TFI International Inc. (TFII) Q1 2025 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's First Quarter 2025 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. [Operator Instructions] Please be advised that this conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. I would also like to remind everyone that this conference call is being recorded on April 24, 2025. Joining us on today's call are Alain Bedard, Chairman, President and Chief Executive Officer; and David Saperstein, Chief Financial Officer. I'll now turn the call over to Alain Bedard. Please go ahead, sir.

All right. Well, thank you -- thanks for that, operator, and we appreciate everyone being on our call today. After market closed yesterday, we reported our quarterly results amidst continued economic uncertainty and the resulting slowdown in freight volume across the industry. Despite cyclical challenges, we're pleased to have again generated strong free cash flow of over $190 million, which, as you've heard me say many times, is a primary focus of ours. Over time, as this free cash flow allows us to maintain a strong balance sheet and strategically invest in both organic growth and attractive M&A while returning excess capital to shareholders whenever possible. Taking a look at our consolidated results, we generated total revenue before fuel surcharge of $1.7 billion, up from $1.6 billion a year earlier, supported by the Daseke acquisition a year ago this month. The industry-wide slump in volumes, however, resulted in operating income of $115 million or an operating margin of 6.7% relative to $152 million and a margin of 9.4% in the prior year period. Quarterly adjusted net income of $56 million was down from $93 million and adjusted EPS of $0.76 was down from $1.24 a year earlier. Our cash generated by operating activity came in at $194 million, down marginally from $201 million in the first quarter of 2024. Our free cash flow, as I mentioned, was a solid $192 million, which was up meaningfully from $137 million, benefiting from favorable working capital, strong management of capital expenditures and of course, the hard work of our talented team members across the organization who continue to focus on operational excellence, especially during slower times for the industry. I'll next provide an overview of first quarter results for each of our three business segments, beginning with LTL. LTL was 39% of segmented revenue before fuel surcharge, which was down 13% year-over-year to $679 million. Operating income of $47 million compares to $85 million in the year earlier period, with margin reflecting typical Q1 seasonality, consistent with what we saw the prior year. The LTL operating ratio came in at 93.1% versus 89.2% in the first quarter of 2024, and our LTL return on invested capital was 14.4%. Turning to Truckload. We generated $666 million of revenue before fuel surcharge or 38% of the segmented total and this was up from $398 million a year earlier due to the Daseke acquisition. Operating income for Truckload was $49 million, up from $41 million in the prior year period. Our Truckload OR was 93.7% relative to 89.6% a year earlier, and our industrial end markets are exposed to tariff-related uncertainty, which was evident during the first quarter before the April 2 announcement. However, we saw improvement in our Canadian OR, while Specialized was in line with normal seasonality. Our return on invested capital for Truckload was 6.7%. Wrapping up the business segment overview. Logistics is 22% of segmented revenue before fuel surcharge or $385 million for the quarter, down from $442 million in the first quarter of 2024. Logistics operating income was $31 million compared to $40 million in the prior year, and that's an operating margin of 8.1% versus 9.1%, while our return on invested capital was 17%. Moving right along, the solid free cash flow of $192 million during the first quarter helped us maintain our strong balance sheet, which is always a focus of ours. We ended March with a funded debt-to-EBITDA ratio of 2.21. During the quarter, we repurchased $56 million worth of shares, which combined with the dividend payout equates to $94 million of excess cash returned to our shareholders during the quarter, which has always been an important objective of ours. Lastly, turning to our business outlook for the second quarter of 2025, we currently expect EPS in the range of $1.25 to $1.40 based on trends we've seen so far in Q2 and assuming no major change in the macro environment. In addition, for the full year, we expect CapEx to be approximately $200 million. And with that, operator, David and I would be happy to take questions. If you could please open the lines.

[Operator Instructions] Our first question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Hey, great, good morning. This is Christyne McGarvey on for Ravi. 2Q guide, very helpful. I appreciate that. Can you maybe just unpack a little bit more high and low end of that? I know it's not a massive range, but just how you guys are thinking about that? And then any thoughts on full year? Clearly, macro visibility is quite limited, but any sort of scenario analysis you guys are thinking through, particularly on the recession side of things, if that comes to fruition, how the business might perform?

Yeah. Well, what I could say is that, guys, because of all this uncertainty, the best we could do is to provide a quarterly kind of guidance, okay, which we just stated between $1.25 maybe at the higher range of $1.40 with what we know today. I mean, you have to understand that when we look at our specialized truckload in North America, we've been really affected because our end customers are sitting on the fence waiting to see where this is going to all go, right? Where are we going to go with that. So this is why it's very difficult for us to predict, okay, the year until we have a much clearer picture of what's going to happen with those tariffs. We know that there's lots of discussion going on, but so far, we have not seen any results, of all these discussions. So this is why based on what we know of April, okay, that's why we're in a position to say, well, we believe that TFI can attain an EPS in that range of $1.25 to $1.40. We also confirm reduced CapEx, right? Because we're not using, okay, our trucks to the full extent because the volumes are not where they should normally be. So this is why our CapEx now going -- are going down from $300 million on a normal yearly basis to about $200 million, right? And you look at our Q1, our CapEx was minimal, right? It's always the same. Last year was more, but we'll have the next three quarters, okay, we're going to be going back with more CapEx, okay, to get that $200 million range for the full year.

Very helpful. Appreciate that. And if I could just ask one more. Maybe just digging in on the US LTL a bit more, can you just parse out to the extent you can, how much of some of the year-over-year pressure we're seeing in operating income is idiosyncratic versus the market maybe being a bit more challenging? And if it is idiosyncratic, kind of any updated thoughts on the trajectory of OR improvement there?

You know what, if you look at our Q1 results, which are very disappointing. I mean, we had a very difficult month of January, very difficult month of February. But we made some change in the leadership at that time, mid-February, we made some changes because, I mean, we were not heading in the right direction. What I could say is that when I look at April, when I looked at March, I mean, I can see some very important change. The morale of the troop has never been so good. I mean the guys are working hard. And under the leadership of Kal and Chris and Keith, I feel pretty good about where we're going. I mean, the name of the game, and I said that on Q4, okay, we've lost so much the small and medium-sized account, and we replaced that with more like corporate accounts with lower margin or maybe sometimes negative margin. I mean that trend is reversed right now, okay? So we're starting to see growth on the small and medium-sized account, okay? At the same time, we are replacing some major accounts where we lose money, right? So I feel really good. The guys now are very well focused. And that's also based on what we are seeing so far in April, okay, we see a change over there. The guys are really working hard on the cost side, at the same time on the revenue side to head this company in the right direction. I've always said that there's no reason why this company cannot be a sub-90 OR. And we've not done that so far. I understand. I get that after four years of buying the company. But I think that we're on the right track with this leadership, the plan that these guys are working on, I feel really good.

