TFI International Inc (TFII) 2024 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's fourth-quarter 2024 results conference call. (Operator Instructions) Please be advised that this conference call will remain -- 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 February 20, 2024.

I will now turn the conference over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

Well, thank you for the introduction, operator, and thank you, everyone, for joining our call.

So yesterday, after market close, we reported quarterly results reflecting the industry-wide slump in freight volumes as well as the ongoing effort by our team to make the most of the challenging conditions. We again produced strong free cash flow of more than $200 million during the quarter.

This brought our full year total to more than $750 million. The third year in a row that we've achieved this mark despite the prolonged weak stretch for the industry. This directly reflects our long withstanding focus on optimizing free cash flow so that we can strategically invest in the business, consider attractive M&A and return excess capital to shareholders. We did all three during the fourth quarter while also reducing our debt to further strengthen our balance sheet.

With that, let's have a look at our consolidated results. For the fourth quarter, our total revenue before fuel surcharge grew 9% over the corresponding prior year period to $1.8 billion, which benefited from our acquisition of Daseke last April. However, operating income of $160 million was down from $198 million reflecting an operating margin of 8.8% versus 11.8% previous year.

We did have unusually high accidents related expense that were about $9 million higher than prior year period. Our adjusted net income of $102 million was down from $148 million the prior year. And adjusted EPS of $1.19 compares to $1.71. I would also note that the impact of foreign exchange fluctuation which during the quarter reduced the reported EPS by $0.03 as every $0.01 fluctuation of Canadian dollar per US dollar tends to impact either positively or negatively our annual EPS by about $0.02.

So again, we produced solid cash flow, as I mentioned, specifically $262 million of cash from operating activity and free cash flow of $208 million. However, both were down from the prior year figures of $303 million and $244 million, respectively. I want to again call out that our ability to produce very respectable cash flow during a prolonged for the industry, is a direct reflection of our team's effort to focus on the details of the business regardless of market conditions. This includes concentrating on quality of freight and other efficiencies.

Let's now turn to a review of our three business segments beginning with LTL, which was 40% of segmented revenue before fuel surcharge during the fourth quarter. LTL revenue before fuel surcharge of $737 million was off 10% and operating income of $70 million, which had an $8 million impact from higher accident-related costs versus the prior year period was up 34%.

Our adjusted LTL operating ratio was 90.3% as compared to 86.1% a year earlier and return on invested capital was 16.3%. So next up is our truckload. 38% of segmented revenue before fuel surcharge at $693 million, which was up from $399 million in the prior year period, benefiting from the Daseke acquisition.

Truckload operating income came in at $60 million, which was up from $51 million. We produced an OR of 91.5% relative to 87.3% a year earlier, and our return on invested capital was 8.4%. Our third business segment to review is logistics, which was 22% of segmented revenue before fuel surcharge or $410 million for the fourth quarter down from $472 million the prior year.

Operating income of $43 million was down from $55 million. This equates to a logistics operating margin of 10.5% relative to 11.6% last year and return on invested capital was 17.1%. Turning to our balance sheet.

During the quarter, we again benefited from our solid free cash flow of more than $200 million. We reduced debt by $156 million. And as a result, ended the year with a funded debt-to-EBITDA ratio of 2.11. In addition to allocating capital to debt reduction, we completed one bolt-on acquisition during the quarter, also during the quarter, our Board declared a 13% increase in our quarterly dividend to $0.45 per share that was paid on January 15.

We also repurchased $42.4 million worth of shares during the quarter, and you'll recall that in October, the renewal of TFI International normal course issuers bid or NCIB was approved for an additional year. So before I wrap up, as you may have seen in our press release, we plan to redomicile TFI from Canada to the US to better align with our shareholder base and commercial presence.

With that, operator, if you could please begin the Q&A portion of the call, and I'll be happy to take questions.

Thank you, and ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Ravi Shanker, Morgan Stanley.

So when you think of where we are in the cycle now and where we ultimately go to, let's say, $8 of normalized EPS. How much of the path from where we are today to that level do you think is idiosyncratic actions that you guys can take versus waiting for the cycle recovery?

Very good question, Ravi. And you know what? I think that we still have a lot of work to do on cost. If you look at our TForce rate, our costs are still too high. we're getting also killed because our volume keeps dropping. Our shipment count is down 6% year-over-year. Although our weight per shipment is about the same. It's a very difficult environment.

So we still have a lot of work to do at TForce rate on the fleet side to reduce our costs. We're on the right track there. Our average age of a fleet of trucks at TForce is 4.2 years, which is getting close to normal versus the average age that we have in Canada, which is a little bit higher. But then if I look at my maintenance cost per mile in the US versus Canada, I mean, there's still a big discrepancy between the 2.

So we still have a lot of work to do on costs at the TForce rate. The same is true also of our Daseke acquisition. If you look at the trend since we bought Daseke in April, I mean, Q2 was okay. And then we had issues with revenue per miles that keep dropping because the freight recession is still with us. And even in Q1 of '25, we're still seeing a very pressure on rates, although it's quite stabilized, but the number of miles are down, and our costs also are too high.

Daseke, we were trying to have a lot of equipment and these equipment are specialized equipment, and they're used not very often. And let's say, wind equipment win is out of wind, right? So it's not very popular right now.

So we have to reduce our asset base at Daseke to reduce our cost, reduce our depreciation expenses to reduce our interest costs as well. So we still have a lot of work to do to get to me, on the cost side, with no market improvement, we have to be closer to [$7 to $7.25] in EPS in a normalized cost environment.

If you look at our logistics, I mean, we're down $12 million quarter-over-quarter -- year-over-year in Q4. This is just volume. I mean, the truck manufacturers volumes are down about 20%. This will continue probably Q1, Q2, Q3 of '25. When we talk to our customers, they see a pickup by the end of '25. So that is also not helping us in the early days of '25, but this is just volume and it's -- it will come back.

So to make a long story short of -- so big question is that we still have a lot of work to do on the US operation to become lean and mean. If I compare that with our Canadian operation, I mean, we still have a lot of work to do in the US.

Got it. That's really helpful. And apologies if I missed this, but did you give us for a 2025 guidance?

No. I mean, we're like our peers. I mean, it's really a very difficult start of the year. It's very foggy. So it's difficult for us -- what I could say is that what we've seen so far in Q1, we're still in a very deep freight recession. The volumes are not there. So it's going to be a difficult '25, I think, again, we thought when we made our plan in October of '24 for '25, we never anticipated this kind of situation which is still difficult in terms of volumes, both truckload and LTL.

Jordan Alliger, Goldman Sachs.

Yes. Just to come back to US. LTL margins deterioration in the quarter, would you say that -- I know you talked about cost as well, but is it primarily revenue? And then can you maybe go into a little bit more color on some of the specific steps, TFI is going to take to work on US LTL margins in 2025, regardless of the volume environment?

Yeah, yeah, yeah. You see the problem that we have Jordan is this, is that right now, okay, we're losing the small and medium-sized, okay, customers, which have the best margin, right? And some of that has been replaced, okay, by, let's say, 3PL and corporate account, which doesn't bring the same margin. And this was really accelerated in Q4. So that's part of the issues that we have is sales, okay? We have to be way more aggressive on the small and medium-sized account.

