TFI International Inc. (TFII) Q3 2014 Earnings Report, Transcript and Summary

Good morning ladies and gentlemen and thank you for standing by. Welcome to the TransForce 2014 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. (Operator Instructions). Before turning the meeting over to management, please be advised that this conference call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded on Friday, October 31, 2014. I will now turn the conference over to Alain Bédard, Chairman, President and CEO. Please go ahead. Alain Bédard: Well, thank you operator and good morning ladies and gentlemen. Yesterday after the market closed, we issued our news release for the third quarter ended September 30, 2014. We also issued a news release updating you on our offer for Contrans Group. In a nutshell, we are extending our offer again to November 11 finalize approval under the Competition Act. I will now discuss the highlights of the quarter and then I will provide you with a more in-depth discussion of the performance of our operating segments. In Q3, we achieved a total revenue increase of 206 million, or 27% to $981 million mainly from acquisitions made over the last 12 months. EBIT reached $82.8 million, up from $59 million last year. This 40% improvement is explained by the contribution of acquisition and improvement in our existing operating divisions. This progress was also achieved despite the impact of acquisition-related costs in the amount of $4.7 million tied to the Transport America and the offer to purchase all Contrans shares. As a percentage of total revenue, the Q3 EBIT margin was 8.4, up from 7.6 in Q3 of last year. Acquired companies generated lower EBIT margin and excluding their contribution, the overall EBIT margin on the existing business was 9.2. We are confident that over time the EBIT margin of our new division will improve. Adjusted net income which provides a better indication of our operating profitability by excluding certain items detailed in our MD&A rose 51% to 53.7 million or $0.53 per diluted share compared to $35.5 million or $0.37 per share last year. We generated a very strong free cash flow of $104 million, or $1.06 per share which was driven largely by higher cash flow from operating activities, improved working capital and the disposal of excess assets. For the most part, free cash flow was used to partially finance acquisition and to buy back 4.7 million worth of TransForce common shares. I will now provide you with a more detailed look at the results for each of our business segment. In the package and courier, revenue excluding fuel surcharge was $297 million, up 5% over the same period last year. The Ensenda acquisition accounts for this increase as existing business was relatively flat. The non-renewal of unprofitable customers in our US same-day service was offset by further progress made in the e-commerce delivery market. EBIT in the P&C segment jumped 18% to $24.4 million and EBIT margin rose to 7.3, up 80 basis points over last year. We are continuing to generate a substantial cost reduction by combining operations in several small markets. In this regard, we closed 18 small sites in the third quarter alone which should further enhance profitability going forward. In the LTL segment, revenue before fuel surcharge was $198 million, a 44% increase over the last year, driven by the Vitran and with Clarke acquisitions. Excluding these acquisitions, revenue was down 5% due to lower volume. EBIT increased $8.1 million to $21.8 million. However excluding acquisitions and gains on the sale of properties, EBIT from existing operation was about $2.4 million lower than last year, reflecting the volume decrease. During the quarter, we continued to dispose of excess assets with the sale of three properties. Although the terminal consolidation and closure over the past 12 months are providing TransForce with a more efficient cost structure going forward and we will continue to adjust supply and demand and further reduce assets where density does not support a sound investment thesis. This is a requirement [ph] for us. We enjoyed a solid quarter in truckload segment, with revenue excluding fuel surcharge of $246 million, up 67% from last year. Most of this increase was attributable to the Transport America and Clarke Road Transport acquisition. Without acquisition, we had a 2% increase in revenue. EBIT in the truckload was $25.4 million, up 69% and EBIT margin was 8.7 compared to 9% in the same period a year ago. If we exclude our acquisition, the EBIT margin from existing operation was up 1% over last year which clearly demonstrate tangible benefit from our ability to adapt supply and demand – to demand. With a more discipline asset management, margins from acquired companies should catch up. In the waste management segment, revenue was up 30% to $56 million, with a significant portion of this increase is attributable to Veolia, solid waste acquisition we made late in Q2. Our Lafleche environmental complex in Ontario continues to generate increasing revenue and we're seeing organic growth in our Québec-based customer. EBIT in this segment was up 1% to $12.1 million and EBIT margin was 21.6 compared to 27.9 in the prior year. Lower margin is mainly due to the acquisition of Veolia asset and we still have a strong focus on bringing their margin up towards that. With respect to our outlook, we hope for modest economic improvement in Canada. As the value of the Canadian dollar decline, we expect to see a gradual uptick in export activity going forward. In the US, the economy is improving and this is generating more activity for our US-based division. Nevertheless we anticipate over the short-term only limited organic growth in our main operating markets. Our strategic objective remains to improve return on asset, continue to improve our efficiencies, further rationalize assets and strictly align supply with market demand, meticulously control our costs and continue to execute our disciplined acquisition strategy in the fragmented transportation industry. These are the measures that clearly drive revenue and EBIT growth for TransForce and that ultimately create value for our shareholders. So at this time, I will be pleased to answer any questions. So operator?

