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TFI International Inc  (NYSE:TFII)
Q1 2020 Earnings Call
April 22, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to TFI International's First Quarter 2020 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.

All dollar amounts are in Canadian dollars. Also last year, the Company adopted the new accounting standards under IFRS-16 and as a result, certain numbers are not directly compatible with past results. Lastly, I'd like to remind everyone that this conference call is being recorded on Wednesday, April 22nd, 2020.

I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

Alain Bedard -- Chairman, President and Chief Executive Officer

Well, thank you for the introduction operator. And I appreciate everyone joining us this morning, as the world continues to navigate through these unprecedented times. Yesterday after the close, we released our first quarter results. And if you need a copy of the release, please visit our website. As we have previously communicated, our utmost priority since the start of the COVID-19 pandemic has been the health and well-being of our employees, our customers and the communities we serve.

In early March, our Senior Executive team came together to strategize and established guidelines for our operations during the coronavirus and pandemic. Following their guidance, TFI International has been handling the ongoing crisis well, and I believe that we will emerge even stronger when economic conditions return to normal. I know you're most interested in current condition and how we are responding, but I wanted to briefly discuss our accomplishments during the first quarter, starting with our listing in the New York Stock Exchange. This was a highly successful strategic accomplishments for TFI but also a very natural step given how our company has rapidly grown over the years to serve all of North America.

Our NYSE listing in February was well received and the culmination of many years of successful growth and value creation at our company. The proceeds from the offering have been provided an even stronger financial foundation for TFI to navigate what's ahead. Operationally, during the first quarter, our performance was solid despite the significant impact of COVID-19 beginning in March. As I've often said, regardless of fluctuating business condition and the industrywide capacity concerns that still exists during most of the quarter, we at TFI always focus on the basic fundamentals of the business. This consistent approach and how we optimize our free cash flow and earnings per shares which then used to expand our business and create long-term value shareholder. For example, we pursue an asset light business model, we seek opportunities to enhance efficiencies and we maintain a strong balance sheet. When it's strategic to do so, we also look at accretive acquisition opportunity always in a highly disciplined manner. And in early March, we completed the acquisition of R.R. Donnelley's Courier Service business. This modest acquisition strategically adds critical mass and valuable new customers to our TForce Logistics same day parcel delivery operation in the US.

In terms of our first quarter financial results, total revenue was up 1% compared to prior year's first quarter at CAD1.2 billion. More important to us because of our emphasis on profitability, our operating income increased 13% to CAD118 million while our adjusted EPS on a diluted basis was up 8% to CAD0.83. In addition, we generated net cash from operating activity of CAD192 million up a very robust 19% when compared to the year-ago figure.

Before reviewing our balance sheet strength and the expenses reduction measure, we have introduced -- I want to share with you how each of our business -- of our four business segments performed during the quarter and discuss how each has been affected by the COVID-19. Although transportation and logistics was quickly deem as an essential service 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 P&C, this segment represents 13% of total revenue, before fuel surcharge saw revenue decline of 4% year-over-year in the March quarter. Operating income was CAD16 million compared to CAD21 million in the corresponding year -- prior year quarter and the segment operating margin was 11.1% relative to 14.3%. Package & Courier, which is typically our highest margin business, has felt the largest impact from the COVID-19 with B2B activity slowing significantly. This segment has been a focal point of our cost reduction efforts, that I'll review in a moment in your formal guidance given COVID-19, we'll instead provide you a look at the over -- at the year-over-year performance for each of our segments in both late March and early April.

For P&C, our revenue were running negative 28% versus the prior year, during the last two weeks of March, and negative 30% during the first two weeks of April. Turning to LTL, this segment represents 16% of total segment revenue before fuel surcharge and saw revenue declined 14% year-over-year in March quarter. Our operating income was CAD18 million compared to CAD28 million in the prior year primarily driven by a CAD9 million gain on sales of real estate in Q1 of 2019 and our operating margin was 9.8% compared to 13.3%. For the LTL, our revenue were running negative 17% versus prior year during the last two weeks of March, and negative 39% during the first two weeks of April.

Next up is our truckload, our segment -- our largest segment representing 48% of total segment revenue before fuel surcharge. Truckload saw revenue growth 1% year-over-year in the March quarter, our operating income was CAD63 million up 24% relative to CAD51 million a year earlier and our operating margin was 11.8% was very solid, 220 basis point compared to the prior year first quarter of last year. For truckload, our revenue were running negative 4% versus the prior year during the last two weeks of March and negative 20% during the first two weeks of April, with both driver and specialized operation impacted. Lastly, logistics is our second largest segment at 24% of total revenue before fuel surcharge and saw revenue grow 20% year-over-year in the March quarter.

Our operating income jumped 71% to CAD26 million from CAD15 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 recognized in association with the acquisition of the Courier Service business of R.R. Donnelley with the rest from operating improvements and M&A. Logistics has received a boost in recent weeks with both the e-commerce and medical end markets doing very well, partially offset by weakness in B2B. For Logistics, our revenue were 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 currently reflects the lowest leverage our company has in many years. Further, we ended the March quarter with about CAD130 million in cash and equivalent CAD830 million still available on our revolving credit facility and no debt maturities until CAD200 million comes due in June of 2021. During the COVID-19 pandemic, our balance sheet has continued to serve us -- to serve as a source of strength for TFI International.

Shifting gears, I want to spend a moment on our expense reduction efforts. While we quickly moved to reduce operating costs and capex in March, we've approached all decision with an eye toward strategically enabling TFI to quickly snap back and emerge even stronger once the operating environment improves. But for now, everyone within the TFI organization is currently pitching in and I'm very grateful for the pride and professionalism of our people have 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. We've reduced wage for executives anywhere from 5% to as much as 15% for all C level officers and all executives VP across our organization. Second, for more than a 1000 full-time employees we've reduced our work week to four days while helping them through this time by maintaining their pay at 85% of base salary which amounts to an increase in their per day wage. Third, many other employees were subject to reduction in force, which we hope will improve temporary. For these individuals, we have not continued to provide benefits, but we also instituted a base salary recovery program to support them during this period of temporary unemployment.

Fourth, we suspended 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 accordance to -- with local requirement. At this point, 70% of our head office employees are working at home and we have taken additional precaution within our offices. These includes the installation of sanitizer, dispenser, six foot distancing policies, limiting in-person meetings to three people, restricting non-essential visitors from office, a visitor 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 in CapEx 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 approach 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 generate not just growth but profitable growth.

Our ultimate goal at TFI is to create and unlock shareholder value, returning excess capital to our shareholders whenever possible. I want to thank all the dedicated and hard working people of TFI. We have demonstrated pride into work that they do each and every day during the COVID-19 outbreak. I also want to welcome aboard, all our new investors that took part in our 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 TFI International.

With that, operator, I'd like to take questions from the audience. If you could please open the lines.

Questions and Answers:

Operator

Certainly. [Operator Instructions]. Jason Seidl with Cowen. Your line is open.

Jason Seidl -- Cowen and Company -- Analyst

Thank you, operator and good morning Alain and team. Alain, I wanted to start off asking the question about we are -- I know CFI itself doesn't have a large exposure to energy, however as the decline we've seen in oil prices starts to flow through and hit the Canadian economy that's likely going to free up a lot of people use the hauling energy and energy-related goods. Is that going to throw a lot of capacity out into the marketplace in profit?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Well, Jason, our exposure to energy is really, really small. I mean, we have a small operation that's left for us in Texas, of P&D Odessa market. But this is really small revenue for us. And we're still very present in Alberta with our LTL, and to a certain degree in our special TTL but really the service that we provide with the energy sector in Alberta or Saskatchewan is very, very limited. I would say that today energy is very small component of TFI's revenue. For sure, if you look at Alberta, I mean the province has been slapped with double whammy, it's got the oil situation and it also has the virus like everybody else in the world. So our LTL has been affected, I believe 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 on the East Coast, Ontario, Quebec.