So this is problem number one for us. If you look at TForce right today, okay, is revenue. Problem number two is cost. So we've been working steadily on costs since we bought this company, and we've invested a ton of capital to improve our asset to improve our training, et cetera, et cetera. But at the same time, okay, our volume, okay, keeps coming down, right?

So it's like you're chasing your tail like a dog chasing it's tail, okay? So this got to stop. So we are at a floor of around 20,000 shipments. The mission that we give to our sales force is to try to grow organically, but also to try to improve that density.

So what I mean by density, and I'm like a guy that's always repeating the same thing. If you look at our Canadian operation, density is second to none. I mean, it's just fantastic. That's why we're doing so well. In the US, our density is the ship. I mean it's really bad. So we have to improve the density. So there's two ways to improve density, right?

Approach number one is to try to do it organically, and that's what we've been trying to do for three years since we bought the company, three, four years. Option number two okay, is down the road, okay, you got to do what we've done in Canada, you got to do some M&A, okay?

So if you can't get the density from organically your sales team, then you have to focus down the road okay, in trying to find a target something that fits you, okay, that could help you improve your density at one point, right?

So this is why we've been saying that one solution down the road, okay, for T-Force rate on sales and revenue it will have to go through M&A at one point. But in the meantime, let's say, during the course of '25 and '26, our focus is to be trying to grow it organically, okay, with the people we have and the sales, the revenue and try to squeeze okay, the cost of our, let's say, fleet operation.

What we've done so far that's good at TForce Freight is our line all okay? So now we're using a software that's really good, which is called Optum, which is used by some of my peers. And now we are implementing Optum in Canada for P&D okay? And we're also starting to look at implementing that P&D tools, it could be Optum or another one in the US, again, to improve the management of our costs on P&D side.

So it's like a two avenue for us. We got to keep working on the cost and do more with less, okay? But at the same time, the mission to our team -- sales team is to grow organically and to improve our density. And over time, down the road, let's say, within 12-months, 24-months, whatever, when we're ready, when we can find the right fit, okay, is to add M&A like we do in Canada all the time.

Just as a quick follow-up then sort of I know things are still a little certainly challenging to start the year. But in that sort of, let's say, no help from the macro were zero volume growth environment. Any sense for where your LTL OR could get to in the US in 2025? Or directionally, where you'd like -- where you think it could get to coming off the 97% or so in the fourth?

Well, what we know, Jordan, is that Q1 is going to be a very difficult quarter, right, a very difficult quarter. But I still believe that -- we've been running this company since we bought it in the neighborhood of 91%, 92%, 93%, 94% OR -- Q4 was a disaster for us. I mean we didn't do a good job in managing our labor cost -- we had too many issues with accidents and claims. If you look at my claim ratio, I went all the way to 0.9% of revenue, which is just unacceptable, right?

So this company, even in this kind of freight environment, we have to be able to run that between 93% and 95% OR. I've been saying since we bought the company that we'll get to a sub-90% OR. But right now, okay, at the level of shipments that we have at 20,000, if our sales team does not help us in trying to grow this density, improve this density and grow their shipment count and working just on the cost within '25 with this kind of freight environment, I think that overall, we should think that it's difficult to say because, again, it's very foggy Q1, Q2 with everything that's going on.

But I mean, to me, is we got to be able to live in the 93% to 95% or even in '25 with this kind of difficult environment. But Q1 extremely difficult because of all kinds of reasons, okay? But for the year '25, even with what we know today, we should be able to play in that 93% to 95%, so which is way above the target that we've had being sub-90% OR, right?

But density is the name of the game. And we've been trying with the sales team to have those guys understand that we need to drive less miles, we need to pick up more freight per stop. It's been quite difficult. Okay. It seems like difficult to do in this kind of an environment. but it's the only way that we're going to bring this company to a sub-90% OR because at 20,000 shipments a day, when you run a national network in the US, you are small. You are small.

In my mind to run -- just look at the shipment count that we do in Canada. In Canada, we do close to 10,000 shipments a day. And we do only 20,000 in the US. So I mean, in Canada, with 10,000 shipments, we have huge density. That's why our costs are so good. In the US, our costs are not good because our density is way too low.

Ken Hoexter, Bank of America.

So a lot happened, it seemed like in the numbers in the LTL, length of haul dropped a couple of hundred miles. You added trucks. You mentioned an $8 million charge in there. Maybe talk about what's going on at the LTL, so we can understand the dynamic and the speed that things are changing. And it looked like GP revenue is really shifting down very quick. So a lot of dynamics going on here. Maybe walk through what changed so quickly.

Yes. Well, GFP has been not doing well since, I would say, 1.5 years ago, when our partner on UPS said, I mean, those customers, we can service those guys because they are not honest and they play games, et cetera, et cetera. So we have to drop okay, all those resellers that UPS didn't want us to service.

So -- and it's -- now we're down to basically not much in terms of revenue versus where we were two years ago. And we've changed the commission structure to our sales team to try to make this thing grow again. But so far, we don't have any results, okay? So that's GFP. But on the asset side, what we have done, if you look at my personal cost, year-over-year, I went from 40% to 44%.

And this is because of all these changes okay, in terms of our service, in terms of not managing the labor costs in the right way and also the mix of the revenue which has deteriorated a little bit, okay, our weight per shipment is about the same, but the revenue per hundredweight is down. Why? Because we're replacing small- and medium-sized account shipments with great margin versus a 3PL in a corporate account with less good margin, right?

So this is what's happening there. And this is where I say that our sales team has to pull its own weight and start helping us to try to grow this better business, okay? But at the same time also, okay? We also have to manage better the claim costs, and this is big for us because we're at 0.9% of revenue, which is completely unacceptable. If you look at our Canadian operation.

Okay. We used to be at 0.2. We're at 0.3 in Q4. If you look at the best-in-class in the US, the guys are at 0.2 or 0.3 or something like that. So we're in Also, our accidents or reserve had to be adjusted with the arterial, which we took another hit. So globally, it's a lot of bad news for us okay?

But the guys, they are rolling up their sleeves and we're attacking, and we understand that the market is not going to help us again in '25. I mean we still think that -- we're going to be in the freight recession. We don't see anything changing over the course of '25.

And this is why when I look at the plan that we have for in running in the 93% to a 95% OR for all of '25 would be probably the best that we could do with the low density that we have okay? And without any M&A in '25, I don't think that we'll have any M&A in '25 to help us improve the density, okay? So with that in mind, this is where we stand, Ken.

But just to clarify, you added 500 trucks. So you grew the fleet significantly. But why did the length of haul drop 400 miles? What did you just change business? Is that --?

No, no, no. Because you have to look at the active trucks can, okay? The active trucks at LTL is about 30 to 100 trucks. The total trucks is about 4,000 trucks because we're bringing new trucks in -- and we're not selling the old trucks, okay? We have about -- I don't remember exactly the count, okay? But we have a lot of old trucks that we're selling now because the active fleet of UPS or the TForce Freight LTL is about 30 to 100. So there's no movement. You have to look at the active fleet.

Okay. And then just to redomicile. Any tax implications on that? Is that just moving headquarters, where are you going to be moving? Is there any follow-on implications for that?

