TFI International Inc (TFII) 2025 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's third-quarter 2025 earnings call.

(Operator Instructions)

Please be advised that this conference call may 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 October 31, 2025.

Joining us on today's call are Alain Bedard, Chairman, President, and Chief Executive Officer; and David Saperstein, Chief Financial Officer.

I'll now turn the call over to Alain Bedard. Please go ahead, sir.

Well, thank you for the introduction, operator. Welcome, everyone, to this morning's call.

Last evening, we reported our quarterly results that shows additional progress with operating margins, especially for our US LTL. In fact, across our entire company, the men and women of TFI International doubled down on our core operating principle, which is setting us up nicely for the eventual rebound in freight volumes.

I'm also pleased with our free cash flow performance, as this is always one of our top priorities. At more than $570 million year to date, this was slightly above the nine-month results from 2024. We use our strong free cash flow to strategically invest in the long term and, whenever possible, return the excess to shareholders.

Speaking of which, as you may have seen in our press release, yesterday, our Board approved a 4% increase in our quarterly dividend to $0.47 per share, suggesting a yield of close to 2%. Equally important, during and subsequent to the quarter, we repurchased additional shares, which I'll speak to in a moment; and while maintaining a very solid balance sheet.

With that, let's review our overall third-quarter results. We generated total revenue before fuel surcharge of $1.7 billion. That compares to $1.9 billion in the year-ago quarter. In aggregate, we produced $153 million of operating income or a margin of 8.9%. We've recorded adjusted net income of $99 million as compared to $134 million in the third quarter of 2024; and an adjusted EPS of $1.20 is relative to $1.58 in the year-ago quarter.

Rounding out our consolidated results, our net cash from operating activities came in at $255 million, up sequentially but down from $351 million in the same quarter last year. Finally, our free cash flow from the third quarter was nearly $200 million, also up sequentially. In addition, as I mentioned, this brought our year-end-to-date free cash flow to just over $570 million.

Overall, when I look at our consolidated performance, first and foremost, I recognize the hard work of our team, with everyone across our segments working to make the most out of a subdued freight environment and, most importantly, setting us to capitalize on the next cycle.

How do they do this? Well, they focus on long-held core operating principle, ensuring that quality of revenue and aiming for constantly improving efficiencies. Additionally, as we make meaningful progress on service improvement in US LTL, it's gratifying to see the team recognized in this regard by leading third-party customer research firms. So we very much appreciate their hard work.

Now, let's take a closer look at each of our three business segments, beginning with LTL. This quarter, our LTL operation represented 40% of segmented revenue before fuel surcharge, which was down 11% versus a year ago to $687 million. Notably, our US LTL operation showed additional progress on margin for a second quarter in a row, producing a 92.2% OR, which matched the performance of a year earlier. Total LTL operating income of $78 million was up sequentially from the second quarter but compared to $96 million a year earlier. Our combined operating ratio for LTL was 88.8%. That's also improved sequentially, in fact, for the second quarter in a row but still compared to 87.3% in the prior-year third quarter. Our return on invested capital for LTL was 11.9%.

Turning to Truckload, it was 39% of segmented revenue before fuel surcharge at $684 million, which compared to $723 million in the year-ago quarter, with tariff impacts on steel and other commodities still waiting on freight volumes. Operating income of $53 million compares to $70 million last year. Our Truckload OR came at 92.3% versus 90.6%. Lastly, our Truckload return on invested capital was 6% for the quarter.

Our third and final segment to discuss is Logistics, which produced $368 million of revenue before fuel surcharge or 21% of segmented revenue. This compared to $426 million in the third quarter of 2024. Operating income came in at $31 million versus $49 million last year. This represents a margin of 8.4% versus 11.4%. Our Logistics return on invested capital was 14.6%.

Next, I'll move on to our balance sheet, which remains very strong, benefiting from a free cash flow I mentioned of nearly $200 million during the quarter and more than $570 million year to date, which is stronger than last year. We end up September with a funded debt-to-EBITDA ratio of 2.4 times.

From this position of strength, we are able to not only pay our dividend, which I mentioned, the Board agreed to raise today; but we also repurchased a total of $67 million worth of shares during the quarter. That brought our total return of capital to shareholders to more than $100 million during the third quarter alone.

As I mentioned at the outset, this is one of our key business principles: to return excess cash to shareholders, whenever possible. I should add that, subsequent to Q3, we also have repurchased an additional $17 million worth of share, as we continue to effectively reduce our share count.

Before we turn to Q&A, I'll provide a fourth-quarter outlook. We expect fourth-quarter adjusted diluted EPS to be in the range of $0.80 to $0.90. We now expect full-year net CapEx, excluding real estate, to be $100 million to $175 million compared to $200 million earlier.

Similar to last quarter, I'll note that our outlook assumes no significant change, either positive or negative, in the actual operating environment.

With that, operator, David and I would be happy to take questions; if you could please open the lines.

(Operator Instructions)

Ravi Shanker, Morgan Stanley.

Alain, I would love your overall thoughts on the state of the LTL market today. Obviously, macro still remains pretty depressed. But you guys are taking idiosyncratic actions, as well.

If you just could address where do you think volumes are going; what do you think the pricing environment is like, that would be great.

Yeah. Well, very good question, Ravi.

