TFI International Inc. (TFII) Q2 2026 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to TFI International Second Quarter 2026 Earnings Call. Please be advised that this conference call may contain statements that are forward-looking in nature and is 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 July 27, 2026. Joining us on the call today are Alain Bedard, Chairman, President and Chief Executive Officer; and David Saperstein, Chief Financial Officer. I would now like to turn the conference over to Mr. Alain Bedard. Thank you. Please go ahead.

Well, thank you, operator, and welcome, everyone, to our call this afternoon. Within the past now where TFI International reported stronger-than-expected quarterly results with adjusted diluted EPS of $1.85, exceeding our outlook range of $1.50 to $1.60 and up 38% year-over-year. All 3 of our business segments grew operating income by double digits, and we again produced solid free cash flow, which, as you know, is a long-standing priority of ours. Put simply, the investment we made during the recent slowdown, both in internal operation and strategic M&A are beginning to benefit our performance. We now have a balanced and diverse portfolio of operating companies and attractive end markets, which we continue to serve while always maintaining our focus on efficiency and related operating principles. And of course, there is no better than the hard-working people of TFI to execute on our plan and capitalize on the resulting opportunities. The foundational support for TFI International's thoughtful approach to value creation, both cycle in and cycle out, begins with our strong balance sheet, which improved further during the quarter. We generated more than $200 million of free cash flow, further supporting our ability to strategically allocate capital and, very importantly, return excess capital to shareholders whenever possible, including close to $40 million in quarterly dividends paid during the quarter. So let's take a high-level look at our second quarter financial results. Starting with the top line. Our total revenue before fuel surcharge of $1.9 billion was up 6% over the past year, while operating income climbed nearly 30% to $220 million. That reflects a margin of 11.6%, which was up more than 200 basis points relative to 9.5% figure a year earlier. Also on a consolidated basis, our net cash from operating activity rose to $256 million from $247 million. Now let's dig deeper into each of our 3 segments, starting with LTL, which was 38% of our segmented revenue before fuel surcharge. We generated $725 million of LTL revenue before fuel surcharge, up 3% year-over-year. Our LTL adjusted operating ratio was 88.5% and operating income of $86 million was up a very solid 17%, producing a return on invested capital of 12%. Now let's move to our truckload, for which revenue before fuel surcharge came in at $761 million, up 7% the past year and now representing 40% of our segmented total. Revenue per truck per week, excluding fuel surcharge, rose 13% year-over-year. We increased our brokerage revenue by 34% in addition to this. Our operating income of $106 million was up a very robust 50% from the prior year quarter, and our adjusted OR of 86.1% improved by 400 basis points. Our return on invested capital for the truckload was 6.9%. Stepping back, as capacity has come out of the truckload sector, we've worked to reduce our own capital intensity and right-size equipment level, creating significant operating leverage. We've also focused on optimizing our business mix and end market exposure, which now includes an attractive mix of flatbed and specialized expertise. Rounding out our segment discussion, Logistics revenue before fuel surcharge was up 10% year-over-year to $432 million, accounting now for 23% of the segmented total. Operating income expanded at 32% to $50 million, reflecting an 11.5% margin, which was up nearly 2 percentage points versus the second quarter of 2025, and our return on invested capital was 13.3%. So before opening up for Q&A, let me discuss our balance sheet and provide our updated outlook. As I mentioned, we generated just over $200 million in free cash flow during the second quarter of the year and ended June with a funded debt-to-EBITDA ratio of 2.4, which has improved from 2.5 at the start of the year. And lastly, looking ahead for the third quarter results, we expect adjusted EPS of $1.70 to $1.80, which would represent a 50% year-over-year increase at the high end. We also expect year-over-year adjusted operating ratio improvement of 500 to 600 basis points in the Truckload segment, 250 to 350 basis points in the Logistics segment and a comparable operating ratio in the LTL segment. For the full year, we continue to expect net CapEx, excluding real estate in the range of $225 million to $250 million, unchanged from previous expectations. And I'll mention, as I do each quarter that our outlook range assumes no significant change, either positive or negative in the operating environment. And now, operator, if you could please open the line, both David and myself will be happy to take questions.

[Operator Instructions] And your first question comes from the line of Scott Group from Wolfe Research.

I wanted to start on the LTL business. I'm not sure if I heard right. Are you saying, sort of, a flattish year-over-year margin in LTL? And if that's right, maybe just talk through what you guys are seeing from a demand standpoint, a service capacity standpoint and maybe a pricing standpoint?

Yes. I think, Scott, that the world of truckload has changed tremendously, okay, over the last 6 to 9 months, okay, with the what the administration has done in the U.S. with all these things that they've done to help us with reducing the supply. So that's really the truckload. But I still find that the LTL market in the U.S. and the same in Canada as well, it's still very soft. I mean there's no big revolution in the demand there. So this is why we're saying that, yes, we're conservative, okay? But we want to say that LTL, we don't see a lot of major improvement, okay, versus what we can see on the truckload sector or on the logistics sector.

Okay. And so maybe just to follow up there, like I guess you're not seeing spill from truckload into LTL. It doesn't sound like you're seeing that. And then on the truckload side, you're saying pretty meaningful improvement. Maybe just talk about like the pricing that you're seeing right now on the truckload business and any sort of differences between the flatbed and some of the other parts?

Yes. That's a very good question, Scott. And I'll ask David to talk about that. But for sure, what we see on the pricing side of the truckload is very impressive. I mean -- and it's -- the way we see it is that it's mostly because of the supply constraint, not because the demand is just going through the roof. It's just the supply, right, David? So maybe you could add to that.