You know what Ken, I think this is an evolution of TFI. So if you look at five years ago, we listed TFI into the New York Stock Exchange. And we were able to do that through what they call an MGDS, okay, exception, right? But this exception will disappear the minute that our shares that are owned by US shareholders, okay? The minute that we go above 50%, then this is not going to work.

So we have to go to the SEC and then we have also to be US GAAP. So it's part of an evolution, okay? But at the end of the day, if you look at TFI today, okay, for head office. We have people working in Canada. We have also people working in the US. We have people in Montreal, in Toronto, Calgary, we have people in Chicago. We have people in Minneapolis.

So we are all over the place in North America with our head office crew. So to me, it's just like an evolution, okay? Because our business is now today about 70% US domestic 25% Canadian domestic and about 3% or 4% or 5% transborder. So it's just -- and with the next M&A, okay, we just announced a small transaction in our MD&A. -- with that and with the possibility of us doing some more M&A in the US, like we said at one point, we will invest $3 billion to $4 billion. It's going to be in the US. It's not going to be in Canada.

So our revenue will creep up to about [80% to 85%]. So it's just an evolution, but we're not moving at office. We're not moving people from, let's say, Toronto to, I don't know, Chicago, every member of the TFI and office is staying where they're at. So that's what we call TFI, TFI International. It's because we're a Canadian and US.

Walter Spracklin, RBC Capital Markets.

So maybe just to clarify on the redomicile. -- you will not be delisting in Canada. Is that right?

No.

No, okay. And will it be a full reincorporation or -- into the US?

That you don't want to -- because we're only in the early days, right? So we still have a lot of work to do on that. We have -- we must get a shareholder approval of that -- so to me, in a simple way, I mean, it's just like TFI International today is a Canadian Corp. tomorrow, once the shareholder approve it, it's going to be a US corp. That's the way I understand it.

So there's no big story except the fact that now by being a US corp -- on the Daseke acquisition, for example, one of our business unit deals a lot with DoD, the Department of Defense, the US Department of Defense. And because we are a foreign owner, okay, that creates a little bit of issues for us. Okay. Well, that's no big deal. We can live with that. But the fact that now you are a US corp, that will help us, okay?

So there's a few things like that. You could be part of some index in the US because now you are a US domicile. But at the end of the day, and like I said to our board member yesterday, it's an evolution of TFI. If you look back five years ago, we had no US shareholder. I mean we were just Canadian, right?

Today, just under 50%, 49.9% of our shoulder summer of '24 were US, okay? And 4%, 5% were I think, European or Japanese or something like that and 45% were Canadian. So it's an evolution.

Got it. Okay. And then my second question really is just on M&A. Alain, you mentioned densification is a big objective and M&A can certainly help with that. This is a tough environment. So arguably, sellers are in a tough spot, could you get -- could you look at bolt-on or accelerating your bolt-on tuck-in acquisitions to a more significant pace to take advantage of potentially lower than normal acquisition multiples to achieve that density so that when things turn, you're building off a larger base.

Yeah, yeah. You're right, Walter. I mean, for sure. But there's always the question, my -- you've been with me for a long time, Walter, right? You know us really well. And me, my saying it's always been you buy in band news and you're selling good news. But it's been bad news for TFI for the last two years, right? Since '22, when our EPS hit $8, I mean it's just been bad. I mean we went to something $6.15. And now this year, we're at $5.75.

So with that in mind and all this, everything that's going on in '25 with the fog that we -- nobody knows where we're going really -- so a lot of people are -- could be scared and say, hey, I don't do anything crazy, don't spend $1 billion or whatever. But I think that you have to be bold, okay? We have a very strong team in Canada, and we're also building a much stronger team in the US in our specialty truckload with Steve Brookshire and with Bob McGonigal at TForce Freight, US and also with Rick Ashe in our logistics, right?

So that -- you may be right, Walter. Maybe it's not going to be in '26. It could be maybe in 25, okay? But it's always to try to balance, okay, between being bold and trying to do something sooner than later, okay, because you may end up being ahead of the curve, okay, in terms of the market improving. Me, I really believe that the US is the best place to be in the world in terms of business. And I feel really good about this US economy.

And I feel really that those guys, okay, will do a great job, the new administration. So I mean, to me, it's time to invest in the US. But then on the other side, I've got guys saying, oh, Alain, it's -- you got to be careful. Your debt is at 2.1, your leverage is at 2.1. So this is why we're trying to reduce our debt by about $500 million -- at least $500 million during the course of '25. So it's a balance, Walter, it's a balance and -- we want to get the Q1 behind us because to me, Q1 is going to be very difficult when I look at my specialty truckload in the US.

When I look at our US LTL, it's going to be a very difficult Q1 maybe also Q2 because with what's going on, we still don't know what are going to be the rules, right? So as of March, the new administration, we'll talk about tariff as of April 1. They will be a report by the treasury, that's going to say whatever, I don't know. So I think that the rules will be clearer starting the summer of '25 into the fall of '25. But with all this in security, if you are bold, maybe it's the right time to do a deal. So we'll see.

Brian Ossenbeck, JPMorgan.

Just wanted to ask, can you give a little more detail as to why you think you're seeing some of this mix shift in TForce Freight and maybe how much you can quantify just how much more PPO you're doing versus SMB? Is this competition, is this the challenge? Is it service level? Is it kind of all of the above?

I think it's all of the above. I think it's just a difficult environment, okay? Everybody is looking for freight. The perception is that through the Mastio report is that, okay, TForce Freight is cheap, but the service is average or maybe not as good as the average of my peers. So I mean, we have to fight and it's the focus of us. I mean there's no other issues.

Now this is what these sales guys have to do. I mean, we've been working at it for three years, and we've not been very successful. The only success we had on the quality of freight is the average weight, which was really low, now is a little bit better at 1,200. That's the only success that we have so far. We're trying to work with these guys say, hey, your responsibility is to bring some freight.

And so far, it's been difficult. So -- like I was saying to the team two days ago to TForce Freight team is that guys I mean I understand that we have this free environment, but we have to have probably better people, better leaders. I don't know. It's -- the boy is in their court, but it's tough.

So looking at Daseke, it looks like, at least on our math, it may be fairly profitable during the quarter. You made some comments that specialized was pretty tough, you have extra equipment laying around. So just wanted to see if there was a path to better profitability? Or is that something you have to wait more for the cycle to turn around? So I guess a similar question there, how much of that is really in your control versus what the broader economy gives you?

Yeah. So the revenue per mile, okay, if you look at our revenue per mile, Q2, Q3 and 4, it keeps coming down, okay? So it's really not good. Our revenue per truck because we have increased the number of miles, stayed about steady. So more miles that we did per truck, Q3, Q4 versus Q2, but less revenue per mile, okay, because the freight is scarce, right? So this is up to the end of '24.

Going into '25, okay, rate per mile has got some stability, but because of everything that went on with the storm and this and that. So number of miles went down in January. And the killer that we have over there is that we have way too much capital invested trucks and trailers invested in that company. And why is that? Because when we acquired Daseke, they had committed to buy a large number of trucks, which we could not walk away. So that's what we did in Q2 and Q3 and Q4 is we had to take on these trucks that we have been ordered, okay?

