Q3 2016 Transforce Inc Earnings Call

Oct 21, 2016 AM EDT
TFI.TO - TFI International Inc
Q3 2016 Transforce Inc Earnings Call
Oct 21, 2016 / 01:00PM GMT 

==============================
Corporate Participants
==============================
   *  Alain Bedard
      TransForce Inc. - Chairman, President & CEO

==============================
Conference Call Participants
==============================
   *  Mona Nazir
      Laurentian Bank - Analyst
   *  Jason Seidl
      Cowen and Company - Analyst
   *  Cameron Doerksen
      National Bank Financial - Analyst
   *  Kevin Chiang
      CIBC World Markets - Analyst
   *  Walter Spracklin
      RBC Capital Markets - Analyst
   *  Turan Quettawala
      Scotiabank - Analyst
   *  David Tyreman
      Cormack Securities - Analyst

==============================
Presentation
------------------------------
Operator   [1]
------------------------------
 Good morning, ladies and gentlemen. Thank you for standing by. Welcome to TransForce third-quarter 2016 results conference call.

 (Operator Instructions)

 Before turning the meeting over to Management, please be advised that this conference call will contain statements that are forward-looking, and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded on Friday, October 21, 2016.

 I will now turn the conference over to Alain Bedard, Chairman, President, and CEO. Please go ahead.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [2]
------------------------------
 Thank you, operator, and good morning, ladies and gentlemen; and thank you for joining us this morning. As you know we released our 2016 third-quarter results press release yesterday after market close.

 I would like to begin the discussion today by providing you with the principal highlights of the third quarter. The economic conditions affecting the freight market across North America remains fragile. Soft manufacturing activity has affected volumes, especially in our Truckload sector, and the lower value of the Canadian dollar has not yet provided the Canadian economy with an appreciable boost.

 In spite of these conditions, however, TransForce results remained solid. The Company's asset-light business model, and the cost and effort across the Organization to improve efficiencies and strictly align supply with demand, continue to serve us well. In our P&C segment, eCommerce activity is on the increase, and in our LTL segment has made significant operational efficiency gain and our free cash flow remains robust.

 In our third quarter, total revenue from continuing operations reached CAD975 million, down 3% compared to the same period in 2015. Before the fuel surcharge, revenue from continuing operations was down 2% to CAD897 million. The decrease stems from lower business volume in our Truckload and LTL segments, partially offset by revenue from small acquisition completed over the last 12 months and higher volume in our P&C segment.

 Operating income from continuing operations was CAD72.4 million compared to CAD72.8 million last year. As a percentage of revenue, operating income was still at 8.1% of revenue versus 8% a year ago. The slight improvement essentially reflects margin gains in our P&C and LTL segments, which were offset by lower margin in our Truckload operations. Adjusted net income from continuing operations was CAD56.4 million or CAD0.60 per diluted share compared to CAD48.6 million or CAD0.48 in 2015.

 Finally, TransForce generated the free cash flow from continuing operation of CAD81.3 million or CAD0.88 a share. We used this free cash flow mainly to repurchase 1.6 million common shares for a total consideration of CAD41.8 million, and to provide shareholders our CAD0.17 a quarter dividend in the amount of CAD15.8 million.

 I will now provide you with more insight into each of our business segments. Driven by eCommerce growth, Package and Courier had a great quarter. Revenue before fuel surcharge grew 3% to CAD328 million, with eCommerce revenue increasing 26% to reach CAD71 million. eCommerce now accounts for more than 20% of this segment's revenue, and we're continuing to make significant inroad in this area.

 Operating income in the P&C significantly increased to reach CAD33.6 million, which is a 50% increase in the quarter. As a percentage of revenue, before fuel surcharge, the operating margin rose 320 basis points to 10.2%. In addition to the favorable effect of higher volume, we also realized efficiency gains that were a direct result of operational improvements and cost-saving initiatives.

 In the LTL segment, third-quarter revenue before fuel surcharge was CAD181 million, down 6% from last year. In large part, the revenue decline reflects the soft economic conditions in Western Canada where demand continued to decline year over year. On the positive side, even though shipments counts were down, the average revenue per shipment has increased slightly year over year.

 Over the short term, despite the lower Canadian dollar value, we do not foresee any significant uptick in price or volumes. The Company's focus on cost control and operational improvements has allowed to mitigate the decrease in LTL demand. In fact, operating income in the segment increased by CAD3.1 million and reached CAD15.3 million in the quarter. Driven by efficiency gains, the operating margin as a percentage of revenue before fuel surcharge increased by 120 basis point to 7.5% excluding gains on the sale of a property.

 The Truckload segment is feeling the impact of a very challenging freight market in the US, where both volume and rates have been under constant pressure in the quarter. We have also had to deal with a drop-off in activity for our specialized division servicing the energy industry. Revenue before fuel surcharge in Truckload fell 5% to CAD343 million.

 Our asset-light brokerage service generated CAD53 million of revenue during the period. This represents about 14% of our total revenue, which is about the same as last year.

 Operating income in our Truckload decreased by CAD12.4 million to CAD24.9 million representing an operating margin down to 7.2% compared to 10.3% in 2015. The bottom line is that the US market remains very difficult in terms of rates and volume. Volume from our Canadian Truckload division was also under pressure, and our focus here will remain on implementing effective measures to that supply to the demand.

 Logistics revenue in Q3 was CAD58 million, down slightly year over year. Excluding business acquisition, revenue decreased by 9%, largely due to lower volumes.

 Operating income for the quarter rose from CAD6 million to CAD6.7 million. The increase was mainly generated by a gain on the sale of property. Excluding this gain, operating income decreased by CAD1 million, and the operating margin decreased as well from 10.1% to 8.6%.

