Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Third Quarter Earnings Call. 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, and welcome, everyone, to this morning's call. Last evening, we reported our quarterly results that show additional progress with operating margins, especially for our U.S. 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 9-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, which 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 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. And 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-to-date free cash flow to just over $570 million. So 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 up to capitalize on the next cycle. How do they do this? Well, they focus on long-held core operating principles, ensuring that quality of revenue and aiming for constantly improving efficiencies. Additionally, as we make meaningful progress on service improvement in U.S. 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 U.S. LTL operation showed additional progress on margin for a second consecutive quarter, 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%, and 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 weighing on freight volumes. Operating income of $53 million compares to $70 million last year, and our Truckload OR came in 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, and this compared to $426 million in the third quarter of 2024. Operating income came in at $31 million versus $49 million last year, representing a margin of 8.4% versus 11.4%. Our logistics return on invested capital was 14.6%. So next, I'll move on to our balance sheet, which remains very strong, benefiting from the 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 2.4x. 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. And I should add that subsequent to Q3, we also have repurchased an additional $17 million worth of shares as we continue to effectively reduce our share count. So 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. And 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. And with that, operator, David and I would be happy to take questions. If you could please open the lines.

Your first question will be from Ravi Shanker at Morgan Stanley.

So 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. So if you could address kind of where you think volumes are going, what do you think the pricing environment is like, that would be great.

Yes. Well, very good question, Ravi. I think that like most of our peers so far, I mean, we're off to a very slow start in Q4 with all kinds of reasons. We have this special situation in the U.S. with the government shutdown and things like that. So we anticipate that probably in our guidance, Q4 versus Q3, we'll probably see a deterioration of the OR between 200 to 300 basis points because of this slow environment and slow volume environment. Now going into '26, we're starting to feel that after 3 years of very difficult freight recession, we believe that finally, all the effects of that Big Beautiful Bill and the fact that the consumer will probably get some tax refund, et cetera, et cetera, along with investments that will probably take place in the industrial sector in the U.S., we feel way more optimistic about '26 than what we've gone through in 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 we're heading in the right direction, and I'm very happy with the team and what the guys are working on right now. We're looking at '26. We need to do some major investment in AI to help us reduce our costs and be more efficient and provide a better service. So in that regard, we have some projects that should take place in '26. I mean, Q4 '25 is difficult for us, but I think that finally, the sun is going to start coming up in '26.

Understood. That's really helpful. And just you very quickly addressed that as well. But if you can just talk about the progress you made with kind of fixing some of the internal initiatives in the LTL business. How far along are you? And what do you think are the next few steps you can expect in the next couple of quarters?

Yes. 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 had lost too much of that in '24. When Kal took it over with Chris and the rest of the team, they said we definitely need to change that, right? So what you see there in Q3 and also the improvement in Q2, some of that is the improved quality of revenue, quality of freight that we do. So that's basically step number one. Step number two is we were a little bit too relaxed on some aspects of our business. For instance, our approach with temp accounts was you deliver the freight and hope to get paid when an account does not exist with you. Well, I don't think anyone is doing that, right? So we were an exception in the U.S. We fixed that in Q2 and for the rest of the year. So now if you order at TForce Freight and you have a shipment 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. So 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 someone to run our fleet management team. I'll give you just a small example. At the last meeting we had in Dallas, it used to be that a TForce Freight truck would get into a shop and that truck would be stuck there for 85 hours. Well, now we're down to about 45 hours. It's still too much, but that helps the cost because now the truck is available, so you don't have to rent a truck for 5 days or 6 days because now instead of being stuck there for like 2 weeks, now the truck is stuck there for about a week. These are all the small details that Kal and the team are looking at. We have a new team that's also focusing on claims because our claim ratio at 0.7% of revenue is not good. I mean, it's never been good. We have to do something about it. If you look at our claim ratio in Canada, we're always in the 0.2% of revenue, which is normal, right? But we're at 0.7%. Now we have a team that focuses on that day in and day out in trying to get that 0.7% down to a more normal level. These are all small things that the guys are doing, and we will be announcing also, Ravi, very soon, probably next week that now within TForce Freight, we have one executive who's going to be a Chief Commercial Officer for all of our LTL operations in the U.S. So again, this is because our focus is on the quality of revenue and growing the number of shipments. This is what I think we will start to see in '26.