I think that like most of our peers, so far, we're off to a very slow start in Q4, with all kinds of reasons. We have this special situation in the US, with the government shutdown and things like that.

We anticipate that, probably -- in our guidance, what we have in there is Q4 versus Q3, okay? We'll probably see a deterioration of the OR between 200 basis points to 300 basis points, okay, because of this slow volume environment.

Now, going into '26, we're starting to have a feeling that after three years of very, very hard, difficult freight recession, we believe that, finally, all the effect of that Big Beautiful Bill's and the fact that the consumer will probably get some tax refund, et cetera, et cetera, the investment, okay, that will probably take place in the industrial sector in the US, we feel way, way, way better about '26 than what we went through about 2025.

Now, what we were able to do with TForce Freight, I think it's a confirmation that the new team is really all hands on deck. We've been working on our costs. We've also been working and improving our service. That's been confirmed by the famous Mastio report. We are improving. We still have a lot of work to do but, still, we're heading in the right direction.

I'm very happy with the team, with what the guys are working on, right now. We're looking at '26. We need to do some major investment in AI, okay, to help us reduce our costs and be more efficient, provide a better service. In that regard, we have some projects that should take place in '26.

Q4 '25, difficult all over for us, I believe. But I think that, finally, the sun is going to start coming up in '26.

Understood. That's really helpful. Just, you very quickly addressed that, as well.

But if you can just talk about the progress you made with fixing some of the internal initiatives in the LTL business, how far along are you? What do you think are the next few steps you can expect in the next quarter or two?

Yeah. Well, one of the first things that we did, Ravi, with Kal and his team there, is we fixed the small- and medium-sized business, where we were way -- we've lost too much of that in '24. When Kal took it over with Chris and the rest of the team there, they said, well, we definitely need to change that, right?

What you see there, okay, in Q3 and also, the improvement in Q2, some of that is the improved quality of revenue, quality of freight that we do. That's basically step number one.

Step number two is we were a little bit too relaxed on some aspect of our business. For instance, our approach [us] with temp account was you deliver the freight and hope to get paid, okay, when an account does not exist with you. Well, I don't think no one is doing that, right? We were an exception in the US. We fixed that in Q2 and for the rest of the year.

Now, if you order at TForce Freight and you have a ship and we don't know who's going to be paying the bill, we hold on to the freight until we know who actually is going to be paying that bill. That's also another improvement. Because of past procedures, we were losing a lot of dollars because of that negligence of our process at the time.

Now, also, we've hired a guy to run our fleet management team. I'll give you just a small example.

Last meeting, we had -- the other day in Dallas, it used to be that a truck, a TForce Freight, get into a shop and that truck is stuck there for 85 hours. Well, now we're down to about 45 hours. It's still too much. But that helps, okay, the cost because now, the truck is available so you don't have to rent a truck for five days or six days because now, instead of being stuck there for, like, two weeks; now, the truck is stuck there for now a week, right?

These are all the small details that Kal and the team there are looking at.

We have a new team, also, that's focusing on claims because our claim ratio at 0.7% of revenue is not good. It's never been good. So we have to do something.

If you look at our claim ratio in Canada, we're always in that 0.2% of revenue, which is normal, right? But we're at 0.7%. Now, we have a team that focus on that day in, day out in trying to get that 0.7% down to a more normal level, right?

These are all small things that the guys are doing. We'll be announcing, also, Ravi, very soon -- probably next week -- that now, within TForce Freight, we have one executive that's going to be a Chief Commercial Officer for all of our LTL operation in the US.

Again, this is because our focus is on quality of revenue, growing the number of shipments. This is what I think that we will start to see in '26.

Jordan Alliger, Goldman Sachs.

Maybe just following up on that, it sounds like real progress is being made, which is great. Hopefully, next year will be better, in terms of the underlying demand.

In the context of that, now that maybe it's getting to that point, how do you think either incremental margins or where LTL OR in the US could ultimately get to? Do you have any updated thoughts on that? Because, clearly, what you've done has improved the company versus the last time we had strength in the LTL market.

Yeah. Yeah. Absolutely, Jordan.

If you look at our US LTL versus our Canadian LTL, in Canada, we have a deep bench and we've been at it for a long time. In the US, don't forget, we're in that business since we bought UPS Freight.

Now, we're beefing up our talent team. That's going to help go through that period that, hopefully, is going to be some tailwinds for the LTL industry, in general. We'll be, I think, well positioned to take advantage of that.

But the focus at TFI, with every business unit, has always been do more with less, okay? This is why, like I said earlier to Ravi, we are really focused, in '26, what implementation we could do with the new AI tools that are available to be in a position to do a better job, provide better service at a better cost for all of our customers.

There, I'm not just talking about TForce Freight or LTL, I'm talking about our Package in Canada, our P&C business in Canada, I'm talking, also, about our Truckload operation in the US. This is really going to be a big focus of ours in '26 because now, contrary to '24, this AI thing there is really something that's going to change a lot of stuff.

We know that down the road -- I don't know if it's 10 years from now, okay -- you'll be probably able to drive a truck without a driver, right? So when you think about that, all the edge that a non-union carrier has versus a union carrier, well, that edge, down the road, will probably disappear, right? But this is 10, 15 years from now. I don't know.

But one thing is for sure is that us, we are embracing AI, big time. We'll be investing on that. That's a big focus of ours in '26. This market has been difficult for us for the last three years, okay?

