TSE:MTL Mullen Group Q3 2024 Earnings Report C$13.06 -0.17 (-1.28%) As of 04/25/2025 04:00 PM Eastern Earnings HistoryForecast Mullen Group EPS ResultsActual EPSC$0.41Consensus EPS C$0.37Beat/MissBeat by +C$0.04One Year Ago EPSC$0.41Mullen Group Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AMullen Group Announcement DetailsQuarterQ3 2024Date10/24/2024TimeBefore Market OpensConference Call DateThursday, October 24, 2024Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptInterim ReportEarnings HistoryCompany ProfilePowered by Mullen Group Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 24, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited Third Quarter 2024 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. Operator00:00:33I would now like to turn the conference over to Murray K. Mullen, Chair, Senior Executive Officer and President. Please go ahead. Speaker 100:00:44Thank you, and welcome to Mullen Group's quarterly conference call. So once again, we'll provide shareholders and interested investors with an overview of the Q3 financial results. And in addition, we will discuss the main drivers impacting these results, our expectations for the year, and we'll close with a Q and A session. But before I commence today's review, I'll remind everyone that our presentation contains forward looking statements, and these are based upon current expectations and are subject to a number of risks and uncertainties, And as such, actual results may differ materially. And further information identifying these risks, uncertainties and assumptions can be found in the disclosure document which are filed on SEDAR Plus and at www.mullen group.com. Speaker 100:01:31So with me this morning, once again, I have the full senior executive team. I have Richard Maloney, Senior Operating Officer Joanna Scott, Senior Corporate Officer and Carson Urlacher, who is the Senior Financial Officer. So this morning, what happened in Q3 'twenty four in terms of our financial operating performance? Well, the 3 main topics that we'll be discussing this morning and then we'll turn the call over to the operator and we'll go straight to the Q and A session. I'll begin with the call with talking about the macro environment that we had to migrate through last quarter, along with discussing what has changed year over year. Speaker 100:02:08Then I'll turn the call over to Carson Urlacher, who will provide an overview of the Q3 financial results. And I will remind you for those interested in detail, we've posted the MD and A, a detailed 60 page report covering all aspects of the results and balance sheet, both on our website, which is www.mullen group.com and on SEDAR Plus. So then after that, we'll close with a discussion on the macro environment as I see it and how our results might be infected for the rest of the year. Then we'll go to the Q and A session. So let's talk about the macro environment. Speaker 100:02:48So last quarter you'll recall that I stated that really in our markets that kind of everything had changed acknowledging the fact that the market is different than last year, in fact the last 2 years. So under this scenario, it would be reasonable to expect that results would be different than in prior years. And this is precisely the case with the results that you're seeing from most carriers and from ourselves, except for one reason, and that's acquisitions. So I've commented that I think acquisitions were the only way you could grow in a no growth economy. So we were right on the first and perhaps we were one of the very few public companies to acknowledge that acquisitions would be the only way to grow given the market fundamentals. Speaker 100:03:33And we didn't see a whole bunch of reason to change that from the internal market dynamics that were going on. So in early 'twenty four, after we were comfortable with the prospects of strengthening the balance sheet with a new and expanded bond issuance and we expected a meaningful acquisition, we executed a meaningful acquisition, finding what we believe is a real market leader in container world. And on that container world has a significant presence in the beverage and alcoholic vertical and province of British Columbia. They generate around $120,000,000 of annual revenues. They operate as a freight forwarder. Speaker 100:04:12They operate a customs bonded warehouse and they are a delivery company. So these are three attributes that we consider crucial to being successful in this market. Now we also know we got lots to do with this business to make it a profitable venture for our shareholders And we'll turn our focus and attention to that in 2025 and beyond. It will take a while to change the culture to one of cost driven and be very focused on those kind of things. But for right now, thus far, we've been focused on making sure that there was a smooth transition from a customer perspective. Speaker 100:04:51And next year, we're going to focus on the cost side, as I talked about. And that's really kind of come from a combination of investing in new operating assets, technology and some business process improvements. But I got to tell you, I think there's more to our results in Q3 than acquisitions. We could not have achieved record revenues and near record profitability if our existing 39 business units did not manage the challenging market conditions as well as they did. So a big shout out here to all of our business units, your hard work disciplined cost management initiatives are a big reason MTL had a very good quarter. Speaker 100:05:30Now we also know that solid senior leadership must also be accompanied by investments in the right verticals in order to achieve solid results today. I've commented many times, there's lots of really good operators in our business, but if you're in the wrong vertical, you're trapped right today. So I continue to state the case of the strategy because not all verticals are created equally. Now you may recall that over the years we built a large diversified organization by focusing on acquiring quality companies and that operate in verticals of the economy that we believe are sustainable and where we can achieve acceptable rates of return. This means we must be disciplined and not chase incremental revenue streams simply for top line growth. Speaker 100:06:13Our strategy to invest where we generate acceptable returns on capital for our shareholders. Now for example, let's consider the LTL segment. Not only is this business in one of the most stable parts of the supply chain, but it also offers in our opinion the opportunity to expand margins through a combination of tuck in acquisitions that help us drive scale through the introduction of new technologies that reduce cost and something that really the smaller competitors just simply cannot implement and we focus on yield management. And I think there's some evidence that this strategy is working and I refer you to our Q3 operating segment results where operating margins in our LTL segment actually increased year over year by a healthy 1.1%. So pretty impressive given that the economy is stuck in neutral. Speaker 100:07:13So a discussion on the market trends last quarter is also relevant to our performance last quarter. So I'll highlight a few of the challenges our business units had to deal with. Let's start by looking at the overall economy. Central banks have successfully brought inflation to the 2% range, but this has only been achieved by slowing the economy through a more restrictive monetary policy and higher interest rates. These initiatives have resulted in virtually no growth in the economy, but it has not collapsed the economy either. Speaker 100:07:43We also know that the consumer's pocketbook has negatively been impacted by yesterday's inflation, which I call the worst tax of all on the vast majority of society and high interest rates. So in other words, consumer spending has moderated as compared with prior years. And what this means for the freight and logistics business is that overall demand has softened from heightened levels of 2022, 2020 REIT. But I always say this, demand only tells one half of the story, supply is the other. And in this case, it's pretty evident that there's more supply today than there was 2 years ago. Speaker 100:08:20And this means there's only one outcome, pricing comes under pressure. And I would argue that this is now the Achilles' heel of the freight and logistics business. There's freight to haul, but the rates are too low for the cost structure the industry is burdened with today. And customers have been quick to bite on the low rates, giving precious little credence to long term relationships or quality. So this explains why it's difficult to maintain margins today in most verticals. Speaker 100:08:44And this in turn exposes the business models that are too dependent on full truckload market as an example. But and perhaps this is the good news, nothing lasts forever and I'll have more to talk about this topic in the outlook section. So in summary, nothing really surprises this quarter, not the market fundamentals, not the economy and not the performance of our business units, which are professionally managed and focused on generating the very best results they can. So I'm now going to turn the call over to Carson Speaker 200:09:14for more on the Speaker 100:09:15Q3 financial analysis. So Carson, you are up. Speaker 300:09:19All right. Well, thank you, Murray, and welcome, everyone. As Murray mentioned, I will focus on the highlights from the Q3, the details of which are fully explained in our Q3 interim report. I thought this quarter it would only be fitting for me to first talk about the balance sheet since we closed a $400,000,000 10 year private placement debt financing in the quarter. This new financing enabled us to end the quarter with $344,400,000 of cash on hand. Speaker 300:09:48Earlier this week, we used $217,200,000 of this cash to repay some previous notes that came to maturity. After this week's repayment, we now have approximately $130,000,000 of cash on hand. We also have access to $525,000,000 of undrawn bank credit facilities, providing us with ample liquidity. In terms of our debt covenants, we have lots of room available. We effectively have one main debt covenant, which is total net debt to operating cash flow. Speaker 300:10:17Once adjusted for this week's debt repayment, our total net debt to operating cash flow covenant is 2.26:one and 2.54:one under our new 2024 note agreement and on our previous private placement note agreement, respectively. The total net debt to operating cash flow covenant is calculated differently under the new 2024 note agreement compared to the previous private placement debt agreement. The main difference being what is considered debt for covenant purposes. Under the new 2024 note agreement, lease liabilities with respect to real property is excluded from debt, while our $125,000,000 of convertible debentures is now included as debt for covenant purposes. These two items differ from the previous private placement debt agreement. Speaker 300:11:04Our $130,000,000 of cash is not reflected in this covenant. So our covenants would actually be lowered even further once our cash is deployed to generate new operating cash flows. Excluding lease liabilities with respect to real property under the new 2024 note agreement provides us with greater flexibility in positioning our existing business units into strategic facilities and provides greater optionality when it comes to making long term investment decisions with respect to acquisitions. Our new blended interest rate, excluding the notes that were repaid this week, is approximately 5.3% per annum. So in summary, our balance sheet is once again well structured and positions us to make long term strategic investment decisions with over a full turn of room available on our debt covenants and cash available on the balance sheet to grow. Speaker 300:11:49Now to our operating results. Sheet to grow. Now to our operating results. The 3rd quarter highlights that really stick out are that we generated $532,000,000 of consolidated revenue, a record compared to any previous quarter. We generated a very respectable $95,300,000 of OIBDA, which is the 3rd highest OIBDA compared to any previous quarter. Speaker 300:12:12We generated net cash from operating activities of $66,200,000 and our return on equity was 15.3 percent in the quarter. Earnings per share also remained consistent year over year at $0.44 per common share. So a very solid quarter from a financial perspective considering current market conditions. I'll go through the results by segment shortly, but the overall theme is as follows. Top line revenues grew due to the acquisition of Container World. Speaker 300:12:39We entered a new vertical of the economy at a reasonable valuation, giving our organization a new platform and opportunity for future growth. We also improved operating margins that resulted from the combination of our tuck in acquisition strategy, from the niche markets we serve and from the diversity of our 40 business units. In the Q3, revenue per working day improved by approximately $500,000 per working day to $8,600,000 with revenue peaking at $8,900,000 per working day in the month of September. From a seasonality perspective, the revenue trend continues with Q3 typically being the strongest quarter of the year. We generated OIBDA of $95,300,000 an increase of $6,700,000 compared to the prior year and this is the 2nd highest Q3 ever recorded, 2nd only to Q3 of 2022. Speaker 300:13:34Acquisitions added $6,400,000 of OIBDA. We also experienced improved results in the LTL segment and in the L and W segment excluding acquisitions. These increases were somewhat offset by lower OIBDA in the S and I and U. S. 3PL segments and from higher corporate costs. Speaker 300:13:52Operating margin improved to 17.9% as compared to 17.6% last year despite more competitive pricing conditions in certain markets and a reduction in higher margin specialized business. Direct operating expenses as a percentage of consolidated revenue decreased by 1.3% as our business units did a great job adapting to current market conditions and controlling costs. S and A expenses as a percentage of consolidated revenue increased resulting from higher costs experienced at Container World and from a negative variance in foreign exchange. Now let's take a look at how we did by segment. First, our largest segment. Speaker 300:14:30Revenues in the LTL segment were $188,700,000 down 5 $500,000 from last year due to a softening in the overall freight demand from demarketing underperforming business and from a $1,600,000 decrease in fuel surcharge. OIBDA was 35 point $7,000,000 up $1,200,000 from last year despite lower segment revenue. Operating margin improved by 1.1% to 18.9% due to the tuck in of B and R's LTL operations into our existing network, driving greater lane density as well as using our existing technology platform. Our 2nd largest segment is our L and W segment. Revenues in the L and W segment were $168,900,000 so up $31,800,000 Acquisitions added 33 $600,000 of incremental revenue, which was somewhat offset by lower revenue generated from our existing business units due to the lack of capital investment in the private sector from competitive pricing in certain markets and from shippers electing to keep a tight rein on inventory levels. Speaker 300:15:34OIBDA was $35,200,000 up $8,400,000 from the prior year with Container World adding $6,400,000 of incremental OIBDA, while our other business units added 2,000,000 dollars of OIBDA due to more efficient operations. Operating margins improved by 1.3% to 20.8%, primarily due to lower direct operating expenses. Moving to our S and I segment, revenues were up $6,400,000 to $131,800,000 due to increased activity levels in the Western Canadian Sedimentary Basin. The diversity of our 17 business units within this segment led to higher revenues. Our production service business units benefited from certain projects related to facility maintenance and plant turnaround work. Speaker 300:16:19Our drilling related services business units also saw an increase in demand for their services. Somewhat offsetting these increases was a reduction in revenue at Premay Pipeline due to the completion of the Trans Mountain and Coastal Gas Projects. Canadian