Yes, absolutely. Because what we're seeing on the LTL, the reason that the margins are expected to be flat is because we have too much volume and not enough price. And that's what we're working on fixing, okay? So that's a specific thing. I don't know if that's really to be extrapolated to the market or not. It's related to us. And of all of the issues to have, it's probably the one that we -- it's clear what to do. And we know that we just need to raise the price, and we're working on that. On truckload, yes, the dynamics are really good. So actually, we saw the pricing or the revenue per truck accelerate throughout the quarter. So in April, we were at 11.1% revenue per truck per week year-over-year growth that increased to 13.3% in May, and it was 14.4% in June. So the dynamics there are strong and the LTL issue that we have, you'll see, I mean, the shipment count was up 7.5% in the quarter in LTL. It's just that the revenue per shipment before fuel was down 2%.

But you know what, Scott, we're very proud of what our truckload guys have been able to accomplish with -- if you just look back at our Q1 OR in our truckload, we were above 90%, right? We were, I think, a 93% OR in our truckload. And now we're down to an 86.1%, okay? I think that this is quite an accomplishment, okay? And the investment that we made 2 years ago in the U.S. specialized truckload is just starting to pay off now.

Yes, exactly, because you see that in the depreciation. We talked about this a couple of quarters ago. Well, the depreciation is down double digits now. And the revenue is up, right? So we're saving a fortune on equipment costs. And the brokerage revenue was up 35% year-over-year.

So this goes back to the saying, do more with less instead of doing less with more.

And your next question comes from the line of Ravi Shanker from Morgan Stanley.

Alain and David, maybe if I can just follow up to your last response on LTL, where you said, obviously, you have too much volume and not enough price. David, do you think that is a -- that's something you can reset in one cycle? Or is it a multi-cycle process to get the price where you want it? And also, if it is a multi-cycle, kind of if you can give us a sense of how much you can do kind of this cycle versus the next, et cetera?

Yes. So you know what, Ravi, I mean, the issue we have with pricing is wins in one sector per se, right? So SMB, no. Corporate, no. The biggest culprit where we probably made a mistake is 3PL, and it's mostly on our blanket thing there where we got inundated with volume, okay, because probably we were the cheapest guy in the country, right? So this is what now our commercial team is working on fixing, okay, because this is like a no, no, right? So it's not all over at TForce Freight, okay? SMB and corporate, not an issue. But blanket 3PL has been overwhelmed with volume and with pricing that probably does not reflect the market. Maybe we were not aware of where the market was going, and now we have to react to that. And that's what David was saying that it's probably in all the problems that we can have, I mean, it's probably the one that could be fixed. Now does that take 3 quarters? I don't think so. I mean our guys are already -- we know what the issue is. We know that the market is still soft to assess, but we're very, very cheap right now with our rates in some sectors. So we're going to be fixing that now. We're fixing that now as we speak.

Understood. And maybe as a quick follow-up, are you getting any more confidence in the cycle to maybe restore a full year guide?

Yes, to restore full year guide, look, as things -- I hope that at some point, we'll restore a full year guide, absolutely. We are starting to get confidence in this truckload cycle, that's for sure. The fact that it's so supply driven and therefore, has sustaining power is -- gives us a lot of confidence. And I think that the delta is going to come from getting the LTL to produce to its full potential.

We're sub-90 this quarter.

Right? But we could be a lot more sub-90 if we fix this pricing. And by the way, when we do that, we won't have all the excess cost that we had this quarter. This quarter, we were dealing with a lot of excess costs related to the surge in volume, which is not necessarily an ongoing thing. So we'll see. We hope that we come back to a full year guidance soon.

And your next question comes from the line of Jordan Alliger from Goldman Sachs.

So just sort of curious, coming back to LTL quickly. With the pricing actions that you guys are working on, I mean, would you expect -- because your tonnage is obviously outgrowing most of the LTL industry. Would you expect that to sort of come down a little bit as you sort of work to repair the price? And then on the flatbed side, specifically, are there pockets -- I know the discussion has been supply tightness, but I'm just curious, are there pockets where demand on flatbed is looking better? And I know you're not giving a full year guide per se, but just because I'm perhaps not as familiar, is there a way to think about seasonality in the truckload/flatbed business 3Q to 4Q?

Yes. So I mean, when you think about the flatbed thing there, Jordan, okay, we are highly involved in wind, and wind is growing, okay? We're also highly involved in data center and everything that is industrial. Now what we've been able -- Steve, our Senior EVP, has been able to do with our flatbed operation is to create within the old Daseke organization, some niche carriers. So I'll give you the example of what Steve and his team have done with one of our carriers that's called SPD on the West Coast, where these guys were running 200 trucks and the old saying, 'jack of all trades master of none.' Now these guys are a niche carrier for the aerospace business. So with Boeing and with Bombardier and with others, okay? Now we see some growth there. I'm sure you're familiar with Boeing. Those guys, I mean, they're quite busy. And we're piggyback on Boeing. But now we made a niche carrier of SPD. So these are sectors like the aerospace, the wind, the data center, that we see a lot of opportunities, steel too, okay? So our TSH group, which specializes in steel, okay, those guys are -- they're up like revenue-wise, I would say, 20%, 25% year-over-year, okay? So steel is -- we're very busy with that. So a lot of steel probably goes into the data center. I don't know where it's going, but it's -- we're really very busy with that. But on the other side, if you think about drywall, okay, we're a significant player in that business, but drywall is maybe not the best business you want to be in right now because not a lot of people are building homes, right? So it's kind of a mix. But I mean, what our team has been able to do, is kind of having within the specialty truckload, our business unit being more specialized in the world, okay? Instead of -- if I take the other example of Lone Star, which is something that's happening now out of Texas, I mean, those guys are good with wind. They're good with data center. They're good at moving everything that nobody wants to move because it's too big or it's too heavy, okay? So now we said, you know what, the over-the-road operation within NOSA, that doesn't fit you. So what we'll do, we'll move that to those specialists within SFI, our Truckload division, Wiley, okay? Wiley is our -- the king of the over-the-road for us, right? So this is what's happening on the truckload side. Now the first part of your question was, David, I don't remember exactly.