Yeah. And Christyne, I would just add that when you look at Q1's OR in the US LTL, it's 160 basis point deterioration relative to Q4, which is exactly the same as the seasonal deterioration last year Q4 to Q1. So you can think about this quarter as the same as last quarter. But we've made changes, and we're seeing those changes start to show some green shoots.

Great. Really appreciate the thoughts. Thanks, guys.

Thank you.

Your next question comes from the line of Jordan Alliger with Goldman Sachs. Please go ahead.

Yeah, hi. Just two follow-up LTL questions. One, can you maybe perhaps update some of the operational improvement efficiency plans that you guys have talked about in the past, whether it be technology or other efforts to improve things? And then secondly, how do you think about your pricing strategies now and the industry's pricing strategies given the ongoing softness in manufacturing, et cetera? Thanks.

Yeah, very good question, Jordan. So in terms of technology, we've made a lot of progress within TForce Freight over time. So one of the last leg that we're working on right now is we've implemented Optum for our linehaul planning, okay? So we're not done with this improvement in technology on our linehaul. But at the same time, okay, we're looking at something similar, probably Optum for our P&D. So we're going to be starting this project of Optum P&D operation in Canada first, okay? And then we'll move that to the US sometimes in '25. So that's going to be helping us in doing a better job on the planning and on the execution of our P&D operation, and the connection between linehaul and P&D at that time, okay, will help us do a better planning for the linehaul. That's number one. Number two is that our software for pricing and master file management, that's been a rock in our shoe for so long, okay? We've started the implementation of that early '25, okay? And this is moving along. It's taking us a little bit more time, okay? But during the course of '25, we should be done with that. Now for sure, our pricing department right now because our sales focus, is growth now, okay, with our team, our pricing guys are very busy going back to the sales team with a pricing proposal for customers because we've adjusted our approach to customer in the sense that we have to go back to the small and medium-sized account. And these guys, they represent about 2% of our volume more today than they were just three months ago. So we are growing those small- and medium-sized accounts. And for sure, that requires better pricing, better price, okay, strategy for our pricing department, which these guys are working on. Anything you'd like to add on that, David?

No.

Good.

Thank you.

And your next question comes from the line of Walter Spracklin with RBC Capital Markets. Please go ahead.

Yeah, thanks very much, and good morning. You mentioned uncertainty in your -- macro uncertainty in your outlook and that giving a little bit of difficulty in planning. I'm just curious whether you're seeing in the quarter meaningful shifts in buying patterns among your customers that are a result of that uncertainty? And any color around that? And a little bit as well on your market share. Do you see any of those shifting buying or any of that customer adjustments is leading to them moving to lower-priced competitors? Are you losing share? Or are they just holding back on orders and volumes as a result of the current environment. Just curious as to what you're seeing kind of in the near term and what those patterns are in terms of your competitive environment?

Yeah. You know what, Walter, a very good question. Think about, if you are a US farmer right now, you don't feel pretty good because your main customer, China is just saying, we don't want your product. So, one of -- our customers are industrial based. So our customers are manufacturing tractors, they're manufacturing agricultural equipment, et cetera. Those guys don't sell a lot because their customer, the farmer are insecure right now. They don't know what's going to happen, right? So that's just one small example of what we're going through right now in our US truckload operation, our specialty truckload, which is a lot of it is flatbed, our industrial base customers are just waiting, okay, because their customers don't know what's going to happen, right? So this is -- if you look at our miles, okay, Q1 in the industrial sector in our flatbed operation, in Q1, we were down like 10% to 15% depending on the week. Today, in April, still a lot of insecurity or instability, but now we're down to about high single-digit, 8%, 9%, okay, still down year-over-year. Now the only good thing that we're seeing so far is the rate per mile, has improved, okay? Strange to say that in a difficult environment, normally, okay, you would say that the rate per mile will also be under pressure, but we're not seeing that. We see our rate per mile improving since, I would say, probably mid-March, okay, that we're starting to see improvement year-over-year on the rate per mile. But the activity is down, okay? So that's what we're seeing. In terms of what the market is doing, okay, we don't see pressure on rates, okay? Would it be either in Canada or in the US For sure, our Canadian guys performed really well, except in certain sectors like steel. As we know, there's a huge tariff on Canadian steel. So our steel market is under pressure for sure in Canada. But there again, I mean, globally, our US truckload operation has been affected also by too much equipment, right? So if you remember, we had huge CapEx in Q2 and in Q3 and also in Q4 for our US specialty truckload operation. And also now the miles are down. So we have way too many trucks, way too many trailers and that affects also our depreciation, but that will be corrected during the Q2 and Q3, okay, of '25 because, as I said, we are lowering our CapEx to a normal level based on the activity level that we have today. Anything else that we may add on that, David?

None.

Good.

Just a second -- final question here on M&A. Can you update on what you're kind of budgeting in terms of any total tuck-in M&A for the year? And just any comment on -- there was some activity here this morning with Andlauer being taken up by UPS in your markets. Just any update on whether there's opportunities that are popping up now? And is it something that you're actively looking at?

You know what, Walter, I mean, on the M&A side, we just closed two very small deals in Q2, okay, that -- I mean, very small transaction. We have one transaction that we really liked, okay? But because of all this uncertainty on tariff, okay, we had to walk away from that deal. It was a transaction that we were really happy to do. But because of all this uncertainty, we said, no, forget about it. We can't touch that. Maybe later on, we'll see down the road once we have better clarity. So, this is why our M&A in '25, Walter, is going to be minimal. So our M&A is more buying back TFI, which we did in Q1, which we also bought back another 0.5 million shares in April, okay? And cautiously, this is going to be the M&A for us in '25 because we're buying something that we know that is very undervalued, okay? Because we have to turn this US LTL ship around to bring back confidence, okay? And we'll do it. But in the meantime, okay, nothing major for us in '25, except the two small deals that we've done and the buying back of TFI stock. I mean we want to keep our leverage in a conservative fashion. We don't want leverage to go higher than 2.5, which we've always said. So right now, we're at 2.2. So, I mean, this is where Q2 and Q3, we can come up with $0.75 of EPS. This is why when we look at the trend of April, we feel pretty good about the $1.25 to $1.40, which is going to help bring our leverage down, okay, hopefully, in the next few quarters.

Thank you very much for the time.

Pleasure, Walter.

And your next question comes from the line of Ariel Rosa with Citigroup. Please go ahead.