(Operator Instructions) Your first question comes from the line of Mona Nazir with Laurentian. Mona Nazir – Laurentian Bank: Just wondering looking at the debt level currently 1.2 billion and taking into account the Contrans pro forma ratio will go over your 3.5 limit. I am wondering if you could speak to you comfort around the debt level and plan to get that down. I think on the last conference call you hinted that you would entertain an equity offering if the stock price gets to a level where it’s looking good. How are feeling about the current price? Alain Bédard: Well, first of all, one thing we have to keep in mind is that we’ve converted in October $85 million of debt into equity. So that means that our debt has been lowered by about 85 million and now we have 4 million more shares on the market. So that’s some more. Once we do -- once we close the Contrans deal which probably should occur around mid-November. Then at the end of the year our debt level will be just a little under 3.5 debt to EBITDA, if you include the trailing 12 months Contrans which is about 80 million. And if you add to our numbers, the trailing 12 months of America and all the acquisitions we’ve made. So being over 3, it's not a position that you like to be in but worse than that, you have to issue more equity. So we don't have in our plan short-term duration more equity, really our plan is to reduce our debt over the course of the next 12 months to an acceptable level, that's going to be under 3, because don't forget we will be generating on cash in 2015. So our debt reduction you'll see the major effect of that within the next 12 months. Based on our plan of 2015 our free cash flow for debt reimbursement will be more than 300 million. So that's why with this in mind, we don't anticipate any equity issue in the short term. Mona Nazir – Laurentian Bank: And just furthering on that, to be clear after Contrans you expect to kind of put a hold on acquisitions. Just digest what you have on your plate. But if you did have cost on hand, is there anything that’s looking good from acquisitions point of view even if it’s tuck-ins? Alain Bédard: Well, you know what, I was reading Mr. [Mullin’s] comment about the pricing of acquisition and the reason why they have been very quiet on the M&A side. What we’re starting to see more and more in the US is that the valuation is becoming out of control. So we are still looking at all kinds of things in the US for a reasonable price. So if we encounter something that makes sense we will look at it. But for now for sure the priority is to integrate the acquisition of America which is doing very well. And then you know with the strong support of the shareholder of Contrans and there I would like to congratulate Mr. Dunford [ph] because and still they have done a fantastic job at Contrans. I was looking at their Q3 and they have done a great job over years and years and we’re very proud once we can get this deal done, to have Contrans Group within the TFI family. So I mean priority is not M&A for sure, priority is really to integrate all of the work that we've done because don't forget, we spent -- we will spend with the Contrans deal over $1 billion in acquisition in 2014. So that's a lot of money, that’s a lot of investment and that will bring to your shoulder a very nice payback over time. Mona Nazir – Laurentian Bank: And you have been achieving significant savings from divesting certain operations that you deem unprofitable, reducing overhead by combining units and that’s furthered by synergies. Do you think that there’s substantial run to increase overall efficiency, or do you think that you’re nearing the end of what you can do with current operations, hence you're growing via acquisition? Alain Bédard: No, not at all. I mean in the P&C sector, in our next-day service in Canada still a lot that we can do. I mean the guys have done a fantastic job so far in 2014. And if you look at the improvement of P&C quarter over quarter of about $4 million bottom line, this all comes from our next-day service in Canada. The same day did not improve in the quarter, they will improve but they haven't really improved. So they have done a fantastic job but there’s still a lot to do. On the LTL, there we still have a lot to do there as well. We’re down on the existing business 2.4 million, this is not acceptable. Yes, okay, we have lower volume, we have all kinds of issues but this is not something that we like to show our investors that we’re down on the existing business. So definitely we still have lots to do there. On the truckload side, I'm very proud of what we've done, a 10% EBIT contribution from our existing business, the acquisition is not a 10%, I mean we have a very strong team of America here in the US. I mean those guys will do a fantastic job. We’re just trying to learn what they're doing comparing what they're doing versus what we’re doing in Canada and we will work together with these guys. I mean they are strong, there's a strong management team. Those guys, they don’t fit them -- once we agree on what should be done to bring the 6% EBIT of America closer to 10%, these guys, they are not studpid. They know and the job will get done. So still a lot to do. And on the waste side, I mean we have lower volume in our landfill in Q3. So this is why – but you'll see a major improvement in Q4 and also the Veolia acquisition, I mean this was something new. It takes time to – for all the action that has been taken by management team there, so I'm very confident that you'll see next quarter a major improvement quarter over quarter.

Your next question comes from Walter Spracklin with RBC. Walter Spracklin – RBC: So I like to start I guess now that you get a little bit more visibility hopefully this Contrans gets done in November 11 as planned. When you look out to 2015 with all the acquisitions that you have -- that you’ve made, if you look at a normalized basis now in 2015 in terms your outlook, can you update us on what you're thinking in terms of EBITDA and free cash flow turns for 2015? Alain Bédard: Yes, we are still not done with our plan for 2015, Walter, but so far I could tell you that we believe that EBITDA consolidated for 2015, including all the business unit that we have, including Contrans hopefully that this gets done mid November, we’re going to be talking about 550, something in that neighbourhood, depends on the price of fuel, it depends on the economy. But this is the best number that I could tell you so far. Now in terms of the free cash flow, start with 550, the CapEx, we anticipate with Contrans and with America in the family, our CapEx net of disposal is going to be in the neighborhood of 100 million. So with that in mind, so let’s say you are at 550 minus the CapEx, you’re down to 450. In terms of working capital requirements all of this should be taken care of. So you are at 450 after CapEx and then you’ve got the dividend which will probably – based on our policy, improve that a little bit. So you're talking probably I don’t know 65 million maybe for our dividend, 65 to 70 million – 450 minus 70, you’re down to 370 something like that. So this is why being conservative, we’re talking about a little bit more than 300 million because then we have the interest which is going to be higher, although we’ve converted some debenture. So we’re going to be north of 300, so that’s going to be 325 to 350 – after dividend and interest payment, yes. Walter Spracklin – RBC: And your tax rate and cash taxes payable is – is there anything going on in there that we should consider what would be your effective tax rate and how much of that would be cash taxes if you have that on hand? Alain Bédard: I would say cash tax is going to be about that -- the tax rate is going to be about 26, 27% based on the best knowledge that I have today. Walter Spracklin – RBC: And underlying that I know in your opening remarks you mentioned modest if any growth. So that EBITDA that you’ve just given us presumably does that -- are you effectively saying zero revenue growth for LTL and parcel there or do you have an organic modest growth built into that EBITDA? Alain Bédard: No, no growth. Walter Spracklin – RBC: So that’s all based on zero growth and if there were growth that came and certainly that will be upside to that number. Alain Bédard: Yes. You see, Walter, plan that we do – is always based on zero organic growth, because this is always an unknown. And with my history and I am saying that to all my executives, if there is organic growth we will grab that. But that's going to be the cherry on the cake. Put up a plan where with zero growth you improve the bottom line and that’s our plan. Walter Spracklin – RBC: I completely agree there. Last question here, you talked a little bit about potential divestitures next year truckload, I guess maybe that's delayed a little bit now with this. But you’re still probably – and correct me if am wrong – a 2015 event, are there other tax implications that we should consider when you look at – if you were to spinoff waste or truckload or other -- how do we look at the tax implications of those type of events? Alain Bédard: So what the tax people have told me so far, Walter, is that if we divest -- let's say we do a spinoff of our truckload down the road. And we sell for $300 million, a part of that truckload division to the market, the first 300 million of a spin-off, there is no tax consequence. Then when you sell the rest, then you trigger a tax bill. Now this is if you do a spin-out. Now if you do -- because that's one thing that we’re looking at. But another thing that we’re looking at also is what if we do some kind of a [vain bid], so it’s like the reverse takeover of a company in the US where we don't get a lot of cash but we get a lot of stock. So the tax implications to be different there. So we don't know exactly -- one thing we know is that if we do a spin-off that's easy because this is completely under our control. If you try to do a blend-in, then you need the support of the target shareholders, to say yes, they like that. Walter Spracklin – RBC: And on the waste side, is there any tax implications there? Alain Bédard: On the waste side, it's quite similar. But on the waste side, to me we still have lots of work to do. So I don't think that's going to be a ‘15 event, still the priority is truckload. We’ve built a hell of a nice truckload company. And once we close that Contrans deal, we have a very strong management team in Quebec. Very strong management team with the Contrans team in Ontario and a very strong team in the US with America. So we’re second to none.