Next question will be from Jordan Alliger from Goldman Sachs.

Just maybe just following up on that. It sounds like real progress is being made, which is great. So hopefully, next year will be better in terms of the underlying demand. So in the context of that, how do you think now that sort of maybe it's getting to that point? How do you think either incremental margins or where LTL OR in the U.S. could ultimately get to? I mean, 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?

Yes. Yes, absolutely, Jordan. If you look at our U.S. LTL versus our Canadian LTL, I mean, in Canada, we have a deep bench, and we've been at it for a long time. In the U.S., don’t forget, we're in that business since we bought UPS Freight. Now we're beefing up our talent team, and that's going to help go through that period that hopefully is going to present some tailwinds for the LTL industry in general. We'll be, I think, well positioned to take advantage of that. The focus at TFI with every business unit has always been to do more with less. This is why, as I said earlier to Ravi, we are really focused in '26, on what kind of implementations 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. And 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 also talking about our truckload operation in the U.S. This is really going to be a big focus of ours in '26 because now, contrary to '24, this AI thing 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, you’ll probably be able to drive a truck without a driver, right? When you think about that, all the edge that a non-union carrier has versus a union carrier, that edge down the road will probably disappear. This is likely 10, 15 years from now, I don't know. But one thing is for sure is that we are embracing AI big time. We’ll be investing in that. That's a big focus of ours in '26. This market has been difficult for us for the last 3 years. Hopefully, the market turns in '26. We don't control that. But what we can control is our cost and our focus, and this is something that I'm reviewing in the plan for '26 as we speak, in the next 2 weeks. So it's a big focus of ours, Jordan.

Okay. Great. I mean, I guess, suffice it to say, without putting a number and a time frame, 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 improvement.

Yes. Yes, for sure. Because don’t forget, if you look at what we were able to do, with sadly 10% less top line in our U.S. LTL. We maintained the same OR as the previous year at 92.2%. So that tells you the heavy lifting that our guys are doing today, and becoming more process-oriented. I'll give you another example. Shippers loading count is from the shipper. But if you don't check, maybe there's a mistake. We were too relaxed on that. Now Kal and the team say no more. We get a full trailer from the shipper. We have to check. If there's a shortage, we have to tell the customer right away and not wait to get a claim 3 months down the road because there was a shortage. This is just being professional in our business.

Next question will be from Scott Group at 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 U.S. LTL margins 200 to 300 basis points worse. It's sort of hard to get all the way to that to your guidance unless, I guess, the rest of the business is doing particularly badly. Maybe, I don’t know, you or David could just walk us through some of the segment expectations, that could be helpful.

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

Scott, yes, embedded in that guidance is a U.S. LTL OR in Q4 of 96%. Specialized truckload between 93% and 94%, and logistics also between 93% and 94%. That logistics piece is down substantially; when you run the numbers, that suggests year-over-year operating income contribution in logistics is down by about half.

Right. And 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%. So that's a huge effect on us. Also globally, our logistics operation in the U.S. is down. The Canadian ones are on plan, doing better. But in the U.S., we're also down. We're running about 92% of plan right now. So this is what we are showing there. I'll give you another example because of the government shutdown; the Department of Defense is affected. One of our divisions, 30% of the revenue comes from the Department of Defense. This is out of our control. The same thing with the OEM selling fewer trucks. This is something we can't control, but we know it's short term. It could be 2 quarters, 3 quarters. Those guys will be selling trucks soon. And that's why we're also keeping the staff because we'll be suffering for a few quarters because of that situation, but we know that this freight is going to come back. The same thing with our truckload operation that services the Department of Defense. We know that this shutdown will stop at one point.

Yes. 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 U.S. LTL side, one of the messages in the last year or so is we have 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?

Yes. Yes, you're absolutely right, Scott. GFP finally has some stability, and now we can start growing again because the business we get from GFP comes mostly from the small and medium-sized accounts. Once you start going back to the small and medium-sized accounts, normally, you should see a benefit to your GFP. In terms of the service, I would say that right now, about 21% of our linehaul miles are on the rail versus 30% or 35% like it used to be. So for sure, our 4-day service has improved tremendously because we use less rail today than we were using about a year ago. So 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 and the guys are working actively on that. We are improving. We're not where we should be, but that is really the goal—to get this up to our peers on the second- and third-day service. Then slowly in '26, I think we'll get there; we can start being seen as a professional carrier that respects the commitment that they give to customers and get a price that is closer to the market. Right now, we're still a discounter versus the market.