Hi, good morning. Alain and Dave, thanks for taking the call. This is Ben Mohr at Citi on for Ari. I wanted to just ask if you could share some thoughts on your US LTL OR outlook for 2Q and full year '25 and similarly, your EPS outlook for maybe full year '25, considering the 2Q, $1.25 to $1.40.

Yeah. So based on our forecast right now, we believe that sequentially, Q2 should improve by about 200 basis points, right? So we're at 99, so we should go down to 97. But on top of that, we believe that there's also another at least 100 basis points of improvement from better market, okay, better freight, et cetera, et cetera, and also better cost management on costs on the P&D side and on the linehaul side to a certain degree. So I mean, from, let's say, 99, we go down probably into Q2 to a 96 OR on the way, okay, down to closer to a 90 OR, hopefully, 92, 93, something like that by the end of '25, right? So that's the trend that the guys are working on. And let me tell you that the morale at TForce Freight has never been as good as what it is today. We've made some changes in the leadership. So our friend, Keith, that used to run all of TForce Freight now is focused only on the operating side of it. Chris, one of our EVPs at TFI is helping on the commercial side. And Kal, one of our senior EVP has taken over everything else, which is finance, IT, fleet and the operation for sure, working with Keith. So I feel pretty good where we're at, okay, with this change in leadership and also the focus on growing those small and medium-sized accounts that killed us in Q3 and in Q4 in terms of profitability. And so the guys are on the right track. They're focused on the right thing. And I think that we're going to start to see some improvement there.

Great. Thanks. And also maybe as a follow-up, thanks for sharing that you're replacing your SMB accounts with enterprise accounts and it sounded like you just mentioned…

The other way around. Yeah.

It's the other way around. We're replacing the big accounts, okay, the corporate account with the small account, okay, which is completely the opposite of what we were doing in Q3 and in Q4 of last year.

Great. Great. Thank you for that. And it sounds like it's up 2% sequentially.

Yes.

Can you discuss in more detail how you're doing this? Any progress in reducing the SMB customer attrition? And are you growing new accounts? Is it bringing back the same accounts, the same lanes or different lanes? And are there any other customer segments similar to SMB that could be at risk of customer attrition and what you might be doing to reinforce customer retention in those segments?

Yeah. So one of the first things that the new team has done is that, let's say that you go with a GRI of 5% and you have an account that runs an 85% OR and the guy just walks, right? Because he's an 85% OR and you had 5% and the market is soft, so the guy walks. So you lose an 85% OR account. So what the new team has said is that this is a little bit stupid in this kind of an environment, okay? So instead of going with a GRI of 5% on an 85% OR account, how about if we just go with 1% or 2% so that we don't lose this business, right? And we don't end up with a major churn, which happened to us in Q3 and in Q4, and we just act smart. And then by keeping those accounts and growing the small, medium-sized account because our pricing is more a reflection of the profitability of the account instead of being just stupid and going ahead with a 5% global and don't forget that all the large accounts will always negotiate that 5% down to 1% or 2% anyway, right? So, let's be more smart and let's be more focused on keeping those small guys and growing that, which is completely the opposite of sadly we did in Q3 and in Q4 of last year, right? So, in terms of better pricing for those small guys, for sure, our pricing department, there's some things that they've been addressed like the weight per shipment. So if you look at our trend, our weight per shipment is about stable at about 1,200 pounds, which is acceptable, but we would prefer to get closer to 1,300. So this is where we made some small adjustment. And at the same time, our GFP, which is terrible. I mean what we've done there, I mean, we've lost revenue like there's no tomorrow, okay? We've refocused our sales team, our local sales team to be part of the solution instead of being part of the problem. So that's also another area of major change in the approach of our sales team under this new leadership is GFP, we have to stop degrading the revenue on that, and we have to start recapturing growth because if you go back in time, okay, let's say in '22, GFP's revenue was $100 million in the quarter. And now we're down, David, we're down to what, $30 million.

$33 million. But I will note that this is the first quarter in a long time where GFP is flat sequentially.

Yeah. Well, we need to grow.

For sure. We're starting to see a little bit of the benefit of this refocus in Q1.

Yeah, because that's a fantastic product that we have. And I mean, nobody has that, except now UPS announced that they will have the kind of similar product. But I mean, this is a great product for our customer. It's just like -- I mean, we have to do a better job in selling it, and I think that the refocusing under this sales leadership shakeup, is going to help us.

Great. Thanks very much.

And your next question comes from the line of Konark Gupta with Scotiabank. Please go ahead.

Thanks, operator. Good morning, Alain and David. Hope you are doing well.

Good morning.

Good morning.

So Alain, you talked about -- and thanks for sharing the guidance for Q2. Actually, it helps, obviously. But in terms of the TForce, you mentioned the leadership changes in mid-Fab, Keith, Kal, Chris. I understand leadership changes are important. But what I'm trying to figure out is how quickly this employee morale is changing with just some changes at the top. Was it just about the top? Like or is there something else structurally in the business, be it unions or some other employees down the value chain where there's an issue in terms of culture or morale? Like is there a low-hanging fruit that you can resolve with more changes down the road in this business?

You know what, Konark, I mean, it's got to start with the top, right? So the approach that now we have under Kal and Chris is that we want to build the company, right? We want to grow this TForce Freight. So -- and you can't just squeeze costs and keep losing top line because this is not the way that you're going to grow and have shareholders that's going to be happy with what's going on, right? So the start of this new team is that, guys, let's roll up our sleeve and let's focus on growing this company again instead of just backpedaling in reducing volume every month, every quarter, okay, and trying to get more money from an 85 OR when already an 85 OR is great within TForce Freight. So you're right, Konark, that at some terminal levels, okay, well, for sure, down the road, okay, we have to make some changes. Already -- we already started to make some changes. I know that in certain terminals, okay, we've made some changes. Now as I said, the last two or three quarters on the call, we have financial information by terminal, okay? So we know which terminals costs are great, and we know which terminal costs are an issue, right? So, now the guys are really focused. And now like I said, Keith's job is not being running the full TForce Freight. He's focused on operation with his regional VPs and get this cost, better everywhere. At the same time, on the commercial side, okay, our friend, Chris, is motivating the sales team, okay, focus on, guys, we have to grow the small and medium-sized account because we need to have a bigger share of our portfolio of business with the small account versus the 3PL or versus the corporate account. We also need to refocus on GFP because we've been working four years, okay, on that GFP. And like I said, we've been going down every quarter. And David just added that for the first time, we stopped going down, okay? Now, okay, guys, this is the floor, and now we have to start creeping up again, right? So we have a product that is second to none that nobody has. So there's no reason why we've lost revenue. The focus was not there. So the morale is great. The guys, they see that it's not just a cost game. It's a global growth in terms of growing the top line at the same time, doing a better job on cost.

