Q1 2020 Earnings Call

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Thursday Thursday

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Thursday Thursday

Thank you for calling may I have the name of the conference? You're calling to, Georgia?

Thank you. And may I have your first and last name spelling, please?

Thank you. And may I have your company?

Thank you. I'll join you to your call at one point two billion.

More important to us because of our emphasis on profitability or operating income increased 13% $118 million while our adjusted EPS on the diluted basis was up 8% off $0.03 in addition. We generate net cash from operating activity of 192 million of a very robust 19% when compared to the year ago figure out.

Before reviewing our balance sheet strength and the expenses reduction measure. We have introduced. I want to share with you each of our business of our four business segments off before and during the quarter and discuss. How each has been affected by the covid-19. Although transportation and Logistics was quickly deemed as an ancestral essential service off during the last two weeks of March we did begin to feel the effect of governmental policies put in place to flatten the Curve.

Starting with PNC this segment represents 13% of total revenue before fuel surcharge. And so Revenue decline the 4% off in the March quarter.

Operating income was $16 million compared to twenty 1 million in the cross pending corresponding year.

About a year quarter and the segment operating margin weighs 11.1 relative to 14.3 package and Courier, which is typically our higher-margin business office has failed the largest impact from the covid-19 would be to be activity slowing significantly. This segment has been a focal point of our cost reduction efforts. I'll review in a moment in your form of guidance given covid-19 will instead provide you a look at the over the year-over-year performance for each of our segments in both late, March and early April.

Can't see our Revenue were running -28 to 28% versus the prior-year during the last two weeks of March.

And negative 30% during the first two weeks of April 2012 TL this segment represents 16% of total segment Revenue before fuel surcharge, and so revved up 14% year-over-year in March quarter. Our operating income Was Eighteen million compared to twenty eight million in the prior year primarily driven by nine million gain on sales in q1 of 2019 and our operating margin was 9.8 compared to 13.3.

For the LT lrm. You were running negative is 17% versus prior year during the last two weeks of March and negative 39% during the first two weeks of April.

Next step is our truck load our segment or larger segment representing 48% of total segment Revenue before fuel surcharge.

For a total revenue Grove 1% year-over-year in the March quarter. Our operating income was $63 million up 24% relative to fifty 1 million a year earlier and our operating margin was 11.8 was it was very solid 220 basis-point compared to the prior first quarter of last year.

For a truck load our Revenue were running negative 4% versus the prior years during the last two weeks of March and negative 20% during the first two weeks of April both drive and and specialised operation impacted.

Lastly Logistics is our second larger segment at 24% of total revenue before she'll surcharge and so Revenue grow 20% year-over-year in the March quarter off our operating income jumped 71% to twenty six million from 15 million a year earlier reflecting a 290 basis point increase in our margin to 9.7%

Approximately half of this increase in logistics operating income relates to the bargain purchase price gain recognize any association with the acquisition of the courier service business or home or Donnie with the rest from operating improvements and Emily Logistics as receive a boost in recent weeks with both the Ecommerce and medical and markets doing very well partially offset by weakness in B2B.

For Logistics or renew? We're running positive 39% versus the prior-year during the last two weeks of March and positive 12% during the first two weeks of April.

Next I'll discuss our balance sheet, which is currently reflects. The lowest leverage. Our company has in many years.

further

We ended the the March quarter worried about 130 million dollars in cash and equivalent eight hundred million eight hundred and thirty million still available on our revolving credit facility and no debt maturities until two hundred million comes due in June of 2021 during the covid-19 pandemic our balance sheet as continue to serve us to serve as a source of strength for international shifting gears. I want to spend a moment on our expense reduction effort.

Well, we quickly moved to reduce operating costs and capex in March. We've approached all the decisions with an eye towards strategically enabling TFI to quickly snap back and emerging stronger Wednesday operating environment improves, but for now everyone within the organization is currently pitching in and are very grateful for the pride and professionalism of our people are shown doing everything they can to help our customers and help our company through this stretch. Some of the many steps. We've taken include the following month. We've reduced wage for executives anywhere from five to as much as 15% for all c-level officers and all Executives across our organization.

Second for more than a thousand full-time employees. We've reduced our work week to four days while helping them through this time by maintaining their pay 85% of base salary wage amounts to an increase in the per day wage.

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many other employees were subject to reduction in force, which we hope will prove temporary for these individuals. We have not continued continue to provide benefits, but we offer a base salary recovery program to support them during this period of temporary unemployment for we suspend all capex to which we had not committed and we plan to revisit these potential outlays as conditions permit again, these are just a few examples of the many strategies. We have implemented in addition. I should mention that we have provided full support to our operating companies so that they can protect the health and safety of all employees in full month with local requirements.

This point seventy percent of our head office employees are working at home and we have taken additional precaution within our offices.

These include the installation of sanitizer dispensers six foot extension policies limiting in-person meetings to three people restricting non-essential visitors from Office may visit your log and mandatory questionnaire and more thorough cleaning of common areas.

Before opening for Q&A. I'll mention that our overall Capital allocation plan. Despite. Our current strategic delays at Camp X is unchanged.

We invest Capital where we see the best risk-adjusted return while paying our quarterly dividend and continuing our track record of identifying attractive acquisition opportunities. We approached all capital allocation in a highly disciplined manner as we always have and as you've seen in our results over the years we look to drain to generate not just grown now but profitable growth

Our ultimate goal is to create and unlock shareholder value returning excess Capital to our shoulders whenever possible.

What do you think all the dedicated and hard-working people are cheerful. I would have demonstrated pride in the work that they do.

Did you do each and every day during the covid-19 outbreak? I also want to welcome aboard all our new investors that took part in a recent offering on the New York Stock Exchange, and we assure you that generating long-term shareholder value will always be the key focus of international with that operator and like to take questions from the audience. If you if you could please open the lines certainly at this time. If you'd like to ask a question by phone, please press star one on your telephone keypad to withdraw your question, press the pound key Jason Seidel with Kalen your line is open.

Thank you operator in the morning and I wanted to start off by asking questions about life. It's closer to energy. However as the decline we've seen in the oil prices search the flow through and hit the Canadian economy as likely going to free up a lot of people used to hauling energy and energy-related good. Is that going to call a lot of capacity out with the marketplace and

Yeah, well gee said you know what our exposure to energies is really really small. I mean we have a small operation that's left for us in Texas. Okay Andy of this Market, but this is really small for us and we're still very present in Alberta with our LTL and to a certain degree in our specialty TL. But really the service that we provide with the energy sector in Saskatchewan these very very limited. I would say that today energy is is very small component of revenue for sure. If you look at the Alberta wage, I mean the province has been slapped with the double whammy is got the oil situation and is also has the virus like everybody else in the world. So our LTE has been affected, you know, probably the same as the rest of Canada if we look at our specialty truckload has been affected a little bit more than the average that we see dead.

on the East Coast

Okay, and and and speaking about the LT obviously, there's a lot of operational leverage in that model over the past couple of years is really taking the approach to life sort of streamlined its Network get it as as Slim as possible. Is there anything left to do there any other small terminals to close down or is it sort of like you're at where you're at and get right up the storm here. Well, you know what Jason this is a very good question. And absolutely I mean we will be you know, two years ago. We we've combined TST Overland with Kings win the East okay, and that was a major transaction for us and it saved us a lot of dollars because you have to understand that on the Canadian side. The LTL is shrinking every week every month because of the e-commerce and and now virus is just one more. Okay, that's just not helping us. So what we are planning and this is going to suck.