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 revenue as a 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 deliveries. Our missed pickups year-over-year are down 60%, and our reschedules are down 34%.

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

And more freight.

And more freight.

Better retention.

Yes. Less turnover.

Next question will be from Walter Spracklin of RBC Capital Markets.

Alain, on 2026, you said the sun is coming up, and you've been very pragmatic, very clear about when you see things that are poor and when you think things are turning. 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 commentary on demand? Specifically, are you seeing any real evidence from the CDL restrictions and English language proficiency requirements that are now being mandated? Is that impacting 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. So Walter, let me be a little bit more specific. When I see the sun coming out, it's mostly in the U.S. I think for Canada, because we still don't have a deal with the U.S., it's probably going to be the same in '26 as we have been going through in '25. But on the U.S. side, if you look at our truckload operation in the U.S., our velocity is down. Our miles are down, but our revenue per mile is up until now. What we're starting to see is maybe a little bit of contraction in the supply. That could be due to the CDL, those permits not being renewed, as well as the English proficiency issue. It’s early stage, but I believe that this is going to help us correct the imbalance between supply and demand. The fact that truck sales are down like 40% is also something that indicates that some capacity is running out of the system. For us in Canada, I’m sure you saw what Champagne was saying about his new budget that he’ll be talking about soon. I hope we’ll have something similar with those Driver Inc. issues, where we’ll finally be 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 for the Canadian market. I think that the Canadian situation will be difficult in '26 because we don’t have a deal with the U.S. yet. I think we will have one, but we don’t have one yet, and maybe it’s going to go all the way to the summer of '26. However, I think that in the U.S., that’s going to change with all the benefits of this Big Beautiful Bill and everything that's going on, and the reinvestment trying to bring those jobs back. After 3 years of a freight recession that has been really bad, we're starting to see some capacity removal. As a matter of fact, even we have one of our peers in Alabama with 500 trucks who is out of business.

They're in bankruptcy.

Exactly. We also have a freight broker closing shops.

So as you become a bit more optimistic on '26, 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 a potential larger platform acquisition.

Yes. Yes. This takes time, right? We've been at it for quite a while, and because we don't have a deal, what we're doing is we're buying back TFI. So that's what we've been doing. In '26, hopefully, we could have—it's always difficult to do a deal when the target doesn't want to sell. That's not easy to do. Sometimes you're better off to say, let’s wait, and let’s work on a different file where at least you have a motivated seller. To me, I'm convinced that in '26, probably mid-'26, or later into '26, we could do something of size. We have the capacity, we have the potential, we have the target to do that. But there again, I mean, TFI stock is so cheap that when we talk to our Board, they say, Alain, why would you invest $1 billion, $2 billion, $3 billion? Why don’t you just buy back TFI? 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 TSX approved the renewal of our NCIB. We might put that on hold for now, depending on the stock valuation and get ready for the next chapter of my life on M&A.

The next question will be from Jason Seidl at TD Cowen.

Getting back to your comments about a potential trade deal with the U.S., I share your hopes that it's sooner rather than 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?

Yes. 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 layoffs right now of quality people who are part of our team, the same story is true for our logistics. As I was saying, Jason, about our truck moving operation, we know that this is just a few quarters. We are suffering because we're keeping our people because these are good people. They’re doing a good job. We'll be suffering on that. And we are still suffering on the Canadian side in our Truckload sector. As an example, steel, okay? Steel is dead for us. We are a big steel hauler. What do you do? Now we have those trucks parked, and we have those drivers at home because that's just what 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 to have to rehire drivers and at the same time, rehire the staff. By investing more in technology through this AI, we'll be in a better position to be nimble and react much faster to market conditions.

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? And 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?

Yes. 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 a taxi in Austin, Texas without a driver. How can we not run shunters in our yard without a driver? Is there a way, guys, let's wake up and smell the coffee. Let's open our mind; we have to change. If Waymo is able to run a cab in a city, why can't we run shunters in a yard without drivers? These are all things that we're looking at, Jason, to be more efficient.

