TFI International Inc (TFII) 2010 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the TransForce's fourth quarter and year-end 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, February 25, 2011. I will now turn the conference over to Alain Bedard, Chairman, President and CEO. Please go ahead, sir.

Well, thank you, operator, and good morning, everyone. The news release detailing the fourth quarter and annual results for the period ended December 31, 2010 was issued by Canada Newswire yesterday after market close.

TransForce delivered a highly satisfactory financial performance in 2010. We accomplished this despite lingering weakness in our markets, which had not yet returned to pre-recession activity levels. Our fourth-quarter results show improvement in every important metric. Total revenue increased 10.5% to CAD540 million. If we exclude the fuel surcharge, revenue rose 9.2% to CAD494 million.

A large part of the success resulted from the acquisition of ATS Retail Solution in late 2009 and of Speedy Heavy Hauling in August of 2010. The key measure of EBITDA showed a significant increase amounting to CAD75.8 million in the fourth quarter compared with CAD60.3 million the year before. It represented 14% of total revenue versus 12.3% the prior year.

Cash flow from operating activity before net change in non-cash working capital reached CAD66.9 million during the quarter, representing an increase of 32.1% over a year earlier. Net income for Q4 stood at CAD35.6 million or CAD0.37 fully diluted versus a loss of CAD27.2 million or CAD0.29 per share last year. But you may recall that we recorded a CAD45 million goodwill impairment charge during the fourth quarter a year ago.

Adjusting for this and other items that are not in our normal business, net income rose 17.2%. This improvement occurred in the face of a still-recovering economy and a stronger year-over-year Canadian currency. Our enhanced focus on value-added services, ongoing rationalization and proactive cost management initiatives enabled TransForce to more than offset those headwinds. The TransForce culture is to provide an out-of-the-box solution to our growing customer base, and our companies distinguish themselves by doing just that on a daily basis.

Let's look at the fourth-quarter results on a segmented basis. While revenue from Package and Courier totaled CAD108 million before fuel surcharge, an increase of 24.7% over last year, and EBITDA reached CAD24.1 million, up from CAD16.3 million a year ago, these improvements reflect improved efficiencies and the acquisition of ATS.

Our LTL segment saw a slight improvement in freight volume. However, pricing pressure, the appreciation of the Canadian dollar and the planned route consolidation more than offset that improvement. Revenue before fuel surcharge decreased 5.9%, and EBITDA came in at CAD7.1 million versus CAD9.6 million last year.

In the Truckload segment, revenue before fuel surcharge remained stable at CAD150 million. The rationalization we undertook focused on improved fleet utilization, including a net reduction of approximately 100 power units in comparison with the year-earlier period. The positive result of our initiatives shows in the segment CAD16.8 million EBITDA during the quarter, a slight 3.6% increase over last year.

In Specialized Services, revenue before fuel surcharge reached CAD141 million, a 27.3% increase over last year. The acquisition of Speedy and reduced discounting in Energy Services contributed to this result. EBITDA rose by over CAD10 million in the segment to CAD24.4 million.

Now let's briefly look at the results for the full year. Total revenue in 2010 was CAD2 billion compared with CAD1.8 billion in 2009. Excluding fuel surcharge, revenue grew 7.1%. I'm pleased to say that EBITDA increased 18.3% to CAD268 million, up from CAD226 million in 2009. EBITDA margin also increased to reach 13.4% compared with 12.3% last year.

Net income was CAD104 million or CAD1.09 a share fully diluted, up from CAD10.9 million or CAD0.12 last year. On an adjusted basis net income rose 57% to CAD73 million. Cash flow from operating activity before net change in non-cash operating working capital reached CAD219 million in 2010, representing an increase of 14.7% over last year. This led TransForce to generate CAD164 million in free cash, which corresponded to CAD1.72 a share.

During 2010, TransForce continued its disciplined consolidation of the North American transportation and logistics industry by making several highly strategic acquisitions. The most significant of these is Dynamex, which was announced in December and concluded earlier this week. This acquisition added a highly respected brand to our Package and Courier capability.