Taking effect at the end of April is that we're also now doing the combination of t St. Overland okay with RCF operation two great names in cat c f was only a regional page covering western Canada and t St. Overland is a national carrier. So as of the end of April, okay, that's one more move that we're doing to stream life and be more efficient. So I was just looking at the equipment. So we're going to share about two or three hundred pieces of equipment in terms of headcount. I mean that counts will be down significantly because of that because we're we're getting ready because this LTL keeps on shrinking. So there's no other options for us in Canada that we have to adjust to the volume off know for sure as soon as we can. Okay, we've got some some Targets in mind. We're also talking to some people because a lot of people in the LTL business in Canada are not making money off.

Because they have the same problem as us is that volume is keeps on coming down and they don't know what to do us we have a plan so our plan is always put in place and we adjust Thursday the we got and we you know, we have to live with the March condition and our focus is always about you know serving customers, but we have to make money.

That makes sense like real quick before I turn over to somebody else. What's the average age of your truck load sleep now in the u.s. In the US, I would say at the end of March. I mean, we're just under 5 years of age. So this is why what we did on the side on the talking with Greg and the team there and David as we said guys, I mean our Fleet is so new that we can't afford. So what we've done is that we've canceled the capex for everything that was not committed. So so probably what we'll see is we still have some capex coming in for you to bring the trucks and trailers, but after Q2, everything has been canceled. So this means if I remember correctly about sixty million dollars net capex, that will not be done in 2020.

For U STL Canadian dollars though. So I mean you put that in.

Let's see $40.45 us. Perfect. Listen, I appreciate the time is always and be safe out there. Thank you. Likewise. Thank you. Jason off with Laurentian Bank your line is open.

Good morning, and thank you for taking my questions and congrats on the corner and a challenging environment. So my first question is just a clarification so for LTL did you say the last two weeks of March was down 17%

You know what? Let me just check because I think so, I think so. Yes. Yes 70% down and then and the first two weeks of April three thirty nine percent down I have to add on that is what we've seen really if I look at my first week of April versus my second week of April now, I've got my third week of April because April for us is three months is five weeks. So when I look at that, I see a trend that this this volume. Okay, I'm really really down the first week and a little bit less in the second week a little bit less in the in the third week. So I think that right now we're probably until you know, the government decides to reopen.

Businesses, I mean, we're probably, you know, just improving a little bit week-by-week the same thing with our PNC PNC the first week, it was a disaster. I mean bang walk and and then it starts to drop him and more. So the first the last two weeks of March, okay, because the announced the closing okay, we went down down down then the first week of April again, even down more money then the second week of April back up a bit and then the third week of April and oversight to see you know up a little bit. So this is why if I look at my P&C as an example two weeks ago for the first two weeks, I was down like 40% now after three weeks. I'm down only 30% year-over-year.

Yeah, that's helpful. Cuz I was just looking even at the quarter. I mean LTL shipments were down almost 17% in the quarter, but just given that margins improved significantly. I was just wondering if it was safe to assume that the majority of that decline was driven by a reduction in lower-margin business. And that in fact is the case. Yeah, then puts his true. Yeah. Yeah. Oh, okay. Okay, and if we're just adding up the steps that you've taken in regard to, you know reducing executive compensation.

Reducing office. To 4 days a week for low-income PNC staff to preserve Capital. I'm just wondering combined. What kind of an impact can all of these systems have on FX? Yeah. Well, that's a very good question. And you know what this also depends on the level of volume that we have but one thing I could say is that we've revised. I mean we are I am monitoring our P&C by the day now, okay the same thing with the same thing with our I used to monitor by the week now, we're by the date what I could answer on that is that you know, a lot of people were scared the t f I would lose money even in too because although we're not going to lose money in Q2. That's for sure. I can't give any God. Well, what I could say is that all the steps that could have been done. Okay, and we're following information and tools and data by the day in every business that wage.

drop like our PNC in our LTL and and my the reason that we're checking the

That by the day now is because that's the most capital-intensive business we have right because my Canadian truckload or specialty truck is not as capital intensive and you know, yes, my division has been affected. My specialties were closed as soon as as an example, the construction in Quebec has been shut down. The mining has been shut down. So now they're trying to reopen that and already was trying to see some improvement in our you know specialty truckload and Canadian truckload. So so really our Focus us right now. Okay. It's really are PNC our LTL and are you that we monitored by the day? Okay now to answer your question your original question how much what's the Quantum of all that? I can't really answer that more. I don't know the numbers, but what I can tell you is that we are monitoring that by the day, we're comparing year-over-year day over day, you know comparing. Let's say for Thursday.

Our labor costs used to be 12% So are we at 13% or we at 11% where we at? And we're doing that for all like I said l t l p n c and u s t o m

Okay, perfect and just lastly for me. I understand that I may maybe temporarily on hold just given due diligence is challenging on third parties at this time and you want to preserve Capital but when she turns back on I'm just wondering what can expect ours invest expect. What can investors expect. Are you going to be sticking to your current verticals? I know you just touched on LTL. But is there any scenarios where you would look outside of current activities? I know in the past. For example, you said that your waist business with a gym? Yeah, absolutely. Now you see more often when the minute we could do em any again, okay, which may be in Q3 depends on what April and May looks like but we will start really with small tuck-in deals that we've been dead for the last a few months and we put on hold so that's how we going to start, you know, emanate and it's going to be either in the US or in Canada, but these will be small deals. Nothing major we were working on.

On significant size deal prior to the this virus thing there but you know, we're not going to do any major deals in 2020. It's it's too risky. Okay not knowing you know, how long this this virus going to be with us for maybe it's a year. Maybe it's 18 months. Nobody knows. So this is why anything of size won't happen until Twenty-One, but I would I would tend to say that small tokens we could do in in Ontario. For instance. I think that there's a probability that would do that in Q3 or in Q4 of 2020. So we have we have ample of a file that we're looking at right now and don't forget if we are in a difficult position because boss Avenue just disappear because of this virus. I mean everybody else in the same boat. We're all on the same ship. I mean the market is is is difficult for everyone now dead.

they like t f

All right, that's got the balance sheet that's got the team because don't forget you need the team to do all this Emily. You need the solid solid operational team to take over a company and just integrate like wage like we're doing any us right now with Donnie. Okay. Sure. The guys will say well then you got five million dollars of profit and you want that comes from that deal. Yeah, because we buy at the right price, What's the what's the problem with that and then you'll see Donnie as an example. Okay, it will help us grow Our Last Mile Logistics business in the US with all the nice vertical like health care for instance or e-commerce.

Thank you. That's very helpful.

pleasure pleasure more.