So now we have way too many trucks in a very difficult environment. So during the course of early '25, we have to start unloading those excess trucks that we have, okay? And then we'll have probably a better result in terms of our depreciation expense, which is just crazy, okay, with the revenue we have. In terms of customer, in terms of activity, okay, we're still in a freight recession in the specialty truckload we are still not active like we should be in a normal environment, but it's been going on for two, three years, right?

So if you look at my peers in the US, in the van world, okay? It's really difficult. I mean, us, if you look at my OR in Q4, I'm above 90% for the first time ever, okay? First time ever that our specialty Truckload OR is above 90%. I think we're 91% something. Because Daseke is, like you said, probably running like a 98% OR right, and the rest of our operation is running sub-90% OR, right? Because Daseke and the existing business that we had before we bought Desk, it's about 50-50.

So legacy, TFI, specialty truckload is about the same size as Daseke in terms of revenue. But in terms of profitability, it's day and night, right? So you're right, Daseke in Q4 did help us because if you look at my year-over-year improvement, top line is through the roof. But bottom line is a meager -- well, just a few million dollars.

So that tells you that we didn't do too well, okay, in Q4 with our US operation, okay? But this is a different environment. TForce is a big rock in my shoe, no question about it. Daseke and our US specialty truckload, this is something that we will be able to fix on the cost side on the equipment side during the course of '25.

And if market conditions improve, that should help us. But if market does not improve, I mean, at least on the cost side, with our specialty truckload, we have a path forward by shedding equipment by improving our costs, improving our overhead as well, okay? So our overhead will come down during the course of '25 So I feel that Q1 is going to be difficult for specialty truckload as well, okay? But I think that we will bring the ore down sub-90% within the next Q2, Q3 and Q4.

Scott Group, Wolfe Research.

My connection is not great. Hopefully, you can hear me Alain. I know Ken asked, but any more color on the LTL length of out such a dramatic change. And then you've mentioned a few times tough Q1. Like do you think TForce is profitable? And then one more guidance kind of question. I know you're not giving specific guidance yet, but as you look at it today, do you think you'll grow consolidated earnings this year?

Tough question, Scott. So far, what we know with everything that's going on okay. We did about $5.75 of EPS in '24. With everything that we know so far, same environment, everything the same. I think that $5.75 to $6, which is what we've done this year, it's still a very, very difficult environment. And I would say probably first 6 months of '25 will be more difficult than the first six months of okay?

And I think that the last six months should get better once we understand the new rules of the North American market. Now in terms of are we going to be profitable at TForce rate it's very difficult right now. So the month of January was not good for us. February still tough.

We believe that the sum of Q1, that's why we've asked our guys to give us a reforecast for Q1. It's tough for me to answer. But one thing is for sure is that we're not going to be better than a 97% OR in our Q1, right? So going back to your question about the average length of all for TForce rate, to me, maybe I'm wrong, but in my mind, the average length of all okay at TForce rate is basically about the same.

So I know Ken was saying that the length of all has changed big time I don't know if it's a mistake. But in my mind, it's about the same. So what I'll do, Scott, on that, I'll ask David to get back to you just to make sure that we all talk the same thing on that.

Okay. Yes. I mean it almost looked like a typo in the press release because it was down so much. So maybe that's right.

It could be because to me, it's -- like I said to Ken, number of trucks you get a look at the active trucks in the MD&A, okay, because it's about the same. But in terms of length of haul, I mean, in my mind, it's basically the same. I mean, we have not changed the company. It's same -- we're about the same as, let's say, ABF. ABF is about 1,100 miles. We are about the same.

Okay. Okay. And then on the strategic side, when you were talking about LTL M&A, I think in your answer, you said like down the road like 5x, like it seems like it could be helpful now. Is this you not ready or you're not able to find a partner? And then just separately on the redomicile, does that -- what does that mean, if anything, for the idea of a spin at some point?

Yes. Okay. So like I said, Scott, I mean, my philosophy has always been, you buy on bad news, you're selling good news. So it's been bad for TFI in the last two years, right? -- is a bit bad for the industry in general, and it's been bad for us as well. But we also did some M&A. So we bought Daseke in those bad time. We bought JT, which is going to be a great asset.

And we're also buying another one that's going to be under the GHC umbrella in April. So we're still active in the good tuck-ins, reasonable price, et cetera, et cetera. Well, in terms of the US LTL M&A, in order to do something, you got to do something of size because the problem we have us is that we're way too small, way too small. 20,000 shipments is the ship. It's bad.

I mean, you cannot have -- it's difficult. If you want to be a national player in the US with 20,000 shipments, it's too small. Just think about we do 10,000 in Canada. I mean Canada is one-tenth of the US. So it doesn't make any sense. So -- but I think the timing is right, but you have to be bold, right? And it also depends on our investors, okay? It also depends on the Board. So me, I'm the CEO, okay? And for sure, I'm making some proposal, okay?

But sometimes, you got board members or people that could say, Alain, are you crazy? I mean, your leverage is 2.1. It's very foggy. Nobody knows where we're going. Okay. Your earnings in Q4 are down like 30%. And okay, are you crazy? I mean, why would you do a deal of size, right?

So me, I'm saying, well, guys, yes, you got this is one side of the coin. The other side of the coin is you got to be bold, you got to do it now when everything is bad because when everything is bad, one day, things will get better. So if you wait for things to get better, you're going to have to pay more.

So it's a balance, like I said earlier, okay? And that's why I'm saying down the road, okay, but maybe the road is not going to be too long. Like I was talking with Walter. We'll see.

And the spin idea?

Oh, the spin. The spin, like I said earlier, Scott, we need size. So if you look at our market cap today, when we talk to our investors, large investors of TFI, they like the idea of the spin, but they say you're too small. You're too small. So if you're a $12 billion market cap guy and you split the company in two, and one is, let's say, $6 billion and the other one is $6 billion, two $6 billion is small.

So we think that your idea is really good. It makes a lot of sense, but try to get a little bit bigger. So let's say, if you do a deal and your market cap is $15 billion, okay, because you're buying something good at a reasonable price, then it makes it easier to do, number one. Number two, it takes time.

So in the meantime, what we're doing, Scott, we're not sitting on our hands, okay? We're getting ready, okay? So we have to work on systems, right? So because the -- when you do the split, you don't want to be stuck with a TSA, a transition agreement for three years like we had with UPS, right? So we're making some moves on the real estate side, too. We're making some move on the asset side, okay?

So let's say, we have trucks that are, let's say, in business A, but they should be in business B because what we used to do in Canada is to have a global portfolio of all assets mixed up between truckload and LTL. So now we're going to the split. So we're not sitting on our hands. We're getting ready, okay, to do that. but it's still in the cards absolutely because it makes a lot of sense.

The return invested capital of our truckload operation is single digit in Q4, single digit, 8-point something, if I remember. I mean and then the rest of our business in a very difficult environment, terrible environment for us. Logistics, okay, LTL, I mean we're running 15%, 17%, 18% return on invested capital. So it's not the same. So it's got to be separate at one point.

Bruce Chan, Stifel.