Jason Seidl -- Cowen and Company -- Analyst

Okay. And speaking about the LTL, obviously there is a lot of operational leverage in that model over the past couple of years. TFI has really taken the approach to sort of streamlined its network, get it as soon as possible. Is there anything left to do? Are there any other small terminals to close down or is it sort of just your -- where you're adding it right out the storm here?

Alain Bedard -- Chairman, President and Chief Executive Officer

You know what Jason, this is a very good question and absolutely I mean, we will be -- two years ago we've combined TST Overland with Kings Wind 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 now virus is just one more, OK, that's just not helping us. So what we are planning and this is going to be taking effect at the end of April is that we are also now doing the combination of TST Overland, OK, with our CF operation. Two great names in Canada.

CF was only a regional player covering Western Canada and TST Overland is a national carrier. So as of the end of April, OK, that's one more move that we're doing to streamline and be more efficient. So I was just looking at the equipment, so we're going to share about 200 to 300 pieces of equipment. In terms of headcounts, I mean headcounts will be down significantly because of that, because we're getting ready because this LTL keeps on shrinking, so there is no other options for us in Canada that we have to adjust to the volume.

Now, for sure, as soon as we can, OK, we've got 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, because they have the same problem as us is that volume 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 and we cut, and we -- we have to live with the market condition and our focus is always about serving customers but we have to make money.

Jason Seidl -- Cowen and Company -- Analyst

Yeah, that makes sense. And real quick before I turn over to somebody else. What's the average age of your truckload fleet now in the US?

Alain Bedard -- Chairman, President and Chief Executive Officer

In the US, I would say, at the end of March, I mean we're just under two years of age. So this is why, what we did on the capex side, on the US talking with Greg and the team there and David, as we said, guys, I mean our fleet is so new, that we can afford. So what we've done in the US, we've canceled the capex for everything that was not committed. So probably what we'll see is we still have some capex coming in for US TL in Q2 in terms of trucks and trailers, but after Q2 everything has been canceled. So this means, if I remember correctly, about CAD60 million net capex that will not be done in 2020 for US TL, Canadian dollars though. So I mean you put that in US, is about, let's say USD40 million, USD45 million.

Jason Seidl -- Cowen and Company -- Analyst

Okay, perfect. Listen, Alain I appreciate the time as always and be safe out there.

Alain Bedard -- Chairman, President and Chief Executive Officer

Thank you. Likewise, thank you, Jason.

Operator

Mona Nazir with Laurentian Bank. Your line is open.

Mona Nazir -- Laurentian Bank -- Analyst

Good morning and thank you for taking my questions and congrats on the quarter in a challenging environment.

Alain Bedard -- Chairman, President and Chief Executive Officer

Thank you, Mona.

Mona Nazir -- Laurentian Bank -- Analyst

So my first question is just a clarification. So for LTL, did you say the last two weeks of March was down 17%?

Alain Bedard -- Chairman, President and Chief Executive Officer

You know what, let me just check, because I think so.

Mona Nazir -- Laurentian Bank -- Analyst

Okay.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes, 17% down. Yes.

Mona Nazir -- Laurentian Bank -- Analyst

And the first two weeks of April, sorry?

Alain Bedard -- Chairman, President and Chief Executive Officer

39% down. Now what I have to add on that Mona is what we've seen really, if I look at my first week of April, OK versus my second week of April, now I've got my third week of April because April for us is three month -- five weeks. So when I look at that, I see a trend that this volume OK was really, really down the first week and a little bit less in the second week, a little bit less in the third week. So I think that right now, we're probably until the government decides to reopen businesses, I mean we're probably just improving a little bit week by week at the same thing with our P&C. P&C, the first week, it was a disaster, I mean bang and then it start to drop even more. So the first -- the last two weeks of March, OK because they announced the closing, OK we went down, down, down, then the first week of April again, even down more. And then the second week of April back up a bit and then the third week of April we're starting to see 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, that was down like a 40%. Now after three weeks, I'm down only 30% year-over-year.

Mona Nazir -- Laurentian Bank -- Analyst

Yeah, that's helpful because 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 is that in fact the case, yes.

Alain Bedard -- Chairman, President and Chief Executive Officer

Mona, it's true.

Mona Nazir -- Laurentian Bank -- Analyst

Okay. And if we're just adding up the steps that you've taken in regard to reducing executive compensation, reducing office staff to four days a week for lowing some P&C staff to preserve capital, I'm just wondering, combined what kind of an impact can all of these items have on opex?

Alain Bedard -- Chairman, President and Chief Executive Officer

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 LTL, the same thing with our US TL, I use to monitor by the week, now we're by the date. What I could answer on that is that, a lot of people were scared that TFI would lose money even in Q2 because all will be, but we're not going to lose money in Q2, that's for sure. I can't give any guidance, but what I could say is that all the steps that could have been done, OK, and we are following information and tools and data by the day. In every business that we had a huge drop like our P&C, in our LTL. And my US LTL, the reason that we're checking that by the day now is because that's the most capital-intensive business we have, right, because my Canadian truckload or specialty truckload is not as capital intensive. And yes, my van division has been affected, my specialty truckload as soon as an example, the construction in Quebec has been shut down, the mining has been shut down.

So now they're starting to reopen that, then already we're starting to see some improvement in our specialty truckload and Canadian truckload. So really our focus are right now, OK, is really our P&C, our LTL, and our US TL that we monitor by the day, OK. Now, to answer your question, your original question, how much -- what's the quantum of all of that. I can't really answer that Mona. I don't know the numbers, but what I could tell you is that we are monitoring that by the day, we're comparing year-over-year, day-over-day comparing, let's say, for instance, our labor costs used to be 12%. So are we at 13% or we at 11%, where are we at? And we're doing that for all like I said LTL, P&C and US TL.

Mona Nazir -- Laurentian Bank -- Analyst

Okay, perfect. And just lastly for me. I understand the M&A maybe temporarily on hold just given due diligence is challenging on third parties at this time and you want to preserve capital. But when the M&A turns back on, I'm just wondering what can expect us 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 waste business was a jam.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah, absolutely. Now you see Mona when the minute we could do M&A again, OK, which may be in Q3 depends on what then May looks like, but we will start really which one small tuck-in deals that we've been working on for the last few months and we put on hold. So that's how we're going to start M&A 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 significant sized deal, prior to this virus thing there. But we were not going to do any major deals in 2020, it's too risky OK, not knowing how long this virus is going to be with us for, maybe its a year, maybe 18 months nobody knows.

So this is why or anything of size won't happen probably until '21, but I would tend to say that small tuck-ins that we could do in Ontario, for instance, I think that there is a probability that we could do that in Q3 or in Q4 of 2020. So we have ample of files that we're looking at right now. And don't forget, if we are in a difficult position because revenue just disappeared because of this virus, I mean everybody else in the same boat. I mean, we're on the same ship. I mean the market is difficult for everyone. Now the strong like TFI, that's got the balance sheet, that's got the team because don't forget you need the team to do all this M&A, you need a solid operational team to take over a company and just integrate like we're doing in the US right now with Donnelley, OK. Sure, the guys will say, well Alain, you got CAD5 million of profit in Q1, that comes from that deal, yes, because we buy at the right price, so what's the problem with that. And then you'll see Donnelley as an example, OK that will help us grow our last mile logistics business in US with all the nice vertical like healthcare for instance or E-commerce.

