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Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TFI International’s Third Quarter 2023 Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please be advised that this conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. Also, I would like to remind everyone that this conference call is being recorded on Tuesday, October 24th, 2023. I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

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Alain Bedard: All right. Thank you, operator, and thank you, everyone, for joining us this morning. Yesterday, after market close, we’ve released our third quarter 2023 results. With weaker demand conditions persisting throughout the quarter, we’re proud of our solid execution which reflects continued adherence to our operating principles. As I mentioned before, our talented team understands the importance of profitability and cash flow, reacting quickly to market shifts and focusing even more intensely on the fundamentals when trade volume weakens. We view this underlying focus on profitability and cash flow as strategically important to the TFI International growth story, allowing us to consistently invest in the business, pursue M&A always in a disciplined manner and return excess capital to our shoulders whenever possible, which, as you know, is one of our guiding principle.

Taking a look at our third quarter results, we generated operating income of just over $200 million reflecting an operating margin of 12.3%. This compares to the prior year’s $318 million with a 17.1% margin. Adjusted net income of $136 million compares to $ 181 million the prior year and adjusted EPS of $1.57 was down from $2.01. Regarding net cash from operating activities, we generated $279 million during the second quarter. And in terms of free cash flow, which we view as strategically important, we produced nearly $200 million. Given the softer market condition, these solid results, along with strong returns on invested capital across all of our business segments, reflect well on the hardworking people of TFI and the importance we place on protecting margins, especially when the freight demand weakens.

It’s also important to point out that when comparing to the prior year, our results reflect not only our sales of CFI last August, but the associated $76 million gain on sales along with cost incurred to transition our IT system from UPS which will provide long-term efficiency advantages. In addition, we continue to face modestly unfavorable move in foreign exchange, I’ll emphasize the results are reporting are fully burdened, not adjusted for any of these items that affect the year-over-year comparison. All right. So let’s review how each of our business segment performed. P&C, which represents 7% of our segment revenue before fuel surcharge saw a 7% decline in revenue before fuel surcharge with the number of package also down 7%. Operating income of $25 million compares to $34 million the prior year with a margin of 23% relative to 28% previous year.

Our return on invested capital was down from 31% a year earlier and came in at still solid 27.6%. Overall, our P&C business is operating well given the weaker demand environment and with less contribution from fuel surcharge benefiting from our unique market exposure and ability to control cost. Moving onto LTL, which is 44% of segment revenue before fuel surcharge. Our revenue before fuel surcharge was down 12% on a 4% decline on shipments. Operating income of just over $100 million was virtually flat year-over-year. Within LTL, Canadian revenue before fuel surcharge increased 5% on a 5.3% in shipments. In addition, the quality and profitability of our business is apparent given difficult market condition with our operating ratio of solid 77.2% compared to 72.8% the prior year.

Similarly, our return on invested capital for Canadian LTL was 19.6% relative to 23.1% a year earlier. Within the US LTL, results clearly reflect our margin resilience, especially given an important 5% wage increase to our labor force during the quarter. Revenue per shipment before fuel surcharge remained flat year-over-year, while our number of shipments were down 7.5%. Our revenue before fuel surcharge of $581 million was down from $687 million a year earlier and we were able to keep our operating ratio flat at 90.8% year-over-year and improve it sequentially. Return on invested capital for US LTL was 15.2% compared to the prior year at 25.2%. Now let’s turn to truckload, which is 24% of segment revenue before fuel surcharge. Amidst a very weak market condition with lower demand and weaker rates, we believe that we were able to outperform the broader market benefiting from our specialized in Canadian exposure.

Our truckload revenue before fuel surcharge was down 21%, reflecting not only the weaker demand, but also the sale of CFI in August ’22, and to a lesser extent, unfavorable foreign exchange. Truckload operating income was $50 million relative to $97 million last year, and our operating ratio came in at 87.5% versus 81.1% a year earlier. So taking a closer look within truckload, although our specialized operation continued to benefit from self-help opportunities along with our diversity and exposure to better-performing niche markets, we were still impacted during the quarter by volume and pricing pressure. This is reflected in our new disclosure of weekly revenue per truck, which declined year-over-year. As a result of this as well as a slight FX and width, revenue before fuel surcharge declined 8% year-over-year to $325 million.

Our operating ratio was 87.8%, relative to 79.9%. And our return on invested capital was 10.1%, down from 12.7%. So taking a look at our Canadian-based conventional truckload business, we generated revenue before fuel surcharge of $79 million, almost entirely flat year-over-year and actually up on a consistent currency basis. However, our adjusted operating ratio was 87.8% relative to 75.5%, and our return on invested capital, which was 20.6%, a year earlier came in at 13.8%. This reflects a decline in both revenue per mile as well as number of miles partially offset by our ongoing focus on network, density and cost control. Wrapping up the business segment discussion, logistics represents 25% of segment revenue before fuel surcharge. Our solid results this quarter reflect our operational strength and ability to control costs.

We generated $416 million of revenue before fuel surcharge, which was down only 2% year-over-year, benefiting from our recent acquisition of JHT while also facing modest FX headwinds. However, on this relatively flat revenue, we were able to drive a greater than 40% increase in operating income to $41 million on a much stronger operating ratio of 9.8%, up a full 300 basis points. Our logistics return on invested capital was 15.5%, down from 21.1% the prior year. Overall, solid performance of our logistics segment benefited from better cost control, the strength of our same-day package delivery operation, the JHT acquisition, and our team’s ability to successfully navigate changing market conditions. Turning to our strong balance sheet and liquidity, which is always a focus at TFI International, we were able to further enhance our financial position both during and subsequent to the quarter.

First, we generated free cash flow of nearly $200 million, as I mentioned, and we ended September with a funded debt-to-EBITDA ratio of only 1.39. Second subsequent to the quarter, we were able to further strengthen our balance sheet with a private placement of $500 million, a fixed rate interest-only debt, bringing our overall weighted average interest rate to 4.5%, entirely fixed, with an overall weighted average duration of nine and a half year. As I mentioned many times, this financial strength is core to TFI International’s strategy, giving us the flexibility to make smart investments regardless of the cycle, while pursuing strategic M&A and returning excess capital to our shareholders whenever possible. Speaking of M&A, during the quarter, we completed four additional tuck-in acquisitions bringing our year-to-date total to eleven.