Can you repeat the first one?

Yes. Well, I was just curious on the less-than-truckload side, given the price actions, repair actions you're taking, your volume is strong. I was just curious how that might look from here a little bit.

Yes, for sure, volume is going to come down a bit because, as you know, the minute you start to get back to closer to market, okay, if we get too close to market because we still have to improve our service. I mean the guys are working on that. But like David was saying, we incurred way too many costs in our Q2 operation because of this huge surge in volume, but also our service offering, right? So now we're fixing price, but we're also fixing our service because our service was improving this time just before we got this crazy weather in Q1, okay? And at the same time, this huge surge of volume mid-Q1 into Q2. So now it's very clear what the mandate is for Kal and his team, and we'll get there. But for sure, I mean, we will have to drop a little -- a few shipments to get there.

And your next question comes from the line of Ken Hoexter from Bank of America.

Alain, can you talk maybe a little bit about the truckload pricing? Are you touching at all right now given the improvement is just maybe given the mix of how much is contract, how much takes time? Just want to see where you are in the marketplace and able to reprice that.

Yes. Yes. So on that, David, I mean, I think that we're not a big player on the spot market. Okay. I don't remember exactly the split between contract and...

On the U.S. side, it's about 25% spot.

25% spot?

Yes.

But for sure, I mean, we are really -- I mean, you know how the shippers are. I mean the market is going down, contract or no contract, they will sit down and try to bring prices down, right? So the market is going up right now. So yes, we have agreement, but we have to sit down with customers because at the same time that the market is moving up and our contract is too far away from the market, then we have to sit down. And we did that. We did that. I mean, we did that with some major customers, and they understand. I mean now it's a different situation. And we're not in the business of hauling freight just to -- for the pleasure of hauling freight. We're in business to service customers so that our shareholders make money, right?

Yes. And I really want to stress that you have two things going on in our truckload. One, we're exposed to the right end market, yes. Two, the market is turning because of the supply, yes. But the last thing, and this is unique to us, is that we've dropped our depreciation by $12.5 million in this quarter alone. And yet the organic revenue is higher than it was last year. So we're truly getting an enormous benefit to the bottom line as a result of that. And that's really specific to the work that the team has done over the past year, making sure that our trucks are being deployed in the right places, trucks that are not being deployed, we move them, and then we broker out what we don't want to do ourselves. That's it.

Because Ken, don't forget, we bought Daseke in '24. In '24, we were stuck with the Daseke CapEx, like these guys like to buy trucks and trailers. So we had way too much CapEx in '24. Then we get to '25. It's too early in the game. So we still bought too much equipment in '25 versus what the market, okay, could bear. So now after 1.5 years of experience with Steve and the team, now we are adjusting our asset base to the business that we want, the business that's highly profitable. That's why we're an 86 OR, right? And we're saying, you know what, those customers, maybe we could broker the freight to some good carriers that want to work for us.

Great. And if I can get a follow-up on capacity on both sides. Maybe talk a little bit about how much capacity you have, utilization on miles per tractor. And then in the LTL with shipments up 8%, talk about what excess capacity you have now? You've changed your management there with Kal. Are you focused more on culling that 3PL business, more on price? How do we think about usage of that capacity as we move forward?

Yes. So on the first one, I'll answer that. We report revenue per truck, not miles per truck. And the reason for that is that some of our business, we bill by the mile, but some of the specialized is build like by the day, for example. It's not so much by the move. So it's not so much of a mileage thing. So revenue per tractor is what we report, and that's up 13%. And as I mentioned earlier, it was increasing as the quarter went on. We exited the quarter around 14.5%. So -- and then in terms of capacity, I mean, we're at capacity. We have to reduce our volume in the LTL because we've had to -- because it went up so quickly that we had to spend money in ways that we wouldn't normally spend money, lots of overtime, lots of third-party carriers to help us out in the pinch. All of these things that you do when volume increases 10%, 12%, 13% overnight. And so if you ask us where we are in capacity, well, we don't have any capacity. We're raising price in order on the brokers in order to bring down that rate of growth.

And your next question comes from the line of Walter Spracklin from RBC Capital Markets.

David, Alain. I would like to start on pricing, but more in a more conceptual longer-term kind of way to look at it. And I'm just curious, when you look at the drivers of pricing, you mentioned supply driven by whether it's the non-domiciled ELD or CLDs [ CDL ] or the English language proficiency or even the Montgomery ruling. These things seem like it's not in the -- like in past cycles where it's something that can be easily or quickly reversed. I know, Alain, you've been in this business a long time, looking back at previous cycles where pricing has come up. Do you feel like this has more stickiness? Can this -- can the pricing here hold for longer given the type of drivers that have caused that pricing to go higher? And can it be sustainable?

Well, you're absolutely right, Walter. I mean, in a normal trucking environment, I mean, guys used to make a lot of money when the demand was high, okay? But demand high doesn't last. I mean it can last a month, could last a year, could last 18 months, and then you go back to -- you got too many trucks because now the demand is falling. What I like about this, which I've never seen before in 30 years being a trucker, okay, is now it's the supply, right? And I was just reading about what the administration wants to do in the U.S. is that they have a particular group of drivers that they're saying now, okay, so we have the CDL, the illegal, the English proficiency, like you just said, but now they're also focusing on another group of drivers that according to the U.S. administration are dangerous, are not safe, et cetera, et cetera. So to me, on the U.S. side, I think that this move that we're seeing now on the truckload sector, which is not the same with LTL or P&C. I mean, for truckload. I mean, I think that this is more of a permanent thing than we've ever seen before. So this is why, Walter, it's a reflection of what our guys have been able to do in this market, even if the demand is not crazy in the truckload -- specialized truckload sector. But those guys were smart enough to take advantage of the situation that we're going through right now -- and that's why from a 93 OR, which was really bad in Q1, okay, now we're down to an 86 OR. And we just said in our presentation that we believe that in Q3, year-over-year, we're going to see, again, another major improvement, okay, in our truckload sector. Some also in our logistics, not so much in our LTL for now because like David is saying, okay, we have to attack some issues that we have in the U.S. right now, U.S. LTL and the guys will do the job. So I think that it's way more permanent, the situation that you were describing, Walter, than ever before. And this is typical of the U.S. market. On the Canadian side, we have a little bit of that, but not so much because, as you know, the Canadian government now is asking the truckers, the employers of owner or whatever to issue a T4A. So now these illegal guys in Canada now have a T4A. So they have to report that as revenue, and now they have to pay tax. So that's all -- also we're starting to see, okay, some major improvement on the Canadian side because the Driver Inc. fiasco is starting to become less. It's still there, but it's not as bad as it used to be.