That makes a lot of sense, Alain. Thanks so much. And if I can follow up with respect to the competitive landscape. in the US LTL market. Are you noticing any big changes there? Like we can clearly see some of the data points we track like some of the competitors like Saia, they're ramping up volumes where volumes are down for the market overall. Are you seeing any changes in terms of like with your culture and morale improving, there is an opportunity to kind of regain some of the market share that you may have lost? Or you did not lose any market share at all? Like was it all market that was soft and you held your market share?

No, no. Konark, we've lost market share, okay? So this is why -- another leg on that share is the quality of our service. So we've talked a lot about missed pickup. So the goal is like in Canada, in Canada, missed pickup does not exist for us. I mean in the US, our missed pickup is 1.7% today, okay, of our total shipment. It's not good, okay? Now the guy will tell you that two years ago, nobody looked at that. A year ago, people woke up and they started looking at it, it was like 4%. Now we're down to 1.7%. The goal of the team is to bring that down closer to zero, like we do in Canada. That's number one. Number two is the quality of our service, okay? So you could always say, I'm 98% on time with a list of 45 different excuses, right? This is the past. And as we look at the reality now, and our service is improving in real term, not with all these excuses because we said, forget about the excuses because we can't grow the business if we're not providing the service, which we said that we would provide, okay? So at the same time, we're moving more freight away from rail onto the road because we control the road, whereas we never control the rail, right? So the rail, you just live based on what these guys will do, right? So all this is also, at the same time, providing comfort to our sales team that, hey, guys, we're serious that we're going to meet and be there, walk the talk, what we're saying to the customer, we will deliver. So we are improving in real terms, not just in the fantasy land, okay, we are improving the reality of our service the next day and also on, let's say, the multiple day transit time. We're not where we should be, okay? But we are improving, and that's going to help us, Konark, with customer, with protecting our customer base with reducing the churn of our business because if I compare the churn we have in the US versus the churn we have in Canada, I mean, this is like day and night, okay? Our Canadian -- if you look at our results in Canada, we're second to none. Nobody is approaching us at all in Canada, right? But in the US, our service is not up to par, and that's also a reason why we have too much churn. By fixing the service and improving the service, which is really a big focus of Keith and his operating team with Kal, it's going to help us reduce the churn and start growing the shipment count and this is the goal.

I get it for sure. Thanks so much for the time and all the best. Thank you.

Thank you, Konark.

And your next question comes from the line of Daniel Imbro with Stephens. Please go ahead.

Hey, guys. This is Reed Seay on for Daniel. I'm just going to follow up real quick on that last question. On service, you've talked a lot about Keith focusing on operations and improving service in the near term. Can you provide maybe some examples of what Keith and the team are working on to improve that in the near term?

Well, yes. The linehaul, okay, it's an issue, right? So if you load the trailers and you have a linehaul provider, okay, would it be a rail or a third party that's not delivering the freight on time. Well, everything in that trailer is going to be late, okay? So the biggest issue okay, that we have in the US in terms of service is providing, the linehaul service. So this is why we're moving away as much as we can, as fast as we can away from the rail because we have no control on rail. I mean you give them the freight and you hope that it's going to be there on time. When it's road, when it's us, I mean, if we make a mistake, this is something that we can manage and we can correct. So this is the big thing that the guys are working on, number one. Number two is, like I said many, many times, missed pickup is a disaster in the sense that the customer is waiting for you to pick up the freight and you don't show up. I mean that doesn't help your reputation. That doesn't help, the churn into your business. So this is why a major emphasis has been put on missed pickup. okay, and also improving our linehaul. The next-day service, when the linehaul is only 400 miles, which is next-day service, I mean, we're doing quite well. It's when you have to move, okay, with two or three days connection, there we need to improve. And one way that we're doing that is we're moving away from rail as much and as fast as we can, number one. And number two is also the third party that we're using, they have to deliver based on the commitment, like we have commitment with customers.

Got it. Thank you. And on the rate side, obviously, it's been a little bit challenged for a few quarters here. I assume some of that is from the shift to enterprise in the back half of last year. As you've refocused the company, when do you expect to have visibility to yields flipping positive year-over-year?

Listen, what we're seeing so far, okay, in April is there's an improvement in trend, but it's still early in the game. But for sure, the focus is there. I mean, we can't do business with an account that runs at 115 OR because we lost so much medium-sized account that runs an 85 OR, right? So this is nonsense that we went through in Q3 and in Q4, like I said on my last call of Q4, and this has to change. And this is why we made some change in TForce Freight leadership. I mean there's no way, and we have to reduce the churn, and this goes back to the operation. We have to meet commitment that we have with customers. So, we will start to see improvement. And this is why, like I said earlier, 99 OR in Q1 is really, really bad, okay? But we believe that sequentially, we will improve 200 basis points just because of the cycle. But we're also going to reduce at least 100 basis points based on quality of revenue, reduced churn, better service, et cetera, et cetera. So this is why we feel that we can say to the market on Q2, we believe that this company would deliver between $1.25 to $1.40 of EPS, okay? This is based on better results at TForce Freight. And also our US truckload operation, specialty truckload operation will do better in Q2. We are unloading excess assets over there that are penalizing us on depreciation and interest costs. So this also will help us participate in that $1.25 to $1.40 down the road.

Got it. Thank you, Alain.

Your next question comes from the line of Benoit Poirier with Desjardins. Please go ahead.

Yeah, good morning, Alain. Thanks for the great answers about the USP. Now if we move on Daseke, it looks like that the OR was closer to 99% in Q1. You mentioned a lot of details around the weaker economy, especially on the industrial side. But I would be curious whether there's also some question mark or issues around the culture and the management team and what we should expect from Daseke in the coming quarters?