You made some comments about the sales team earlier in the call and the opportunity in SMB, which I think makes a lot of sense. But you've also been trying for three years at this. You've had a lot of competitors in the space that are targeting this sector/ So the question is, how does TFI win in these RFPs? Are you just going to keep slogging it out, do you need to hire more? Do you need to change incentives, especially without improving your service for us.

Yeah. I think we did all of that -- we changed incentive, okay? We've changed people, okay? The focus is still the same. And we've not been able to have the results, right? So we are working on our service. We have improved service at TForce Freight, absolutely. Right now, if you look at my miss pickup, I'm -- I still have way too many. I've got about a little shy of 400 a day that we miss pick up. But we used to be double that, right?

So we are improving. Now for sure, the Mastio report is not helping us in the perception of TForce Freight. Why is that? Because we came to know that sadly, Mastio was trying to get in touch with us, and they couldn't get in touch with us for four years. So they were using information that is stale from 2020.

So maybe this report is not accurate because we never provided them the right information for them to really get a true picture of TForce Freight services, right? So hopefully, down the road now that we have a communication, they will talk to customers that we service and maybe hopefully that perception that TForce rate service is not good, will improve.

And I think the service reality wise has improved, right? Now our sales teams are fighting that, okay, and are finding our peers that have better service. And in a difficult environment, okay, where freight is not easy to find. The service is key, right?

So if the customer has the perception that your service is not as good as the other guy, and the price is about the same. The customer is not stupid. He's going to go with the other guy, right? So we have to change this perception of service, and we also have to work on improving our service at the same time.

And we also have to educate our sales team that, guys, I mean, our service is improving guys, and you got to fight. You got the fight, right? And so far, if I look at my corporate and 3PL, we're about flat, okay, in '24 year-over-year. So far in '25, we're down a little bit on corporate, but about flat on -- but we're down on, again, on small, medium-sized account, which is the most profitable business that you can have.

So I mean -- so we're trying organically, okay, to improve that because that would help us with our density. And like I said earlier in the call, down the road, okay? And that's what we've done in Canada. That's what we've done in Canada for years and years and years is that we beef up density through M&A, okay, through M&A. So we continue to do that. And in Canada, we run either union or nonunion, right?

So we got a union network, and we also have a nonunion network. And we beef up density in all these two networks, all the time. And this is now after trying for three years, okay, to grow organically, and it's not working, okay? So we keep pushing our sales team to grow this thing. But if we now understand that we have to do something, okay, down the road on M&A either to build a nonunion network on the site or to try to grow with some regional unionized LTL to beef up TForce Freight.

I mean -- but don't forget, our approach us on M&A is always the same, is that if we do some M&A, we keep business separate, right? We don't like merger. We're not a big fan of merger okay? We don't do that, right? So we work together, so let's say, we own another company. I mean, we will work the two companies will work together. But there's no combination. There's no merger. We hate that because, yes, the accountant will tell you that you could save a lot of money. But at the end of the day, it falls. So we keep the two -- like we do in Canada, right?

Okay. That's really helpful color. And then just a really quick follow-up on that M&A point. Is the thought still that an asset light operation makes the most sense? Or are you kind of broadening up the search a little bit?

Well, asset light is always the best. So if you look at our Canadian LTL, it's really, really light. Why is that? Because we are heavy intermodal, we are also heavy with third-party PND. So for sure, I mean if we have an option to buy an asset light as a reasonable price, okay, we'll jump on that one first. Now we also understand that there's not that many asset-light operation, okay, in the US on the LTL side.

So then, okay, we look at an asset operation. So about a year ago, we bought $100 million revenue asset company, nonunion in the US, okay? So this is our first, okay, of maybe more to come on that side. Now this company, the beauty of this company is that they're also big in the transborder between US and Canada, right which has got better yield, better yield than US domestic or better yield than Canadian domestic.

So this is a first for us a year ago. And down the road, okay, this is an area that we'll be trying to grow? And maybe if we can find a good brother to TForce Freight, okay, I mean that's also something that we're going to be looking at. If we can find a good brother, a good fit -- but without merging, I mean, guys never say that TFI wants to buy a company and merge it with A or B or C, we don't do that.

Tom Wadewitz, UBS.

Yes. I wanted to get a sense -- I know we've had quite a bit of discussion on US LTL. I think we've had for the last couple of years a real framework of idiosyncratic drivers for improvement in US LTL and that you had a fair bit of control. It feels like we're kind of waiting for the market to improve. And you really need a better freight backdrop to see things get better in US LTL. Do you think that's fair, that's really the most important lever for US LTL to get better? Or there's still levers that are kind of meaningful enough that you can push in your control in US LTL?

No, I think so, Tom. I think that we still have a lot of work to do on the cost side. I think fleet okay, is a big problem for us since day one because we had old truck -- now we have a normal fleet, but our cost is too high. So we're starting to see some improvement because we have a new leader, okay, that oversees our fleet management now. And this is something that should help us during the course of '25 and beyond. That's number one.

Number two is, like I said earlier on the call, the P&D software that we're using dates back about 20 years, right? So it was good 20 years ago. okay? So now in '25, we're going to be updating that through either a item, which is the software that we're using now for our line haul, which helped us big time, okay?

So our line haul cost today, even if we put more freight on the road versus rail our line of cost per pound or per shipment is less today than it was three years ago with better service because the rail is the rail, right? So we put less stuff on the rail. More on the road calls about the same and services better.

But on the P&D side, we have a big job to do there because we could save a lot of money. So to me, it's really the next big focus. So fleet, we have the tools. We have the software. We have a better leader now. We should -- that should help us in '25. P&D, it's going to take probably all year, okay, to get this new software tested, implemented, maybe '25 into '26. The other thing also that we are implementing now is also -- has been a cancer for us billing, master file of customers and all that.

So we are implementing, as we speak, and it's going to take all the way until the summer of '25, a software that's been used by one of our peers. So it's been tested by those guys and that's what we are implementing now. So that's going to help us build customer properly, okay? I have a better control about what's going on, better visibility about what's going on et cetera, et cetera. So that's also another lever during the course of '25 that should help us on the cost side.

Now if market starts to turn, if this economy starts to get better, if this freight recession disappear, let's say, '25 even better. But for us, in '25, we have to stop, okay, the degradation of volume, okay, and slowly improve it. as much as we can. And we have a big job to do on cars on fleet, still on P&D and on building customer properly so they can pay us properly.

Right. Okay. What about -- there hasn't been much discussion on competitive environment. But if you take a step back, a number of the bigger players have added terminals and recycled the yellow terminals, if you will, expanded and are focused on growth. So do you think that's potentially contributing to some of the pressure on shipments that other players who have added terminals are taking business, and that's contributing to the pretty significant cycle pressures and lower shipment count. That might be hard to see, but do you think that's a factor, too.

Economy 101 tells you that if you offer more, okay, you'll get less, right? So if you offer more freight capacity, you'll get less money. To me, it's basically the rule of economy. So by adding capacity to the LTL environment, for sure, down the road, you're going to be putting pressure unless the market starts to grow, okay? And if there's growth, maybe not so much.