Hopefully, the market turns in '26. We don't control that. But what we can control is our cost and our focus. This is something that I'm reviewing the plan for '26, as we speak, next two weeks. So it's a big focus of ours, Jordan.

Okay. Great. Suffice it to say, without necessarily putting a number then and a timeframe, I would suspect, given what you've done, when we do get to a positive volume environment, you'd expect fairly quick reaction to the operating ratio to the improvement.

Yeah. Yeah, for sure. Because, don't forget, you know what, [Jord], if you look at what we were able to do, with, sadly, 10% less top line, okay, in our US LTL -- and we maintained the same OR as the previous year at 92.2% -- that tells you the heavy lifting that our guys are doing today, okay, and becoming more process-oriented.

I'll give you another example: Shippers loading count, okay? You get a trailer and the load and count is from the shipper. But if you don't check, maybe there's a mistake.

But we were too relaxed on that. Now, Kal and the team says no more, no more. We get a full trailers from the shipper, we have to check, okay? If there's a shortage, well, we have to tell the customer right away and not wait and get a claim three months down the road because there was a shortage.

This is just being professional in our business, right?

Scott Group, Wolfe Research.

I wanted to see if we can dig into the fourth-quarter guidance a little bit. I think I heard you say, Alain, the US LTL margins, 200 basis points to 300 basis points worse. It's hard to get all the way to your guidance, unless like, the rest of the business is doing particularly badly. Maybe -- I don't know, you or David -- just walk us through some of, like, the segment expectations, that could be helpful.

You know what, Scott, that's a very good question. I've got David next to me. He's the CFO. I think I'm going to let that to David. He's the numbers guy.

Scott, yeah, embedded in that guidance is a US LTL OR in Q4 of 96%. Specialized Truckload, between 93% and 94%. Logistics, also between 93% and 94%. That Logistics piece is down substantially. When you run the numbers on what that suggests year over year, operating income contribution in Logistics is down by about half.

Right. Logistics, Scott, as you know, we move all the trucks that are being manufactured in North America for PACCAR and Freightliner. These guys are down, like, 40%. That's a huge effect on us.

Also, globally, our Logistics operation in the US is also down. The Canadian ones are on plan, doing better. But in the US, we're also down. We're running about 92% of plan, right now.

This is what we are showing there.

I'll give you another example: Because of government shutdown, DoD is dead, Department of Defense. One of our divisions, 30% of the revenue comes from the Department of Defense, right? This is out of our control.

The same thing with the OEM, okay, selling less trucks. This is something that is out of our control. But we know it's short term. It could be two quarters, three quarters. Those guys will be selling trucks soon.

That's why we're also keeping the staff. We're keeping the team because we'll be suffering for a few quarters because of that situation, okay? But we know that this freight is going to come back.

It's the same thing with our Truckload operation that service the Department of Defense. We know that this shutdown will stop at one point.

Yeah. And then, in terms of rounding out the rest, P&C and Canadian LTL, we see those in the 82%, 83% range; and Canadian Truckload, around 90%.

Okay. Very helpful. And then, Alain, it feels like on the US LTL side, one of the messages in the last year or so is we got to get service better before we can start focusing on price. Where are we in terms of the ability to start getting a little bit more focused on price?

And then, maybe just with that, it feels like we're seeing some stabilization in the GFP business, is there any potential to start growing that business again?

Yeah. Yeah. You're absolutely right, Scott. GFP, finally, is -- we got some stability. Now, we could start growing again because the business we get from GFP comes mostly from the small- and medium-sized accounts. Once you start going back -- the small- and medium-sized account, normally, you should have a benefit to your GFP.

In terms of the service, what I would say is that, right now, about 21% of our linehaul miles are on the rail versus 30% or 35%, like it used to be. For sure, our four-day service has improved tremendously, right? Because we use less rail today than we were using about a year ago. That's number one.

Next-day service, we're up to par. If we compare our next-day service to our peers, we're there.

Where we still have issues is second-day and third-day service. The guys are working actively on that. We are improving. We're not where we should be. But that is really -- the goal is to get this up to our peers on the second- and third day service. And then, slowly in '26 -- and I think we'll get there -- we can start being seen as a professional carrier that respect, okay, the commitment that they give to customers and get a price that is closer to the market versus -- right now, we're still a discounter, okay, versus the market.

Yes. To follow up on what Mr. Bedard said on service, I think one of your peers pointed out that we were the most improved carrier in Mastio in this year's survey. I can tell you that that's underpinned by real data that we're seeing.

Our small-, medium-sized percent of revenue is higher than it was last year. We're at 27.4%, relative to 26.7% last year, this quarter.

Then, on service, we've improved 340 basis points in terms of our on time. Our missed pickups year over year, they're down 60%; and then, our reschedules are down 34%.

These are facts, Scott. This is going to help us, like you've asked the question, to get better profitability from the top line.

And more freight.

And more freight, sure.

Better retention.

Yeah. Less turnover.

Less turnover.

Walter Spracklin, RBC Capital Markets.

Alain, on 2026, you said the sun is coming up. You've been very pragmatic; very, very clear about when you see things that are poor and when you things that are turning. And so that's very interesting for you to say and to hear you say.