Yeah. Well, Benoit, Daseke's OR in Q1 is closer to 96 than 99, right? So that's number one. So it's the level of activity, Benoit, in Q1 that killed us with our specialty truckload in the US. Our miles were down depending on the week, up to 15%. So just a disaster in terms of the fact also that we had excess trucks and excess trailers, right? But that will correct over '25. The excess assets will correct it over '25. Now, in terms of the culture of the truckload in the US, the specialty truckload in the US, it's not an issue like we had at TForce Freight a few years ago. The trend, what you'll see us do more in the US is we will drive less miles and have more revenue, right? That's the goal. And so our asset-light operation, if you look at the way we report logistics revenue, right, so you'll see in our US specialty truckload operation, we will grow our asset-light operation, okay? And probably, let's say, the asset side of our business will stay about the same size, less assets, okay, but better revenue, better miles per truck, better revenue per truck. And if I remember correctly, David, okay, our revenue per truck in Q1 is better, okay, in our US specialty truckload. We have more miles per truck, okay, with a little bit less of revenue per mile in Q1, okay? But that is reversed in Q2, where we have better rate per mile in Q2 in our specialty truckload so far, okay? And we have a little bit more miles per truck again, okay, in Q2 so far. So the trend is going to improve over time. And the Daseke acquisition, I'm telling you, I mean, we have a fantastic operating team there. It's just like we have -- like I said to Steve at TFI, Steve Brookshaw, see, we have very good truckers there. It's just like we have to transform these guys as a very good business guys, okay? It's all about making money, right? It's all about the bottom line. Yes, we are in business to service customer, but we service customers if we make money. If we don't make money, I mean, what's the sense of servicing customers. So for example, one of our business, Wiley, okay, those guys are big into a sector of the industry where we look at the number of trucks we have there, we have 150 trucks, 600 trailers, 600 trailers. Why do we have 600 trailers? Well, that's, right? So we have way too many trailers. And even 150 trucks for that segment of our business, we have 50 too many trucks, right? Because we are hauling a product that is difficult to haul where you could be subject to claim, okay? And, guys, we can't haul that for 2 points to the bottom line. Might as well put our capital into, let's say, a bank, okay, we're going to get 4% dividend. Why would you invest capital for that? So for sure, in that division, the 600 trailer will go down to 300 during the course of '25, okay? It may be down to 200, right? And the number of trucks may go down to from 150 to 100, okay, where it makes sense. So that's a little bit of a change, okay, where Steve is working hard with the team there to turn a trucker's business into a business, right, a trucking company into a business about making money. So we said a 96 OR in Daseke in Q1, it's not acceptable. Everybody knows that. I mean 4 points to the bottom line, no, okay? So the guys know, hey, specialty truckload. I mean, look at our van world in Canada running a 90 OR, okay, if you exclude the gain on asset, a 90 OR in Canada, where we are competing with the Driver Inc [indiscernible]. And those guys are able to get to a 90 OR and our specialty is 94, not acceptable, okay? Globally, Daseke is 96 something, right? So we know what to do. We'll keep working at it. And for sure, I mean, we see until that tariff uncertainty and fog, whatever you call it, okay, for sure, we'll be under pressure in terms of miles in terms of volume. But I think that in six months -- three months, six months, okay, we'll have a better visibility and then people will start, okay, buying again in the industrial sector that is core to us.

Yeah, exactly. I think that's so important to remember the context of this quarter. I mean the specialized end markets are -- our customers in the specialized end markets, the ones specifically affected by the trade situation and the trade uncertainty. So of course, they're easing off on production and easing off on orders and as they wait to see how things are going to play out. So that's the very, very near term. But the long term is we believe in North American industrialization. We believe in North American production. And this is the way that the economy is moving. That's why we want this exposure.

Yeah. Absolutely.

That's great color. And just in terms of follow-up quickly, guys, we've seen a lot of headlines about cargo volume that is expected to be down significantly in the second half given the reduced imports from China. So, comments from the ports and RF could be down somewhere 10% to 20%. So I understand that it's pretty foggy out there, but any thoughts about how this could impact TFI and whether this could make the typical second half pickup maybe a little bit less pronounced than it has been historically?

Yeah. That's a very good question. And we know that the port activity, okay, will be less because there's less ship coming from Asia to the US in Q2. We know that. But if you go back to what we're saying, Benoit, about our specialty truckload, what we're moving has got nothing to do with Asia, right? It's industrial activity in the US. That may be affected a little bit, okay? It's more like the retail stuff, okay, that probably will be affected. And until that they fix this tariff situation with Asia, I mean, there could be some pressure in Q2 and in Q3. But in our specialty truckload, I mean, when we talk to our customer, okay, that's not the reason why they're slow. The reason they're slow is that nobody knows, if you're a farmer in the US today, and you're a crop, you don't know who's going to buy your crop because the Chinese are saying, you know what, we're going to buy from Brazil. We're not buying from the US anymore, right? Then you're not going to buy a tractor, you're not going to buy a combine, you're not going to do anything until you have better visibility. So this is what's affecting our volume today. When we talk to Yellow Iron, okay, all this construction material, where you have interest rates that are quite high still in the US, I know Mr. Trump wants them lower, but so far, I mean, they're still high, right? So it affects construction. Construction is us. I mean, we're moving building material. We're moving all this related to industrial activity. It does not affect whatever China shifts to the US that much, okay, for us. Maybe a little bit on the LTL side, but not that I know of, Benoit. But for sure, I mean, Q2 could be for our world, okay, more difficult in the US based on the number of ships that are not coming to the US because of what's going on.

Yeah. And I think the best way to try and quantify that is to look at Page 4 of the MD&A where we actually list out our end markets by percentage of revenue. You can see that retail is 19%. The remainder are various, mostly industrial end markets. And so that can help people get a sense.

And also, if I may add, if you look at that, the automotive is mostly US, okay? So in the automotive, we have GHT moving trucks, okay? We have contracts with -- I would say that 90% of our automotive revenue is US-based. So it's not Canadian-based and et cetera, et cetera. It's mostly US-based, stuff that we do at TA dedicated for some customers that we have there. Everything that we move from GHT is mostly for the US market out of Canada. Canada, it's a small plant and a little bit of Mexico as well, but it's mostly for the US domestic market.

Okay. That's very good color. Thanks for the time.

Thank you, Benoit.

Your next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

Hey, thanks, good morning. Just a quick follow-up on specialty truckload. Relative to that 94% OR in Q1, how do you think about the progression there into Q2 in the guide and maybe back half of the year?

Embedded in the guide is a 91, 92 for specialized in Q2.

Okay. And do you think -- is there more self-help there with respect to Daseke? Or is sort of improvement beyond that sort of going to be more dependent on cycle in trucking.

Yeah. Scott, for sure, there's some improvement on the Daseke side, on the financial side. I mean, all the admin and the IT system, the safety, okay, which is a big issue for us because of all the claims, okay, of accidents, et cetera, et cetera. So there's a huge focus on that in the part of the guys over there. The culture that an accident is the problem of the insurance company, while it's not -- it's our problem. So safety first. So these are all changes that should help us. Also, we have a business unit that did not perform really, really well in Q1 in the US where it's -- we're on our last leg, okay, with that business. If we can't fix it, we're just going to have to do something else with it. And it's not part of Daseke, right? So the only business unit that we made some changes that was part of Daseke was Bulldog, which was very small that we shut it down. So overall, I mean, we know what to do there. The other thing, as I said, Scott, many times, we have way too much asset in that business, thanks to Daseke's previous management team where they were a big fan of buying trucks. So today, we have way too many trucks for the volume. okay? We have way too many trailers. So this excess asset will come out of our books, will reduce our depreciation. And at the same time, we're going ahead with smart CapEx on our truckload, again, going back to the philosophy that the balance between asset-light and asset in our specialty truckload in the US has to change, okay? And this is one also of our goal is to improve or increase, I would say, the asset-light revenue, okay, and keep the asset side revenue about stable, but the growth has to go to our asset-light operation.

