Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited first quarter earnings conference call and webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Mr. Murray K. Mullen, Chairman, CEO and President. Please go ahead. Thank you. Welcome everyone to Mullen Group's quarterly conference call. Once again, we'll provide shareholders and interested investors with an overview of our first quarter financial results. We'll discuss the main drivers impacting operating performance, our expectations for the year, and, we will close with the Q&A session. Before I commence today's review, I am always reminded, but I need to remind everyone that the presentation contains forward-looking statements that are based upon current expectations and are subject to a number of risks and uncertainties, and as such, actual results may differ materially. Further information identifying the risks, uncertainties, and assumptions can be found in the disclosure documents, which are filed on SEDAR and at www.mullen-group.com. With me this morning, I have the majority of our executive team. I have Richard Maloney, he's the Senior VP. Joanna Scott, Corporate Secretary and VP of Corporate Services, and Carson Urlacher is our Senior Accounting Officer, who's been filling in for Stephen Clark as he recovers from the side effects of multiple surgeries on his ankle. Son of a gun. Steph is taking some well-needed time to try and get that looked after. Carson has been filling in for Steph, as I said, and will until Steph comes back to fulfill his normal duties. As I turn to the next section, I'm gonna talk about the Q1 2022 financial and operating performance. I think the way to start this is the numbers really tell the story. We had record revenues, we had higher operating profitability, and if we can base the future on our March results, I would tell you we have a lot of room to improve. Oh, yes, you will notice we have fewer shares outstanding. To all of our loyal shareholders, we had a very good quarter, and if I'm right, then many more solid quarters are in our future. More on this in our outlook commentary. If you looked at our MD&A, you'll see it has a new look to it. It's crafted by Carson Urlacher, and he'll provide the additional commentary in just a few moments, explaining in detail the reasons and events influencing our Q1 performance. In my opening comments, I'll summarize the important highlights and themes impacting the economy and our business in the quarter. Let's call this my Twitter version. What did we see in quarter one? Let me start with the obvious. Acquisitions that we completed in 2021 provided the growth. What the numbers do not tell you is the quality of these new acquisitions. They are all first-rate companies, and I'm delighted that they are part of our organization. Truthfully, based upon what I see in this market, acquisitions are the clearest path to growth, especially in a market where there is near full employment, new equipment is virtually impossible to obtain, and if you talk with any transportation service provider, they'll most likely tell you the warehouses and docks are running at full capacity. I know ours were. In other words, internal growth is difficult to achieve. Now, this might just explain why inflation is running so hot. We'll talk more about this shortly. Here's what we witnessed in the first quarter from an overall economic and market perspective. You know, when I analyze our results and the data, it's pretty evident the economy continued to show some pretty good resilience, with consumer spending still remaining strong, freight demand elevated, and tight labor markets. Truthfully, we did not see any real growth. There were also a few issues. For example, inflationary pressures started to really alter consumer behavior. High food prices, the rising cost of home ownership, and of course, fuel prices that have doubled year over year. Of course, consumers must alter their spend. I can also say that some of these inflationary pressures we didn't plan on, like the huge jump in oil prices, which only accelerated when Russia invaded its neighbor. This impacted costs, but more importantly, the rate increases we implemented early in 2022 did not take into account the surge that occurred in the quarter. As a result, margins got squeezed by a couple of points. Now let me spend a few minutes on the fuel story. Year-over-year, fuel prices have doubled. We all know this because as individuals, you go to the gas station every week or so. To the trucking industry, we go to the fuel pumps every day. Fuel expense is now the number one issue for the trucking industry. Generally, we are indemnified from increases in fuel with fuel surcharges, but this always lags the real-time price that shows up at the pumps. We're behind in quarter one because fuel prices just kept rising. As they moderate, the surcharges will catch up to the cost. There is another issue related to the rise in fuel price, and that is inefficient trucks. If you operate an older truck, and let me tell you, there are lots of older trucks on the highway, your fuel mileage will not be where it needs to be. Even the fuel surcharges won't be enough to cover your increased costs. I predict there will be a huge shakeout of the inefficient carrier, small and large, especially if freight demand slows and rates fall. Stay tuned to this. This could tighten trucking capacity even more. Now what about the supply chain? Obviously, it starts with the demand, and as I commented, overall freight shipments were generally quite strong in the quarter. This may or may not be a negative because consumer demand did not appear to grow. If spending cools for a period, then the supply chain can regroup, productivity can improve, and costs can moderate, helping the inflation bite. In the quarter, there was lots of freights to haul. However, it appears some of this most certainly was tied to backlogs associated with the supply chain bottlenecks that continued deep into quarter one. This kept the trucks moving and warehouses full. It does appear that end demand was virtually pretty stagnant, so I suspect the supply chain will start to improve in quarter two with improved weather, fewer employee absences, and the expected change in consumer spending habits. What about flat deck freight? More accurately, let's call that the demand for goods related to capital investment. I'll tell you, this part of the economy and our business was quite strong, as evidenced by our Logistics & Warehousing segment. One area still struggling was service activity related to oil and gas investment as the drilling rig count really never took off in the quarter. This is this part