But it's still a very weak market for sure. By adding capacity, you're putting pressure down the road on rates, the shipper sees that, they know that. and they will RFP the business and then you're stuck with fixed costs.

And there's a fight for freight, okay? So this is basic economy. So this is why us, our approach has always been guys. Don't add capacity. Don't do that, right? So -- this is why us down the road. What we're trying to do is through some M&A to some education kind of -- if you add capacity, you'll make less money. It's very simple. You have to understand, just look at the price of oil, add capacity, add more oil, price of oil goes down, right? It's just basic rules.

So us in Canada, why we're so good is we're not adding capacity. We're shrinking, shrinking, shrinking and making more or at least protecting -- if you look at my LTL OR okay? It used to be 79%, I think, in last year, and 80-something now, 80-point something, right? So we are protecting our margin.

So you're right. I mean, there could be some pressure down the road. Hopefully, our peers understand that and don't offer too much capacity because -- the US LTL is the best place to be in North America today. Best place to be because it's more -- it's not like the truckload where every time they can are could be a truckload guy tomorrow.

So just to make sure I understand your comments. So you did not -- it wasn't clear that there was like a worsening of competitive pressures in 4Q. You don't really think that was the issue. It was more broader market. but you might be concerned about pressures in the future. Is that -- I guess, is that the what you're seeing.

Yes, yes. Q4, it's hard to say, okay, maybe okay, I don't know. Well, one thing is for sure, long term, when you add capacity and the market is not growing, you're going to end up with price pressure.

Benoit Porier.

With respect to free cash flow, obviously, you were able to pull close to $800 million in 2024. I would be curious, given all the comments that you provided, how should we be thinking in terms of free cash flow generation for 2025 and maybe a little bit more color around CapEx, given the investment needed for Daseke that you committed for?

Yes. So I think based on what we know so far, Benoit, is TFI will pay is dividend. TFI will reimburse, okay, about $400 million to $500 million of debt during '25. TFI will also invest about USD200 million in M&A. So if you do the sum above that, I mean, it's basically about the same of -- because our CapEx will be reduced. Why is that? Because when you do -- when you drive less miles in your truckload operation, okay, well, you can extend the life of the truck, right?

So our CapEx will be less in '25 than they were in '24 because of that depressed truckload environment. The same is true of LTL. So LTL for this year, we're buying 400 trucks, US LTL, I'm talking here instead of buying 500 or 600 trucks in '24 and in '23, right? Because our average age, okay, is at 4.2 now at the US LTL. So globally, our CapEx net CapEx will probably be less $50 million to $100 million year-over-year.

That's great. And in terms of M&A, just for the follow-up, you gave very good color on the timing. It seems to be most unlikely in 2025. I'm just wondering how much it's pushed to the right given maybe the financial situation? And do you feel you need to further integrate UPS freight and the key before pulling the trigger on the larger one. And obviously, when we look at the past, you've been quite good monetizing some assets, think about Heartland Express waste management. So is it something that might be in the cards down the road?

Monetizing assets, no, except on the real estate side, Benoit. And in terms of TForce Freight, I mean we have a plan, and M&A will just help TForce Freight down the road, I think. So we will not stop an M&A transaction because we're not happy with what's going on at TForce Freight. I'm not happy at all with what's going on over there. The guys are working hard, but we need results, right?

So M&A could be part of that solution, helping them on the density side at one point maybe. And on the Daseke side, I mean, we are really busy in reducing overhead costs over there. We have way too much assets. So this is killing us on depreciation expenses because we have probably in the neighborhood of 400 trucks to many, okay, because we were stuck buying the commitment that Daseke's prior owners made.

And we got all these trucks in '24. And now, okay, we have to start unloading the older trucks, okay, in a depressed environment. So what the guys have been doing is what they're saying is that the market is so bad. I don't want to sell it now. I just want to wait until this market gets better. So this is today, right?

So me, I'm saying, no, guys, I mean do we see the US market preowned trucks getting better, okay? Not really. Well, okay, so let's start unloading the trucks. And that's what we're doing now. And the beauty of Daseke is that we're not losing money when we're selling trucks even in a very depressed preowned market compared to when we are selling all UPS or T4 freight trucks, okay, because they've been.

So the fleet has been so poorly managed that if you look at my disposal of equipment in Q4, I've lost money, right? Not much, but I still lost money, right? But on Daseke -- when I sell equipment at Daseke, I don't -- overall, I don't lose money. So I said, guys, now is the time, I don't know when this market is going to get better. We know because we all own the new trucks for Packard and freight that the production is down 20%, okay, in Q4.

It's going to be down 20% in Q1, Q2 and Q3, probably and picking up again in Q4. Q4 '25, according to our forecast, on the truck. I mean, for the first time, they will do a better job in Q4 '25 than in Q4 '24. For the first time so I mean, it's a global situation. But M&A, like I said, many, many times, you buy in bad news, you sell good news. It's all bad. It's been bad for years and years. It's just like we have to be bold. We have to find the right target. We have to do the right deal at the right price.

And that's been the success of TFI over the last 25 to 30 years is by the right price at the right time. We bought Daseke a year ago in April Q2 was okay, Q3 and Q4, not so good, but I feel really good with Mr. Brookshaw and his team.

We're going to -- we have a lot of work to do on reducing our overhead costs, reducing our asset base so that we could bring our expense depreciation expense down we're going to turn the ship around. I mean, running a 90% OR in specialized truckload, it's not acceptable, okay? Everybody knows that. I mean we're not a van guy. We are a specialty -- so we got to bring this OR down, and we're going to get sub-90% for sure during the course of '25, even in a difficult -- still difficult market.

Daniel Imbro, Stephens.

I want to that maybe back on the US LTL service side, you mentioned a few times the claims ratio is unacceptably high at 0.9. To a previous answer, you said some other things are getting better, but this has been softening for a couple of quarters. I'd love to hear some of the investments you're making to actually improve this claims ratio going forward? And could you provide any other update on like on-time deliveries any other service metrics that have been a headwind on the US LTL side and maybe what you're doing to improve those?

Yes. So on the claims side, here's the story, okay? So the reason we're at 0.9 is that -- we used to break so much stuff that we have a store in Richmond that was selling the stuff that we were breaking. But now we break less stuff, so we don't have this revenue that goes against the expense. I mean that is the story right now, which to me is, okay, fine.

But at the end of the day, okay, our claim will come down back -- will come back down again, okay, in the next quarters. And what we're doing about that is, again, is working with the customer, working with the operators, and we know what to do. It's just like the story is that well, the benefit that we had by selling all the stuff that we were breaking, I mean that is gone. The store is closed. We don't have that anymore.

And now we're just expensing okay? The stuff that we're breaking now, okay, or losing now. So okay, fine. That being said, what is the plan to bring the 0.9 down to more acceptable level. So we're going back to the source. And we should do a better job on that, right?

So the guys are all sensibilize that, hey, this is not acceptable, okay? This affects our service, affects our customer relationship. Nobody likes to have stuff broken. Nobody likes to have stuff lost, right, even if you pay for it. So that is where we're going on that. And what was your next. Second question, I forgot.

Just any other update on the on-time deliveries or other service metrics that have been kind of elusive.

