TFI International Inc (TFII) Q3 2020 Earnings Call Transcript

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TFI International Inc (TFII -4.68%)
Q3 2020 Earnings Call
Oct 23, 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 Third 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. [Operator Instructions]

Before we turn 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 risk and uncertainties that could cause actual results to differ materially from those anticipated. All dollar amounts are in Canadian dollars.

Lastly, I would like to remind everyone that this conference call is being recorded on Friday, October 23rd, 2020.

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

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, thank you very much for the introduction, operator, and I appreciate everyone joining us for this morning's call. Yesterday, after market closed, we released our third quarter results. If you need a copy of the press release, please visit our website.

TFI International had a very strong third quarter. As I mentioned on our last call, we had seen several positive developments that bodes well for our performance going forward. These played out as expected during the quarter, and our strong financial and operational results came despite of the ongoing pandemic and are despite our continued focus on the health and well-being of our employees and customers.

As you frequently hear me mention a hallmark of TFI International's operating philosophy is our relentless focus on the fundamentals of the business consistently getting the details right. We constantly seek opportunities to enhance efficiencies and increase returns on invested capital. We also look to optimize our free cash flow in our earnings per share adding to our strong financial profile. This position of strength allows us to strategically expand our business with a long-term goal of creating shareholder value, and this includes returning excess capital to shareholders whenever possible.

During years such as this, when macro-uncertainty is elevated, we believe that maintaining our culture and adhering to these principles is even more important. You see it in our quarterly results that I'll next walk you through and you also see it in our continued identification of strategic accretive acquisitions opportunities to expand and enhance our platform.

During the third quarter, we completed four acquisition, and we agreed to acquire an additional business expected to close during the fourth quarter. In addition, subsequent to September, we completed two additional acquisition. In total, that seven well time and highly strategic acquisition since our last call. I won't walk you through the compelling rationale for each, but I do invite you to read more in our recent press releases, as we extend our long and successful track record in this regard.

Turning now to TFI International's third quarter results, let's start with our high-level performance. And as a reminder, these results are despite the continued absorption of COVID-19 related costs and our continued focus on health and safety. Our total revenue of CAD1.2 billion was down 4% compared to the prior year's third quarter. This was a significant improvement over the second quarter's negative 17% year-over-year growth. More importantly, our operating income increased 18% to CAD156 million and our adjusted EPS on a diluted basis expanded 20% to CAD1.25, up from CAD1.04 a year earlier. Our net cash from continuing operation activities was a healthy CAD190 million and that was up slightly over the prior year. We view cash flow as strategically important as it allows us to invest in our business and seek expansion opportunities. Overall, we were very pleased with our performance.

More specifically, let's look at how each of our four business segments performed, beginning with our P&C, Package and Courier. Our Package and Courier represents 14% of total segment revenue and saw a 5% increase in revenue before fuel surcharge versus the prior year. Operating income of CAD28.5 million was up 1% as the segment operating margin of 17.5% compares to the 18.% in the prior year. These year-over-year P&C results were much improved over our second quarter performance. Throughout the third quarter, we saw a pickup in B2C activity, and even B2B, which has slowed significantly due to the effect of CAOVID-19 improved as the quarter progressed. Going forward, we believe that our P&C segment is emerging even stronger from the pandemic with a more balanced mix of B2C and B2B demand that we are well prepared to accommodate.

Moving to LTL. This segment represents 16% of our total segment revenue, and generated revenue before fuel surcharge of CAD177 million, down from CAD205 million in the prior year. That rate of year-over-year decline is much improved, and in fact, half of that was during the prior quarter, reflecting a rebound in demand. Importantly, our operating income grew 36% to CAD35 million and our operating margin expanded more than 700 basis point to 19.7%. This 36% year-over-year growth in operating income was a result of not only the Canadian Wage Subsidy of CAD8 million, but our significant success driving operating leverage, for example, by merging our Canadian Freightways and TST Overland Express operating companies in May. These ongoing efficiency significantly benefited our margin and more than offset the weaker demand environment.

Next, turning to Truckload. This is our largest segment representing 47% of our total revenue. Revenue before fuel surcharge declined 2% year-over-year, which was a sharp rebound from the 17% decline in the prior quarter. Truckload operating income declined just slightly to CAD75 million from CAD76 million in the year earlier quarter, and our operating margin was up slightly. It should also be noted that we had CAD6.4 million of higher gain on sales of real estate in the year-ago quarter.

