Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's fourth quarter 2020 results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Callers will be limited to one question and a follow-up in order to get to as many callers as possible. Further instructions for entering the queue will be provided at that time. Before we turn the call over to management, please be advised that this conference call will contain several statements that are forward-looking in nature and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, please note that TFI has changed its presentation currency, and all dollar amounts are in US dollars. Lastly, I would like to remind everyone that this conference call is being recorded on Monday, February 8th, 2021. I will now turn the call over to Alain Bédard, Chairman, President, and Chief Executive Officer of TFI International. Please go ahead, sir. Thank you very much, operator, and I want to welcome everyone to this afternoon call. Today was a special day, I guess, as our press release is now out just since about 5:00 o'clock. I don't know if it's because we changed from Canadian dollars to US dollars. There was a glitch. I'm sorry about that, but the press release is finally out. My script was saying, well, today after market close, but really it was at 5:00 o'clock, we released our fourth quarter and full year 2020 results. TFI International had another very strong quarter, which capped a very successful year. A year that include our listing on the New York Stock Exchange one year ago this month. Most importantly, we generated robust operating and financial results despite the ongoing pandemic and our focus on health and safety of our employees and customers. Looking back at 2020, we never strayed from our operating philosophy, which includes a relentless focus on the fundamentals of the business and on getting the details right. Seeking opportunities to enhance efficiencies is a nonstop focus of ours. That became even more important last year. As always, we look to increase return on invested capital, optimize our free cash flow, and grow our earnings per share. This, in turn, place us in a position of strength with a strong financial profile that allows us to strategically expand our business. Our ultimate aim is to create long-term shareholder value, returning excess capital to shareholders whenever possible. The identification of strategic, accretive acquisition opportunities to expand and enhance our platform has long been part of our strategy. During the fourth quarter, we completed five acquisition, bringing our total to 13 well-timed and highly strategic acquisitions for the full year. Subsequent to year-end, we have already completed another acquisition. As you know, we have also announced an agreement to acquire UPS Freight, expected to close during the second quarter. In a highly disciplined manner, we continue to selectively seek acquisition candidates that are both accretive and strategic to extend TFI International's long and successful track record of growth through M&A. Let's now walk through fourth quarter results, starting with our high-level performance. As you may have seen in our earnings release today, we have elected to change our presentation currency from Canadian to US dollars due to our growing market presence in the U.S. and to facilitate a comparison of the company's financial position to that of its peers. For competitive purposes, our historical financial statements have been restated. Our total revenue for the quarter is $1.1 billion, was up 13% compared to the prior year's fourth quarter, marking a return to year-over-year growth. Even more important, given our focus on profitability, our operating income increased 26% to $117 million. Our adjusted EPS on a diluted basis expanded 36% to $0.98, up from $0.72 a year earlier. Our net cash from continuing operation activities was a robust $165 million, up 24% over the prior year. As I mentioned, this strong cash flow is strategically important, allowing us to invest in our business and seek strategic expansion opportunities. Digging in further on these strong results, let's review each of our four business segments, starting with our P&C. P&C represents 15% of total segment revenue and saw a 21% increase in revenue before fuel surcharge versus the prior year December quarter. Our operating income was $29.4 million, was up 30%, and the operating margin was at 19.1%, up 130 basis points. Our growth over the prior year was due to a pickup in both B2C and B2B activity, which has come back well following the pandemic-related slowdown earlier in the year. As I mentioned last quarter, following the pandemic, our P&C segment has a more balanced mix of B2C and B2B, and we believe that we are well-positioned to capitalize on future growth opportunity in both markets. Our LTL segment represents 14% of total segment revenue and generated revenue before fuel surcharge of $141 million, compared to $151 million the prior year quarter. While the pandemic-related decline in demand persisted, we saw improvement during the quarter. More importantly to us, our LTL operating income grew 27% to $24.5 million, and our operating margin expanded 450 basis point to 17.3%. This strong growth in operating income received a small boost from the Canadian wage subsidy of $2.1 million, but was mainly driven by our success driving operating efficiencies at the same time that year-over-year revenue decline had continued to moderate to only 7% in the fourth quarter. Moving on to Truckload, this segment represents 42% of total segment revenue. Revenue before fuel surcharge returned to year-over-year growth in the fourth quarter, up 6%, and our truckload operating income also returned to growth, up 15% to $54 million. Our operating margin also expanded up 100 basis points to 12.2%. Within Truckload, both our U.S. and Canadian operation grew revenue before fuel surcharge 3% over the prior year period, while our specialized business grew 9%, and similar to LTL, we benefited from a small Canadian wage subsidy of $4.1 million in our Truckload segment. Completing our business segment discussion, Logistics represent 29% of total segment revenue. Our revenue before fuel surcharge jumped 62%, driven by e-commerce, same-day package delivery demand, and our acquisition of TForce Worldwide in November. Our operating income nearly doubled to $26.5 million from $14.2 million a year earlier, driven by strong top-line growth, combined with 110 basis points of operating margin expansion. TFI International's balance sheet is a significant source of strength that allows us to be opportunistic as we execute our business plan. We ended the year with more than $800 million of liquidity, which benefited from our strong cash from operating during the fourth quarter, and we reduced our long-term debt by 35% over the course of 2020. Subsequent to year-end, we further strengthened our financial profile with January's private placement of $500 million in senior notes, substantially extending maturity to 8-15 years at fixed rates. In conclusion, I'll reiterate that at TFI International, we focus on the fundamentals of the business to maximize profitability and cash flow. We seek to optimize our capital allocation to further enhance value. This is our approach regardless of constantly changing macro condition. You saw us adhere to this philosophy during 2020, which was certainly an unprecedented year. Looking ahead, I believe TFI International is in its strongest position ever to create additional shareholder value. You can rest assured that our entire team is focused on driving efficiencies to produce not just growth, but profitable growth. I said at the outset of today's call, our ultimate objective is to create and unlock shareholder value, returning excess capital to our shareholders whenever possible. With that, operator, if you could please open the lines, we can begin the Q&A session. Ladies and gentlemen, to ask a question, you will need to press star one on your telephone keypad. To withdraw your question, please press the pound or hash key. Callers will be limited to one question and a follow-up in order to get to as many callers as possible. Again, that's star one to ask a question. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open. Thanks. Good afternoon. Alain, can you give us some color on what customer industry feedback has been post your announcement of the UPS LTL acquisition? You mean the customer feedback that UPS Freight got from this acquisition? Is that the question? All of the above. Have you heard from UPS customers? Do you have a sense of how they're reacting to your purchase of the business? Also, any of your existing customers or other people you don't do business with, now that this deal has really put you on the map in the U.S.? Yeah. I think that the customer reception is, wow, this is a fantastic transaction, because as you know, UPS Freight for UPS was very minimal in terms of their portfolio, in terms of the percentage of their business. It was not a real focus of theirs. Which will be a real focus of ours, though. Based on all the experience we have in Canada, and if you look at the profitability that we're able to come up, the Canadian LTL market is very competitive, and we're able to do really well there. I think that the UPS Freight acquisition is really going to be such a strategic acquisition for us at TFI. It's fantastic. We had a reaction from the employees at the company. We had a reaction from customers. We had a reaction from suppliers. We have reaction from people that sells trucks, because as you may have heard, we're planning on investing a lot on CapEx there, at least for the next two or three years in order to do a little bit of a catch-up. The reaction so far has been really positive. In Canada right now, UPS Freight serves Canada with a local cartage company. For sure over time, this is going to be part of our strategy to really move that business away from the strategic partner that they used to have in Canada into our own network. It's going to be really positive for the cost of our division in the U.S. and positive also for the profitability of our Canadian division that's going to take over that business over the next, I don't know, year or two years, whatever the transition's going to be. Great. As a follow-up question, you guys were very targeted and tactical with inroads in the B2C e-commerce business, kind of going after really dense profitable lanes that you said were more profitable than even you expected. Do you expect those opportunities to persist into 2021 once the world starts normalizing again? Or do you feel like that was a unique thing driven by the pandemic? I don't think that we'll ever go back to the pre-COVID market condition. I think that what you're seeing is a very successful strategy that was put in place by Mr. Cloutier, our EVP, that runs the show for us in our P&C and his team. Very successful in really focusing. If you look at our EBIT margin in Q4, we've grown the top line, we've grown the bottom line, and the margin as well. We at first, if you go back maybe 18, 24 months, we were always afraid of going too much on the B2C because there was a perception that because it's free, you can't make money on it. We had customers that was pushing us into doing things that didn't make any sense. Us, we said, "No, we're not in business to practice delivery. We're in business to make money on behalf of our shareholders." Finally, we were able, thanks a little bit to this pandemic thing there to say, "Well, you know what? B2C, if we do it properly, if we do it where it makes sense, where the density is high, yeah, we could still come in with great margin." The confirmation is in our Q4 numbers. Wait till you see. I've seen so far January, and the trend is still the same. The organic growth is still about the same as we saw. Now, I don't think that when B2B reopened fully, let's say in six months, nine months or a year, maybe there'll be a little bit of a small effect on B2C. By the time that this happens, B2C is growing all the time. The pandemic was just a major catalyst for this business to explode. We're not going back to the pre-COVID at all. No way. If you look at our logistics, it's the same story. Our results there are just going through the roof. We're on fire there. We're on fire in Canada big time. The U.S., we still have a lot of work to do on the U.S. side. The team is really focused on improving. We saw major improvement too also on our U.S. operation, not to the degree. We're not growing organically in the U.S. today same as we are growing in Canada. We'll get there. Great. Thank you. You're welcome. Your next question comes from the line of Allison Landry with Credit Suisse. Your line is open. Thanks. Good afternoon. It doesn't look like there was any specific guidance, and obviously there's quite a few acquisitions that you guys are digesting, but maybe if you could just give us a sense for how you're thinking about organic top-line growth in 2021. Obviously, there's a lot of margin improvement opportunities, both organic and inorganically, but just hoping you can give us some sort of broad guideposts for how to think about the earnings power of the business over the next 12 months, and also free cash flow generation. That's a very good question. There again, guys, I'm really sorry about this press release that came out so late. I know you guys are good, you're a fast reader, you really have to read fast about what's going on. Your question about organic growth, if you look at our P&C's result, okay, in Q4, and you look at the organic growth that we have there, it's really very comforting to look at that. We're up about $20 million in the quarter, okay, which is huge. It's like more than 10%-20%. We see the P&C growing the same kind of rate in 2021 so far. LTL, the Canadian LTL, we're down 7% in the quarter year-over-year. Probably what we see for 2021 is that this will probably remain like a negative 5% or negative 5% - 10% on the top line, not on the bottom line, though. We have lockdowns in Canada still big time in Ontario and in Quebec, so our LTL is really affected by that kind of environment. Plus, there's also a depreciation of the market in the sense that a lot of our customers are shutting down their doors because of the e-commerce growth. There's a rationalization of the number of stores, so that affects our business on the LTL side. LTL on the Canadian side, we see a negative organic growth there for 2021. Now, if you look at our Canadian truckload, our specialty truckload, and our U.S. truckload, we see a little bit of growth there, a few points. Not much. The focus for us is really get the business more efficient. What we're talking about is, we have a project in the U.S. with CFI and TCA, and maybe down the road once we acquire UPS Freight, the truckload division of UPS Freight, the intention is really to have one business unit in the U.S. to reduce our overhead, reduce our costs, and run a much better operation that will be able to be closer to an 85 OR versus a 92 OR like we are today. Logistics, that's also a big story for us. Yes, if you exclude the acquisition of DLS, which is TFWW within TFI, if you exclude that, we're growing. We're growing in Canada like 20%-25%. Right now in the U.S., not