Your next question comes from the line of Benoit Poirier with Desjardins Securities. Benoit Poirier – Desjardins Capital: Just to come back on package and courier, and when we look at your margin 7.3 versus 8.4 last quarter, just wondering what’s your level of confidence of reaching the double-digit number next year? Alain Bédard: I mean we’re going towards that direction, Benoit. So we’re improving every quarter, so I said that this year we should improve by about 100 basis point and the same trend – we should note the same Trend next year. Now don't forget that all the improvement that we’re seeing now comes from our next-days guys in Canada. Our same-day guys either in Canada or in the US right now as we speak in Q3 there is no improvement there, because we’re still stuck in improving the operation of the Velocity acquisition that we made. We’re at the end of that but you will see Q4 which will be the first time that – our same day business both Canada and the US is doing better than the year before. Benoit Poirier – Desjardins Capital: And what was the -- now that the contribution of Velocity in terms of revenue and margin – Alain Bédard: The revenue of Velocity – we’re down to about $60 million of business. So we shed a lot of business. So you know hindsight is always 2020, so if you asked me the question – if you would have to do it again, would you buy a Velocity and I would say probably but maybe not when I did it last year. The problem with Velocity was a company that was out of control with a very, very poor management team with lots of revenue, lots of terminal, lots of cars, didn’t make any money. And the plan was really to digest these operations much faster. So we did that deal probably a year too early because it was a fix it. Benoit Poirier – Desjardins Capital: And just on the waste side, you experienced lower margin from waste collection. So could you provide more color about whether it’s temporary, may be the key reason and how long do you think your Veolia integration will last? Alain Bédard: Well, Veolia, when we bought Veolia, these guys didn’t make any money. So it’s not normal with $40 million of business that you don’t make money. So us in Q3 we made a little bit of money but the average EBIT – let’s say is around 24 points although in the quarter down to 21. But the average should be about 24. Now we buy something that don’t make any money, so for sure it's going to be a drag on your earnings. So we boost up the top line but there was no bottom line. They didn’t lose money, Veolia didn’t lose money in Q3 but they made just a little bit of money. So we put in place with Mr. Richmond and Mr. [Bullion] a plan and you'll see major improvement in Q4 and on and on. So in my mind to bring Veolia to our standard it’s probably going to take us nine months maybe 12 max. Now Veolia will never generate 24, 25% EBIT margin because Veolia, the asset that we acquired, they have no Landfill. So that's why at best that 40 million will probably contribute with the 15% EBIT margin. There will always be a little bit of a drag on our 25% margin but that's normal because they don't have any landfill. Benoit Poirier – Desjardins Capital: Any reason for the lower margin from waste collection, Alain, is it kind of volume or business – particular business you have been losing or – Alain Bédard: No, no, no, it's just a matter of timing. And so what we did is we have more volume coming into Q1 in our Granby landfill and you have a commitment with your permit. So in Q1 if you go instead of 24% of your yearly volume go 35% in Q1 because the demand is there, well then you have to slow down because you can’t go over the 100% permit that you have. So this is what we face in Québec with our landfill in Granby. So we had to slow down a little bit. Benoit Poirier – Desjardins Capital: For the package and courier for Google Express, could you give an update on how the plan is progressing with them? Alain Bédard: Well you know our e-commerce business in the US is really growing, really growing and growing quite fast. We have few accounts, a few customers where we’re really proud of what’s happening over there. We're going to be opening the same day service for a major retailer starting in the next week in three markets Chicago, New York and LA, with the other provider that you mentioned, it's going great in San Francisco, New York. We opened up some new markets but those guys Boston, DC, it’s new, takes time but I believe that the formula of some of the markets for the e-commerce has to go to the same day guys, some – maybe 5%, maybe 10%, maybe 15, I don't know. We’re in a transition phase. We are very well-positioned with our team and I'm telling you -- I'm in Dallas right now, and we had a budget meeting yesterday with our team there. We’re going to do great things in 2015 here in the US and that's the area that we’re focusing. Benoit Poirier – Desjardins Capital: And last question Alain, on the LTL side, organically revenues are down 5% mostly due to tonnage, margins slightly improved from almost 5.9 year-over-year, maybe mention more color about what's happening on the tonnage side and maybe what you expect in terms of -- what we should expect in terms of margin improvement from the current 5.9? Alain Bédard: You know what the LTL market in Canada is really a city market and when you look at what's going on in the US, these guys have volume growth in the US. They are pricing -- I was looking at Conway for instance, year-over-year they had a 5% price increase, I mean us – we’re just struggling to maintain the price – a city price we have – we’re just struggling to do that. Why? Because there's less demand every day for LTL in Canada. We lost most of our industrial base and we have too much capacity. So that's why the acquisition of Vitran and Clarke is the direction we have to go as to have a better offer to a shrinking demand. Now there's a company that's being sold right now and hopefully the deal will get done pretty soon. That's another fairly good-sized company that will be under a group where they want to make money. So once this deal is done and hopefully there will be more to be done in 2015, ‘16 in Canada, there we will bring that market into a fair pricing. The problem is us right now we are working like slaves to reduce our costs, adjust our footprint. We’re doing everything we can on the cost side but we’re facing major headwind since 2009 in that market. Now one good thing, though is the truckload market in Canada is improving slowly. And history tells us that truckload is the first market to dip, it’s always the first one to come back. And we’re starting to see some come back slowly in that truckload market. We also know -- normally – Benoit Poirier – Desjardins Capital: How much is driven by the market sure moving to the rails because it’s a story we hear a lot in the last few weeks or months? Alain Bédard: What do you mean? You mean truckload volume moving to the rail – Benoit Poirier – Desjardins Capital: LTL, sorry Alain? Alain Bédard: Oh, LTL moving to the rail – well that’s us. The rail guys don't do any LTL, it's companies like us and like Maritime Ontario that provide LTL to the rail, you understand. They don’t have any LTL operation these guys. We use them for our line. So they are not competing -- the problem is that in LTL – what I was just trying to explain you is that LTL normally follows truckloads improvement but a year later. To answer your question when do you anticipate to see some improvement, truckload I think will get a lot of tailwind in ’15. LTL if history proves me right, maybe it’s going to happen in ’16.

