Earnings Call: Q4 2019

Feb 10, 2020

Earnings release

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's 4th Quarter 2019 Results Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions for entering the queue will be provided at that time. Before turning the call over to management, please be advised that this conference call will contain several statements that are forward looking in nature and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, last year, the company adopted the new accounting standards under IFRS 16, and as a result, certain numbers are not directly comparable with past results. All dollar amounts are in Canadian dollars. In addition, the company has filed today a prospectus supplement and a registration statement to issue common shares and list the company's common shares on the New York Stock Exchange. This presentation is meant to discuss the company's latest results and is not made in furtherance of the offering or to solicit investors in connection with the offering. Following the advice of the company's Securities Council, the company will not discuss the offering, the prospectus supplement or the registration statement or comment beyond the scope of its publicly filed materials. Q and A will be limited to the same scope for this call. Lastly, I would like to remind everyone that this conference call is being recorded on Monday, February 10, 2020. I will now turn the call over to Alain Bedal, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir. Well, thank you for that operator, and I appreciate everyone joining us this afternoon. Within the past hour, we released our 4th quarter and full year 2019 results. If you need a copy of the release, please visit our website. Our Q4 performance capped a very strong year for TFI International, driven by our continued attention to the basic fundamentals of the business, regardless of capacity concerns across the industry and other fluctuating business conditions. This consistent focus allows us to produce strong and consistent free cash flow and earnings per share, which we then use optimize our operation, grow our business and create long term shareholder value. We employed this consistent approach to the business during the Q4 and in fact throughout all of 2019. Specifically, we pursued an asset light business model. We capitalized on opportunity to enhance efficiencies, we maintained a strong balance sheet and in a highly disciplined manner, we completed 8 accretive acquisitions during the year. At TFI International, it's our ultimate goal to create and unlock shareholder value and whenever possible, return excess capital to our shareholders. Therefore, as we've often said, we look to generate not just growth, but profitable growth. And you'll see that philosophy at work with our 4th quarter results, which I will cover now. So total revenue was down 1% compared to the prior year's Q4 at DKK1.3 billion. However, our operating income increased a robust 20 percent to DKK124 1,000,000, while our adjusted EPS on a diluted basis was DKK0.95 Our operating results are a strong example of our primary focus on profitability. Another priority of of ours is cash flow performance. And during the quarter, we generated net cash from continuing operating activities of 176,000,000 dollars similar to the year ago figure. For the full year 2019, we produced net cash from continuing operating activity of CAD665 1,000,000, up 22% over the prior year period. Let's turn to our 4 business segments, each of which we believe has performed well, especially given the freight environment, I mean the soft rate environment in 2019. Starting with our P and C, this segment represents 15% of total revenue and in the year ago quarter experienced a onetime benefit related to the Canabo strike, making for a more challenging year over year comparison. Revenue before fuel surcharge was down 5% from the prior year 4th quarter. Operating income was CAD 30,000,000 compared to CAD 34,000,000 in the corresponding prior year quarter and the segment operating margin was 17.8% relative to 19.4%. Given the weaker business condition versus a year earlier and the prior year benefit from Canada Post, we believe that we outperformed the industry and we will continue to deploy cutting edge technology, optimize our business mix and asset utilization and leverage our strong network to capitalize on e commerce growth opportunity regardless of macro factors. LTL, less than truckload, represents 18% of total segment revenue and generated revenue before fuel surcharge of CAD200 1,000,000 relative to CAD232 1,000,000 the prior year period. Our operating income, however, was $25,000,000 which was up a healthy 9% versus a year earlier and our operating margin climbed to a robust 270 basis points to 