 In terms of our outlook, we anticipate the soft manufacturing activity through North America will persist in the months ahead, slow economic growth, and that the Canadian economy will continue to be challenged by low energy prices. Given these market condition, our decentralized and diversified business model should serve us well, as it gives us the flexibility to adapt rapidly to changing market conditions.

 Asset-light activity remains a priority, as they provide TransForce with superior returns and solid free cash flow. Increasing our reach in the eCommerce intermodal and brokerage sector will allow us to capitalize on this strategy.

 As always, our primary commitment is to enhance shareholder value. To do so, TransForce will continue to generate profitable growth through its existing operation and our selective acquisition strategy. As well, we will aggressively pursue every avenue available to reduce costs, improve operating efficiency, and enhance margins.

 Additionally, we will continue to employ our free cash flow for M&A activities, reimburse debt, and return cash to our shareholders through dividend and share repurchase program. In this regard, I'm also pleased to announce that our Board of Directors has approved a 12% increase in our quarterly dividend from CAD0.17 to CAD0.19 a share.

 So now I would like to open the line to your question. Please, operator?

==============================
Questions and Answers
------------------------------
Operator   [1]
------------------------------
 (Operator Instructions)

 Mona Nazir, Laurentian Bank.

------------------------------
 Mona Nazir,  Laurentian Bank - Analyst   [2]
------------------------------
 Good morning. Just a couple questions for me.

 On the last call you had provided an updated guidance range for the year of CAD435 million to CAD450 million in EBITDA. Just wondering does that range still hold true? Is there any change given the outlook?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [3]
------------------------------
 Well I think so, Mona, because if you look at our Q1 we were behind plan and behind last year, Q2 was even worse behind plan and behind last year. If you look at our Q3, okay, we are flat versus last year. And in this Q3 we had also some very exceptional costs that really affected our numbers mostly stemming of our insurance claim which was a disaster for us in Q3 which hopefully we don't anticipate the same thing in Q4.

 We think that this has been exceptional US Truckload division there. We believe that Q4 this year will be better than Q4 of last year. So that's why we feel pretty good that this objective is still attainable.

 We believe that our e-commerce business will be a tailwind for us in Q4. If you look at what's going on in the US, even in Canada, we are starting to see more and more growth in the e-commerce business. I think that this should help us boost our results in Q4, and the cloud we have over our head, which is the Canadian economy, sure we don't anticipate that this is going to get any better with oil prices $50 a barrel with the situation in Alberta, which is a disaster. It's a big recession there.

 Hopefully we are at the bottom of the barrel now. It's not going to go any lower. And with the election behind us in the US, we feel pretty good that 2017 and also our Q4 with e-commerce in the US, we feel pretty good that the disaster that we went through in our US domestic Truckload division in 2016 will start to subside because if you look at what's happening with the trucks in the US they have a tough time selling trucks.

 There's a reduction year over year the supply is shrinking, okay? The demand is not improving, but at least the supply is shrinking. We feel good that sometime in 2017 also with the fact that ELD will have to be adopted, okay, by the end of 2017. We have a good feeling. We should finish the year 2016 stronger than what we did last year, and I think I feel very good about 2017 with our P&C, our LTL. We know LTL. It's a terrible business.

 It's been really bad for the last five - six years. We know there's a lot of carrier that are dying, okay? Because they don't adapt volume, okay? The offer with the demand on the volumes so their cost is going through the roof. There will be some kind of correction in the LTL in Canada within the next two or three years in terms of offer. The offer has to reduce. So we feel that for CAD435 million to CAD450 million, we feel good about that.

------------------------------
 Mona Nazir,  Laurentian Bank - Analyst   [4]
------------------------------
 Okay. That's helpful. Thank you. And you spoke specifically about the e-commerce side and the very, very strong growth that we saw this quarter continuing. In the MD&A you speak about increasing your market share, just wondering if that's planned to come organically or acquisitions out there you can make in the space?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [5]
------------------------------
 Well so far in our P&C business we haven't done any acquisitions. So what you see in Q3 year over year is really organic growth, right? And don't forget that our e-commerce is not really growing through acquisition because there's not much to do in Canada on e-commerce side in terms of M&A, and in the US it's very difficult because if you look at the trade that was done between GLS, which is a sub of Royal Mail, they bought DSO -- Golden State Overnight, GSO, at a price that we can't afford.

 When you're buying company 15 - 18 times earnings, and us we trade at 10 to 12, how can I do any M&A in the US? Maybe it's better if I sell my business because I am so poorly valued. But that being said, no, M&A for us, yes, small deals here and there, it's doable for us. But the growth has to come from our existing business.

------------------------------
 Mona Nazir,  Laurentian Bank - Analyst   [6]
------------------------------
 And just last question for me. In regard to the dividend increase that we just saw and the heavy investment in the share buyback program, should we take that as a signal that the M&A landscape, particularly on the Truckload side, is not as attractive or that you are not seeing any near-term opportunities? I'm just saying that as you had explicitly spoken a few quarters ago about timing for adding on to the Truckload division and then timing to potentially spin it off. Is that still on your radar?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [7]
------------------------------
 Absolutely. That's still on our radar. The share buyback is the safest buy that we could do because we know what we are buying. Because every time we do some M&A deals, although you do all kinds of due diligence, there's always risk. When I'm buying my stock I know what I'm doing. I know what I'm buying. I know the Company inside out.

 And with the stupid price that we have, okay, that's why we bought again in the quarter about CAD40 million of shares that we bought back. And that also allows us to -- with our free cash flow and our policy and our number of shares down year over year. So we said, listen let's raise our dividend 12 points, 12%; and the sum of the dividend payment to our shareholder will stay the same because we have about 7 million less shares. Okay?