Yes. Yes, yes, yes. Well, the on-time delivery, we are improving absolutely. But we'll never be a 99.9% guy. So the goal is to be something around 98%. When we bought the company, we were more like a 90%, 91%, 92%, and we had all the excuses in the world to be at 90%, 91%, 92%. Right now, we're more like a 95%, 96% in range. if you exclude everything that's going on with weather issues.

So we have improved. We're still probably not to the level our peers are, okay, but we are improving. And I just gave the specific on miss pickup. I mean our miss pickup is down 50% versus what it was like a year or two years ago. So our service is improving. Absolutely.

Got it. And then as my follow-up, I wanted to ask a longer-term maybe a strategic one on the US LTL side. It's been a few years now. You mentioned it's been a challenging three years of owning the TForce asset. Whether we think about the ability to cut cost or add density I guess, how much of those differences in the US versus Canada are maybe more structural than you appreciated when you bought this business as you've learned?

And when we think about where OR can get to, maybe 93%, 95% is this year, but has anything changed? Like where can this business go over time as you better appreciate the headwinds and just the challenges of the US market.

You know what? The market in Canada is not different than the one in the US and vice versa. What's different is the level of issues when we bought UPS Freight, okay? So we could never -- even with all the due deal that we've done, we knew that the fleet was not up to par. We knew that the real estate was not up to par. But the system, the financial system we were not aware because these were UPS system, okay? So they were connected to the UPS environment.

So we didn't know anything about that. and the tools for LTL because the tools for package at UPS are probably fantastic because these guys do a fantastic job over there. But the tools for LTL were poor okay? So this is something that is taking us way more time than we thought. So I've talked about the line all, okay?

So line haul. Now we have Optum, which is helping us break time. the fleet. Now we have Sutaris that has been implemented a year ago. We had to change leadership. Now we have a new leadership. So Sutaris and the tool and the new leadership will help us reduce maintenance costs. Billing and master file management. It's been a nightmare for us, okay, from day one.

Now we are implementing a software that's been used by one of our peers -- by the end of summer, this should be done with. So it's much worse, okay, than we thought when we bought the company, okay? But we're going to get over it. I mean we know what to do, okay? The US market is not that different than the Canadian market.

The basic rule, okay, why are we so good and successful in Canada is because our density is second to none. We drive in the US right now for our P&D, 10 miles between each and every stuff. This is not acceptable. I mean we drive less than 5 miles in Canada. Why is that?

Because we've educated our sales team, everybody in our Canadian operation that we want the driver to drive less miles and pick up more freight. That's the culture we have in Canada. In the US that culture did not exist, okay? And we've been trying working with the sales team to understand, guys, we need more freight close to our terminal. We need more freight per pickup.

So it's what we call density that helps us reduce costs, right? By doing that, okay, you're way more efficient. So -- what we're trying to do for the first three, four years, four or five years that we bought the company is trying to do it organically. And we've not been successful so far.

The only success we have is we move the rate on the rate, but the weight per stop -- the weight per sub. The weight per shipment, okay, from, let's say, less than 1,100 pounds to about 1,200 pounds. That has been a success. But besides that, we have not done anything on density. So this is why I'm saying that down the road, okay, you try organically to improve your density. But at one point, and that's been the success of Canada, M&A has been the success that we encounter in Canada, both union and nonunion, okay, is to grow a network that through M&A, you build your density.

Ariel Rosa, Citi Group.

Back to the small, medium business. Is it losing accounts and lanes? Or is it keeping accounts and lanes but just losing volumes just to try to understand the ease of winning back that business when you improve service. And are there other higher-margin customer segments you could focus on to offset in case small and medium business is still low in 2Q and you're at risk of OR being close to that 97% for 2Q.

Yes, yes. No, I think that it's just like the focus of our sales team has not been good, okay? So the reason that we lose, okay, is because our churn is too high, right? So we look at the churn -- normal churn in an LTL environment could be 5%, 10%. But on your trend is way more than that, which is the case at TForce Freight, then it takes, you lose more than what you gain. So the net is minus, right?

So you got to stop the churn, you got to stop what you're losing, okay, so that you could have a positive when you had the loss because you will always have loss okay? So because there's -- you always have churn, but you have to have less loss than what you can bring in.

And so far, okay, on 3PL and corporate, okay, we're fine. The problem is that with small and medium-sized accounts, we lose more than what we gain, right, in terms of customer and also in terms of lane. So it's just like guys roll up your sleeve and you got to be more aggressive so that we stop losing more than what we're gaining.

Okay. Great. Appreciate that. Maybe just as a follow-on from your Investor Day a few years ago, you were great in providing estimates and OR improvement, for example, 50 or 100 basis points on -- just to understand the magnitude of the, I think, five or so actions you're implementing now, the sales culture to maximize shipments per stop, the P&D software would be number two, building system number three, or you talked a terminal level visibility and compensation tied to that, which needs time to gain -- and then five would be the line haul insourcing. Can you provide sort of rough estimates on OR improvement basis points, ranges for these.

Yes. So on P&D, it's too early, I don't know, okay? So this is difficult to say. On fleet. On fleet, in my mind, okay, if I look at the plan, what we're trying to do, I think, fleet year-over-year, same miles, same everything. Our cost has to come down between $20 million to $35 million year-over-year. That's fleet -- in terms of billing bad debt claims and this and that, to me, I mean, this is another $10 million to $15 million that we just throw money out the door. We pick up freight, we deliver freight.

And we don't know who we have to build because it's not clear, okay? We accept an order and our people are just saying, well, I think it's A, no, it's B. So we bill A and then after six months, A is not paying because it's not me, okay? So then you go back to B and B says, no, it's not me because it was not clear the day that you took the order. So we have that because of all the software, all tools that we have that did not control that process, which will happen during the course of '25 until -- from now until the summer, July right?

So on the line haul side, I think we're probably doing a great job. We're probably at 95% of what the Optum. The best that we could do on that our objective has been to move more freight on the road versus rail to improve service, and we've done that. So we run a lot of teams now okay, running our line hauls. So we're doing a better job on that. So online or, I don't see that so much. So it's basically the PND, although P&D, I cannot put a number on it, it's too early and fleet and also bad debt and billing customer properly.

So these are the kind of lever. Density, it's a push. We've been pushing with no results with no results so far. So again, '25, we'll keep pushing on that. And that's why I'm saying down the road, we're going to have to do something on M&A to help us improve okay, that density because again, we buy a company, there's no merger, but we work together, right?

So like we do in Canada, if I take the example of Canpar Loomis, so what we're saying is that these zip codes are Canpar, let's say, in Toronto and these zip codes are Loomis. So we're not merging the company, but in the zip codes,okay, Canpar is delivering both Canpar and Loomis stuff. But the companies are not combined, but we work together.

So we improved that density by doing that in those zip codes because now Canpar delivers freight for Canpar and freight for okay, Loomis. And then in a different region of Toronto, for example, it's going to be, let's say, a Loomis territory where Loomis is going to deliver both Canpar and Loomis freight, right? But we don't merge the company. No, no, no, no, no. We don't do that.

Konark Gupta, Scotiabank.