Your next question comes from the line of Turan Quettawala with Scotiabank. Turan Quettawala – Scotiabank: I guess maybe first question, I know you talked quite a bit about EBIT expectations for ‘15 and I guess you’re helping us with our modelling. So maybe on ‘14 can you give us a sense of do you think it will end up bad now on EBITDA? Alain Bédard: Hey listen, I mean it all depends on the Contrans – well, let’s says without Contrans – Turan Quettawala – Scotiabank: Without Contrans I guess, right – I mean that’s probably going to be Q1 now – maybe a month? Alain Bédard: No, Contrans is going to be before Q1. Contrans to me is going to be mid-November but let’s say we exclude Contrans, because you know what it's just a month. So it's not really relevant. So our plan really for this year will just be a little over 400 or in that neighborhood of 400. So I know that we’re at, what, 280 something like that now after three months -- after three quarters. So we had a very rough Q1, good Q2, acceptable Q3 with all the COGs that we have to -- all the financial and all of that and the severance because also we paid $1.7 million in severance in the quarter. I think that will be in the neighbourhood of 400 million for 2014, so that means that our Q4 should be about same as our Q3 of this year because we came up at 116, 117, if you exclude the one-time -- so we missed the consensus which I think was 122. I don't know what’s your consensus for Q4, but we should be in the same neighbourhood. Turan Quettawala – Scotiabank: And that’s ex Contrans, right? Alain Bédard: Ex Contrans, yes. Turan Quettawala – Scotiabank: And I guess maybe it's a big picture question here, so you know you’re obviously doing a lot of restructuring here, a lot of different segments. I know you talked about them but when you think about the ideal margin that you think you should be getting in P&C and LTL and truckload, can you give us a sense of just how far ahead you are on all this restructuring work? And I guess maybe which one carries the most risk in your view in terms of you not being able to hit that maybe ideal margin? Alain Bédard: Well on the P&C side, I think that this is – we are on the right track. So we will get to at least a double-digit EBIT in the short term which is 12 to 18 months. I see some major improvement in our same day going forward. We were bogged down a little bit in the waste without Velocity acquisition which was my mistake. But you know the same day will improve with the e-commerce – so this I feel very good about that. On the next day service we have in Canada we have a very strong team there making a lot of changes. As you may have noted we shut down 18 terminals in small market in Canada and we will keep on doing that, because our intention is really to service 80% of population. So we like the [rest BC] but it's too small for us to be there. So we got out of there, so that's what we’re doing to reduce our footprint to be able to cover 80% of the Canadian market. And at the same time reduce our investment. We sold one terminal in Prince George for $6 million. It doesn't make any sense for us that $6 million invested in Prince George terminal. It was good 30 years ago when CF was the only guy in town. Now we have competition, everybody was trying to grow and they open up new terminal. So I said forget about it guys. Let’s go back to basic. We will service 80%, so P&C not an issue. LTL we should be in the same 10% and more EBIT. That is more difficult because we need a little bit of support on volume or we need the market to adjust to a reduction in volume. And this is going to be done -- second one is going to be done with more consolidation. So hopefully like I said one company will be taken over by someone else that will do exactly what I have just said and will improve the margin. And that's where the LTL used to be 12%, 13% EBIT margin up to 2008, now it’s a depressed 6, 7%. And so what we’re doing is we’re reducing our investment. We’re selling with a gain a lot of asset and we will be selling more terminals. I’ve got another $25 million in terminal that will be sold within the next 12 months with huge profit. And I reduced my asset base, I'm becoming more flexible. So we will be in the better position to adjust the volume. In the truckload sector, I mean already our existing business is double-digit in Q3. And this is without any support from the Canadian market. We are starting to feel that the Canadian market will slowly improve, is it because now the dollar is around $0.90 and some companies are now in a position to export to the US. There is more demand in the US, the US economy is improving. So it's still too early but the feeling we’re getting, when I talk to my guys and we talk to our customers that we feel that ‘15 should be a better year than ‘14 for our truckload operation. I was talking to Scott, I got from America, and those guys anticipate an organic growth close to double-digit, come ’15. Big issue is to get the power – I mean the driver but the market is there. The pricing is improving. So on the waste side, a piece of cake, I mean we have a very strong team there. We’re down a little bit in Q3 mostly because of the Veolia acquisition but we will bring these guys up to our standard pretty soon. So to say that could generate $80 million in EBITDA in ’15, it’s stuff for a fetch. Turan Quettawala – Scotiabank: I guess then maybe on Veolia though, if I remember correctly, it was about 17% EBITDA margin-ish kind of business when you bought it. So I guess when you say it wasn’t making any money with – basically no EBIT, is that right? Alain Bédard: Yeah, it was no EBIT -- 17% EBITDA margin, they were if I remember correctly about $40 million revenue and basically if they generate 4 million, so that was probably more like a 10 in EBITDA.