Its same-day delivery enhanced service to existing customer, while the combination of TransForce and Dynamex constitutes a powerful offering to potential new clients. We are confident that this combination will yield attractive synergies with our existing division while opening new doors in the vast US market.

The Company's financial situation is solid, as our strong balance sheet, free cash flow generation and debt reduction clearly demonstrate. TransForce reduced its long-term debt by CAD74 million in 2010. Furthermore, we negotiated a new credit facility during the year, and we also issued CAD144 million in new convertible debentures last November.

We're looking ahead with prudent confidence. Our role as a disciplined industry consolidator is helping us build shareholder value, and we will continue to pursue strategic acquisition opportunity. We will continue to seek out the best company in a still highly fragmented industry and thereby continue to increase our geographic reach, provide complementary services and increase market penetration.

As we further expand our network, we believe that the synergies we can achieve and our constant initiative to reduce costs have positioned TransForce for considerable new growth once the economy fully recovers. Recovery in the LTL market is likely to remain slow, so our growth focus will continue to be our Package and Courier and our Specialized Services. We expect our Package and Courier segment to outperform, led by the addition of Dynamex, which has strengthened our existing service and created major new opportunity in the US.

We expect some improvement in the general economy in 2011. Whether or not that improvement comes, we will go on controlling costs and optimizing asset utilization. A key focus is on protecting and improving operating margin. While volume will likely remain relatively stable, greater efficiency should lead to increased profitability.

In any event, our market leadership, expanded network, solid financial situation and leaner operation will have a multiplier effect on the value we generate for our shareholder. So I am pleased now to answer any question you may have.

(Operator instructions) Jason Granger, BMO Capital Markets.

First question here, on the Dynamex transaction, certainly a sizable strategic transaction new growth platform for you. You mentioned it enhances your service offering. Could you just add some more color, take us through your thoughts on the transaction, really where you see the most opportunity for TransForce, why you did this transaction, and maybe some more color in terms of what you see around synergies, what potential is there? What sort of earnings or EBITDA could Dynamex be contributing in the next couple of years?

That's a very good question, Jason. First of all, let's look at the US market, number one. You have to understand that the market in the US is about the CAD7 billion to CAD10 billion market. And would you believe that Dynamex is the number-one company in the US in terms of size? And they are relatively small. Okay?

So they are number one with about, let's say, CAD300 million of revenue in a market that is about CAD7 billion to CAD10 billion. So on the US side we cannot really talk too much about whatever synergies because we're not really present. But I think we have a very good team there, and we could use that team, and I think that this has always been Mr. Welch's plan, or Mr. -- the Chairman there, right; Mr. McClellan, okay, has always been to grow the business on the US side. The model is very flexible because everything is built on the owner-operator basis, okay, so it doesn't need major investment.

So really, on the US side, my plan -- I'm there in Dallas next week, okay, meeting the team there. But on the US side, for me the first thing is really to understand, okay, the management team there, what's the plan? What is the growth plan? Because they are talking about growing the business about 8% year over year, over the course of the next four or five years. Okay?

So there I see the US really as a major opportunity for us, okay, to grow in a very fragmented market, okay. We have a solid management team. I think that we have the best management team in that business in the US, so we can grow, okay. So that is really on the US side.

On the Canadian side, okay, this is a dominant player. They are the dominant player in that sector as well in Canada. Okay, we as TransForce have many other type of operation, okay, so on the Canadian side I think that we -- there's a few things that we could do together, okay, really to provide better service to customer, better product line because right now -- just take the example of the Ontario government contract. Those guys are asking us for same-day. Well, within Canpar there was no way we could provide that. So now, with Dynamex being part of our family, it's much easier.

So the potential in Canada is different than the US. Okay? Already their profitability, their gross margin in Canada is about 25% -- not bad. Maybe we could do better; time will tell. Their profitability, bottom line, in Canada, I think, is very good. For sure, we will be working with the management team there to try to find solutions to make it better.

And on the US side it's really a growth -- it's a platform for us to grow on the US side. At first, when I was looking at the company, I was mostly interested just on the Canadian operation. But after talking to Mr. McClellan, after talking to Mr. Welch, Mr. Welch told me, hey, I think we have a plan here. You will be very happy to see what we can do in the US.