Jac Atkins with Stevens your line is open hailing. Good morning. Thanks so much for taking my questions. I really appreciate it pleasure Joe. So I guess just took start off here with a couple of you know, higher-level questions. But you know, I know you've seen a lot over the years. I know you're a young man, but you've seen a lot over the years. So I guess I'd be curious to get your take on life sort of, you know, how you think what we're seeing right now from this covid-19 demek. How does that structurally change the transportation markets in the US and Canada, you know as we look out over the next couple of years and sort of you know, how do you want a position TFI to really capitalize on that?

Well, that's a very good question man. And you know Jack we've learned from the lesson of 2008/2009. If you go back and look 2008 or Revenue oil dropped about 5% All right, bit dropped about the same but we were way more Capital intensive than than we are today, you know, our balance sheet was not as strong as what it is today. And and you know, that's that's one of the things that we've learned from that that crisis then if you look at this crisis now, okay, and and you look at that and you say well Jesus Christ, this is really the first time that we had, you know, shut down everything just overnight just overnight. Okay, the government decide that for health reason. Okay. Well, this is got a shutdown boom. Goodbye off. So our B2B has been affected and what we learn from okay, if we look you know in the future, I think that this the the the consumer, okay.

Was slowly moving towards more and more e-commerce slowly. I think that this is going to be a catalyst. Okay for those guys to slowly even know not as much slowly, but for the probably a little bit faster into more and more of this e-commerce thing because there are getting some of the consumer are getting used to the e-commerce. Okay, we're buying a let's see just a few months ago. These guys said, well, he Commerce I don't really like that. I'm I'm just going to go shopping at the mall. So I think that this is going to be really a catalyst to have even more and more e-commerce down the road. Okay faster than it would have been without the virus. I think that the solution that we have are set here is unique because if you look at Canada we offer the next dissolution with the campfire Loomis operation or he which competes with you know, UPS or FedEx or or Puro in Canada in the south.

we we don't have the solution but we have our Logistics and last-mile solution, which is

Which is the same as the big eat Taylor everybody knows about Amazon. We have exactly the same product. So so this is like a diamond in the rough within the family and I think that people are just trying to understand, you know, Wednesday is start understanding that. Wow. This is a real diamond those guys. Okay can compete easily. Well for sure we service Amazon as a customer although small town, but we have the same service that we can offer to other customers, which we're doing okay in which we're growing. So going back to your your question. What do I see from? This is that e-commerce will keep growing even faster and that's going to help. You know, our last Mile in logistics. This is to me. This is the first thing I see when I look at this the other thing also is that the fact that the TFI is always being, you know low and capital intensity. If you look at the global TFI today, we're between 4 and 5% Capital intensity. Why because our phone number?

This is always been to generate cash. We want to generate cash. Why because we want to buy back stock. We want to buy pay dividends to our shoulders. We want to do m&a, etc. Etc. We do offer free cash flow generation. You can't do that. I mean, yes, you know some trucking companies have no debt, but they have no free casual for so for sure. They can't afford to have that off or they can't you know pay dividend. So our approach has has always been okay try to do more with less. So if you look at our operation about a two years ago Greg or came to us and say hey, we have to start a logistics operation within CFI. So Greg makes a lot of sense Okay, so we've invested in that month. We've also focused lately even more into trying to grow our owner-operators Fleet in the US. It's always been a problem with the growth at lately. I mean Greg and his team has been very successful.

We're adding owner operator. So that will reduce our Capital intensity, you know, hopefully for the next next year to come. So I mean, this is a really good question Jacqueline think that this is what's so important about understanding where TFI is today and where can it be tomorrow? Okay, this this e-commerce solution that we have within TFI. It's like what's Best Kept Secret in North America?

Well, that's that's great to hear and I guess just to just to follow up on on that. You know, you guys have a great track record of free cash flow generation that continued in the first quarter of you know, we've been hearing some anecdotes over the last, you know couple of months that shippers have been trying to push back on on payment terms as they look to sort of hold on to cash. You know, everyone took a whole lot of cash as much as they possibly can. Have you guys seen that how are you responding to that? You know, how are you thinking about, you know free cash flow generation this year more broadly.

yeah, well for sure there's

Some customers that always try to hide and give you the excuse so, you know just the delay the payment but us we're very strong on that and I'll give you an example. There's a huge Mining Company in Canada that those guys, you know at all kinds of issues with their it system. You know, that's always a good excuse and we say guys, I mean, we're not a bank. I mean, we're not a bank so we can support you guys. It's a it's a huge corporation and and then the National Corporation. So finally we're able to get you know payment because we set guys if we don't get the money you guys don't get the trucks. So that's always been our approach. I mean, you know, when you do a transaction with a customer, I mean we agree on price we agree on service, but we also agree on payment terms and every every thing in that agreement has to be respected.

Makes total sense. Well, thanks again for the time Jack. Take care.

Scott group with wolf research your line is open. Hey morning. Thanks for the time guys. So can I just clarify the the April updates that you gave that were home? Was that volume or revenue? And and if that's revenue is that with or without fuel?

Yeah, no, I'd say excluding Fuel and this is revenue. Okay, and is there any way on on the so the the I think down 30% in in April? Can you help us think about you know, what what trends you're seeing specifically B2B or b2c? Maybe just remind us of the mix of me to be happy to see for you there. And then anything that's noticeably different between the package side and and The Courier side. Yeah. So so if you look at a P&C you could split that into so you got Loomis and camper package and you got our specialty kind of p and see which is i csnt f is so if you look at t f i t f i s and I see as those guys are Niche bhi to be carrier. So those guys are way more affected. Okay than the camper Loomis why because can't buy Loomis as also be to be but also as a dog

Is significant content of e-commerce where whereas if you look at and ICS, they're basically very very little e-commerce in those two divisions took these our specialty characters like as an example.

ICS is is very heavy with the insurance World very heavy with the optical world, you know dental and all that. So it's really so all the dentists all the Practical boutiques are closed down. I mean i c s is just that okay. So so that's the big difference between the two so you'll see you know, if if you say 30% down okay in early April. Well, that means that those specialty guys are like closer to 50% down. Okay, and the other guys are closer to 12% though.

Because the more e-commerce and let's be to be exposure than the other one.

So is it fair to think then that the So within the down Thirty that the the B2B maybe to your point is down and half and the the yeah need to see is okay. Yes, sir. Yes, sir. Absolutely. Because you know with all these shut down. I mean think about all the malls. They're they're shut down completely. So you all your customers are closed. So that's why our B2B. Okay has been affected so badly in our knees Cherry like i csnt f i s

What are the implications on on margins for that segment? I know you said hey, don't worry. We're we're going to make money this quarter, but can that segment of the segment make money in this kind of environment or is there any way to think about margins in that quarter right margins in that segment right now? Well, we look at our forecast sorry forecast and Thursday forecast is is we're not losing money in any of our sectors. Okay in Q2 based on what we know after three weeks of operation in April.

So we're not going to be an 18-point e bit. Okay PNC into to it's impossible, but we're not going to lose money.