 But in terms of M&A, okay, in the Truckload, don't forget my philosophy has always been you buy and buy and you sell good news. So Truckload now is the (expletive). It's really bad in the US. It's time to buy, you know?

------------------------------
 Mona Nazir,  Laurentian Bank - Analyst   [8]
------------------------------
 Okay.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [9]
------------------------------
 No, it has not changed. We are working -- I have been working on deals for the last 9 - 12 months, but if you want to buy at the right price or sell at the right price, it takes time. Okay? The mission is still there, okay? And hopefully we can see some interesting news within the next 6 to 12 months.

------------------------------
 Mona Nazir,  Laurentian Bank - Analyst   [10]
------------------------------
 Okay. Thank you so much. That was great color.

------------------------------
Operator   [11]
------------------------------
 Jason Seidl, Cowen and Company.

------------------------------
 Jason Seidl,  Cowen and Company - Analyst   [12]
------------------------------
 Hello, Alain. How are you?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [13]
------------------------------
 I'm good. How about you, Jason?

------------------------------
 Jason Seidl,  Cowen and Company - Analyst   [14]
------------------------------
 No complaints, sir. No complaints. I wanted to touch on a couple things here. First of all, getting back to the e-commerce growth. You mentioned obviously this has been organic for you guys. What types of investments from here on out as we look for the next call at 12 to 24 months do you think are needed to not only keep pace with the growth that's in e-commerce for your Company, but to even grow your presence beyond that organically?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [15]
------------------------------
 That's a very good question, Jason, because you see everything that we have done so far in the US, or in our last-mile business, has been done through our IC model, Independent Contractor model. But we are starting to get more and more demand from customers that want an employee model. An employee delivering, that is one of ours, delivering on behalf of the customer, which is something that we already do in Canada, okay, for the last I would say 6 to 9 months for e-commerce customers.

 So that's something new for us in the US. We just started the Boston market with that. We have two or three locations now in the Boston area running with employee model. So when you talk about employee, you talk about a truck or a minivan or something like that. So far what we have done is we have leased equipment. Okay?

 But down the road we will have to buy. So what we are doing now is we are just building that, okay? We anticipate that our employee model, okay, will be at a run rate which is still small of CAD1 million a month by the end of this year. I don't know what's our forecast for 2017 because next week I'm going to be with my friend at Dynamex, and we are reviewing their plan for 2017. So I will know more then.

 But this is really something that's going to grow. But don't forget, we are talking small piece of equipment. We are not talking $100,000 a truck. We are talking $25,000; $35,000; $40,000. And these are the same kind of trucks that we use in our ICS business here in Canada where we are buying the Sprinters or the Ford Transit I think is the name, a little bit smaller truck.

 So this is what we are looking at. Or you know that GMC Savannah type of thing there? So you are talking $25,000-$40,000 with a life of probably between 6 to 8 years. So in terms of CapEx for us growing e-commerce in 2017, I haven't seen the total plan, but to me it's going to be less than CAD5 million.

------------------------------
 Jason Seidl,  Cowen and Company - Analyst   [16]
------------------------------
 Okay, less than CAD5 million. No, that's good. Let me shift the conversation back a little bit to a division that hasn't been doing that well based on, I think, the Canadian economy, the LTL division. Now you have taken many, many steps to try to streamline that division to try to keep profitability at least a respectable level. When do you see that turning a little bit? So when you guys can start reaping the rewards of the massive investments that you guys made?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [17]
------------------------------
 Well you see, Jason, first of all in our LTL we've got two kind of LTL. We have got the intermodal and we have got the overload. Our intermodal, at least the good thing is we have no capital invested in those divisions because the rail are doing the line haul and we have the P&D operation all given to third parties.

 But on the Over-the-road, okay, this is where we are getting killed where we have lots of investment in real estate, okay? And that's why we're moving away from the small towns and we are selling terminals there, and that's why you keep on seeing a selling real estate and with huge gains. Now, for sure the Canadian LTL market will keep on shrinking. There's no dream there, okay?

 The market will keep on shrinking because of e-commerce, and e-commerce affects the positively the P&C guy and it's negative to the LTL. That's a fact. And the offer has to reduce, so you will probably see us during probably during 2017 we are in discussion with a few LTL carriers that are just dying, okay, because they don't make any money. And the solution in the Canadian LTL is really to adjust the offer to the demand which is reducing every hour, okay?

 Because the Canadian economy is not growing at the retail level, or very small, and the e-commerce is really the big growth engine and that is not positive for the LTL. So LTL for me in 2017, Jason, is still going to be a drag on our average quality of profit, but I think the good news is that we are starting to see some LTL players reducing their fleet, looking at selling their company. I went through about three or four files so far. So far we have not been really successful, but we will see some action there I think on our side, on the M&A side, on the Canadian LTL in 2017.

 And then when you do that you are in the position to really adjust the cost, get rid of equipment, get rid of the excess terminal and all that, and then you are in the position where you stop fighting for a rate of CAD1.00 dollar when it costs you CAD1.25. And that's why you see us, you know, our revenue is always going down because our mission is return on asset. So I'm not going to give an asset to a customer that says I will pay you CAD1.20. I'll pay you a dollar and the service costs CAD1.25. We are not in that business.

------------------------------
 Jason Seidl,  Cowen and Company - Analyst   [18]
------------------------------
 Listen, I appreciate the color and I'll turn it over to somebody else right now. Thanks again, Alain.