I’m also pleased to announce that our Board of Directors has raised the quarterly dividend by 14% and that the share repurchase program, our NCIB has been renewed for an additional year. I’ll now conclude with our updated full-year outlook before opening up to Q&A. Today, we are reaffirming our 2023 EPS guidance provided in July of a range of $6 to $6.50. We’re also maintaining our full-year free cash flow outlook at $700 million to $800 million, including CapEx of $200 million to $225 million. In addition, we have already exceeded a combined total of $500 million this year of capital deployed in M&A and share repurchase given our very strong financial position. And with that operator, if you could please open up the line so we can move to the Q&A portion of the call?

Operator: Thank you. [Operator Instructions] The first question comes from Ravi Shanker of Morgan Stanley. Please go ahead.

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Ravi Shanker: Thanks. Good morning, Alain. Would love to get your thoughts on where you —

Alain Bedard: Good morning, Ravi.

Ravi Shanker: Think we are in the cycle right now. Obviously a very interesting time kind of bouncing on the bottom, but maybe some signs of life. When do you think that upcycle comes in? Is that late ’23, early ’24? How powerful is it going to be? Just your overall thoughts would be very helpful.

Alain Bedard: Yeah. You know Ravi, what we’re starting to see in Q4 is improvement, okay, versus our Q3 numbers in term of activity. But you know small, excuse me, small. We anticipate that ’24 is probably still going to be a transition year, okay. There’s a lot of things that are, you know, in terms of the politics, there’s an election in the US. There’s issues in Europe with war and things like that. So I think that, I mean, that’s what we’re doing now. We’re just going through our budget. And I think that I’m convinced that ’24 will be a better year than ’23 for us, okay, but it’s hard to have a good feel about how good is this going to be. Is that — are we going back to normal ’24 or it’s still going to be more towards kind of a transition to — towards better days, if you want to call it like that.

Ravi Shanker: Got it. That’s helpful. And for my follow-up kind of just given some of these structural changes in the LTL market in the US and some of the, I mean, just with the benefit of three months of hindsight and settling down kind of how do you think the whole post yellow situation has played out so far versus your expectations? What do you think happens in the near term and the medium term? Do you think it can kind of set you up pretty well for ’24?

Alain Bedard: You know, the fact that, you know, there’s been some major changes in our industry. And I think that the US LTL industry is very well disciplined, okay. So we went through some, you know, tough times in ’23. The fact that a significant player, okay, that was probably a very little margin player has gone from the market. I think this bodes well for the LTL industry. But notwithstanding that, Ravi, our focus at TFI with TForce Freight is really — it’s on costs. I mean, yes, you know, our market share could increase, our volume will increase slowly, but our major, major focus is we need to be leaner and meaner over there and that’s what we’re doing. So we’re providing the team over there with better information, financial information.

During the course of Q4 and into ’24, we will be providing what we have in Canada with all our LTL operation and package, financial information by terminal so that the manager could start doing a better job of managing costs. Because right now the excuse is, well, I don’t know. I don’t have the information, so I can’t do anything about it, right. So the excuse will be gone now, okay, the training and the education about all this financial information at the terminal level will be top priority for our EVP, Bob McGonigal; and Keith, the President of TForce Freight. So just to make a long story short about that. Our focus for us is really we have to be more efficient. We have to do better. We have to do more with less.

Ravi Shanker: Very helpful. Thanks a lot.

Alain Bedard: Pleasure.

Operator: The next question comes from Tom Wadewitz of UBS. Please go ahead.

Thomas Wadewitz: Yeah. Good morning, Alain. Wanted to see if you could talk a little bit more. Yeah, I wanted to see if you could talk a little bit more about kind of how yellow the business from yellow coming over affected performance in the quarter. I think we were anticipating maybe a sequential lift in price, but I don’t know if there’s like a significant mix effect within that. And then also just when you have kind of a disruptive step up in activity that can cause some inefficiency. So wanted to see if you could provide a bit more perspective on how that affected your results in 3Q?

Alain Bedard: Yeah. Yeah, very good question. So you know what Tom, what you could see is that if you look at our average weight per shipment. I mean, it’s up, I think, 7%, okay. So this is thanks to a little bit of change in our, you know, shipment, okay. So for sure, the fact that the display — has disappeared helped us improve our weight per shipment. In terms of pricing, our pricing and revenue per shipment ex-fuel is about flat year-over-year. So we were not really helped with that. Now, don’t forget, we used to run 23,000 shipments before what happened to YRC. We went all the way to 26,000, but now we’re back down to more like 24,500 to 25,000. And during the quarter, we had also — we went through increased cost in a sense because with pickup in volume, we had to, you know, bring back people, bring back people cost money.

And then whoops, again, okay, we went back closer to 24,500, 25,000 shipments. So then we have to readjust our labor force again. And as I said, you know, the problem we have at TForce Freight is when you don’t have financial information at the thermal level, the reaction time, okay, with all this variation of volume is too long, okay. And this is what we will be correcting in the future when we provide those guys with financial information — accurate financial information by the day, okay, by the week. So, all-in-all, if you look at our operating ratio, okay, we’re about flat year-over-year in Q3 for US LTL. One thing that we have to keep in mind is that our GFP operation, excuse me, was down on the revenue big time, okay. So but we’re coming back.

I mean our sales team is working on that. So that should improve for ’24.

Thomas Wadewitz: So I guess as a follow-up question, do you have any thoughts on how we should — what we should consider when we’re modeling 400 OR and also when we’re modeling 2024 US LTL OR?

Alain Bedard: You know what, Tom, excuse me. I think that ’24 LTL — US LTL OR should be less than 90. I’m just losing my voice, too bad. Yeah. So we should be in that neighborhood of 88 — 87, 88 to 90.

Thomas Wadewitz: Okay. Great.

Alain Bedard: Okay.

Thomas Wadewitz: Thanks for the time, Alain. Okay.

Alain Bedard: Pleasure, Tom.

Operator: The next question comes from Ken Hoexter of Bank of America. Please go ahead.

Ken Hoexter: Great. Good morning, Alain. Thanks for taking the questions.

Alain Bedard: Good morning.