so much. We're about flat to +1, +2. By the end of the year, I think that we'll be closer to a +5%, +6%. More importantly, look at the improvement on the margin. Even if you exclude DLS, which has a much lower margin, DLS runs about 3%, 4% net profit. It's really low. We just bought the company a few months ago. Globally, we don't give any guidance for 2021 because there's so many things that can happen. I just looked at the consensus on Bloomberg. I think that the consensus that we have for 2021 on EPS diluted, I think it's attainable. Guidance for us is nothing before we get into Q1 and nothing before we're sure of everything that's going to go at UPS Freight or TForce Freight. There's too many moving parts right now. Okay. That was actually really helpful. Just following up on UPS Freight. Obviously, just an actual transaction, but is there any sort of possible real estate or terminal sales or divestitures or anything like that that you foresee with UPS Freight? I know that you have an agreement or some kind of a commercial arrangement with Saia. Is there any sort of competitive implications there? Maybe if you could speak to those two questions, that would be great. Thank you. Yeah. That's a very good question, Allison. The relationship with Saia is very strong and very solid. As a matter of fact, we had a call with the team there just to make sure that they understand that the transaction with UPS Freight's got nothing to do with the relationship between Saia and one of our business unit, which is TST-CF. We're going to keep on working on this relationship and grow that. The UPS Freight acquisition, that's a different story. It's got nothing to do with the relationship we have with Saia. In terms of the real estate, my first comment on real estate, I don't think that we will have any real estate to sell. What I think is going to happen over time is that we will have more revenue generating from the real estate portfolio. Let me explain what I mean by that. 25 years ago when I took over this LTL company in Canada, a terminal was the only source of revenue was the LTL operation. If you look at the way we run our business today, let's say in Toronto, okay, one terminal, I could have maybe 30% of this terminal being occupied by a TFI business, and the rest is third party, a different trucker. We rent space on the dock. We rent space in the yard. I think that when I look at the real estate portfolio of UPS, what I can see now, okay, but it's still very early, is not that we're going to be selling anything. As a matter of fact, we're probably going to be building, okay, terminals there and to eliminate the leases that we have. What I think is going to be a nice feature down the road is that we'll bring other revenues into our real estate portfolio by leasing space in our yard, by leasing space on our dock where it makes sense and where it fits. Okay. Excellent. Thanks, Alain. Appreciate it. Pleasure, Allison. Your next question comes from the line of David Ross with Stifel. Your line is open. Yes. Good afternoon, Alain. How are you doing, David? Wanted to talk about the dedicated opportunity at UPS Freight, the dedicated truckload piece that's being peeled off of there. Once you merge it with CFI and TCA, how big is your total U.S. dedicated business going to be post-deal? Okay. Another very good question, David. If you look at TCA today, there's about 500 trucks running dedicated today. If you look at UPS, they run close to 1,000. If you do the sum, it's about 1,500 trucks tomorrow, okay, let's say in the summer of 2021, that will run into our dedicated unit. I guess when you think about UPS Freight, on the LTL side of things, the TForce Freight side, what's the one thing you need to get right over the next couple of years to make everything else easier? Yeah. Oh, boy. There's many things that we have to get right. Okay. Our first priority, and I think I've said it, is CapEx, because we want to have a fleet that represents the company in the sense that safety-wise, fuel economy-wise, maintenance-wise. It's about the same plan that we did when we bought CFI. CFI, at the time, was running what we call a rainbow fleet. We have a similar kind of story over there. Safety, driver satisfaction, et cetera. That's really key number one for us, okay, on the CapEx side. The other thing also that's going to help us is on the claim. Okay. We are going to be really focused in reducing our claims because cargo claim, as an example, is about 1% of revenue today. 1% of revenue in our book is way too high. We're going to work with the team there to get this closer to half or half a point. For sure, we will have to address some customers' issue, okay, because the rating of the business and maybe some freight doesn't fit the network. When we bought CFI, the truckload division of XPO, we were stuck with tons of freight that did not fit CFI. It took us a year to get rid of that freight that we were losing money on. When we look at TForce Freight, we have something similar. There's some freight there that the company does not make any money on it. Now, it's normal because it was part of a global commingling, bundling, whatever word you want to use, okay, for the good of the company, UPS. If you look at the results of UPS, they are fantastic. Okay. UPS Freight not so much. Now UPS Freight being a standalone, they have to stand on their own two feet, and there's some freight maybe that don't fit the network. We will have to address that as soon as possible, as soon as we get in there, okay, and talk to the customer who understand if it fits or not, and then take action. If you ask me, Alain, is it possible, like you just said, when you announced the deal that you could run a 96 OR within 12 months? I'm convinced. I'm also convinced that when I look at the good LTL company in the U.S., and there's many, like OD and Saia and others, that those guys all run sub 90 OR. There's no reason us why in two to three years we are not in the same position of sub 90% OR. I know there's always a story. Yeah, there's a union. Us, a union, we work with the union. We respect the contract, but we manage the business. That's all. Thank you very much. Yeah. Your next question comes from the line of Scott Group with Wolfe Research. Your line is open. Hey, thanks. Afternoon, guys. David, I don't know if you're on, but if you've got some history on the updated financials in U.S. currency that you can send around, that would be helpful for everybody. In terms of question, maybe just start, can you just give us an update on DLS and how it's performing? Operator. Hello? I'm sorry, operator, because I can't understand. Is this any better? That's good. Now I can hear you. Okay, go ahead, please. Okay. Sorry about that. Apologize. I'll just start over. David, if you're on and if you've got some history of the financials in U.S. currency, that'd be helpful for everybody. Alain, my question for you on how is DLS performing? I know you mentioned sort of low single-digit margins. Where do you think those can go this year? Well, this year, here's my thinking. We're happy with what we're seeing so far, okay, in terms of revenue, in terms of revenue growth, in terms of gross margin. It matches what we thought it would be, okay. In terms of free cash flow, it's fine. Are we where we think that we should be? I don't think so. It's still too early in the game to really be able to say, well, are we going to be running a 96 OR all the time over there, or are we able to run a 90 or 92 OR? I think that a 90-94 OR is doable in this business, but it's still too early in the game to get more specific on that. We just bought the business in