12.8%. This improved profitability despite a 4.4% decrease in our revenue per 100weight reflects strong cost management and our continued focus on the quality of our freight. Our Truckload segment represents 47% of total segment revenue and generated revenue before fuel surcharge of $545,000,000 which was 3% higher than the prior year period. Our truckload operating income was $61,000,000 up 17% relative to CAD52 1,000,000 a year earlier and our operating margin of CAD11.2 was up a solid 130 basis points compared to the prior year Q4. Our adjusted operating ratio was 85.9 percent for our Canadian truckload, 89.3 percent for our specialized truckload, both similar to the prior year period, while the adjusted operating ratio of 92.4% for U. S. Truckload was 90 basis point improvement. We're proud of the growth, improved efficiency and operating margin expansion in our overall truckload segment, especially in light of continuing continued challenge in the freight market. Logistics, which we previously referred to as Logistics and Last Mile, represent 20% of total segment revenue and generated revenue before fuel surcharge of $263,000,000 reflecting double digit growth over the $236,000,000 in the prior year 4th quarter, and our operating income was EUR 19,000,000. Within logistics, as I mentioned last year, we implement we are implementing a margin improvement plan and are beginning to see some positive results. Shifting gears, our focus to capital allocation remains balanced and disciplined. During 2019, we made 8 accretive business acquisitions, all of which were completed within the 1st 9 months of the year. Also during the Q4, we returned $50,000,000 to shareholders, including $20,000,000 of dividend and $30,000,000 in the form of a share repurchase. As we mentioned in October, after expanding the size of our buyback authorization twice during 20 18. In late September, we received approval from the TSX to repurchase for cancellation an additional 7,000,000 common shares through October of 2020. After our 4th quarter repurchase, there remained 6,300,000 shares arise for repurchase. I want to wrap it up with our capital allocation plan, which are unchanged. We plan to continue investing capital where we see the best risk adjusted return, pay our quarterly dividend and extend our track record of identifying attractive acquisition opportunity and executing on them in a highly disciplined manner. In other words, it's business as usual here at TFI International. Now, operator, I'd like to take questions from the If you could please open the lines. Absolutely. The first question will come from the line of Jason Seidl of Cowen. Please go ahead. Your line is open. Yes. Thank you, operator. Elaine, team, good afternoon. A couple of quick questions. One, I guess, I'll start on in logistics. You talked about how you're starting to see some early benefits from that margin improvement story, I'm assuming mostly in the U. S. Here. Can you give us a little more meat on the bones to understand what's going on, especially in the U. S? Yes. Well, you see, Jason, I mean, our U. S. Operation, don't forget, when we bought Dynamics in 2011, those guys were 1% to 2% bottom line guys. What we were able to do over time is really our Canadian operation is really running like it's unbelievable what our team in Canada has done. Now the U. S. Has always been a lagger. And the delta between U. S. And Canada is like 8, 9, 10 points at one point. So we said, you know what, in the summer, with all these no, the team was not no, the team was not no good. That's why they were losing money. So we said, let's have our Canadian team help the U. S. Team to perform better. And you're starting to see some improvement in Q4. And if you look at our plans for 2020, I'm sure that the team now with the support of the Canadian guys will definitely do way better in 2020 versus 2019. But it's always the plan at TFI. It's more of the same, trying to do more with less, trying to do better, beat the plan. So I mean, we're really this is probably one of the diamond that we have that's going to be shining more at the end of 2020 versus 2019. Now the team is led by Scott Leverage and Cal now as an EVP. We have some super regional RVPs there, Bo and Mike. I'm convinced that this is going to be a huge success for us in 2020. Well, you mentioned that 8 to 10 point delta. How quickly do you think you could sort of have the gap between the 2 of them? Yes. It will take some time, okay. But if you look at what we've done with CFI, I mean, with the 2018 now that we have a CFI, we were able to turn that quite fast, right? Took us about 18 to 24 months. And even now, if you look at our Q4 numbers in a very soft rate environment, if you look at our peers in Q4 in USCL, most of them are