of our business changed a little year over year, and most likely because oil and gas companies simply bought back shares or paid higher dividends, rather than go through the drill bit. This too may be changing, as the need for additional crude oil and natural gas continues to grow. At least this is what the commodity prices are telling us. Now, if this is to occur, then our Specialized & Industrial Services segment will be a big beneficiary. I suspect we will know more in the next few quarters if a new cyclical uptrend emerges. To our long-term investors, you all know we have had a successful history in the oilfield services business. As for last quarter, however, the industry was basically flat year-over-year. With all of this as a backdrop, I admit we did not improve our margins as expected, most of which I attribute to increased costs and lower productivity levels that were really tied to unplanned events. Issues such as weather, blockades, COVID-related absenteeism, and vaccine mandates. These all cost money and margin. For example, we had 10% fewer drivers, sorry, qualified to cross into and out of the US border. All in all, however, I take the view that our business units did a pretty good job of managing the issues. Those that didn't, I will tell you this, they'll get it right this quarter. Our biggest issue today is inflation. As I look back to 2020, we had the COVID surge. In 2021, we had a freight surge, and this year we have a cost surge. We just adapt, we stick to our long-term strategy, we manage our business, and we capitalize on miscalculations by our competitors. Carson, you are up. Take it away. All right. Thank you, Murray, and welcome everyone. I'll provide a bit more of the detail. However, our first quarter interim report will fully explain our financial performance. As such, I'll provide you with some of the financial highlights. For the quarter, we generated record revenue as compared to any previous quarter, which was largely driven by acquisitions. Year- over- year, revenue was up CAD 166 million or 57% to roughly CAD 457 million. Our revenue growth can really be broken down into three factors. The first and most significant of which is the CAD 135 million of incremental revenue we generated from acquisitions. Our growth from acquisitions really started to commence in the third quarter of 2021. Secondly, we also experienced modest internal growth of approximately CAD 17 million or 6.4%. That was mainly attributed to the strong results experienced within our L&W segment. While our internal growth from the LTL and S&I segments remained largely flat when compared to the prior year. Lastly, our revenue from fuel surcharges, excluding acquisitions, rose by CAD 14 million due to the sharp increase in diesel fuel prices. In terms of total fuel surcharge revenue, which includes the amounts for acquisitions, this was CAD 45 million, an increase of CAD 25 million compared to the CAD 20 million we recorded last year. Most of the increase in fuel surcharge revenue occurred in the LTL segment. The average wholesale rack price for diesel fuel, this isn't the price that you see at the pump, but the average wholesale rack price in Canada for the first quarter of 2022 was approximately CAD 1.17 per liter, and ended the quarter at CAD 1.36 per liter. Needless to say, the wholesale rack price for diesel has continued to climb in April. It's important to note that virtually no margin is made on fuel surcharge revenue, so this is actually detrimental to our overall margin, but more on this in a bit. Now going a bit deeper into our segment revenue. First, starting with our largest segment, being the LTL segment. It grew by CAD 55 million to CAD 175 million compared to CAD 120 million in 2021. Acquisitions accounted for CAD 44 million or approximately 80% of the rise in revenue. The remaining increase was mainly due to an CAD 8.6 million increase in fuel surcharge revenue and a modest CAD 2 million of internal growth as consumer spending remained strong but did not grow. Revenue growth was challenged by unplanned events, including severe weather conditions in northern Ontario and Manitoba, and freight bottlenecks in major distribution hubs of Vancouver and Toronto. Revenue in the L&W segment rose by CAD 51 million to CAD 142 million as compared to CAD 91 million in 2021, and this was due to CAD 29 million of incremental revenue from acquisitions, as well as a CAD 4 million increase in fuel surcharge revenue. We also experienced almost CAD 18 million of internal growth as demand related to capital investment and infrastructure projects was strong. This translated into an overall improvement in freight demand and higher spot market prices at virtually all of our business units within this segment. Moving over to the S&I segment, it increased by CAD 4 million to CAD 83 million, as compared to CAD 79 million in 2021, primarily due to CAD 4.5 million of incremental revenue from the acquisition of Babine and a CAD 1.1 million increase in fuel surcharge revenue. Revenue from our established business units declined by CAD 1.6 million, mainly due to a CAD 9.3 million decrease at Premay Pipeline Hauling, which came off a stellar performance in the first quarter of 2021. This decrease was almost entirely offset by greater revenue being generated from our drilling-related services and from our those business units involved in the transportation of fluids and servicing of wells, as higher commodity prices led to a slight improvement in activity levels this year compared to 2021. Drilling activity recovered a bit, but not enough to really provide for any meaningful growth. We also experienced greater demand for our dewatering and water management business at Canadian Dewatering, which had an excellent quarter in what is traditionally a slow period for that business unit. Revenue generated by our US 3PL segment were strong, coming in at $57 million for the quarter, as consumer spending remained robust and the supply chain was still recovering from bottlenecks that were noted in 2021. Our team at HAUListic continues to grow in the 3PL space by adding new additional station agents to our SilverExpress technology platform. Now moving over to profitability. Our adjusted OIBDA was CAD 60 million in the current quarter, an increase of CAD 19 million as compared to CAD 41 million in 2021. The CAD 19 million increase was largely due to acquisitions, which generated CAD 13.4 million of this increase. We also generated CAD 5.8 million from internal growth. Now, internal growth was mainly experienced in the L&W segment and to a lesser extent in the S&I segment. Let's take a look at adjusted OIBDA by segment for a