Your next question comes from Cameron Doerksen with National Bank Financial. Cameron Doerksen – National Bank Financial: Just want to talk about pricing a bit in the package and courier, we saw your peer later put out a press release a few weeks ago about increasing rates 4.9% and I know that the doesn’t necessarily mean that pricing is going up to 4.9% next year but what do you think that mean – I assume that will be directionally positive in your view. Alain Bédard: Absolutely, I mean I think finally if you go back five years ago and when DHL was running -- was operating in the US it was a depressed market because those guys were trying to gain market share away from FedEx and UPS. And UPS and FedEx had to protect and the pricing environment was to shift. So to me [Purel] has always been the leader in Canada, is always more attracted by volume than profit. And I think that they were starting to feel that there's a change there. There seems to be a new management team that understand that volume and no money, it's not good for you shareholder. So we’re very happy to see the leader of Canada in the next day service is saying we need to adjust our rates. But our plan us is based on no rate increase, we don't dream of new volume and price increase. If it happens if we can do it, we will do it. But you need the leadership of the leader that says hey guys we have to do something. If you look at the pricing because every time I talk to Canadian shipper that's got US operation, first thing he tells me gees, wish it’s expensive in US. Well, no, that expensive in the US, it's cheap in Canada. Cameron Doerksen – National Bank Financial: Just a question on other segment, I know you are not – you’re highlighting this too much anymore but you still have the logistics and rig hauling in there. And margin was improved year-over-year; I am just wondering if you can describe what happened there? Alain Bédard: Well on the logistics side, it's a fairly simple. I mean we’re doing good, we’re doing fine there. On the rig moving side, the fact that we shut down the Canadian operation is really helping our numbers. I mean revenue is down but at least we stop losing money. So on the US side, we see some improve -- even oil at $80 a barrel I mean the activity is not growing but it’s not slowing down. We still have about $60 million of assets invested in that business in the US right now, with underperforming results. So we have a new leader there that has been with us for a year now, Jay. Jay is doing his outmost best to improve what we have. I mean he is everywhere and trying to improve what we do. So right now we are adding let's call it a small -- very small profit but it's not acceptable. So Jay knows that if we don't bring the return on assets to acceptable level, we’re going to have to do what we've done in Canada, the same thing we will have to do it in the US because we can’t invest capital with a 2% return on capital. So Jay knows he is working like a dog day and night to improve. It's a small company in the US right now. We are running about $100 million a year in revenue but you know the profit is not where it should be. But this is a boom and bust mentality. In years you make a ton of money, you look like a really hero but then market slows down and you look like a zero. And that's what we've been looking like for the last 2013 and ’14. But now at least with the Canadian operation being shut down we stop losing money. It is not a cash flow drain and when I look at what's happening on the Canadian side, I'm very happy with the decision we made to sell all the assets we have. We didn't lose any money in selling on the asset, and as a matter of fact we gained because we stopped losing money in operating those assets. So all in all I'm pretty -- feeling good with that. Now Jay has got a big job to do again in ‘15 to make sure that the return on asset improves, because then if it doesn't improve we will have to take action. Cameron Doerksen – National Bank Financial: Maybe just final question for me, just take as more of an industry sort of truckload question, and just on the margins and taking maybe about EBIT margins here, if I compare your truckload margins to actually most of the other Canadian margins – Canadian trucking margins and LTL, they seem to be lower than most of the US guys and you understand the mix of business is different but is there anything structural in Canada that’s different from the US that would explain that? Alain Bédard: Yeah, you see, Cameron, the big difference between us and let’s say most of the US carriers is that these guys all buy their trucks. While us, we don’t buy any trucks, we just lease them. So if you compare EBITDAR to EBITDAR, it's where the comparison should be done but really EBITDAR and a lot of people look at that. So if you compare me with either Contrans or America our Heartland, odds are position has always been because it's such a short-lived asset we’re going to be leasing it with an option to buy back at the end of the lease if we feel good about it. But that reduces your EBITDA because rental goes to your operation -- reduce your debt too, but it reduces your EBITDA. So us, the approach has always been like that. We’re looking at America, we’re looking at what the rest of the guys are doing and we will see what the plan will be. But let's say that our truckload business becomes a standalone business then for sure we would be -- in order to be compatible because it's always the compare you with someone else – but in order to be comparable if we have to go towards more buying of the trucks and that's what we'll do but don’t forget – we know when it's within TFI, a lot of people don't see the value of that either the waste or the P&C because we’re like a holding company. Cameron Doerksen – National Bank Financial: I mean I guess that explains if I look at your truckload results, so the big increase in depreciation in the quarter was 100% related to the addition of Transport America. And in your Canadian TL operations what percentage is asset light versus asset heavy – I mean it sounds like it’s majority asset light but is there – there must be some percentage that's owned? Alain Bédard: Well, you see what happened is that in our Canadian division, we buy all the trailers but re-lease all the trucks. So this is why when you look at our capital intensity, you look at America and you see they are 9% -- around 9% capital intensity let’s say with a 16% EBITDA margin, then you’re down to about a 7% EBIT. If you look at us, I mean our capital intensity is much lower, why because we don't buy the trucks, we lease them. And if you compare that with Contrans, Contrans, most of their trucks are bought. So they buy most of their trucks or capital leases. So that's why their EBITDA is higher, but their capital intensity is high as well.

Your next question comes from Jason Seidl with Cowen and Company.

This [Matt Oldcoat] for Jason actually. If I can go back to the LTL segment and ask a question in a slightly different way. So your LTL revenue ex acquisitions was down 5%, and your operating expenses declined 3%. So I was just trying to get a sense of where you expect this unfavorable variance to trend in Q4? Is it going to be favorable or is it going to stay unfavorable but narrow and in 2015 as well? Alain Bédard: Well you see -- what all the moves that we've made Matt is towards reducing our costs, so we were not able to adjust ourselves path enough with that lower volume. And so that’s a killer for us and this is where our guys are working like day and night to correct the situation because this is not acceptable. Really that’s the first quarter that we’re seeing that our existing business is doing worse than the year before. Based on all the discussion that that's going on and all the action that has been taken, I don't anticipate to see a negative like we have in Q3. I was talking -- I was looking at our numbers of October this year versus last year, so we’re starting to see some improvement based on the action that we have taken. We also announced the closing down of two of our terminals in Québec in small region where we shut down the operation there and we’re moving towards an agent model. And there is more to come. We’re working on a plan that will affect the few of our terminals again in LTL because you see the big difference between US and Canada is that the Canadian market is shrinking and the pricing power is non-existing at all. So we’re fighting an uphill battle all the time every quarter. So that's why the decision was made over the last few years to reduce our footprint in areas where there is low density and high competition. We have high competition in high density area like Toronto, Montreal, Vancouver but at least you could fight because that's a big market and we retained some good market share. But in a small market where you find just a local guy with cost structure that's completely different than ours, it's a no-win situation. So we said let's reduce our investment in these regions and let’s focus on 80% of what we do and let's do that and do it more efficiently. It's all about time and energy. So that's what we’re doing. And you should see some improvement. I was very unhappy with that fact that our existing business did worse this quarter than last. Our new business Vitran and Clarke – Clarke did very well in the quarter and Vitran has done a fantastic job because they are US business, they are transport business, they have a partner that didn’t provide the right service. So that affected by Vitran Canada big-time, they lost a lot of business because of that. But I mean the team there at Vitran, they are not stupid, they are not sitting on their end, and they turned around and they went -- they were able to get the whatever business there was lost because of poor service of our partner in the US, they were able to get back some domestic Canadian business. So it can be done, it’s just a matter of the focus has to be at the right place. So 5, 6, 7 years ago I remember the focus was let's cover all the Canadian towns and maybe 5 to 10 years ago – for the last two, three years with us, we’re saying, no, no, forget about it. No, our big carrier will cover 80%. Yes we still have some very niche carrier in Alberta that are doing very well. That we keep but the national carriers operating in a small Prince George down or Prince Rupert, forget about it. I mean we’re out of there.

And speaking of the differences between the freight demand and capacity dynamics in the US and Canada, is it feasible that if the US continues to be very strong and capacity continues to be very tight and Canada continues to be lacklustre, is it feasible that any type of positive spillover effect could happen in Canada eventually? Alain Bédard: Well, you know what, Matt, it's a different story because in Canada we lost most of our manufacturing base. So all those plants that used to operate in Canada when we had a $0.75 dollar and $0.80 dollar, those poor guys are gone, they are dead. If you look at my business 10 years ago in Toronto, a lot of my customer were industrial based customer. Those guys are all dead, they are gone and they will not come back because the decision has been made to shut down those Canadian plants because they were small, and moved the manufacturing into the US. So this is -- to me the LTL market in Canada from the 2007 till now it's been a depressed market and it’s also a market that's been shrinking because we lost a lot of our industrial base and it is not going to come back. So to me it's a permanent impairment. So what you have to do when you see a situation like that, you have to adjust yourself. So us, what we’re doing is we're adjusting ourselves in a small market. So we’re pulling out of those small markets. But our competition they have to understand that in order to become a more viable company you have to reduce the offer, so then I mean you could start adjusting the rates, because at the rates that we’re having in Canada I was looking like I said earlier, Conway’s rate improved 5% quarter over quarter. I mean if we would get that -- us we would be laughing all the way to the bank but there's no way – there is no way we can get that because there's too much offering in Canada. So the only way you’re going to control that better is by consolidation -- the LTL market in the US is way more consolidated than the one in Canada, way more. So that's the way to go.