I'm just curious, is that a commentary on price? Is it a commentary on demand? Specifically, are you seeing any real evidence, either from the CDL restrictions and English language proficiency requirements, that are now being mandated?

Are you seeing that impact today on price? Are you seeing any light at the end of the tunnel, in terms of overall demand, as you go into 2026?

Okay. Walter, let me be a little bit more specific. When I see the sun coming out, it's mostly the US. I think Canada, okay, because we still don't have a deal with the US, it's going to be probably the same in '26, like we have been going through in '25, right?

But on the US side, if you look at our Truckload operation in the US, our velocity is down. Our miles are down. But our revenue per mile is up until now, right? So what we're starting to see is maybe a little bit of contraction in the offer. That could be, like you just said, Walter, this thing about the CDL, okay? Those permits are not being renewed, okay?

The same is true of the English proficiency thing.

The early stage, okay? But I believe that, okay, this is going to help us correct the imbalance between the offer and the demand, okay?

Also, the fact that the truck sales are down, like, 40%. That's also something that tells you that some capacity is running out of the system, right?

Now, for us, Canadian, I'm sure you saw what Champagne was saying about his new budget that he's going to be talking about soon, okay? Hopefully, in Canada, we'll have something similar with those Driver Inc., thing there, okay, where, finally, we were able to convince the federal government to say, if you're a trucker, you have to issue either a T4 as an employee or a T4A as a subcontractor, right, Walter?

So the Canadian, finally, also could be a help for us in '26, maybe not on the volume but the offer could reduce. As a matter of fact, we just saw one of the Driver Inc., up for sale, okay? We're not going to buy a Driver Inc., company but just to say that those guys are starting to feel, woah, things are changing in Canada.

I think that, globally, the Canadian situation is going to be difficult in '26 because we don't have a deal with the US yet. I think we'll have one. But we don't have one yet. Maybe it's going to go all the way to the summer '26.

But I think that the US, okay, that's going to change. That's going to change with all the benefit of this OBB; the Big Beautiful Bill; and everything that's going on -- the reinvestment, okay, trying to bring those jobs back into the -- all of this, to me is, guys, let's get ready, okay?

I think, after three years of a freight recession that has been really, really bad, we're starting to see some capacity out. As a matter of fact, even, we have one of our peers in Alabama, 500 trucks. The guy is out.

They're in bankruptcy. Yeah. Exactly. We're seeing those come across our desk more and more now.

Exactly. We also have a freight guy, a freight broker, okay, closing shops.

As you become a bit more optimistic on '26 then, does that change, at all, your strategy on M&A? Do you pull that forward at all? Is it contingent on the seller?

Just curious your update on what -- and I'm talking, not the tuck-ins, a larger platform acquisition.

Yeah. Yeah. You know what? This takes time, right? We've been at it for quite a while.

Because we don't have a deal, what we're doing is we're buying back TFI, right? That's what we've been doing.

I think that in '26, hopefully, we could have -- it's always difficult to do a deal when the target doesn't want to sell, right? This is not easy to do, right? Sometimes, you're better off to say, you know what, let's wait, okay; and let's work on a different file where, at least, you got a seller that's motivated, right?

To me, I'm still convinced that '26, probably mid-'26, later into '26, we could do something of size. We have the capacity. We have the potential. We have the target, okay, to do that.

But there, again, TFI stock is so cheap that when we talk to our Board, they say, hey, Alain, why would you invest $1 billion, $2 billion, $3 billion, okay? Why don't you just buy back TFI, okay? We've been doing that slowly.

But now, things could change with this macro environment and maybe it's best to put the buyback on hold for now, although we have our Board -- and the TSX approved the renewal of our NCIB. But maybe put that on hold for now, depending on the stock valuation and get ready for the next step, the next chapter of our life on M&A.

Jason Seidl, TD Cowen.

Getting back to your comments about a potential trade deal with the US -- and I share your hopes that it's sooner versus later but if it is later, have you given any thoughts to maybe some further cost reductions that you might have to take, given that you saw CN out there the other day laying off about 400 people?

Yeah. Well, you know what, Jason, I don't know that. What I could tell you, though, is that because we're so embracing AI, I think that with this tool, we'll be in a position to do more with less. I think that to do some layoff, right now, of quality people that are part of our team -- the same story is true of our Logistics, right?

As I was saying, Jason, about our truck-moving operation, we know that this is just a few quarters. So we are suffering because we're keeping our people, right? Because these are good people. They're doing a good job. We'll be suffering on that.

We are still suffering on the Canadian side in our Truckload sector. As an example: steel, okay? Well, steel is dead for us. But we are a big steel hauler. So what do you do? Now, we have those trucks parked and we have those drivers at home because that's the only thing we could do. But then, we have to protect our staff because the problem is, when this business gets back on track, you don't want have to rehire drivers and, at the same time, also rehire the staff.

This is why by investing more in technology through this AI thing there we'll be able to be better positioned to be fast; to react much faster to market condition.

Well, Alain, as a follow-up there, as we think about JHT, can you give us some numbers in terms of how much of a drag it's placing on the margins at Logistics? In terms of the AI, how quickly do you think some of your investments are going to bear fruit that we can see, as we move throughout '26?

Yeah. I'll give you an example, Jason, about the AI. When I'm talking to Kal and his team at TForce Freight, I'm saying, you know what, guys, we have to find a solution, if Waymo can run taxi in Austin, Texas without a driver, how can we not run shunters in our yard without a driver, right? Is there a way, guys?