Ken Hoexter: So just maybe to follow up on that for a second, lots of puts and takes in US LTL this quarter. There was the 5 million, I guess you’ve got the ongoing charge. Maybe you can talk a little bit about, you know, when you start transitioning from the UPS network, and then you start eliminating those contractual charges, the ground freight pricing. Is that something that continues to fade away? I just want to be able to step back and understand kind of how we should think about the US LTL and then your near-term target of moving sub-90 and your long-term target of getting to the, you know, as much as 80%.

Alain Bedard: Yeah.

Ken Hoexter: So maybe just thoughts about what’s in the number, what’s the clear, and then what’s the go forward?

Alain Bedard: Okay. So the transition from UPS at the latest, I mean, we’ve done, like, Q1 of 2024, okay. So what we’ve done so far is financial, so we moved Oracle to our own Oracle financial system. We did HR as well. We did HR in the summer. We also did the fleet in September. So we move from UPS fleet management to our own [indiscernible] system. So the only thing really of importance that’s left is the housing of our edge system. Excuse me. So that’s the only thing really left with those guys. So to me, all these transition costs, all these excess costs should be things of the past, probably into ’24. But for sure, you won’t see anything like that into after Q1 of 2024. Now, in terms of our GFP, so last year, we were just flying with that, doing really well.

This year, okay, starting Q1, I mean, our revenues started to drop. I mean, we had some — some customers’ issue, okay, that we have to fix which we have been fixing and working on. And now we’re starting to see revenue of GFP slowly picking up again. Our volume at GFP is down, like I said, big time, like 40% and this is not normal. So we had some issues with some, certain customers, but we’re working with them and we’re going to fix that. And it’s coming. Now in terms of the LTL, like I was saying to Tom, I’ve been seeing the plan. I’m going to be with the guys tomorrow, okay, and talking about their plan for ’24. But I can’t see us coming up with a plan with an OR of 90 plus. Okay. I think that the market is still going to be soft, okay, but we can’t blame the markets for that because us, we have a lot of work to do in our cost.

So even if the market stays soft like it is now, I think that TForce Freight team will definitely improve. So this is why, to me, when we have a target for ’24 to be in this 87, 88 range, okay, I think it’s reasonable. But this is me talking before meeting those guys tomorrow. I hope that’s their plan because to me, that is a reasonable plan. That’s a reasonable target. We’ll see. But the fact that this market probably will stay soft, okay, even with the disappearance of a major player, okay, that’s the best that we can read so far. If I’m wrong and the market improves, so now even better, but the focus and I’m repeating that at TForce Freight, we have to be more efficient. We have to reduce our costs. We’re going to be providing — providing them financial information now by terminal, which they never had, which we have in Canada.

So think about it, Ken. Look at our OR in Canada. I mean, in a very difficult market in Canada, we’re able to come out in Q3 with less volume with a sub-80 OR. Why? Well, because our guys are very disciplined. They manage the cost notwithstanding the market condition. They do a better job than our US team. Our US team, you know, they don’t have the financial information detail. We’ll have that by terminal, and we’ll start to see some improvement ’24 and on.

Ken Hoexter: Great. Alain, I’ll ask a follow-up, but I’ll keep going. So you can get a sip of water there, but maybe you kind of reiterated your full-year target, right? So you’ve been yet and that’s a pretty wide range when we’re looking just as we move into fourth quarter. Maybe can you talk a little bit about what gets you to the bottom end versus the top end? Or is there — is your thought still some decent rebound into the fourth quarter. You look at that Canadian LTL, I agree, you know, staying in the 70s, amazing, but yet deterioration of 400 basis points. So I don’t know if there are thoughts you want to throw out there about what gets you bottom end versus top end of the range given we’re close to that, that year-end number.

Alain Bedard: Yeah. Good question, Ken. You know, if you look, our logistics in Q3, what you see in there is only six weeks of our JHT acquisition. So for sure, I mean, JHT is going to be there for the full quarter. So that’s going to help us. I believe that TForce Freight will do better in Q4 ’23 than Q4 ’22. Okay. So that’s going to help us to get to our target. Now, first, we’re going to work hard, okay, to — because we miss consensus two quarters in a row, right, Q2 and Q3. And you know, out of 25 years, we missed guidance about five times. I have been involved with trucking. So I don’t like that. So this is why, believe me, we’re going to work very hard to be closer to $6.50 than to $6, right. First, results that I’m seeing from October, okay, are very encouraging. So that’s why I feel pretty good of just reaffirming our $6 to $6.50, but we’ll probably be closer to $6.50 than $6 — $6.50 than $6.

Ken Hoexter: Great. Alain, thanks for the time. Appreciate your thoughts.

Alain Bedard: Very good, Ken.

Operator: The next question comes from James Monigan of Wells Fargo. Please go ahead.

James Monigan: Hey, good morning. Actually, just wanted to sort of follow-up

Alain Bedard: Good morning, James.

James Monigan: On the broader LTL. Good morning. Follow-up on the broader LTL discussion kind of to get a better understanding of the volume and pricing trends you’re seeing. It seems like there was surge of break to pull back. Just kind of want to get some context around that as well.

Alain Bedard: Okay. So I mean, the forecast we have for Q4 and into the new year, I mean, our forecast is based on about 25,000 to 26,000 shipments a day, okay. That is where we are seeing us going into ’24. So that to me is should be normal, okay, for the company of our size for, you know, the next years to come. And Tom, what was the, I mean, what was your next question?

James Monigan: Essentially, the trends you’re seeing in October and then you mentioned that there was a spike up in volume, and the spike down, just what was driving that during the quarter?

Alain Bedard: Yeah. Well, it’s just adjustment from shippers, right. So you know, when YRC closed their doors, I mean, for sure, customer called you, and then there’s an action and reaction and there’s been an adjustment. So this is why we went from 23 to close to 26 and back down to 24, 25 as we speak now. So but there, again, the story of TForce Freight, it’s not about volume for now. It’s about cost, okay. So what we’re saying to our sales team, guys, okay, try to get better freight, okay. 26,000 shipments is normal for us in ’24. That’s our goal. Okay, fine. Get better shipment because we keep improving that. And the ops guys have to work on the cost. So that’s how we’re going to bring, okay, we’re not focusing on getting more money from the customer. If we can do that, fine. If the market allows us to do it, fine. But our focus is not that our focus is really bring the cost down, okay. Be more efficient, do more with less.