So that is the story about Dynamex. Now, we just bought the company this week. So I'm going to be there next week. Within the next few weeks I will know more about the team there and the potential. But to me, I think this is going to be fantastic for our shareholder base.

Okay, that's good color, thanks for that. The second question here, on fuel with diesel standing around CAD3.50 a gallon with unrest in the Middle East -- could you give us a sense of how much of a headwind fuel is for you if it stays at these levels for the balance of the year? Certainly TransForce is not your typical transportation company with your diversity by service line. Your MD&A there makes reference to fuel being 3% to 12% of revenues, depending on which operating segment.

So if you could just give us some information on that, that would be helpful.

See, Jason, the problem with fuel is always the same. It is, if you have stability, then you have fuel surcharge to cover whatever, based on the price, the basic price versus the market price today. Now, the problem where us we're getting hit, okay, and it's a problem, is when you have, okay, increase and spike like we're going through right now. Okay?

Because let's say you have the spike and it lasted for two weeks. We can't change the price of our customer every day. So we have agreement with them so we could adjust the fuel surcharge, depending on the deal, every week, every two weeks. Some are every month. Okay?

So when the fuel is going up we always lose. Okay? We lose that lag, and it's even worse when it's big spike, like it goes from CAD80 a barrel to CAD100 a barrel within a week. Okay, that -- I'm just taking the example of the month of January. The situation on the fuel in January will cost me over CAD1 million. Okay?

And so far I'm looking at February -- February is going to be worse. Okay? Now, as soon as we have some kind of stability, then we can catch up with the fuel surcharge with the customer. It's just the spike and the major change, rapid change. There, we always lose.

Now, if fuel was to stay here for, say, the rest of the year --

That's not a problem. If we have stability, okay, it's not an issue. The problem is always the up and down. This is a problem.

Yes; I suspect you would take some hit -- well, mostly on the Truckload segment, given the higher --

Yes, exactly.

-- Given the higher (multiple speakers)?

Exactly, exactly, exactly. And you know, winter, it's the worst month because we consume more fuel in the winter, okay, because the temperature is different versus the summer. So it's a double whammy because we consume more fuel and fuel is more expensive. But that's the nature of the beast; we try -- and this is where, if you have a major density, okay, versus somebody else, this is going to be a gain for you or less of a loss. Okay?

Okay, fair enough. The guidance or the commentary you had given previously on 2011 excluding the Dynamex acquisition EBITDA, thinking around CAD300 million might be achievable -- with the Canadian dollar being just above par and fuel being where it is, are you still comfortable with that if we exclude the Dynamex transaction?

Yes. Excluding Dynamex, okay, Jason, we will be -- with the dollar the way it is, being at $[1.05], this is not helping me, either. But I'm very confident. I'm confident that we will definitely be very close to CAD300 million, excluding Dynamex.

Okay, that's helpful, thanks very much, Alain.

David Newman, Cormark Securities.

Congratulations on Dynamex. I just wanted to ask you a couple questions on the LTL side and then I was hoping to shift over to the Energy side.

Yes, that's a tough one.

(Multiple speakers) I guess, in the rationalization and consolidation of some of your terminals in the LTL business to regain margins. Have you changed your assessment on time line to recovery on the LTL? And is there more you could do on that front in terms of some of your subsidiaries in the LTL network where you can consolidate them and perhaps eliminate some more terminals?

See, David, you have the tough question this morning. The LTL -- it's my nightmare right now. I'm very unhappy with what's happening right now. 2009 was a difficult year. 2010 was not great; it was -- you know, bad year. And we had to make tons of changes, okay, out West and in Ontario and in Quebec. So we had to consolidate and let go a lot of people, okay, which we don't like to do. But the reason behind that in my mind is the fact that this LTL market, okay -- it's never going to come back the way it was five years ago, okay, because the manufacturing base of Canada -- a lot of things have changed. The parcel guys, okay, are trying to get more of that small LTL business. The truckload guys are trying to get more of the high, big weight LTL.