down, okay, versus the previous year, 2018. Us, we're up a bit, not much, but we're up a bit. So I think that our last mile growth there will definitely improve that and get to a point where we could be very proud of a double digit EBIT. To me, it's doable in the U. S. And we'll get there. Okay. Time wise, Jason, time wise, it's not going to be done within 6 months, but you'll see over time very important improvement. I'll tell you also another story. If you go back when we bought Loomis or DHL Canada, that was in 2011. Our EBIT went from 13% down to about 6% or 7% at that time. And we said to the investor then, guys, we'll be back double digit EBIT. It will take us some time. So in 2012, we were about 6%, 7% EBIT. Well, today, okay, you got to see, I think, it's 8 years ago. Well, now we're at 17% EBIT, all in, including DHL Canada. Well, you brought up the U. S. And some of the improvement that we've seen with what's going on at CFI, and that's obviously welcomed improvement. Is the U. S. Once again a laggard compared to the rest of the truckload operations you have, Canada and also specialty. Can you talk a little bit about where you guys think you can take that OR in 2020? And also what sort of an impact that fleet refresh is going to have on the numbers? Yes, that's a very good question. I mean, when we talk to Greg and we are so proud of what him and his team have done there. I think that we still have some improvement that needs to be done at TCA. And there's no reason why we cannot run on average, on average, a truckload operation in the U. S. With over 10 years period, at least a 10% to 12% EBIT contribution to the company. I mean, if you look at what we do in Canada, year in, year out, I mean, we're producing on our van division between 12% to 16% EBIT. Our specialty truckload, even with all the M and A that we're doing, buying companies with 4% EBIT, 3% EBIT, 6% EBIT, I mean, we're coming in with a 12%, 13% EBIT now in a software environment. So I mean, our team is I'm telling you, in Canada, for sure, we're second to none. And in the U. S, I mean, we're beefing up the team. We're adding to our team. We just hired a new kind of ops guy that will help our team in the U. S. To beef up the team. So it's all good. We have the recipe. Now we have the people and we'll deliver because never forget, Jason, us, we're in business for the shoulder. We're not in business to be big and just spin our wheels. I've always known that. And Alain, appreciate the time as always. And I'll turn over to somebody else. Thank you, Jason. Your next question will come from the line of Jack Atkins of Stephens Inc. Please go ahead. Hey, Alain. Good evening. Thanks very much for taking my questions. Hey, it's not good, Jack. So let me start off on the truckload business for a moment. And there's definitely the expectation in the market that we're going to see a turn in the U. S. Truckload market at some point in 2020. Some are more bullish about it being towards the middle of the year than others. But I guess I would just be curious to get your take on how you see the market developing in 2020 from your perspective within the truckload within your truckload operations and sort of how you have positioned TFI and your various subsidiaries to capitalize on that? You know what, Jack, I'm in a tough position because of what we're doing with the equity offering. What I could tell you though is I concur, okay, with the guy that says probably the freight environment will be soft in the 1st 6 months and it will probably get better because don't forget, last time I looked at it, there was about 60,000 to 70,000 trucks too many, okay, on the road in the U. S, too much supply versus the demand. Now every week, okay, this oversupply is being reduced. So this is why I think that the U. S. Economy is doing well. We look at unemployment, we look at everything that you look, things should get better. Now the problem is we created this overcapacity, we're stupid. We created this overcapacity ourselves in 2018 because we listen to customers, oh, add trucks, do this, buy trucks, lease trucks. And then we oversupply the market and then we're stuck with our pants down like it happened in 2019. So I think that I tend to agree. I don't want to talk too much about TFI because I'm not really allowed to do that. But I concur with the feeling of what you just explained. Okay. Got you. Totally understand about being a little bit constrained there. Just with regards to the Q4, was there any impact in the Q4 from the rail strike in Canada? Anything worth calling out there in terms of the impact that may have had on results? Well, the problem that we face all the time, Us, is that we use Array for our LTL. And when we have a strike with CN or CP, it's always to our detriment