Yes. And then the only thing I would add to that is that the brokers are now very careful about wanting to broker loads to well-capitalized serious carriers that are serious about safety and they are spending the money on that. So the whole industry is being cleaned up in a way that's going to result in better safety and normal rules being followed. No more cheating.

Fantastic. There you go. Looking at your capital plan for this year, I know you're not seeing any significant changes in growth, but you mentioned on the subsegment area where you have exposure, you are seeing growth. Is that causing you at all to revisit your capital plan? I think you had us at $225 million to $250 million for the year of net CapEx. Is that still the plan? Or is there opportunities for you now to invest to take advantage of some of those subsectors?

Yes. So far, I mean, we're still in that range, Walter. I mean, for sure, we're seeing a lot of discussion with customers, okay? The other thing also I'd like to point out, Walter, is that now what Steve Brookshaw has done is now we have a Chief Commercial Officer for our U.S. Truckload operation, Mr. Hoppe. Scott Hoppe is our Chief Commercial, which is going to be a big thing for us because if you look at the way Daseke was run, it was like a 9 sales team and 9 of everything. So now we are consolidating a lot of that. And commercial side is under Scott Hoppe, and Scott has got a tremendous experience, okay, in the U.S. I mean, he's lived all his life into that world, right? So that's going to help us. I mean that is for sure, having a one commercial team under Scott, I mean, we're already seeing the benefit when we talk to our customers.

And your next question comes from the line of Brian Ossenbeck from JPMorgan.

Maybe I just wanted to understand a little bit better if you can make some changes or have made changes to the LTL commercial team and maybe how it ties in together with operations because I would think that at least with the blanket pricing on 3PLs, you can adjust that relatively quick and not the only network, we've heard, that got a little bit flooded, but maybe just some thoughts on what could be done differently or changes you've already made for the next time.

Right? So it's the mistake that we encounter is that focus was, hey, guys, we need to grow organically. And we got overwhelmed because our pricing was too low, right? So we fixed that. One thing I could tell you is that we are implementing a pricing software, the one that most of our peers are using. So we are getting rid of the old UPS freight pricing. We've also, through our finance team now getting our finance team involved through AI, okay, to help those guys make the right decision by lane, by customers, et cetera, et cetera. So maybe, David, you could give a little bit more details on that.

Yes, absolutely. It's very interesting. I mean we now have tools where we're taking spreadsheets, which have an entire month of shipments. So these spreadsheets have about 500,000 lines and tons of columns, tons of data. And we're able to really isolate very specifically the problematic lanes, very specifically the problematic freight, the terminals, the customers. And so -- and then we're using that to help our pricing team go in and be real surgical and move faster. So we're able to treat large amounts of data in ways that we haven't been able to in the past to be much more surgical with the pricing actions that we're taking.

Okay. I appreciate that. Just kind of a cleanup question. You talked a couple of times in the release about this incremental accident reserve. It's like $10.5 million in the quarter. Does this recur? Is this a prior period adjustment? Because I think when we look at the corporate line, that certainly stood out this quarter.

It's not recurring. That's for sure. We sure hope not. No, it's -- yes every quarter, we go through and we assess very clearly where our reserves need to be, and we'll make adjustments to various files -- and we don't -- it seems like some people wait until year-end to do that. We don't do that. We do it every single quarter.

But also, David, if you could just add to that, I mean, the approach that through Brandon and the new team, okay, versus the old way that we used to do it until about a year ago. So by trying to settle, okay ASAP, okay? And I mean, this is also a part of the change.

Yes, that's actually -- it's very interesting. So from a business perspective, what you want to do is be very forthcoming and very aggressive with settling matters quickly. And so what we've done over the last couple of years is built a Miami-based legal team of in-house lawyers who are managing all of our claims and are working with the external lawyers and really driving it because the external lawyer doesn't always have your interest in mind given how they get compensated by the hour or our interest is getting it done. And what's interesting about that is that when you start settling things fast, right, your actuarial reserves actually need to go up because the actuarial assessment is not looking at the fundamentals of what's happening. It's just saying, well, you guys had a ton of spend this quarter. Yes, we did have a ton of spend. But the reason we had a ton of spend was that we took care of a bunch of things that are not going to come back to bite us down the road. And so over -- so right now, we're in that lump where the actuarial reserves are actually a little coming in high because of those settlements. But of course, when that then translates into less spend down the road, those reserves are going to come back and it will unwind into -- in the other -- in the opposite direction.

Yes. And also maybe a few words on settling on the spot, what we're doing.

Yes. Yes, absolutely. We do that with our internal team as well as an external provider in terms of when there's an accident, we dispatch somebody immediately to the scene with authority to settle on the spot. And so we've had a lot of success with that. And it's -- yes, it's an important part of our strategy.