Anything more directional that you think is worst thing about is this a mid-single-digit kind of business right now for the time being or could it be a little bit but I would say so I would say so I mean it all depends based on what we know so far, but also when I look at the trend and that's what I was saying earlier, okay, there's a little bit of improvement in our Trend. So so we really took a major hit, you know in the first two weeks of April, it was really a while where we going with that. So we now I think we found some kind of stability. Okay, and then slowly, you know, we're picking up again because if you look at the the virus in Canada, I mean Quebec has been affected so bad. It's terrible and then you got on Thursday, but if you look at the Western provinces, we we believe that those provinces will reopen faster than let's say Quebec Quebec will probably very slow because they got so much dead.

You know virus case there are more than fifty percent of the cases in Canada right now. So Quebec will be slow. But the West will probably be you know, the first page in the maritimes to reopen slowly. So based on what we know okay, and and not forecasting a lot of improvement in Q2 in May or in June P&C will be something in the in the three to five percent probably but this is this is not a guy that this is an opinion.

No, no, I I get that and then just last thing you gave us the the truckload sort of cutbacks how much it's cut but in aggregate now, what's the the capex budget or plan for the the Smith Cafe? This is probably going to flow around between 80 to 100 million net net of disposals, which is about half of what we normally do.

Okay. All right. Thank you for the time guys. Appreciate it pleasure.

Tom wadewitz with UBS your line is open.

Yes, good morning. I think going on. Yeah, good morning following a little bit along the lines of the the, you know, questions and topic you just had what is the month BC B2B mix and the PNC business and as you look at that and and your comments on, you know acceleration and e-commerce, do you say well, you know, maybe before she wanted to be uh a stronger on B2B, but we kind of review the structure and you know change the strategy a bit in terms of you know, how we look at be to see even if it's a lower margin business in kind of, you know Cordy to be

That's a very good question because let me explain you our philosophy philosophy's our next day service. Okay, which is can't buy Loomis t f i s i c s package with UPS FedEx and and puerile in Canada. Our focus is yes will do e-commerce, but not so much where it makes sense and we're we're our margin could be as good as the the rest of our business why because us we have a solution that nobody has which is our Logistics and Last Mile and this is really the best tool. This is really the official and in huge, you know, high-density areas. Like let's say in Canada Toronto Montreal et cetera or New York Chicago in the US.

Ellie in Dallas. So our solution is really the same kind of solution that the big e-commerce guys is using to service is customer way more efficient way more effective less capital-intensive because we don't have the conveyors. We don't need those conveyors because you know, everything is done. The Sorting is all done at the customer level. So that's why going back to your question our our P&C business the focus. It will remain on B2B and I agree with you that maybe I will you know get down the revenue will slowly get down because of this move of e-commerce, but we're also replacing some of that business with e-commerce that makes sense. Okay that we could do in our life, you know next day service.

What we're trying to explain to our customers the guys we offer another solution which is our Logistics and last-mile. Okay, which is which is really good. But you need like all the other guys like Amazon you need you need warehouses and if you don't have where else is it's very difficult to do. Okay what Amazon is doing, right?

So, I mean it sounds like it might be fair to say that, you know, if there's a big acceleration be to see any Commerce in it. It's more on a structural basis that that kind of bad news for P&C to some extent but it's really good news for your last mile business. Is that fair that it's kind of you know, partial. Yes. Yeah. Yeah. This is exactly what I'm trying what I'm trying to say. Okay, and and you know when I talk to calorie VP in charge of our Logistics and last my said guy, you got a diamond you got a diamond in the rough and and the the only problem is that people still don't understand what we can offer they understand the Amazon solution. Okay, because Amazon is fully integrated now from warehousing, you know to to distribution and us we're not in the warehousing business. We're just talking to some customers and say guys wage

Have this kind of distribution Network. We could help you on the e-commerce. So we'll take time, but we

You have the solution that is you know, it's it's unbelievable what we could do with that. It's just it will take more time, but the e-commerce because of this virus will axcelerate absolutely. So it will be to the detriment or the be to be in the PNC side for us or for puerile for probably FedEx and UPS will see that soon and it's probably going to be some kind of permanent kind of impairment of the B2B because of what's going on.

Right. Okay, that's great. That makes a lot of sense what other question for you, you know your strategy is differentiated in terms of the aggressive use of independent contractors wage. Obviously that you know, it's a component of our focus on cast. Um, you know, I know there's there's some cyclical aspect to attracting I fees and you can probably you know attract whether it's driver's rep or whatever I would think easier in this environment. Do you look to make potentially structural changes on the mix? Do you say well, you know, this is an opportunity if we were, you know, I'm not sure the number in it specific business. But if we were 40% I see 60% company driver now we want to go to you know, fifty-fifty or we want to flip it and go to 6046 you look at the market and just say hey, we like our mix of icy and Company driver and this is just cyclical stuff that doesn't change the kind of structural, you know, kind of icy versus company driver.

Yeah, very good question. And and you got to you know, look at it differently either if it's a truckload operation or if it's a PNC and LTL operation PNC an LTL operation, you know, it's it's a moral that's very easy to run with owner operator. Why because it's it's easier. Okay easy to find the guys are happy. They have their own business their home et cetera et cetera. So that's why if you look at our P&C and LTL, I mean our mix is very very high on the owner operator model on the truck load side. I mean, it's it's more difficult even in the US. It's even more difficult. Okay, because a lot of those guys don't make any money because there's you know in the US a lot of pressure on rates with customers with the customers are smart. They feel that oh, there's an overcapacity because the trucker's about so many trucks in 2018 because they thought that this would be you know a fantastic year for the next fifteen years.

So they bought cars on the trucks and now the rates are the shed. So those poor owner operators are just dying. So to answer your question. I mean truckload for us, you know, a mix that make sense is 65% asset and 35% non-asset, which would be either Logistics or owner operator. But you look at our PNC and LTL. It's completely the opposite. So there you you will see us running at 30% asset and 70% non-asset.

So the that's the mix but you're saying the mix doesn't necessarily change for you as a result of the current condition. No.

Right. Okay. Thank you for the time.

pleasure

Ken hoexter with Bank of America your line is open.