minute. In the LTL segment, adjusted OIBDA increased by almost CAD 5 million to CAD 23 million, as compared to CAD 18 million in 2021. This increase was due to CAD 6.8 million of incremental adjusted OIBDA from acquisitions, which was somewhat offset by higher fuel and purchase transportation costs. The CAD 8.6 million increase in fuel surcharge revenue in this segment had a detrimental impact on our margins. As a percentage of revenue, adjusted operating margin decreased by 2% to 13.2% as compared to 15.2% in 2021. This margin erosion is due to higher operating costs and lower productivity levels that resulted from inclement weather, protests and blockades, freight bottlenecks that I spoke of earlier, and surging costs, most notably being fuel. Overall, the segment did experience a stronger month of March. As the weather improved, volumes recovered, and a number of price increases were implemented. Adjusted OIBDA in the L&W segment increased by CAD 10.8 million to CAD 25 million, as compared to CAD 11.7 million in 2021. CAD 5.1 million of this increase was due to incremental adjusted OIBDA from acquisitions, while the remaining increase was largely attributed to internal growth of CAD 5.7 million across virtually all of our business units within this segment. Adjusted operating margin increased by 1.8% to 17.9% compared to 16.1% in 2021, as our business units did an excellent job mitigating the cost surge with general rate increases and fuel surcharges. The cross-border freight market between Canada and the U.S. saw the largest freight increase. This, coupled with government-mandated vaccine requirements for drivers traveling to and from the U.S., reduced the capacity of qualified drivers, resulting in customers paying higher rates to get their freight moved. Adjusted OIBDA in the S&I segment increased by CAD 2 million to CAD 13 million, as compared to CAD 11 million. The CAD 2 million increase is attributable to improved results at Canadian Dewatering and from those business units involved in drilling-related services and the transportation of fluids and servicing of wells. These increases were somewhat offset by a CAD 2 million decline in OIBDA at Premay Pipeline. Adjusted operating margin improved by 1.9% to 16% from 14.1% due to the strong performance at Canadian Dewatering. Adjusted OIBDA in the US 3PL segment was $1.1 million, or 1.9% of gross revenue. During the first quarter, the availability of contractors was extremely tight, which led to higher spot market prices and which negatively impacted our margins. Operating margin as a percentage of net revenue was 23.4%. From strictly a cash perspective, Adjusted OIBDA in this segment is virtually the same as earnings before tax. As I summarize our margin on a consolidated basis, Adjusted OIBDA as a percentage of revenue was down by 0.9% to 13.2% from 14.1%. This 0.9% reduction is explained by really two factors. First, accounting rules require us to report gross revenues on our US 3PL segment, which in the quarter generated $57 million of revenue and a margin of 1.9%. By excluding the financial results of this asset light segment, our overall margins would have actually improved by 0.7% to 14.8% compared to the 14.1%. Excluding the US 3PL segment on a consolidated basis, our rate increases and change in business mix enabled us to more than offset the surge in inflationary costs in the quarter by a bit. Secondly, including acquisitions, we generated CAD 45 million of fuel surcharge, which was increased by CAD 25 million compared to the CAD 20 million last year. If we were to exclude that CAD 45 million of fuel surcharge in the first quarter of 2022, our Adjusted Operating Margins would have actually increased by almost 1.5 points to 14.6%. Similarly, in 2021, if we excluded the CAD 20 million of fuel surcharge revenue, our operating margins would have improved by just over 1% to 15.2%. Looking at some other notable items, we continue to generate cash in excess of our operating needs as net cash from operating activities for the period was CAD 18 million compared to CAD 39 million in 2021. This decrease of CAD 21 million is due to our revenue growth and business expansion as we are now a much larger organization, and as a result, we need to finance our working capital requirements. We have a total of CAD 250 million of bank credit facilities available to us, and we had CAD 111 million drawn at the end of the quarter, thus leaving us approximately CAD 140 million worth of room. Our earnings per share was up to CAD 0.17 as compared to CAD 0.13 on a reduced share count as we bought back and canceled roughly 926,000 common shares in the quarter at an average price of CAD 12.01 per common share. The main reason for the increase in earnings per share was due to the CAD 13.2 million increase in OIBDA and the CAD 1 million increase in earnings from equity investments. These were somewhat offset by a $3.4 million negative variance in our foreign exchange due to our US debt and swaps, and a CAD 3.3 million increase in income tax expense due to greater earnings. With respect to ESG, I'd like to remind everyone that posted on our website is our 2021 ESG report that outlines our approach for ESG, along with some of the measurements that you can use to benchmark our performance. In the first quarter, we continued to make progress on some of our ESG initiatives by committing CAD 9.5 million of CapEx towards our sustainability goals. The majority of these CapEx are expected to be received in 2022 and 2023 and consist of additional CNG-powered trucks, along with containers to support our investment in the intermodal space that will assist us in moving customer freight while reducing emissions. Murray, with that, I will pass the conference back to you. Well done, Carson. Now if you read our new look MD&A, you're gonna see that our outlook for each segment is well explained, so I don't need to reiterate it word for word. In the interest of your time, I wanna make sure we leave the rest of today's discussion for the Q&A session. Now, I'm sure everyone is wondering about the so-called freight recession that has been talked about in recent weeks. My personal view is, yes, consumer spending on discretionary items will slow. By how much, no one really knows. I would be very, very surprised if it doesn't slow. Now I do expect this is gonna impact van carriers the most, which we are not highly leveraged to. I do expect our LTL segment to slow somewhat, but we have a very good critical mass in most lanes, so we will just simply adjust schedule. We'll focus on operating margin. We're gonna get productivity levels back, which will help margin. I can also tell you there's