November, right? We have two, three months behind us. It fits the plan. It fits where the plan that these guys provide us with. Am I happy with this for now? Yes. Can we do better? Absolutely. I'm convinced. Rick Ashey is working with Tom and the crew there. For sure, it's a big cultural change for them. I'll just give you a small example, is that they never managed the cash there. Our focus is we have to manage the cash. We have one supplier that we were paying those guys at seven days, a transportation company. You say, "Why are we paying those guys at seven days?" Well, it's because it looks better. Well, no. We changed that to 30 days because normally in our book, our logistics company are working capital negative. You don't need a working capital to manage this business. In the case of DLS or TFWW now, we need a working capital to operate the business. One step at a time, by the summer, we will be moved out of SAP at Donnelley into our Oracle system. You will start to see, because we're still in a transition agreement. We're paying for their service as we speak. For sure, there's going to be some saving over there down the road. It's still too early to say, but top line is there. Gross margin is there. The overhead, I'm convinced that there's something that we could do about that. Okay, thanks. Just last one. Since announcing UPS Freight, you've also announced another smaller tuck-in acquisition. Should we expect that you'll continue to do a bunch of those tuck-ins this year? With UPS Freight, do you think there's less of the small activity? No, the small ones, we do them all the time. All the time. The big ones is once every three years, two, three, four years, we do a large one. The small ones, we do them all the time. We've got so many opportunities. Our pipeline is full of what we could do. For sure, it's got to fit, the price has to be reasonable, and the resource has to be there. This one that we just announced this year is under Mr. Brookshaw, our special TL operation. Absolutely. If we could buy a company in Canada right now that would be in the same business as our P&C group, absolutely, we would do this deal. If we could find an LTL company in Canada that fits, absolutely, we will do the deal. Are we going to do any LTL deals in the U.S. after this deal? No. We're going to be really busy in the U.S., okay, getting this company to the level of profitability that is normal. Got it. Thank you, guys. A pleasure. Your next question comes from the line of Walter Spracklin with RBC Capital Markets. Your line is open. Thanks very much, operator. Good afternoon, Alain. Good afternoon, Walter. Keeping on with acquisitions, I know you were talking last year about your focus on a potential something in the truckload space. I'm curious with UPS Freight, is that off the table now, both because of balance sheet and resources that you're devoting to the integration, or do you consider yourself able to do still a larger deal in a separate segment if the stars align? Yeah. If it's the right deal, Walter, we'll do it. In our truckload division, absolutely, it can be either in the U.S. or in Canada. If it's the right fit, if it fits, absolutely, we'll look at it because don't forget, really, this UPS Freight thing there is going to take a lot of my time, a lot of the time of our LTL group working with those guys. Yes. Okay? Our truckload guys, our logistics guys, if there's a deal that fits, if there's something that's reasonable, that there's a nice payback, absolutely, we won't pass on it. Nothing major, though, nothing. There's not going to be a $300 million investment into a company right now. It's impossible. Something small that the investment is going to be $20 million, $30 million, $40 million, $50 million, $60 million, yes. Got it. Okay. Understanding you're not giving guidance on any of the major items, I was wondering, Alain, if some of the other areas, like your CapEx spend anticipated, I know you gave us some indication with UPS Freight and what would be required there, but on a kind of global US dollar side, your tax rate, I don't know if you have any D&A forecasts out there. Any of those kind of more accounting-related or along those lines that you might be able to give us some insight on for this year, if possible? Yeah. Walter, what we would prefer to do right now is to get, well, Q4 is behind us now, Q1. Okay. Once we get Q1 out, we will have a much better feel about where we are going. CapEx, okay, if you exclude, okay, the UPS Freight acquisition, our CapEx is going to be normal again this year, like in Canadian dollars, net of disposal, it is always about CAD 200 million, right? Our dividend stays the same. It is $0.29 a share right now per quarter. That doesn't change. There are many things that don't change. It is just that we don't know enough about what is going to happen in Q2 and in Q3. Q2, because of the amount of subsidy that we got in Q2, okay. We want to get closer to Q2 so that we are really going to be in a position to say, "Okay, forget about subsidy." If you look at our Q4, subsidy is minimal. I think it's about $6 million or $7 million. Probably Q1 is going to be close to zero. Q2 is probably going to be again zero, right? We just want to see a little bit more, not to mislead the investors. What I could say is that the consensus that is out right now for 2021 in terms of diluted EPS, I think it's attainable. The CapEx, basically it's about CAD 200 million for the existing business, and then over and above that, we're going to do more with the TForce Freight acquisition. Great. I've got a 25% effective tax rate. Is that good to keep using that tax rate? Yeah. Yeah. Cool. Well, it's lower than that this quarter, but yeah, 25% is reasonable. Okay. Appreciate your time. Pleasure, Walter. Your next question comes from the line of Tom Wadewitz with UBS. Your line is open. Yes, good afternoon. Good afternoon, Tom. Let's see. I know you've been asked a bit about, I guess, whether you can do small deals and other deals. How long do you think that it takes to digest something this large? Is this something that don't look for another large deal for two or three years? Yeah. you need that kind of time? How do you think about. Obviously it's really big for you and there's a lot of work to be done. Absolutely. If you look at history, there's always three years between a big deal for TFI, right? 2011 was a big deal for us, a big year deal. 2014 was big. 2016 into 2017, CFI was the one, now it's 2021 is UPS. There's nothing major that can happen in 2021, 2022. Impossible. We will be laser-focused on TForce Freight and UPS Freight, whatever you want to call it right now. That's going to be our mission, is to bring this company to the level of profitability that is normal. Right now, at 99 OR, it's not normal. That's going to be our focus. The small deals, yes, we could do the small tuck-ins in truckload, the LTL in Canada, in P&C in Canada, no sweat. Small. When I say small, the aggregate could be like CAD 200 million invested, or let's say $150, on the small deals. Yeah. Per year. Yeah. Okay. That makes sense. What about synergies across the system? I think we haven't really seen historically that truckload and LTL companies together. I guess case in point would be kind of Con-way bought CFI, and then they ended up separating them, and I'm just wondering how you think about potential synergies across your different businesses in the U.S. and the network. Also whether there's a mix of union on the LTL side and non-union on truckload side, whether that's a barrier to sharing some of the terminals or whatever kind of resources, assets you might want to