So the pie of LTL to shrinking. Okay? So there's no other way to look at it. So I had no other option than to say, guys, we're going to have to merge the operation. And I hate to do that because, once you merge in operation -- let's say what we did out West, CF/Byers. Okay, we will lose customers. There's no doubt, because a customer that was used to deal with Byers -- maybe he won't bother too much if it's CF. But some may say, you know what, I don't like CF. So they will go with somebody else.

So in a merger you lose customer, you lose people, and you go through a period of instability. Okay? But we had no other option to do that.

Now, the LTL market, in my mind, is going to be depressed, 2011. And I'm looking at the US market, where volumes are growing by 10%-15%. We don't see that in Canada. The market is depressed. It's not growing. It's, at the best, stable in terms of volume. But the pricing pressure is still there. We are getting hit with the improvement, okay, of the Canadian dollar, which is affecting us big time in CF and TFC.

So the color that I could give you on my LTL is we are planning, okay, on beating what we have done in 2010, in 2011, based on the cost -- not the volume, not the pricing. We had a tough start of 2011, okay. We did better in January than last year, okay. But it's still not easy. This is my worst division. This is my nightmare right now. And I am very unhappy with what we are doing now, but I know that everybody is rolling up their sleeves, okay, and everybody is doing their best. But it's tough.

What sort of margin do you think you can get out of there? Let's say the LTL market, like in 2011, as you say, is not likely to come back, which I think actually is a bit concerning because maybe it's more reflective of the consumer versus the industrial side.

Yes.

But what do you think you can do in a sort of flat environment, let's say?

We've got to shoot for 10% EBITDA margin. This is a minimum to me. Look at our depressed Truckload market, and we are floating around 10% right now. But, finally, we are going to start moving up slowly over there.

Now, this LTL -- it was a bad year for us. We had to make tons of changes, and it's not -- we're not going to get the 10% out of the gate in 2011. But we have to be close to that 10% before the end of the year. There's no other way. But the market is not going to help us, no doubt about that. The market is going to be --

(Multiple speakers) to do that; right?

Right.

Right, okay. And just shifting gears over to somewhere where you've actually had a nice recovery throughout 2010, on the Energy side -- obviously, high energy prices, a refocus on the oilsands and, obviously (multiple speakers), obviously you saw the discounting disappear. Where are (multiple speakers) --

Well, it didn't disappear. It's less. It did not disappear.

Where are we versus the previous sort of (multiple speakers)?

Oh, no. Still have lots to do, to go. And if you read Mr. Mullen's comment, okay, on his Q4, Murray is saying that the only division where I'm having a tough time is the rig moving.

Yes.

Okay? So this is my business, okay, you know. So it's still -- I'm still not happy with what we are doing in Canada. The discounting is still too much. The return on assets is still not where it should be, but it's better. Okay? And I think that it's going to get better down the road, slowly, in Canada.

On the US side, that's a different story. On the US side, I think that there is a new business. We used to be a small player at CAD40 million. Now, with the acquisition of Speedy, we should be a CAD100 million player on the US market. There, you know, we have better returns on asset. It's a different market. We are in the right location in four or five major states. We just signed a small acquisition, again, in Colorado. We will be taking over that small business; I think it's within a month.

So on the US side it's a different market. There is more -- it's a little bit more profitable. On the Canadian side the discounting is less, the activity is more, okay. But still the return on asset is not where it should be.

Okay, and last one for me, just on the housekeeping side, I saw you did another sale/leaseback in January for CAD40 million. Do you know how much more can you do on that front? And your CapEx guidance for 2011?

Yes. So we did that deal in Vancouver. We don't have anything, okay, that we're working on right now. There's a terminal in Montreal that's going to be up for sale because this weekend we are moving one of our divisions that's in the east part of town into the west part of town. That's the only one that we had left in the east part of town. So that terminal, which is probably valued at CAD10 million to CAD15 million, will probably be sold within the next 12 months.

But in terms of sale and leaseback I'm not working on anything significant right now. Okay?

And your CapEx (multiple speakers)?