dewatering experienced lower demand for dewatering services and smooth contractors also experienced lower demand for civil construction services in Northern Manitoba. OIBDA was $28,500,000 down $1,200,000 from last year due to lower OIBDA being recognized at pre made pipeline and Canadian dewatering. Lower OIBDA was also experienced at our drilling related service business units as Okay Drilling experienced certain one time wind up costs. Speaker 300:17:03Operating margins decreased by 2.1% to a respectable 21.6% due to the reduction of higher margin business and from higher S and A costs. In our non asset based U. S. 3PL segment, revenues were $45,700,000 a decrease of $3,100,000 from last year due to the ongoing issue of operating in a highly competitive market. OIBDA declined to $300,000 and operating margin on a net revenue basis was 7.5% compared to 25% in 2023. Speaker 300:17:34The decline in operating margin was primarily due to S and A expenses higher S and A expenses as a percentage of segment revenue. So in summary, a very solid quarter from both an operating and financial perspective as well as exiting the quarter with a balance sheet that puts us in a very enviable position going forward with cash on hand, lots of room available on our debt covenants, undrawn bank credit facilities and long term notes in place at decent rates that mature in 10 years. So with that Murray, I will pass the conference back to you. Speaker 100:18:09Thanks, Karras. Now as I look to the as to what's going to happen in the outlook over the next let's think about the near term. Personally, I don't see much that's going to change in the near term. Demand has definitely stabilized over the last quarter or so in most verticals. But as I noted in my earlier commentary, pricing is currently kind of the Achilles heel of the majority of the industry right now. Speaker 100:18:40It's very price competitive in a lot of verticals. So this is what I now describe as maybe a structural issue for the industry. And if my analysis is correct, then it's going to take some time for the industry to come to a senses and price to generate a return rather than price to gain market share. This is a strategy that simply is not sustainable. So eventually we know that it will revert to the mean, but we've got to get some common sense that returns to the market by many of the industry players. Speaker 100:19:15So with this as the backdrop, let me just reiterate that our strategy, our focus has not changed. We continue to keep a tight rein on costs. We'll work with our customers to help streamline their supply chain needs, but we need to be profitable. And of course, we will pursue acquisitions that meet our base criteria. And we also know that the independent business model works for us. Speaker 100:19:39And to this end, I will tell you, we just completed our biannual Insight Conference. We brought together 160 of our business leaders to collaborate, to learn and about what's going on with the latest trends like AI and to hear from industry leaders like John Hinckley from FedEx. Now his presentation about how one of the biggest and best logistics companies in the world is navigating these choppy waters was fantastic. We all learned from 1 of the best. So in terms of the 4 segments, let me share a few of the expectations. Speaker 100:20:17The Lesson Truckload segment, so we still see the most stability. And because the smaller carriers in our network are struggling in this market, we think we can still continue to advance our tuck in acquisition model, which can help drive future margin improvement. And that's through route, terminal and equipment rationalization. And to that end, we've already completed or in the process of completing 3 smaller tuck in acquisitions September 1. Those will help our existing business units that we roll them into to help them. Speaker 100:20:55So that will be continued to be a strategy for us going forward. In the logistics and warehouse equipment, we still believe that our core business units will perform well and that's back stopped by the likes of Damstra Group and Gleeson Group, companies that have unique and sustainable business models. So we do not, however, believe that there are any internal real internal growth opportunities for the foreseeable future growth in the segment is going to come from our acquisition of Container World and that will be for at least another few quarters. And we are of course on the lookout for other quality companies that will fit in our organization. So logistics and warehousing probably going to be up because of the acquisition of Container World. Speaker 100:21:413PL, holistic is currently our only business unit in the U. S. And 3PL International Logistics segment. And it's going to continue. They're going to continue to struggle until we can get some scale and size. Speaker 100:21:55Most likely we'll have to come to an acquisition of a complementary or a competitor business. Now we have a solid senior team there. We've got a fantastic technology platform. We just need more revenue stream and they'll do just well. But our focus right now has been folks stay in your lane and keep working on that technology platform because that is going to be the future of Holistic. Speaker 100:22:26In the Specialized Industrial Service segment, there's going to be some changes. Some of it is market driven. It might be a little bit softer now that commodity prices have softened a little bit. But we're also doing some realigning within some of our business units, particularly those business units are very, very capital intensive where we don't think that the returns on future are going to be good enough to justify future CapEx. So we're going to realign and shutter a couple of those business units like the Okay and drilling groups. Speaker 100:23:01We just they're so capital intensive and I just don't think the returns are there to justify new capital and we got to give them new capital to be best in class. So we've kind of decided. They're small business units. We're just not going to put more capital into those businesses. And as I say in our world, if we're not prepared to invest, then we'll divest. Speaker 100:23:21So the core of the segment though, we still expect to meet our investment thresholds and we think that will be okay. In summary, just before we go to Q and A, I'm going to say a little bit like what Carson said, we think we're in an enviable position here, especially within the context of majority of our competitors and our peers. First, we have a very large and diversified portfolio of well managed business units. They've been acquired over 30 some years and many are operating in verticals where the fundamentals remain pretty solid. Secondly, and this is where we have a tremendous advantage, we have a well structured balance sheet. Speaker 100:24:00We have no bank debt. All the long term debt is interest only What I believe is pretty attractive rates. And Carson, we're still sitting on some cash to be able to deploy on some new opportunities. So with that, I know there's a number of you wanting to ask some questions. So let's move right into the Q and A session. Speaker 100:24:19Operator, I'll turn it over to you and let's go to Q Speaker 200:24:21and A. Speaker 100:24:21Thank you. Operator00:24:23We will now begin the question and answer session. The first question comes from David Ocampo with Cormark Securities. Please go ahead. Speaker 400:24:56Thanks. Good morning, Murray and Carson. Speaker 100:24:59Good morning, David. Speaker 400:25:01I just wanted to first kick off with a question on the S and I segment. You just touched on it briefly there about the wind down of TREO and Okay Drilling. I was just wondering what the impact is going to be on revenue and EBITDA and then perhaps even the cost to wind down these businesses as it looks like you guys did incur some costs this quarter for related to that? Speaker 100:25:22Not much on the revenue side. These are really small businesses today. I mean there was a time Trio Drilling was just one of the really stars of our organization when there was a lot of delineation of oil sands work and that they just did a fantastic job for us, but that's changed. There's no growth and there's no really drilling for significant drilling for delineation on that. So we're not going to put more capital into it. Speaker 100:25:53We really haven't had much revenue from Truro for 3 years, 4 years now. 3 years. Yes. So that's not going to impact us. Okay, it's very small. Speaker 100:26:02What are they above $4,000,000 $5,000,000 a year maybe of revenue. And the impact on EBITDA will be virtually nil because they really weren't that profitable. And that's why we're saying, okay, we kept them around when we had really good people and those kind of things. But once you need new capital, I'm saying, well, if you don't make money with what the capital we got you now, I don't know how you're going to make money with more expensive capital. So we just once our leader there decided he wanted to retire, we also retired along with him in that business. Speaker 100:26:38But it won't impact significantly the either top line or bottom line. We have some restructuring costs that came in, in the quarter in the Carson of about $500,000 or something like that that you've got to settle up and those kind of things. But once we sell the assets, we'll recover that. Speaker 400:26:59Yes. That's helpful. And then, Kars, just quickly on the CapEx. It was a little bit like this quarter. It does seem like you're running behind the $80,000,000 budget. Speaker 400:27:08Just curious if there's going to be a pretty big catch up here in Q4 or do you have a new number where you guys expect to land for the year? Speaker 100:27:15Well, at the start of the year, I think our objective was $80,000,000 It was. $70,000,000 was going to be for replacement and then $10,000,000 was going to be for sustainability. But early on, we put everybody on a diet because we said, look, there's 2 fundamental reasons. One is you're not going to need new capital to grow. I can tell you that because there's no growth. Speaker 100:27:42And number 2 is just be patient because the equipment valuations that they're coming down for new equipment. So yes, we just waited for prices to come down a little bit and we were correct. So over the next bit we'll start back into the replacement cycle primarily because equipment values are coming down. So we can get more bang for the buck. So why there was no sense buying in the first half of the year because we thought that prices were coming down and sure enough prices are coming down. Speaker 500:28:18Yes. That makes a lot of sense. Speaker 300:28:20I wouldn't expect us to hit that target David by the end of the year. Speaker 400:28:24Okay. Sounds good. And then just last one here just on the growth outlook it does seem like it's mostly going to come from M and A and you guys have typically have always maintained discipline there and keep your multiples quite consistent. Just curious what seller expectations are now? Have they come back down to earth? Speaker 400:28:42And are you starting to see more files across your desk, given all the pressure that we're seeing with some of the smaller trucking operators out there in the marketplace? Speaker 100:28:52Well, first of all, David, you're right. We've been disciplined and you can probably all of our shareholders and potential investors can probably assume that we will continue to be disciplined. I don't think we're going to lose that. In terms of sellers' expectations, I think it depends on what denominator you're using. You've got to remember most of the industry was really profitable in 2022, 2023 and we didn't bite. Speaker 100:29:28I said and the reason was, I said, this doesn't make sense. It's too good. I've been in the business too long to know that good times don't last for too long. So we didn't bite. Now you've got the rebound of those really good times, which is really difficult times. Speaker 100:29:46So the sellers' expectations have come down from the highs, obviously, but they're not making any damn money. So So I say to my shareholders, well, do you want us to go buy companies that don't make any money? Well, that doesn't seem to make much sense. So we got to find ones that are tuck ins, where we can get rid of cost. That makes I think that makes imminent sense, David. Speaker 100:30:13And then secondly, we'll take a look at opportunities where we think the future is long and bright and then we can work through and help streamline those businesses and get their cost structures in line, I. E. Container world. We know that the beverage and the alcohol vertical is going to be around for a long time. So all we have to do is work with that company to implement technology, streamline business processes and become more profitable. Speaker 100:30:44And so we'll look at those opportunities for sure. Speaker 600:30:47And Murray, the phone and the other final point was, are there lots of opportunities? I mean, David, it's daily. The opportunity is coming from all angles and sizes and shapes. But at the end of the day, as Murray said, we will pick the ones that work for us. Speaker 100:31:03I could tell you, David, I'd rather be sitting in our chair with cash and the opportunity to do deals than having to sell my business right now. Speaker 400:31:15That's all the questions I had. Yes. Speaker 300:31:17Thanks a lot guys for the commentary. Speaker 400:31:19I always appreciate it. Thanks. Operator00:31:23The next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead. Speaker 200:31:31Yes, thanks very much. Hi, everyone. Maybe a few rapid fire questions here. I don't know how deep you want to dive, but really interested to see if Murray you're seeing any signs of life here in the overall macro. I know you said it was a fairly neutral environment in your statement. Speaker 200:31:53Could you touch on what you're seeing in any inflection in trucking rates? Any conversations with customers that might signal changes either direction in demand, any of those factors getting you more or less optimistic with regards to kind of the outlook for the next 3 to 6 months? Speaker 100:32:13Yes. Boy, that's one, Walter, that all of us struggle with. We think there's some structural things that have happened in the market. So you got to be careful in most verticals. Demand is Walter, I think demand is okay. Speaker 100:32:34Like it's not you can see from our revenue number like it's not a disaster in most the rails and everybody else. The demand is okay to flat. It's solid. I think it's the word that we use and many other people use. It's solid. Speaker 100:32:50I'd call it okay. There's no growth. We don't see that. Will low interest rates and other factors lead to more growth? Well, you've got a whole group of economists that will pick that. Speaker 100:33:06You don't need to hear from me on that. But in terms of pricing, I kind of be honest with you, I kind of think we're in a really complicated market in terms of pricing. And my primary thesis behind that is I just don't think the average consumer can tolerate high prices today. They're strapped. And so I think there's been compression of that and I think that could stick around for a while, Walter. Speaker 100:33:37And so we're being very, very cautious on that side. I don't see a big rebound in the rate side. Now if you said to me we're going to have a big reduction in supply, that the competition folds, there's huge consolidation, blah, blah, blah, then I can say, yes, that's Speaker 400:34:00where Speaker 100:34:00it is. Otherwise, you've got to rely on the thesis that they come to their senses that you've got to price to make a profit, not to gain market share. Speaker 200:34:07But I think Murray that's why I would count on that Speaker 100:34:09for in the short term. Speaker 200:34:11Yes. And that's my second question actually. It doesn't really seem that that's happening, right? You look at Pride, they go bankrupt, but there's still business as usual operating under restructuring. And it just seems that there's more leniency or opportunity for those kind of those type of situations prevail and remain and continue to kind of keep this excess trucking supply issue out there for longer? Speaker 200:34:45And does that then if Speaker 100:34:47you said Speaker 