share. Yeah. Well, in terms of the synergies, you're absolutely right. Except for the buying power, okay? When you discuss with the truck manufacturer, or when you discuss with a fuel provider, they don't care if it's LTL or truckload. The sum of the two, normally we should get a better deal. That could be an area of synergies. Okay? The spare parts for the maintenance and all that. In terms of the customer, we don't see that. The bundling, we're not big fan of bundling, us. Because if you tell me that I'm going to lose money with this account because Paul makes money on it, we don't do that. Peter has to make money, Paul has to make money. Very simple. Peter runs the show, and Paul is the same. In terms of purchasing power, yes, there's some synergies there that are attainable and doable, like the tires and all that. In terms of under the same roof, okay, having a union or a non-union carrier, okay, we don't have a problem in Canada. We do that all the time. We've done that since the last 25 years. Maybe in the U.S. it will be a different story. I don't know. Okay. What I can tell you, though, is that, in my mind, the terminals that we're buying are owned by a real estate company. Will be owned by a real estate company, which is going to be a subsidiary of TFI. That's the plan. That's what we're working on now. The operating unionized company is a tenant of the real estate company, like anybody else. We'll see, Rright. Okay. That's all. That's helpful. Thank you. Tom. I'm sorry. Go ahead. What we want you guys to understand is our philosophy is that a terminal is not a union terminal because it's a real estate asset that will be leased to a union carrier that's owned by TFI or a non-union carrier that's owned by TFI or a non-union carrier that's owned by somebody else. It remains to be seen whether there's receptiveness from the union to that approach. Is that fair, or you think you have visibility to that? Well, it's just a real estate transaction. The important thing is that the operating company is a tenant like everybody else. Right. Okay. Well, thank you for the perspective. It's helpful. You're welcome. Your next question comes from the line of Konark Gupta with Scotiabank. Thanks, good evening, Alain and David. Good evening. Hi. First of all, glad to see the numbers are in US dollar. You sure scared me for one minute and some AI bots there. Yeah. Main first one on, not to beat the dead horse here, but just on the UPS acquisition. I understand that you are buying the small piece from UPS here, obviously, clearly they were bundled. The freight business you acquired deals with UPS, the parent company, as well as other external customers. Now when you talk about focusing on improving their profitability, one of the key tenets to that is you have to update or improve the pricing in some businesses, or you have to let go that business perhaps. My question is: what would be the take or the reaction from UPS parent or the external customers when you go to them and ask for putting the right price or the fair price there? They might think maybe they go to somebody else. What are the risks and pitfalls in going to those customers and telling them all of a sudden that we will not be able to provide the same pricing that UPS could for many years? Well, if you look at one experience that just took place the last few years is the large competition to UPS is another group that is also the number one LTL provider. Okay. The largest LTL carrier, okay, in the U.S. is competing with UPS in the parcel business, right? They used to do a lot of bundling. They used to do a lot of give me a good price on my package, and I'll give you a deal on the LTL. The reaction of this company has been, FedEx, I'm talking about. You know what, guys? We are so overwhelmed with volume. Why would we be using LTL as a loss leader? Right? I think that if you would ask the question to the UPS team there, I think that they are overwhelmed with volume, and a lot of customers are calling us and them and FedEx and everywhere for capacity. Right. I think that it's the same problem also with the LTL. There's a capacity issue there as well. Us, our approach with customers is going to be very simple, is that, "Guys, this freight does not fit." Either it fits or it doesn't fit. It could be because the lane does not fit, or it could be because the commodity does not fit because there's too many claims, or it could be the region does not fit because we don't cover it ourself, and we lose money with the agent. There's many reasons. We sit down with the customer and have a discussion, and we can provide to a customer another solution. Let's say it doesn't fit our operating company. Maybe it fits our logistics company. This will take time, guys. It's not going to happen overnight. It's the same kind of discussion we just had on the real estate side. This will take time. It's not going to happen overnight that we're going to have tenant in our real estate portfolio, outside tenants. If you look at 25 years ago, Cabano Kingsway, there was none. Today, we generate a ton of money in our real estate division renting space to third party. Right. It's the same story with the customer. We got to go step by step and have a chance to discuss. We have lots of tailwind right now in the industry, on the package side and on the LTL side in the U.S., I'm talking about. Right. It's kind of fair to expect that perhaps the first three to six months post-closing, there will be a lot of discussions with the existing customers on the terms and conditions premise. Yeah. Don't forget, guys. Our focus number one is going to be the equipment. We want to reduce the maintenance. We want to improve the safety. We want to also improve the driver's experience. Instead of driving a 2004, the guy drives a 2021. It's not the same experience. There's more safety on the truck. We want to do all of this step one, and also at the same time, slowly address the situation because we want to be lean and mean in terms of cost. One big area that we can do without making a mistake. With customers, you can make a mistake, right? It takes time. On the CapEx side, replacing old equipment with new equipment, reducing your maintenance cost, improving your safety, improving the driver's experience by replacing 2004 with 2021, you can't make a mistake by doing that. Right. Thanks for that, Alain. My last one is on the investment. Thanks for providing color on CapEx and tuck-ins. Just want to parse out the CapEx numbers. If you have a $200 million net CapEx, let's say, from existing operations, what is sort of the disposal number implied there? Or gross CapEx, whichever you want to kind of call out. Free cash flow was obviously very strong in 2020 in terms of US dollars, but just wondering if, with the CapEx guidance you provided, plus the investments you have to make at UPS, should we expect free cash flow to improve this year from last year? Yeah. This year was exceptional in the sense that we did not invest the CapEx that we should normally have done because we put a lot of CapEx on hold in Q2. We will have a little bit of this recoup to a certain degree. Gross CapEx, normally, pre-acquisition of UPS Freight in CAD is going to be about CAD 250-CAD 260, minus the disposal, which is net about CAD 200. Right? I'm going to have to get used to the USD numbers because that's the way we're going to be reporting. That is the CapEx though, because USD is something also new for us. That's not going to change. Over and above that, the normal CapEx for TForce Freight globally or UPS Freight, in my mind, sustainable CapEx to sustain the existing business in US dollars, okay, net of disposal