CapEx is same story because, don't forget, the beauty of that dynamics model is there's no CapEx. Right? So CapEx-wise we are still floating about CAD60 million with a dollar at par.

Got it, excellent, thanks Alain.

Benoit Poirier, Desjardins Securities.

Just to come back on the question about the LTL margin, you were previously shooting toward the 14%. And I understand, with the current market environment --

Oh, yes.

-- the quarter, it's now closer to 10% for 2011.

Yes.

But is it a matter more, would you say, of volume, pricing? Is it the (multiple speakers) --

It's everything, Benoit, it's everything. The pricing is bad, and the volume is not there at all. So we are -- if we compare our volume, we've lost about 15% to 18% with that 2009 disaster. And let's say we are back with 3% or 4%. So we are still down 10% to 15%, depending on where you look at. And we have more pressure on the pricing. So it's really a mess, okay. So this is why we have no other option than to do all of this reorganization, as I was explaining.

Now, the target of 14% is still the target for us long-term because you can't run an LTL company with 10% EBITDA margin. This doesn't make any sense. But short-term, okay, in 2011 we had to be in the double digits.

Okay, excellent. And now, just to come back on the question on the CapEx, you mentioned about CAD60 million. But is it net CapEx including (multiple speakers)?

This is net, yes, this is net.

Okay, okay. Is there a lot of disposal expected, aside the (multiple speakers) --

No, nothing, nothing major, nothing major except maybe that terminal I was just talking about there, okay. But that is not in the plan, that is not in the budget. This is -- when we say that CAD60 million, this is normal, regular CapEx with, okay, normal regular disposal.

Okay, and when we look at the trucking environment, is there an impact on you guys with respect to the new regulation, this CSA?

No, no.

No?

No.

Okay, okay, excellent. And what should we expect in terms of effective tax rate for 2011?

Well, you see, now, Dynamex is going to have an effect on that, okay, because the tax rate in the US is more than the tax rate in Canada. So I would be saying about 30% because the Canadian tax rate is going down. The US -- I think the US is about 40%. But they have a large, big tax rate over there, but nobody's paying tax. I don't understand that. They have all kinds of whatever they can do over there.

But I would say in your model, Benoit, if you put like that 30%, it should be okay.

Okay, and maybe last question -- you obviously discuss about the fuel impact on the margins, the lag, everything. But what about your competitiveness in terms of volume in terms of market share versus other modes?

Yes, so that's always a question, you know. Listen, the economy -- the way we see it in the US, it's starting to reignite over there. Okay? So we're starting to see a little bit more action south of the border. Now, this fuel situation -- I think it's temporary. They will fix this issue over there, I think. Okay? So it should not -- because the Chinese, the Americans, the Europeans -- everybody has got too much to lose with this kind of instability when we are in a recovering mode. Okay?

So this is why I don't see that as being a long-term issue. Okay? I think that it's going to be, I don't know, a few months maybe of instability and then they will have to resolve the issue over there.

Okay, and maybe I forgot about one question. Obviously, very strong free cash flow the last two years. There was also some debt payment. What should we expect in 2011? Are you still comfortable with some debt payment? And are you looking for a big free cash flow for 2011?

Oh, for sure. We will definitely do better than CAD1.72. We did CAD1.72 this year. We will be -- in my mind, we'll be close to CAD2 in 2011, if we -- if the roof doesn't cave in. I think, like I said to Jason, I think the CAD300 million mark before Dynamex is attainable. Okay, with Dynamex, you know, we will have that for 10 months. So 10 months, let's say CAD325 million. And with that in mind, generate CAD200 million of cash flow. I think it's doable.

On the debt repayment, this is, for sure, our priority. I don't see anything major in terms of big disbursements for an acquisition. If you want to put something in the model, you could talk about CAD50 million. See, we did about, prior -- last year we did about CAD75 million. So this year, an additional maybe CAD25 million to CAD50 million over and above whatever was the Dynamex costs, and debt reduction of at least CAD100 million.

Okay, perfect, thank you very much for the time, Alain.