Sales augmentation as well; increasing the productivity massively of salespeople in terms of identifying targets that fit—not just names, but how that fits with our network. The solutions can do a lot of that work and 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 rolling out right now.

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

The margin at JHT is probably depending on what you're talking about. If you're talking about trucks that move from Mexico to the U.S. or Canada, the margin is not the same because we use a Mexican partner to move that truck from Mexico into the U.S. or Canada. Also, don’t forget, we have experienced drivers in there. We also have a logistics division. When the volumes are down, our logistics division is very small because logistics gets the overflow. Right now, there’s no overflow. That's why our logistics margins are really good when the overflow is going. So this is a complex story. What I can tell you is that JHT is a diamond for us because it’s very well run. 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 because when things go back to normal, we want to be there to service them.

Next question will be from Konark Gupta at Scotia Capital.

Alain, you mentioned AI quite a lot on this call and technology. 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 years ahead to invest in technology for the eventual rebound in volumes, how do you see the capital planning for those things? Should we expect 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. 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; it would be an expense and will not be noticeable. We're not building data centers or anything like that. We're just customers and adopters of the technologies out there. As it relates to regular CapEx on trucks, there's no question that this is a very, very light year. 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, and we had excess equipment from the Daseke acquisition that we're able to reduce the CapEx without aging the fleet significantly. You should think about a more normal net CapEx number for us to be around $300 million, but that will also take place in a year where there's more normal earnings.

The other thing is that our CapEx has been delayed at TForce Freight because the supplier was unsure; the trucks are assembled in Mexico. All this tariff situation has caused the trucks to be delayed by about 3 months. We are getting trucks in October, November that were supposed to come in Q3, and some of the trucks will also come in Q1 '26 that were supposed to be part of '25. That's why this revised CapEx is exceptionally low in a year like '25. If things come back like we think they will in the U.S., we should get back to a more normal environment of activity, miles, and freight. We will also be back to normal CapEx.

Makes sense. And just quickly to follow up. You mentioned Daseke in terms of access equipment you got there. Where is the integration process on Daseke now? It’s been a while, right? You had Daseke in the system. Obviously, the volumes are soft and all that. But from a self-help perspective, are you fully done there? Or is there more to do?

On the Daseke, on the financial side, we're done by the end of '25, okay? Fleet management, financial, they run MIR now, like Contrans. They also run on Infineon for financial like Contrans, which is our Truckload division. So this is done. In terms of the day-to-day TMS, there, we're still working on McLeod and TMW, updating those systems and also making sure that we have visibility across all the divisions. Daseke was a more siloed kind of company. That is going to change during the course of '26. Sales is also something that we're working on our U.S. truckload operation. This is something I’m still discussing with my friend Steve on how we're going to proceed with the commercial operation in '26. This is still something that needs to be ironed out, but we need to invest more on the commercial side of our U.S. specialty truckload because I believe that with everything that's going on in the U.S., we need a sales team that is aggressive because there's going to be more business.

Next question will be from Ken Hoexter of Bank of America.

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

The start to October is soft, like the industry leader pointed out when they reported recently.

I just want to understand if it accelerates because when Alain said LTL 200 to 300 basis points deterioration, you said 96, which would be a 380 basis point sequential deterioration. I just wanted to know if there wasn't anything in there that was getting worse or if the volumes were accelerating the downside, just understanding what was in the numbers there.

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

Yes. Ken, because I'm always optimistic, that's why I have that target when I talk to Kal. But David is the CFO; he's the numbers guy, so sometimes we have different perspectives. You should probably trust David more because he's the numbers guy.

And then just following up on that. The logistics, I guess similarly, right, the OR deterioration? You mentioned the JHT— is that getting more expensive or deteriorating OR because of the 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?

It's not the cost side. It's not harder for us to get capacity. It's a combination of—we remember, our logistics broker—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. However, 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.

Yes. The old red is killing us at JHT because, as David is saying, we're keeping the staff. We're keeping the team because we know this is short term. So, excuse me, please go ahead.

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. It sounds like you’re seeing not only direct business where particularly for the DoD customer, but I guess the derivative of that— is that kind of having another flow-through on other or derivative customers increasing that demand or not necessarily at this point; too early?