another round of rate increases that are absolutely required. We know that the supply chain is quickly recovering. Now this takes the pressure off of shippers and retailers, meaning they do not need to overbuy, which they have done for over a year now. All this did is really exacerbate an already overstretched supply chain. This is where I believe the trouble may occur. I think inventories are bloated. We know this because our warehouses are jammed. I wouldn't be surprised to see a few quarters of adjustments to clear out the backlog. You know, if you're a buyer of discretionary consumer goods, I'm betting that there will be some good sales on soon. Now, if there's one lesson everyone should learn by now, it's that anything can happen anywhere in the integrated supply chain ecosystem. I wouldn't get too comfortable when things sort themselves out over the next month or so because trouble will just simply find another home. As such, I anticipate structural changes to the supply chain are still required. How we're gonna handle this, we're gonna focus on building out our LTL network. We're gonna expand our warehousing and intermodal service capabilities, and we're gonna look at adding to our 3PL business, which really, this keeps us close to the customer without the CapEx burden. Our shareholders also know we are a diversified logistics revenue provider, and we service multiple different verticals. Now earlier, I spoke about the other end of the economic spectrum, which is what's called that capital investment. In terms of an economic outlook here, I'm actually quite optimistic because I believe that industry needs to retool and infrastructure needs to be built. Two critical factors if productivity is to improve, a necessary ingredient for inflation to be tamed. I'm in the camp that we're entering a strong capital investment cycle, and that implies that our Logistics & Warehousing segment should be able to continue producing some pretty strong results. This dovetails nicely into our Specialized & Industrial Services segment, which has you know no one really liked for the last 10 years or so. Evidence is mounting that oil and gas, mining, old economy needs to reinvest. When they do, we have a decent footprint from which to capitalize on the renewed demand. I'm quite optimistic for our oil and natural gas business units, in particular. The service industry is really no different than the oil and gas companies. It has been starved of capital, so any additional demand will be welcomed with open arms, but it will be costly, as I say to our customers. Just saying, folks. Now let's open up the phone lines for the Q&A session. Operator, I'll turn it over to you and to the Q&A. Thank you, folks. We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from Michael Robertson of National Bank Financial. Please go ahead. Hey, good morning, all. Congrats on a solid quarter, and thanks for taking my questions. I was wondering maybe we could kick it off, was just wondering if the M&A backdrop has shifted at all, given that spike on the cost side, maybe shifting to a more favorable buying environment given some of those pressures. Murray, I know in recent calls you know, you weren't exactly thrilled with some of the asking prices out there. Any color on that would be great. Yeah, thanks Michael for the question. That's one that, you know, I quite regularly get asked about is M&A, and so let me just take a step back. Last year, we were very, very active on M&A. It proved out to be, you know, as you can see by our numbers, pretty good. What about today? I think the challenge you're having with M&A right now is forecasting what do we think is gonna happen with the overall economy and then expectations. I suspect that M&A is gonna be very, very active. It's what's the expectation of the sellers? That's I think gonna be the rub. We always take a long-term view. I'll be honest with you, with everybody on the line. Look, we don't just buy companies to grow the revenue side. We buy it because it's strategic, and it's in the areas where we see the future opportunities are gonna be pretty good. We just don't buy to buy. Everybody knows we'll look at consolidating LTL because that just strengthens your critical mass in those networks. We also know that, you know, the supply chain is changing dramatically because you can't just rely upon the supply chain on just in time today if you're in a global marketplace. As I said in my press release, I said, "Look, you can access the goods anywhere globally, but you've got to be able to deliver the goods locally." That requires being close to the customer, and that implies warehousing. We're seeing a boom in warehousing all over. That implies more inventory in the system, so you can get it closer, you can get to the customer. We'll continue to look at warehousing and the long mile with intermodal as a service offering because we can tie it in with our LTL network. Very, very few companies can do that. I feel pretty good about that side. Yeah, we get M&A every day, every week. But we're pretty selective of which ones that we go after. They've gotta be quality companies. There's gotta be some type of synergy that we can find so that's how our investors win. If all you do is just buy a company, you really don't get a good arbitrage for the shareholders. You've got to find some synergy that at least you got to identify it so that you can say, "Look, I can get one plus one is more than two." That's just a long explanation for there's gonna be lots of M&A activity over the next bit that's nearly baked in the cake. We've got to be very sensitive to what's the price we pay on behalf of our shareholders. Got it. It's helpful color. I appreciate that. One more from me, just maybe a quick one for Carson. I think you touched on this at the end of your prepared remarks. I was just wondering if you could provide some additional color on the spending surrounding the sustainability initiatives. Particularly I was wondering if those were hybrid or CNG or hydrogen fuel cell powered or maybe a combination thereof. Really they're compressed natural gas trucks. Michael, there's, I think we have six on order. Correct. We've had some good success with the ones that we've bought previously, so we've added to that order. In terms of timing, not exactly sure if we'll get them all in 2022 versus 2023. The other large order that we put in was for our intermodal containers. That's for growth from within to extend our intermodal footprint within our APPS group. Again, timing on that, it's gonna be 2022, 2023. It's really difficult to say, you know. Some of them will probably start trickling in throughout the