------------------------------
Operator   [19]
------------------------------
 Cameron Doerksen, National Bank Financial.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [20]
------------------------------
 Thanks, good morning. Question on the Truckload, just as a clarification, I guess the insurance claim or accident-related costs up CAD2.9 million. Why was it up so much year over year?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [21]
------------------------------
 Because we had too many accidents.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [22]
------------------------------
 Okay, so is just an unusual quarter for accidents?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [23]
------------------------------
 Well maybe our leadership at America, we have to go to church not just once but twice a week and pray so that we don't have another quarter of this disastrous accident situation. And sometimes it's not our fault. We get involved into an accident but in the US it's a very expensive market.

 Although if you look at our Transport America division we are making all the right investments in people, in training, in education, in equipment where we have -- Keith was telling me that 80% of our fleet now has got all the driver-assisted technology, like the collision avoidance and the lane change and the rollover thing and all that then. And I'm looking at that and say geewhiz. We have not been too lucky in this Q3.

 It's really another negative to our results in our US domestic operation, but I think this is exceptional. And what I am saying when I am talking to the guys is that guys, we are doing all the right thing. It's probably that we have not been -- we have been unlucky, I would say.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [24]
------------------------------
 Okay. All right.

 Just on the Truckload outlook, you mentioned this earlier. But there's some positive commentary coming out of Mullen on their view of the Western Canada, Alberta specifically. I know there's some optimism that maybe things will stabilize there, but are you actually seeing that customers coming back a bit or at least the supply in the industry being reduced? Is that something you are actually seeing in Western Canada?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [25]
------------------------------
 Not really. We just bought a small company a few months ago in Alberta through contracts, and before buying the company we went and talked to -- it was small so we talked to a few customers. And one of them, I mean, they said no issues no, no, no; and then after we bought the company the business was put up for bid, and the rates was just down 20%. It's still -- Murray knows that area way better than me, so maybe he knows things that I don't know. But I don't have a lot of faith in Western Canada right now. Maybe if oil goes back to [75], well okay.

 That's what us we keep in Western Canada what we have, but you will see that our investments are not going to be done in Western Canada. Us, I think it's clear what we are doing. Our vision is really south of the border and in the eastern part of Canada where the large population is, BC; and I hope Murray's right.

 If it's going to help us it's going to help everybody. But I don't have a lot of faith right now with what we are seeing us, okay? It's our leadership team there, they are fighting days in and days out just to protect what we have. Because, I mean, we have the waste hauling contract that we had so much competition there with our friend Progressive bidding the business. And we have been doing that for a long time in Alberta, and it cost us a fortune because we had to lower in order to protect the business.

 You know, Cameron, I don't know. I hope he's right, but I don't know. That's why us, we know what's going to happen in the US. We know that the Truckload and the e-commerce is going to be very positive for us in 2017. So BC, we know that it's growing. Alberta and Saskatchewan and Newfoundland, it's going to be a different story. I hope he's right.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [26]
------------------------------
 Okay. Just on the Package and Courier, you had double-digit EBIT margin percentage in the quarter so very strong result.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [27]
------------------------------
 Finally.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [28]
------------------------------
 Is there still, I guess, more cost savings to come, and I would think that just from a sequential point of view Q4 would potentially see an even higher margin given that I would think the e-commerce volumes would be peaking in Q4. Is that the right way to look at it?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [29]
------------------------------
 You see, Cameron, what's happening is that you have to go back in time. We bought Dynamex in 2011 with a (expletive) 2% bottom line. Our first mission, well, first was to learn the business and understand, and we lost a year. Okay? So we lost really 2011 and most of 2012.

 So finally our post has been to reduce our overhead, which we did very well in the US, and then the Canadian operation was not so bad at the time in terms of overhead. But the quality of revenue in the US was good when we bought the company, okay? And I made the mistake of buying Velocity, which was like a defensive move, okay?

 And then it's always the same thing, you put dirty water with the clean water. Well what happens is the water becomes dirty, and we had a tough time digesting all the dirty customers of Velocity. So we lost a year and our margin at Dynamex US went from a good 28 to 30 down to 25 to 26.

 What we have been doing because of the growth of e-commerce, this allows us in the US, which we did in 2015 to get rid of that 2% bottom line guy; and all these guys and clean that and replace that with better margin business, which we did in the US in 2014 - 2015. And now we're starting to see the benefit of that in 2016.

 The Canadian operation, as I said on Q2, we have about CAD40 million of (expletive) business, okay, that will be turned over. You will see growth in the e-commerce, but you will see probably a little bit of a growth in the total revenue because we are replacing low-margin business with better margin business because that's what we want. We are not in the business of -- we are not 2% guy. 2% is not for us. We will leave that to the other guys.

 That's why I was a little bit more optimistic when I was talking to [Maniere] about our Q4 is we believe that our Q4, okay, our P&C will keep on improving on the back of growing e-commerce. And on the Canadian side, the e-commerce is -- we are just starting to see the tip of the iceberg. So we are servicing only two markets right now, Toronto and Montreal. That's it.

 On our next day operation, like Canpar Loomis, yes; but it's still small over there. All in all, I think that it was a pleasant surprise our P&C, margin improvement. I said it for a long time that this got to run double-digit EBIT. We are there now even after depreciation of intangible.

 So we still have a long way to go. Our team at Canpar, Loomis and ICS and TForce are working day and night to keep on reducing the cost and being more efficient, et cetera, et cetera. When last year our Q3 results were affected by severance, our Q2 result this year and our P&C was affected by severance. Our Q2 will also be affected by severance because we are investing in technology.

 We are combining storing location and that brings efficiency for the future, but there's always a cost on our severance. So that's why when you read our MD&A you will see that we are commenting that this quarter our severance is CAD1.4 million less than last year. Okay? But that will be in Q4 it's going to be probably more in Q4 than last year just to keep the cost and efficiency going down.