And then maybe just last quick one. I saw a few weeks ago, UPS announced an expanded version of their own GFP business, maybe on some bigger sized shipments. Is there any impact to you from UPS making a bigger push into GFP?

No, not at all, Scott, not at all. I mean they've always been in that position, okay? They've always been there, okay? And it's never been big for them. And probably they're trying to grow it, okay? But at the same time, us, we didn't do our job. I mean, when you look at that, I mean, now we're going to be doing our job on GFP, and we're going to grow that business again because for sure, if you're UPS and you look at what TForce Freight has done over the course of the last four years, and say, what are these guys doing, right? But we had some issues with some customers that our partner, UPS, doesn't want to deal with, okay, some resellers. So that's one of the reasons why our revenue dropped so much. But there's also a fact that we didn't do our job, right? So now the morale is through the roof over there. The guys are really up and running. And like David was saying, for the first time, we were flat quarter-over-quarter on GFP. But for sure, we're going to -- our focus is to grow this business again. And there's no reason why we shouldn't be able to grow that because we have a product that is second to none for small shipment that could be conveyable okay, with UPS quality of service. So there's no question about the quality of service of UPS, okay? So I mean, guys, let's sell it. Let's move.

Okay. Thank you, guys. Appreciate it.

Thanks, Scott.

And your next question comes from the line of Ken Hoexter with Bank of America. Please go ahead.

Hey. Hi, Alain and David. Thanks for taking my question. This is Adam Roszkowski on for Ken Hoexter. I guess going back to US LTL, how much time do you think before you start seeing material improvement in the claims ratio? I was at 0.9% this quarter, flat and a little worse year-over-year. Anything that's happening right now that's starting to move the needle on that? And I guess I asked because it sounds like the small business share you were winning is being done more or less with price. So just any kind of thoughts on the service side.

No, I would say that. But on the claims side, okay, for sure, we're at 0.9% of revenue, which is terrible, right? And there's a lag, okay? There's a lag. So when I talk to the team there, they say, hey, you know what, I mean, we'll do a better job in Q2. We're still paying for mistakes that -- or issues that were not addressed in '24, right? So there's a lag. So you should see us improving, 0.9% is completely unacceptable. If you look at our Canadian operation, if I remember correctly, we're about 0.2% okay, which is best-in-class. I mean, if you look at our US peers, best-in-class are about 0.2%. And this is the goal. This is where we have to be. But we used to be in a way better position at TForce Freight, if you go back maybe a year, 1.5 years ago, we went as low as 0.4%, 0.5%. Now we're back to an unacceptable level of 0.9%. You should see us improve during the course of '25. In terms of the new business that we're bringing in, okay, the small, medium size, it's not based on price. okay? Our price is competitive. Our price reflects the market, okay? And we're not trying to gain shipments on the back of stupid pricing and losing money about it. The problem that we had in Q2 -- sorry, Q3 and in Q4 is we were losing the small and medium-sized quality freight, and we've replaced that with guys, major accounts that are slow paying you okay? And you lose money with those guys. So this is a major change of the sales team there under the management of Chris and Kal and on the commercial side. And you should see some benefit, okay? Like I said earlier, cyclicality, we should improve to 100 basis points from the disastrous 99. And then we believe that our improvement also will also reduce another 100 basis points to closer to a 96 OR in Q2 and walking closer, slowly to at least a 90 OR at one point and then break that famous glass ceiling for us that's been the 90 OR.

Thanks for the color. I guess then just on maybe the pace of contractual pricing renewals. I mean you previously noted pricing at the lower service end of the US LTL space has been competitive. So any update on just the kind of quarterly contractual pricing renewals run rate, particularly as you have started to make these shifts over these past couple of months?

I think that everything is normal on that side. David, I mean, what we're seeing.

Yeah, we're -- look, the renewals are taking place in the mid-single-digits, right? The problem is our revenue per shipment is down because the mix has deteriorated in the way that we've described with the shift from SMB to larger customers. But the renewals are in the mid-singles.

Got it. Thanks for the time.

Thank you.

And your next question comes from the line of Brian Ossenbeck with JPMorgan. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. Just to ask SMB maybe a different way. I guess what we're -- the market is concerned with additional competition in an area that everybody seems to be wanting to grow when volume is down pretty significantly just across the board. So maybe you can help, you give a little bit of the answer there, but maybe you can help elaborate with a little bit more of maybe milestones for service improvements? Or is this going to be better density and then for better service with some of the information you got with the terminals. Maybe you can help provide some I don't know, cutovers from the systems or perspectives from the actual operations that would help kind of catalyze this service gain or the share gain rather as opposed to just looking from the outside and thinking, well, this just looks like more competition in a pretty tough market. So anything there would be helpful.

Well, when you look back at this company, TForce Freight, I mean, we had issues with mix everywhere, right? So if you look at our linehaul, okay, our mix was way too much rail miles versus truck miles. So we've been addressing that to improve the service. The other thing also that was not good in the mix was the small and medium-sized account versus the 3PL versus the corporate account, okay? That was -- our mix is not normal, right? Because we went the easy way with the 3PL and the corporate account, et cetera, et cetera. Instead of -- so the mix that we have today, is not normal. So let's say that the normal mix of small, medium-sized account is 45% of your business, we're not there at all, right? So that's why we're having a tough time. So our peers is probably a better mix than us, okay, I would say, and this is why for us, okay, it's got to be a focus of rebalancing the mix on the linehaul, okay, like I've talked earlier, and at the same time also, the trend that we were going in '24 was really, really bad because we were just making the balance even worse than what it was prior. So the guys are working and it's showing results, okay, as we are seeing it now, okay? The small and medium-sized account part of our business is increasing instead of the way it used to be, let's say, two or three quarters ago being reduced. So it's a question of balancing. Now, versus our peers, okay, what we're seeing is that sometimes what is good for us, maybe it's not that good for one of my peers, right? So it's just to focus on the right stuff, okay? And for sure, like I said many, many times, down the road, we have to improve the density. So again, is, well, everybody wants to improve density. But my density, because this is where I'm situated, maybe it's not the same as one of my peers, which is 40 miles away from me, right? So it's just having the right focus, and we've been working at it for a long time. But on the sales side, okay, we went the opposite way of improving. We went the wrong way. Now we're correcting that on the sales side. And on the upside, I mean, missed pickup, we're doing a better job today than a year ago, but we're still not doing the job that we're supposed to do, right? And on the just on time, yes, on the short haul, we're there. But on the long haul, which is a lot of our freight is long haul, we're not there. So we have to keep improving that with our hub, okay, with our linehaul provider. And as much as we can reduce the rail miles, as fast as we can so that we are in control of what's going on because when you give that to rail, you have no control, right? So that will also help us reduce the churn. So when you reduce the churn, you stop losing customer and losing freight from customer. So that puts less pressure on your sales team, okay, that's always running like a dog that's running to a sale, right, running in circle, trying to chase its tail, right? So all that is part of that global strategic plan that we established with Kal, Chris and Keith over there. And like David was saying earlier, I mean, we're going to see some improvement there.