200:34:48in your prepared remarks as well, you're going to kind of be patient and wait for those to happen. You just mentioned maybe there's going to be failures and consolidation. But it doesn't seem like that's happening. And if that's not happening, does that adjust your strategy of waiting? Did you start to get a little bit more aggressive in terms of what you do if failures just aren't happening? Speaker 100:35:13We will only invest in verticals where we don't compete with the likes of pride. I will not compete. There's no sense and you just explained why there's no common sense and I don't see them going away anytime soon. So we try and stay away from that type of market, Walter. We try and stay away from that type of market. Speaker 100:35:37We try and stay away from having to compete or do business with Amazon, for example. So that's when you hear me talk about verticals that have some competitive edge, that's what we search for here as this senior team. We're out there. We know which ones we want to go after and which ones we think have don't have to butt up against that competition every day. So LTL is our primary one and then we look at verticals like we did with containerboard where we go, you know what, we've got a really strong position. Speaker 100:36:12We just got to improve their margins and that's what this team is. We know what we're doing. We know what to look for. We know what to measure and then we'll improve the performance. So we're going to be Walter, I'm going to continue to be picky because you know why it's served us well for 30 years as a public company. Speaker 200:36:34Yes. That actually dovetails exactly into my next question is the type of acquisition. Are larger deals in this space you're going after, do they exist or is it just really just tuck ins? Speaker 600:36:48Yes. Of course Speaker 100:36:48they do. Yes. There's larger deals that exist, Walter, Speaker 200:36:52absolutely. In Canada, I mean. Speaker 100:36:54Yes, in Canada. Okay. And of course there's larger deals that would be strategic. And then but remember what I said, no market is going to stay down forever. No market stays up forever, no market stays down forever. Speaker 100:37:10Eventually you're going to have a rationalization that happens in the industry. The one thing I'm not looking for common sense from our industry, but I am saying to you one of these days they may not be able to get insurance, because if you don't have a balance sheet the insurance companies aren't going to take that risk. If you can't get insurance, you're not in the business. That may be the rationalizer of this business. And if that happens, we will have a very quick recovery in terms of rates because then all of a sudden customers are saying, well, I need you to haul because there's demand. Speaker 100:37:52It's just currently there's just a little bit too much undisciplined pricing. Speaker 200:37:57Yes, Yes. Last question now, as we go into 2025, can you give us some indication either preliminary or indication as to what if you're going to be coming out with your business plan as you have in the past? When you look out to 25%, even just broad revenue and EBITDA metrics consensus, are you comfortable with it? Anything, I think consensus around the 3.50% level for EBITDA for next year? Speaker 100:38:27Yes. Harry, what you're seeing, I think we've got early December set as our the time that we'll we're in budget season right now with our business units. And our process here is we give guidelines to our business units, but we tell them it's your budget. But you better so go through it and then you got to present it to us, us being the senior team. And we then go through each budget and question their rationale and all those kind of things, but it's their budgets. Speaker 100:38:55And then we will aggregate them together early December and then we'll come out with what we think will happen next year. But from a macro side, let's start with that. Is there going to be a lot of growth in the Canadian economy next year? But let's be honest, I mean, we're running a $50,000,000,000 deficit in Canada right now to get no growth. If we weren't running a $50,000,000,000 deficit, we might have negative growth. Speaker 100:39:20Can we go to $100,000,000,000 deficit next year? I doubt it to get so I think it's going to be okay, but I don't see a huge rebound in the economy unless you said there's a lot of capital coming into Canada, we've got a grand new scheme that says, you know what, invest in Canada. I'm not feeling that right now. I think we've scared away capital out of Canada and we're really just a consumption economy right now. And I think that consumption economy will remain above where it is right now, maybe up a little bit, maybe down a little bit. Speaker 100:39:59But my early indication suggest is more of the same next year. That's why we've got to stay focused on cost, process improvement, remain maintain our discipline. But we'll be able to still outperform the overall market because of acquisitions. Why? Because we got the damn balance sheet. Speaker 100:40:18And we're one of the elite few that have got that balance sheet to execute and it's just up to the senior team here to pick the ones that are going to add value to shareholders. Speaker 200:40:29Okay. And just as a I don't know, Carson, I think the last official guide for this year was $325,000,000 for 2024. It looks like you're going to come in nicely ahead of that if we take the kind of you're running at about $7,000,000 above Q3 this year versus last year. And if we assume kind of the same run rate of seasonal outperformance there then you're kind of coming into the 3.30, 3.35 mark. Is that a Speaker 100:41:02Walter that's We came out with $325,000,000 $24,000,000 and we're not going to be far off that. We might be a little bit above it. We think that if you look at Q4 of last year, I think we're at $80,000,000 Speaker 300:41:18$80,000,000 Yes. Speaker 100:41:19Yes. Right, Carcewood. Speaker 300:41:20Yes. We did about $500,000,000 in revenue in Q4 of last year and call it $80,000,000 of EBITDA. And if you kind of look at the trend line right now, we've got container world that we've got now that we didn't have last year. Speaker 100:41:36So Let's just call it a little bit better than last year, Walter. Speaker 700:41:40Okay. Speaker 200:41:41That's great. And just Speaker 100:41:42like we were in the Q3, we were a little bit better than last year. And that's what we think right now is we'll be a little bit better than last year. And then of course the we're feeling much more comfortable that we'll have some be able to take advantage of some acquisition opportunities next year and that will add us another growth curve in 2025. Speaker 200:42:07Okay. Appreciate the time. Thanks guys. Operator00:42:09Thanks Walter. Thanks Walter. The next question comes from Cameron Doerksen with National Bank Financial. Please go ahead. Speaker 500:42:18Yes, thanks. Good morning. Just a question on the L and W segment. Just looking at the margins, like a pretty solid number in the quarter. And my original thought was that maybe you've done some good work at the container world business to cut some costs there. Speaker 500:42:33But just based on your comments, it doesn't sound like that was necessarily a contributor to the margin in this quarter. So I'm just wondering what did drive that nice kind of margin improvement in L and W year over year and sequentially? Speaker 300:42:49Well, I'd say it's probably a combination, Cameron. Container World does generate good EBITDA. However, the majority of their costs fall below that EBITDA line with respect to leases. Speaker 100:43:09That's an IFRS number. Speaker 300:43:10It's an IFRS kind of a playbill. Speaker 100:43:13So the good news about container world is that number that you see that they're generating that pays all their bills, okay, under IFRS rules. Correct. Our job is to improve that above there so that we make money on our investment. And I can guarantee you, we're going to improve that. But that didn't Continuum World didn't hurt our numbers. Speaker 100:43:39And our we've got some really good solid business units in there like Cleese and Advancement, we highlight them. They continue they're in good market segments. They're in good verticals. Some of our business units didn't perform very well. They if you're involved in competing in the full truckload side like some of them like Ken Holt and Payne and oh my goodness and even Kaneda. Speaker 100:44:04They're in a tough market for a little bit and it won't stay that way forever, but it's that way for right now. But I'd say it's really container world and then our 2 real good ones in Bancher and Cleason that had continued to perform at the highest level of any business units we got. Speaker 500:44:26Okay. That's helpful. And then just a second question for me around capital allocation. Obviously, M and A is a priority, but it sounds like it's probably more focused on tuck in acquisitions. And you've got very significant cash on the balance sheet now and lots of available credit and free cash flow generation is still really positive. Speaker 500:44:47So just wondering how you're thinking about, I guess, the other aspects of capital allocation, specifically on NCIB. I mean, there's been some activity, but just wondering if that's something that you expect to do more of in the absence of a bigger ticket M and A or is that something you're just comfortable kind of at the same pace that we've seen for this year? Speaker 100:45:05Yes. So we talk about that at the Board level, which is really that's a Board discussion. But our thoughts on that are this, is that given the opportunities that we see on the acquisition front, Tamara, we think that if we buy back if we do share buyback, we're allocating capital to that. That's not helping our business grow for the next 10 years. But if we do a good acquisition and use those funds that we got, that sets us up for the next 10 years or plus. Speaker 100:45:39So I think our priority is go out and get some really good acquisitions and grow rather than share buyback. We'll still probably do some, but it won't be the highest priority. I think our highest priority is going to be growth. Speaker 500:45:57Okay. No, that's very clear. That was all for me. Thanks very much. Speaker 100:46:00The tuck in acquisitions will help you drive margin in the short term. If you do a bigger acquisition, you've got to be a little patient just like container oil because it takes a while for the market to come back and for you to get the disciplines in place that we think you have to have to be a free cash generator. Speaker 500:46:20Right. No, absolutely makes sense. Thanks very much. Speaker 200:46:23Thanks, Cam. The Operator00:46:26next question comes from Konark Gupta with Scotiabank. Please go ahead. Speaker 700:46:33Thanks, operator. Good morning, Murray and team. Just one question to begin with. You talked about Q4 to Walter's question. I understand you're running a little bit ahead of your initial expectation for full year EBITDA and container world certainly is a big contributor there. Speaker 700:46:55But how should we think about the other segments like LTL and S and I in Q4? Do we see any signs of growth versus last year in Q4? Speaker 600:47:10I don't. Speaker 100:47:13I think if I look at the LTL segment, there really was no growth. What there was, was some we met our objective, of course, which we said, let's go out and improve the margin this year even though there's no growth. Correct. And we said we could get 1%. That was our target and we've met that. Speaker 100:47:35So once you that's tough work, right? You don't get margin improvement without being doing some pulling some pretty good strings there, particularly when there's no growth in the market and you really can't get pricing leverage from customers today. So we did some good rationalization and I think Carson highlighted that it was we took an underperformer in B and R Echols and we put it in with top performers which is Grimshaw and Highway 9. So we put that from a negative to a positive and that's where we saw the 1% growth. But really not a lot of growth in that segment. Speaker 100:48:11Specialized Industrial, not a lot of growth right now. We had a couple of good wins, a couple of loss. We lost the pipeline business that project is over. Okay. But the rest we're diversified and we had other business units pick it up and those kind of things. Speaker 100:48:28So I don't see a lot of growth, Connor, unless we do acquisition. And we could go give you growth tomorrow. But as I said to you, what the hell good is growth if you don't bring margin with it? What's that doing? So that to us, that's a fool's game, so we don't play that game. Speaker 100:48:50It's never been our DNA. We're not changing. We're going to we like what we're doing on that. I love having as I said to you, just fun. We will do acquisition. Speaker 100:49:01We always have done acquisition since 1993. How many have we done? Speaker 300:49:0880 plus. 80 plus. 80 plus. Speaker 100:49:11I think we'll probably do some more, particularly what we got that nice balance sheet. So let us choose where we think we can drive margin. I'd love to be able to hit you a home run and say, hey, you've got high margin, high revenue, everything. Yes, there's only a few of them out there. Speaker 700:49:32Right. That makes sense. Thanks for that color, Marie. But just following up maybe on M and A then, like I think you guys are obviously a little bit more careful and disciplined, I would say, in terms of chasing acquisitions and pursuing the right fit and all that, which is great. But obviously, you can see clearly the market loves to pay for a lot of growth right here. Speaker 700:49:57So there could be opportunities, which could be small, medium or big for you guys, right? In terms of your appetite, I wanted to ask you, like you have good cash, you have good lines and all that. Are your stocks actually not doing bad, like considering obviously the last many years, it's sitting at a decent level here. What's your strongest currency right now? Is it your debt? Speaker 700:50:18Is it your equity? If it's something big like $500,000,000 plus of deal comes through? Speaker 300:50:26Well, I would say, obviously, right now, Konark, the debt markets have been pretty favorable for us. And that's just a function of the Board deciding that it was prudent to own our Speaker 700:50:42own real Speaker 300:50:42estate. There's value in that, that the debt holders see, but doesn't show up in earnings per share because you don't fair market it in every quarter. So the other thing is that sets us apart is we generate free cash every year and have done so for the last 30 years. So that consistency just leads you to that debt market where they love that consistency, they love that balance sheet. There's a hidden gem there that doesn't show up in the stock price or in your earnings. Speaker 300:51:25So I would say if we had a really good idea that came up that I think we've shown the history is that the debt markets would support it. We would also go to our equity holders and say, hey, you support us in this great idea. Speaker 100:51:43Good ideas will be supported by the market, whatever that market is, the debt markets or the capital markets in general, Connark, you know that. Those would be transformational acquisitions what you're talking about. If you're talking about just growing at our standard what since 1993, 11.7%, while we can do that without any more debt and without any more Speaker 600:52:09we generate enough free cash Speaker 100:52:10on what we got now to continue to grow at 11% for quite some time. We don't need to go to the markets. But if we saw a transformational acquisition, okay, well, that's a different discussion. Speaker 700:52:22Yes. That makes sense. Okay, perfect. Thank you. Thanks for the time. Speaker 100:52:25Thanks, Connor. Operator00:52:28The next question comes from Tim James with TD Cowen. Please go ahead. Speaker 800:52:35Thanks very much. Thanks for the time. I just want to drill down a little further into 2 previous questions actually. 