------------------------------
 Cameron Doerksen,  National Bank Financial - Analyst   [30]
------------------------------
 Okay. That's great color. Thanks very much.

------------------------------
Operator   [31]
------------------------------
 Kevin Chiang, CIBC.

------------------------------
 Kevin Chiang,  CIBC World Markets - Analyst   [32]
------------------------------
 Alain, thanks for taking my question here. Just turning to maybe some of the more macro commentary you have. You've noted the difficulties in the LTL market in Canada, the challenge you have in the US TL market there. Just wondering, do you feel like you have found a floor though that things aren't getting worse per se even if they are still down? And maybe we can bounce off the bottom here as supply-adjusted demand maybe the overall economy gets better. Is that the feeling here, or do you think there's still more downside to what you are seeing in the broader market?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [33]
------------------------------
 Yes, you see, the US market and the Canadian market to me is different. If you look at the US Truckload market, in my mind I think that Q2 and Q3 I have been really, really rough. Okay? But I believe that we are going to be getting out of that mess either early in 2017, like Q1 or Q2. Okay, because of the offer is being reduced now.

 All the large fleets are reducing the number of trucks, et cetera, et cetera. So this will have any effect on the offer and finally it will bring back profitability because I think also that in 2017 the US Truckload market will grow because of the consumer demand. I don't think it's going to grow because of the industrial demand because the dollar will be expensive, US dollar will be expensive. And that is going to have some kind of pressure on their capacity to sell their industrial product.

 And as a matter of fact, us -- we have very good rates with shipping products from Canada to the US, but right now we are going through a nightmare trying to find a backhaul into Canada. Why? Because the Canadians are not buying anything from the US. Okay? Or much less because of the value of the US dollar. So that, I think, it's in issue that will stay with us.

 Now, on the Canadian side in the LTL I think the LTL carriers in Canada, they have to understand that you have to reduce -- you have to reduce the number of trucks. You have to reduce the number of terminal. You have to reduce the number of doors. You have to reduce because although the population is growing in Canada, okay? But the biggest market of our LTL has been industrial and right now it's not because we've lost most of our industrial base in Canada.

 So it's retail. So retail, okay, the brick and mortar guys that have been serviced by LTL guys like us and others, we are suffering because our customers are suffering because they are losing business to the e-commerce guy. I don't think that this will change. I think this will keep on.

 And that's why the LTL market in my mind will keep on shrinking. So the only way that you can keep on building a good business there is you have to adjust yourself, you have to reduce. And then the cake or the pie is going to be smaller, but if the pie or cake is smaller you need less players. You cannot feed as many people when the cake is shrinking. So you need less people at the table. And I think that you will start to see in 2017 guys are just saying I quit, I am gone, I am leaving, right?

------------------------------
 Kevin Chiang,  CIBC World Markets - Analyst   [34]
------------------------------
 That's helpful.

 And it seemed like in an earlier response that you have looked at a number of LTL, I guess, companies come across your desk, and I'm just wondering what's your -- I guess what the strategy is in terms of potential to look at tuck-in acquisitions within LTL? Is it addition by subtraction? So you got to take out a competitor and rationalize the market yourself? Are there lines that you need more density in? Maybe just a little bit of color there would be helpful.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [35]
------------------------------
 Yes, you are absolutely right, Kevin; it's addition by subtraction. We are always the same, us, if we buy a company that is not making any money. We are not magicians. If we keep on doing what the guy is doing, well we will just keep on not making any money. So we have to change.

 What do we have to change is: number one, is the quality of revenue. If the quality of revenue is not good; and it's always you've got some good ones, you've got some average and you've got some bad ones. That's always the issue with the LTL guys. It's complex to identify the good versus the bad and the ugly.

 So that's what we have been doing, okay? But if you look at what we bought lately in the LTL, we bought some good companies like Vitran, Quick X, and Clark. So these were not fixer-upper. These were going through some tough time because of the market et cetera, et cetera. But if you buy a fixer-upper sometimes -- it's you just shut it down or you just say you know what? We will take the good and just get rid of the rest.

------------------------------
 Kevin Chiang,  CIBC World Markets - Analyst   [36]
------------------------------
 That's helpful. And just on the e-commerce front, it sounds like this came in -- it was a pleasant surprise as you noted. I think in your last call you had suggested that when you look out into 2017, the run rate revenue you saw from this business was roughly CAD275 million. Is that still the case after a strong Q3 and a pretty optimistic Q4 or do think you can be punching above that and -- maybe an update on the margin profile with this business.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [37]
------------------------------
 This is something new for us, Kevin. If you go backache year-and-a-half ago, e-commerce for us was really not insignificant but small. So we don't know. We know that we have a great recipe. We know that we are lean and mean. We know that we are highly competitive in this market. We saw what happened in Q3.

 We hope that we are going to be that in Q4, but our experience is limited. The e-commerce in my mind is a transition mode right now. It's always been a next-day guy that's been servicing the e-commerce until about a year ago -- a year-and-a-half ago. So there's some kind of transition with the e-tailer. Some of the volume now is going to the last mile. Some also the volume -- they're trying to do it themselves, right?

 How much of that will they keep on growing the share they did do it themselves or would they -- after they look at their costs and compare that with what it cost them to use us, they say hey why would we do it ourselves? But those e-tailors are in the trial-and-error mood, right? So they try something, and if it works good for them. If it doesn't work then they call back the carrier. So it's hard to say.

 We believe that we have a good shot. We have a fantastic product that we can offer these guys. But it's still early. We have only one year really of experience.