Yes, because the problem with claim grows with time. I mean, over time, it's not going to get any better. It's just going to get more expensive. So this is why we changed completely the approach there is if it's a minor thing, for sure, if it's major, okay, nobody is going to solve on the spot. But if it's a minor thing that could turn over time after a year or two, something like way more expensive. So we went, like David says, with our own team and with also an external provider to try to settle as much as we can on the spot right away before the lawyers comes in, before or whoever, okay? And now I don't remember how many cases we settled.

It's about 200.

200, right? On the spot. So I mean, over time, this is, for sure, is going to help reduce our cost of claims.

So just to understand, it seems like you've been doing this for a couple of years, at least had the team in Miami doing it, but you feel like you've sort of hit an inflection in cleaning up some of the stuff. And so now quarterly is going to be more of a standard practice. It seems like it still could be a little bit lumpy just based on the activity.

No, I think that this quarter's reserve increase in reserve is exceptional. We do not expect these types of movements every quarter.

And your next question comes from the line of Jason Seidl from TD Cowen.

Alain, David, I wanted to get a clarification question in first. I think you said that in terms of your spot TL exposure, it was at 25%. I was wondering if that includes all the heavy haul because it seems a bit higher than I thought it would be. I think like Daseke legacy was about 5%.

No, that's the U.S. flatbed. It's 25%. The heavy haul and the legacy specialized in Canada is very, very negligible.

No.

There's none. So when we talk about...

It's like the over-the-road, Jason, the over-the-road flatbed, not the special -- highly specialized tank, okay or dumps or whatever. It's really the over-the-road thing, the regular flatbed, if you want to...

Okay. My next one is more of a macro question. Alain, did you guys see sort of any pull forward into June and maybe talk about the July trends that you're seeing out there?

So far, I mean, what we're seeing in July, okay, or in June, I mean, I think that if you look back, David, the month of June, I mean, this was a great month of June. I mean May was a little bit soft. June was great.

Yes, exactly. I mean, in July, right now, up until today in July, the revenue per truck in the truckload is 14.5%, which is the same as it was in June. And then what we're seeing in the LTL is what we expect, right, which is that the revenue per shipment is down less, right? It wasn't down 2%, it was down less. And then also the shipment count is coming down. So we're starting to see the effect of that price increase that we're putting through, and work through in the way that we expect it to.

Yes. And this is with the 3PL, okay? So corporate and SMB, I mean, it's steady for us volume-wise and price-wise. Yes.

And your next question comes from the line of Konark Gupta from Scotiabank Capital.

So my first question is on the LTL. I'm just trying to understand the move from Q2 to Q3. For the second quarter, the LTL operating ratio was, I think, 88.5%, which is, I think, better than the mid-point of what you were expecting heading in. Now you're saying flat in Q3, which probably means about 88.8%. Now if you had high 3PL volumes and higher costs in Q2 and working to address that in Q3, why is that Q3 operating ratio not improving sequentially from Q2? I mean, is there -- is it because it's going to take time to resolve those things? Or is there some other noise in Q3?

Okay. So Konark, there's one thing that you got to keep in mind is USD versus Canadian dollars, right? So our Canadian profit now are discounted at -- it's $1.40, okay, versus the average of Q2. So that's a little bit of an issue, okay? The other thing also, part of our forecast, is what's going to happen with fuel. So for sure, there's no question about that, that the only area was -- where it's really a tailwind fuel is the Canadian LTL and P&C. I mean, truckload is never a tailwind for us and U.S. LTL is never a tailwind or logistics. So for sure, not knowing where we're going, okay, with fuel, this is why our Canadian folks, okay, when they gave us their forecast, they went with maybe a little bit conservative on fuel versus what it is today, right? So now we're, again, above USD 5 a gallon. But that's why our Canadian folks are being very cautious about where this is going to go. So you've got USD, okay. So what is USD versus CAD at? $0.01 difference on us, David?

Yes, $0.01 is about $0.01 of EPS. Yes, it's about 1:1 now.

And then...

By the way, Konark. To make sure [ you're ] understanding those margin improvements that you put in the press release and then -- and you mentioned, those are year-over-year numbers.

Yes, absolutely. I mean, I think your Q3 LTL year-over-year being flat also somewhat means your sequentially flat given you had 88.8% and 8.5%. So that's a good explanation. And if you can help us -- I know you guys are not disclosing your regional operating ratios. But from a trend perspective, is the U.S. LTL operating ratio likely to make a bigger move, a bigger and better move in the next coming quarters compared to your Canadian operating ratio because that's where you're seeing service improvements. Is that fair?

Yes, absolutely, Konark. I mean, the biggest bang for the buck is on the U.S. LTL. I mean, on the Canadian side, we are running very, very lean and mean and very efficiently compared to the only peers we have in Canada. I mean, when we compare ourselves to the only peers we know about, I mean, yes. So it's really the U.S. where -- I mean, we still have a lot of work to do, okay, to get to where we have to be.

Okay. And then just to put that into context, Alian. How far are you from mid-80s on that? Like is it like a year away or it's more like 6 months away in the U.S.?

I mean, Konark, I've been at it with the team for 5 years. And -- I mean, every year, we have a different kind of an issue, and we're just saying when is this going to end, right? So if you would talk to [indiscernible], that is exactly what he's going to tell you. But we fixed a lot of things, okay? I think that we're getting close to the end, right? Because once our commercial team is like way better, okay? We have stability in our commercial team now, which never happened before. Our operating team, we definitely need some improvement there, and we're working on that. Our fleet, okay, in terms of the asset and in terms of the management of our fleet, I mean, it's major improvement. So I mean, we're heading in the right direction. But -- I mean, we fell in Q1, Q2, okay? But now we're back on our feet, and we're going to be correcting that, okay, in the next quarter. It's been much easier, Konark, to turn around a truckload operation because if you look back, okay, and you look at Daseke today, I mean, the SFI Truckload in the U.S., I mean, it's day and night versus what these guys were doing 2 years ago. I mean, much easier to turn around, okay, a truckload division versus a big network, okay, that was probably not very important to the previous owner, okay? So this is why the tools, the fleet, the real estate, the morale, the management team was probably not priority for them, but it is for us.