Mona Nazir -- Laurentian Bank -- Analyst

Thank you. That's very helpful.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure Mona.

Operator

Jack Atkins with Stephens. Your line is open.

Jack Atkins -- Stephens Inc. -- Analyst

Hey, Alain good morning. Thanks so much for taking my questions. I really appreciate it.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure. Joe.

Jack Atkins -- Stephens Inc. -- Analyst

So I guess just to kind of start off here with a couple of higher level questions, but 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 sort of how you think, what we're seeing right now from COVID-19 pandemic. How does that structurally change the transportation markets in the US and Canada as we look out over the next couple of years and sort of how do you want to position TFI to really capitalize on that?

Alain Bedard -- Chairman, President and Chief Executive Officer

Well, that's a very good question and Jack, we've learned from the lesson of 2008, 2009 as a TFI. If you go back and look 2008, our revenue wheel dropped about 20%. Our EBITDA dropped about the same, but we were way more capital intensive than we are today. Our balance sheet was not as strong as what it is today, and that's one of the thing that we've learned from that crisis then. If you look at this crisis now, OK. And you look at that and you say, well, Jesus Christ, this is really the first time that we have shut down everything just overnight, just overnight, just overnight OK, the government decided that for health reason, OK, well, this is going to shut down, boom, goodbye.

So our B2B has been affected. And what we learned from that, OK, if we look in the future I think that this -- the consumer, OK, was slowly moving toward more and more e-commerce, slowly. I think that this is going to be a catalyst, OK for those guys to slowly even know not as much slowly, but probably a little bit faster into more and more of this e-commerce thing because they are getting some of those consumer are getting used to the e-commerce, OK, whereby, let's say just a few months ago, these guys say while e-commerce, I don't really like that. I'm just going to go shopping in 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, OK, faster than it would have been without the virus. I think that the solution that we have as at TFI is unique, because if you look at Canada, we offer the next day solution with the Canpar, Loomis operation, OK, which competes with UPS or FedEx or purolator Canada. In the US, we don't have this solution, but we have our logistics and last mile solution, which is the same as the big e-tailer everybody knows about Amazon, we have exactly the same products. So this is like a diamond in the rough within the TFI family. And I think that people are just starting to understand once they start understanding that wow this is a real diamond those guys, OK can compete easily well for sure we service Amazon as a customer, although small, but we have the same service that we can offer to other customers, which we're doing OK and which we're growing.

So going back to your question, what do I see from this is that e-commerce will keep on growing even faster, and that's going to help our last mile 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 TFI is always been low in capital intensity, if you look at the global TFI today, we're between 4% and 5% capital intensity, why because our focus is always been to generate cash. We want to generate cash, why, because we want to buy back stock, we want to buy pay dividend to our shareholders, we want to do M&A, et cetera, et cetera without that free cash flow generation, you can't do that. I mean, yes some trucking companies have no debt, but they have no free cash flow.

So for sure they can't afford that debt or they can't pay dividend. So our approach us at TFI has always been, OK try to do more with less. So if you look at our US TL operation about two years ago, Greg Orr came to us and say, he we have to start a logistics operation within TFI. So, Greg, makes a lot of sense, OK. So, we've invested in that, we've also focused lately even more into trying to grow our owner operators fleet in the US, it's always been a problem to grow that.

Lately. I mean, Greg and his team has been very successful, we're adding owner operator, so that will reduce our capital intensity hopefully for the next years to come. So I mean this is a really good question Jack. And I think that this is what's so important about understanding where TFI is today, where can it be tomorrow, OK, this e-commerce solution that we have within TFI is like one of the best-kept secret in North America.

Jack Atkins -- Stephens Inc. -- Analyst

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

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah, well, for sure, there is some customers that always try to hide and give you the excuse. So just to delay their payment but as we're very strong on that and I'll give you an example, there is a huge mining company in Canada. Those guys had all kinds of issues with their IT system, 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 huge corporation and an international corporation. So finally, were able to get payment because we said guys, if we don't get the money you guys don't get the trucks. So that's always been our approach, like I mean, 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 everything in that agreement has to be respected.

Jack Atkins -- Stephens Inc. -- Analyst

Makes total sense. Well, thanks again for the time.

Alain Bedard -- Chairman, President and Chief Executive Officer

It's a pleasure Jack. Take care.

Operator

Scott Group with Wolfe Research. Your line is open.

Scott Group -- Wolfe Research LLC -- Analyst

Hey, morning, thanks for the time guys. So, can I just clarify the April updates that you gave that were helpful, was that volume or revenue and if that's revenue is that with or without fuel?

Alain Bedard -- Chairman, President and Chief Executive Officer

I'd say excluding fuel, and this is revenue.

Scott Group -- Wolfe Research LLC -- Analyst

Okay. And is there any way on the -- so the P&C that's I think down 30% in April. Can you just help us think about what trends you're seeing specifically B2B versus B2C? Maybe just remind us of the mix of B2B versus B2C fair? And then anything that's notably different between the package side and the courier side?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes. So if you look at our P&C, you could split that in two. So you got Loomis and Canpar, OK, and you got our specialty kind of P&C which is ICS and TFIS. So if you look at TFIS and ICS, those guys are niche B2B carrier. So those guys are way more affected, OK, than the Canpar Loomis. Why? Because Canpar Loomis has also B2B but also has a significant content of e-commerce. Whereas if you look at TFIS and ICS, they are basically very, very little e-commerce in those two division because these are specialty carriers like, as an example, ICS is very heavy with the insurance world, very heavy with the optical world, dental and all that. So, it's really -- so all the dentists, all the optical boutiques are closed down. I mean, ICS is just dead. Okay? So, that's the big difference between the two. So you'll see, if you say 30% down, OK, in early April, well, that means that those specialty guys are like closer to 50% down, OK, and the other guys are closer to 20% down, because they have more e-commerce and less B2B exposure than the other one.

Scott Group -- Wolfe Research LLC -- Analyst

So, is it fair to think then that the -- so within the down 30%, that the B2B, maybe to your point, is down in half and the B2C in e-commerce is -- OK.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes, sir. Yes, sir. Absolutely, because with all these shutdown, I mean, think about all the malls, they're shutdown completely. So, customers are closed. So, that's why our B2B, OK, has been affected so badly in our niche carrier like ICS and TFIS.

Scott Group -- Wolfe Research LLC -- Analyst

What are the implications on margins for that segment? I know you said, hey, don't worry, we're going to make money this quarter. But can that segment -- can the P&C segment make money in this kind of environment? Or is there anyway to think about margins in that quarter right -- margins in that segment right now?

Alain Bedard -- Chairman, President and Chief Executive Officer

When we look at our forecast -- our reforecast and our rereforecast is, we're not losing money in any of our sectors, OK, in Q2 based on what we know after three weeks of operation in April.

Scott Group -- Wolfe Research LLC -- Analyst

Okay.

Alain Bedard -- Chairman, President and Chief Executive Officer

So, we're not going to be an 18 point EBIT, OK, P&C in Q2, it's impossible, but we're not going to lose money.