Within this segment, our U.S. Truckload operation grew revenue 2.5% over the prior-year period, while our Canadian specialized business each saw -- our Canadian and specialized businesses each saw a single-digit percentage decrease in revenue, which led to a Canadian Wage Subsidy of CAD11 million.

Rounding out our segment discussion, Logistics is our second largest segment at 22% of total revenue. We saw year-over-year growth of 9% in revenue before fuel surcharge. Our operating income more than doubled in the quarter versus a year earlier at CAD30 million compared to CAD14 million in the prior year. Our operating margin came at 10.7%, well above the year ago 5.4%, as our margin improvement initiatives produced solid improvement on the bottom line. E-commerce and same-day package delivery demand remains powerful organic growth driver for us.

Turning to our balance sheet, it remains a meaningful source of strength for us, allowing us to execute on our business plan. We further strengthened our financial profile in August, with the share offering that provided gross proceed to TFI of approximately CAD290 million. Our strong liquidity further benefited from our strong cash from operation during the quarter. All in, we ended September with our long-term debt down 27% since the start of the year, and a total of CAD1.5 billion of liquidity.

Given our continued strong operating performance and very solid financial position, I am pleased to be announcing today that our Board of Directors has announced a sizable 12% increase in our next quarterly dividend payable in January. In addition, I am pleased to report that as business conditions have improved and TFI International has continued to perform, during the quarter we reinstated full five days work week for 486 employees, and we rehired 298 employees full time, who had been furloughed.

Lastly, wrapping up my prepared comments today, I want to update you our full outlook for 2020. We now expect diluted earnings per share to be a minimum CAD4, up from our previous range of CAD3.40 to CAD3.75. And we expect our free cash flow, which is a non-IFRS measure to be minimum of CAD600 million, up from CAD425 million to CAD460 million previously.

On summary, as I mentioned at the start of the call, at TFI International, we focus on the fundamentals of the business and optimizing our capital allocation regardless of constantly changing macro-conditions. Specifically, we invest in a highly disciplined manner, where we see the best risk-adjusted return, while also paying our quarterly dividend. On a day-to-day basis, our entire team looks to drive efficiencies and produce not just growth, but profitable growth. Our ultimate aim is to create and unlock shareholder value returning excess capital to shareholders whenever possible.

I want to thank the entire team at TFI for generating the results I just outlined and for their continued dedication to this unprecedented year.

And with that, operator, if you could open the lines, so we can begin the Q&A session.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And your first question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Ravi Shanker -- Morgan Stanley -- Analyst

Good morning, everyone -- good morning, and thanks for taking my question. So I want to start of with two, kind of, longer-term questions. First on M&A, obviously, you guys have been super busy this year even with everything going on, and you've just made what one would consider to be a fairly sizable acquisition. Can you remind us again, kind of, what your pipeline looks like? Are you guys taking a little bit of a break here? And also with the market -- where the stock market where it is, do you feel like valuations out there are compelling for you to go offer new targets?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

That's a very good question, Ravi. I mean M&A has been the secret sauce of TFI for the last 20 years. So -- I mean, what we've done so far this year is just some small tuck-ins that we do every year. We invest about CAD200 million [Phonetic]. So far, we've invested only a hundred-some million, CAD110 million, CAD115 million with some very nice small strategic acquisition. But for sure, I mean, we're going to be closing the DLS acquisition, which is the significant one for us. We're going to be closing that sometime early November, OK, everything is done. So that's going to be a great acquisition for us.

Now in terms of the pipeline, our pipeline is always very full. In Canada, if someone wants to sell this Company, the first call is always TFI. Why? Because we have a strong track record of closing transaction, Number 1; and Number 2, I mean, we create an environment where someone sells his family owned company to us, I mean, we keep the value -- this kind of environment that is prop [Phonetic] is to growing the business. We've done well.

In the U.S., we're new players, OK, for sure. What we've done so far is some significant transaction the CFI won like three years ago. Now, the DLS one, we've done dynamics in 2011, and our future for a significant transaction for sure, we've said it many times, it's going to be south of the border. It cannot be in Canada, because we're such a dominant player in Canada, if we try to buy a company with revenue that is a little bit more than CAD90 million. There we have to sit down with the Competition Bureau in Ottawa, and it's a long, long process and takes a novel costs with lawyers and things like that.