Hey, good morning Lane and Dave just want to follow up on I guess you have great Insight giving your multiple segments and and I get what you're saying on the down 30000 kind of, you know, different depending on the segments. But where do you look first given your multiple views into the market your touch points to see the trends as you prepare for the reopening, but where do you expect to see that that kind of the signals first within your your different end points? I think that you know, where we been affected the most. Okay, which is our PNC Bank what we're waiting the signal is that at one point they reopen, you know, the shops the malls that the retail business because this is really killing off our B2B business. So that's why we're monitoring that by today about three weeks ago. I said when I looked at the sharp decline in our revenue and RP insisted guys, I mean you guys

Monday through that by the day, but us it's by the weekend office. It's got to be done by the day. And we monitor, you know, the labor cost the owner operator cost the staff costs and all that. So for us off the other thing also that we've implemented is a kind of bring back the employees with a support dear. So if an employee has been laid off when he comes back, let's he comes back after 12 we serve so we have a program in place that he's got an incentive to come back. So if I remember correctly, the first four weeks were supporting this guy with a hundred dollars a week after four weeks would go up to a hundred twenty-five for the next four weeks. And then we go to 150 a week. So let's say the guy has been away for ten weeks. So so he's got an incentive to come back to work when we call him. So he's ready to come back because over and above that he's got his job back. He's also have a a kind of a bonus to come back to and they all the bills that he's been stuck with because of wage.

this pandemic

Great, and then you know you kind of gave some thoughts on on your your margin outlook for for the the PNC. You just kind of gave that the Mix Change on on the box truck load side given trying to stay asset-light. But what what kind of margins do you anticipate? Uh, you know, seeing on the the truckload side it depends if you look at m u s t l i mean if we look at our forecast for you to like I said, we have no sector that's going to be losing money. Now. Are we going to be able to run a $94.95 a month? You know what we see is r o r into one has been deteriorated by about 100 basis-point. Right? If you look at I think we did 93.54 and a year before we did 92.4. So a hundred basis point, you know deterioration year-over-year now, can we think that in public?

Can we see a 500 basis?

Deterioration. Maybe what I've seen so far from the other U STL is that in q1 some of them have the duration of 150 basis point or even more not a lot of them coming out so far. So, you know, the target is always not to lose money and this is a known most priority. It's it's very early in the game because we have only three weeks experience in April, but what I could tell you is that if you if we look at our model none of our division are losing money and even are U STL not losing money based on what we could see we lost some customers because of closure like Picard for instance, but we also have customers that, you know are doing three or four times more life. So our revenue is down. Yes. It's more down at TCA than CFI because of our dedicated business for instance Mercedes has been shut down, but they are reopening off.

Okay, so all in all it's it's that's why we're not giving guidance because it's such an unknown environment. But the only thing I could say is that the guys are working really really hard and we're not going to be losing money in in Juju or any other quarters. I mean in in all of our division and he's and every one of them.

Appreciate that and then just real quick. I guess to wrap up. Are you seeing any differences in in your Canada operations versus us and in general in terms of how you're handling the impact. Well what we look at the Canadian operation in our truck load sector. I mean we're we're really affected is is our flatbed because of the steel, you know, if car plants remain shut down for six months and months because there's no demand for cars in Canada. I mean, it's really our flatbed business that's been affected. We don't have any flatbed business in the US. Oh, so we're not in that business. So but the rest of our business in Canada, it's fairly it's it's down but it's not down as much as our flatbed business.

Bye appreciate it. Thanks.

Pleasure again, with Scotiabank your line is open.

Good morning, and thanks for taking my question. I hope you're keeping safe and healthy their yes. We are. Thank you. That's very good to hear ya. It's just wanted to ask you first on our pricing. So it seems like as you noted in the financial the pricing ten positive and q1 in in most of the segments from negative and Q4. So first like what caused the pricing done like that? And then how do you see the pricing Trends? And then the first two weeks of April or three weeks available?

Yeah, well if you if you think about our pricing with with our LTL, for example, I mean our pricing improve it's not because the market has improved in terms of pricing. It's just because we're not getting rid of all the time of low-margin account. So this is why you know getting rid of all those guys that don't want to pay the fair price. It improves our average revenue. So LTL, it's not a pricing power that we have is just that we're cleaning up again and we always find those those situations whereby a customer try to take advantage of a you know of a trucking company name if you look at our P&C. Okay, it's it's more like the average wait or The Coincidence of delivery rates are fairly stable U STL our wait a little bit under pressure not so much. Okay, but what we see probably in Q2 is I will have probably a little bit of pressure on the rates in the US not so much in Canada so far so, you know dead.

The way we're going to win this war with this virus. It's it's about cost.

It's above volume. Now. The focus has always been a TFI that we service customer where we can make money. So get rid of all those guys where we you lose money or you make two points off. So it's this is why we're so light in assets. And this is why return on invested capital is so good is because we're focused on that all the time. Now the problem is when you have be too long shot down like like fifty percent you you lose business you lose volume that are highly profitable and there's nothing you can do about that except adjusting your cost base awfully when those guys reopen, you know, within the next few months. I mean, we'll be back on business. But like I said earlier on the PNC side, you know, long-term medium long-term will probably see either flat or some reduce volume, but that is will be 45 to the advantage of our solution, which is our last Mile and Logistics. Yep.

Where do we see that? I mean our Logistics Division in Canada is up if you look at our Revenue so far into two were up. Okay, that's basically the only division that we're up with you over a year.

Okay.

Actually, no, thanks for that. I think you obviously give you give us a pretty good color on how the revenue run late September and March and April. So thanks for that. Just wanted to understand on the truck load and large 6 a.m. So you you noticed the numbers on Revenue being in down 20% in April and then on lunch takes up 12% in April. So, um just want to clarify is that uh Apples to Apples. I mean normal izing for Acquisitions because they were some Acquisitions. Okay? Yes, so they included as well last year, right? Okay. So the logic is it is it the wage that's what's driving the revenue after significant in marshmallow.

Yeah, well, let me get that again. Okay, so if you look at our Logistics you were here. Okay in q1 versus there was no real big. But if you look at the first two weeks, okay. Only isn't there? Okay, so don't lie. If I remember correctly. I think we closed that deal mid-march. So that's why you know, we took some improvement but don't forget. Like I said our Logistics in Canada is up organically. Okay. There's no emeny. They're up double-digit in Canada. And then then we were down organically if you exclude Donnelly why because we were really badly affected in New York New York's, you know big market for us Detroit Boston Chicago. And so we lose their we gain on the other side. So so we gained a little bit on the e-commerce in the US weekend a little bit on the west coast, Texas. We've also been yep.

Add insult, Florida so forecast as an exam.

And last mile into two in the US excluding m&a is that we're going to be down probably like 10% because of you know, New York and Chicago and Detroit, Michigan.

Okay, and that's great color in the in the Press Lisa. You mentioned the Cisco with began good demand for like household goods. Obviously Healthcare e-commerce can offer is like I'm CVV talked extensively about p and see here, but can you talk about exposure to household goods Healthcare e-commerce for other segments like in L TL TL or last month or Logistics? So what kind of dog do you have there? And then how do you compare those Trends in those segments will be ready? Okay. So if you look at you know Logistics sector, I mean in the US, we're really big on the healthcare. So it's probably like 25% of our Revenue today, you know, so it's we've got we've got really some good exposure in The Last Mile with that in our PNC in Canada. I mean, it's it's mostly are

Excuse me, our specialty like like an ICS because of its Optical exposure. Although it's Healthcare, but all the shops are closed all the stores are closed. So it's not helping me at all. LTL is small I mean LTL is mostly retail as you look at my pie chart on retail this number one and we used to be big industrial LTL and Canada, but gosh, they shut down all the plants over the last ten fifteen years. So so we're mostly retail carrier like everybody else now in Canada on the on the outside.