 And like I was saying to Jason, now these guys are asking us an employee model. It's good because us in Canada we have the experience of the employee model. We do it already, but we are not doing it in the US. We just started a month ago. How big is that going to be for us in a year? It's still very difficult to say.

------------------------------
 Kevin Chiang,  CIBC World Markets - Analyst   [38]
------------------------------
 That's helpful. I'll leave it there. Thank you very much.

------------------------------
Operator   [39]
------------------------------
 Walter Spracklin, RBC.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [40]
------------------------------
 Thanks very much. Good morning, Alain.

 So, yes, I wanted to come back to the outlook side of things because reading your outlook you admonish that it nothing has really changed. We are still in this kind of sluggish environment, but signs of optimism in certain parts of your business as you go into 2017, particularly around e-commerce and so on.

 When I look at how you frame your expectations for next year, I know historically you've always look at a zero-growth basis, and then seeing what you can grow on the last year relative to some of your internal initiatives. How do you frame -- how do you look at 2017 now that you see e-commerce coming on, and as well as some of your internal and continued internal initiatives? How should we look at and what would you point us toward in terms of EBITDA guidance for 2017?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [41]
------------------------------
 You know, Walter, I think that if business stays the same, right, with what we know today and we are just in the middle of reviewing budget right now, but my guess would be that we have to improve and we will improve, globally, TFI, by about CAD20 million, okay? Most of that, in my mind, has to come from P&C improvements, okay, and our Truckload. US domestic Truckload and even our -- to a certain degree our Canadian Truckload.

 Now the Canadian Truckload, there's a little bit of an issue there because don't forget we are buying trucks in US dollars. So that trucks that we are buying today, we are buying them at CAD1.30. They are replacing trucks that we used to buy at a dollar if you go back in time four years ago.

 We have an increasing cost right now on truck and trailers on the Canadian side. The US has got nothing to do with that because the US is US. There's a little bit of cost pressure here with about 20% of our truck fleet in our Truckload and about, let's say, 10% of our trailer fleet because trailer lasts longer than trucks.



------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [42]
------------------------------
 Got it.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [43]
------------------------------
 So this is an issue that will be not just us, everybody in Canada face the same situation. The spare parts and all that. So when I say 20, you've got to keep in mind that the US dollar is going to penalize me on CapEx and cost load. CapEx on the Truckload not so much because we lease trucks, but it will affect my lease payment.

 So that being said, that's why I'm saying -- and like usual I never talk about pricing improvement, okay, and we don't think about volume. We just think about how can we do better next year with this kind of environment? And, yes, hopefully if we can improve the pricing, okay, because the market helps us doing that. Fine, but it's not in our model. So to answer your question, I believe that a CAD20 million improvement with this year's result -- so let's say we close the year at CAD435 million, that's going to bring us to about the CAD450 million to CAD460 million with this little price on equipment that's going to affect me.

 You know, if you are not buying any trucks, like if you have 30% of your fleet that's part because you are operating in Western Canada, okay, and the demand is so bad so it's not going to be affecting my Western Canadian operation. But it will be affecting my Eastern Canadian operation.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [44]
------------------------------
 Right, and you mentioned the higher US dollar purchase of your rolling stock, how does that figure into your next year's CapEx plan? I know you were guiding us this year at around CAD80 million net CapEx. What should that number look like next year?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [45]
------------------------------
 Well you know you have to think about on the truck and trailer side of it. It's going to cost me between CAD10 million and CAD20 million on the CapEx side.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [46]
------------------------------
 Yes, that make sense. And so when you look at all that and put it together, can you give us some indication with cash taxes, the CapEx program as you just mentioned, I mean, your interest is pretty much baked in your cash interest. What are we looking at in terms of free cash flow conversion? Generally you are mentioning a run rate of upwards of CAD300 million from operations and then maybe some more from land sale. How would you position your free cash flow expectations for next year?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [47]
------------------------------
 I think that if you consider everything in there, Walter, we will probably be at the same level next year as we are doing this year.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [48]
------------------------------
 Got it. Okay. Got it.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [49]
------------------------------
 Now don't forget that also every dollar that we improve in our US operation has been a disaster, Truckload I am talking about, this year. Which we believe will improve next year. Don't forget that dollar will come back at CAD1.30 for us.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [50]
------------------------------
 So your EBITDA improvement will be offset, I guess, by the US dollar impact of higher CapEx spend, interest relative the same; tax rate should be the same roughly?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [51]
------------------------------
 Yes. Yes.

------------------------------
 Walter Spracklin,  RBC Capital Markets - Analyst   [52]
------------------------------
 Okay. All right. Okay. That's all for me. Thanks very much, Alain. I really appreciate it.

------------------------------
Operator   [53]
------------------------------
 Turan Quettawala, Scotiabank.

------------------------------
 Turan Quettawala,  Scotiabank - Analyst   [54]
------------------------------
 Good morning, Alain. Listen, I just had the one question quickly here on the sustainability of the margins at P&C. So obviously great to see that 10% number there. I just want to get a sense, I know you talked about a few puts and takes, but as we think about -- I know the quarterly variations are there because you're making some adjustments on the supply side there in your business. But if you think about 2017, is it fair to think of 10% as of being a sustainable margin going forward or does it go higher from here? Can you just give us some color on that?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [55]
------------------------------
 We've always being very conservative, Turan, and I have been saying for years that we have to get back to double digit EBIT which we are now at. If you go back in time before the acquisition of DHL Canada and Dynamex, we were a 12% to 14% EBIT guy.

 I don't think that because of the last-mile business and the market condition that we could be at 14% guy within the next year or two. But with our cost initiatives, our efficiency initiatives, and all the right things that we are doing I believe that it's going to be eight it's going to be a 10-plus. Can we be at 11? I think so, okay? Can we be 14? Today I would tell you no, okay? It's too difficult to predict because from a 10 to go to an 11 in next year's, I think it's doable. I think it's doable.