James Monigan: Got it. Then on Canadian LTL, you’re doing much better than sort of the long-term guidance you had given at the Investor Day. And it seems like we’re at 12 [indiscernible] in terms of it. So like how should we think about essentially, is that number conservative, or is that actually sort of how you still think about the business? And if not like what do you actually do think the long-term margin can be in Canadian LTL? Thanks.

Alain Bedard: I think Canadian LTL, if you look at that Q3, with volume and pressure on the Canadian market, we were able to come up with a sub-80 OR. And don’t forget that we also made an acquisition in the Canadian LTL market, the Kindersley Group. And these guys are 2% bottom-line guys, right? It’s going to take us a year to bring those guys closer to 15% bottom line guys, right? So I mean, to me, we’ve always been more focused on bottom line than top line. So Kindersley is going to help us with the volume. So this is why when you look at our Canadian volume, Q3 over last year, our volume is up because of Kindersley, right? But you know, that’s good in terms of volume. But the profit margin is really, really like 2% with these guys.

So it’s going to take us a little bit of time. But I think that the Canadian market — Canadian LTL market is way more difficult than the US one in terms of market condition, quality of revenue, et cetera, et cetera. So this is why when you look at also our Canadian LTL, a lot of our freight is intermodal, okay? So probably like 40% of our revenue runs on rail. So to be able to come up with a sub-80 OR using the rail this is like close to America. But again I’m always emphasizing this is that our Canadian team has information, okay, to act and react, okay, every day. And this is what’s lacking in the US, those guys have the excuse today of not knowing anything about costs. The only thing that now they know is their labor cost per shipment, okay, since October of last year.

James Monigan: Thank you.

Alain Bedard: Welcome.

Operator: The next question is from Jordan Alliger of Goldman Sachs. Please go ahead.

Jordan Alliger: Hi. Good morning. You guys made some pretty good cost improvement.

Alain Bedard: Good morning, Jordan.

Jordan Alliger: Good morning. Looking at things like cost per shipment, which was down quite a bit year-over-year, and flat sequentially despite the labor increase. I’m just curious if you could provide a little more color on where you think you’ve made some of that progress. And how do we think about costs per shipment from here? Thanks.

Alain Bedard: Yeah. Yeah, so you know, those guys today, with the increase in salary to our — to our union labor force, okay. You know, we are a little bit ahead of our target. So our target should be, you know, in a neighborhood where we’re right now about 5% or 6% more than that, but the target for ’24 drops again, okay. So the guys will have to do a better job. So how can you do a better job? It is you have to act and react, okay, in a much faster way. We’re also providing our team for the line-all of a software of the 21st century, right. So this is going to be up and it’s in the trial, okay, phases right now. And based on what the guys are saying, is that this is going to be fully implemented into ’24. So there, again, with better information, better tools to our line-all guys.

I mean, they’ll be in a position to shape costs. So I can’t really tell you what our labor cost per shipment is. But what I could tell you is that, even with more — paying our employees more, our labor cost shipping today is less than a year ago.

Jordan Alliger: Got it. And then just as a follow-up, I know we’ve talked about yield and mix and what have you. I don’t call you touching on sort of like core pricing, ex the effects of fuel and mix. And just as contracts have come up, what you’re seeing, especially since the yellow bankruptcy? Thank you.

Alain Bedard: Well, I think that for Q1 and Q2 of ’23, we were starting to see a little bit of pressure on rates in the US LTL market. Now with the fact that this thing happened, okay, with YRC, the pricing pressure has alleviate. I’m not saying that GRI and all this is going to be great in ’23, ’24, but at least the pricing pressure because of too much capacity in the market starts to alleviate in Q3. And I think it’s going to be a thing on the past for Q4 and into ’24.

Jordan Alliger: Thank you.

Operator: The next question comes from Kevin Chiang of CIBC. Please go ahead.

Kevin Chiang: Hi, Alain. Thanks for taking my question here. Maybe just looking at the US LTL division, you know, after 2024, it feels like, you know, the 87, 88 OR that you think you can get next year is burdened with a higher wage rate in the first year of your new deal. I think it’s 5% and it steps down. Just as you kind of roll through that wage, it feels like you have — you have a good line of sight to get to that 85. And maybe it’s more of a 2025 story. Is that kind of the right way to think about the OR cadence just as wages — as wage growth steps down and you continue to get yield growth and I presume unit cost declines?

Alain Bedard: Yeah. Well, absolutely, Kevin. Because you know, it’s a huge hit. When you have to give 5% more to your employee right there, okay, and employee cost is a big components of our costs, right. So you’re absolutely right. I mean, that 5% is really a big hit for year one. But then when you get to our new contract with year two, three and four, I mean, we’re not talking about 5%, right. So I think it’s about 2%, something like that. Because overall the contract is just under three over five years, right. So that’s a huge headwind for us now, okay, because all these costs, we have to manage them. We got to try to pass on more to — in terms of pricing, okay, which we haven’t done because if you look at our average revenue per shipment, I mean, we’re flat year-over-year.

So really, this increased cost per hour, we have to swallow it, you know, within our operation. So again, it’s by being more efficient that we’re able to come up with an OR that’s about stable year-over-year with 5% more money to our employees, right. So time is on our side, okay, for sure, because down the road, we will not raise the salaries by much as ’23 and we’re still going to be working on, you know, reducing the miles, reducing the hours, having a better planning, talking about my line-all operation, that’s going to help big time. I mean, its new tools with AI that’s really going to help our line-all division to be in a better position to forecast because every day it’s a different story, right. So I’m convinced, okay, that ’24 will see major improvement versus ’23 in our US LTL operation.

Okay. So that’s why I’m convinced that we could get to the 87, 88 OR, and then we’re on track to be closer to 85 in ’25. Our goal has always been to be closer to 80, but we got to go step by step.

Kevin Chiang: That’s helpful. And maybe just — maybe just as my last question here. You’ve talked about normalized earnings for your company, and I think you mentioned this on the Q2 call kind of between 8 to 10. I know you’re looking at ’24 being a transitionary year, but does that get you within that range? Do you think you can get to the bottom end of that 8 to 10 normalized earnings in ’24, even if it’s a transition year or was it still a pretty challenging market out there?