Yes. Yes. One thing is for sure; everything is slow right now because some people are not being paid or are delayed in the payment of their salaries. The demand is slow right now, and it will correct itself as soon as there's a deal in the U.S. We don’t know when; I think it's going to be soon. DoD is a significant part of our specialty truckload. Normally, it’s about 30% of our business; that’s one example why our Q4 guidance is exceptionally low. It's not normal for us, but it's like a perfect storm.

Yes. One more thing I wanted to add, Ken, is that the government shutdown is hurting us because, as David said, we are holding onto good staff and team members because we know this situation is short term.

Last question on that, a more temporary question; I don’t want to talk about the government shutdown on the post office, but the post office is threatening to make drastic changes, like changing how many days you get deliveries. Is that a huge potential for P&C? Or is that a cost issue? I want to understand if that longer term—not just the takeaway of the strike minimal volumes, but thinking bigger picture long term, does that change the structure for your P&C business?

For sure, Ken. If finally, these guys in Ottawa decide to change because you're talking about Canada, right? Yes, yes, you’re talking about Canada. Yes, you’re talking about Canada. So for sure, I think that the guys in Ottawa now have to see that things have to change. We are way more efficient than them. Whatever change they do should help us in the longer term in Canada. I’ll give you an example of what's going on with credit cards from financial institutions; they used to be with Canada Post, but now they are mostly with us.

Next question will be from Cameron Doerksen at National Bank Capital Markets.

A question on the Canadian LTL shipments down quite a bit; 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. They’re less busy. We're not losing any major customers; I think we've lost one customer that I'm thinking of. But in general, we're not experiencing unusual churn in customers. It's just lower activity.

Okay. And 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? Are you expecting that some of these Driver Inc. carriers will just not be able to remain in the market, and so there's a volume positive for you? Or is it simply that they are just underpricing in the market and this will lift the pricing across all carriers if they don’t have that benefit anymore?

Yes. We know these guys have been cheating all along, and we know that now if they have to issue T4A, the cheating is going to disappear. 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? We have to be more competitive. This was always unfair competition. Now with this new issue, customers are starting to understand. We’ve got customers that are stating, we don’t want to deal with those Driver Inc. anymore. So we have won a big paper guy in Quebec that said, 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 those guys has been questioned. I think that, in '26, the market will probably be a little bit more difficult, but the supply will be much less. We will probably be in a better position in '26 than we were in '25 because slowly, those drivers will have to adjust and 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, and Revenue Canada is aware of him. If he doesn't pay his taxes, he’s going to have a problem.

Next question will be from Brian Ossenbeck at JPMorgan.

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. I’m trying to understand how you can be pretty good on 4-day service and next day, but not necessarily on 2- to 3-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 4-day service where we were able to make some changes is that we moved freight from rail to road, right? So when you do that, you are in control. This is why we're doing really well on 4-day versus what we used to do. Next-day because we come from the UPS environment where everything was kind of next day, these guys have always been good on next day. So it's just a continuation of what these guys have done. The second-day and third-day have been the issue where we are not acting professionally. We don't monitor; we just let the other guys do the job. So now it's a focus of ours because this is a big issue. You have a commitment that you give to a customer that is going to be there in 3 days, but it's not there in 3 days; it's there in 5 days. That doesn't work. So we’ve got to have processes in place that manage that. This is something where, in the old days, there was no real focus. But now, through this new focus of the team, it has been a major focus of ours, and we know that second day and third day— we are not as good as our peers, but we're getting there because we're making improvements.

In our experience so far, we would expect to see the impact first on volumes. Your turnover and churn come down; you're able to retain more business that you get. Then you start to get more wallet share from the same customer. A lot of the big customers use all of us; they use multiple carriers. It's just a question of how much they're allocating to each one. You do a good job, you start to get a little bit more, so the first place 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. When the market is more balanced and our service is improving and we're getting more freight from people, we can start to see pricing. We've made big improvements, but there's still a long way to go; we’re not best-in-class yet. We still have another couple of hundreds of basis points to improve on-time deliveries. We can drive our missed pickups down further, reschedules further, and our claims down even further. We’re still in the early stages, and 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.