because then we're stuck with the customer saying, well, where's my freight? Well, then we say, well, we don't control the line oil. It's stuck with this rail company that's on strike. So then we probably have to do something to help our customers. So we have to put it on the road. So we don't save anything. As a matter of fact, it's a negative in a sense to us because we're there, we have to protect the relationship we have with the customers. So I mean, it's not been huge for us. I mean, we're not in the business of excuse, so we never really talk about that, but it's not been a positive. The only positive we had, okay, versus 2018 versus 2019 in Q4 is that postal strike in Canada. So that was a little bit of a tailwind for our Loomis Canpar operation, okay. And that's why we did not as good in Q4 this year versus last year. Okay, understood. Let me ask you a couple of quick questions about the LTL segment, if I could, and then I'll turn it over. But your cross border partner in the U. S. Is going through a significant expansion of its footprint within the Northeast. And I've got to think that that will help or has helped, maybe if we want to focus on 2019, some cross border activity there. Could you maybe I mean, is that something we should be thinking about as a tailwind to 2019 and beyond, maybe if they continue to get traction with their initiatives in the Northeast? Well, absolutely. I mean, we've been really happy carrier for 20 years. After 20 years, they just said, hey, TFI, thanks, but no thanks. We're going to deal with a different guy in Toronto, a cartilage guy. And then we went with Saia. I can say we went with Saia at the time. And those guys were not big in the transborder business, but we work with them, okay, like we did 20 years ago with the other guy. So and we're really proud because these guys, the volume has been growing in and out every month. And you're absolutely right, their expansion in New England being so close to Ontario and Quebec, it should be a positive down the road. Okay. I think that's got me taken care of. Thanks very much for the time. Thank you, Jack. Your next question will come from the line of Walter Spracklin of RBC Capital. Please go ahead. Thanks very much. Good afternoon, Hey, nice to see you, Walter. Yes. So just I don't know what you can kind of what you can share for us here in terms of 2020, but typically it's around this time of the year, you give us some indication in terms of what you're expecting in terms of EPS, free cash flow and CapEx. Are you able to provide some insights at top level on that those items or No, no. You see, that's the problem, Walter. I can't say anything right now because of what's going on. So let's maybe, I don't know, maybe in a few weeks when we're allowed to explain a little bit where we're going. As soon as I can, Walter, we'll provide indication. What I can say though is that our team is really focused. And when these guys are focused and they know the mission, and the mission is we're in business for the shoulders. We have to be more efficient and we have to do more with less And we have to consolidate the real estate. How can we do if we do an acquisition, how fast can we turn these guys around, etcetera, etcetera. So it's the same kind of religion because it's like a religion in TFI. That same religion, Walter, is still there, okay. So as soon as I can, okay, we will be providing guidance, okay. But right now, I cannot say anything. Understood. Okay. And in terms of the you mentioned in your prepared remarks that you've been active on the acquisition front. When you look at the pipeline right now, what areas would you say either geographically or by segment would look the most appealing to you right now? Well, then again, on pipeline, I cannot say anything right now, Walter. But just look at history, what I was saying before, okay, I can say that really. Is there anything that has changed? Probably not. Like we kept on saying, it's always the same religion at TFI. As soon as I can, Walter, we'll be able to talk more about 2020 2021. Okay. Let me go to a strictly 2019 question and perhaps you can give me some color on that. I should understand you're fairly limited. So I was at a conference last week and there was some discussion in some of the centers that insurance rates have really spiked for truckers, particularly cross border truckers. And that's leading to some movement of volume over onto the rail as some of the capacity tightens up there. Are you seeing those rates for you? I know you do a lot of self insurance there. Is that an opportunity? Is it a cost item for you? Are you even seeing that? Or just any color on kind of the cross border insurance costs that you're seeing recently? Well, one thing is for sure, Walter. You're