1, just the margin performance, the really good margins in the logistics business. You called out Banstran Gleeson. Speaker 800:52:51What like is there anything specific there that accounts for why they're performing so well? Whether you can is this a pricing dynamic? Is it cost initiatives that have been undertaken? I'm just trying to understand better why it's performing so admirably? Speaker 100:53:12Well, it's the business models they have. So both of them are in verticals or in markets or have assets that are really, really difficult to replicate. So you don't have the same pricing pressures as you're experiencing in most other verticals. So that's number 1. And I guess the other is quite simply they don't have the same competitive pressures. Speaker 100:53:40They're kind of they're unicorns, they're so good. I'd love to have a whole bunch more of them to be honest with you. And we look for them and we wait for them and when we see them we buy them and we invest in them. So they're 2 really solid business units. And we got we don't have better management teams at Clisa and Banter than we do in a month of our other business units. Speaker 100:54:05But they are in really solid verticals at the moment for sure. And we think that their verticals they're in are pretty sustainable. So that's probably the number one reason. Speaker 400:54:20Okay. Speaker 800:54:23The U. S. And International Logistics Business, Marie, in some of your earlier comments, you're talking about that you need to grow the scale there to really take advantage of holistic. Like is this environment and I want to specifically think about the U. S, I'm assuming you kind of have your eyes in the landscape there for opportunities. Speaker 800:54:43Is this environment that we're talking about with this kind of supplier capacity imbalance, this excess, is this not a good market relative to a year ago or a couple of years ago for finding a transaction to build scale in the U. S? Do you feel sort of incrementally positive on the opportunity set that you're seeing down there? Speaker 100:55:06Yes. We've spoken with the senior team there is that we all have our eyes and ears out and we're listening and we're watching to see if something fits quite nicely with them. Until we find that, I've told the senior team there, I said, look, just keep working on your game plan. Make sure the customers are looked after and make sure you keep advancing that Silver Express platform that we've got that's really difficult to replicate. So when we find the right one, we're just going to be able to plop in the revenue sources and that's when we'll get the margin improvement. Speaker 100:55:42So either that or maybe the economy improves down there, I don't you know what? But for the moment right now, what you're seeing across most transportation companies, both sides of the border, very competitive markets, Even though demand is reasonably it's not bad, but if you have a small reduction in demand, but no corresponding reduction in supply, what happens to price, Tim? I don't care what market you're in. Until they find a new equilibrium, price will be low. Not everybody is going to survive this low price environment. Speaker 100:56:25You can take that to the TD Bank or any bank. Speaker 600:56:29And if I may add as well, within that business model, we know it's more of a little bit of a volume issue right now because as Carson has articulated, we have kind of a fixed nature of our SG and A. We do know though right now that a lot of the big 3PLs down in the states have been kind of laying people off and they did that at the last part of last year. So our focus in addition to Silver Express building that out is to we've enhanced our recruiting efforts on independent station agents. So they're independent, they're not employees. That's not going to double the size, but that will certainly help us backfilling it a little bit more volume until that moment in time when there is that acquisition. Speaker 600:57:10So that is a major focus of our team down there and I know they are listening in right now as well and will continue to be. So we will kind of add things along as we go. People like the platform we know Speaker 400:57:21because people are coming on. We have added 4 Speaker 600:57:21or 5 additional station agents or on. We've added 4 or 5 additional station agents or our agent models and we'll continue to do that. Yes. I think, Tim, on that side, by having Holistic Speaker 100:57:30and team as part of our big, big diversified network, we give them the time and the space to kind of work through these very difficult markets and we don't have to over put too much pressure on them. I said just work on the long term fundamentals and everything will take care of itself longer term, but work on the fundamentals, make sure that we're the best one of the best employers in that business, best places for people to want to apply their skills because it's a people business. It's not a freight business, it's a people business. And work on that damn technology because that's going to be your secret sauce of the future. So we've said to stay in your game. Speaker 100:58:16Eventually, if we do the fundamentals right, we think it'll all take care of itself because we got the patients when many others are single source. The pressure is too hot on them. So we're in a good space. We just wait for the right opportunity that fits in with them because I tell you we got the team. They got more horsepower down there than so we can grow. Speaker 100:58:41We just need the right opportunity to fit with that with those horses down there. They know what they're doing. Speaker 800:58:49If I could just squeeze one more in quickly. We talked about on a number of occasions the fact that supply has not yet responded or capacity has not yet responded accordingly to sort of the demand, the pricing environment. And you mentioned sort of there's a bit of a structural issue here. Can you I'm curious, Marie, to your thoughts on why it hasn't responded like specifically? Is it changes in the CCAA process? Speaker 800:59:18Is it something to do with creditors in Canada or the holders of capital are prepared to accept lower returns? Is there anything you can point to as to why there hasn't been a supply side response yet? Speaker 100:59:34Yes, they're damn tough. What are they going to do? They fold their tent or they just work harder? My history tells me when times got tough and I saw this even within our business when we were a small company. When times got tough, we worked harder and we worked leaner and we were tough damn competitors to big companies. Speaker 101:00:01And there's just a lot of them out there and they're just damn tough right now. But eventually, you can only be tough for so long. Eventually, you have to be profitable. And I explained what I think the major issue will be. You're going to have to show a profit one day or the insurance companies are not going to ensure you take the risk on your and then if you can't get insurance, you can't hold freight. Speaker 101:00:29So I think it resolves itself, but not quickly. It could take a little bit of time, but I think the insurance companies may be the ones that bring discipline to the market. Customers are not going to do it. Customers are going to take advantage of low rate whenever they can. That's just the way the game is played. Speaker 101:00:50And right now they're doing a hell of a good job of it. But the tide will turn and come back in and we will be positioned to take advantage of that. Others may not last through it. That's the you've got to stand tough times to be successful over the long time. How long we've been in business, Rich? Speaker 601:01:14At 75%. 75%. Every economic cycle, everyone through. So, Tim, I think in addition to that, Murray talked about the insurance part of this. But those whomever and you talked, you said CCAA, whomever would have lent credit to groups that have kind of bumped that system, if you will, if you want to call it that. Speaker 601:01:32It will be interesting going forward if they'll be able to get fuel, you got to pay that bill every 7 days. Anybody who sends them sold them equipment on credit, it will be interesting to be able to do that. So you know what, it could take time, but maybe they got salvage, but can they afford to operate going forward? Will they be able to get fuel, tires? It's Speaker 101:01:52just going to take time, Tim, but it will work itself out. So, I just want I can't tell you which quarter will be the inflection point. I can't tell you that yet. I haven't seen it yet, but I know we're 1 or 2 quarters closer to when it's going to happen. Speaker 801:02:10So I know you guys can't reflect on 75 years of history, but in your experience, is this supply response taking longer than what you've witnessed in other comparable times in the cycle or is this just normal do you think? Speaker 101:02:27Well, look, the cycle hasn't played out yet. So give it time. Speaker 801:02:31Well, I mean the upturn, the timing of how long Speaker 701:02:34it takes to pass me to respond. I think Speaker 101:02:35one more question we're going Speaker 701:02:36to move on to, but Speaker 101:02:37I think it's I don't think we're in the 9th inning, Tim. I'll leave it at that. Speaker 801:02:43Okay. Super. Thanks for the time. Speaker 101:02:46Thank you very much. Operator01:02:53The next question comes from Kevin Chiang with CIBC. Please go ahead. Speaker 901:03:00Hey, good morning, Kevin. Speaker 701:03:01Good morning, everyone. Speaker 901:03:02Hey, good morning, Murray and team. Thanks for squeezing me in here. Maybe just two quick ones. One, you talked about demand. Demand is okay, obviously excess supply, a lot of comments on this call about that. Speaker 901:03:15Just wondering, when you look at your LTL volumes, do you have a sense of maybe what percentage or what amount of revenue might have temporarily shifted to the full truckload market just because rates there are unsustainably low and maybe those are bonds that come back as the freight cycle starts to hopefully inflect at some point in 2025? Speaker 101:03:39I've seen some of that commentary, Kipp, and I haven't been able to reconcile that with our network. We most of our LTL network is in the smaller communities and whatever. So I don't we're not going to lose it to the full truckload in our LTL space. So I don't think there's been Speaker 301:04:00a lot of that. Speaker 101:04:00Yes, you know what, has there been have we lost some out of California and some long haul? Yes, we've lost a little bit. But honestly, I don't think that's the issue from our perspective. We just think that you've got to be really, really careful of the impact that Amazon has on LTL. They're the biggest they're one of the biggest LTL guys now, Speaker 601:04:29right? Because of e commerce. Speaker 901:04:31Yes. That makes Speaker 101:04:33a lot of sense. So I think there's I'm more I guarantee you, I am way more worried about Amazon than I am about the full truckload guy getting a little bit of our freight. I guarantee. That's a fair comment. Speaker 601:04:49Okay. If I can add, I think if you think about the interlining component of LTL where the trailer is already full and you've got a little bit from here to the other place, we're hearing that happening maybe more in some of the U. S. Locations where you can get almost a tractor service. But getting to the final mile, how we what our core focus is on LTL that to Murray's point, we don't see that. Speaker 601:05:10But you can you maybe see some of that breaching in and what we're hearing down in the States, not so much here. But once the trailer is full, it's just got Speaker 101:05:17to go from Toronto to Speaker 601:05:17Mount Edmonton, anybody can haul that across the country. We don't see that as evident right now. Speaker 901:05:26Right. That makes sense. Speaker 101:05:28I'll tell you what I see in the U. S. And on the LTL side because I know you follow them as well. There's a lot of tough competitors down there and every one of them I see adding capacity, but I don't see the economy growing. So where in Canada, there's really only a few of us. Speaker 101:05:49The market's really spread out visavis the U. S. Market, right? So it's still a little different space. And I mean, you see what Transforce does their Canadian LTL is best in class. Speaker 101:06:05They're fantastic. Speaker 901:06:06Yes. That's a good point. That's a good point. Speaker 101:06:11You know what? TFI is a disciplined pricer. I mean they don't they're we don't mind competing with TFI or Manotum. These are business people. They like to make money because they have to invest it. Speaker 101:06:27And so we can continue to provide the service to customers, yes. Speaker 901:06:33Alain would agree with you. He likes to make money. Speaker 101:06:35I think he would, yes. Speaker 901:06:39Maybe just sticking with LTL, last question here. When you buy these tuck ins, I'm assuming that you're buying a company where maybe they've been less rational on pricing, correct me if I'm wrong. Just wondering as you look to reprice their book as you integrate those assets into your own organization, has the success rate been pretty good or have you had to kind of hold the price at a lower level than you would have otherwise liked to just because of the freight economy and maybe you'll look to reprice when things are better. Just wondering how that repricing cycle works when you acquire some of these companies? Speaker 301:07:15Well, I guess, Kevin, I would say the first thing that we look at when we look at layering in LTL is lane density. That's 1st and foremost. That's what really drives your margin. Also on facilities, facility costs are as you know quite high. And when you can consolidate facilities that's another win. Speaker 301:07:36So those are really kind of the 2 arching aspects when we look at layering in LTL acquisitions. Pricing does come into effect, that's for sure. As you saw in our MD and A, we demarketed some business in that segment. It didn't make sense for us to continue servicing those customers at those rates. So I'd say that that's where some pricing discipline comes in as well too. Speaker 101:08:03I think when you do an acquisition, Kev, of these smaller companies and these tuck ins, clearly you have synergy on cost because you're adding yield and network and utilizing the assets. So we don't need every truck following each truck. That's how we drive margin. But I think the other thing that comes into is more pricing discipline. Smaller carriers sometimes they're very tough. Speaker 101:08:29So once you take that undisciplined price throughout of the market, if we don't raise prices, we have more discipline on pricing. Speaker 901:08:40That makes sense. Speaker 101:08:41That's what really happens. It's just more discipline, yes. Hey, we can talk about. Nobody I don't want anybody to think you go and you do an acquisition and then you can control pricing. No, the market controls pricing, not us. Speaker 101:08:57But sometimes some you have done disciplined pricing, like for example our B and R group, they were just undisciplined pricers. And as I said to you, a customer will always fight on low price, Kevin, always. That's never changed in my career. Speaker 901:09:16That's a fair point. Hey, look, it's you're definitely executing well in a tough market here, so congratulations on that. That's it for me. Thank you very much. Speaker 101:09:23We appreciate it. Speaker 301:09:24Thanks, guys. Operator01:09:27This concludes the question and answer session. I would like to turn the conference back over to Mr. Mullen for any closing remarks. Speaker 101:09:37Not many more holds. Thanks for joining us. We've been a little longer than our 1 hour allotment. So we got a lot of horsepower online. I'm going to let you go. Speaker 101:09:46Thank you very much. And next communication will be after we do our Q4, which will be in early February. Until then, we got a lot of hard work to do. Thank you very much. Operator01:10:00This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallMullen Group Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsInterim report Mullen Group Earnings HeadlinesCormark Cuts Mullen Group (TSE:MTL) Price Target to C$17.00April 27 at 1:23 AM | americanbankingnews.comMullen Group (TSE:MTL) Upgraded at Raymond JamesApril 27 at 1:23 AM | americanbankingnews.comTrump Treasure April 19Thanks to President Trump… A $900 investment across5 specific cryptos… Could gain 12,000% so quickly that, just 12 months later…April 27, 2025 | Paradigm Press (Ad)Mullen Group (TSE:MTL) Price Target Cut to C$16.50 by Analysts at ScotiabankApril 27 at 1:23 AM | americanbankingnews.comCormark Issues Positive Estimate for Mullen Group EarningsApril 26 at 2:51 AM | americanbankingnews.comAcumen Capital Has Lowered Expectations for Mullen Group (TSE:MTL) Stock PriceApril 26 at 1:13 AM | americanbankingnews.comSee More Mullen Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Mullen Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Mullen Group and other key companies, straight to your email. Email Address About Mullen GroupMullen Group (TSE:MTL) is one of North America's largest logistics providers with a network of independently operated businesses provide a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized, third-party logistics & specialized hauling transportation. 