Scott Group -- Wolfe Research LLC -- Analyst

Anything more directionally you think is worth thinking about? Is this a mid-single-digit kind of business right now for the time being, or could it be a little bit better than that?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah, 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, OK? There's a little bit of improvement in our trend. So, we really took a major hit in the first two weeks of April. It was really a while, where are we going with that. So we -- now, I think we found some kind of stability, OK, and slowly, we're picking up again, because if you look at the virus in Canada, I mean, Quebec has been affected so badly, it's terrible and then you've got Ontario. But if you look at the western provinces, we believe that those provinces will reopen faster than, let's say, Quebec. Quebec will probably very slow, because they got so much virus case, they have more than 50% of the cases in Canada right now. So, Quebec will be slow. But the west will probably be the first areas in the maritimes to reopen slowly. So based on what we know, OK, and not forecasting a lot of improvement in Q2 in May or in June, P&C will be something in the 3% to 5% probably. But this is not a guidance, this is an opinion.

Scott Group -- Wolfe Research LLC -- Analyst

No, no, I get that. And then just last thing, I -- you gave us the Truckload sort of capex, how much it's cut. But in aggregate now, what's the capex budget or plan for the year?

Alain Bedard -- Chairman, President and Chief Executive Officer

Net capex is probably going to flow around between CAD80 million to CAD100 million net capex, net of disposals, which is about half of what we normally do.

Scott Group -- Wolfe Research LLC -- Analyst

Yeah. Okay. All right. Thank you for the time, guys. I appreciate it.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure.

Operator

Tom Wadewitz with UBS. Your line is open.

Thomas Wadewitz -- UBS -- Analyst

Yes, good morning. I think following on...

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning.

Thomas Wadewitz -- UBS -- Analyst

Yeah, good morning. Following a little bit along the lines of the questions and topic you just had, what is the B2C, B2B mix in the P&C business? And as you look at that and your comments on acceleration in e-commerce, do you say, well, maybe before we wanted to be stronger on B2B, but we kind of review the structure and change the strategy a bit in terms of how we look at B2C, even if it's a lower-margin business and kind of core B2B?

Alain Bedard -- Chairman, President and Chief Executive Officer

That's a very good question, because let me explain you our philosophy. Our philosophies are next-day service, OK, which is Canpar, Loomis, TFIS, ICS, which compete with UPS, FedEx and Puro in Canada. Our focus is, yes, we'll do e-commerce, but not so much, where it makes sense and where our margin could be as good as 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 efficient way in huge, high-density areas like, let's say, in Canada, Toronto, Montreal, etc., or New York, Chicago in the US, LA, Houston, Dallas. So, our solution is really the same kind of solution that the big e-commerce guys is using to service its customer, way more efficient, way more effective, less capital-intensive, because we don't have the conveyors, we don't need those conveyors, because everything is done, the sorting is all done at the customer level.

So, that's why -- going back to your question, our P&C business, the focus, it will remain on B2B. And I agree with you that may be B2B will 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, OK, that we could do in our next-day service. What we're trying to explain to our customers is the guys, we offer another solution, which is our Logistics and Last Mile, OK, which is really good. But you need like the other guys like Amazon, you need warehouses. And if you don't have warehouses, it's very difficult to do, OK, what Amazon is doing, OK?

Thomas Wadewitz -- UBS -- Analyst

So, I mean, it sounds like it might be fair to say this, if there's a big acceleration B2C and e-commerce and it's more on a structural basis that's 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 parcel...

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes.

Thomas Wadewitz -- UBS -- Analyst

Yeah. Okay.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. This is exactly what I'm trying to say, OK. And when I talked to Kal, our EVP in-charge of our Logistics and Last Mile, I said, guy, Kal, you've got a diamond. You've got a diamond in the rough. And the only problem is that, people still don't understand what we can offer. They understand the Amazon solution, OK, because Amazon is fully integrated now from warehousing to distribution. And us, we're not in the warehousing business. We're just talking to some customers and say, guys, if you have this kind of distribution network, we could help you on the e-commerce. So we'll take time. But we have this solution that is, 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 accelerate absolutely. So, it will be to the detriment of the B2B in the P&C side for us or for Puro, for probably FedEx and UPS, we'll 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.

Thomas Wadewitz -- UBS -- Analyst

Right. Okay. That's great. That makes a lot of sense. One other question for you. Your strategy is differentiated in terms of the aggressive use of independent contractors and obviously that -- it's a component of your focus on cash. I know there's some cyclical aspect to attracting ICs and you can probably attract, whether it's drivers or ICs, or whatever, I would think, easier in this environment. Do you look to make potentially structural changes on the mix? Do you say, well, this is an opportunity, if we were -- I'm not sure the number in a specific business. But if we were 40% IC, 60% Company driver, now we want to go to 50-50, or we want to flip it and go 60-40? Or do you look at the market and just say, hey, we like our mix of IC and Company driver and this is just cyclical stuff that doesn't change the kind of structural kind of IC versus Company driver mix?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Very good question and you got to different -- look at it differently either if it's a Truckload operation or if it's a P&C and LTL operation. P&C and LTL operation, it's a model that's very easy to run with owner operator. Why? Because it's easier, OK, easy to find. The guys are happy, they have their own business, they're home every night, etc., etc. 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 Truckload side, I mean, it's more difficult -- even in the US, it's even more difficult, OK? Because a lot of those guys don't make any money, because there's -- in the US a lot of pressure on rates with customers. The customers are smart. They feel that, oh, there's an overcapacity, because the truckers bought so many trucks in 2018, because they thought that this would be a fantastic year for the next 15 years. So they bought thousands of trucks, and now the rates are the [expletive], so those four owner-operators are just dying.

So, to answer your question, I mean, Truckload for us a mix that makes sense is 65% asset and 35% non-asset, which would be either logistics or owner-operator. But if you look at our P&C and LTL, it's completely the opposite. So there, you will see us running a 30% asset and 70% non-asset.

Thomas Wadewitz -- UBS -- Analyst

So that's the mix, but you're saying the mix doesn't necessarily change for you as a result of the current condition?

Alain Bedard -- Chairman, President and Chief Executive Officer

No.

Thomas Wadewitz -- UBS -- Analyst

Right. Okay. Thank you for the time.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure.

Operator

Ken Hoexter with Bank of America. Your line is open.

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

Hey. Good morning, Alain and Dave.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning, Ken.

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

Just want to follow-up on the -- I guess, you have great insight, given your multiple segments, and I get what you're saying on the down 30%, down 50% kind of difference 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? Where do you expect to see that kind of the signals first within your different endpoints?

Alain Bedard -- Chairman, President and Chief Executive Officer

I think that, where we've been affected the most, OK, which is our P&C and LTL what we're waiting the signal is that, at one point, they reopen the shops, the malls, that the retail business, because this is really killing our B2B business. So, that's why we're monitoring that by the day. About three weeks ago, I said when I looked at the sharp decline in our revenue in our P&C, I said, guys, I mean, you guys monitor that by the day, but us, it's by the weekend in office, it's got to be done by the day. And we monitor the labor costs, the owner-operator costs, the staff costs and all that.

So, for us, the other thing also that we've implemented is, it kind of bring back the employees with a support deal. So if an employee has been laid-off and when he comes back, let's say, he comes back after 12 weeks, so we have a program in place that he has got an incentive to come back. So, if I remember correctly, the first four weeks, we're supporting this guy with CAD100 a week. After four weeks, we go up to CAD125 for the next four weeks, and then we go to CAD150 a week. So, let's say, the guy has been away for 10 weeks, so he has got an incentive to come back to work when we call him back. So he is ready to come back, because over and above that, he has got his job back. He is also having a kind of a bonus to come back, too, and pay all the bills that he has been stuck with because of this pandemic.