Okay makes sense. And the last thing coming out of this down to do you do you see an opportunity to optimize your portfolio like like you did in 2008 and I'm like in the way of any divestitures or any positions focused on particular areas you would be looking at. Oh, absolutely. Absolutely. We you know the way I See 20/20 is like okay. It's it's a test. It's a month and and for sure it's turning some lights on it. Hopefully it will help us sell even more of our Logistics and last mile to our customers so that we can offer them a great service at a very very attractive price. But also, you know, we look at the LTL in Canada and it's it's a shrinking business. So so I think that we have to get more Emily in Canada on the LTL side to help us in the future. I think that there's a lots of opportunity in Canada. Maybe there will be some opportunity in the US will have to see that down the road.

Because you know, we we're on a partnership model with with a guy right now, you know, you know, maybe we'll see what happens there on the truck load side. I mean, we we see a lot of opportunity again in improving our density in Canada, Ontario mostly to beef up the density the the offering that we could give our customers Thursday and and we've opened up a small specialty truckload division in the US through some acquisition. We would like to grow that so there again, they'll be lots of opportunity. We're you know discussing with many many trucking company in the US about, you know, join the family and do more with the FI. So our balance sheet is really strong. Our team is second-to-none. You know, our our mission is very clear. So, you know, we have to go through this storm. We we've navigate to some storm before we're going to navigate to this one. We're really solid dead.

monitoring monitoring things by the day and

And we're not sitting on our hands.

And that's all for me. Thank you so much and have a good one. Hey, thank you likewise.

Brian Beckwith JPMorgan your line is open good morning. And thanks for taking the questions. I used to follow up on that last last one month you talk about consolidation after all this is done. You just run us through competition at this point in time considering the big drop-off and in volume. If you see any place that it's maybe a little bit outsized pressure particularly in some of the more challenging in markets and you know the way from consolidation, what do you think about the the general health of some of your competition a expecting absent consolidation just for some capacity overhang to get listed here as some players exit the markets, you know, maybe more than asset heavy side of the business.

Huh? Well, you know what we're seeing so far from the competition is I think that everybody is so busy trying to manage the you know, the downsizing and the business office that you know, they've not been chasing the other guys volume to try to replace the volume that they've lost because of whatever happened. That's what we've seen so far that may change down the road but so far, I mean everybody is so busy trying to manage. Okay safety for the employees of downsizing the operation here doing this doing that that we haven't seen any competition trying to chase volume. The other issue is that if you try to chase volume, the shippers are busy also themselves trying to manage their own their own issues right off. So is that the right time for them to switch because one trucker is going crazy and offer stupid rates so so far so good on that I mean dead.

The business we have we haven't lost anything so far because of somebody comes in and and offer a stupid race to our shipper and the guy says okay. I'm going to jump on that so far off as of, you know, the industry in general if you look at the industry in general in Canada, it's very different than the industry in general in the US because what we see out of, you know, the large Trucking Company balance sheet is strong. Most of them don't have any debts so they don't they're not I don't think they're going to go crazy banana but in Canada, it's a different story. I mean most of the time these are small highly leveraged and and for sure some of those guys are calling us and we're saying guys, I mean m&a is completely out of the question for us now, but we could start looking at the situation. So this is why when I say looking at the situation if you know today we probably have a 8 or 10:00 active files in Canada that we're just wage.

Okay to say okay go because we have a you know more visibility about our Q2 and what should we may look like? So if you think that after a look at April we look at May and we okay fine. He are we on plan with our new refocus plan or we better than the plan or we worse than the plan that will guide me Choi saying well, okay. This is these are the small details that we could do right away in Canada. These are the small these right away we could do in the US. So so the Eminem machine has been put on hold. Okay, because we want to be cautious but that doesn't mean that the activity is not there. I mean, we have lots of opportunity that's going to be so great for her shoulders in the future.

Okay, got it on the self-help side of things. Obviously, you're you're managing through this just like everybody else but I think little while ago you can bind some of the leadership for last mileage Mystics and give them some responsibility in the the Canadian team. Maybe you just give us an update on things away from you know, in the in the areas that you can control combining the systems and operations platforms rather on the TL side in the US and then specifically on last mileage istics. Is that something you're just sort of treading water on Thursday the current environment or are there sort of other members you can pull here in the meantime.

You know what the right what we've done with our Logistics trying to have Cal overseas both division US and Canada having Dean overseas boat sales force in Canada. Also our Canadian Financial team help our team there. It's already already helping are you to do much better? Don't forget that these guys have or swallow. Okay three acquisition. We bought dycom company like completely disorganized we bought beavex in nineteen completely disorganized. We bought the home division of Donnie even worse. So those guys have a lot of Challenge and they need help they need support and this is why you know, if we look at the all these Acquisitions, this is beefing up the revenue helping us or improve our density and at the same time. We're also correcting some mistakes of the past some some culture is issue dead.

You know the focus about you know, making two points. Is that good business? Well, maybe for the other guy's not for us. I mean change this culture and if we if we could look at our q1 last mile improve. It improved by I would say about two hundred basis point and I said that in to 4 on the call is that I'm seeing at least two hundred basis points that are you male operation even in a very difficult context because some of our great markets like New York forget about New York. I mean, it's down 60% You're sixty 65% because of what's going on there some of the great markets like Chicago or down also as well. So even with that, I mean we're doing way better job in terms of dollars bottom line and percentage.

So it's it's okay, and there's a lot more to do.

Okay, got it last quickly. If you can just offer some comments on you know, the decentralized model that you have more of a central overlay for a lot of the functions and the monitoring that you test drove a few times during the call in terms of how your monitoring things by the day instead of by the week. But just wanted to see if you're given this current stress test that you're going through. What do you think of the month going forward if they're things are looking to add or tweak or is this, you know kind of what you expected how how to perform and the people underneath you given the current environment cuz she can I mean Brian our team is really great. What I've done is monitoring by the day instead of by the week. It's just I want to make sure because I've got a responsibility to walk more than with my shoulders and I don't want to come up with the excuse. Oh, okay. So we dropped the ball. No, no, no. No, we can't come in with some issues. We dropped the ball. So I've got a strong faith.

That my guys are doing the right thing, but I just wanted to make sure that hey we don't drop the ball because this is like you said a lot of stress you have to manage down.

Rising you have to manage customer's expectation, etc. Etc. So these are very very difficult times and you know in very difficult times like that. This is when you see that you got all the crew and I'm proud of our crew a t f i mean. Oh my EVPs, I mean the guys are doing you know, a fantastic job a fantastic job and money, you know, like we always do in the office. We just want to make sure that those guys are you know focused on the right things and and this is why you know, I went through a lot of different phase critical phase in my Trucking career when the trucker for some twenty years. So I'm I'm there just to make sure that we don't drop them all we don't lose focus. And also I'm there to modify the guys in to encourage them. It's not easy to do work with what we have to do now to be successful and to preserve capital and to keep the morale up, you know when you drop off.

When you have a business that drops 50% it's not it's not a crisis. It's a tsunami. So so you have to let go people you have to you know, what are we going to do tomorrow? It's it's not easy. This just happens overnight. It's not something that has been going on. Okay for six months it just boom. It happened. And then okay, what do you do now right wage? Okay, great. Thanks Lainey appreciate the time.