remainder of the year, but I suspect there'll be some coming in 2023 as well. Got it. Again, helpful color. Appreciate Let me look. Yeah, go for it. I'm gonna have Richard just step in here and talk a little bit about CNG, compressed natural gas, and why did we make that investment. Rich, maybe you just wanna talk a little bit about what the equivalent fuel mileage is to a diesel truck, but then the cost of CNG vis-a-vis. There's a ESG component to it, Michael, but there's also a business component that I want Richard just to define a little bit to give some color to all of our listeners on why we're really investing in CNG. We wanna do the right thing for the environment, but we also gotta do the right thing for the bottom line. Rich, can you just give some additional information to the listeners on this? Absolutely. Yeah. It was roughly about a year and a half ago, a year ago, when we first took the order with the CNG trucks through PACCAR Kenworth. We looked at it, and with the compressed natural gas units, and we put them into Mullen Trucking, and they're predominantly going through, you know, up and back and forth into Edmonton. We've actually run trucks over the mountains into Vancouver. We've had very good success on the mileage on that. It's consistent with the newer trucks that we're seeing with the 6.8s, with the PACCAR Kenworth trucks. The difference in what Murray is alluding to is when we're seeing in the seven miles per gallon range for what we're able to do with these newer trucks. As Carson pointed out, when you're seeing diesel prices approaching CAD 1.40 a liter, the cost for us per liter for a CNG or the equivalent is CAD 0.79. We are looking at continuing to invest in this. As we build out these units and as stations are built to help fueling and the partners we have with those groups, we suspect and we know that the cost of that CNG will be coming down as well. It gives us, as Murray said during his prepared remarks, that, you know, fuel pricing right now is the single biggest cost that is impacting the transportation industry. CNG works predominantly when you're kind of, you know, between major centers and such as well. That is something that we're looking at, you know, to continue to build out through our LTL type of network and parts of our logistics and warehousing network as well with the Mullen Trucking. Real simple, these trucks, CNG, are used in local markets because the infrastructure isn't there to do long haul, basically. Number two is they're basically getting about similar equivalent mileage as a diesel engine, but the price is down in half from diesel. What the guys were talking about is the rack price of diesel, but the pump price is actually higher. For example, in the lower mainland of BC, diesel is over CAD 2 a liter, which equates out to nearly CAD 10 a gallon. That's super interesting color. I appreciate the details, so I'll turn it back. The next question comes from Walter Spracklin with RBC. Please go ahead. Yeah, thanks very much. Hi, everyone. Just a question on how you're looking at the quarter in terms of your plan and the guidance that you provided there back in December, and whether you add in any acquisition opportunity or acquisitions that have done perhaps, as you alluded to, Murray, better than expected. Walter, it's based upon the first quarter. I would say we're more than on target for what we had originally opined to all of our shareholders at the first of the year. I said, "Look, we'll be on target." If I used March as the barometer, then I could make a pretty good case that you know, we might be above the you know, what we originally came up with. I think we need to see whether that's sustainable or not. The economy is pretty fluid right at the moment. I'm optimistic, but I'm reluctant to really, you know, to say, "This is exactly what's gonna happen for the rest of the year." I think what we'll be able to do at the end of the next quarter is be able to say, "Okay, we'll give an update on, you know, what our overall plan was, whether we're on target or above target." We will not be below target, whether we're on target or above target. We'll be able to give that, you know, better color on that after the second quarter. The first quarter is typically not our best quarter anymore. Typically, the second and third quarters are our best quarters, so I'm expecting better, but we'll give a full update at the end of next quarter. I think rather than me guessing, I'd rather say that. I know we're not gonna be below target, Walter. You know, a better overview once we really see how is inflation really impacting the consumer right now? That everybody's talking about it and everybody has a viewpoint. We'll be able to give you real-time information in a couple months. Okay. Looking at March, what really stood out would you say? Was it your operating performance? Was it your pricing that you were able to achieve? Was it the level of volume demand, perhaps some improvement in fluidity levels? What really stood out in March as being exceptional if you had to boil it down to one or two things? Really, I think it was the demand came back pretty strong. You know, there was some real crappy stuff that none of us planned on. You know, when I did our budget up and I gave, you know, here's what we're gonna do, or all of you did your analysis up, did you really count on blockades affecting the supply chain and all of the productivity and all the costs associated with that? We just couldn't move freight. Did anybody count on more absenteeism, 10% absenteeism because of COVID? I mean, I wasn't counting on that. Boy, we had some real crappy weather in Northern Ontario and Manitoba. That really hurt our Gardewine Group in January, February, particularly. They recovered nicely in March, but they got smacked around pretty good. I'll be honest with you, a lot of freight got stuck. It just wasn't moving with that crap weather. Those were things, those impacted the margin. If I normalize those things, margins would've been up by about two points in the quarter. We'll see if we get that in this quarter. We better get it. I've told our business units I expect it. I wouldn't wanna- My last question, yeah, is just on the M&A side and whether I know you touched on it, but just with all the unprecedented and really structurally different ways things are happening here in the transportation logistics sector that you had pointed to in your prepared remarks. Are you revisiting what you're looking for anymore? C ould you look at different operations than what you otherwise would have? Are you more emphasizing certain types of companies or in different geographies than you otherwise