And your next question comes from the line of Tom Wadewitz from UBS Financial.

Let's see. I wanted to ask a little bit more on LTL and the brokerage piece, there's the 3PL piece. How much of the book in LTL is with 3PL? Is that 30%? Is it bigger or smaller than that? And then I think in terms of just like maybe if we look to, let's say, 2027, how do you think these 2 big businesses you have, so LTL and truckload develop? It seems like you are seeing a lot of really good news in truckload this year. Is there kind of more significant runway or a similar improvement in '27? Or is that kind of more moderate? And then LTL, just from a, I think, margin and pricing perspective, is taking a bit longer, but is that kind of any ways to think about the delta and the improvement you could experience in '27 in LTL? So I guess a couple of questions within that.

Yes. Okay. You know what, on the truckload side, we're just starting. We're just starting, right? So we're just starting in a sense that what we've done with SPD, now SPD is focused on, okay, one business, okay? We're doing the same thing with [Lone Star, okay? So Lone Star, your focus is going to be, let's say, the wind, the data center, everything that is big and heavy and long, et cetera, et cetera. Next is we're going to be working with another of our division, okay, that we're going to do the same thing. And then we're going to attack another one of our division. So this is an ongoing process, okay? And it's not going to end in '26. It's probably going to go all the way to probably summer of '27, maybe Q1 -- by Q1 of '27, we should be done, okay? And then we have one company that's called SFI, okay, with one leader of commercial, which is our friend, Scott Hoppe, okay, on TMS, which is the McLeod system that now it's going to be implemented all over with one finance system, which is our Infineon system, okay? With one fleet management, which is called MiR. So with one visibility. So we're also implementing Salesforce for Mr. Hoppe and his sales team. So it's going to be one company versus when we bought Daseke, it was more like 9 companies that were all over the place. Now this is truckload. So what you see an 86 OR right now, are we going to do better than that in '27? If the market is about the same and the same is true of this supply constraint, yes, we'll do better. Can we get to, let's say, an 80% to an 82% OR, 83% I think so, okay? If market stays about the same, and the supply is not changing, okay? I think so. I mean, we still have lots of good stuff going on. Our brokerage operation with our specialty truckload is growing, like David was saying, I think, 35%, okay, with good margin. And we are protecting ourselves, okay? We use carriers that are professional that we deal with them on a day-to-day basis. We don't deal with fly by night that -- so this is really our truckload operation. On the LTL side, okay, we're working on improving, okay, like we said, post freight. But at the same time, okay, we have a very small nonunion LTL business today in the U.S. very small, 1,000 shipments a day, 1,300 shipments a day, which is peanuts, right? But, I mean, we are working to build that up, okay, over the next few years and do the same thing as we do in Canada. So in Canada, we run union or we run nonunion, right? So we run both. And this is what we'll also be focused on is trying to beef up that nonunion LTL slowly, with small -- and we don't want to be in states where there's no density. So when you build from scratch, the advantage you have is you pick the states. So where we want to be? Well, we want to be in Texas. That's for sure. We want to be in California. That's for sure. We want to be in Ohio. We want to be in Michigan. We want to be in New York, we want to be in the Carolinas, okay? So this is the beauty when you build from scratch. And with 1,000 shipments, that's what you would call that, build from scratch, right? Whereas with TForce Freight, we have a huge network, okay? And we have to live with what we've got, and we're working on improving it every day.

Any thoughts on just like mix of 3PL within your LTL today? How large it is?

Yes. It's over 1/3. It's balloon to over 1/3, yes, as the volumes increase.

So do you -- I mean it's pretty sizable. It's not atypical, but do you think that there's a significant loss of shipments as you price up because I think the 3PLs do tend to be -- they shift things around as your pricing changes, I guess, as you saw by having low prices.

Well, if you talk about the 3PL, the CSP, the customer-specific pricing, no, okay, don't -- they don't move around because what you give them is a specific pricing for a specific customer. So that is way more stickier than the blanket. The blanket, you're right, okay? When you get the shipment, it's probably because you're the cheapest guy in town, okay? And this is where, okay, we're working on changing the mix, okay? Until a few years ago, blanket was probably like 80% to 85% of the shipment that we're getting from the 3PL. Now if I remember correctly, our CSP customer specific, we're at 45%, 55% is blanket. And this is where we got overwhelmed with volume, and this is what we're fixing. Now one thing is for sure is that 33% with 3PL is too much. And the approach has been with [ John ] and the rest of the team is you want to use maybe the blanket as a loss leader when you are in a soft period, let's say, December, January, and February, so that you don't have to lay out your workers, you could maybe use some of those 3PL blanket shipments to keep your employees, okay, at work. And then you don't have to rehire people when you become busier, let's say, in February and March.

And your next question comes from the line of Kevin Chiang from CIBC.

I'll keep it to one. Just when I think back to your Canadian Truckload segment during the last peak, we saw ORs below 80% there. And now you're having the drivers in model getting tackled more aggressively by the federal government. Just wondering within your Canadian TL segment, do you think margins can achieve a higher peak than you saw in the last cycle given that cycle also saw the driver in headwinds?