 I think the e-commerce is going to help us in Canada because the Canadian market is just not growing, although I have to say that our team at Canpar have done a fantastic job because these guys are growing organically, Canpar. A little bit of ICS too.

 But Loomis is not growing right now and TFIS is not growing because one of their nice niche, the entertainment, is slowing down every year because of technology. But all in all I think with a little bit of organic growth in Canada and our Dynamex Canadian operation, as I said, we're cleaning up the mess there.

 We are letting go some customers, as I said, in Q2. So the Canadian revenue up Dynamex will go down and will be replaced by e-commerce. We feel pretty good that in the Toronto market, for example, we will probably be delivering about 5000 to 6000 parcels a day.

 That's what our customers is telling us. Those guys have the know-how, they have the knowledge. But we haven't seen it so far, but we are just at the end of October, and they just launched their new product offering in September and we're at CAD2500.

 That's why I feel, going back to Mona's question, I feel pretty good about our Q4. 2017, I think that we will be a 10 plus. It's still early for me to say it because I haven't seen my guys and their plan for 2017, so I don't want to be too much ahead of the ball, but we don't want to go back to the single-digit EBIT. That's for sure.

------------------------------
 Turan Quettawala,  Scotiabank - Analyst   [56]
------------------------------
 For sure. Perfect. Thank you. And then if I think about maybe 10% to 11% margin expansion there at P&C and your comments, I guess, to the earlier question about CAD20 million increase in EBIT, you are leaving a little bit of a table there with the LTL and Truckload, or do you think those will be flattish when all said and done in 2017?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [57]
------------------------------
 I think LTL, it's going to be tough to keep on improving in a (expletive) market, but if there's some players that just fold their tent and just say goodbye, I'm out. That's going to help. That's going to help.

 If Murray is right about Alberta, because Alberta has always been the best market we have for LTL. If he's right, that's going to help me. Because right now it's the (expletive). LTL, if Western Canada improves, that's definitely going to help us. And if some players on the East Coast -- Ontario, Quebec I am talking about -- decide to say hey, we are gone, we're back, we are closing shops. That's going to help too.

------------------------------
 Turan Quettawala,  Scotiabank - Analyst   [58]
------------------------------
 Perfect. Thank you very much. That's all I had.

------------------------------
Operator   [59]
------------------------------
 David Tyreman, Cormark Securities.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [60]
------------------------------
 Yes, good morning, Alain. A few clarifications just to start. You mentioned you had an exceptional cost in Q3. I didn't catch what you said that was?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [61]
------------------------------
 In Q3 it was our insurance claim, okay? When you read, David, our MD&A you will see in there that our insurance claim in Q3 has been really difficult for us which is exceptional.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [62]
------------------------------
 Okay. Okay. That's perfect. And then also on the e-commerce, you mention CAD5 million, or less than CAD5 million for next year. Is that per month you are referring to? I think you said it's related to the employee model. You said the employee model is CAD1 million --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [63]
------------------------------
 Okay. No, the employee model right now we are trailing at CAD1 million revenue a month.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [64]
------------------------------
 Yes.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [65]
------------------------------
 Okay? That's what we are doing today. I would just start, and we believe that the employee model will grow into next year. I don't think I've said CAD5 million, David. But I don't know exactly how much because I haven't reviewed really the plan for next year. This is going to be done next week with my guys.

 But for sure growing the e-commerce for us in the US, I think that the target is going to be about $50 million for the year.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [66]
------------------------------
 Okay, and that's --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [67]
------------------------------
 We have some very good customers. As a matter of fact, one of them, which is a great company, we are exclusive with them. We just opened up for them San Jose. We just opened up two weeks ago Long Island for them.

 We feel very good about the US market and the Canadian side we feel good as well. But we are so behind in terms of coverage in Canada versus the US. We are just servicing two markets right now.

 Montreal, we should be in there probably within the next 6 to 12 months, but really it's only two markets. The Canadian market could be what six markets maybe? You've got Vancouver, Calgary, Edmonton, maybe?

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [68]
------------------------------
 Yes, got you.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [69]
------------------------------
 And then you've got the big Toronto. Toronto we are already at [CAD]2500 a day. Don't forget Toronto is the third-largest city in North America. So it's not going to be LA. It's not going to be New York, but it's going to be good.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [70]
------------------------------
 So just to clarify the $50 million, is that in all business both employee and --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [71]
------------------------------
 Yes.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [72]
------------------------------
 Okay, and that's in Canadian dollars or US dollars?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [73]
------------------------------
 (laughter)

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [74]
------------------------------
 There is a difference, Alain.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [75]
------------------------------
 No, no, that's US. That's US.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [76]
------------------------------
 Thank you.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [77]
------------------------------
 You get me confused sometimes because I've got to think before I answer.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [78]
------------------------------
 Yes. No, fair enough. And then on Q4, I think you said there was going to be some severance. Is that in P&C that you were referring?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [79]
------------------------------
 P&C. P&C. Yes.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [80]
------------------------------
 Okay, but it sounds like the benefits of e-commerce and whatever else you are doing could be larger than the severance?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [81]
------------------------------
 Oh, yes. Oh, yes. But don't forget this is short-term paying for long-term gain. And I think that guys are starting to see the numbers because this is not the improvement that you see in Q3.