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

Great. And then, you kind of gave some thoughts on your margin outlook for the P&C. You just kind of gave that the mix change on the Truckload side, given trying to stay asset-light. But what kind of margins do you anticipate seeing on the Truckload side?

Alain Bedard -- Chairman, President and Chief Executive Officer

It depends. If you look at our US TL, I mean, if we look at our reforecast for Q2, like I said, we have no sector that's going to be losing money. Now, are we going to be able to run at 94%, 95% OR? So far, what we see is our OR in Q1 has been deteriorated by about 100 basis points, right? If you look at, I think, we did 93.4%, and the year before we did 92.4%, so 100 basis point deterioration year-over-year.

Now, can we think that in Q2, can we see a 500 basis point deterioration? Maybe. What I've seen so far from the other US TL is that, in Q1, some of them have deterioration of 150 basis points or even more. Not a lot of that have been coming out so far. So, the target is always not to lose money and this is an utmost priority. 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 our US TL is not losing money. Based on what we could see, we lost some customers because of closure like Packard, for instance, but we also have customers that are doing three or four times more like Clorox. So, our revenue is down. Yes. It's more down at TCE than CFI because of our dedicated business, for instance, Mercedes has been shutdown, but they are reopening, OK.

So, all in all, 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 Q2 or any other quarters, I mean, in all of our divisions and each and every one of them.

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

Appreciate that. And then just real quick, I guess, to wrap up. Are you seeing any differences in your Canada operations versus US in general in terms of how you're handling the impacts?

Alain Bedard -- Chairman, President and Chief Executive Officer

Well, when we look at the Canadian operation in our Truckload sector, I mean, where we're really affected is our flatbed because of the steel. If car plants remain shutdown for months and months, because there's no demand for cars in Canada, I mean, it's really our flatbed business has been affected. We don't have any flatbed business in the US. So we're not in that business. So -- but the rest of our business in Canada, it's fairly, it's down, but it's not down as much as our flatbed business.

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

All right. Appreciate the time. Thanks.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure, Ken.

Operator

Konark Gupta with Scotiabank. Your line is open.

Konark Gupta -- Scotiabank -- Analyst

Good morning, Alain, and thanks for taking my question.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning.

Konark Gupta -- Scotiabank -- Analyst

I hope you're keeping safe and healthy there.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes, we are.

Konark Gupta -- Scotiabank -- Analyst

Thank you. That's very good to hear. Yeah. So, just I wanted to ask you first on pricing. So it seems like, as you noted in the financials, the pricing turned positive in Q1 in most of the segments from negative in Q4. So first, like, what caused the pricing to turn like that? And then how do you see the pricing trends in the first two weeks of April or three weeks of April?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Well, if you think about our pricing with our LTL, for example, I mean, our pricing improved, it's not because the market has improved in terms of pricing. It's just because we're getting rid all the time of low-margin accounts. So this is why by 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. It's just that we're cleaning up again and we always find those situation, whereby a customer who tried to take advantage of a trucking company.

If you look at our P&C, OK, it's more like the average weight or the coincidence of delivery, rates are fairly stable. US TL, our rates are a little bit under pressure, not so much, OK? But what we see probably in Q2 is that, we'll have probably a little bit of pressure on the rates in the US, not so much in Canada so far. So, the way we're going to win this war with this virus, it's about costs and it's about volume.

Now, the focus has always been at TFI that we service customers where we can make money. So, get rid of all those guys where we -- you lose money or you make two points. So, it's -- this is why we're so light in assets, and this is why return on invested capital was so good is, because we focus on that all the time.

Now, the problem is, when you have B2B shutdown, like 50%, you lose business, you lose volume that are highly profitable. And there's nothing you can do about that except adjusting your cost base. Hopefully, when those guys reopen within the next few months, I mean, we'll be back on business. But, like I said earlier, on the P&C side, long-term -- medium- to long-term, we'll probably see either flat or some reduced volume. But that is -- will be for TFI to the advantage of our solution, which is our Last Mile and Logistics, already we see that. I mean, our Logistics division in Canada is up. If you look at our revenue so far in Q2, we're up, OK, that's basically the only division that we're up year-over-year, excluding M&A.

Konark Gupta -- Scotiabank -- Analyst

Okay. That makes sense. I see. Thanks for that. And I think you obviously gave us pretty good color on how the revenue run rates have trended in March and April. So thanks for that. Just wanted to understand on the Truckload and Logistics side, so you noted the numbers on revenue being down 20% in April and then on Logistics, up 12% in April. So, just wanted to clarify, is that apples-to-apples, I mean, normalizing for acquisitions because there were some acquisitions? Okay. Yeah.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes.

Konark Gupta -- Scotiabank -- Analyst

So they include acquisition this year, as well as last year, right? When you see.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah.

Konark Gupta -- Scotiabank -- Analyst

Okay. Makes sense. So the Logistics, is it the e-commerce? That's what's driving the revenue up significantly in March and April?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Well, let me get that again, OK? So, if you look at our Logistics year-over-year, OK, in Q1 versus there was no real big M&A. But if you look at the first two weeks, OK, Donnelley is in there.

Konark Gupta -- Scotiabank -- Analyst

Okay. I see. Thanks.

Alain Bedard -- Chairman, President and Chief Executive Officer

So, Donnelley, if I remember correctly, I think we closed that deal mid-March. So that's why we still show some improvement. But don't forget, like I said, our Logistics in Canada is up organically, OK? There's no M&A there, up double-digit in Canada. And then in the US, we were down organically, if you exclude Donnelley. Why? Because we were really badly affected in New York. New York is big market for us, Detroit, Boston, Chicago. So, we lose there. We gain on the other side. So, we gained a little bit on the e-commerce in the US. We gained a little bit on the West Coast, Texas. We've also been affected in South Florida. Oh, our forecast, as an example, in our Logistics and Last Mile in Q2 in the US, excluding M&A is that, we're going to be down probably like 10% because of New York and Chicago and Detroit and all that.

Konark Gupta -- Scotiabank -- Analyst

Okay. And that's great color. In the press release, you mentioned the -- since COVID began, you saw good demand for like household goods, obviously, healthcare, e-commerce. Can you remind us like, obviously, we talked extensively about P&C here? But can you talk about exposure to household goods, healthcare, e-commerce for other segments like in LTL, TL or Last Mile or Logistics? So, what kind of exposure you have there? And then how do you compare those trends in those segments versus B2B?

Alain Bedard -- Chairman, President and Chief Executive Officer

Okay. So, if you look at our Logistics sector, I mean, in the US, we're really, really big on healthcare. So, it's probably like 25% of our revenue today. So it's -- we've got really some good exposure in the US Last Mile with that. In our P&C in Canada, I mean, it's mostly our -- excuse me, our specialty 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, it's small. I mean, LTL is mostly retail. As you look at my pie chart, retail is number one, and we used to be big in industrial LTL in Canada, but they shut down all the plants over the last 10, 15 years. So, we're mostly a retail carrier like everybody else now in Canada on the LTL side.

Konark Gupta -- Scotiabank -- Analyst

Okay. Makes sense. And then lastly, coming out of this down to our land, do you see an opportunity to optimize your portfolio like you did in 2008 and '09, I mean, like in the way of any divestitures or any acquisitions focused on particular areas you would be looking at?