It's still early, Kevin. But I would say that if you look at -- the problem we have is that some sector of the Canadian truckload are still very weak like steel, right? As you know, steel is -- on the Canadian side because of the tariff, steel is an issue. The other thing also that is an issue still in Canada is forest products, right, lumber, plywood, et cetera, et cetera. So because of those weaknesses, okay, in some sector, because we still don't have a deal with the U.S., right? So this is why we're seeing major improvement, okay, on the Canadian side. But can we see more? Maybe if ring continues to disappear, okay? The problem that we have is that we have some sector on the Canadian truckload side, steel, forest products that are being affected, okay, because of we don't have a deal with the U.S. so far. Aluminum, okay, we have lots of tariff on aluminum. But aluminum, it's not an issue because right now, I mean, if you look at the situation in Qatar, that they probably supply 10% of all the aluminum in the world and those guys are out, okay? So this is why our guys, the aluminum from B.C., although B.C. is small for aluminum, but Quebec is big. I mean this is like flying out the door. I mean really, really busy with that. But the issue is steel and forest product.

And your next question comes from the line of Bascome Majors from Stephens.

To follow up on Tom's question about where you think there might be opportunity in your larger businesses to really continue to deliver significant growth in the next year. Where are the places that are most likely to show acquisitive M&A growth in the next year? Do you have a sense of that? Any walk-through of how you feel on that side of the business would be helpful?

You mean -- excuse me, but you mean -- does you mean on M&A side?

Yes, what settlements would grow though M&A?

Okay. Well, what we like in M&A for sure -- I mean, and you've seen it with the Daseke acquisition is that if we could find something of size that fits well in our specialty truckload, absolutely. But between you and me, like I said, a small nonunion LTL, okay, that could be added to our small nonunion LTL that we have today, let's say, a $200 million LTL that would be a great fit for us to start with to build that network. And logistics. I mean, us, we're a big fan of logistics. I mean, we love logistics. We love to make money. And if you exclude the intangible, okay, I mean, we do really, really, really, really well with our investment in logistics. So if we could have a chance to put our hands like we did in December, we bought is fantastic, but it's small. It's only, I think, $150 million revenue, but it's highly profitable. And we have a solid team there that's going to grow, but it's still small. It's only USD 150 million, right? So, I mean, you say -- well, I mean, this is all. I mean, yes, absolutely. because TFI's blood is growth through acquisition. Yes, we like to grow organically, but M&A has been the success story of TFI. And with the huge free cash flow that we generate, okay, our leverage is down to 2.4. If we don't do anything of size, our leverage is going to come down to close to 2 by year-end, right? Why is that? Well, because we generate so much cash, right? So we're very well-positioned, okay, solid balance sheet, huge free cash flow. So -- and we're on the hunt for sure. I mean, yes.

And your next question comes from the line of Ari Rosa from Citigroup.

Just very quickly a point of clarification. For the U.S. LTL business, does the third quarter guide assume deterioration in the OR there? And then continuing on Bascome's question, Alain, you're usually very good about giving us your thoughts on kind of the M&A landscape and how it might have changed and where there might be value. Maybe you could speak about what you're seeing there.

Yes. So on the Q3 for our U.S. LTL, no. I mean, they will improve the profitability of the company. There's no doubt about that versus Q2. And in terms of M&A, I mean, I've always said you buy bad news and you sell good news. So that's why we invested $1.8 billion over the last 3 years. So now people are starting to think that, "Oh, now times will be better, right?" So then M&A could be more expensive, right? So this is why when you have the M&A market more expensive, what's important is the fit, okay? How does that fit you? So if you have a target that profitability, let's say is $10 million, okay? And instead of paying 5x, you have to pay 6x because the market. So what are you going to do with that $10 million? If the $10 million is after 2 years, going to be $ 10.5 million, maybe it's not the best deal. But if you think that the $10 million will become $15 million or $18 million, well then that's a great deal, right, even if you have to pay a little bit more. So this is that balance, okay, that we have to look at. But never forget that one of the easiest things to buy is your own stock, right? So that's also the thing that we have to look at, right? So if I'm buying a TFI, I know what I'm buying. I mean, we've built TFI over the last 30 years. So we know TFI, right? So that's always the balance between buying an opportunity or buying TFI or just reducing your leverage.

Okay. Very helpful. And just quickly, I'm curious -- it probably seems a little bit out of left field. But could we get your thoughts on kind of autonomous trucks and the development there? And any opportunities to maybe leverage that in line-haul operations? Or do you see that as still being kind of far down the road?

No, no, no. As a matter of fact, I mean, we are talking right now about that, okay? We're talking -- so maybe, David, you could give us a little bit more insight on that.

No, absolutely. It's actually exactly for our line-haul as a first step, but we're very eager to roll this out. So we are talking with one of the major providers of this autonomous truck technology. And it was a surprise to us that this has moved a lot faster than we thought to this particular company has driven millions of miles on railroads all around the southern part of the U.S., spanning from the west to the east. And they've gotten into 0 accidents. And that's an incredible, incredible fact. So you look at this and you say -- okay, there's a bit of an upfront cost and then there's a cost per mile. But what you benefit from is, first of all, it's like a team. So it can drive day and night, there's no hours of service. Second of all, it drives the truck way better. There's no idling. There's no acceleration. There's no braking, it's all very measured. And so you get better utilization out of the truck. [indiscernible]. And so -- and there's the reliability of knowing the truck is going to be able to be driven. You don't have to deal with the driver turnover and the reality of people not showing up to work and whatnot. So it's very, very, very exciting. So we're rolling it out in the U.S. LTL on the line-haul. In the first instance, the way the business model works is we broker to them like immediately. So they operate the truck, we get used to in loading their vehicle, navigate it in our yard. We sort of work in that way, but we broker it to them and they know what the operation.

Purchase transportation, it's PT.

But then as soon as next year, we're going to be able to buy technology, which gets put into new trucks. And then we build this out. And if it works, we'll roll it out beyond the line-haul in the LTL. There's tons of applications for us.

Got it. So it sounds like starting small, but opportunity to scale if it works. Like anything on time line in terms of what that could look like getting to scale?