(Operator instructions) Walter Spracklin, RBC Capital Markets.

Perhaps, if -- you gave some great color on your LTL near-term target margin, 10%, 14% long-term. Has there been anything that changed your view on any of the other segments? Perhaps give us some of your assumptions for margins in 2011 versus what they might be on a target basis for the other divisions. And if I look at, for example, Package and Courier, I think you've talked in the past about a 15% to 20% target margin.

Yes.

We seem to be there right now. Are you comfortable with that range for 2011?

Well, you see, what's going to happen, though, is that margin will be brought down by Dynamex, because they are not at that level, those guys. Okay? So to say that we will be floating between 15% and 20%, yes. You know, what would help me in my margin with -- if I would have a partnership, okay, an international partnership, this is high-margin item.

Until such time that I have a partnership, it's going to be very difficult for me to get that 20%. Okay? But with the domestic business like we have today, we are floating at 18%. This is going to be brought down. The same happened when we bought ATS. At first, it was brought down, and now we are back on track. The same thing is going to happen when we take over -- well, we just took over, this week, the company. But working with the local management we will try to identify what can be done to -- is it the pricing? Is it -- because the cost model is very good. It's an owner-op model. So there's not much to do on that side. But can we do more in terms of technology? Could we have less office people, using better technology, etc., etc.?

But I think that 15% to 20%, you know. When you look at UPS, when you look at TNT, when you look at DHL or FedEx, at 15% even those guys would be happy.

So I had you coming down to 12% with Dynamex and then growing back to the bottom end of your 15% to 20%.

Yes.

Is that a fair --

Yes.

That's a good way to look at it?

Yes, yes, because those guys will bring us down for sure.

Okay, and then shifting over to your Truckload, and you mentioned that you've done some good rationalization there, you've talked in the past sort of in the 11% to 13% range. You are around 10% right now. What can we expect in 2011?

You know, a good target -- if you get that 1% improvement this year -- because right now, Walter, I don't see this big demand for freight like there was in the US and some part of 2010. We don't see that here. We are just starting to see -- in my mind, we are just starting to see a little bit of action south of the border.

Don't forget that we have a dollar at par, hey. So --

That's a structural change.

Yes. So it takes time. But I'm confident that we are not going to go in single-digit. I'm confident that it's going to be 10% plus, I'm shooting 11% and going towards -- to the 14%. Truckload just be around that 13%-14%, same as LTL.

When you discuss these targets or these margins, this is excluding fuel surcharges, is it not?

Yes, yes, yes, yes, yes.

Just to make sure there. Okay, well, that's great on the cost side. Just on the pricing side and sort of your assumptions for 2011 -- I know you have talked about -- you have been very conservative in that CAD325 million. I believe you're conservatively forecasting pretty much flat pricing and flat volume. Is that still the case?

Yes, yes, yes.

That you are (inaudible)?

Yes, because don't forget, the dollar is going to cost me another CAD10 million. And all this mic-mac about the fuel is going to cost me. Between you and me, Walter, it's going to cost me CAD5 million, okay, and it's probably going to be 80% in Q1, all this spike and this and that. For us it's a killer.

But, that being said, I think it's fair if we look at what we have, if I look at the team that we have on the US side with Dynamex, those guys are hungry for business. I just looked at their month of January. They had a very good month over there. So it's going to be a nice challenge to work with those guys, and I'm sure this is going to be a huge success like Canpar and ICS and ATS. ATS has been a fantastic acquisition for us. We have a super team over there, same with ICS. I'm very happy with that sector of the business.

Now, on the LTL side, though, everybody is working day and night to fix a situation that is really tough. But we'll get it done.

Okay. Specialized Services, though -- that looks like a great -- it's having a great upturn. It would be pretty conservative to say that -- I appreciate you want to be conservative. But really, we could see upside in that Specialized Services segment in 2011, could we (multiple speakers)?

Yes, yes. I think that there -- it's really on the US side, I'm very confident. On the Canadian side, I don't understand what's going on over there. Yes, we have less discounting today than, let's say, a year ago. But it still doesn't make any sense, the pricing that we see over there. Now, there's more activity. Okay? So at the end of the day we should start seeing less and less of that discounting, which is completely stupid.