So, I mean, yes, we've been really busy, but this is normal for us. What is little bit less than unusual is every three years or above, we do some significant transaction. So this is why DLS is a significant transaction not that big, but it's important to us. I mean, we're going to be investing $225 million on this acquisition. And it's a strong team led by Tom, and we have a lot of faith in the future in that business. It's our first step into the U.S. LTL market through this asset-light kind of acquisition. So we're going to use that to really understand the market drivers of this LTL market in the U.S., which is a little bit different than probably the one in Canada.

Now that doesn't say that we're going to be stopping, that's -- if you look at we've got CAD1.5 billion of liquidity available for us for M&A. We're going to be spending in Canadian dollars about CAD300 million on DLS. So we still have a lot of dry powder. If we find the right acquisition, the right fit, absolutely we're going to jump on it. We have a deep bench. In Canada, our team is second to none. And in the U.S., we're beefing up the team. I mean, again this DLS acquisition is going to beef up our team. All these small acquisition that we've done in the U.S. through our special TTL now. We're running, probably, like a little bit more than a 1,000 trucks in our specialty truckload, which three years ago we were, well, zero, OK. So we've got a lot of faith in this economy in North America, U.S. and Canada. I think that once this election is behind us, some concern will probably evaporate. And then 2021, we see a lot of tailwind for transportation, lots of potential.

Now in terms of the valuation, I think that there is still ways to do a transaction that is accretive day one. Doing a transaction that's accretive after 10 years, well, this is not in my bag. We're not really in that business. Accretion has to be like day one and, normally, without any synergies because day one you don't have any synergies, you know, you start the business and here we go. So if you look at DLS, if you look at everything that we've done over the last one year, that's how we were able to build this TFI, which we're really proud of today and very, very proud of our people, our team.

Ravi Shanker -- Morgan Stanley -- Analyst

Great color. Thanks, Alain.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Pleasure, Ravi.

Operator

And your next question comes from the line of Jason Seidl of Cowen. Please go ahead.

Jason H. Seidl -- Cowen and Company -- Analyst

Thank you, operator. Good morning. Alain, and team. Wanted to focus a little bit on some of the trends you've been seeing across your different business lines as we sit here in 4Q. I'm curious to know, sort of, the rate of recovery you're seeing there, and then talk about how that's going to impact the bottom line profitability, especially with the Canadian Wage Subsidy eventually going away?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well, absolutely, very good question, Jason. So if you look at our Q2, the subsidy in Canada was about CAD22 million. The forecast for us in Q4 is going to be about just a few million dollars. Our P&C, if you look at what we've been doing so far is our mix of B2B versus B2C as change in Q3, but our profitability has not changed that much. So if you look at our P&C in Q3 and going into Q4, our B2B is still down year-over-year, OK. If I look at ICS, if I look at TFIS, which are our specialty P&C guys, mostly B2B, ICS is still down about 5%, 6%, 7%, OK; TFIS is still down about 20%. But globally, overall, our P&C is up a bit, OK. So that means that we've replaced a lot of our B2B with B2C without affecting our bottom line too much.

If you look at our adjusted EBITDA has stayed about the same. So that's our goal going into Q4 and into 2021, OK, We'll keep growing this B2C. Hopefully, all of our B2B comes back. Probably, there is going to be some leakage, because as we know e-commerce is eating a lot of the lunch of the brick and mortar guys. So maybe there is a permanent, OK, impairment in some of our B2B business. We will see, I mean, but we're back. So we're replacing B2B with B2C without affecting the bottom line because we're focused, we have a very solid plan, OK, to replace the B2B that is gone, and also growing the global revenue of our P&C, which I think in 2021, you will see even some better organic growth.

Now going into e-commerce, then it brings me to the next sector, which is our Logistic. Logistic is on fire for us, I mean, if you look at our Last Mile operation in Canada, I mean, we're doing so good. So good in terms of increased revenue and so good in terms of bottom line. But Canadian market is small. So if you look at our U.S. market, OK, one of the main driver of our bottom line improvement in our Logistic is our U.S. Last Mile operation, OK, which -- OK, the top line has not grown, OK, because we're still getting new business in of quality and at the same time, we still have some business that are, let's say, 2%, 3%, 4% bottom line, and Kal and his team are saying, "You know what 2%, 3%. We don' -- sorry, guys, we can't service you for 2%, 3%. So you guys have to walk."