 It's not just about the e-commerce, okay? It's about our Canpar operation has done a great job in Q3. Our ICS seems to be our diamond. It's not just the e-commerce, but -- and this is all, for instance, in Q2 -- yes. I think it's in Q2 or Q3. I'm not too sure. We had to let go about 40 people because of a move that we made in Ontario. So it cost us but down the road it's efficiency of our network, and we are investing in technology. We are investing in conveyors and cubing and sorting and all that to capture better quality revenue too.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [82]
------------------------------
 Right. I understand. And then the P&C you said you have CAD40 million to CAD50 million of bad business there. How long --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [83]
------------------------------
 That's Dynamex. That's Dynamex.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [84]
------------------------------
 How long do you think it will take to switch that out and get better business?

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [85]
------------------------------
 We will have a dip in the revenue for sure, David. We will have a dip in the revenue in 2017 with Dynamex Canada. No question about that.

 What's the potential with e-commerce in Canada, it's in my mind for sure today it's not CAD40 million. So we will have a dip in revenue, but the guys are working hard to replace that with quality. So, for instance, we should do way better in Vancouver. Vancouver, it's a growing city like Toronto.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [86]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [87]
------------------------------
 We are just scratching the surface because we were stuck in Prince George. Why are you losing your time in Prince George?

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [88]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [89]
------------------------------
 Invest your time and effort in Vancouver. Prince George is a nice town, but it's not going to grow that fast.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [90]
------------------------------
 No, I understand. Okay. And then on LTL, you've made some pretty good margin improvements throughout the year and Q3 was the best yet. Is it possible to continue making margin improvements or is it pretty much --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [91]
------------------------------
 No. No. No. You see, David, if Murray is right and Alberta is coming back, and I hope he's right, that's going to help my LTL, because my best market has always been Western Canada. Because now I am going to (expletive) because of the situation there. Now, that's number one.

 Number two, one the east part of Canada, the problem is the market itself. It's not the economy. Over there it's the economy. Over here it's the market. There's too many players. There's too many dogs chasing the same bone. That's a different problem versus the west.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [92]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [93]
------------------------------
 So Murray he doesn't have that problem because he's not here. The problem he has is market, and market, I hope he's right, market improves? He's win -- it's his win. It's my win. Here in the east there's too much capacity. We need players to disappear or adjust, because the LTL market, and I'm repeating myself, will shrink because of the e-commerce.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [94]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [95]
------------------------------
 Simple fact.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [96]
------------------------------
 So could your margins actually go down next year because of the --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [97]
------------------------------
 No, I don't think so. The only thing that may go down, David, is revenue.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [98]
------------------------------
 Okay.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [99]
------------------------------
 I haven't seen all the plans of my guys, but I think probably our revenue will go down 5%, and the goal is to protect the bottom line and improve it.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [100]
------------------------------
 Okay, so that implies margin expansion then in percentage.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [101]
------------------------------
 Yes, a little bit. Yes.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [102]
------------------------------
 Yes. Okay. Understood. And last question a broader long-term question. Do you have any thoughts on platooning in --

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [103]
------------------------------
 That's a good question because three years ago nobody thought anything about that. I was at the conference -- where was that? In Dallas, I think. Yes. I was with some of the guys there. I think it is something that we will see.

 It is a safety issue, David. Right now what we are doing, us and others, we are implementing in the truck drivers-assistant technology like lane change and collision avoidance and all that. So that's step one. Because in the US, if you are not safe, and you have money -- if you are not safe and you are a poor guy nothing is going to happen to you.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [104]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [105]
------------------------------
 Right? But if you are not safe and you've got money, or if you don't have all the odds to you with the equipment. So that's the first step. The second step, I think it makes a lot of sense for trucks to move in a group and we're all these trying to see Uber in Pittsburgh et cetera, et cetera. I think it's coming. How long this is going to take, I don't know. But the biggest thing in my mind is safety because a driverless truck, in my mind, when it's fully secure will be safer than a human being because they don't make mistake.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [106]
------------------------------
 Right.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [107]
------------------------------
 They don't.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [108]
------------------------------
 So it sounds like it's a stay tuned.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [109]
------------------------------
 They don't fall asleep at the wheel because they had a tough day or whatever.

------------------------------
 David Tyreman,  Cormack Securities - Analyst   [110]
------------------------------
 Yes. Okay. Very good. Thank you very much, Alain.

------------------------------
Operator   [111]
------------------------------
 Mr. Alain Bedard, there are no further questions at this time. Please continue.

------------------------------
 Alain Bedard,  TransForce Inc. - Chairman, President & CEO   [112]
------------------------------
 Okay. Thank you for joining us this morning and I look forward to speaking with you again following the release of our year-end results. Thank you all and have a great day. Bye.

------------------------------
Operator   [113]
------------------------------
 Ladies and gentlemen, this concludes our conference call for today. Thank you for participating. Please disconnect your lines.




------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the 
Transcript has been published in near real-time by an experienced 
professional transcriber.  While the Preliminary Transcript is highly 
accurate, it has not been edited to ensure the entire transcription 
represents a verbatim report of the call.

EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional 
editors have listened to the event a second time to confirm that the 
content of the call has been transcribed accurately and in full.

------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other 
information on this web site without obligation to notify any person of 
such changes.

In the conference calls upon which Event Transcripts are based, companies 
may make projections or other forward-looking statements regarding a variety 
of items. Such forward-looking statements are based upon current 
expectations and involve risks and uncertainties. Actual results may differ 
materially from those stated in any forward-looking statement based on a 
number of important factors and risks, which are more specifically 
identified in the companies' most recent SEC filings. Although the companies 
may indicate and believe that the assumptions underlying the forward-looking 
statements are reasonable, any of the assumptions could prove inaccurate or 
incorrect and, therefore, there can be no assurance that the results 
contemplated in the forward-looking statements will be realized.

THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------