Let's wake up and smell the coffee. Let's open our mind that we have to change. If Waymo is able to run cab in Austin, in a city, okay, why can't we run shunters in a yard, okay, without the drivers?

These are all things that we're looking at, Jason, to be more efficient, right?

Sales augmentation, as well, increasing the productivity massively of salespeople, in terms of effecting; in terms of identifying targets that fit not just names. It's -- okay, what's their business look like? How does that fit with our network?

The solutions can do a lot of that work and then, increase the velocity of the contacts and the outreach and the back and forth. It's remarkable. That's another important application that we're looking at, right now; and we're rolling, out right now.

That's some good color. The margin hit from JHT?

Well, JHT, the margin at JHT is probably -- depending on what you talk about, if you're talking about trucks that move from Mexico, okay, to the US or Canada, the margin is not the same because we use a Mexican partner to move that truck from Mexico into the US or Canada.

Also, don't forget that we have experienced drivers in there.

We also have a Logistics division. So when the volumes are down, our Logistics division, okay, is very small, okay, because the Logistics gets the overflow. Right now, there's no overflow. This is why -- and as you know, Jason, in our Logistics, the margins are really good, okay, on the overflow. This is a little bit of a complex story.

But what I can tell you is that JHT is a diamond for us because it's very well run. The guys -- and this is why we're suffering so much, right now, because the volumes are down but we probably have 50% too much staff for the volumes we have. But we're keeping those guys, right, because when the things go back to normal volume with Freightliner and PACCAR, we want to be there. We want to be there to be able to service them, right?

Konark Gupta, Scotia Capital.

Alain, you mentioned about AI quite a lot on this call -- and technology. I'm pretty sure I think that's the next evolution for you guys and everybody in the industry.

I think, though, you reduced the CapEx guidance for this year. I'm just curious, when you think about the year or years ahead to invest for technology and for eventual rebound in volumes, how do you see the capital planning for those things? Should you see a significant increase in CapEx for that?

On the AI, no. These are licenses. It might be $30 per person per month, $35. It depends on what exactly we're talking about, what -- but these are light, very nimble tools that we add on.

Like in sales, you'll add it on to your CRM. So I wouldn't -- first of all, that's not going to be CapEx, that would be expense. It will not be noticeable. We're not building data centers and that kind of thing. We're just customers and adopters of the technologies that are out there.

As it relates to regular CapEx on trucks, there's no question that this is a very, very light year, right? At the outset of this year, we set out to do $200 million of net CapEx. Normal for this business would be more around $300 million.

But the volumes are so low. We're driving so few miles that we -- and we had excess equipment from the Daseke acquisition that we're able to reduce the CapEx without really meaningfully aging the fleet. And so that's fine.

But you should think about a more normal net CapEx number for us to be around $300 million. But that also will take place in a year where there's more normal earnings, right? So free cash flow would be higher than it is this year, even with that increased CapEx.

The other thing, too, is that our CapEx has been delayed at TForce Freight because the supplier was not sure.

Because the trucks, they are assembled in Mexico, right? All this tariff-thing situation, the trucks have been delayed by about three months. Right now, we're getting trucks in October, November that were supposed to come in Q3, right? Some of trucks, also, will come in Q1 '26 that were supposed to be part of '25.

This is why this revised CapEx that you see is -- it's exceptional that we're so low in a year like '25. We should -- if things come back, like we think they will in the US, we should get back to a more normal environment, okay, of activity, miles, and freight.

For sure, we'll be back to normal CapEx.

Makes sense. Just quickly, to follow up: You mentioned Daseke, in terms of access equipment you got there. Where is the integration process on Daseke now? Like, it's been a while, right?

You had Daseke in the system. I'm sure, obviously, the volumes are soft and all that. But what you can control, from a self-help perspective, like, are you fully done there? Or there's more to do?

You know what, on the Daseke, on the financial side, okay, we're done, okay? By the end of '25, we're done, okay? Fleet management, financial, they run MIR now, okay, like Contrans. They also run on Infineon for financial like Contrans, okay, which is our Truckload division, right? So this is done.

In terms of the day-to-day TMS, okay, there, we're still working on McLeod and TMW, okay, updating those systems; and ,also making sure that we have visibility across all the divisions because Daseke was more of a siloed companies, okay? That is going to change during the course of '26.

Sales is also something that we're working on at our US Truckload operation. This is something I'm still discussing with my friend, Steve, okay, how we're going to go about the commercial operation in '26. This is still something that needs to be ironed out.

But, for sure, we need to invest more on the commercial side of our US Specialty Truckload because I believe that with everything that's going on in the US, we need a sales team that are aggressive because there's going to be more business.

Ken Hoexter, Bank of America.

Can you address the start in October on volumes, relative to the down 7% tonnage in the fourth quarter, 11% shipments?

Yeah. The start to October -- we're not in the habit of giving monthly data, as you know. But the start to October is soft, like the industry leader pointed out on -- when they reported recently.

I just want to understand if it accelerates because David, just to clarify, right, when Alain said LTL, 200 basis points to 300 basis points deterioration, you said [96], which would be a 380 basis points sequential deterioration, I just want to -- was there anything in there that's getting worse? Or I didn't know if the volumes were accelerating the downside, just understanding what was in the numbers there.