absolutely right. The insurance world is really tight right now. So if you talk to the U. S. Domestic truckers, they're feeling the pinch and the pressure. Us, like you just said, I mean, in Canada, we're mostly self insured, not in the U. S. So in the U. S, we have retention that are fairly high, but we have coverage from insurance company. And what we've done since we are involved in the U. S. Is we spend a lot of money, first of all, in the aging of our fleet. So we replace a lot of trucks. So right now, if you look at the average age of our truck, we're just under 2 years, about 1.7 years in the U. S. Years old. So with that, so we have all the safety features of lane change assist, collision avoidance. We also have all the forward facing camera. So really, if you look at our loss ratio, we're probably one of the best customer for the insurance company, because our loss ratio is maybe like 10%, 15%, max 20% in the U. S. So I agree with you, probably a lot of these truckers that their loss ratio is 100%, 150%, they will have to pay more. But for us, I don't think it's going to be an event because of our loss ratio and because of the obvious equipment that we've invested in safety because we believe us, it's not just the claim, it's the safety of the citizen that are on the road. We're there to protect that. Now does this affect more the transborder world of trucking? I think it's all across. It's U. S. Domestic, it's Canadian domestic and it's also transborder. Now don't forget that us in Canada, we're slow. I mean ELDs, we're still talking about that. It's still not in place. And that should help in the safety because then the guys don't cheat, they don't run hours and they get tired and that's when it could become a problem. That was my last question is on ELDs as it starts to come into force in Canada, you're mentioning it will have a positive impact on safety. Do you think it will affect capacity the way it did in the U. S? Or is that really already kind of played itself out here in Canada? It's hard to say, Walter. Us, we believe safety, it will be much better because then the cheaters will be gone. Now will that affect capacity? Maybe, maybe a little bit. But us, like I said earlier, Walter, our focus is really how can we be more efficient. We don't really care about if there's a shortage of capacity for 6 months or 12 months. I mean, just look at what happened in the U. S. I mean, 2018 was fantastic, Yieldy came in, the demand was high, the supply was less and then we're stupid. We just add trucks. I mean, the guys just add trucks and then we're short in 2019. And if you look at Q4 of all the U. S. Trucking company, I mean, they're all down 20% to 40%, but most of them beat consensus. How about that? Not bad. Thanks for the color as always, LA. Pleasure. Your next question will come from the line of Mona Nazir of Laurentian Bank. Please go ahead. Congratulations and thank you for taking my questions. Pleasure, Mona. So I understand that you're limited in the scope of what you can speak about and I do appreciate your perspective. With that, it's easy for us to read comp results, which vary across the board but indicate softness or an industrial recession. I'm just wondering if you could speak a bit more about your asset light model and your mix of business, particularly the specialization and how much your model has shielded you from seeing the significant trend down in your business versus peers? Yes. Mona, that's a very good question because if you look at what we do us and our capital intensity is really low. Why? It's because our focus if you look at our Canadian operation, our truckload Canadian operation, both on the specialized side or on the van side is we're focusing us on return on invested capital. So we talked to our executives saying, can you get more revenue, okay, without the asset? So can you guys hire more independent contractors? Can you guys do more, okay, in trying to sell, okay, to the small truckers that has a truck and likes to have a truck? Me, if I could do more without trucks, we'll do it. See, that's our focus. Try to do more without the trucks. So this shields us because I still remember about 2,008, 2,009 when we had this recession, big recession, our revenue went down 20%, our EBITDA went down 20%, my debt at the time was $800,000,000 went down to 6.75 dollars But my stock was in that, went all the way down to $3 because people thought that we would go bankrupt or whatever. So that's where it comes from is that, guys, let's do more with less. So that's why if you look at our P and C, the capital intensity of P and C, geez, it's unbelievable. If you look at us versus our peers, okay, which are the big guys, I mean, our free cash flow conversion is like 80%, something like that, 80%, 