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There are 10 speakers on the call. Operator00:00:00Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited Third Quarter 2024 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. Operator00:00:33I would now like to turn the conference over to Murray K. Mullen, Chair, Senior Executive Officer and President. Please go ahead. Speaker 100:00:44Thank you, and welcome to Mullen Group's quarterly conference call. So once again, we'll provide shareholders and interested investors with an overview of the Q3 financial results. And in addition, we will discuss the main drivers impacting these results, our expectations for the year, and we'll close with a Q and A session. But before I commence today's review, I'll remind everyone that our presentation contains forward looking statements, and these are based upon current expectations and are subject to a number of risks and uncertainties, And as such, actual results may differ materially. And further information identifying these risks, uncertainties and assumptions can be found in the disclosure document which are filed on SEDAR Plus and at www.mullen group.com. Speaker 100:01:31So with me this morning, once again, I have the full senior executive team. I have Richard Maloney, Senior Operating Officer Joanna Scott, Senior Corporate Officer and Carson Urlacher, who is the Senior Financial Officer. So this morning, what happened in Q3 'twenty four in terms of our financial operating performance? Well, the 3 main topics that we'll be discussing this morning and then we'll turn the call over to the operator and we'll go straight to the Q and A session. I'll begin with the call with talking about the macro environment that we had to migrate through last quarter, along with discussing what has changed year over year. Speaker 100:02:08Then I'll turn the call over to Carson Urlacher, who will provide an overview of the Q3 financial results. And I will remind you for those interested in detail, we've posted the MD and A, a detailed 60 page report covering all aspects of the results and balance sheet, both on our website, which is www.mullen group.com and on SEDAR Plus. So then after that, we'll close with a discussion on the macro environment as I see it and how our results might be infected for the rest of the year. Then we'll go to the Q and A session. So let's talk about the macro environment. Speaker 100:02:48So last quarter you'll recall that I stated that really in our markets that kind of everything had changed acknowledging the fact that the market is different than last year, in fact the last 2 years. So under this scenario, it would be reasonable to expect that results would be different than in prior years. And this is precisely the case with the results that you're seeing from most carriers and from ourselves, except for one reason, and that's acquisitions. So I've commented that I think acquisitions were the only way you could grow in a no growth economy. So we were right on the first and perhaps we were one of the very few public companies to acknowledge that acquisitions would be the only way to grow given the market fundamentals. Speaker 100:03:33And we didn't see a whole bunch of reason to change that from the internal market dynamics that were going on. So in early 'twenty four, after we were comfortable with the prospects of strengthening the balance sheet with a new and expanded bond issuance and we expected a meaningful acquisition, we executed a meaningful acquisition, finding what we believe is a real market leader in container world. And on that container world has a significant presence in the beverage and alcoholic vertical and province of British Columbia. They generate around $120,000,000 of annual revenues. They operate as a freight forwarder. Speaker 100:04:12They operate a customs bonded warehouse and they are a delivery company. So these are three attributes that we consider crucial to being successful in this market. Now we also know we got lots to do with this business to make it a profitable venture for our shareholders And we'll turn our focus and attention to that in 2025 and beyond. It will take a while to change the culture to one of cost driven and be very focused on those kind of things. But for right now, thus far, we've been focused on making sure that there was a smooth transition from a customer perspective. Speaker 100:04:51And next year, we're going to focus on the cost side, as I talked about. And that's really kind of come from a combination of investing in new operating assets, technology and some business process improvements. But I got to tell you, I think there's more to our results in Q3 than acquisitions. We could not have achieved record revenues and near record profitability if our existing 39 business units did not manage the challenging market conditions as well as they did. So a big shout out here to all of our business units, your hard work disciplined cost management initiatives are a big reason MTL had a very good quarter. Speaker 100:05:30Now we also know that solid senior leadership must also be accompanied by investments in the right verticals in order to achieve solid results today. I've commented many times, there's lots of really good operators in our business, but if you're in the wrong vertical, you're trapped right today. So I continue to state the case of the strategy because not all verticals are created equally. Now you may recall that over the years we built a large diversified organization by focusing on acquiring quality companies and that operate in verticals of the economy that we believe are sustainable and where we can achieve acceptable rates of return. This means we must be disciplined and not chase incremental revenue streams simply for top line growth. Speaker 100:06:13Our strategy to invest where we generate acceptable returns on capital for our shareholders. Now for example, let's consider the LTL segment. Not only is this business in one of the most stable parts of the supply chain, but it also offers in our opinion the opportunity to expand margins through a combination of tuck in acquisitions that help us drive scale through the introduction of new technologies that reduce cost and something that really the smaller competitors just simply cannot implement and we focus on yield management. And I think there's some evidence that this strategy is working and I refer you to our Q3 operating segment results where operating margins in our LTL segment actually increased year over year by a healthy 1.1%. So pretty impressive given that the economy is stuck in neutral. Speaker 100:07:13So a discussion on the market trends last quarter is also relevant to our performance last quarter. So I'll highlight a few of the challenges our business units had to deal with. Let's start by looking at the overall economy. Central banks have successfully brought inflation to the 2% range, but this has only been achieved by slowing the economy through a more restrictive monetary policy and higher interest rates. These initiatives have resulted in virtually no growth in the economy, but it has not collapsed the economy either. Speaker 100:07:43We also know that the consumer's pocketbook has negatively been impacted by yesterday's inflation, which I call the worst tax of all on the vast majority of society and high interest rates. So in other words, consumer spending has moderated as compared with prior years. And what this means for the freight and logistics business is that overall demand has softened from heightened levels of 2022, 2020 REIT. But I always say this, demand only tells one half of the story, supply is the other. And in this case, it's pretty evident that there's more supply today than there was 2 years ago. Speaker 100:08:20And this means there's only one outcome, pricing comes under pressure. And I would argue that this is now the Achilles' heel of the freight and logistics business. There's freight to haul, but the rates are too low for the cost structure the industry is burdened with today. And customers have been quick to bite on the low rates, giving precious little credence to long term relationships or quality. So this explains why it's difficult to maintain margins today in most verticals. Speaker 100:08:44And this in turn exposes the business models that are too dependent on full truckload market as an example. But and perhaps this is the good news, nothing lasts forever and I'll have more to talk about this topic in the outlook section. So in summary, nothing really surprises this quarter, not the market fundamentals, not the economy and not the performance of our business units, which are professionally managed and focused on generating the very best results they can. So I'm now going to turn the call over to Carson Speaker 200:09:14for more on the Speaker 100:09:15Q3 financial analysis. So Carson, you are up. Speaker 300:09:19All right. Well, thank you, Murray, and welcome, everyone. As Murray mentioned, I will focus on the highlights from the Q3, the details of which are fully explained in our Q3 interim report. I thought this quarter it would only be fitting for me to first talk about the balance sheet since we closed a $400,000,000 10 year private placement debt financing in the quarter. This new financing enabled us to end the quarter with $344,400,000 of cash on hand. Speaker 300:09:48Earlier this week, we used $217,200,000 of this cash to repay some previous notes that came to maturity. After this week's repayment, we now have approximately $130,000,000 of cash on hand. We also have access to $525,000,000 of undrawn bank credit facilities, providing us with ample liquidity. In terms of our debt covenants, we have lots of room available. We effectively have one main debt covenant, which is total net debt to operating cash flow. Speaker 300:10:17Once adjusted for this week's debt repayment, our total net debt to operating cash flow covenant is 2.26:one and 2.54:one under our new 2024 note agreement and on our previous private placement note agreement, respectively. The total net debt to operating cash flow covenant is calculated differently under the new 2024 note agreement compared to the previous private placement debt agreement. The main difference being what is considered debt for covenant purposes. Under the new 2024 note agreement, lease liabilities with respect to real property is excluded from debt, while our $125,000,000 of convertible debentures is now included as debt for covenant purposes. These two items differ from the previous private placement debt agreement. Speaker 300:11:04Our $130,000,000 of cash is not reflected in this covenant. So our covenants would actually be lowered even further once our cash is deployed to generate new operating cash flows. Excluding lease liabilities with respect to real property under the new 2024 note agreement provides us with greater flexibility in positioning our existing business units into strategic facilities and provides greater optionality when it comes to making long term investment decisions with respect to acquisitions. Our new blended interest rate, excluding the notes that were repaid this week, is approximately 5.3% per annum. So in summary, our balance sheet is once again well structured and positions us to make long term strategic investment decisions with over a full turn of room available on our debt covenants and cash available on the balance sheet to grow. Speaker 300:11:49Now to our operating results. Sheet to grow. Now to our operating results. The 3rd quarter highlights that really stick out are that we generated $532,000,000 of consolidated revenue, a record compared to any previous quarter. We generated a very respectable $95,300,000 of OIBDA, which is the 3rd highest OIBDA compared to any previous quarter. Speaker 300:12:12We generated net cash from operating activities of $66,200,000 and our return on equity was 15.3 percent in the quarter. Earnings per share also remained consistent year over year at $0.44 per common share. So a very solid quarter from a financial perspective considering current market conditions. I'll go through the results by segment shortly, but the overall theme is as follows. Top line revenues grew due to the acquisition of Container World. Speaker 300:12:39We entered a new vertical of the economy at a reasonable valuation, giving our organization a new platform and opportunity for future growth. We also improved operating margins that resulted from the combination of our tuck in acquisition strategy, from the niche markets we serve and from the diversity of our 40 business units. In the Q3, revenue per working day improved by approximately $500,000 per working day to $8,600,000 with revenue peaking at $8,900,000 per working day in the month of September. From a seasonality perspective, the revenue trend continues with Q3 typically being the strongest quarter of the year. We generated OIBDA of $95,300,000 an increase of $6,700,000 compared to the prior year and this is the 2nd highest Q3 ever recorded, 2nd only to Q3 of 2022. Speaker 300:13:34Acquisitions added $6,400,000 of OIBDA. We also experienced improved results in the LTL segment and in the L and W segment excluding acquisitions. These increases were somewhat offset by lower OIBDA in the S and I and U. S. 3PL segments and from higher corporate costs. Speaker 300:13:52Operating margin improved to 17.9% as compared to 17.6% last year despite more competitive pricing conditions in certain markets and a reduction in higher margin specialized business. Direct operating expenses as a percentage of consolidated revenue decreased by 1.3% as our business units did a great job adapting to current market conditions and controlling costs. S and A expenses as a percentage of consolidated revenue increased resulting from higher costs experienced at Container World and from a negative variance in foreign exchange. Now let's take a look at how we did by segment. First, our largest segment. Speaker 300:14:30Revenues in the LTL segment were $188,700,000 down 5 $500,000 from last year due to a softening in the overall freight demand from demarketing underperforming business and from a $1,600,000 decrease in fuel surcharge. OIBDA was 35 point $7,000,000 up $1,200,000 from last year despite lower segment revenue. Operating margin improved by 1.1% to 18.9% due to the tuck in of B and R's LTL operations into our existing network, driving greater lane density as well as using our existing technology platform. Our 2nd largest segment is our L and W segment. Revenues in the L and W segment were $168,900,000 so up $31,800,000 Acquisitions added 33 $600,000 of incremental revenue, which was somewhat offset by lower revenue generated from our existing business units due to the lack of capital investment in the private sector from competitive pricing in certain markets and from shippers electing to keep a tight rein on inventory levels. Speaker 300:15:34OIBDA was $35,200,000 up $8,400,000 from the prior year with Container World adding $6,400,000 of incremental OIBDA, while our other business units added 2,000,000 dollars of OIBDA due to more efficient operations. Operating margins improved by 1.3% to 20.8%, primarily due to lower direct operating expenses. Moving to our S and I segment, revenues were up $6,400,000 to $131,800,000 due to increased activity levels in the Western Canadian Sedimentary Basin. The diversity of our 17 business units within this segment led to higher revenues. Our