Alain Bedard -- Chairman, President and Chief Executive Officer

Oh, Absolutely. Absolutely. We -- the way I see 2020 is like, OK, it's a test. It's a test. 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, we look at the LTL in Canada, and it's a shrinking business. So, I think that we have to do more M&A 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. We'll have to see that down the road because we run a partnership model with a US carrier right now. Maybe we'll see what happens there.

On the truckload side, I mean, we see a lot of opportunity, again, in improving our density in Canada, Ontario, mostly, to beef up the density, the offering that we could give our customers. 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, there will be lots of opportunity we're discussing with many, many trucking company in the US about join the family and do more with TFI. So, our balance sheet is really strong. Our team is second to none. Our mission is very clear. So, we have to go through this storm. We've navigated to some storm before. We're going to navigate to this one. We're really solid. We monitor things by the day. And we're not sitting on our hands.

Konark Gupta -- Scotiabank -- Analyst

Okay. That's all for me. Thank you so much and good luck.

Alain Bedard -- Chairman, President and Chief Executive Officer

Hey, thank you, likewise.

Operator

Brian Ossenbeck with J.P. Morgan. Your line is open.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Good morning, Alain. Thanks for taking the questions.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Maybe just a follow-up on that last one, you talked about consolidation after obviously done. Can you just run us through competition at this point in time, considering the big drop-off in volume, if you see any place that it's maybe a little bit outsized pressure, particularly in some of the more challenging end markets? And away from consolidation, what do you think about just the general health of some of your competition? Are you expecting absent consolidation just for some capacity overhang to get lifted here as some players exit the markets, maybe in more of the asset-heavy side of the business?

Alain Bedard -- Chairman, President and Chief Executive Officer

Well, what we're seeing so far from the competition is, I think that everybody is so busy trying to manage the downsizing of the business. That -- 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, safety for the employees, downsizing the operation here, doing this, doing 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 issues, right? So, is that the right time for them to switch because one trucker is going crazy and offer stupid rates? So far, so good on that. I mean, the business we have, we haven't lost anything so far because of somebody comes in and offer a stupid rate to a shipper and the guys says, OK, I'm going to jump on that, so far.

In terms of 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 the large trucking company in the US, their balance sheet is strong. Most of them don't have any debt. 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 companies are small, highly leveraged. 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 is, today, we probably have eight or 10 active files in Canada that we're just waiting, OK, to say, OK, go because we have more visibility about our Q2 and what Q3 may look like.

So, if you think that after we look at April, we look at May, and we -- OK, fine. Are we on plan with our new refocus plan? Are we better than the plan? Or are we worse than the plan? That will guide me into saying, well, OK, this is -- these are the small deals that we could do right away in Canada. These are the small deals right away we could do in the US. So, the M&A machine at TFI has been put on hold for now, OK, 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 our shareholders in the future.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Okay. Got it. On the self-hope side of things. Obviously, you're managing through this just like everybody else. But I think a little while ago, you combined some of the leadership for Last Mile and Logistics and give them some more responsibility in the US, the Canadian team. So, maybe you can just give us an update on things away from 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 Mile Logistics? Is that something you're just sort of trading water on given the current environment? Or are there sort of other levers you can pull here in the meantime?

Alain Bedard -- Chairman, President and Chief Executive Officer

You know what Brian, what we've done with our Logistics, trying to have Kal overseas, both divisions, US and Canada. Having Dean overseas both sales force, US and Canada, I think also our Canadian financial team help our US team there. It's already helping our US team to do much better. Don't forget that these guys had to swallow, OK, three acquisitions. We bought Dicom complete -- Dicom US, completely disorganized. We bought BeavEX in '19, completely disorganized. We bought the courier division of Donnelley, even worse. So, those guys had a lot of challenge, and they need help. They need support. And this is why if we look at the -- all these acquisitions, this is beefing up the revenue, helping us, OK, improve our density. And at the same time, we're also correcting some mistakes of the past. Some culture is issue. The focus about making two points. Is that good business? Well, maybe for the other guys, not for us. I mean, change this culture.

And if we look at our Q1 US Last Mile, it improved. It improved by, I would say, about 200 basis points. And I said that in Q4 on the call is that, I'm seeing at least 200 basis point improvement in our US Last Mile 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% -- 60%, 65% because of what's going on there. Some of the great markets like Chicago is down also as well. So, even with that, I mean, we're doing way better in terms of dollars, bottom line and percentage. So, it's a great boom and there's a lot more to do.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Okay. Got it. Last quick one, if you can just offer some comments on the decentralized model that you have with more of the central overlay for a lot of the functions in the monitoring. You touched on it a few times during the call in terms of how you're monitoring things by the day instead of by the week, but just wanted to see if given this current stress test that you're going through, what do you think is the model going forward, if there are things you're looking to add or tweak? Or is this kind of what you expected? How for it to perform and the people underneath you, given the current environment?

Alain Bedard -- Chairman, President and Chief Executive Officer

See, Ken, our team is, Ken -- 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 with the Board and with my shareholders. And I don't want to come up with the excuse that, oh, OK. So we dropped the ball. No, no, no. We can't come in with some excuse, we dropped the ball. So, I've got a strong belief 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 downsizing, you have to manage customers' expectation, etc., etc. So these are very, very difficult times. And in very difficult times like that, this is when you see that you got a hell of a crew. And I'm so proud of our crew at TFI. I mean, oh, my EVPs, I mean, the guys are doing a fantastic job, a fantastic job.

And me -- like we always do in the head office, we just want to make sure that those guys are focused on the right things. And this is why I went through a lot of different phase, critical phase in my trucking career. I've been a trucker for some 20 years. So, I'm there just to make sure that we don't drop the ball, we don't lose focus. And also, I'm there to motivate the guys and to encourage them. It's not easy to do what we have to do now to be successful and to preserve capital and to keep the morale up. When you drop -- when you have a business that drops 50%, it's not a crisis, it's a tsunami. So, you have to let go people. You have to -- what are we going to do tomorrow? It's not easy. And this just happens overnight. It's not something that has been going on, OK, for six months. It just boom going to happen. And then, OK, what do you do now, right?

Brian Ossenbeck -- J.P. Morgan -- Analyst

Right. Okay, great. Thanks, Alain. I appreciate the time.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure, Brian.

Operator

Walter Spracklin with RBC Capital Markets. Your line is open.

Walter Spracklin -- RBC Capital Markets -- Analyst

Yeah. Thanks very much. Good morning, Alain.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning, Walter.

Walter Spracklin -- RBC Capital Markets -- Analyst

So, when I look at your free cash flow for this year, I know you're probably reluctant to give any guidance there, but just looking at CAD1 free cash flow deployment, it sounds that, obviously, you've talked about acquisitions being on hold for now.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yes.

Walter Spracklin -- RBC Capital Markets -- Analyst

Would that hold as well, obviously, dividend, buyback, and really, you're just reloading your balance sheet, building up liquidity? Is that the best description of the 2020 strategy for free cash flow?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. So there's no concern on the dividend. So, we're not going to do anything on the dividend in 2020.

In terms of M&A, like I said, nothing is going to happen in Q2 and then maybe something in Q3 and in Q4, depending on what's the visibility we have now.