No. Listen, the 96 is what's embedded in the guidance. That's what our current forecast says. That is driven by our observation of the first month of the quarter. So yes, October was weaker than it usually is; weaker than expected.

Yeah. Ken, because, me, I'm always being optimistic. This is why me -- that's the target, when I talk to Kal. But David is the CFO. He's the numbers guy.

Sometimes, we have different perspective. But you got to trust -- probably, better -- David because he's the numbers guy.

Okay. And then, just following up on that. The Logistics, similarly, right, the OR deterioration. You mentioned the JHT. Is that getting more expensive or deteriorating OR because of what's going on, in terms of reduced capacity availability from ELP and the CLs you're talking about? Just want to understand the negative mix. Was it really just on the top line, like you're talking about with LTL and the volumes? Or is it the cost side kicking in, as well?

No. It's not the cost side. It's not like it's harder for us to get capacity. It's a combination of -- we -- remember, our Logistics broker -- the brokerage portion of our Logistics, most of it is LTL. So if LTL is off to a slow start in Q4, the same is going to be true for our LTL brokerage, in terms of demand.

And then -- but the majority of the drag in that segment is coming from the truck-moving business and the dynamic that we've talked about, in terms of holding on to our people during that period.

And then, Alain (multiple speakers) --

Excuse me, I was just going to add, Ken, that this is -- the old red is killing us at JHT because like David is saying, we're keeping the staff. We're keeping the team because we know this is short term.

Excuse me. Please go ahead.

No. Exact same issue, right, which is short term on that because you mentioned the government shutdown, it's surprising because it seemed like a lot of companies were avoiding that thing. We don't really move that stuff. But it sounds like you're seeing not only direct business where, particularly, for the DoD customer -- but the derivative of that.

Is that having another flow-through on other -- or derivative customers increasing that demand or not necessarily at this point, too early?

Yeah. Yeah. Well, one thing is for sure, Ken, is that everything is slow, right now, because think about the fact that some people are not being paid or delayed in the payment of their salaries. For sure, the demand is slow, right now. It w1ill correct itself, as soon as there's a deal in the US. We don't know when. I think it's going to be soon.

DoD, it's a big part of our Specialty Truckload, Ken. 30% of our business normally is moving freight for the Department of Defense. It's just one example that this is why our guidance for Q4 is exceptionally low.

This is not normal for us. But it's like a perfect storm where our Logistics has been affected badly, okay? Our Truckload, the same. So -- and also, the fact that in Canada, it's pretty difficult, as we speak, right, because of the trade between the two countries. So it's like a perfect storm for us.

But $0.80 to $0.90 EPS for us is not normal. It's exceptionally low, okay? But we have to give guidance that is proper.

Yeah. One more on that real temporary question but -- and I don't want to talk about the government shutdown on the post office but the post office is threatening to make drastic changes of changing how many days you get deliveries and things like that.

Is that a huge potential for P&C? Or is that a cost issue? I just want to understand if that's longer term, not just the takeaway of the strike minimal volumes. I'm thinking bigger picture, long term, does that change the structure for your P&C business?

Well, for sure, Ken. If, finally, these guys in Ottawa decide to -- because you're talking about Canada, right, Ken?

Yeah, just Canada. Yeah. Yeah.

Yeah. Yeah. You're talking about Canada. For sure. I think that the guys in Ottawa now wake up and they see that things have to change. Things have to change. We are way more efficient than them, okay? So whatever change they do, okay, it should help us on the longer term, Ken, in Canada.

(multiple speakers)

You know what, I'll give you an example of what's going on, credit cards, okay? Credit cards from financial institution used to be with Canada Post. Now, it's mostly us, right?

A year ago, there was another strike. So we did that. Then, they went back to Canada Post. But now, the discussion we're having with them, this is going to be a permanent change because I think the financial institutions are sick and tired of back and forth.

Cameron Doerksen, National Bank Capital Markets.

A question on the Canadian LTL shipments, down quite a bit there, I think 12%; but revenue per shipment was nicely positive. Just wondering if you could describe what you're seeing in the Canadian LTL space? Are you just being more selective in the business that you're chasing there?

No, no, Cameron. It's just our customers -- the weight per shipment is down, right? They're less busy. Us, we're not losing customers, major customers. One that I think of -- we've lost one customer that I'm thinking of, yes, okay? But, in general, there's no churn in customers, unusual. It's just, like, lower activity, Cameron.

Okay. Just on -- going back to your comments around the Driver Inc., and, hopefully, this change in the government will actually result in some change as we look ahead to next year. If that does happen, what does that impact on your business?

Is this something where you just expect that some of these driver in carriers will just not be able to be in the market at all and so there's a volume-positive for you? Or is it more just that they're are underpricing in the market and this will just lift the pricing across all carriers, if they don't have that benefit anymore?

Yeah. Yeah. Well, we know these guys have been cheating all along. We know that now, if they have to issue T4A, the cheating is going to disappear. So if you look at the evolution of our OR in Canada, the Canadian Truckload, it's just a disaster because we used to run 80 to 85 OR. Now, we're running a 90 OR.

Why is that? Well, because we have to be more competitive, et cetera, et cetera. This was always unfair competition to us. So we think that now with this new issues, okay, you're going to start to see some change.