85%, maybe 90%. And theirs is maybe 20% to 30%. Why is that? Well, because all the line hauls, okay, that we do either air is with cargo jet, if it's road, it's going to be a 3rd party trucker. So we don't do any linehauls in our P and C. And our P and D operation is mostly done, okay, with 3rd party, okay, owner operators. We have some of the P and D, let's say, Toronto, Montreal, Vancouver, we have our own trucks where the density supports that. But if the density is not used, then we go with the owner operating model. If you look at our LTL, we've diversified over time with the intermodal. So today, we've got about 35% of our revenue in LTL that is intermodal. And why? Because this is really an asset light operation. So again, our logistics with our last mile, I mean, it's 99.9 asset light. So if there's a storm, if there's a recession, I mean the proof is in the pudding. Us, we're ready. We're ready and that's the negative is that, okay, there's a recession, but that also creates opportunity for us on the M and A side because of our strong balance sheet. And be but for sure, if this is successful, okay, that's going to improve our flexibility. Right now, if you sum up the flexibility for M and A of TFI, it's official. The flexibility is about CAD 650,000,000, okay? And maybe with everything that we're doing, maybe we'll get all the way up to a $1,000,000,000 That's very helpful. Thank you. Your next question will come from the line of Konar Gupta of Deutsche Bank. Please go ahead. Thank you and good afternoon, L. A. Yes. Good morning, Konar. Good, Alain. So just let me start with the pricing here. So looking at the Q4 P&C, LTL and truckload, it looks like the pricing was weaker in all three segments, and it seems like a bit of a reversal from what we saw in Q3. So just wanted to understand, it just your capacity in the market that's kind of creeping down now or the weaker demand is kind of showing up in pricing from Q4? Yes, that's a very good question as well. So if you look at our LTL, okay, you look at the revenue per hundredweight and it's down, okay, like you said. And there again, I mean, it's always a factor of the freight environment that is soft. No question about that. It also has something to do with the average length of haul, okay, which is doesn't change much though. And then you got the average weight of the shipment that you got to look into it. Now how can you guys with less revenue, a lower quality of revenue, you guys are still doing better than last year, right? So it's because we were able to be more efficient, okay? So it's the LTL market in Canada, if you look at that, it will keep on shrinking. Why? Because most of our customers in LTL, industrial LTL have disappeared in Canada. Most of our LTL now supports the retail industry, the brick and mortar guys, the malls and all that. So we are losing because our customers are losing to the e commerce, okay? Now the other side of the coin because us were so diversified that we're suffering on the LTL, absolutely, okay, but we're still more profitable because we can shape costs faster than revenue. Now the other side of the coin is that our e commerce guys in our last mile division and those guys are growing. And the same thing with the P and C. Now you're going to say, well, I think your P and C is flat or down a bit because of maybe the strike that last year you guys were doing well. But there's it's a trade off because even on the P and C, I'm losing to the brick and mortar guys because if you look at as an example, Macy's shutting down over 100 stores in the U. S, the brick and mortar guys are suffering and Macy's was truckload and LTL in the U. S. To support the store. So that's the beauty of this TFI play is that we play on the geography, we play also on the different line of products. And so yes, we had a little bit of pressure on rates, but we protected the margin though. Right. That makes sense for sure. I understand. Obviously, pricing is a weak across the board, right? And I think you guys had some sort of pricing initiatives before, right, that kind of helped to some degree, obviously. So that's good. So on the Canada Post strike you mentioned, right, obviously. So maybe if I look at the organic revenue growth or decline before fuel surcharge, I mean, it's quite evident that I mean, it was down 9% in Q4 versus last year and the 1st 9 months was down like 7%. So I'm like, would you think the organic environment would have been similarly weak compared to last 9 months if you strip out the Canada Post strike? Or was there something else in Q4? No, no, no, no. I mean, if you remove because we're never sure about Canada Post strike, what was the benefit? So this is difficult to talk about, but exactly what was the benefit of the post strike there. But