production service business units benefited from certain projects related to facility maintenance and plant turnaround work. Speaker 300:16:19Our drilling related services business units also saw an increase in demand for their services. Somewhat offsetting these increases was a reduction in revenue at Premay Pipeline due to the completion of the Trans Mountain and Coastal Gas Projects. Canadian dewatering experienced lower demand for dewatering services and smooth contractors also experienced lower demand for civil construction services in Northern Manitoba. OIBDA was $28,500,000 down $1,200,000 from last year due to lower OIBDA being recognized at pre made pipeline and Canadian dewatering. Lower OIBDA was also experienced at our drilling related service business units as Okay Drilling experienced certain one time wind up costs. Speaker 300:17:03Operating margins decreased by 2.1% to a respectable 21.6% due to the reduction of higher margin business and from higher S and A costs. In our non asset based U. S. 3PL segment, revenues were $45,700,000 a decrease of $3,100,000 from last year due to the ongoing issue of operating in a highly competitive market. OIBDA declined to $300,000 and operating margin on a net revenue basis was 7.5% compared to 25% in 2023. Speaker 300:17:34The decline in operating margin was primarily due to S and A expenses higher S and A expenses as a percentage of segment revenue. So in summary, a very solid quarter from both an operating and financial perspective as well as exiting the quarter with a balance sheet that puts us in a very enviable position going forward with cash on hand, lots of room available on our debt covenants, undrawn bank credit facilities and long term notes in place at decent rates that mature in 10 years. So with that Murray, I will pass the conference back to you. Speaker 100:18:09Thanks, Karras. Now as I look to the as to what's going to happen in the outlook over the next let's think about the near term. Personally, I don't see much that's going to change in the near term. Demand has definitely stabilized over the last quarter or so in most verticals. But as I noted in my earlier commentary, pricing is currently kind of the Achilles heel of the majority of the industry right now. Speaker 100:18:40It's very price competitive in a lot of verticals. So this is what I now describe as maybe a structural issue for the industry. And if my analysis is correct, then it's going to take some time for the industry to come to a senses and price to generate a return rather than price to gain market share. This is a strategy that simply is not sustainable. So eventually we know that it will revert to the mean, but we've got to get some common sense that returns to the market by many of the industry players. Speaker 100:19:15So with this as the backdrop, let me just reiterate that our strategy, our focus has not changed. We continue to keep a tight rein on costs. We'll work with our customers to help streamline their supply chain needs, but we need to be profitable. And of course, we will pursue acquisitions that meet our base criteria. And we also know that the independent business model works for us. Speaker 100:19:39And to this end, I will tell you, we just completed our biannual Insight Conference. We brought together 160 of our business leaders to collaborate, to learn and about what's going on with the latest trends like AI and to hear from industry leaders like John Hinckley from FedEx. Now his presentation about how one of the biggest and best logistics companies in the world is navigating these choppy waters was fantastic. We all learned from 1 of the best. So in terms of the 4 segments, let me share a few of the expectations. Speaker 100:20:17The Lesson Truckload segment, so we still see the most stability. And because the smaller carriers in our network are struggling in this market, we think we can still continue to advance our tuck in acquisition model, which can help drive future margin improvement. And that's through route, terminal and equipment rationalization. And to that end, we've already completed or in the process of completing 3 smaller tuck in acquisitions September 1. Those will help our existing business units that we roll them into to help them. Speaker 100:20:55So that will be continued to be a strategy for us going forward. In the logistics and warehouse equipment, we still believe that our core business units will perform well and that's back stopped by the likes of Damstra Group and Gleeson Group, companies that have unique and sustainable business models. So we do not, however, believe that there are any internal real internal growth opportunities for the foreseeable future growth in the segment is going to come from our acquisition of Container World and that will be for at least another few quarters. And we are of course on the lookout for other quality companies that will fit in our organization. So logistics and warehousing probably going to be up because of the acquisition of Container World. Speaker 100:21:413PL, holistic is currently our only business unit in the U. S. And 3PL International Logistics segment. And it's going to continue. They're going to continue to struggle until we can get some scale and size. Speaker 100:21:55Most likely we'll have to come to an acquisition of a complementary or a competitor business. Now we have a solid senior team there. We've got a fantastic technology platform. We just need more revenue stream and they'll do just well. But our focus right now has been folks stay in your lane and keep working on that technology platform because that is going to be the future of Holistic. Speaker 100:22:26In the Specialized Industrial Service segment, there's going to be some changes. Some of it is market driven. It might be a little bit softer now that commodity prices have softened a little bit. But we're also doing some realigning within some of our business units, particularly those business units are very, very capital intensive where we don't think that the returns on future are going to be good enough to justify future CapEx. So we're going to realign and shutter a couple of those business units like the Okay and drilling groups. Speaker 100:23:01We just they're so capital intensive and I just don't think the returns are there to justify new capital and we got to give them new capital to be best in class. So we've kind of decided. They're small business units. We're just not going to put more capital into those businesses. And as I say in our world, if we're not prepared to invest, then we'll divest. Speaker 100:23:21So the core of the segment though, we still expect to meet our investment thresholds and we think that will be okay. In summary, just before we go to Q and A, I'm going to say a little bit like what Carson said, we think we're in an enviable position here, especially within the context of majority of our competitors and our peers. First, we have a very large and diversified portfolio of well managed business units. They've been acquired over 30 some years and many are operating in verticals where the fundamentals remain pretty solid. Secondly, and this is where we have a tremendous advantage, we have a well structured balance sheet. Speaker 100:24:00We have no bank debt. All the long term debt is interest only What I believe is pretty attractive rates. And Carson, we're still sitting on some cash to be able to deploy on some new opportunities. So with that, I know there's a number of you wanting to ask some questions. So let's move right into the Q and A session. Speaker 100:24:19Operator, I'll turn it over to you and let's go to Q Speaker 200:24:21and A. Speaker 100:24:21Thank you. Operator00:24:23We will now begin the question and answer session. The first question comes from David Ocampo with Cormark Securities. Please go ahead. Speaker 400:24:56Thanks. Good morning, Murray and Carson. Speaker 100:24:59Good morning, David. Speaker 400:25:01I just wanted to first kick off with a question on the S and I segment. You just touched on it briefly there about the wind down of TREO and Okay Drilling. I was just wondering what the impact is going to be on revenue and EBITDA and then perhaps even the cost to wind down these businesses as it looks like you guys did incur some costs this quarter for related to that? Speaker 100:25:22Not much on the revenue side. These are really small businesses today. I mean there was a time Trio Drilling was just one of the really stars of our organization when there was a lot of delineation of oil sands work and that they just did a fantastic job for us, but that's changed. There's no growth and there's no really drilling for significant drilling for delineation on that. So we're not going to put more capital into it. Speaker 100:25:53We really haven't had much revenue from Truro for 3 years, 4 years now. 3 years. Yes. So that's not going to impact us. Okay, it's very small. Speaker 100:26:02What are they above $4,000,000 $5,000,000 a year maybe of revenue. And the impact on EBITDA will be virtually nil because they really weren't that profitable. And that's why we're saying, okay, we kept them around when we had really good people and those kind of things. But once you need new capital, I'm saying, well, if you don't make money with what the capital we got you now, I don't know how you're going to make money with more expensive capital. So we just once our leader there decided he wanted to retire, we also retired along with him in that business. Speaker 100:26:38But it won't impact significantly the either top line or bottom line. We have some restructuring costs that came in, in the quarter in the Carson of about $500,000 or something like that that you've got to settle up and those kind of things. But once we sell the assets, we'll recover that. Speaker 400:26:59Yes. That's helpful. And then, Kars, just quickly on the CapEx. It was a little bit like this quarter. It does seem like you're running behind the $80,000,000 budget. Speaker 400:27:08Just curious if there's going to be a pretty big catch up here in Q4 or do you have a new number where you guys expect to land for the year? Speaker 100:27:15Well, at the start of the year, I think our objective was $80,000,000 It was. $70,000,000 was going to be for replacement and then $10,000,000 was going to be for sustainability. But early on, we put everybody on a diet because we said, look, there's 2 fundamental reasons. One is you're not going to need new capital to grow. I can tell you that because there's no growth. Speaker 100:27:42And number 2 is just be patient because the equipment valuations that they're coming down for new equipment. So yes, we just waited for prices to come down a little bit and we were correct. So over the next bit we'll start back into the replacement cycle primarily because equipment values are coming down. So we can get more bang for the buck. So why there was no sense buying in the first half of the year because we thought that prices were coming down and sure enough prices are coming down. Speaker 500:28:18Yes. That makes a lot of sense. Speaker 300:28:20I wouldn't expect us to hit that target David by the end of the year. Speaker 400:28:24Okay. Sounds good. And then just last one here just on the growth outlook it does seem like it's mostly going to come from M and A and you guys have typically have always maintained discipline there and keep your multiples quite consistent. Just curious what seller expectations are now? Have they come back down to earth? Speaker 400:28:42And are you starting to see more files across your desk, given all the pressure that we're seeing with some of the smaller trucking operators out there in the marketplace? Speaker 100:28:52Well, first of all, David, you're right. We've been disciplined and you can probably all of our shareholders and potential investors can probably assume that we will continue to be disciplined. I don't think we're going to lose that. In terms of sellers' expectations, I think it depends on what denominator you're using. You've got to remember most of the industry was really profitable in 2022, 2023 and we didn't bite. Speaker 100:29:28I said and the reason was, I said, this doesn't make sense. It's too good. I've been in the business too long to know that good times don't last for too long. So we didn't bite. Now you've got the rebound of those really good times, which is really difficult times. Speaker 100:29:46So the sellers' expectations have come down from the highs, obviously, but they're not making any damn money. So So I say to my shareholders, well, do you want us to go buy companies that don't make any money? Well, that doesn't seem to make much sense. So we got to find ones that are tuck ins, where we can get rid of cost. That makes I think that makes imminent sense, David. Speaker 100:30:13And then secondly, we'll take a look at opportunities where we think the future is long and bright and then we can work through and help streamline those businesses and get their cost structures in line, I. E. Container world. We know that the beverage and the alcohol vertical is going to be around for a long time. So all we have to do is work with that company to implement technology, streamline business processes and become more profitable. Speaker 100:30:44And so we'll look at those opportunities for sure. Speaker 600:30:47And Murray, the phone and the other final point was, are there lots of opportunities? I mean, David, it's daily. The opportunity is coming from all angles and sizes and shapes. But at the end of the day, as Murray said, we will pick the ones that work for us. Speaker 100:31:03I could tell you, David, I'd rather be sitting in our chair with cash and the opportunity to do deals than having to sell my business right now. Speaker 400:31:15That's all the questions I had. Yes. Speaker 300:31:17Thanks a lot guys for the commentary. Speaker 400:31:19I always appreciate it. Thanks. Operator00:31:23The next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead. Speaker 200:31:31Yes, thanks very much. Hi, everyone. Maybe a few rapid fire questions here. I don't know how deep you want to dive, but really interested to see if Murray you're seeing any signs of life here in the overall macro. I know you said it was a fairly neutral environment in your statement. Speaker 200:31:53Could you touch on what you're seeing in any inflection in trucking rates? Any conversations with customers that might signal changes either direction in demand, any of those factors getting you more or less optimistic with regards to kind of the outlook for the next 3 to 6 months? Speaker 100:32:13Yes. Boy, that's one, Walter, that all of us struggle with. We think there's some structural things that have happened in the market. So you got to be careful in most verticals. Demand is Walter, I think demand is okay. Speaker 100:32:34Like it's not you can see from our revenue number like it's not a disaster in most the rails and everybody else. The demand is okay to flat. It's solid. I think it's the word that we use and many other people use. It's solid. Speaker 100:32:50I'd call it okay. There's no growth. We don't see that. Will low interest rates and other factors lead to more growth? Well, you've got a whole group of economists that will pick that. Speaker 100:33:06You don't need to hear from me on that. But in terms of pricing, I kind of be honest with you, I kind of think we're in a really complicated market in terms of pricing. And my primary thesis behind that is I just don't think the average consumer can tolerate high prices today. They're strapped. And so I think there's been compression of that and I think that could stick around for a while, Walter. Speaker 100:33:37And so we're being very, very cautious on that side. I don't see a big rebound in the rate side. Now if you said to me we're going to have a big reduction in supply, that the competition folds, there's huge consolidation, blah, blah, blah, then I can say, yes, that's Speaker 400:34:00where Speaker 100:34:00it is. Otherwise, you've got to rely on the thesis that they come to their senses that you've got to price to make a profit, not to gain market share. Speaker 200:34:07But I think Murray that's why I would count on that Speaker 100:34:09for in the short term. Speaker 200:34:11Yes. And that's my second question actually. It doesn't really seem that that's