I mean, they spend a lot of money during the course of 2023 and probably prior for people that came in to help them at head office, right? As an example, they’ve implemented Oracle Finance, same as us, okay? Us, we’re doing it ourselves. Over there, they’ve done it with the consultant. That cost them, I don’t know, if I remember, $3 million, $4 million. I mean, us at TFI, we’ve done it ourselves. I mean, we didn’t invest in the consultant to help us do that. I mean, we’ve done it ourselves, right? So, that’s what I’m saying. Those guys are — the operating guys are really, really sharp. So, if market conditions turn sometimes in 2024 late or maybe into 2025, there’s lots of construction that needs to be done in Canada and in the US. I mean, the infrastructure, the road, the schools, the housing, et cetera, et cetera.
So, that’s why I believe that our timing is fantastic for Daseke’s acquisition. The same as our timing for selling CFI was great. I mean, we were in a good position when we sold CFI, fantastic. I think we’re in a fantastic position with this acquisition of Daseke, step one. And then it positions us well to do what we want to do in 2025 with probably other parties, and to do a great specialty truckload public company in the US that’s got size, okay, with the TFI asset and maybe other assets.
Kevin Chiang: That makes a ton of sense. Great color, and best of luck in 2024.
Alain Bedard: Thank you.
Operator: Our next question is from Cameron Doerksen with National Bank Financial. Please proceed with your question.
Cameron Doerksen: Yes, thanks. Good morning. Maybe just two quick ones from me. I guess, maybe first on the logistics, you alluded to this a little bit, but the JHT acquisition looks like it was a real positive in Q4. I’m just wondering about the sustainability of the logistics margins in 2024. And is there any, I guess, seasonality in there that either helped Q4? Or maybe the question is really more about what we should expect as far as the sustainability and margins in logistics?
Alain Bedard: Yes. You know what, Cameron, I think that our logistics sustainability is under 90 OR. We’ve always played in the 90, 91, 92 OR so far. I mean, you saw us at 88-something in Q4. I think you’ll see us below 90 for 2024. Now, JHT, for sure, 2024 is going to be a little bit of a slowest year for them because the build rate, okay, of Packard and Freightliner, DaimlerChrysler — not DaimlerChrysler, but Daimler, okay, will be a little bit less in 2024. But 2025, 2026, I mean, JHT is just going to be booming big time. So, to answer your question, I think that the new normal for a logistic is going to be sub-90 OR, okay? And I would say that 2025, 2026 probably will get even better with existing business that we have today.
Cameron Doerksen: Okay, perfect. And then, just secondly, on the Canadian Conventional Truckload, obviously some challenges there on the OR. How much of that was kind of driven by M&A that you did during the year where you’re still working through the improvements with those tuck-in acquisitions?
Alain Bedard: No, Cameron, this is a Canadian problem that we have, right? So, we are losing, okay, because the market is soft and we have unfair competition with the Driver Inc. situation in Canada. I mean, this is a disaster that we have in Canada, and nobody is doing anything about it, right. So, I don’t know if you guys are familiar with the Driver Inc. thing there, okay? But Driver Inc. is — it’s unfair competition to all the regular company — trucking company in Canada. So, we are suffering. We’re losing volume to those guys because it’s unfair competition. The Driver Inc, okay, has got probably a $0.20 to $0.35 advantage minimum versus us, because they’re not paying any benefits to their drivers.
Cameron Doerksen: Right. Right. Okay. No, that’s a good–
Alain Bedard: That’s the problem we have in Canada. Cameron, that’s the problem we have in Canada. Now, that will get fixed if volume comes back to a certain degree. But it will be a long-term problem for us, okay, as long as nobody in Ottawa, okay, or in Quebec or Toronto does anything about it.
Cameron Doerksen: Right. Okay. No, that explains it. Thanks very much.
Alain Bedard: Pleasure Cameron.
Operator: Thank you. Our next question is from Benoit Poirier with Desjardins. Please proceed with your question.
Benoit Poirier: Hey, good morning Alain.
Alain Bedard: Good morning Benoit.
Benoit Poirier: Yes. Just in terms of capital deployment, you provide good color about the buyback M&A we might see in 2024. I would be curious to hear you about CapEx, what kind of numbers we should expect. And also, in terms of M&A, your appetite to get exposure to claims down the road through M&A, given your focus on cash and asset-light business?
Alain Bedard: Yes. So, CapEx, excluding Daseke, should be the same 2024 than in 2023. So, if you look at our CapEx, net CapEx, we’re talking about something in the neighborhood of $300 million, okay? So, excluding Daseke, we’re talking about the same kind of number, right? So, I mean, our free cash flow is going to be great again, I think, in 2024. So, like I said earlier, Benoit, I don’t think that we’re going to do a lot of buyback unless there’s an opportunity on the stock price. So, really the focus is going to be, do the Daseke deal, fine, bring the leverage down back to something like 1.5 by the end of the year, okay, and do maybe some small nice tuck-ins here and there, spend maybe $200 million to $300 million, like we always do. And if there’s a transaction that makes sense for us late in the year or into early 2025 in terms of either LTL or logistics, well, for sure, we’ll look at it. Hello?
Operator: There are no further questions at this time. I’d like to hand the floor back over to Alain Bedard for any closing comments.
Alain Bedard: All right. I want to thank everyone for joining us this morning. We’re excited about the year ahead, and we’re glad you were able to join us today. If you have any follow-up questions, as always, please don’t hesitate to reach out. Enjoy the weekend everyone and thank you again. Bye.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