Your next question comes from the line of David Tyerman with Canaccord Genuity. David Tyerman – Canaccord Genuity: First question is just on the P&C margin. When I look at it sequentially it looks like it's down about 1%. And I don't think I have heard through the whole call why that was. Maybe I missed it. Alain Bédard: Well, Q3 and Q2 are different historically, David. So what you have to do is always compare Q3 with Q3 and Q2 with Q2. So our Q2 of this year was better than the Q2 of last year and our Q3 of this year was better. So it's sequentially – quarters are not all the same. David Tyerman – Canaccord Genuity: What would be different from Q3 to Q2, you had more sales in Q3, I would think the operating conditions would be at least – maybe easier since you’re not going to have much weather impact. So I am just wondering why would you have lower margin sequentially in the summer in P&C? Alain Bédard: Boy, that's a good question but you know what I've never looked at it like that David. We always compare one quarter with the same. So that's a good question. Let me think about it because you know July, August okay -- if I look at my same-day business in Q3 where you got the July and August, the only good month that you have is really September. If you look at Q2 you’ve got May and June, they are our strong months and also most of the time April. So what you have in Q3, you’ve got two weak months. July is even weaker because a lot of people on vacation etc. etc. So when I think about that, to have 3 on the P&C smaller in terms of profitability, you say well the revenue is not the same, or maybe a little bit more. So why would you be less profit – I’ve never really looked at that, David. David Tyerman – Canaccord Genuity: Certainly it would be interested if there was – your sales even if you took the acquisition that was pretty similar. So I am kind of surprised to see such a large decline in margin. Alain Bédard: But don’t forget one thing – the Ensenda acquisition is the only area where our sale have been growing and the Ensenda acquisition in Q3, because of intangible depreciation and because also it was the first quarter, the profitability of Ensenda because it's an agent model it's never going to be the same as Dynamex. Ensenda because it's an agent model its bottom line is going to be in the neighborhood of 5, 6% versus the Dynamex that will be in the once everything is done in the neighborhood of 10, 12 maybe. David Tyerman – Canaccord Genuity: Perhaps that’s the difference. I won't belabor the point, if you had an explanation, I’d certainly be interested. Second question, the rail guys who many of us cover have been talking a lot about taking share from truck that their service is getting better, they’re driving their cost down. And so for example CP Rail seems -- has a very strong volume growth expectation over the next number of years and a lot of it sounds like it’s going to come out of truck. I was wondering if you are seeing increased competition from rail and whether that either impact you on price or volume or both? Alain Bédard: David, if I ask you the question what is the service performance of rail guys right now – on time service performance? David Tyerman – Canaccord Genuity: I can't say in your area. I know what isn’t – which is what you're driving at – but in your area, in the truckload area which presumably is the thing would affect, this is what they are driving at, saying they’re going to do a lot better – Alain Bédard: Well, could be, but one thing is for sure as we deal with them, we are a customer of the rail that’s for more than hundred million dollars of business that we get through the rail and we have lots of service issue. If you’re looking at a trucking company with a performance on time of 90% you are talking a shitty company. I mean the on time performance of the trucking industry is probably neighborhood 95 to 100% all the time. If you look at the rail performance, you can’t compare that at all. That’s number one. Number two, I mean I don't know I'm not in the rail business but I could tell you one thing is that you know on commodity, you can't beat the rail, I mean on coal and grain and all of that, that's why the rail is there, that’s their market. Now if you start thinking about the truckload world or either US and Canada it depends on the distance for sure if you're talking shipping coal product from Toronto to Calgary, why would you do that with a truck? One thing is for sure is that the trucking business is growing in the US, not in Canada because the economy in Canada is really flat. We’re just starting to see some improve -- some improvement in our truckload and the small reason for that is that the rail guys are eliminating slowly the boxcar. So if you are a customer in [Latoo] Québec and the guy tells you, you know what you're not going to get any boxcar anymore. So you’re going to have to use the truck. David Tyerman – Canaccord Genuity: So it sounds like there you’re not seeing at that – Alain Bédard: No, we are not seeing that at all. It's a question David that we get all the time. So it’s like you could fly out of Toronto to get to Montreal, or you could use your car, you could take a bus but it all depends what you want to do. David Tyerman – Canaccord Genuity: And then the last question I had -- you painted a picture that some pretty good improvements for most of the sectors I think, pretty much all of them actually in the next year or so. Aside from the economy, are there any things that you can see that could prevent you from hitting the kinds of margins that you're talking about getting over the next 12 to 18 months? Alain Bédard: No, the only reason David is people. We have the right team at our P&C next day service. We have the right team at our same day service both Canada and the US. So I feel pretty good that we’re going to do what we said that we’re going to do. LTL, the same thing, it’s about people. So there we need to do a better job and we are working on it. On the truckload side I feel very good that – there the truckload side, I think the market will help us in 2015. Both Canadian and the US. Waste side, on the waste business, the market is definitely helping us. We have some small growth there and on the cost side we've been investing in transfer station like there's no tomorrow and that will start to produce better results over the course of the next year. We still have a capacity issue at Moose Creek, we could put another 200,000 ton at Moose Creek, we’re working on it, so at 200,000 ton that's a $5 million improvement to the bottom line easy. So we have lots of good stuff. Now one thing that we don't really talk about is the Canadian dollar. I mean the Canadian dollar if it stays at $0.90 like it was in Q3 slowly I think that this will help the small manufacturing base that’s still left in Canada and that will help us. Don't forget that we generate a little over $150 million of free cash in US dollars. So if the dollar stays there, that should be a tailwind for us. So in terms of negatives, I don't think that Canadian economy could do worse than what it’s doing now. I think that probably over the course of the next 12 to 24 months we should start to see some improvement piggyback on the US economy. US economy is slowly improving, slowly which is good. So no, I think that all the other balls are really aligned properly for us to be in a great position for 2015.