Alain Bedard: Our truckload is really killing us, right. If you look at the Star in the US, okay, the best truckload company in US. They had a very difficult Q3, us were the same. Really, really for us in ’24 is how is our truckload, okay, specialty truckload is going to come back. To me, if our truckload is coming back slowly, okay, to a more noble environment, I think that ’24, we should be in a position to get closer to 8 than 6.50, right. So truckload is a big story for us this year. LTL — US LTL, volumes in Canada, if we could start to see a little bit of growth there and M&A too, I mean, for sure JHT will help us big time to get closer to 8, RIGHT. And – and we have other things in the pipeline that could be also interesting for ’24. So I mean let’s talk about ’23. Get to 6.50 in ’23 and then, guys, we got to get closer to 8 in ’24. And we did 8 in ’22. Okay. So I mean that’s a nice target to be an 8 in ’24.

Kevin Chiang: I agree. That’s it for me, Alain. Thank you for taking my questions.

Alain Bedard: Thank you.

Operator: The next question comes from Brian Ossenbeck with JPMorgan. Please go ahead.

Brian Ossenbeck: Hey. Good morning, Alain. Thanks for taking the question.

Alain Bedard: Good morning, Brian.

Brian Ossenbeck: Hey, just wanted to follow up on the M&A and maybe get your thoughts on capital deployment and you know, sort of the rationale and timing behind the private placement. You know, what are some of the best opportunities to pour capital? You see, right now, there’s some bigger deals and maybe getting a little more interesting as the freight recession lingers. And then if you can offer some comments on the last time you said you had enough doors — you had enough doors now in US LTL, so maybe yellow’s auction doesn’t interest you, but comments on that’d be helpful?

Alain Bedard: Yeah. Yeah, you know what, Brian, I mean, the reason we did that $500 million placement is because — it’s not because we don’t know what to do, right? It’s just — we’re just getting ready to do something right. So if you look at what we’ve done this year, I mean, we’ve done about $100 million, right, of investments, okay, in terms of M&A. I think that we’re going to do more than that in ’24. So this is why we got set up with this private placement just in order to get a little bit more dry powder for us to be in a position to do the good things that we want to do into ’24. In terms of our pipeline, our pipeline is really strong in terms of M&A. Hello?

Brian Ossenbeck: In terms of quick follow-up, any thoughts on the yellow bankruptcy auction? Anything — seems like you have enough doors in the US now, but wanted to see if there is any particular assets that looked of interest to you. And then maybe just as a quick follow-up, same time, can you just give us a sense of how density is tracking in TForce Freight? It’s always a big part of the story here, some comments on stops per truck or miles between stops now that you have a big step up in volume in the third quarter. Thank you.

Alain Bedard: Yeah. Yeah, you know what, Brian, we’ve said it many times. I mean, our focus in the US, okay, has always been logistics and LTL. And to a certain degree, specialty truckload if there’s something that makes a lot of sense for us to do. In terms of improvement, okay, at TForce Freight, our miles per stop between each and every stop has improved, okay. This is helping us reduce the cost, okay, but we’re still a far cry from what we do in Canada. So, as an example, if we do, let’s say the Canadian story is we do about 5 miles between each and every stop. In the US, we used to be doing double-digit miles over 10, right? So now, with less volume than two years ago when we bought the Company, okay, our average mile per stop is not 5 in the US, but it’s not 10 anymore.

So it’s single-digit now. So slowly, okay, we’re doing more in terms of having drivers picking up freight and driving less. And when they drive less, well, they cost less money because they don’t on fuel. There’s less risk of accident because they — they’re not driving, they’re picking up freight. All right. So we are on the right track, okay, but we’re still far from the efficiency that we have in Canada. But this is work that needs to be done between our sales team and our ops team. So that the sales team really understands what we’re looking for. So TForce Freight used to be a sales-oriented company when it was owned by UPS. When it’s owned by TFI, it’s not a sales-oriented company. It’s an operational-oriented company. So the operation talks to sales about what they want, what they need to improve density.

It’s not the other way around where sales, this is the customer, this is the shipment, and now you got to take care of that. No. This company is moving into an ops-driven, okay, environment, and it’s the operation that works with sales and say, hey, this is what we want, this is the area, this is the kind of freight we need, okay. And don’t bring me something that I don’t want, right. Because I’m not jack of all trades and I still have none anymore.

Brian Ossenbeck: Got it, Alain. Appreciate it. Thank you.

Alain Bedard: Very good, Brian.

Operator: The next question comes from Scott Group of Wolfe Research. Please go ahead.

Scott Group: Hey, thanks. Good morning, Alain. Just want to follow up on the M&A. Just want to follow up on the M&A discussion. So it sounds like more M&A next year. Should we be thinking about a sort of a larger, more transformational deal? Is this just more — just more of the tuck-in deals? And how do you balance M&A with the potential for a big buyback just like the stock is now, basically back to like, pre-yellow levels right now? So how do you balance on the neighbor’s buyback?

Alain Bedard: Well, you know, buyback, we really love buyback. So I’ll give you an example. We just renewed our NCIB, Scott. All right. And we have an order to buy 1 million shares depending on the price. So this is, you know, this is the focus depending on the price, we’re there, we’ve renewed our NCIB, and we’re going to be, you know now. If there’s a major transaction, okay, and I think that if you look at history, normally you have something of size in ’24. We did a lot of nice tuck-ins in ’24. We’re probably very close to being done for, I mean, ’23. We’re probably close to being done in ’23. We got this $500 million placement just to get ready to be in a position, okay, in a better position. Our leverage is 1.39 right now.

We should be closer to 1.2 at the end of the year. So we have a lot of dry powder on our line of credit with our bankers. Now we have cash. We got $300 million to $400 million of cash at the end of the year. Okay. So we’re well positioned to do something of size in ’24. Now, it’s always the same story with TFI. There’s always one — not just one file that we’re working on. There are always more than one. So I think that the possibility of doing something of size in ’24, I would put that at 65%, 75%.

Scott Group: Okay. And then the —

Alain Bedard: Scott?

Scott Group: The other — at times, though, you’ve actually gone the other way and you’ve sold assets or spun assets. Is that something you’re thinking about right now? Are there assets potentially worth monetizing?

Alain Bedard: No, not in ’23 or ’24, Scott. Maybe that’s something that may happen in ’25, depending on what happens in ’24. We’ll see.