Walter spracklin with RBC Capital markets your line is open and thanks very much. Good morning early morning Walter. So when I look at your free cash flow for this year. I know you're probably reflecting a guidance there, but just looking at $1 free cash flow deployment. It sounds that you know, obviously, you know, you talked about Acquisitions being on hold for now. Would that hold as well, you know, obviously dividend buyback and really you're just reloading your balance sheet building up liquidity is that is that the best description of of the twenty-twenty strategy for free, Yeah. So there's no concern on the on the dividend. So we're not going to you know do anything on the dividend in 2020 in terms of how many like I said, nothing's going to happen in Iraq, maybe something in Q3 and then to 4 depending on what what's the visibility we have now in terms of the buy back we put that on hold we we did some buy back into one we bought back about a

For the million three one point three million shares, we're not this was not normal because normally you don't issue shares then buy it back. This was just because we gave notice to the you know, the life I could sort be seated manager ncib prior and the stock dipped so much with with what happened at the buyback was now back on track. But as of April 1st, I mean, we're not doing any buyback. We're just going to wait and see one once we see what I put in looks like what may looks like and what the stock price looks like. Maybe then it becomes a choice we get by a company or we just going to buy the stock will see that but I don't think ncib is in the picture at least for a few months and then we go back to me Walter but you know on the capex side it's going to be a huge reduction and we can afford that because our Fleet is so young in the US and then so we've canceled the us but we've postponed no.

so

So on the Canadian side depending what we see into two and early Q3 or in Q3, we could we could get the benefit of those capex. Okay, because they were booked at a very low exchange rate u.s. Canada. So we would like to do those Canadian capex into four but you know, the the environment has to be you know positive for us to do that. You mentioned some files you were you were you were investigating you're doing due diligence on your holding back for now obviously given the conditions. What's your main? You know concern is it really just you don't know how much covid-19

The first reason for us to put that on hold is to preserve cash, you know not knowing. Okay, what will be the impact of the virus and how long this is going to be an issue? So that's reason number one all the discussion. We're having with sellers. Nothing is about price so far because we don't want to talk about price with these guys trying to to tell them that well, you know Market valuation a trucking company has dropped 30% So we have to drop our offer 30% We don't like to do that. I mean because you know, maybe TFI stock is down Thirty forty percent but this is maybe it's going to be up 30% in a year and half so we don't play this game of trying to squeeze the cellar. We have a reputation same thing and in the US to be fair, so we want to buy, you know, a fair price but you know if there's a permanent impairment in the Target, okay, because you know those customer

This guy has or has he is revenue was $60 million and it will never be back at sixty million. It's because when ever happens, I mean, he's got a lot of B2B customers I shut down and they will not be open. Then we have to really address the price. Okay because of that but we never really address the price because of Market condition. This is not fair in our mind, but for now everything is on Old because we want to be cautious about, you know, preserving the cash and on that note about permanent impairment and then opportunity. Obviously, there's going to be a companies that post covid-19 off are permanently impaired. There'll be those that go back to normal and those that drive and and go to a, you know benefit from a new normal when you look at each of your businesses generally once covid-19 has and a new kind of new normal establishes. What's your anticipation division by division of whether they can go back.

normal

Whether they will be permanently impaired or are there or what what areas would would actually Propel to a new level post covid-19. So that's that's a very good question. And I think that on PNC I said it is that because of B2B will never be the same. Okay pre covid-19 and after covid-19, I think that has a lot of stores et cetera will never reopen so that's that will have some effect to our B2B. Okay within our PNC next day delivery system because the guy will never reopen so that being said, but it will probably be small. Nothing major. Okay buddy will be more than you know, if we went home virus that accelerate the e-commerce, so we will probably lose a little bit on that side, but we will gain tremendously in our Logistics and Last Mile operation.

Both in Canada and the US the LTL three, I've said it many many quarters is LTL keeps on going down all the time because of the Commerce. So the only way as we've been able to sustain some kind of Revenue is to m&a. Okay Feed the Beast why because and then just continue serving the good customer that you are welcome to the acquisition and just get rid of all the small guys that don't want to pay a fair price. So l t l is a little bit the same as as the PNC because all these malls. Okay. I've been fed by PNC guys and LTL guys. So to me, there's a little bit of permanent impairment there. Okay. So this is why us our emeny strategy. Okay, we'll keep on you know doing what we've been doing for, you know for that long of a time. I don't think truck tow will be impaired at all because truckload either specialty dead.

Or van, I mean all these switch of e-commerce is is really not a big effect on truckload. I mean those fulfillment center have to be filled up like the Pac-12 Walmart in the of Amazon and all that. So so on the truck roadside, I don't see anything significant because of this virus before and after month. So huge gain in my mind down the road with our Logistics. We already seeing that some customers are just saying, you know, what we would like an Amazon type solution Buckeyes. We had a well. Yeah. Oh, we don't have any DCS. Well, okay. If I we don't have any diseases you could we could match you with someone that's got a that's their business to run these know so we could we see that and it's it's it's the diamond within the TFI family like the way she used to be. You know, one of our Diamond PNC is still a diamond. We need TFI, but it it lost a little bit of a game.

luster because of this, you know, maybe some small permanent impairment because B2B will never be the same after this virus thing just

Back to normal, but all in all if you some that up with n t f i t f i will be a huge Gainer. Okay after this virus is is behind us off. That's really good color. I really appreciate the time tonight.

Cameron doerksen with National Bank Financial your line is open.

Yeah, thanks. Good morning morning Kevin just to really quick ones for me for just on the r r Donnelley acquisition mentioned that the probability of that revenue is probably pretty just wondering just in the very short-term what that means for for margins in that business. And is that a business that you can pretty rapidly get the quality of Revenue improved? Absolutely. Absolutely. I'm not convinced on that camera. And I mean, you know, we bought the business we have to shed one major account that you know didn't make any sense. So those guys are are gone or will be gone within the next five weeks. There's another one that will be gone in June significant customers. But you know, it's it's it's just crazy. Listen to that. We had a a cargo liability that those guys in the ten million dollars. I said think the guy said I mean who who can be calling opioids or things like that with ten million dollar?

So you can negotiate the race with the customer. The first thing you have to negotiate with them is we don't want to have this ten billion dollar liability. So customer says well, we'll try to find another wage structure that's going to accept that. Well, good luck. So so that being said those two customers two or three customers are gone the rest what we see so far will be good business page it fits in the in to our Network. So this Donnie acquisition once we get rid of all the things that don't fit TF. I it's going to be fantastic.

Okay, great. And it just secondly for me just on the specialty truckload in Canada specifically, you know, one of the drivers there is obviously construction activity. I've already yeah, it's starting to see a little bit of opening up. And I mean that is that kind of one of the bigger drivers of of that business rebounding is really construction coming back. Yeah construction is one mining is the other. Okay. So mining is back. Okay. Bye wage, you know for my knee you need the world economy to get back on track. So yes, the minds are reopen in Canada. So it's it's good but we need the global economy to you know to be on a strike. So when you look at what is anticipated for 20 20, most of Europe is going to be down GDP about 5% 6 7% above the same. So it's going to be still a difficult year for us in twenty-twenty. But I think twenty one is going to you know explode back into you know, what what makes more sense the other business that's affecting. Yep.