Well, the brokerage is happening this year to them. I expect that it will go well and then we'll be owning some of this technology next year. And then we'll just see how quickly we can scale it. So it's too hard to say right now how quickly. But we're -- the dynamics of no accidents, better utilization on the truck, it's basically a team, all of the things that we discussed is really, really interesting. And then it's extremely interesting to think about as this gets rolled out broadly through our industry, what that means for consolidation among the well-capitalized truckers, right? That's very interesting to think through. And I think that what it means is that you're going to have a lot more consolidation and large capitalized players who can afford this technology are going to be dominating it and trucking probably looks a little bit more like the rail in that way.

Yes, we are definitely embracing that technology. That's for sure.

And your next question comes from the line of Cameron Doerksen from National Bank.

I guess, I wanted to just ask a little bit about the logistics, the operating ratio improvement that you've indicated for Q3. Obviously, on a year-over-year basis, you've had some acquired businesses that are helping that. I'm just wondering how much the -- maybe an expected improvement in the truck moving business is impacting the Q3 year-over-year? Is that more of a Q4 into 2027 when we'll see kind of those volumes pick up just based on, I guess, the production plans for some of the truck OEMs?

Yes. So what we're seeing on the truck moving business is that if you go back to '25, okay, and '26, it's like the reverse. So the first 6 months of '26 was way lighter than the first 6 months of '25. And the last 6 months of '25 are very light compared to what we anticipate to be the last 6 months of '26, right? So it's like the reverse, right? So for sure, our truck moving business is going to be very, very, very busy in the last 6 months of '26 and into '27, right?

But is it -- I guess, are you seeing that yet? Or is it more so in Q4.

Yes. No, no, we're seeing that in Q3, I think.

Toward the end of Q2?

Yes.

And your next question comes from the line of Benoit Poirier from Desjardins.

Maybe, Alain, I appreciate the color about flat LTL expectation for Q2 -- Q3 with some improvement. But any thoughts whether the tighter market for TL could eventually help the LTL market at one point? And when would you expect the pricing action to kick in a more material manner?

Yes. You know what, Benoit, we were talking to one of our peers in the industry, and he was telling us -- he's in the LTL business, and he was telling us that he's already starting to see, okay, shipments moving from truckload back to LTL. I mean us -- I would say us, we have not seen that, okay? But this is what this guy from the industry was telling us last week, right? So I think that the fact that the truckload guys are getting busier because the supply has been reduced, reduced, reduced, then you just say, you know what? This is -- these LTL shipments, it's too big of a hassle, okay? I'm going back to just your truck, right? So this is a transition that is probably starting as we speak, okay? But this is affecting the van guys, okay, to the LTL, this is not affecting us in our specialized truckload operation because we don't really move LTL shipments in our specialty truckload sector.

That's great color. And maybe just in terms of follow-up, there was some more talks today about the renewed liability risk after the legal case with -- against C.H. Robinson. So I don't know if you have any thoughts on what could -- there could be some -- any potential impact on your brokerage business, Alain?

What I would say on that is, first of all, remember, most of our logistics is not brokerage, okay? So our Logistics segment has some brokerage, but it's a lot of niche asset-light businesses that -- what they have in common is that they're asset-light, it has nothing to do with brokerage, last mile, trucking business, value-added warehousing, et cetera. As it relates to brokerage, yes, for sure, I mean, listen, we have a very serious safety review process for our carriers, and we're looking at exactly, if anything, what we need to enhance in that regard. But we're already operating at an adequate level. What I would say, though, is that as soon as Montgomery came out, as soon as the judgment came out, not the one against the broker that came out probably -- I mean, when the Supreme Court ruled. As soon as that happened, we started getting calls like crazy from all these small brokers we had never heard of, right? And they were calling us and trying to build those with us. Why? Because those are probably the ones that are feeding fly by night carriers, and it's too dangerous now to do that. And I think that with this judgment that we've seen, it's only going to increase the level of diligence that brokers are going to do on their carriers, right? And so it's going to become unquestionable. You're going to have to work with a well-capitalized, professional, auditable safe carrier. And so I think this is going to benefit folks like us and also some of the major truckload carriers who are doing everything they can on safety. That's...

And Benoit, at the end of the day, I mean, I think the shipper also, it could be a wake-up call for the shippers to say, you know what? Why would I deal with a guy that's got no money and is a risk, right? So I mean, this is all things that are helping, like David was saying earlier, clean up our industry of all the bad actors that have been there for so long.

And your next question comes from the line of Bruce Chan from Stifel.

Just want to follow up on some of your comments around forestry products and Canadian steel. Obviously, we've had a lot of variability, let's call it, in the trade situation. And now there's discussion about new tariffs on Canadian goods in August. Just want to get your thoughts on how that might affect volumes, especially to the extent that anything is baked into guidance and whether you're expecting or seeing any inventory front-loading at this point?

Yes. No, we're not seeing any movement exceptional, okay, like pre-buying or pre-shipping, okay, because of the 30-day implemented implementation deadline, okay? So we're not seeing that. So this is not the same as what we've seen in Q1 '25, where everybody was trying to chase volume into the U.S. prior to that. So we're not seeing that. The feedback that we're getting, okay, so far is that -- I mean, it will be implemented. So we've asked our Canadian folks to look at what it is. And so far, I mean, it's huge for the Canadian economy, right? So I think it's $20 billion of export. But for us, I mean, there's no real issue. The biggest issue we have between U.S. and Canada trade is forestry and steel. And when we look at those next round of tariff, I mean, there's no real issues for what TFI is doing transporter in Canada-U.S., U.S.-Canada.

That ends our question-and-answer session. I will now hand the call over to Mr. Bedard for any closing remarks.

Well, thank you again, everyone, for joining us and of course, for your ongoing interest in TFI International. So as we move through the back half of the year, we will keep you posted on our progress, and we look forward to seeing many of you at upcoming events. Please don't hesitate to reach out if you have any further questions, and I hope that you have a great evening. So thanks again.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.