Just the relative size of the 2 to 3 days; that’s probably a bigger chunk of the market or the opportunity relative to maybe the 4 and the next day.

Yes, absolutely, Brian. The 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 2 and 3 days. This is where we are the weakest today, and this is where our focus is because we made some major improvements in 4 days. We’re good on next-day service; fine. But let’s do the job on the 2 and 3 days and we’re improving, absolutely.

Next question will be from Tom Wadewitz at UBS.

Alain, I wanted to get your thoughts on the size of the terminal network for U.S. LTL and where you would want to be for shipments. I think that was something where you kind of 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 and the cycle went down. That has been a component where you’re like, well, we can’t be a 90 or mid-80s 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? That seems like a factor that would matter as well.

You're absolutely right, Tom. In Q4, we will probably swap 3 terminals with one of our peers to readjust the size of our terminal versus those guys. This is an ongoing thing that we continue to do. Cash-wise, we should see a net positive between USD 40 million and USD 50 million in Q4. Even with that, going into '26, I would say that we probably have another 2,000 doors too many. The challenge we gave our team is that the network was built to support 40,000 shipments a day, and we're doing half of that. Organically, it’s going to take some time. Can we go from 20,000 shipments a day to 40,000 organically? That takes a long time. There’s more to come into adjusting our network to today's reality, and we'll keep doing that. We're talking to our peers all the time about the number of doors we would need today, probably more like 5,000 to 6,000 to 7,000 doors. These doors need to be in the right location. We have areas where we are growing, like Dallas; I don’t have too many doors in Dallas because we’re doing well there.

Next question will be from Benoit Poirier at 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 in the U.S. LTL. I’m just curious what kind of OR could you produce in a flat volume environment in 2026? And maybe another scenario where you see a more bullish stance in terms of volume?

If everything stays the same, in this kind of an environment where the volumes are light, I think that in our Q2 and 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. Can we say no volume growth for '26 versus the same kind of environment in '25? With the investment we're doing in our cost management, probably a 200 basis point global improvement, 200 to 300 basis points versus what we're delivering in '25 into '26.

That's very great color. And 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? How will it change the job performed by Kal and the team overall?

No, the guy comes from within TFI.

Next question will be from Bruce Chan at 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 are needed for maintenance and potentially growth?

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. That’s all maintenance CapEx. The way that we think about CapEx is really about maintaining the fleet 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. We take the highest paying freight and we get the operating leverage that way.

Next question will be from Ariel Rosa at Citigroup.

I wanted to ask about tariff impacts and what you're seeing there? To what extent do you think tariffs are kind of 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 independent of the tariffs? To the extent that we get a little bit more tariff clarity, do you see that as a positive or an incremental positive in 2026?

One thing is for sure; if you don't know the rules, everybody sits on the sidelines, right? The problem we have right now is that we don’t have a deal. Mexico or Canada, both countries are big traders in the U.S., but we don’t have a deal. That's why it’s so important that in '26, at one point, there has to be a deal between the three countries. In the meantime, not knowing where we’re going is a big effect. If you take the aluminum, I read what the President of Rio Tinto is saying. Aluminum is not affecting them, but they’re shipping some of their aluminum from Canada to Europe. It’s affecting me because I don’t have any ships. Down the road, this is temporary. This will change as soon as we have clarity on tariffs finalized. That product will go back to the U.S., right? We just need to have a deal between the three countries. Once we have that clarity, it will be clear sailing.

Let's hope we get some clarity on that in the months ahead. 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? 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?

For sure. If you're a truckload guy and you're stuck, what do you do? You try to get the good heavy 5, 10 pallets of LTL and give the shipper a good rate. A lot of freight has been moved to the truckload guys, which is good rates and good freight for LTL. We’ll see what happens. When the truckload guys get busier, are they going to walk away from that freight because now they don’t need to do that? Experience tells us that this is what happens, and we’ll probably see that sometimes in '26; hopefully, okay? But who knows when.

And at this time, Mr. Bedard, we have no other questions registered. Please proceed.

Well, thank you, operator, and 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’ conferences before year-end. As always, please don't hesitate to reach out with any further questions. Have a terrific Halloween, and have a great weekend, everyone. Thank you.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And we ask that you please disconnect your lines.