Another thing, also, that's important to notice is the safety record of those guys is not good. So people are starting to understand. We've got customers now that are stating, we don't want to deal with those Driver Inc., anymore, right?

We have won a paper guy big in Quebec that said, hey, you know what, you have to certify that you're not a Driver Inc., because more and more, there's also -- not just the cost, but the safety of these guys, okay, has been questioned now, right?

This is like, to me, in '26, when I look at Canada, the market is going to be probably a little bit more difficult but the supply is going to be also much less.

So we'll probably be in a better position in '26 than we were in '25 because slowly, okay, those drivers will have to adjust. They will have to adjust the rates. They cannot cheat because, right now, a Driver Inc., guy is not paying any taxes. Now, he gets a T4A, whoops, Revenue Canada is aware of him. If he doesn't pay his taxes, then he's going to end up with a little bit of an issue.

Brian Ossenbeck, J.P. Morgan.

Just going back to the Mastio survey and the big improvement you noted, when do you start to get credit for that? Is that something that you do at once? Obviously, it's continuous but you get some credit the first time you make a couple of big steps; and then, they start to give you more volume; and then, maybe, more price later.

And then, just related to that, I'm trying to understand how you can be pretty good on four-day service and next-day but not necessarily two- to three-day. What's the part I'm missing there?

Okay, Brian. I'll let David talk about the Mastio report.

But what I can tell you is that the four-day, okay, where we were able to make some changes is that we move freight from rail to road, right? When you do that, you are in control, right? This is why we're doing really well on four-day versus what we used to do.

Next-day, because we come from the UPS environment where everything was next-day, these guys have always been good on next-day. We're just -- it's just a continuation of what these guys have done all along.

The second-day and the third-day, this has been the issue, okay, where we're not acting as being professional. We don't monitor. We just let the other guy do the job. Now, it's a focus of ours because this is a big issue because you have a commitment that you give to a customer that is going to be there in three days. But it's not there in three days, it's there in five days.

Well, that doesn't work, right? So you've got to be having process in place that you manage that. This is something where in the old days, there was no real focus. Now, through this new focus of the team, it has been a major focus of ours.

We know that second-day and third-day, okay, we were not as good as our peers, right? But we're getting there because we're making a lot of changes and a lot of improvements.

That's the difference between four days, two days, three days, Brian.

In terms of how you get credit, in our experience, so far, we would expect to see the impact, first, on volumes, right? Your turnover and your churn comes down. You're able to retain more business that you get. Then, you start to get more wallet share from the same customer.

Because remember, our customers -- a lot of the big customers use all of us, right? They use lots of carriers. It's just a question of how much they're allocating to each one. And so you do a good job, start to get a little bit more.

The first place that we would expect to see it is on volume. Pricing will come later.

Pricing, frankly, is going to be a little bit of a function of the supply-demand imbalance correcting itself or, at least, normalizing; and the market being a little bit more balanced, right? When the market is more balanced and our service is improving and we're getting more freight from people, then we could start to see pricing.

The other thing I'll point out on this is that the beauty is that we've made big improvements but there's still a long way to go, right? We're not best-in-class yet. We've still got another hundreds of basis points to improve on time.

We can drive our missed pickups way down further; reschedules way down further. Our claims can come down way further. So we're still in the early stages. There's a lot more value for us to create for our customers in the form of better service; and, ultimately, for our shareholders, when that plays through to the numbers.

And then, just the relative size of the two to three days, it sounds like that's probably the bigger chunk of the market or the opportunity, relative to maybe the four and the next-day.

Yes. Absolutely, Brian. Because I would say that next-day for us is about -- not even 20% of our volume today; and 4 days is probably about the same. The big chunk of our business is between two and three days.

This is where we are the weakest today. This is where our focus is is, guys, this is where we have to work on, right? So we made some major improvement in the four days there. We're good. We're good on the next-day service; fine. But let's do the job on the two and three days.

We are improving. Absolutely.

Tom Wadewitz, UBS.

Alain, I wanted to get your thoughts on just the size of the terminal network for US LTL and where you would want to be for shipments. I think that was something where you inherited some or you bought something that had over 30,000 shipments a day -- I don't know, 33,000, whatever it was -- a wind down on your own initiatives. The cycle went down.

I think that has been a component that you're like, well, we can't be a [90%] or mid-[80%s] OR company, if we're just way underutilized. How do you think about where the network is and how much volume is a piece of ultimately getting to the goals? Like, maybe how large that gap is? Because that seems like a factor that would ultimately matter, as well.

You're absolutely right, Tom.

As a matter of fact, in Q4, we will probably swap three terminals with one of our peers to readjust the size of our terminal, okay, versus those guys, right? This is an ongoing thing, okay, that we continue to do.

Cash-wise, probably, in our Q4, between what we're buying and what we're selling, we should see a net positive between USD40 million and USD50 million in Q4. But, still, even with that, going into '26, I would say that -- we probably have another 2,000 doors too many, okay?

Now, the challenge that we gave our team is that the network was probably built to support 40,000 shipments a day. We're doing half of that, right? So organically, it's going to take us some time. But can we go organically from 20,000 shipments a day to 40,000 shipments a day? That takes a long time. So this is for sure.

There's more to go. There's more to come into adjusting our network, okay, to today's reality. We'll keep doing that.