Is there anything that goes on in Canada from a scale or critical mass standpoint where you could separate the two businesses? Or could you separate US and Canada? Is that a possibility?

Yes, yes, for sure. Definitely, it is.

Understood, okay, that's all my question, thanks very much, Alain.

Damir Gunja, TD Securities.

I just wanted to touch on acquisitions, Alain, maybe where you are seeing the most deal flow and how pricing is looking. Is it creeping up on you? And maybe, is the high dollar an opportunity to look a little bit more on the US side?

Yes, well, you hit nail on the head. Definitely, we are more active on the US side right now, as a small deal that we did on the energy sector. With Dynamex, based on the discussion I had, very brief discussion with Mr. Welch -- for sure, we see an opportunity there in the US to do some small tuck-in type acquisition. Don't forget, like I told you, Dynamex is the number-one guy. He's number one, okay. And he's small, in a huge market. And talking with our team over there, we identify about four markets where we could grow.

So, to answer your question, yes, the US is definitely a focus area. And in Canada we are still doing some small acquisition in our waste business. We just bought a small collector of waste in Ontario. We are looking also on the Package and Courier side. There's not much, but there is some very interesting deals that we are looking at right now. We are trying to get some kind of an agreement with an international player. As I said earlier, if we could get that international partnership with somebody, it would be a huge benefit for TransForce.

So, yes, there's a lot that we could do. But as I told you earlier, as I said earlier, after this Dynamex acquisition we will be conservative. We are talking a maximum of CAD50 million in terms of acquisition.

Okay, and maybe just one follow-up -- what would the typical size of some of these companies would be that Dynamex would be targeting?

Well, you see, if you look at the Dynamex thing, next to them, there's about four or five regional players that have revenue of CAD100 million-CAD150 million. Okay? So CAD100 million and CAD150 million -- how much are we going to pay for that? Those are private companies. Depending on the profitability, and most of the industry over there is the same as ours, it's owner-op. So there's no CapEx, there's no fleet, there's no assets, really. So you are talking 3 times the EBITDA., 3.5, maybe 4.

Okay, all right, thanks very much.

Benoit Poirier, Desjardins Securities.

Alain, could you maybe provide more color about the ramp-up with the government of Ontario, whether it's at full capacity right now, or is there still some leverage?

There is not enough information right now, Benoit, to tell us that we are at full capacity. I was with Mr. Houston this week on a review of what we're doing at Canpar. And based on what Jim was telling me is that we don't have enough history over there. For sure, we see that a lot of time. Whatever was in the bid in terms of volume after, what, six months now, we are not at that level at all.

But this, again, okay, is -- it was based on the shipper's information. And this is the Ontario government contract. They don't control all of their shippers.

So, so far, it's hard to say. But for sure, it's not going to be a CAD30 million business. I think, talking with these guys, we'll be floating more closer to a CAD20 million contract.

Okay, so probably I would assume also to be, let's say, a less important profitability than previously expected right?

Yes, yes, yes, yes.

Okay, excellent. And what about -- you mentioned good color about the international partnership, the high margin. What about the likelihood in 2011? Do you think there is a probability, or it's more beyond that?

Well, this is a tough question, Benoit, because, you know, you work with an international company. It's a long process. You've got to talk to them, and you've got to make them understand who we are because TransForce is known in Canada, it's known now more and more in the US. But when you talk to international player, they don't really know who we are. Okay?

So I'm confident that with this situation now, the Dynamex deal done, I'm working very hard on that one as well. So, hey, you can't say that you have a deal until you have a deal. But I'm working very hard on that. And could 2011 be the year? I think we will know within the next few months.

Okay, excellent, thanks again.

Mr. Bedard, there are no further questions at this time. Please continue.

Very good. So ladies and gentlemen, thank you for your interest in TransForce and please note that our annual meeting of our shareholder will be held in Toronto, okay, at the Toronto Stock Exchange on May 17. So we hope to see all of you there. Thank you, and have a pleasant day.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect your lines.