is about $90 million. Okay? We're going to do more than that. Us going from acquisition, it will take us maybe three, four months before we get the stuff. Let's say by Q3 and Q4, we'll probably do like $60 million, okay, because we won't get all the stuff because you got some delay, et cetera. In 2022, instead of being $90 million CapEx normal for 2022, we're going to talk between $150 million - $165 million in 2022, the full year. That is U.S., right? We got the catch-up CapEx in there. U.S. $150 million - $165 million, right. Okay. U.S., yeah. Perfect. No, that makes sense. Much appreciated the time, Alain. Thank you. Okay. Your next question comes from the line of Jason Seidl with Cowen. Your line is open. Thank you, operator. Good afternoon, Alain. I wanted to talk a little bit about getting added to the U.S. indices, which I think is the next important step for you guys. What's left and what's the timeline that investors can look at? Very good question, Jason. I mean, we're thinking about it. In order to be that, we have to be a U.S. corporation. We are still a Canadian company today. Okay. We are in discussion right now with legal and tax, David and myself and our group to see if it's doable, if it's possible. Some Canadian companies have done it. It's not simple to do. We'll see. We are thinking about it. For sure, it would be a great benefit to our shareholder base to be part of the index. So far, we don't have a timeline, Jason, on that. We know we're looking at it, but we have nothing to really come up with, we're going to do that within a year or two years or whatever. Not yet. Okay. Fair enough, Alain. Follow-up question. You touched a little bit on CapEx. I was wondering if within that number, what is your assumption for truck count growth or decline, if you will, in the U.S.? Right now, Jason, the numbers I'm talking about is there's no loss of business or there's no revenue loss because of discussing with customers or freight that don't fit because we know in principle. What we know so far, guys, is that this process of discussing with customer has already started at UPS Freight. It's not something that is going to be new. They already have started this process probably like six, seven months ago. What they've seen so far, okay, what the guys are telling us is that they haven't lost any piece of business. Right? Right. It's the pace, how fast these guys are going about it, and it's also, if you have a chat with an account that you lose 15% and you ask the guy for 2%, and the market is really 5% more than the price that you're charging, and you're asking only for two, for sure, you're not going to lose the business because the guy understand that he still has a fantastic deal with you. This is why us not knowing really the U.S. market, the LTL market, this is why we bought this DLS company, because it's a brokerage operation, so they buy and sell all the time, right? With Tom, we have also an idea now of what's the market of that lane. Okay. That's where we're going to have some good discussion with our guys at UPS Freight or TForce Freight now, down the road, then we'll address the customer one by one. It's a long process. You don't want to rock the boat. You want to go slowly about it. This is why our main focus is going to be us working on efficiency and cost and improving safety and things like that we're sure we cannot make a mistake. At the same time, we're learning about the customer and the business, so that when we start discussing and having a good plan with customers, we have more knowledge than on May 1st, because May 1st, we don't know anything about the business. We have to learn. Okay. That's great color, Alain. It's going to be basically a flat tractor count between CFI and Transport Corp. Yeah. Real quickly also, you mentioned obviously the money that you want to put into a new fleet and better technology within the cabs at UPS Freight. Is there anything on the dock side that you guys are looking into that you think that could be added down the line, in terms of improving productivity? What we've seen, Jason, so far on the dock is they just did the rollout of a new technology that these guys have, and we're really impressed with the tools that these guys have to monitor productivity on the dock. Between you and me, they have better tools than what we have us in Canada. Now, tools is one thing. It's like a mechanic. You could have the tool, but you need the mechanic to repair the car. What we're seeing is that they have a fantastic toolbox. Now, how are they using it? It will take us some time to really evaluate that. I appreciate the time as always, Alain. Be safe out there. Pleasure, Jason. Your next question comes from the line of Ken Hoexter with BofA. Your line is open. Hey. Great, Alain. Dan, good for you there. Good afternoon. Some major moves over the year, so congrats on all the acquisitions over the last few months. Thank you. Alain, you mentioned earlier in the call blending some assets in the U.S., talking about CFI, TCA, and other things. That is a little bit different than the way you have tackled by keeping things individually. Is that any kind of structural change, or is that blending, moving to blend the TL? Would you look to do that in any other segments where you are looking at keeping brand names separate? Yeah. That's a good point, Ken. Why are we doing that? Okay. It's because we look at dedicated with the Flash acquisition, I say Flash, UPS Freight acquisition. It makes sense now to have a dedicated business because right now we have TCA, which is 50% dedicated and the other 50% is not. We look at CFI. CFI is got no base dedicated business. Then we just bought MCT about a few months ago, which is a temperature control thing there. Are we going to use MCT? There was no value to MCT. Now we said, "Okay, we're going to use CFI temperature control, and it's going to fall under the CFI umbrella." Then we're buying a UPS Freight. What are we going to do with that? The UPS Freight truckload division. Are we going to keep the name? No, we can't. What are we going to do? We're going to fold that into TCA, and then TCA will become a dedicated carrier, and then whatever is not dedicated will fall under CFI. After having all kinds of discussion with our people, we came to the conclusion that probably, maybe it makes sense to keep two or three DBA, Doing Business As like TCA or Doing Business As CFI temperature control. Really down the road, we're going to be one business unit in our USTL operation with different sectors. Logistics being one, the dedicated truckload being another one, the temperature control, and just the other CFI van regular business. Just a follow on, would you look to do that in any other area, with one brand name, like in Canada on LTL, or is this just a special case with USTL? It's something that we're always thinking about. If you look at what we've done in Canada in the summer of 2020, we combined TST and CF, and it's been a fantastic results. That's one of the reason, if you look at our margin on the LTL, with less revenue, our margin in dollars and in percentage is just doing very well. It's something that we always look at. Sometimes if a brand is worth something, we'll be careful. In the case of our truckload operation, we know CFI is a diamond in terms of brand. MCT, there was no value. It was confirmed. TCA, we're not sure. This is why Greg and the team there are discussing that. In terms of the business unit, for us, it's going to be one. Maybe we'll use two DBAs, CFI and TCA. The guys are still talking about that. For sure, the truckload division of UPS Freight is not going to be called UPS Freight