would have maybe a year or two ago? No, we're not looking at anything different. We haven't changed our strategy. We know precisely what we're looking for, but we don't chase them. You know, we're very selective, and we'll continue to be so. Now, you know. None of our numbers that we've given any guidance on or talked about have included any if we do any M&A activity this year. We always have files under consideration. At every quarter, we have files under consideration, but we don't always move them along. Sometimes we don't like what we find. You know, we've all got some files that are active. Okay. That's all my questions. Thanks very much for the time. Thanks, Walt. The next question comes from Konark Gupta with Scotiabank. Please go ahead. Thanks, operator. Good morning, everyone, and congrats on a good quarter. Also thanks for splitting out individual segmented outlook. That's really helpful. Maybe, Murray, my first question is on the broader market and the spot rates especially, given the spot rates have been sparking a lot of fear among investors that, you know, there's going to be a freight recession. Obviously, a lot of trucking companies and your competitors have reported recently, calling out that they are not seeing the weakness in the contract market. I wanted to understand, in terms of your business, certainly the L&W segment seems to have a spot exposure. How would you characterize your spot business across your three trucking and logistics segments compared to what we have seen out there in the spot markets, broadly published by different platforms? Well, that's a good observation, Konark. Here's what we think. We know there was some surge pricing that happened in the first quarter, and it needed to. Now, we use a lot of subcontractors, and we got caught a little bit on that with some of our. You know, you make a commitment to the customer, maybe in December, and then all of a sudden, you know, you have vaccine mandates that come in and 10% of drivers couldn't cross the border. Where you saw a lot of the surge pricing was crossing the border. Those prices have still remained elevated because the drivers still are not able to come back to work, you know, across the border. We've really had about a 10% reduction in the amount of capacity going to and from the United States at the same time that demand has stayed relatively flat. That's where a lot of that surge pricing happened, and we got caught a little bit, some of our business units in January, February. But they made that. You know, they recovered and to what the market was in March, and I think they're probably doing the same thing today. When I talk to our business units real time, it's softened a little bit, but we're not going back to where we were. That's absolutely a fact. I think generally prices are gonna be elevated from where they were over the last decade. I think some of the surge pricing might come out of it. Temporarily, perhaps, because the wild card here, Konark, is what happens with fuel prices. If fuel prices double, I will predict right now that well over 10% of the trucks that are on the highway right now should be parked. They are not efficient, and they are losing money going to work every day. That cannot last for very long. You heard Carson talk about we cannot just go get additional capacity. The industry cannot add new trucks, fuel efficient trucks today. Which, Rich, what are we at seven, eight miles per gallon is the- Correct. This is what the new units, a new unit will get you. At least 10% of those trucks out there's a two-three fuel mileage, mile per gallon arbitrage. Those trucks at four are going broke. Now either that or prices have to go up to keep them in business because they're the marginal provider. Which way is it gonna work out? Short term, I don't know. Long term, if fuel prices stay up and elevated, you gotta have new equipment, and that fits pretty good with a company like, a professional company like ours. That's where I think it's gonna happen. I think we're gonna lose a lot of independence. They just can't make it. Costs are too high, and they can't retool. Yeah, no, that's good, Konark, Murray. Thank you so much for that. Maybe switching gears to your S&I segment. You know, if we go back historically and not even very far back, just you know, pre-pandemic, that segment has typically done north of CAD 400 million in revenue, and it's sitting somewhere near about CAD 300+ million right now. Now you talked about you know, drilling activity and you know, the oil and gas market capital investment cycle could probably start rebounding in the second half. While your pipeline business seems like it's still kind of softer than last year but kind of stabilizing perhaps. What's your operating leverage and what's your thought to the oil and gas commodity prices for that segment? Where can that go to if we see what's happening right now and drive capital spending? Carson, what's our leverage to the drill bit? Maybe CAD 150 million, somewhere around there above revenue right now. It'd be in that ballpark. You'd be looking at maybe 10% of it. Yeah, 10% of our revenues. I suspect that goes up. I think where you're really gonna see the change, Konark, is this industry has been starved of capital for virtually a decade now. If the oil and gas producers decide they are now gonna go and increase production, and they can only increase production through the drill bit. If they decide to go and put more capital to work at the drill bit, then the assets and the business we have are pricing. This will be a pricing game, not a growth game. I will remind our oil and gas company customers that just as you have seen a surge in the price of your commodity, I can tell you will see a surge in the price of our service. It takes a little bit of incremental demand, and it looks like the market needs increased supply of commodities. I'm not making that up. That's what the commodity prices are telling us. You either are gonna have to have increase in the drill bit, or consumers are gonna have to quit consuming. I'll let you decide which one that is. That makes sense. Thanks for the answers. Thank you. The next question comes from Kevin Chiang with CIBC. Please go ahead. Hi. Good morning, everyone, and thanks for taking my question here. Two for me. Just wondering, you know, just with the spike in fuel pricing and that impacting, you know, the all-in freight rates that shippers have to pay, just what do you see from a modal shift perspective? Are you seeing more demand for intermodal versus over the road, just given that the former should be cheaper? Are you seeing any change in shipper behavior from that