happening, right? You look at Pride, they go bankrupt, but there's still business as usual operating under restructuring. And it just seems that there's more leniency or opportunity for those kind of those type of situations prevail and remain and continue to kind of keep this excess trucking supply issue out there for longer? Speaker 200:34:45And does that then if Speaker 100:34:47you said Speaker 200:34:48in your prepared remarks as well, you're going to kind of be patient and wait for those to happen. You just mentioned maybe there's going to be failures and consolidation. But it doesn't seem like that's happening. And if that's not happening, does that adjust your strategy of waiting? Did you start to get a little bit more aggressive in terms of what you do if failures just aren't happening? Speaker 100:35:13We will only invest in verticals where we don't compete with the likes of pride. I will not compete. There's no sense and you just explained why there's no common sense and I don't see them going away anytime soon. So we try and stay away from that type of market, Walter. We try and stay away from that type of market. Speaker 100:35:37We try and stay away from having to compete or do business with Amazon, for example. So that's when you hear me talk about verticals that have some competitive edge, that's what we search for here as this senior team. We're out there. We know which ones we want to go after and which ones we think have don't have to butt up against that competition every day. So LTL is our primary one and then we look at verticals like we did with containerboard where we go, you know what, we've got a really strong position. Speaker 100:36:12We just got to improve their margins and that's what this team is. We know what we're doing. We know what to look for. We know what to measure and then we'll improve the performance. So we're going to be Walter, I'm going to continue to be picky because you know why it's served us well for 30 years as a public company. Speaker 200:36:34Yes. That actually dovetails exactly into my next question is the type of acquisition. Are larger deals in this space you're going after, do they exist or is it just really just tuck ins? Speaker 600:36:48Yes. Of course Speaker 100:36:48they do. Yes. There's larger deals that exist, Walter, Speaker 200:36:52absolutely. In Canada, I mean. Speaker 100:36:54Yes, in Canada. Okay. And of course there's larger deals that would be strategic. And then but remember what I said, no market is going to stay down forever. No market stays up forever, no market stays down forever. Speaker 100:37:10Eventually you're going to have a rationalization that happens in the industry. The one thing I'm not looking for common sense from our industry, but I am saying to you one of these days they may not be able to get insurance, because if you don't have a balance sheet the insurance companies aren't going to take that risk. If you can't get insurance, you're not in the business. That may be the rationalizer of this business. And if that happens, we will have a very quick recovery in terms of rates because then all of a sudden customers are saying, well, I need you to haul because there's demand. Speaker 100:37:52It's just currently there's just a little bit too much undisciplined pricing. Speaker 200:37:57Yes, Yes. Last question now, as we go into 2025, can you give us some indication either preliminary or indication as to what if you're going to be coming out with your business plan as you have in the past? When you look out to 25%, even just broad revenue and EBITDA metrics consensus, are you comfortable with it? Anything, I think consensus around the 3.50% level for EBITDA for next year? Speaker 100:38:27Yes. Harry, what you're seeing, I think we've got early December set as our the time that we'll we're in budget season right now with our business units. And our process here is we give guidelines to our business units, but we tell them it's your budget. But you better so go through it and then you got to present it to us, us being the senior team. And we then go through each budget and question their rationale and all those kind of things, but it's their budgets. Speaker 100:38:55And then we will aggregate them together early December and then we'll come out with what we think will happen next year. But from a macro side, let's start with that. Is there going to be a lot of growth in the Canadian economy next year? But let's be honest, I mean, we're running a $50,000,000,000 deficit in Canada right now to get no growth. If we weren't running a $50,000,000,000 deficit, we might have negative growth. Speaker 100:39:20Can we go to $100,000,000,000 deficit next year? I doubt it to get so I think it's going to be okay, but I don't see a huge rebound in the economy unless you said there's a lot of capital coming into Canada, we've got a grand new scheme that says, you know what, invest in Canada. I'm not feeling that right now. I think we've scared away capital out of Canada and we're really just a consumption economy right now. And I think that consumption economy will remain above where it is right now, maybe up a little bit, maybe down a little bit. Speaker 100:39:59But my early indication suggest is more of the same next year. That's why we've got to stay focused on cost, process improvement, remain maintain our discipline. But we'll be able to still outperform the overall market because of acquisitions. Why? Because we got the damn balance sheet. Speaker 100:40:18And we're one of the elite few that have got that balance sheet to execute and it's just up to the senior team here to pick the ones that are going to add value to shareholders. Speaker 200:40:29Okay. And just as a I don't know, Carson, I think the last official guide for this year was $325,000,000 for 2024. It looks like you're going to come in nicely ahead of that if we take the kind of you're running at about $7,000,000 above Q3 this year versus last year. And if we assume kind of the same run rate of seasonal outperformance there then you're kind of coming into the 3.30, 3.35 mark. Is that a Speaker 100:41:02Walter that's We came out with $325,000,000 $24,000,000 and we're not going to be far off that. We might be a little bit above it. We think that if you look at Q4 of last year, I think we're at $80,000,000 Speaker 300:41:18$80,000,000 Yes. Speaker 100:41:19Yes. Right, Carcewood. Speaker 300:41:20Yes. We did about $500,000,000 in revenue in Q4 of last year and call it $80,000,000 of EBITDA. And if you kind of look at the trend line right now, we've got container world that we've got now that we didn't have last year. Speaker 100:41:36So Let's just call it a little bit better than last year, Walter. Speaker 700:41:40Okay. Speaker 200:41:41That's great. And just Speaker 100:41:42like we were in the Q3, we were a little bit better than last year. And that's what we think right now is we'll be a little bit better than last year. And then of course the we're feeling much more comfortable that we'll have some be able to take advantage of some acquisition opportunities next year and that will add us another growth curve in 2025. Speaker 200:42:07Okay. Appreciate the time. Thanks guys. Operator00:42:09Thanks Walter. Thanks Walter. The next question comes from Cameron Doerksen with National Bank Financial. Please go ahead. Speaker 500:42:18Yes, thanks. Good morning. Just a question on the L and W segment. Just looking at the margins, like a pretty solid number in the quarter. And my original thought was that maybe you've done some good work at the container world business to cut some costs there. Speaker 500:42:33But just based on your comments, it doesn't sound like that was necessarily a contributor to the margin in this quarter. So I'm just wondering what did drive that nice kind of margin improvement in L and W year over year and sequentially? Speaker 300:42:49Well, I'd say it's probably a combination, Cameron. Container World does generate good EBITDA. However, the majority of their costs fall below that EBITDA line with respect to leases. Speaker 100:43:09That's an IFRS number. Speaker 300:43:10It's an IFRS kind of a playbill. Speaker 100:43:13So the good news about container world is that number that you see that they're generating that pays all their bills, okay, under IFRS rules. Correct. Our job is to improve that above there so that we make money on our investment. And I can guarantee you, we're going to improve that. But that didn't Continuum World didn't hurt our numbers. Speaker 100:43:39And our we've got some really good solid business units in there like Cleese and Advancement, we highlight them. They continue they're in good market segments. They're in good verticals. Some of our business units didn't perform very well. They if you're involved in competing in the full truckload side like some of them like Ken Holt and Payne and oh my goodness and even Kaneda. Speaker 100:44:04They're in a tough market for a little bit and it won't stay that way forever, but it's that way for right now. But I'd say it's really container world and then our 2 real good ones in Bancher and Cleason that had continued to perform at the highest level of any business units we got. Speaker 500:44:26Okay. That's helpful. And then just a second question for me around capital allocation. Obviously, M and A is a priority, but it sounds like it's probably more focused on tuck in acquisitions. And you've got very significant cash on the balance sheet now and lots of available credit and free cash flow generation is still really positive. Speaker 500:44:47So just wondering how you're thinking about, I guess, the other aspects of capital allocation, specifically on NCIB. I mean, there's been some activity, but just wondering if that's something that you expect to do more of in the absence of a bigger ticket M and A or is that something you're just comfortable kind of at the same pace that we've seen for this year? Speaker 100:45:05Yes. So we talk about that at the Board level, which is really that's a Board discussion. But our thoughts on that are this, is that given the opportunities that we see on the acquisition front, Tamara, we think that if we buy back if we do share buyback, we're allocating capital to that. That's not helping our business grow for the next 10 years. But if we do a good acquisition and use those funds that we got, that sets us up for the next 10 years or plus. Speaker 100:45:39So I think our priority is go out and get some really good acquisitions and grow rather than share buyback. We'll still probably do some, but it won't be the highest priority. I think our highest priority is going to be growth. Speaker 500:45:57Okay. No, that's very clear. That was all for me. Thanks very much. Speaker 100:46:00The tuck in acquisitions will help you drive margin in the short term. If you do a bigger acquisition, you've got to be a little patient just like container oil because it takes a while for the market to come back and for you to get the disciplines in place that we think you have to have to be a free cash generator. Speaker 500:46:20Right. No, absolutely makes sense. Thanks very much. Speaker 200:46:23Thanks, Cam. The Operator00:46:26next question comes from Konark Gupta with Scotiabank. Please go ahead. Speaker 700:46:33Thanks, operator. Good morning, Murray and team. Just one question to begin with. You talked about Q4 to Walter's question. I understand you're running a little bit ahead of your initial expectation for full year EBITDA and container world certainly is a big contributor there. Speaker 700:46:55But how should we think about the other segments like LTL and S and I in Q4? Do we see any signs of growth versus last year in Q4? Speaker 600:47:10I don't. Speaker 100:47:13I think if I look at the LTL segment, there really was no growth. What there was, was some we met our objective, of course, which we said, let's go out and improve the margin this year even though there's no growth. Correct. And we said we could get 1%. That was our target and we've met that. Speaker 100:47:35So once you that's tough work, right? You don't get margin improvement without being doing some pulling some pretty good strings there, particularly when there's no growth in the market and you really can't get pricing leverage from customers today. So we did some good rationalization and I think Carson highlighted that it was we took an underperformer in B and R Echols and we put it in with top performers which is Grimshaw and Highway 9. So we put that from a negative to a positive and that's where we saw the 1% growth. But really not a lot of growth in that segment. Speaker 100:48:11Specialized Industrial, not a lot of growth right now. We had a couple of good wins, a couple of loss. We lost the pipeline business that project is over. Okay. But the rest we're diversified and we had other business units pick it up and those kind of things. Speaker 100:48:28So I don't see a lot of growth, Connor, unless we do acquisition. And we could go give you growth tomorrow. But as I said to you, what the hell good is growth if you don't bring margin with it? What's that doing? So that to us, that's a fool's game, so we don't play that game. Speaker 100:48:50It's never been our DNA. We're not changing. We're going to we like what we're doing on that. I love having as I said to you, just fun. We will do acquisition. Speaker 100:49:01We always have done acquisition since 1993. How many have we done? Speaker 300:49:0880 plus. 80 plus. 80 plus. Speaker 100:49:11I think we'll probably do some more, particularly what we got that nice balance sheet. So let us choose where we think we can drive margin. I'd love to be able to hit you a home run and say, hey, you've got high margin, high revenue, everything. Yes, there's only a few of them out there. Speaker 700:49:32Right. That makes sense. Thanks for that color, Marie. But just following up maybe on M and A then, like I think you guys are obviously a little bit more careful and disciplined, I would say, in terms of chasing acquisitions and pursuing the right fit and all that, which is great. But obviously, you can see clearly the market loves to pay for a lot of growth right here. Speaker 700:49:57So there could be opportunities, which could be small, medium or big for you guys, right? In terms of your appetite, I wanted to ask you, like you have good cash, you have good lines and all that. Are your stocks actually not doing bad, like considering obviously the last many years, it's sitting at a decent level here. What's your strongest currency right now? Is it your debt? Speaker 700:50:18Is it your equity? If it's something big like $500,000,000 plus of deal comes through? Speaker 300:50:26Well, I would say, obviously, right now, Konark, the debt markets have been pretty favorable for us. And that's just a function of the Board deciding that it was prudent to own our Speaker 700:50:42own real Speaker 300:50:42estate. There's value in that, that the debt holders see, but doesn't show up in earnings per share because you don't fair market it in every quarter. So the other thing is that sets us apart is we generate free cash every year and have done so for the last 30 years. So that consistency just leads you to that debt market where they love that consistency, they love that balance sheet. There's a hidden gem there that doesn't show up in the stock price or in your earnings. Speaker 300:51:25So I would say if we had a really good idea that came up that I think we've shown the history is that the debt markets would support it. We would also go to our equity holders and say, hey, you support us in this great idea. Speaker 100:51:43Good ideas will be supported by the market, whatever that market is, the debt markets or the capital markets in general, Connark, you know that. Those would be transformational acquisitions what you're talking about. If you're talking about just growing at our standard what since 1993, 11.7%, while we can do that without any more debt and without any more Speaker 600:52:09we generate enough free cash Speaker 100:52:10on what we got now to continue to grow at 11% for quite some time. We don't need to go to the markets. But if we saw a transformational acquisition, okay, well, that's a different discussion. Speaker 700:52:22Yes. That makes sense. Okay, perfect. Thank you. Thanks for the time. Speaker 100:52:25Thanks, Connor. Operator00:52:28The next question comes from Tim James with TD Cowen. Please go ahead. Speaker 800:52:35Thanks very much. Thanks for the time. I just want to drill down a little further into 2 previous questions actually. 