Scott Group: And then just lastly, you made a comment earlier that you’re not sure if the — if it’s the right environment for big LTL GRIs or something like that. And I know the GRI you announced earlier this month was, you know, a bit lower than last year’s GRI. We just had Saia announced their GRI this morning, and it’s actually a point bigger than last year. So maybe just I want to understand why you think it’s not an environment more supportive for LTL GRI and pricing.

Alain Bedard: Scott, you can’t compare OD, Saia with TForce Freight, right? So our reputation is not the same you know. So we have to gain reputation. We have to improve our service. We have to improve our cost, but we’ll also have to improve our service because for years and years, we’re hiding the truth, right? So this is why us in Canada, we could do these kinds of things, okay. We could be the leader, okay. But Scott, I’m sorry, but in the US, we have to be followers today. We have to follow OD and Saia and can we be in the same league of those guys? No. I mean, we were not as good as them. We’ll be, but we’re not today. So this is why when we talk to our teams as guys, let’s be cautious on that, okay. And Saia and OD are, you know the big guys.

You do really well. Fine. Us, we still have lots of work to do in terms of service, in terms of costs. And maybe next year we’ll be in the same league. Maybe it’s going to take us another year or two, but we’re not there, Scott. So we cannot be as aggressive on pricing as these guys are. Us, we have to be very aggressive on our cost.

Scott Group: Makes sense. Thank you, Alain, for the thoughts.

Alain Bedard: Pleasure, Scott.

Operator: The next question comes from Konark Gupta of Scotia Capital. Please go ahead.

Konark Gupta: Thanks, Operator. And good morning, Alain. Hope you’re doing well.

Alain Bedard: Good morning, Konark.

Konark Gupta: Good morning. I just wanted to circle back on TForce Freight’s yield XPO in the third quarter. It seemed to have come down sequentially. And I’m just curious, you know, the yellow bankruptcy situation definitely created a more sort of balance between demand and supply. The LTL market is already pretty consolidated right and concentrated. So I’m just curious like what would have contributed to that yield decline in Q3 versus, you know, the first six months of this year?

Alain Bedard: Well, I think that if you look at the revenue per shipment, I mean, it’s flat. The yield is lower because the shipments are heavier. So there’s a little bit of a trade-off, okay. So really Konark, us, what we look at is, hey, what’s the revenue per shipment? And our goal is always to increase the weight because we are being paid by the weight. Now, when you increase the weight, you have to reduce a little bit the rate, okay. So it’s a balancing act, okay. And like I said with Scott earlier on, I mean, we’re not perfect. I mean, we’re, you know, it still needs some improvement, our pricing team, you know it’s — you know, we lack a lot of discipline in the past, okay, that we’re trying to correct, but that takes time, you know, with customers.

So we want our customers to have a great experience when they deal with TForce Freight. And you know we had a lot of issues in the past with the service, our equipment was so bad, okay. I think that for the first time in the MD&A, we’re showing the age of our trucks at TForce Freight. So now we’re down to about 4.6 average age versus when we bought the company, we were closer to 8. I mean, that’s issues with service, for sure, I mean with old trucks. So slowly, I mean, we’re going to get to a better quality of revenue. But we have to improve our service. We have to improve our customers’ experience with us. And this is why, you know, it’s a little bit of a balancing act, okay. This is like when you’re trying to buy, let’s say a car. Okay. So you can’t sell a car that is not a Bentley at Bentley’s price.

Konark Gupta: Right. It makes sense, Alain. Thanks for that color. If you can follow-up on the operating ratio. So I heard you saying 87% to or 90%-ish almost right next year for US LTL. You guys are at 90% today so that — that’s a decent improvement, clearly. But I think previously you kind of alluded to, you know, probably as low as 85%. I’m just wondering like is it market forces or is it market driven that you are not expecting 85% next year maybe? Or is it something else in that equation that has changed?

Alain Bedard: Yeah. No. You know what, Konark, it’s a soft patch for the volume right now, right? So for sure that the fact that YRC has gone has improved, okay. But the market is still in an overcapacity, okay, situation in the US. Not big, but still is, right. So this is why we have to be careful. We say 90 for us in ’24 should not be our target. It’s got to be closer to 87, 88, okay, keep improving that. And as I said it, with minimal improvement on volume because our targeted volume is to be closer in the 25 to 26 range shipments per day, right. So a little bit of improvement in volume, a little bit of improvement maybe on the pricing, okay, with the GRI, fine. But the big improvement has to come from the operation in terms of the line-all cost, in terms of our P&D costs, in terms of our — you know that’s how we’re going to get to 88 and 85 and hopefully one day get closer to 80.

Now, we also have to live with the environment, right. So what we’ve seen so far is in Q3, one of my peers came out non-union with an 85 OR, okay. So us, unionized in a difficult environment because TForce Freight has been abandoned, okay, not really invested a lot by the previous owner because that was not their focus. So we’re going through a lot of improvement and changes. So to me, when you look at the US at 90 something OR for us in Q3 in a soft market, yes, YRC has gone. Okay, that helps. But still, I mean, my GFP Logistics operation is down big time. Okay, that’s going to come back in ’24. But still, I mean, I’m really proud of what the guys have done so far at TForce Freight. You know, we bought this company two years ago, okay. At that time, it was losing money.

Today, it’s close to making 10 points in a softer market versus a year ago.

Konark Gupta: That’s great, Alain. Thanks so much for the color. And all the best for 2024.

Alain Bedard: Thank you, Konark. We’re going to need that for sure.

Operator: The next question comes from Bascome Majors from Susquehanna. Please go ahead.

Bascome Majors: Thanks for taking my questions here. There’s been a lot of talk on US LTL, understandably, given how much you’ve improved and driven value from that business. But can you go back to the truckload segment a little more in detail, how comfortable are you that this kind of $100 million adjusted EBITDA level is close to the bottom? You know, should we see some negative seasonality into the fourth quarter? And you know, are we at a floor there where we feel pretty good about where we’re bottoming? And it’s really just a question of how long it takes us to get better and how quickly that can happen. Thank you.

Alain Bedard: Very good question. I think that if we’re not at the floor, we’re very close to the floor. Okay. You know, the truckload world, our specialized truckload, okay, is very disappointing in a sense because, you know, we’re coming out with 87, 88 OR. But then we take comfort when we look at the Van world in the US where most of the guys are coming out with a 95 OR, okay, in Q3. So what we’ve seen so far you know. So it’s very disappointing. When I talked to Steve, okay, Brookshaw, the guy, our leader over there. And the feel is that I don’t think it’s — we’re going to see some major improvement in Q4, and it’s probably going to take us all the way to somewhere in ’24 before we start to see improvement, okay, in the specialty truckload.