Your next question comes from Kevin Chiang with CIBC. Kevin Chiang – CIBC: It’s actually Kevin. Just a couple of housekeeping questions actually. Just in your P&C, if you were to back out the impact of Velocity and the fact that called out the nonrenewal of some of the lower margin customers, would the rest of your business see positive organic growth and if so, would have been pricing or volume or maybe a little bit of both that drove the rest of that? Alain Bédard: If we exclude the Velocity business that we’re -- and even in 2015 we still have the backlash of that Velocity to a certain degree. But no, I mean the US operation before I bought Velocity, we were running an EBIT at the time close to eight points. Velocity killed me -- Velocity – I mean the management team there worked day and night and then we kept on losing customer because the service was so bad before we bought the company. And then the pricing with some business was – didn’t make any sense. So I mean we were stuck in the mud for about 12 months. Right now if you look at our Dynamex US operation, we’re getting close to where we were before the Velocity acquisition. We added about $50 million in revenue net of all the disposals we did. And in Q4 finally like I said the US Dynamex operation will do better than ever it. So we are on the right track but we have to dispose of a lot of terminals and a lot of bad business. So like I said earlier, hindsight is always 2020, so if I would buy Velocity again when I bought it, no. Would I buy Velocity today, I would buy Velocity because we have a stronger team now within Dynamex than a year and half ago when we bought the company. Kevin Chiang – CIBC: And then just on the Contrans offer, I think in your early October press release, you noted that the competition bureau was looking at -- represented roughly 2.5% of your combined business. In the most recent press release there was a percentage – is it still the same amount of change – Alain Bédard: Same, same. It’s a little bit less because at first they had concern with two business lines which -- the drybulk and the dumpster operation – so the drybulk that's solved now. So they understand there is no issue there. So it's really – it’s even smaller than that 2% that we talked about. But we've answered all the questions, the same with Contrans, finally because they kept on asking for more and more and more. So October 6 finally was the last day that we said, okay, you guys got everything you want now. They said, yes. Okay so now from that point they have 30 days, so that leads us to November 5 at the end of the day. So that's why we are now in the position, once we get this no action letter to close the Contrans deal, because now we have the support of more than 70% of the shareholder Contrans. Kevin Chiang – CIBC: And just lastly from me, I think you are hearing more and more throughout the year, especially now during this earnings season on UPS and FedEx about how they are spending more money to prepare for peak season this winter. Have you seen an opportunity your same-day service to increase your e-commerce market share? I would imagine some of the customers that might've been put off by the poor service last winter may look to move from next day service to maybe same-day service as a way to – Alain Bédard: It’s too early, Kevin. It’s still too early because don't forget we’re starting with a major retailer in the US which is really the first time besides the IT company that we’re servicing right now. It's really the first time that a major retailers as you know what guys, that’s where we’re going. So we’re starting with three markets with those guys. And we’ve been talking for years with another major retailer but we’re going anywhere with these guys. I mean it’s like they don’t have the solution because don’t forget if they don’t have the solution, us we’re just servicing the customer. So if he doesn’t have the solution but I think that the other major retailer has a solution as the commitment over there and I think this is going to be successful. But we’re starting very small with them with three markets. And we believe because this is in transition right now, this is transition. The e-commerce in the US is serviced by USPS, UPS and FedEx. I think that there is a small share of that market, I don't know how much 5%, 10%, 15%, high density market New York, Chicago, LA, Houston, Dallas, the big cities in the US, Miami where density is high. The last mile guys are in a good position to gain some market share away from the next day guys. Kevin Chiang – CIBC: Would it make sense – I think FedEx has a same day service, and USPS has one, but I don’t believe UPS has a same day service of any type of real scale, would it make sense for you to partner with them or for them to partner with you as a way to help them, alleviate congestion in their terminals – Alain Bédard: Hey, listen, we will see, Kevin, time will tell. Time will tell. This company has got – it’s the best company in the world. So we'll see what their plan is but the one thing is for sure you cannot do same-day within a network even if you’re called ABC or D. It’s got to be a separate operation with a separate technology etc. etc. and we have that for us. We don't mix our same day business in Canada with our [Campa] or Loomis operation, it doesn't work. It’s different. So that's the beauty of TFI today as we can offer that to our customer both in Canada and in the US. We are the lead dog in the US, although we’re small. But we're investing. The problem is that I love to hear -- and that's my fault, lost a year with this stupid Velocity thing there that took me too long. But who doesn’t make any mistake? So that’s behind us now and the focus of our team here in Dallas is really to satisfy the demand and offer our new customer base solution to be able to service that growing e-commerce and also I think that the last mile guy will get some share of that market. It’s never going to be 50% of the market. But if it's only 5% or 10%, I mean it’s going to be great for us.

Your next question comes from Maxim Sytchev with Dundee Capital. Maxim Sytchev – Dundee International Markets: Just maybe thinking sort of strategically and more medium-term than anything else. I mean obviously contemplating right now there are sort of TL stuff and potentially doing something on energy services. So how should we think about company’s positioning over the medium-term? I mean what are we trying to achieve over the next 3 to 4 years? What would you envision actually TFI to be done down the line as you rebalance the asset portfolio? Alain Bédard: Well you know what, we’ve said for last three years that we want TFI to be an asset light company and then buy strucking truckload company, you guys you know what is he doing – he wants to be an asset light, he is buying truckload company, is he stupid or what? Well, no, what we’re trying to do is – TFI is an asset light company but it's got a nice portfolio of truckload company that could be now with Contrans contract that's got five. It's a $1.8 billion company. It’s got three super team, so these guys could be standalone. So within the next two, three years I think it makes sense, because the focus of TFI is to be in the asset light world. If you look at the last acquisition we've made in the LTL those guys, the depreciation as percent of revenue is about 1%. So they are asset light, quick action was the same. All our P&C is really light, truckload is a great business. We do it well but we need the size. So this is why -- and we need geography. So now we have a super company in Canada with Contrans. We have a strong team in the US where we can grow and that could be standalone in one way, could it be a spin-off or could it be abandoned, we will see. So that is one thing. Then the waste is a diamond in the rough. We’re doing well. We did this small Veolia acquisition but something has to happen because in my mind it is not valued property. And so now what's going to be first – is it truckload or waste that I don't know. I'm working on both thing at the same time and whatever happens the first one we will see. The rest of our business -- which is our LTL, P&C and our logistics, that's a fit. The goal is really to grow in that sector. Now on the next day service in Canada not a lot we can do on the M&A side. The market is not growing but I think that the market will start growing once the economy gets a little bit better. The LTL, we need to consolidate more in Canada. It doesn't make any sense we have that market underperforming the US market like there's no tomorrow. But there's more consolidation that's been done in the US. So us and I think somebody else will take charge of that and will start to consolidate that market that really needs a lot of consolidation. Now that being said, the same day and the LTL and the P&C that makes a lot of sense to be standalone. So when you look at TFI in three years that is probably what you'll see is a huge cash flow machine with P&C, LTL and logistics. And you'll see a great investment in truckload that's probably going to go down with time and the same story on the waste side. Maxim Sytchev – Dundee International Markets: And in terms of – do you have an estimate of your market share in the LTL space in Canada? Alain Bédard: Yeah, the LTL space in Canada right now, we are probably -- if you include our intermodal division with our overall division we probably have 20%, maybe 25% of market share.

