was saying earlier, clean up, right? Our industry of all the bad actors that have been there for so long.

That's great, caller, gentlemen. Thank you very much. Pleasure, Benoit.

Thank you, and your next question comes in the line of Bruce Chen from Stifel. Please go ahead.

Hey, good evening, Jens. Just want to follow up on some of your comments around forestry products and Canadian steel. Obviously, we've had a lot of No, we're not seeing any movement exceptional, okay, like pre-buying or pre-shipping, okay, because of, you know, the 30-day

and many more. So, we're not seeing that. So, this is not the same as what we've seen in Q125, where everybody was trying to chase volume into the U.S. prior to that. So, we're not seeing that. The feedback that we're getting, okay, so far is that, I mean, it will be implemented, so we've asked our Canadian folks to look at what it is. And so far, I mean, it's huge for a Canadian economy, right? So I think it's $20 billion of export. But for us, I mean, there's no real issue. The biggest issue we have between U.S. and Canada trade is forestry and steel. And when we look at those next round of tariffs, I mean, there's no real issues for what TFI is doing trans-border, Canada, U.S., U.S., Canada.

Okay, very helpful. Thank you.

Thank you. That ends our question and answer session. I will now hand the call over to Mr. Bedard for any closing remarks.

Well thank you again everyone for joining us and of course for your ongoing interest in GFI International Inc. So as we move through the back half of the year, we will keep you posted on our progress and we look forward to seeing many of you at upcoming events. Please don't hesitate to reach out if you have any further questions and I hope that you have a great evening. So thanks again.

Thank you and this concludes today's call. Thank you for participating and may all disconnect.