Is the the automotive business because of the steel so steel and Automotive. I think it's going to be really difficult for them at least for a year. So so that's probably it's going to be slow until mid 20 21 21. Twenty or Twenty-One. So really the the specialty truck load it it will probably be the one that is less affected but really are flat bed is the one that is mostly affected now as an example, we all a lot of explosives for the mines while everything was put on hold until Thursday. So in Quebec the construction has been put on all since mid-march, they are signs slowly to reopen this has been a huge huge negative for us in Quebec. I mean, I think Quebec was the only Province or state that closed down the construction industry, so

Okay, so that to me is back on track.

Okay. No, that's that's helpful. That's all three. Thanks very much.

Legend Camry David Ross with Steve hold your line is open.

Hey, good morning, Elaine morning David. Just a quick question on the Last Mile in the after you've done recently there any holes left? How do you think about the US Network and where you want it to be in a couple of years versus where it stands today? Yeah, that's a very good question. So, yes, we have some markets where we could be stronger better and and we're always on the lookout for for some m&a we have discussion with another group and finally, you know, maybe it will happen sometime late this year or early into next year. But really the main focus of our business in the US with Cal and Dean there is to to really sell our solution. Okay, we've been very successful in Canada selling our solution but not so much in the US as of yet. So really, you know, we have a great solution for e-commerce. We have a

Solution for let's say the hell can industry we do. Well what we could do better so really m&a. Yes, if we can if we can find the right Target in the US absolutely going to jump on that but I don't see anything major in 2020 on that but why is she very important with Cal and Dean and and Scott leverage and all the team in the USA's guys? We have a fantastic solution. Okay that is second to none and we have to to have customers understand better. So so we we really should focus on that for 4:20. Now the problem is that you know, try to sell something to a customer now, it's difficult because you know, they're they're like us they're stuck in this major crisis of the virus. So there's not a lot of people to really listen to a new solution but we're educating educating our sales people or you know where you know working on the birth.

I mean all of that to be ready as soon as we can sell the solution to to the market. So right now big issue is how we going to digest all these Acquisitions. We're doing that. Now. We've improved our bottom line. Like I said earlier in our us Logistics by about two hundred basis points you want, you know, we still have a lot of work to do with the only acquisition. So we're busy. We're busy a lot of good stuff. But we also we're getting ready as soon as we can to sell our solution like we're doing in Canada in the US.

And then you talked recently about the automotive sector and how that's going to take some time to come back about 9% of the business. Which yeah, is that most concentrated in would that be LPL and Canadian truckload or is there something else truckload and a little bit also ustr so we got package as an example customer both in the US and Canada those guys are shut down but we got Mercedes in the US. Those guys are shut down. We got Nissan. Okay. So it's it's dead. I would say probably a little bit more than than Canada for for the automotive business today u.s. U.s. Mexico. Okay, but it's primarily in the truckload segment wage. Yes struggle. Yeah. No, no, no, nothing major in LTL Lawrence.

excellent

Thank you.

Our final question comes from a line of Benoit Poirier with Desjardin Capital. If you'd like to ask a question, please press star one. Then while you're line is open. Hey, good morning, Wait a minute. Yes, just to come back on the potential Target on The Last Mile business and the US would it be similar profiles to die, Thursday or this would be higher. Let's say more organized companies or would it be now would be the profile? It's it's it's going to be the same profile the three that you just talked about. Okay, that's great. That's great. Okay, and when we look at e-commerce, you've been very very disciplined in the past. You could have found that business much higher but profitability was all always a big threshold. So I'm just wondering given the strong demand we see these days what time?

The the pricing environment do you think there's better opportunities given Amazon's or are very busy and is your goal to become fully integrated or family to complement the the biggest player right now? Yeah a good question. So yes, you know Amazon for sure is really really busy. And what we've done in the meantime is, you know, because New York has an example. I mean we're down so much in New York with our regular customers. So our us team said, okay. Well, we'll make a deal with Amazon. So right now we're we're delivering about five thousand Parcels add a New York because we're down so much. We know that this is short-term. We know that as soon as they will try to find somebody else to do it cheaper than us because us we're both making money, but that being said, you know the environment what we're trying to do, but is is Jose.

Understand better or solution now our solution like you said is not fully integrated like an Amazon solution Amazon's got the Fulfillment center and distribution today. So our solution is a little bit like the other Transportation Company UPS or FedEx. Whatever is that we offer the transportation not the but our solution to customer to have these C's or or are matched up with DC's is is the same as similar to what an Amazon solution is very efficient lean-and-mean a great service and that's what we're trying to do now down the road. Okay, does it make sense for us to really have a partnership? Okay with with someone that's got the capability and that's offering the the this kind of service to the shippers. Maybe that may happen, but but we're not there yet.

perfect and

When we look at the the fuel and the the foreign exchange, obviously, there's been some big movements year-to-date which I would expect to be favorable. So could you maybe provide some caller or on how does it going to be flowing to the bottom line? Which respect you Fuel and FX? Yeah. Well if use a pass-through so really Noth nothing May on the fuel side, but really on the effects for sure I mean, but but we need US Dollars profit to be you know significant. So I'm sending how how good our last month on our truck load guys will do in the US will definitely helped EFI are Canadian division, mostly run Canadian dollars except for some of our track division. So it it could help us a little bit in in, you know the rest of the year because now we're I think the dollar is about a dollar forty or something like that. So we'll see but this is not something

I would say been why it's really significant for us in terms of bottom-line. Okay, perfect. And the last one for me you provide kind of a Consolidated number for net cap this year. I was just curious whether the amount of asset disposal should be bigger in light of the adjustment to the capacity or asset disposal should be nosy similar to the the panel no normal normal. I mean what we're doing is we're not shedding trucks or okay, because of this, you know Revenue shortfall because you know, like we're protecting our employees with our kind of system of bonus to bring it back to work. We don't believe today that this will be long-term impairment in terms of the volume. So it will be a disaster into two thousands of the volume everything that we read says that maybe the US GDP in Q2 will be down like 30% Okay, but it's up into three. Okay. So yep.

Two for everything that we read about that. So what we're saying, is that okay? Well, we don't have any other options. So we sell what needs to be sold. But what is still useful for the company in the the time being is going to have to park that at the fence and wait till the business comes back. Okay. Thank you very much for the time and congratulations again. Thank you anyway.

There are no further questions at this time. I would now like to turn the call back over to batard for final remarks.

Well, thank you operate it for facilitating this morning's call and thank you everyone for joining us today. So we very much appreciate your interest in want you to know that as I said, we're working hard to create value unlock and unlocking for investors and whenever possible return the excess Capital to our shareholders, so I look forward to updating and I can't assure you that working together. We will all make it through these unprecedented times and even an emerge even stronger. So I have a great day and thank you again.

this concludes

DTF I Internationals first quarter 2020 results conference call. We thank you for your participation. You may now disconnect.