In terms of the buyback, we put that on hold. We did some buyback in Q1. We bought back about 1.3 million shares. We're not -- this was not normal because normally, you don't issue shares and buy it back. This was just because we gave notice to the -- as a matter of fact, it's RBC that managed our NCIB prior and the stock dipped so much with what happened that the buyback was now back on track, but as of April 1, I mean, we're not doing any buyback. We're just going to wait and see. Once we see what April looks like, what May looks like and what the stock price looks like, maybe then it becomes a choice. Are we going to buy a company? Or are we just going to buy the stock? We'll see then. But I don't think NCIB is in the picture, at least for a few months.

And then like I said...

Walter Spracklin -- RBC Capital Markets -- Analyst

So as we go -- please go ahead.

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Excuse me, Walter. But 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 Canada. So, on the Canadian side, depending on what we see in Q2 and early Q3 or in Q3, we could get the benefit of those capex, OK? Because they were booked at a very low exchange rate US-Canada. So, we would like to do those Canadian capex in Q4, but the environment has to be positive for us to do that.

Walter Spracklin -- RBC Capital Markets -- Analyst

You mentioned some files you were investigating, you're doing due diligence on you're holding back for now, obviously, given the conditions. What's your main concern? Is it really just you don't know how much COVID is going to impact the operations of potential targets? And you want to get a better handle on that? Or is it that the seller has gotten a little bit more reluctant? Or are you renegotiating price given everything going on? What's the tenor of the discussions with those you already have actively involved in?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. So the first reason for us to put that on hold is to preserve cash, not knowing, OK, 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 tell them that, well, market valuation of trucking company has dropped 30%, so we have to drop our offer 30%. We don't like to do that. I mean, because maybe TFI stock is down 30%, 40%. But this is -- maybe it's going to be up 30% in a year and a half. So, we don't play this game of trying to squeeze the seller. We have a reputation of us in Canada and in the US to be fair. So we want to buy at a fair price. But if there's a permanent impairment in the target, OK, because those customers that this guy has or, let's say, his revenue was CAD60 million, and it will never be back at CAD60 million. It's because whatever happens, I mean, he's got a lot of B2B customers that are shut down and they will never reopen, then we have to readdress the price, OK, because of that, but we never readdress the price because of market condition. This is not fair in our mind. But for now, everything is on hold because we want to be cautious about preserving the cash.

Walter Spracklin -- RBC Capital Markets -- Analyst

And on that note about permanent impairment and then opportunity, obviously, there's going to be companies that post-COVID-19 are permanently impaired. There will be those that go back to normal and those that thrive and go to a benefit from a new normal. When you look at each of your businesses, generally, once COVID passes and a new -- kind of new normal establishes, what's your anticipation, division-by-division of whether they can go back to normal, whether they will be permanently impaired or are there -- or what areas would actually propel to a new level post-COVID-19?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. So that's a very good question, Walter. And I think that on P&C, I said it, is that, because of B2B will never be the same, OK? Pre-COVID-19 and after COVID-19, I think that a lot of malls, a lot of stores, etc., will never reopen. So that's -- that will have some effect to our B2B, OK, within our P&C next-day delivery system because the guys will never reopen.

So that being said, but it will probably be small, nothing major, OK? But it will be more than if we wouldn't have this 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, to me, I've said it many, many quarters is, LTL keeps on going down all the time because of the e-commerce. So, the only way us, we've been able to sustain some kind of revenue is through M&A, OK, feed the beast. Why? Because -- and then just serve -- continue serving the good customer that you acquired through the acquisition and just get rid of all the small guys that don't want to pay a fair price. So, LTL is a little bit the same as the P&C because all these malls, OK, have been fed up, fed by P&C guys and LTL guys. So to me, there's a little bit of permanent impairment there, OK? So this is why us, our M&A strategy, OK, in LTL will keep on doing what we've been doing for that long over time.

I don't think Truckload will be impaired at all because Truckload, either specialty or van, I mean, all this switch of e-commerce is really not a big effect on Truckload. I mean, those fulfillment centers have to be filled up like the DC of Walmart and the DC of Amazon and all, yes. So on the Truckload side, I don't see anything significant because of this virus before and after. So, huge gain in my mind down the road with our Logistics. We're already seeing that. Some customers are just saying, you know what, we would like an Amazon-type solution. Well, guys, we have that. Well, yeah, but we don't have any DCs. Well, OK, fine, we don't have any DCs us, but you could -- we could match you with someone that's got a DC, that's their business to run DCs. So, we see that -- and it's the diamond within the TFI family. Like the waste used to be one of our diamond. P&C is still a diamond within TFI, but it lost a little bit of its luster because of this, maybe some small permanent impairment because B2B will never be the same after this virus thing gets back to normal. But all in all, if you sum that up within TFI, TFI will be a huge gainer, OK, after this virus is behind us.

Walter Spracklin -- RBC Capital Markets -- Analyst

Got it. Okay. That's really good color. I really appreciate the time, Alain.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure, Walter.

Operator

Cameron Doerksen with National Bank Financial. Your line is open.

Cameron Doerksen -- National Bank Financial, Inc. -- Analyst

Yeah, thanks. Good morning.

Alain Bedard -- Chairman, President and Chief Executive Officer

God morning, Cameron.

Cameron Doerksen -- National Bank Financial, Inc. -- Analyst

Just two really quick ones for me. First, just on the R.R. Donnelley acquisition. You mentioned that the profitability of that revenue is probably pretty low. I'm just wondering, just in the very short term, what that means for margins in that business. I mean, is that a business that you can pretty rapidly get the quality of revenue improved?

Alain Bedard -- Chairman, President and Chief Executive Officer

Absolutely. Absolutely. I'm convinced on that, Cameron. I mean, we bought the business. We had to shed one major account that didn't make any sense. So those guys are gone and will be gone within the next few weeks. There is another one that will be gone in June, significant customers, but it's just crazy. Listen to that, we had a cargo liability with those guys in the CAD10 million. I said it, like I said. I mean, who can be hauling opioids or things like that with a CAD10 million cargo. So you can negotiate the rates with the customer. The first thing you have to negotiate with them is, we don't want to have this CAD10 million liability. So, customers says, well, we'll try to find another stupid trucker that's going to accept that. Well, good luck.

So that being said, those two customers, two or three customers are gone. The rest, what we see so far will be good business and it fits into our network. So, this Donnelley acquisition, once we get rid of all the things that don't fit TFI, it's going to be fantastic.

Cameron Doerksen -- National Bank Financial, Inc. -- Analyst

Okay. Great. And then just secondly for me, just on the Specialty Truckload in Canada specifically, one of the drivers there is obviously construction activity. We're already, I guess, starting to see a little bit of opening up. But, I mean, is that kind of one of the big drivers of that business rebounding is really construction coming back?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Construction is one. Mining is the other, OK? So mining is back. Okay? But we -- for mining, you need the world economy to get back on track. So, yes, the mines are reopened in Canada. So it's good, but we need the global economy to be on track. So, when you look at what is anticipated for 2020, most of Europe is going to be down GDP about 5%, 6%, 7%; US, about the same. So, it's going to be still a difficult year for us in 2020. But I think '21 is going to explode back into what makes more sense.

The other business that's affecting us is 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 probably, it's going to be slow until mid-2021 -- '21, not '20, but '21. So really, the Specialty Truckload, it will probably the -- be the one that is less affected, but really our flatbed is the one that's mostly affected now. As an example, we have a lot of explosive for the mines. While everything was put on hold until now. So in Quebec, the construction has been put on hold since mid-March. They are starting slowly to reopen. This has been a huge negative for us in Quebec. I mean, I think Quebec was the only province or state that closed down their construction industry. So, I mean, it is back on track.