Okay. Thanks, Alain. I appreciate that. And then just a quick question on cross-border activity. I don't think it's necessarily a huge part of your business, but just wanted to see given all the volatility in the headlines and on and off again tariffs, if you see a big surge there and then drop. And I guess, to the extent that you've got any visibility, what's embedded in the guidance there for 2Q? Thank you.

Yeah. Very good question, Brian. On the truckload side, we follow every day the number of load that goes to the border, okay? So what's happening now is that there's no issues with volume. The problem we have is that there's nothing coming back to Canada right now. So it's an issue. The backhaul is killing us right now on the truckload side. On the LTL side, yes, we are a big player on the transborder freight between US and Canada. We see some softness there, some softness from our partner with TST. We see some softness from our own operation with TForce Freight US and Canada. Nothing very important. I would say probably we're down about 10%, 15% so far. Again, this is based on a lot of insecurity. A lot of it is based on, I don't know where I'm going, okay? So I'm just waiting to see what's going to happen next. So a little bit on the LTL side, not so much. And on the truckload side, everything that comes from Canada to the US, the float is normal. I mean aluminum -- I mean, I think we're doing more aluminum now than we used to do six months ago, right? Steel is down, no question about that. Steel is down out of Ontario, but aluminum out of Quebec, I mean, we're still running like crazy even with the 25% tariff, and we know why. I mean, Canada manufactures, what, 4 million tons a year. US manufactures not even 1 million tons a year. And the market is right now from Canada is 75% of the US, I think, and nothing has changed. And if you remember what the President of Alcoa was saying, I mean aluminum has to come from Canada, unless there's another market that could be -- but Canada is very close to the US I mean it's like the car. It's like the automotive industry. It's very -- it's like the truck. It's all integrated, right? So yes, make a long story short of your question, it's not that significant so far. But we could do better, okay? And this is going back to what David was saying about this sector of our business that relates to industrial. A lot of our customers are sidelined waiting to see what's going to happen.

Yeah. And, Brian, to address your question about how it's taken into consideration in the guide, the guide, as Mr. Bedard said in his opening remarks, is based on the first three weeks of April and what we've seen in actual results, and what we've done is, we've extrapolated that taking into consideration the trends that typically occur between April, May and June. And so we've extrapolated that in an appropriate way, taking that into consideration, and so what we're saying is, if things continue in Q2, the way that they started, this is what we'll do. And if there's some major change in the macro related to trade, then that will have an implication up or down.

Okay. Thanks very much guys.

Thank you, Brian.

Your next question comes from the line of Bruce Chan with Stifel. Please go ahead.

Hi, Alain and David, this is Matt Milask on for Bruce this morning, thanks for taking a quick one from us here. Just on the P&C side of the house, US market is getting a bit more competitive on the B2C side. I know B2C is a smaller portion of the business. Would you be able to give a sense of what percentage that is now? And maybe comment on if you're seeing some increased price competition in that market? Or is it stable? Thank you.

Very good question. On package, our B2C is growing, okay, because our B2B is not growing, right? And for sure, B2C is one stop, one shipment normally, right? So it affects our density, if you want to call it like that, so it's a little bit of a headwind for us, okay? But if you don't beat them, you have to join them, right? So this is where we have no other option than to grow our share of B2C versus our B2B in our P&C in Canada. Now -- and also the pricing is very aggressive because there's lots of guys that have done major investment in Canada on B2C, and a lot of this B2C business is managed by the large player, okay, which is Amazon in Canada as well. Now the thing is also talking about Amazon, if they decided to shut down their Quebec operation, they went with all kinds of small guys. Maybe they're talking to a big player, okay, to help them. I mean we could see that down the road, okay? We'll have to see that. Keep in mind, though, that because of our density in our P&C and in our LTL in Canada, fuel is a tailwind for us. And the Canadian government with Mr. Carney now in charge, although there's an election at the end of the month, but still, Mr. Carney decided to get rid of the carbon tax, which is lowering the fuel costs in Canada, except Quebec. Those guys, I mean, they're, I would say, late to the party. But that has also an influence on fuel cost for us. So it reduced our fuel cost, but it also reduced our fuel surcharge. And because of our density, okay? This now is a little bit of a headwind for us. But this is something that we're going to have to manage because carbon tax in today's environment in North America, I think this is dead. I mean, so it's going nowhere. So our guys are working around this, okay? But there again, I mean, this is part of all this change in the macro environment that TFI is adjusting to.

Excellent. Great color. Thank you.

Welcome.

And your next question comes from the line of Cameron Doerksen with National Bank Financial. Please go ahead.

Yeah. Thanks. Good morning. Really just one question from me. I just want to talk a little bit about free cash flow. I mean you sort of indicated that you're going to be pretty light on CapEx for 2025. I'm just wondering, obviously, there's a cloudy outlook here with the business. But I'm just wondering if we look at 2024 free cash flow kind of in that $700 million to $800 million range, is that -- could that be a reasonable expectation for 2025 given the fact that you're going to have lower CapEx?

You know what, Cameron, I think that -- maybe, David, you could comment on that. But I think that what we will generate in '25, what we know so far, okay, based on what we know, I mean, we should be in the same kind of ZIP code, okay? That's the plan so far. Now for sure, Q1 free cash flow was through the roof because we have very little CapEx, right? But going into Q2, Q3 and Q4, we'll have more CapEx, absolutely, but we'll also generate more cash, right? So this is why -- what can we add to that, David?

Well listen, I would say that we were really strong in free cash flow because of the CapEx in Q1, but also because of working capital. There was a release of cash that was over $30 million from working capital. So those are the three variables that drive your free cash in the year, Cameron. The most important one is earnings. That's the most important one, okay? So that underpins it all. And we've given the guidance based on the visibility that we have at this time for that. And then the other two are CapEx and working capital.