perspective? You know what, Kevin, I mean, we know that the long-term trend is towards intermodal. I don't think that is something that is revolutionary. It shouldn't be to anybody that's in the logistics and freight business. Freight has to move more efficiently, particularly as the price of fuel goes up. It makes intermodal that much more competitive because trucks and trucking, the rates are going through the roof because drivers costs, access to equipment and fuel. Intermodal becomes more competitive. It just makes more sense. You know, we're gonna continue to expand our footprint in that. Rather than buy trucks to go long haul, we'll invest in the container, and we'll invest in warehouses, and infrastructure so that we can provide that service to the customer. Intermodal's been one of the real beneficiaries of this freight demand surge. You've seen it in the United States. You've heard it from CN/CP. Intermodal's pretty strong. Now that might soften a little bit as the inventory management, supply chain kind of rectifies a bit. I think the long-term trend is well entrenched there. That's my thesis. Now, there's always ebbs and flows in the market, but the long-term trend is undeniable. I know it is with us. You know, that's one of the reasons why we strategically invested in APPS. You know, just they're an exceptional intermodal provider with a good footprint, with good warehousing capabilities. That's a good long-term investment on behalf of our shareholders. That makes sense. Maybe just a second one for me, and it's really maybe an observation from Knight-Swift last night. You know, they were talking about the US brokerage market and maybe an observation that they saw, and I recognize that they're also talking their own book here, you know, a shift away in the brokerage market, away from asset-like brokers towards maybe asset heavier brokers that offer a power-only solution. When I think about you growing your US 3PL, one, is that something that you're seeing? Maybe 'cause you're starting from a smaller position, you know, this potential shift that might be happening in the market, you know, in some way could be relevant to you because you're building off a small base. Just wondering, like, I guess based on some of the comments some of your peers have said in the brokerage market in the US, maybe what you're seeing and what that means for your growth overall in US 3PL. You know what, Kevin? I've seen some of those articles, the same ones that you're referring to. Honestly, I think it depends who the author of the article is. If you're a hard asset business, you're gonna take the view that, "No, we're gonna win the game. If you're a non-asset-based one, you'll say, "Hey, we'll still find the arbitrage out there," because you're always still gotta find the best price in the market for the customer. I think there's room for both, to be honest with you. We entered that market, as, you know, in the US, is to give us another growth platform down the road. We're just in the early innings of capitalizing on that, you know, on that strong book of business that we got. I mean, they continue to grow their business and get access to customers. What we wanna do is add more service offerings to it, which will be part of our longer term game plan. I think the market's still gonna. You're still gonna have to find the best price and best arbitrage out there. Smaller shippers are gonna have a very difficult time going to big companies, big carriers. Probably the big shippers will either do their own freight transportation. You saw what Walmart did, for example, to get drivers. I mean, they're paying drivers, what? Up to $100,000 a year now, $ 120,000? The big shippers are probably gonna do their own supply chain. I know Amazon's doing more of their own. I think there's a place for both, to be honest with you, and we'll try and carve out our niche. No, that makes a ton of sense. That's it for me. Congrats on a good start to the year here. You know, Kevin, you know, I know we were off on your expectations for the quarter, but I'm sure when you did your expectations, you didn't count on the blockades or some of the things either. I think we probably would've been a lot closer to your expectations in the absence of those one-time events that I didn't count on either. No, that makes a ton of sense. That makes a ton of sense. Nonetheless, it was a good quarter. Thank you. The next question comes from Matthew Weekes with iA Capital Markets. Please go ahead. Good morning. Thanks for taking my question. I think I just have one at this point. Most of mine have been answered. Just thinking about acquisitions and the asset integration piece of the outlook here as you go forward. I was just wondering if you have a typical timeline that you look at in terms of integrating the assets and achieving the synergies that you would normally expect. Yeah. Typically, Matthew, you know, good question. It's, there are some of the business units we don't integrate. First of all, we don't integrate right off the bat. The first thing we do when we do an acquisition is we get it, and then we learn. Okay, where is it best to integrate with another business unit, or is it best for us to integrate another business unit in with that one? It depends who's got the best footprint, best management teams, et cetera, et cetera. Takes about a year to learn that. I can tell you, we've been very active over the last bit, streamlining our businesses, and we did a bunch of it again this first quarter, which is aligning the business units where we think we can find those synergies. That's what we do. When we do an acquisition, it takes a little bit to learn. You gotta make sure. I don't slap them together and then hope it works. We learn, then we put together the ones where it makes sense to do it, but we're always doing it to look for synergy. It's not just we save a couple jobs. We're looking for real synergy, how we can provide a better long-term service offering to our customers. Because if we do that, then we win the long game. That's what we're really after. Okay, thanks. That makes a lot of sense. I think I'll actually just ask one more. You provided some good commentary on the market dynamics on the call, given some of the concerns that certain industry participants have been raising. You talked about if you see sort of a bit of a tempering of consumer demand. There will be opportunities for productivity improvements offsetting a bit of that, as supply chain bottlenecks ease a bit. I was wondering if you could just comment specifically on what some of those productivity improvements might be. Well, first of all, we got to get people back to