But again I haven’t talked to the team there. I’m going to be with the truckload team next week to see what the plan is for ’24. But I would — my feeling right now is that ’23 has been difficult, okay, for truckload. And we’re probably at the floor, but we’re going to stay on the floor probably for at least the next six to twelve months. Maybe I’m wrong, maybe things will improve faster than that. But us, we’re always very conservative, okay, and fuel is an issue. Fuel surcharge is an issue when you have a soft market, okay, shipper to get advantage of you, okay, by trying to squeeze you fuel surcharge as well as rates, right. So this is what we’re going through now. It’s not so much the rate, okay, is the activity level that’s down for us in our truckload.

Our revenue per truck per week is down. Our miles are down, okay, because the activity is down. The rate is not so bad, but it’s the fuel surcharge squeeze that we’re getting from shippers that is affecting us more than the rate, the base rate, right. So there’s two things, activity, okay, number one, revenue per truck lower. And number two, the squeeze on fuel surcharge.

Bascome Majors: So higher fuel is helpful next year, and you know it’s — profit improvement is not purely a function of the bid season for you. It really can involve utilization as well. Is that fair?

Alain Bedard: It’s fair, yeah. Absolutely. So utilization is too low. Okay. So that’s number one. And number two, rates are about, okay, not so bad because, you know, we hold on to the rate, okay, and we less — we get less volume because we hold on to our rate. But then we’ll also get squeeze on fuel surcharge. So instead of getting the fair fuel surcharge because the market is soft, we get a discounted fuel surcharge from the ships today, right. So before things start to get better for us, we need more volume so that the market condition starts to change with the shipper. Okay. And it’s kind of a cycle thing, right. So some people are dropping from the market right now because you know, they come to the shippers with fuel in price, and then oops they lose their fuel card because they can’t pay their fuel bill.

So I mean the demand is still weak and the offer is still more than the demand, but you’re going to see some truckers slowly getting out of the business, okay, because, you know, they get with the shippers with stupid pricing. So that’s why I’m saying we’re on the floor, okay. Are we going to stay on the floor for three months? Absolutely. Is that going to last for nine months? I don’t know. But one thing is for sure, I don’t think that we’re going to see worse condition than what we have today. And then also listening to what the way our peers are looking at the market, you know, and I think it’s basically the same message is that we’re on the floor. It’s just that how fast can we get up from the floor? It’s hard to say.

Bascome Majors: Okay. Thank you.

Operator: The next question comes from Elliot Alper of TD Cowen. Please go ahead.

Elliot Alper: Great. Thank you. This is Elliot on for Jason Seidl. Maybe over on the logistics side and the JHT acquisition. I guess how’s the integration going so far? How does their margin profile maybe compare to your core logistics margin? Maybe how we should think about that in Q4? I know they’re a pretty niche player in the auto space. Curious if they’re being affected by the auto strikes as well.

Alain Bedard: Yeah, very good question. So, no, they’re not affected by the auto strikes at all. Okay, number one. Number two is their profile of margin is similar to ours, right. So they’re not in the business of 2%, 3%, bottom line because we’re not big fan of that. You know, we’re not big fan of 2%, 3%. So they’re close to ours. And then you know I think that JHT will do better than the average TFI Logistics earnings in ’24, ’25. We see probably in ’24 a little bit of a dip in volume, okay, at JHT versus ’23, but we see a major improvement for ’24, according to the forecast that I’ve seen so far. In terms of the integration, I mean, this is so new to us. I mean, we’re just learning, okay, with the team there. I mean, JHT is a fantastic company.

It’s a great acquisition for TFI Group of Companies. As a matter of fact, after this call, I’m going to be with the management team of JHT to talk about their plan for ’24. And you know I think that even with less volume I think that JHT will do as well in ’24 as they did in ’23. So very happy with this transaction and this is the kind of deal that’s going to help us create value for our shareholders long-term.

Elliot Alper: Got it. And then maybe separately on logistics. You know, as a whole, I mean, you had some organic operating income growth, I believe, in the quarter. I think you called out some strength in the same-day package business. Any other color there on this would be helpful. Thanks.

Alain Bedard: Yeah. You know what, our logistics arm, our last mile operation in US is doing really well. I mean, our volume is about stable year-over-year in a more difficult market. We’re down a bit in Canada because one of our customer, we just cut him off because of issues with credit. So this is why in Canada, our volumes are down a bit, okay, year-over-year in Q3. But we have a new business coming on stream for Q4. So probably Q4, we’re going to be flat year-over-year in terms of volume, again in a softer market, okay, in ’20 versus ’22. So we’re doing well on the medical side of things. The e-commerce for sure, I mean e-commerce is not as good today as it was two years ago. So it’s a little bit of a fight. But we have a fantastic team over there that’s doing a great job.

So volume is about stable, but profit is up. If you look at year-over-year, I mean, JHT is helping, US logistics is also helping. Our volume is down at WW quite considerable, okay, because of market condition, but the bottom line is down just a few points. So all-in-all our logistic is performing really well and I think that we’re going to do even better in ’24.

Elliot Alper: Great. Appreciate it.

Alain Bedard: Welcome.

Operator: The next question comes from Cameron Doerksen of National Bank Financial. Please go ahead.

Cameron Doerksen: Yeah, thanks. Good morning.

Alain Bedard: Good morning, Cameron.

Cameron Doerksen: So maybe just a quick couple of questions on the packaging courier business. Just wondering if you can talk a little bit about the outlook as we head into kind of the peak volume period for that business. I mean, what does it look like this year year-over-year? And then maybe secondly, just on the margin, some pressure year-over-year. I mean, how much of that is I guess maybe a little bit lower volume environment but how much is also perhaps the benefit from or the lack of benefit from fuel surcharge revenue?

Alain Bedard: Right. Right. Absolutely, Cameron. I mean our volume is down 7%, right. So if you look at our piece count and all that, if I remember correctly, I mean, we’re down about 7%. On revenue, we’re down $8 million. And basically, we’re down $8 million on OE, Q3 year-over-year. And some of that is it’s attributable to less volume, okay. Our cost is about stable, okay, but the volume is just killing us. And because we’re so dense, because we’re so good, okay, when fuel is expensive, we make a little bit of money on fuel. When fuel is not expensive like it is now, that profit is gone, right. So that is a little bit of a headwind for our Canadian LTL in our package. When fuel is low, I mean, we don’t make — we don’t have a little bit of profit from fuel.