truckload division or whatever once we buy the company. It's going to fall under Greg into CFI. Perfect. Let me just switch subjects for my follow-up real quick. You said focus on maintenance, safety, driver experience, but I think earlier, in the call, you mentioned that your, I guess, damage was up to 1%. Did I hear that right? Versus kind of peers at 0.1%, I guess, OD. Cargo. Half a percent. Yeah, cargo claims. Yeah. Cargo. You're answering what needs to be done, why is that so high relative? That's not relative to the equipment or safety, right? No. The cargo claim's got nothing to do with equipment. It's got something to do with the freight, the way it's packaged, et cetera. This is an ongoing thing. I mean, for sure. I'll give you an example. We started our e-commerce business with the largest retailer in Canada, and we've dealt with Amazon for a long time, and never any issues with Amazon because the way they package the product is fantastic. This retailer, the largest retailer in the world, one of the largest ones, they're not used to e-commerce. I'm talking two, three years ago. We had lots of issues, okay, with the way the product was packaged for delivery to a consumer. We sat with them, we talked with them, and finally, I look at what we do with them today, it's fantastic. What I'm saying is that in our LTL, one of the reasons that you have claims, there's a few. If you touch the product 25 times, every time you touch the product, you may break it. You got to make sure that you don't touch it too much. The average line haul, the number of hubs that you have, so if you ship from, let's say, L.A. to New York, and you have 25 hubs in between, so you touch the product 25 times, load, unload, you have more chance to break it than if you run direct. The commodity that you haul also has got something to do. What I'm saying is that cargo claim, it's an area that we see that there could be improvement. That's nothing compared to workers' comp claim, okay, and accidents. Accidents, in our mind, in our experience, the more safety you have in the equipment, that helps the driver, so the driver does not make a mistake, because this guy doesn't want to be involved in an accident, but he makes a mistake. He's a human being. Okay, we can make mistakes. If you've got equipment up to today's technology that tells you, "Hey, don't change lane. There's another car there, and you're going to hit the car." That helps. Reduce the number of claims. Reduce the BI. The same thing, collision avoidance. The driver has got some distraction, and he rear-ends a car. With today's technology on the truck, it's going to help you. Right? What I'm saying, Ken, is that there's many things that we could do to reduce the cost of the operation today in terms of the freight that fits, in terms of rate or in terms of cargo claim, and then also the accident and the workers' comp. That's something that it's our control. Something that is our control, but also needs the customer to help us, is the rate. This is why for us really is our focus going to be what can we do us to be better, okay? At the same time, yes, slowly, we'll have a discussion with customer to make sure that we're hauling freight that fits at rates that make sense. Great. Appreciate the time some. Thank you. Pleasure, Ken. Your next question comes from the line of Tim James with TD Securities. Your line is open. Thanks. Good evening, Alain. Good evening, Tim. Just wondering if you're seeing any kind of residual efficiency challenges related to kind of disruption like hangover from the pandemic at docks, terminals, what have you? I'm just trying to understand if, as we get to a more normalized environment, if that maybe is an opportunity on the cost side, if there's still some challenges there today that may subside going forward. Absolutely. The lockdown is a big problem for us. We have a huge lockdown in Quebec, huge lockdown in Ontario. This is not helping us, right? Yes, it helps us in the sense that our P&C guys, their e-commerce is just booming. True. We're losing on the B2B side. If this pandemic could go away by the end of 2021, our 2022 year, in my mind, okay, should be even better in the sense that you have six people. Someone didn't get sick at the workplace, but he got sick because his partner got sick at her workplace. It's just a global issue. You got guys that are no-show because they said, "I don't want to go because I'm afraid that I'm going to catch the virus." I'm talking truckload drivers in Canada that doesn't want to cross the border into the U.S. because they listen to the news and they say, "Oh, there's a lot of COVID thing in the U.S." It's disruptive for sure. I was just reading and talking to our steel hauling department. Now we're short of chips for the manufacturing of cars and trucks. It will affect the steel and the aluminum shipment. It's all related to the global supply chain and over and above, it's been just made worse with this pandemic. Okay. Thank you. That's helpful. My follow-up question, you've given some great color on where you're thinking in terms of tuck-in opportunities going forward. I'm just wondering specifically, has the pandemic changed at all the opportunities that you see? If we were to back up to 12 months ago, has your view on what maybe makes sense and what doesn't make sense, has that changed at all, or is it more or less the same? I would say that to me it's more the same. I think the only thing that I could say that pre-COVID and now is we had a perception with our P&C that B2C would dilute our margin. When we got stuck in a lockdown in March and April, we had no other option than to look at the B2C, and we looked at it in a smart way. Our perception pre-COVID, that it would be diluted to the margin was wrong because we did it the right way. If you just look at our Q4 numbers, it's just a confirmation of that. Although we came out late with our press release. I'm sorry again about that, guys. There was a little bit of a glitch. I don't know what happened, but we're going to make sure that it never happens again. Okay. Thank you very much, Alain. Pleasure. Your next question comes from the line of Brian Ossenbeck with JP Morgan. Your line is open. Hey, good evening, Alain. Thanks for taking the questions. Pleasure. I know we talked a little bit about synergies and how you might be able to use the footprint at UPS Freight today and on the last call. I was wondering if you could do something along the lines of an LTL consolidation business where you go into large retailers, help them meet the OTIF standards. Is that something you think that the footprint is well suited for when it comes to leveraging the hard assets, but also having maybe enough space on some of these docks or maybe even expanding the warehousing footprint to be able to be more of an aggregator of sorts for that particular end market? You know what? What you're saying just made a lot of sense, but I cannot answer that right now. Okay. I don't have a clear picture of what we can do. One thing that we look at us is what we call door pressure. Is how many bills a day would go through a door, okay? When we compare the door pressure of UPS Freight today versus what we do in Canada, it's day and night. That tells us that the real estate is big and there's some things that we could do. It's still too early. What we're doing now, guys, is just the phase I and phase II, where it needs to be done in terms of the environment. I haven't toured any real estate so far. I haven't seen anything. For sure, it's going to be a priority because real estate is expensive, and you want to make sure that you get every dollar out of that major