I could tell you that basically, if look at our P and C, the focus has been year in, year out about bottom line. Now you look at the future and we'll talk about that as soon as we can. Right. Okay. That makes sense. And then lastly on the share buyback. So I saw you did some 10% of your NCIB already in the 1st few months of the NCIB here. What do you think about the remaining 90 percent? I mean, is that something that you are looking to do still here? Or you want to preserve some capital for M and A? This is a question that I can't really answer right now because of what's happening with the offering. So I can't really talk about that. Sorry. No, understood. I will wait for that then. Thanks so much, Alain. Okay. Thank you. Our next question comes from Cameron Doerksen of National Bank Financial. Please go ahead. Hi, good afternoon. Good afternoon, Cameron. So just one question for me. I just wondering if you could talk a bit about the, I guess, the logistics Last Mile segment, I guess, just calling it logistics now. But you talked a bit about it earlier, but you mentioned that you're obviously looking to improve the bottom line there. Can you just talk a bit about where you are in the process of integrating some of the acquisitions that you've made on the Last Mile side? I mean, you mentioned the Dycom and the VBEX. Where are we in that process? I mean, is there still did we see any of that sort of benefit of maybe rationalizing some of the operations in Q4? Or is most of that still to come? Yes. You see, Cameron, I mean, we did those acquisitions just a few months ago. So you're right. I mean, there's more to come, okay? There's more to come in terms of pricing action when those guys that didn't like to make money, they were not pricing business properly. So we're in discussion right now with customers. That you know what guys, I mean, I understand that we have this you guys had a deal, sweet deal with BeavEx, but BeavEx is gone. BeavEx is bankrupt. I mean, we bought that from a bankruptcy court. So it but that you get a lot of pushback, wait, wait, wait. It's this. So there's lots of negotiation. So there's still more room for improvement on the quality of the revenue. In terms of the real estate, those guys have signed leases for a year, 2 years, 3 years. So you're stuck with the real estate for some period of time. So it doesn't happen overnight, okay? So to answer your question, on the real estate side, there's more to come. In terms of driver pay or owner operator pay, this is more like, okay, this isn't in control right now. We control that. It's fair. It makes sense. But overall, when I said last quarter, I feel good that our logistics operation in the U. S. Will definitely improve by 200 basis points. I'm still feeling as good as I was 3 months ago. Okay. No, that's very helpful. Thanks very much. Pleasure, Cameron. Your next question will come from the line of Benoit Poirier of Desjardins Capital. Please go ahead. Good afternoon, Alain. With respect to M and A, could you maybe reiterate your M and the willingness to increase the leverage ratio up to a certain level, Alain? Yes. Not Benoit. The only thing I could say is that it's going to be more of the same. TFI, it's always we spend we invested $200,000,000 last year on M and A. We did above the same, okay, in the year before that, very accretive. And just look at our track record of 20 years. So if somebody would have invested 20 years ago into a TFI stock, well, the return would be about 4,800%. Now that's quite good. Okay. And looking at 2020, where do you see the greatest potential for margin improvement among your business segments, Alain? That one, Benoit, I can't really I'm stuck right now. I can't really talk about 2020 until this thing that's going on right now. As soon as I can, okay, we will come out with how do we see 2020, as soon as I can. Okay, perfect. Thank you very much for the time, Alex. But Benoit, you got to look at Q4. We did pretty good. Definitely. Thanks. Thank you. We have no further questions at this time. I will now turn the call back over to Mr. Badal for closing remarks. Well, thank you very much, operator, and thank you, everyone, for joining this evening's call. So we at TFI International very much appreciate your interest. We're pleased with our results in 2019 and look forward to delivering continued strong results in the New Year by focusing on the business principle I outlined. Specifically, we'll strive to find opportunities to create value, unlock it for our investors and whenever possible return excess capital to our shoulders. Thank you again for your time. We look forward to updating you on our progress throughout the year. Have a good evening. Thank you. This concludes today's conference call. You may now disconnect.