When fuel is high, we do well on fuel because of our density which is very different than our US LTL operation because we never make money on fuel in the US LTL world like today. Now that’s going to also help us because our MPG because of the new equipment is doing way better. Okay. There’s about 17%, 18% saving on our new trucks versus the old trucks that we used to run. So over time, I mean, when fuel was going to go back a little bit higher, that should help us in the US as well. But that’s the story. The way we see Q4, Cameron, into the volume for our P&C, volume will not improve year-over-year. The market is too soft. And us, we’re focused on bottom line like we’ve said many times. So I mean this is why, guys, let’s protect the margin and let’s not fight this — fight with customers that don’t want to pay the fair price.

Cameron Doerksen: Okay. That’s helpful. And maybe just a quick follow-up just on I guess how we should think about CapEx for FY 2024. Obviously, you haven’t set your budget yet, but just kind of framework, is there anything, I guess, directionally you can tell us about CapEx as we look into next year?

Alain Bedard: I would say about the same as this year, Cameron. So far what I could think of okay. So you know, for sure, we did a lot of CapEx in TForce Freight. That was well warranted. And we will continue to make sure that the average age of our fleet keeps going down closer to 4 versus 4.7 it is right now. Our trailer fleet is — needs some improvement too. So it’s underway. So I would say overall for TFI, CapEx should be in the same league as what we’ve seen in ’23.

Cameron Doerksen: Okay. That’s great. Appreciate the time. Thanks.

Alain Bedard: Thank you, Cameron.

Operator: The next question comes from Bruce Chan of Stifel. Please go ahead.

Andrew Cox: Hi. Good morning. This is Andrew Cox on for Bruce.

Alain Bedard: Okay. Good morning.

Andrew Cox: Oh, sorry, making sure you got me. Hey, I just wanted to get any color on hiring and retention, acknowledging that the facility managers are still lacking necessary IT systems to react as rapidly as you’d like. I just kind of want to know if there’s been any impact of tens of thousands teams that are becoming available on the market has been easier to add post-yellow and do you feel you need to add and need to manage the target of 26,000 shipments per day next year? Thanks.

Alain Bedard: No. We don’t need to add any management, that’s for sure. And your question is really a good question and we can’t really answer that. So those managers have not been trained in managing costs, right? So that’s what we’re going to do in ’24. Once we provide them the financial information, we’re going to train them. Now, if you ask me what’s going to be the success ratio of those managers that have never done that hard to say. So we know one thing for sure is that it’s not going to be a 100%. So we will have guys that are going to make it and probably we have guys that are not going to be able to make it and pass the test of being able to manage costs. It’s a transition year for these guys over the course of ’24.

And to tell you what the success ratio is going to be, I don’t know, okay. One thing we know is that they’ve never done it before, so we’ll see how good these guys could be. Now listen, I mean, if you look at TForce Freight two years ago and TForce Freight today in terms of the executive, Paul, the President, has retired. The pricing guy, David Myers, has gone away. Eileen, the sales leader, has been replaced, okay. So the fleet managers, okay, is new. So at the top level, we have a lot of new blood here new [indiscernible] clean right. And you know if we need to do the same kind of adjustment in the people at the terminal level, that’s what we’ll do.

Andrew Cox: Okay, Alain, that’s very helpful. Thank you. Can I just ask you a bit about the volume churn? There was some intra-quarter swings throughout the quarter, and I just wanted to know if that — if you think that was more a function of just normal seasonality or is this more a function of yellow freight finding a home? We’ve heard from other executive teams that there’s been kind of waves of yellow freight go from one carrier to the next depending on service levels. Just wanted to get a sense of whether that’s functionality of seasonality or finding a home for yellow freight. Thank you.

Alain Bedard: I think that we’ve said it. I mean, day one, the shippers, okay, they go wherever they can. And then they start reacting. And that is probably, I don’t think that is seasonality so much as just shippers trying to find a home where they feel that it’s a better deal for them.

Andrew Cox: Thanks, Alain.

Alain Bedard: Pleasure.

Operator: The next question comes from Benoit Poirier of Desjardins Capital Markets. Please go ahead. Benoit, your line is open, please go ahead.

Benoit Poirier: Okay. So, sorry, Alain, I was on mute. So just looking back at US LTL to get toward the 80%, 85% OR longer term, just wondering if you need to get rid of a railroad similar to the best-in-class players in the US? And what about the pricing and the service these days?

Alain Bedard: Yeah, good point, Benoit. So for sure, okay, we will do more with the rail, okay, because the service with rail is always an issue and the customer cannot blame the rail, they talk to you, right. So there’s again, I mean, we have to bring our costs of our own fleet down, okay. So then there’s no real benefit to move freight on rail. So this is — there’s two things that’s going to happen. The improved, okay, fleet that now our guys are working, better trucks, okay, that’s number one. Number two, better management, okay, for our line-all provider. I mean, our line-all team, with this new software that we are implementing now, that’s going to be fully implemented by the end of ’23. That’s also going to help us. For sure, I mean, if you look at our Canadian operation, we run road and rail.

And the only reason we run rail is because some customers want it cheap, but they know that their service is never going to be the same. And we have to, you know, fight with the rail because the service is not there. But we say to Mr. Customer, you want a cheap deal? Well, you’re going to live with cheap service, right. US, it’s a little bit different because, you know, customers are not really always saying, I want it on the rail, and then the rail is not successful, they don’t deliver. And then so it’s a transition. Okay. And like you said, the best of class in the US LTL world, don’t use too much rail. So, yeah, it’s the trend that you’re going to see us moving slowly, okay, away from rail as much as we can and to service us through our own team directly.

Benoit Poirier: That’s great. Thank you very much, Alain.

Alain Bedard: Pleasure, Benoit.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Alain Bedard for any closing remarks.

Alain Bedard: Well, thank you, everyone, for being on this morning call. We appreciate your interest in TFI International. And as always, if you have any follow-up questions, please don’t hesitate to reach out. Please enjoy your day and we’ll speak soon. Thank you again.

Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.