Cameron Doerksen -- National Bank Financial, Inc. -- Analyst

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

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure, Cameron.

Operator

David Ross with Stifel. Your line is open.

David Ross -- Stifel, Nicolaus & Company -- Analyst

Hey, good morning, Alain.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning, David.

David Ross -- Stifel, Nicolaus & Company -- Analyst

Just a quick question on the Last Mile in the US after the three deals you've done recently. Are 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?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah, that's a very good question. So, yes, we have some markets where we could be stronger or better. And we're always on the lookout for some M&A. We have discussion with another group. And finally, maybe it will happen sometimes late this year or early into next year. But really, the main focus of our business in the US with Kal and Dean there is to really sell our solution, OK? We've been very successful in Canada, selling our solution, but not so much in the US as of yet. So really, we have a great solution for e-commerce. We have a great solution for, let's say, the healthcare industry. We do well, but we could do better. So really, M&A, yes, if we can. If we can find the right target in the US, absolutely, we're going to jump on that. But I don't see anything major in 2020 on that.

But what I see very important with Kal and Dean and Scott Leveridge and all the team in the US is, guys, we have a fantastic solution, OK, that is second to none. And we have to have customers understand better. So, we're really focused on that for '20. Now, the problem is that, try to sell something to a customer now it's difficult because 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 our salespeople. We're working on the program and all that to be ready as soon as we can sell this solution to the market.

So right now, big issue is how we're 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 200 basis points in Q1. We still have a lot of work to do with the Donnelley acquisition. So we're busy. We're busy. We got lots of good stuff, but also we're getting ready as soon as we can to sell our solution like we're doing in Canada and the US.

David Ross -- Stifel, Nicolaus & Company -- Analyst

And then you talked recently about the automotive sector and how that's going to take some time to come back, it's about 9% of the business, which segment is that most concentrated in? Would that be LTL and Canadian truckload? Or is there something else?

Alain Bedard -- Chairman, President and Chief Executive Officer

It's Canadian Truckload and a little bit also US TL. So we got Packard, as an example, customer, both in US and Canada, those guys are shut down. So, we got Mercedes in the US, those guys are shut down. We got Nissan, OK? So it's, I would say, probably a little bit more US than in Canada for the automotive business today, US, Mexico.

David Ross -- Stifel, Nicolaus & Company -- Analyst

Okay. But it's primarily in the Truckload segment?

Alain Bedard -- Chairman, President and Chief Executive Officer

It's -- yes, Truckload. Yeah, yeah. No, nothing major in LTL or in P&C.

David Ross -- Stifel, Nicolaus & Company -- Analyst

Excellent. Thank you.

Alain Bedard -- Chairman, President and Chief Executive Officer

Pleasure, Dave.

Operator

Our final question comes from the line of Benoit Poirier with Desjardins Capital. [Operator Instructions] Benoit, your line is open.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

Hey, good morning, Alain.

Alain Bedard -- Chairman, President and Chief Executive Officer

Good morning, Benoit.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

Yes. Just to come back on the potential targets on the Last Mile business in the US, would it be similar profiles to Dicom, Donnelley and BeavEX? Or this would be higher, let's say, more organized companies? Or would it be -- how would be the profile?

Alain Bedard -- Chairman, President and Chief Executive Officer

No. This is -- it's going to be the same kind of profile, the three that you just talked about.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

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 grown that business much higher, but profitability was always a big threshold. So, I'm just wondering, given the strong demand we see these days, what about the pricing environment. Do you think there is better opportunities given Amazons are very busy? And is your goal to become fully integrated or really to complement the biggest player right now?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Good question. So, yes, Amazon, for sure, is really, really busy. And what we've done us in the meantime is because New York as an example, I mean, we're down so much in New York with our regular customers. So, our US team said, OK, we'll do a deal with Amazon. So, right now, we're delivering about 5,000 parcels a day in 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 about making money.

But that being said, the environment, what we're trying to do, Benoit, is have customer understand better our solution. Now, our solution, like you said, is not fully integrated like an Amazon solution. Amazon's got the DC, 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 DC. But our solution to customers that have DCs or have matched up with DCs is the same -- is similar to what an Amazon solution is, very efficient, lean and mean, great service, and that's what we're trying to do. Now, down the road, OK, does it make sense for us to really have a partnership, OK, with someone that's got the DC capability, and that's offering this kind of service to the shippers? Maybe that may happen, Benoit, but we're not there yet.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

Perfect. And when we look at the fuel and the foreign exchange, obviously, there has been some big movements year-to-date, which I would expect to be favorable. So could you maybe provide some color or on how this is going to be flowing to the bottom line with respect to fuel and FX?

Alain Bedard -- Chairman, President and Chief Executive Officer

Yeah. Well, fuels are pass-through. So really nothing major for us on the fuel side. But really on the FX, for sure, I mean, our -- but we need US dollars profit to be significant. So, depending how good our Last Mile and our Truckload guys will do in the US will definitely help TFI. Our Canadian division mostly run Canadian dollars, except for some of our Truckload division. So, it could help us a little bit in the rest of the year because now we're -- I think the dollar is about CAD1.40, something like that. So, we'll see. But this is not something I would say, Benoit, it's really significant for us in terms of bottom line.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

Okay, perfect. And last one for me. You provide kind of a consolidated number for net capex 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 pretty similar to the past?

Alain Bedard -- Chairman, President and Chief Executive Officer

No. No. Normal, normal. I mean, what we're doing is, we're not shedding trucks, OK, because of this revenue shortfall because like we're protecting our employees with our kind of system of bonus to bringing them 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 in Q2 in terms of the volume. Everything that we read says that maybe the US GDP in Q2 will be down like 30%, OK? But it's up in Q3, OK? So -- and in Q4, everything that we read about that. So, what we're saying is that, OK, 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 time being is, we're going to have to park that at the fence and wait till the business comes back.

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

I see. Okay. Thank you very much for the time, Alain, and congratulations, again.

Alain Bedard -- Chairman, President and Chief Executive Officer

Thank you, Benoit.

Operator

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

Alain Bedard -- Chairman, President and Chief Executive Officer

Well, thank you, operator, for facilitating this morning's call, and thank you, everyone, for joining us today. So we at TFI, very much appreciate your interest and want you to know that, as I've said, we are working hard to create value and unlock it for our investors and whenever possible, return excess capital to our shareholders. So, I look forward to updating you throughout the year, and I can assure you that working together, we will all make it through these unprecedented times and emerge even stronger. So have a great day, and thank you, again.

Operator

[Operator Closing Remarks]

Duration: 95 minutes

Call participants:

Alain Bedard -- Chairman, President and Chief Executive Officer

Jason Seidl -- Cowen and Company -- Analyst

Mona Nazir -- Laurentian Bank -- Analyst

Jack Atkins -- Stephens Inc. -- Analyst

Scott Group -- Wolfe Research LLC -- Analyst

Thomas Wadewitz -- UBS -- Analyst

Kenneth Hoexter -- Bank of America Merrill Lynch -- Analyst

Konark Gupta -- Scotiabank -- Analyst

Brian Ossenbeck -- J.P. Morgan -- Analyst

Walter Spracklin -- RBC Capital Markets -- Analyst

Cameron Doerksen -- National Bank Financial, Inc. -- Analyst

David Ross -- Stifel, Nicolaus & Company -- Analyst

Benoit Poirier -- Desjardins Securities Inc. -- Analyst

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