1, just the margin performance, the really good margins in the logistics business. You called out Banstran Gleeson. Speaker 800:52:51What like is there anything specific there that accounts for why they're performing so well? Whether you can is this a pricing dynamic? Is it cost initiatives that have been undertaken? I'm just trying to understand better why it's performing so admirably? Speaker 100:53:12Well, it's the business models they have. So both of them are in verticals or in markets or have assets that are really, really difficult to replicate. So you don't have the same pricing pressures as you're experiencing in most other verticals. So that's number 1. And I guess the other is quite simply they don't have the same competitive pressures. Speaker 100:53:40They're kind of they're unicorns, they're so good. I'd love to have a whole bunch more of them to be honest with you. And we look for them and we wait for them and when we see them we buy them and we invest in them. So they're 2 really solid business units. And we got we don't have better management teams at Clisa and Banter than we do in a month of our other business units. Speaker 100:54:05But they are in really solid verticals at the moment for sure. And we think that their verticals they're in are pretty sustainable. So that's probably the number one reason. Speaker 400:54:20Okay. Speaker 800:54:23The U. S. And International Logistics Business, Marie, in some of your earlier comments, you're talking about that you need to grow the scale there to really take advantage of holistic. Like is this environment and I want to specifically think about the U. S, I'm assuming you kind of have your eyes in the landscape there for opportunities. Speaker 800:54:43Is this environment that we're talking about with this kind of supplier capacity imbalance, this excess, is this not a good market relative to a year ago or a couple of years ago for finding a transaction to build scale in the U. S? Do you feel sort of incrementally positive on the opportunity set that you're seeing down there? Speaker 100:55:06Yes. We've spoken with the senior team there is that we all have our eyes and ears out and we're listening and we're watching to see if something fits quite nicely with them. Until we find that, I've told the senior team there, I said, look, just keep working on your game plan. Make sure the customers are looked after and make sure you keep advancing that Silver Express platform that we've got that's really difficult to replicate. So when we find the right one, we're just going to be able to plop in the revenue sources and that's when we'll get the margin improvement. Speaker 100:55:42So either that or maybe the economy improves down there, I don't you know what? But for the moment right now, what you're seeing across most transportation companies, both sides of the border, very competitive markets, Even though demand is reasonably it's not bad, but if you have a small reduction in demand, but no corresponding reduction in supply, what happens to price, Tim? I don't care what market you're in. Until they find a new equilibrium, price will be low. Not everybody is going to survive this low price environment. Speaker 100:56:25You can take that to the TD Bank or any bank. Speaker 600:56:29And if I may add as well, within that business model, we know it's more of a little bit of a volume issue right now because as Carson has articulated, we have kind of a fixed nature of our SG and A. We do know though right now that a lot of the big 3PLs down in the states have been kind of laying people off and they did that at the last part of last year. So our focus in addition to Silver Express building that out is to we've enhanced our recruiting efforts on independent station agents. So they're independent, they're not employees. That's not going to double the size, but that will certainly help us backfilling it a little bit more volume until that moment in time when there is that acquisition. Speaker 600:57:10So that is a major focus of our team down there and I know they are listening in right now as well and will continue to be. So we will kind of add things along as we go. People like the platform we know Speaker 400:57:21because people are coming on. We have added 4 Speaker 600:57:21or 5 additional station agents or on. We've added 4 or 5 additional station agents or our agent models and we'll continue to do that. Yes. I think, Tim, on that side, by having Holistic Speaker 100:57:30and team as part of our big, big diversified network, we give them the time and the space to kind of work through these very difficult markets and we don't have to over put too much pressure on them. I said just work on the long term fundamentals and everything will take care of itself longer term, but work on the fundamentals, make sure that we're the best one of the best employers in that business, best places for people to want to apply their skills because it's a people business. It's not a freight business, it's a people business. And work on that damn technology because that's going to be your secret sauce of the future. So we've said to stay in your game. Speaker 100:58:16Eventually, if we do the fundamentals right, we think it'll all take care of itself because we got the patients when many others are single source. The pressure is too hot on them. So we're in a good space. We just wait for the right opportunity that fits in with them because I tell you we got the team. They got more horsepower down there than so we can grow. Speaker 100:58:41We just need the right opportunity to fit with that with those horses down there. They know what they're doing. Speaker 800:58:49If I could just squeeze one more in quickly. We talked about on a number of occasions the fact that supply has not yet responded or capacity has not yet responded accordingly to sort of the demand, the pricing environment. And you mentioned sort of there's a bit of a structural issue here. Can you I'm curious, Marie, to your thoughts on why it hasn't responded like specifically? Is it changes in the CCAA process? Speaker 800:59:18Is it something to do with creditors in Canada or the holders of capital are prepared to accept lower returns? Is there anything you can point to as to why there hasn't been a supply side response yet? Speaker 100:59:34Yes, they're damn tough. What are they going to do? They fold their tent or they just work harder? My history tells me when times got tough and I saw this even within our business when we were a small company. When times got tough, we worked harder and we worked leaner and we were tough damn competitors to big companies. Speaker 101:00:01And there's just a lot of them out there and they're just damn tough right now. But eventually, you can only be tough for so long. Eventually, you have to be profitable. And I explained what I think the major issue will be. You're going to have to show a profit one day or the insurance companies are not going to ensure you take the risk on your and then if you can't get insurance, you can't hold freight. Speaker 101:00:29So I think it resolves itself, but not quickly. It could take a little bit of time, but I think the insurance companies may be the ones that bring discipline to the market. Customers are not going to do it. Customers are going to take advantage of low rate whenever they can. That's just the way the game is played. Speaker 101:00:50And right now they're doing a hell of a good job of it. But the tide will turn and come back in and we will be positioned to take advantage of that. Others may not last through it. That's the you've got to stand tough times to be successful over the long time. How long we've been in business, Rich? Speaker 601:01:14At 75%. 75%. Every economic cycle, everyone through. So, Tim, I think in addition to that, Murray talked about the insurance part of this. But those whomever and you talked, you said CCAA, whomever would have lent credit to groups that have kind of bumped that system, if you will, if you want to call it that. Speaker 601:01:32It will be interesting going forward if they'll be able to get fuel, you got to pay that bill every 7 days. Anybody who sends them sold them equipment on credit, it will be interesting to be able to do that. So you know what, it could take time, but maybe they got salvage, but can they afford to operate going forward? Will they be able to get fuel, tires? It's Speaker 101:01:52just going to take time, Tim, but it will work itself out. So, I just want I can't tell you which quarter will be the inflection point. I can't tell you that yet. I haven't seen it yet, but I know we're 1 or 2 quarters closer to when it's going to happen. Speaker 801:02:10So I know you guys can't reflect on 75 years of history, but in your experience, is this supply response taking longer than what you've witnessed in other comparable times in the cycle or is this just normal do you think? Speaker 101:02:27Well, look, the cycle hasn't played out yet. So give it time. Speaker 801:02:31Well, I mean the upturn, the timing of how long Speaker 701:02:34it takes to pass me to respond. I think Speaker 101:02:35one more question we're going Speaker 701:02:36to move on to, but Speaker 101:02:37I think it's I don't think we're in the 9th inning, Tim. I'll leave it at that. Speaker 801:02:43Okay. Super. Thanks for the time. Speaker 101:02:46Thank you very much. Operator01:02:53The next question comes from Kevin Chiang with CIBC. Please go ahead. Speaker 901:03:00Hey, good morning, Kevin. Speaker 701:03:01Good morning, everyone. Speaker 901:03:02Hey, good morning, Murray and team. Thanks for squeezing me in here. Maybe just two quick ones. One, you talked about demand. Demand is okay, obviously excess supply, a lot of comments on this call about that. Speaker 901:03:15Just wondering, when you look at your LTL volumes, do you have a sense of maybe what percentage or what amount of revenue might have temporarily shifted to the full truckload market just because rates there are unsustainably low and maybe those are bonds that come back as the freight cycle starts to hopefully inflect at some point in 2025? Speaker 101:03:39I've seen some of that commentary, Kipp, and I haven't been able to reconcile that with our network. We most of our LTL network is in the smaller communities and whatever. So I don't we're not going to lose it to the full truckload in our LTL space. So I don't think there's been Speaker 301:04:00a lot of that. Speaker 101:04:00Yes, you know what, has there been have we lost some out of California and some long haul? Yes, we've lost a little bit. But honestly, I don't think that's the issue from our perspective. We just think that you've got to be really, really careful of the impact that Amazon has on LTL. They're the biggest they're one of the biggest LTL guys now, Speaker 601:04:29right? Because of e commerce. Speaker 901:04:31Yes. That makes Speaker 101:04:33a lot of sense. So I think there's I'm more I guarantee you, I am way more worried about Amazon than I am about the full truckload guy getting a little bit of our freight. I guarantee. That's a fair comment. Speaker 601:04:49Okay. If I can add, I think if you think about the interlining component of LTL where the trailer is already full and you've got a little bit from here to the other place, we're hearing that happening maybe more in some of the U. S. Locations where you can get almost a tractor service. But getting to the final mile, how we what our core focus is on LTL that to Murray's point, we don't see that. Speaker 601:05:10But you can you maybe see some of that breaching in and what we're hearing down in the States, not so much here. But once the trailer is full, it's just got Speaker 101:05:17to go from Toronto to Speaker 601:05:17Mount Edmonton, anybody can haul that across the country. We don't see that as evident right now. Speaker 901:05:26Right. That makes sense. Speaker 101:05:28I'll tell you what I see in the U. S. And on the LTL side because I know you follow them as well. There's a lot of tough competitors down there and every one of them I see adding capacity, but I don't see the economy growing. So where in Canada, there's really only a few of us. Speaker 101:05:49The market's really spread out visavis the U. S. Market, right? So it's still a little different space. And I mean, you see what Transforce does their Canadian LTL is best in class. Speaker 101:06:05They're fantastic. Speaker 901:06:06Yes. That's a good point. That's a good point. Speaker 101:06:11You know what? TFI is a disciplined pricer. I mean they don't they're we don't mind competing with TFI or Manotum. These are business people. They like to make money because they have to invest it. Speaker 101:06:27And so we can continue to provide the service to customers, yes. Speaker 901:06:33Alain would agree with you. He likes to make money. Speaker 101:06:35I think he would, yes. Speaker 901:06:39Maybe just sticking with LTL, last question here. When you buy these tuck ins, I'm assuming that you're buying a company where maybe they've been less rational on pricing, correct me if I'm wrong. Just wondering as you look to reprice their book as you integrate those assets into your own organization, has the success rate been pretty good or have you had to kind of hold the price at a lower level than you would have otherwise liked to just because of the freight economy and maybe you'll look to reprice when things are better. Just wondering how that repricing cycle works when you acquire some of these companies? Speaker 301:07:15Well, I guess, Kevin, I would say the first thing that we look at when we look at layering in LTL is lane density. That's 1st and foremost. That's what really drives your margin. Also on facilities, facility costs are as you know quite high. And when you can consolidate facilities that's another win. Speaker 301:07:36So those are really kind of the 2 arching aspects when we look at layering in LTL acquisitions. Pricing does come into effect, that's for sure. As you saw in our MD and A, we demarketed some business in that segment. It didn't make sense for us to continue servicing those customers at those rates. So I'd say that that's where some pricing discipline comes in as well too. Speaker 101:08:03I think when you do an acquisition, Kev, of these smaller companies and these tuck ins, clearly you have synergy on cost because you're adding yield and network and utilizing the assets. So we don't need every truck following each truck. That's how we drive margin. But I think the other thing that comes into is more pricing discipline. Smaller carriers sometimes they're very tough. Speaker 101:08:29So once you take that undisciplined price throughout of the market, if we don't raise prices, we have more discipline on pricing. Speaker 901:08:40That makes sense. Speaker 101:08:41That's what really happens. It's just more discipline, yes. Hey, we can talk about. Nobody I don't want anybody to think you go and you do an acquisition and then you can control pricing. No, the market controls pricing, not us. Speaker 101:08:57But sometimes some you have done disciplined pricing, like for example our B and R group, they were just undisciplined pricers. And as I said to you, a customer will always fight on low price, Kevin, always. That's never changed in my career. Speaker 901:09:16That's a fair point. Hey, look, it's you're definitely executing well in a tough market here, so congratulations on that. That's it for me. Thank you very much. Speaker 101:09:23We appreciate it. Speaker 301:09:24Thanks, guys. Operator01:09:27This concludes the question and answer session. I would like to turn the conference back over to Mr. Mullen for any closing remarks. Speaker 101:09:37Not many more holds. Thanks for joining us. We've been a little longer than our 1 hour allotment. So we got a lot of horsepower online. I'm going to let you go. Speaker 101:09:46Thank you very much. And next communication will be after we do our Q4, which will be in early February. Until then, we got a lot of hard work to do. Thank you very much. Operator01:10:00This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.Read morePowered by