work. When you have 10% of your workforce off, all you do is you got higher, you got more costs related to sick days. But worse than that, you've burdened the other 90% that they got to pick up the slack. Usually, that means in our business with the hourly workers, you're paying overtime quite a bit. We just aren't as efficient. We're just moving. We're handling the freight twice. You can't get it in to get it offloaded. You're reloading it here. We're handling the freight too many times and too much overtime. That kind of, you know, explains what happened on that front. When you put that across the whole system, that ends up being a lot of cost. I suspect as it slows down a little bit, that will, you know, we'll be able to get those productivity improvements back and get our costs back under control. They were a little bit squirrely in the first quarter, to be blunt with you, in a number of our business units. Yes, I think that demand is gonna slow a little bit, but as I said to you, the offset is what happened with supply. The offset is, I think at least 10% of the trucks are gonna be broke because they just can't be competitive. Even at elevated fuel price levels, they're still not making any money, so they're not gonna last. Supply is gonna shrink because we cannot add additional capacity right now. You just can't get it. I think, you know, overall, if you've got a good fleet, and you've got good capacity, I think you'll do just fine. Okay, thanks. I appreciate the answer on that. I think a solid quarter overall, despite some of those supply chain challenges. That's it for me. I'll turn the call back. Thanks. Thank you. Once again if you have a question please press star then one. The next question comes from Miguel Ladeira with Cormark. Please go ahead. Hi, good morning. The first question I had, I just wanted to talk about the margin delta between Logistics & Warehouse and LTL. Is this just a function of the markets being served, or is there other dynamics involved here? Thanks. I think, first of all, we think Logistics & Warehouses, they had a fantastic quarter. They didn't get hit as hard as our LTL business did. When I talk about LTL, I'm really talking about our Gardewine Group. They're such a big component of that, right, Carson? Yes, they are. They really got hit hard, really with some bad weather and some productivity problems. To be blunt, they were a little slow coming out of the gate on the pricing. They put pricing increases in, but they got caught with the cost surge. January, February were not kind to Gardewine, and they're a big component there. I think if we normalize that, Carson, we would have been probably a lot closer to flat on flat in that section, if I'm not mistaken. Yeah, for sure. Miguel, if your question is more of a, you know, why is the margin a little bit lower in the LTL segment versus the L&W segment. Well, the LTL segment is predominantly assets that we own, so it's more company equipment. You're seeing that the margin on that side is a little bit lower in the first quarter. A lot of that fuel surcharge flowed through into the LTL segment versus the L&W segment, which is detrimental to margins. As Murray mentioned, one of our largest business units within that segment, we lost several operating days within the first quarter just due to inclement weather in their main operating areas, which is going to impact your margins. Coupled with that is the issue that we had with drivers. You're gonna see that wages might look like in our charts that wages is down as a percentage of revenue, but you almost have to couple that with purchase transportation, given the fact that if we don't have a company driver to put in a seat, now we're farming that out. Our purchase transportation increased in that segment as well too, so. Yeah. Miguel, just to follow up on that, I don't think there was anything structured. We did get hit some with some one-timers in that first quarter. You know, but really, I think I outlined those pretty good as to what the main drivers of or those main issues, not the main drivers of that. Longer term, I don't think we're gonna, you know, our longer term objective is that we're still gonna get move our LTL margins up. They're not going down. I've told all our business units very firmly, I won't accept lower margins. Now we did have them, and I've said this, I acknowledge we're behind the curve in the first quarter. But I don't wanna be talking about that every quarter. That's what I told our business units. Typically, LTL is weakest in the first quarter as well, just given consumer demand after the holiday season drops off. It's really you got the combined impact of lower demand, like the seasonality impact of it. Then this year we got the double whammy with the issues that Murray talked about. That's great color. Then, last one for me, just a housekeeping item. You mentioned some one-time costs in the US 3PL. Do you mind elaborating or just providing a number to stick into the model? Yeah. You know, first of all, they use all subcontractors. When they bid to a customer and then the spot market goes against you lose the margin there. They're behind the curve because there was some real surges in the first quarter. You've seen that in everybody's press releases, is that, you know, the spot market was pretty high. They got trapped a little bit there. Then we have some one-time healthcare expense costs that happened as regards in regards to moving, transitioning those medical expenses over to HAUListic from the previous owner, which was Quad/Graphics. There was some one-time catch-up costs there. Those will not be. They're just one-time costs. If you exclude those out, you know, they were pretty much in line with where they have been since we acquired them. Yeah, there was a couple one-time costs that they got hit with in that quarter as we true up. We're ending our one-year transition agreement with Quad/Graphics. I think, Joanna, it expires at the end of June 'cause we bought them a year ago. There's always a bit of true-up that happens and debates that you have. We just took the cautious approach and booked those for the interim. Perfect. That's all for me. Appreciate your time. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Mr. Mullen for any closing remarks. All right. Thanks, folks, for joining us. We look forward to giving you a more wholesome update as to what the whole rest of the year will look like at the end of next quarter. Lots of moving targets right now. Some positives, and I think the positives outweigh the negatives. Thanks for joining us. Really appreciate it. Take care. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.