It's been a long call, so I'll keep it pretty short, hopefully. I know you're not guiding here for '25, but I think you're alluding to some pressures and headwinds in the specialty truckload, the TForce and GHG, right, for the better part of the 2025. In terms of the remaining operating segments, right, the Korean LTL, Canadian truckload, package and Korea, et cetera. Do you see those segments like maybe offsetting the headwinds in the remaining segments perhaps? So I mean like perhaps this is like a flattish year from earnings perspective?

Yeah. I feel pretty good about our logistics, okay? So our logistics are going to do well, except for GHT, the first probably nine months, okay, we're going to be behind last year because of -- but logistics, I feel really good. P&C, I mean the team there, Mike and Chris, they've done a fantastic job. If you look at my Q4, while you could say, well, because of the Canada Post strike, yes, a bit -- but don't forget that we're mostly B2B us, right? So I feel good about Canadian LTL. I mean the Kindersley acquisition will turn into a good or environment because right now, it's a drag on our Canadian OR. So the Canadian truckload, the driver ink is killing us, okay? So it continues.

But I think that the federal government now is taking action, reducing the permit, the work permit and all of that. So maybe this is going to help us. So the big rock in my shoe. Okay, and it's been like that for a few years is TForce Freight, and we're working on it. Specialty truckload in Canada, we're doing well, doing really well. specialty Truckload in the US, we will do better in '25. We have a rough start of '25. We got too much trucks, too much assets that we're stuck with because of commitment of the previous management team there that we had to take on -- and then also the revenue per mile has been difficult for us in Q3 and in Q4. So far in Q1, revenue per truck is okay.

The revenue per mile is okay. The revenue per truck is down because the miles are down because of weather issues that will disappear during the course of the year. The freight is still not the greatest environment, okay?

Hopefully, with the new administration in the US, things will start to accelerate this freight demand. So yes, Konark, I feel really good about certain part of my business. My biggest problem is really TForce Freight in the US. I mean it's been that for four years. That's the only reason I keep up at night, okay, is really TForce Freight US.

That's helpful, Alain. And then maybe just a quick follow-up on re-domiciling. Any timelines you want to kind of suggest here in terms of the application process, the shareholder approval and when this thing can be wrapped up?

I think the time line is between 9 and 12 months. And again, okay, if I may add to that, Konark I mean, we have today within the TFI head office, we have employees in Canada and in the US. We have employees in Montreal, Toronto, Calgary, Chicago, Miami, et cetera, et cetera. And it's not because the domicile of TFI International will move from Canada to the US.

We're not moving people. We're not moving people from Canada to the US. I mean, we're not doing that. We're not stupid. I mean -- so I mean it's business as usual, okay? And us at TFI, we hire the best talent where the talent is. So if the talent is in Chicago, we hire in Chicago, if the talent is in Toronto, we hire in Toronto, right? So that has always been the nature. It's just like by doing that, now we become a US domicile, but every responsibility of TFI and office remains where the responsibility is today.

Kevin Chiang, CIBC.

Alain, I'll leave it to one and I appreciate all the color you provided on this call. I think in answer to an earlier question, you said absent any I guess, revenue recovery. You saw a path at least get just $7 or $7.25 EPS with your self-help levers. I know you're refraining from providing guidance.

But when we think of level of earnings growth without a macro recovery. You have a sense of how long you can get there? It sound like you have a lot of irons in the fire for '25. So is that something we can think of as at least in north star for 2026 as you kind of work through some of these initiatives? Or is it longer than that, shorter than that?

No, for sure, Kevin. It's going to take us some time. I mean the cost issue that we have at TForce Freight TForce rate is still a drag because our volumes are too low. Our volumes are too low. So 20,000 shipments a day. It's just very difficult. But we have levers that we're going to be working on. Now in terms of our logistics, I mean, it's a little bit of a market condition as soon as, okay, this GST situation corrects itself by the end of the year, okay? We're going to be doing about $200 million of with our logistics division.

Now this year, we'll probably be down to $150 million, $160 million because of what's going on with the truck manufacturing. I think our Canadian operations will do as good as they did in '25, and '24, okay? It's really we need major improvement. Because if you look at my TForce rate Q4 year-over-year, I'm down like $30 million I mean this is like a nightmare for me, right?

So I mean, we have to take the bull by the horn now, okay, Q1, because of everything that I've said because of all the fog and all this -- we can't -- we don't know where we're going to end up with Q1. So far, very difficult for our TForce Freight in our US specialty truckload operation I think that the truckload operation will improve during the course of the year. And it's -- we have a big job to do at TForce Freight US LTL. We're going to need a lot of work. But what the old saying, the harder you work, the luckier you can get.

Cameron Doerksen, National Financial.

I'll stick to one question as well, and you kind of mentioned earlier in the call just around uncertainty around tariffs and what that might mean for volumes. Just wondering if you can just talk a little bit about your cross-border exposure? I know you've got a decent amount of automotive work. I'm not sure how much of that is cross-border. Just any, I guess, additional color you can provide on where you see the risks might be if we have some sort of big blanket tariffs applied to Canadian imports into the US.

Yes. It's a good question, Cameron. I mean we all -- a lot of aluminum as. Okay. So for sure, aluminum is going to be part of the tariff. I mean, Mr. Trump has already said that aluminum tariff is going to be 25%. So we know that, okay? But we lived through that also in '18, right? So I don't think that this is going to affect the volume for aluminum, but we don't know. When we talk to customers, I mean -- they feel good. Well, we don't know, right? This is why I'm saying we are going to some fog right now because I think that by the summer, we'll know.

But right now, we don't know. Steel, we believe that Canada produces a lot of steel for the US market. Some of it is specialized. So I don't see issues too much with that. We hold some of that -- some of it is more like commodity steel, which is like a telco, for example.

So that could be a problem, okay, with tariff. So this is mostly FX Ontario. It will affect us a little bit. But the problem is always the domino effect of all these truckers that are holding this product that we don't use today that now are out of work could they start to rock the ship and attack some of our customers that we service today.

So it's still difficult to say, right? But because we're mostly a specialty truckload guy, it's not as easy as a van kind of world, right? So what we know so far, Cameron, we shouldn't be doing too bad. Now the transborder revenue is about 4% of global TFI revenue, 4%. So it's big, but it's not that big, right?

So we'll have to see. That's why we cannot provide guidance. I mean, even in my US peers, okay, are having a tough time to give guidance because of all this unknown is inflation coming back in the US or in Canada, okay? Who knows? -- the interest rates? Are they going to stay high like they are in the US?

The 10-year US bond is 4.5 or about that. So that's high, right? So is this going to stay -- Mr. Trump wants interest rates to come down. But so far, it's not happening, right? So all this is creating a lot of issues and not knowing where we're going. But to me, it's foggy, but it's going to clear up. It's going to clear up. I think it's going to clear up in the summer and then we know the rules, and then we'll just adjust.

And that is the end of our question-and-answer session. I would like to turn it back to Alain Bedard for closing remarks.

Okay. It's all right. Well, thank you very much, operator, and we appreciate everyone who's joining today's call, and I want to thank you for your interest in TFI International. So I look forward to providing additional updates as we move through the new year. And please, if you have any additional questions, be sure to reach out. Enjoy the day, everyone, and thank you again. Bye.

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