We're talking to all of our peers all the time. What's the number of doors that we would need today? Probably more like 5,000 to 6,000 to 7,000 doors. But these doors have to be in the right location, right?

That's the other thing that we're working on. In some areas, I'll give you an example. Dallas, I don't have too many doors in Dallas because we're doing well in Dallas and we are increasing our volume in Dallas. Chicago, the same, right? So we got areas that we are growing, okay?

Now, you say, well, your volume is down, yes, because in other areas, we are losing, right? But we were working on balancing the network, absolutely, like everything else, Tom.

Is that an issue on service that if you rationalize or it's not -- it's size of terminal for you, it's not necessarily, like, reach of the network?

No, it's not an issue for service, Tom. No.

Benoit Poirier, Desjardins Capital Markets.

Thanks, Alain, for the great comments about the impact of regulation, both sides of the border.

Obviously, you mentioned some color about 2026 being more of a sunny picture, especially on the US LTL. I'm just curious what OR could you produce in a flat volume environment in 2026?

Maybe another scenario where you see a more bullish stance, in terms of volume?

Well, I think if everything stays the same, I think that in this kind of an environment where the volumes are light, et cetera, et cetera, if you look at our Q2, if you look at our Q3 -- for sure, last year's Q1 was a disaster for us at [99]. I don't think that we'll be in that position.

So can we say no volume growth, okay, for '26 versus the same environment, '26, that we've been seeing in '25, with the investment that we're doing in our cost management and all that? Probably a 200 basis points, globally, improvement; 200 basis points to 300 basis points versus what we are delivering in '25 into '26.

Okay. That's very great color. Just with respect to the Chief Commercial Officer role, is it fair to say that the candidate has already been identified and is coming from the outside? I'm just curious to see how it will change the jobs performed by Kal and the team, overall.

No. The guy comes from the family. The guy is within TFI.

Bruce Chan, Stifel.

This is actually Pernille Buhl, on for Bruce. I appreciate all the color here.

A quick one. I wanted to ask about CapEx. In terms of CapEx budget from here, how would you expect it to trend, going forward? What investments of needed, as far as maintenance and, potentially, growth?

Yeah. For this year, we've updated our guidance to $150 million to $175 million net CapEx for '25. In normal years, it would be more, like, $300 million, okay? That's all maintenance CapEx. The way that we think about CapEx is really about maintaining the fleet that we need.

We're not seeking to grow the fleet organically when volumes turn, we just use that opportunity to get more productivity out of our assets; use that opportunity to take the highest paying freight. We get the operating leverage that way.

Ariel Rosa, Citigroup.

I wanted to ask about tariff impacts and what you're seeing there. To what extent do you think tariffs are holding back business, whether it's cross-border or in Canada versus how much of the volume weakness is related to cyclical factors or underlying economic factors that would be independent of the tariffs?

And then, to the extent that we get a little bit more tariff clarity, do you see that as a positive or an incremental positive into 2026?

Well, one thing is for sure: If you don't know the rules, everybody sits on the sideline, right? The problem we have, right now, is that we don't have a deal. Mexico or Canada, both countries, big traders in the US, we don't have a deal, right? This is why it's so important that in '26, at one point, okay, there has to be a deal between the three countries, right?

In the meantime, okay, in terms of not knowing where we're going, right, for sure, it's a big effect, right? If you take the aluminum, okay, I was reading what the President of Rio Tinto is saying, aluminum is not affecting them, okay, the tariff, okay? But what they're doing is they're shipping some of their aluminum from Canada to the Europe. Well, it's affecting me because I don't have any ships, right?

But down the road, okay, this is temporary. For sure, this will change, as soon as we have clarity on tariffs, finalized all that. That product will go back to the US, right?

So it's just -- we need to have a deal between the three countries. Once we have that, whatever it is, okay, then we know what to do and what adjustment will be needed. And then, it's going to be clear sailing.

Yeah. Well, let's hope we get some clarity on that in the months ahead.

And then, just as a follow-up, Alain, I wanted to ask about how you're thinking about the dynamics between LTL and Truckload, right now. Do you think there's a lot of LTL volume that's slipped into the Truckload market? Obviously, if we get some tightening here because of some of these enforcement actions, how positive of an effect can that have for the LTL market?

Well, that's for sure. When you think about that, you're a Truckload guy, you're stuck, okay? What do you do? You try to get the good, heavy 5, 10 pallets of LTL; and you give the shipper a good rate, right?

Right now, what's happening in the LTL industry is that there's lots of freight that has been moved to the Truckload guys. This is good rates, good freight for LTL. So we'll see what happens.

When the Truckload guys get busier, okay, are they going to walk away from that freight because now, they don't need to do that? Probably. Experience tells us that this is what happens, okay? But we'll probably see that sometimes in '26, hopefully, okay? But who knows when, right?

Okay. Appreciate the thoughts.

At this time, Mr. Bedard, we have no other questions registered, please proceed.

Well, thank you, operator. We appreciate everyone joining us today. Thank you for your interest in TFI International.

We look forward to finishing the year strong; and are confident we'll be entering '26 in a position of strength. I look forward to seeing many of you at several investors conference. We'll be attending before year end.

As always, please don't hesitate to reach out with any further questions.

Have a terrific Halloween. Have a great weekend, guys. Thank you.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today.

Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.