Your next question comes from Mona Nazir with Laurentian. Mona Nazir – Laurentian Bank: Just some follow-ups. You’ve spoken about Velocity and I am wondering if you could provide an update on Dynamex and Loomis? Alain Bédard: Well, Dynamex in the US or in Canada or both? Mona Nazir – Laurentian Bank: Both. Alain Bédard: Well like I said Dynamex US we’re doing very, very good now. I mean Velocity is behind us and 2015 is going to be a year where we’re going to improve our bottom line by at least 100 -- probably 100 to 150 basis points. Our focus in the US is really to grow the e-commerce. We’ve got lots of demand and that’s going to be the focus because we’re not going to be stuck in the same situation like we were stuck in 2014 trying to get -- bad customers, get rid of terminal, this is over. And in Canada the same thing. I mean we acquired small PDS, we’re growing with some e-commerce there also in Canada. So we have a strong team there. We will definitely improve Dynamex Canada by at least 100 basis point there again. So we will be much closer to an 8.5% to 9% EBIT by the end of next year on both division, US and Canada. Mona Nazir – Laurentian Bank: And then just going back to the comments on tonnage the LTL side down 5% and yield up on the truckload side. How do we look at this going forward? Do you think based on your comments tonnage will continue to be down for the next at least 12 months and pricing could trend further upwards as the economy improves on the truckload side? Alain Bédard: Yes. Well let’s start with the LTL, the drop in volume in the LTL it's something that market is shrinking. So our strategy is to adjust ourselves to a lesser demand. So that being said, it's always difficult to adjust dollar for dollar when the volume is shrinking. When we see volume also it also is the size of the shipment that is shrinking. So instead of having an average weight let’s say you have a thousand pound, now you're stuck with 900 pound average weight shipment. So I mean this is because the market is shrinking and I don't anticipate this market to get any better in terms of in the LTL. So we have an uphill battle again in 2015 in our LTL. The good thing though is that with our intermodal division like Quik X and Vitran and Clarke, there at least because these guys are more asset light, so it's easier for us to adjust to variation of volume with these guys because they don't do the P&D, they don't do the line haul. So it’s all third-party. So when volume drops it’s easier to adjust whereas the overall guys you're stuck with the truck, you're stuck with the line haul, you’re stuck with the terminals and it is more difficult. And that's what we’re going through now with smaller lower volume and then we’re like a dog chasing its tail all the time. In terms of the truckload, what’s going to see is more demand but I don't want to say too loud because it's just something new I would say since May of 2014. So is it a trend -- is it just a glance -- I don't know, so this is why we’re prudent, we’re conservative. By saying we’re just – feel a little bit more uptick in demand there but it takes us a little bit more time to be in a position to say, okay, the Canadian truckload market is starting to get aligned on the US market, where US market we see demand, we see organic growth in the US. That’s why I said earlier we haven't finalized the America -- Transport America budget, talking to Scott the other day. He was telling me, they have a good feeling that organically they will grow top line by 7, 8, 9 points. So the market is growing in the US. Mona Nazir – Laurentian Bank: And then just lastly from me, there was a substantial increase in fuel surcharge I believe 54% year-over-year. I understand that, that part of that is the acquisitions that you’ve done but I am just trying to get an understanding even if you back out that, of why you increased so much just give the price of fuel? Alain Bédard: Well it's all about the price of fuel, it's more volume because of acquisition and the price of fuel that's going up. Now it’s going down. So you'll see probably a reverse action in Q4 but we suffered big time in Q1 because the price of fuel in Q1 went through the roof and it was went through and hopefully we will get some of that money back in Q1 of 2015 because if price of fuel stays low, that helps me in a tough quarter like Q1 because we consume more in Q1 because it's cold, and when the price is high, and also we’re not busy as much. So when you call the customer to say I have to adjust your fuel surcharge, they say, wait for a week, wait for a week, because it's January, February, so it’s difficult.

Your next question comes from Benoit Poirier with Desjardins Securities. Benoit Poirier – Desjardins Capital: Alain, I just read the document and you still have 100 million of assets for sale. I was wondering if you could provide more color about the timing expected for that and whether what would be a potential opportunity with Contrans once the acquisition closed? Alain Bédard: Yeah that $100 million of asset that we’re talking about this is real estate that we have. Now like I said earlier in the call we have within the next 12 months another 25 million that's going to go up and that’s going to be sold with huge profit. If you look at my deal in Q3 of this year I mean we sold three piece of property and we made a lot of money. So you should see the same thing happening over the course of the next 12 months, a minimum of $25 million of that 100 million will be sold, 25 may be up to 40 million within the next 12 months will be sold. And the reason is this is pretty simple. I will give you an example where we shut down Baldor because it was a port terminal, I mean too much competition and return on asset was the shit. Now we are in discussion right now and I think that the several will be sold within the next 12 months, Baldor, the mining town is doing well. So I mean that's one example -- we shut down Prince Rupert and we’re in discussion right now, we've got an offer in the table so that terminal should go within the next 12 months. So we’ve got a lot of good things because like I said earlier with our P&C and our LTL we are moving out of low density area because when volumes drop and you have a fixed cost like terminal, it kills you. That’s why we have a $100 million of asset to get rid of. Benoit Poirier – Desjardins Capital: And on the waste, you are looking for about 80 million of EBITDA next year. Just wondering if you are still awaiting to get through the 100 million threshold before thinking about the spin-off opportunity? Alain Bédard: No, not necessarily, Benoit. I mean 80 is a good target for us in 2015. Now 80 million of EBITDA – it’s also important to look at the free cash. We generate a ton of free cash in the business and it makes a lot of sense for us to combine this business with somebody else. Like I said earlier I mean I am busy right now because I've got this and I have got the truckload and also we have to integrate what we bought. So it's not going to be a really a 2015 big M&A year but it's going to be a big year I think for restructuring the strategy, another strategy but the structure of TFI having a great truckload. If we could do that into 2015 that would be the great success. So that's really the plan. Now in terms of the waste, $80 million in EBITDA and strong free cash flow 20 some percent EBIT margin, the combination – it’s not that many company where we can combine with. So it’s not that you have to chase 30 companies. I mean it’s a handful of company where it makes sense for us to sit down and have a good chat.

Mr. Alain, there are no further questions at this time. Please continue. Alain Bédard: Okay. Well, thank you very much for joining us on our call today. So I look forward to speaking with you again following our fourth quarter. So have a great day. Thank you.