investment that you do in terms of land, in terms of building. Okay, got it. Nothing structurally that would prevent you from doing that, if it were to make sense? I don't think so. To me, this is why to us, this transaction is so important that we have the real estate separate from the operating company, because this is just a smart way of doing it. Real estate's got nothing to do with the operate. You're just a tenant like everybody else. You build for a third party or whatever you could do. One thing I said on the call, Brian, is that the way I look at it is that we are a tenant in about 50 terminals. For sure, if it makes sense, we want to get out of those leases and have our own terminal in the U.S. where it makes sense. For sure, if there's capacity, we'll try to fit somebody else in there. If there's too much land, if the building is too big, for sure, all of this will be addressed over time because the focus at TFI is how can we do more with less, not the opposite, do less with more. Understood. Maybe for a quick follow-up, you can just touch on what's going on in the U.S. Logistics segment. I think you still got some self-help initiatives going on there. The consolidation of that segment and industry is clearly going to take some time. I believe you mentioned that there wasn't too much growth there this quarter where there was a lot in Canada. If you can bring us up to speed on recent initiatives and what you see on the table for the year ahead. The way we run our Canadian operation is fantastic. We have growth right now of 30%, 35%. What we've done about a year ago is we said, "We're so successful in Canada." I've asked Kal, the guy that runs our Canadian operation, to get involved into supporting our U.S. operation. Since that time, what have we done? Right now, the sales leader responsible for sales is a North American sales leader now. It's not just about U.S. or Canada, it's both. The guy is responsible for both. What we have just announced February 1 is that the guy that used to run Canada for us is going to be moving to the U.S. and will run the East Coast, because for us, the U.S. is split in two, East and West. Dan Leslie will be now responsible for running the East Coast operation. What we're trying to do is, and we've been successful so far, because if you look at the EBIT margin of our U.S. division a year ago versus what it is today, it's 100% improvement. You say, "Wow, 100%. This is fantastic." No, it's not, because we still have a long way before we get to the Canadian margin. We run right now, the U.S. operation only with a high single-digit EBIT number. We could do way better than that, but one step at a time. Also most importantly is that organically, our U.S. division is not growing. Today, we're about flat year-over-year. It's not normal. If we can grow 30%, 35% in Canada, why are we flat in the U.S.? It's just because this was not the focus of ours, and this is what Kal and Dean and the team there is going, and we see the potential. Absolutely, we're going to start growing the top line, but we want to make sure that we also provide the right service to the customer. If you have a business unit that's been used at zero growth or minus five negative growth, they're not big fan of getting new customer in because they get lazy. Now we have to change this kind of culture of, "Okay, we're going to do today the same thing as we did yesterday." No more. It's again, a one-step process, step-by-step, and you'll see us by the end of 2021. The plan is that we're going to start growing organically by about 5%. Well, 5% is not much, it's a step in the right direction. In 2022, there's going to be more catch-up versus our Canadian operation. At least, based on what I could see, we're going to break this single-digit EBIT number in 2021 and get into a double-digit EBIT number in our logistics and last mile in the U.S. A lot of good stuff on the go. Just look at our Q4 number, a year-over-year improvement, Brian, right? Yeah, that was quite strong. All right. Thank you, Alain. Appreciate it. Yeah. Hey, Brian, the only thing is you guys got the numbers so late that you couldn't have the chance to read them, right? I finally got to it. That's okay. No problem. Thank you. Okay, good. Your next question comes from the line of Benoit Poirier with Desjardins Capital Markets. Your line is open. Yeah. Good afternoon, Alain, and congratulations for the results. Thank you, Benoit. Yeah. Thanks for the great color about the opportunity to improve margins for U.S. last mile. When we look now at TL, obviously you break down into three different segments, and what is nice is to see specialized surpassing the margins in Canada. It seems on a good path here at close to 85%. Although when we look at U.S. TL, 92% OR in 2020, what is the opportunity to improve this OR, especially in the U.S. and recoup the gap versus specialized or Canada down the road, Alain? Could you maybe give us more color about this opportunity? Well, Benoit, if you look at a 92 OR right now, for sure, it's the sum of two business units, TCA and CFI. The problem we have is that CFI is really running a sub-90 OR company. Goes through to an 85, 86, 87 during the course of 2020. The problem we have is with our other business unit, and this is why, like I said on the call, with the fact that Flash is coming in, not Flash, but T Force, because the code name was Flash. This is why it confused me a little bit. UPS Freight, truckload division coming in, it opens up the opportunity for us to create a real dedicated truckload business of size. I said it early on the call, that means our dedicated truckload business is going to be about 1,500 trucks, 1,400, 1,500 trucks under the leadership of Greg Orr. We will also run a temperature control separate segment. I think that during the course of 2021, this is when we're going to do all this transformation, and I believe that by the end of 2021, we will be running closer to a 90 OR globally. We're 92, we should be running closer to 90 OR. One thing is for sure is the business that we're buying through the UPS, those guys are running today at 96 OR or 96, 97 OR. They're worse than our business today at 92, right? We have also a lot of work to do with those guys and the existing business that we have at TCA. This is why I think that a good way of approaching 2021 is to bring globally the OR to a 90 OR. Don't forget, it takes time to correct the situation, and then we'll address that. I agree with you. If you look at all the divisions of TFI, P&C, logistics, LTL, specialty truckload, the only one that you could say, "You know what, Alain, you guys are a star. You are a star of a company in P&C with the results, the LTL, ba, ba, ba." The only areas that you could maybe say, "Well, we're not going to give you a triple A, we're going to give you maybe a B," is our U.S. TL. The team is there, and the guys are going to be working really hard to move from B to closer to an A or an A+ kind of an operation. I'm convinced. Okay. Thank you very much for the color, Alain. Pleasure. There are no further questions at this time. I will turn the call back over to Mr. Bédard. Okay. Well, thank you very much, operator, for helping with today's call. On behalf of the dedicated men and women of TFI International, I want to thank everyone for joining us today and for your interest in TFI. We continue to work hard every day for our shareholders, and I look forward to updating you on our progress throughout the year. Please stay safe and don't hesitate to reach out with any follow-up questions. Have a great evening and thank you again. Bye. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.