Okay. And on working capital, I mean, how does that trend, I guess, through the remainder of the year?

Well, so working capital is an interesting one. Working capital provides a release of cash when conditions deteriorate. So as revenue declines and in particular, as fuel price declines because fuel is the most working capital-intensive thing that we have. Because remember, our DSO is 39 days across the company, but we pay the fuel providers in seven days. okay? So when you have decreasing revenues from lower activity and decreasing fuel, that releases a lot of cash from the working capital. And that's part of what we experienced in this quarter. And then you have the reverse, of course, which we saw, for example, during the pandemic, as things ramped up, activity ramped up, fuel prices ramped up, you had a drain. So the way that I would think about working capital is as really an offset to some extent to the earnings, meaning when earnings are climbing higher, typically, that's a drain on working capital. And so you'll have increased cash flows from the operations being offset somewhat by working capital needs. And then when conditions deteriorate, it's the reverse. You'll have earnings coming down, partially offset by a release of working capital.

Over and above that because the carbon tax in Canada, okay, being eliminated, fuel cost in Canada has dropped, okay? And that's going to help us, again, because our customer pays us in, on average, 40 days, 39 days, and we pay fuel every week, right?

Correct.

Okay, no, that makes total sense. Appreciate the color. Thanks very much.

Pleasure, Cameron.

And your next question comes from the line of Elliot Alper with TD Cowen. Please go ahead.

Hey, great. Thanks. This is Elliot on for Jason Seidl. Maybe just one on the logistics side. Can you discuss maybe the moving pieces within that segment in the first quarter? Was that primarily the truck moving business driving the weakness? And should we expect that to persist given the tariffs? Or are there any businesses within that segment helping offset some of the broader weakness?

Well, if you look at the OEMs, I mean, the OEMs volumes, I mean, PACCAR and Daimler, our two major customers, I mean, they produce 20% to 30% less trucks today than they used to a year ago. So for sure, this is affecting our business at GHG big time. So if you look at our revenue in our logistics, I mean, the drop in revenue comes mostly from that, right? On our logistics side in Canada, we're doing really, really well. On our logistics side in the US, a little bit of a weakness in Q1, but the guys are addressing that. And we believe that if you look at the year '25, excluding the truck moving business at GHT, I mean we should do really, really well. I mean -- so the Canadian side, US side will improve, no issues. The truck moving according to the discussion we're having with the OEM in Q4, we should do better Q4 '25 than we did in Q4 '24. And Q4 '24 was really the first quarter that we started to see a drop in that business, okay? And it continued in Q1. It will continue in Q2 and Q3. And according to our guys, Q4 looks for the first time, we'll do a better revenue in Q4 year-over-year '25 versus '24. Now '26, if you listen to the OEM, it's going to be a boom year, okay, and to a certain degree, '27 because of all the changes unless Mr. Trump administration makes some changes in the requirement of -- environmental requirement on the truck manufacturers. I mean, '26 is going to be a boom year and '27 may be more quiet. We'll see.

Appreciate it. Thank you.

Pleasure.

Your next question comes from the line of Bascome Majors with Susquehanna. Please go ahead.

David and Mr. Bedard, good to hear you guys both on together here today. About a year ago, Mr. Bedard, we talked about kind of what you want to see through and you talked about digesting Daseke and potentially another big acquisition and the spin-off plans that were maybe more prominent or near term when we discussed that a year ago. Can you give us an update on what you'd like to accomplish in your role here before you feel like you've done everything you wanted to do, just given everything that's changed in the last 9, 12 months here. So...

Yeah. Listen, I mean, like I said, '25, we can't do anything of size on M&A, right? We had to walk away from a transaction that was a great transaction for both parties, the seller and us, and we had to walk away because of all this environment, okay? But that doesn't change the plan. The plan is, for sure, if it's not going to be '25, it's going to be '26. We need to do another acquisition of size in the US. And that's number one. And the spin-off, okay, in our mind, it still makes a lot of business sense, but there, again, I mean, there's always been a question of size. So when you have a market cap that is now down to $6 billion or $7 billion US, I mean, any spin-off is -- doesn't make any sense also in the global environment. So we have to wait. So it's not going to happen in '25. Probably in '26, we'll have to see depending on where we're going, okay? But it makes a lot of sense to have our Truckload division stand-alone, okay? Because the return on invested capital is not the same, okay? The liquidity is not the same. So it makes a lot of sense. And I think everybody agrees that this is the way to go. It's just the timing, okay? We thought that a year ago, the timing would be within two years. And within two years, it would be like '26. I don't think it's going to happen in '26. I think it's more like maybe a '27 issue, okay? The market has been tough for truckload guys, okay? If you look at our peers, they've been suffering badly '23, '24 and even '25, okay? I think it's going to be a tough year. Maybe things will start to improve in '26. And then it makes lots of sense for us if we have the size, okay? Because don't forget, our truckload operation running today at 90-some OR, 93, 94 globally with the van world. I mean, we don't want to do a spin-off with a 93 OR company. I mean we've got to bring that OR down to closer to an 85, which is best-in-class, okay? And this is the goal for '25, '26. And after we get to that goal, then maybe it makes sense. But again, if our market cap is still $6 billion at the time, it's going to be tough to do. So there's still a lot of things to do before we do this kind of spin-off, but we're getting ready for it. I mean we're taking action, every day that we can to be in a position when it's time to say go. I mean, we are in a position to go, right? There's some assets that needs to be transferred. There's some technology that needs to be addressed, et cetera, et cetera, which we are working on, in order to be ready when the right time comes. And in terms of M&A of a sizable deal, it's going to have to wait '26 because we have to show to the market that we've been talking about TForce Freight for four years. Now we bought TForce Freight four years ago. And we used to do, okay. And in '24, we just did worse, right? So we got to turn this thing around, okay, before doing anything of size in the US until we don't turn TForce Freight back to closer to a 90 OR or under 90 OR, which I think is feasible. I mean, don't forget that we run an 80 OR in Canada today in our Canadian LTL, which is unionized, right? So there's no reason union, no union, no, no. It's just us, okay, we have to do a better job.

Thank you for that.

Presenters, I am not showing any further questions at this time. I would like to turn it back to Mr. Alain Bedard for closing remarks.

All right. Well, thank you, operator, and thank you, everyone, for joining us today and for your ongoing interest in TFI International. So we look forward to keeping you updated as we move through '25. And as always, please reach out if you have any additional questions. Stay safe. Enjoy the day, and thanks again.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.