So what you're going to see in 2020 and into 2021 is that the bottom line of our U.S. operation is going to keep on growing, getting closer to a double-digit EBIT. That's the goal. Top line will grow, but not by much, because we're still replacing 2%, 3%, 4% bottom line guys with better quality of bottom line.

Now if you look at our LTL, here is the problem. In Canada, OK, most of the LTL is retail. So this is why you see us in Ontario and in Quebec, OK, not so much out West, because the West is just small, but there was never any industrial LTL out West. So there is nothing to lose there. But this industrial LTL in Ontario and Quebec keeps on coming down. So this is why our revenue keeps on going down, OK, year-over-year organically, and at the same time, some of our brick and mortar guys', LTL guys' customers are also losing to the e-commerce. So this is why we're still down big time in our LTL, but at the same time, OK, all of the right rules that we're doing and focusing on the right lane, the right customer, the right wave break, so we're not in the business of hauling freight for CAD40. I mean, leave that to the other guys. But our LTL for sure needs to grow through M&A.

So we're looking at all kinds of opportunities. What can we do on that? We were trying to buy apps. We announced this acquisition, but finally there were certain closing condition that were not met. So we had to say, "Well, OK, we'll look at something else." So, but the LTL will -- it's going to be organic growth into 2021, yes. But I think that we're going to keep growing the dollar of the bottom line, OK, through our efficiencies, and hopefully we're working on different scenarios to keep growing the top line on our Canadian LTL.

Now, if you think about our Truckload, our U.S. Truckload operation has done OK in Q3. Yeah, revenue is about stable. Our CFI operation did a little bit better than TCA. Our MCT acquisition is doing really, really well. Our Specialty Truckload is still affected in Canada. Some of the mines are coming back. Construction is OK, but the automotive business is still not where it should be. So steel, aluminum is affecting us a bit. But I see 2021 like -- our USTL will definitely improve, absolutely. I think our Canadian specialty and van division also will get to see some improvement there.

So overall, I'm very confident. So this is why when we give guidance for 2020, we say EPS is going to be a minimum of CAD4, EBITDA is going to be probably a minimum of CAD900 million, OK. But I think that 2021 is really going to be a lot of the small acquisition that we've done in 2020 plus the DLS One that's closing in the end of the year, OK, is going to help us into the 2021 year, and I think that TFI will again produce even better results in 2021 versus 2020, even without the Canadian Subsidy.

Jason H. Seidl -- Cowen and Company -- Analyst

That's fantastic color, Alain. If I could sneak this last one. Capex -- I mean, obviously you had capex deferred. And then in 3Q, you lead times go out on equipment, which everyone has been experiencing. How should we think about capex for 2021?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. So on Q4, our capex for sure, you'll start to see capex -- net capex probably going to be like between CAD50 million and CAD60 million, OK, into Q4, because some of the lag, some of the capex that we've put on hold will be taken care in Q4. But if you look at 2021, globally, TFI net of disposal in Canadian dollars, we should be running around the CAD200 million mark.

Jason H. Seidl -- Cowen and Company -- Analyst

Okay. That's great. Listen, I appreciate the time as always, Alain. Nice job on the quarter.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Pleasure. Thank you, Jason.

Operator

And your next question comes from the line of Allison Landry with Credit Suisse. Please go ahead.

Allison M. Landry -- Credit Suisse -- Analyst

Thanks, good morning. Just talk about...

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Allison.

Allison M. Landry -- Credit Suisse -- Analyst

I'm good. How are you?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good.

Allison M. Landry -- Credit Suisse -- Analyst

[Speech Overlap] could speak to the USTL segment, and specifically, what your expectations for contract rate increases might be for 2021. And do you see an opportunity to maybe price a little bit higher than the market given your yield improvement initiatives?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Very good question. So what we're seeing as of now, OK, is that contract pricing is up by about 5%, 6%, 7%, 8%, OK, depending on the customer. We all see the spot rate going through to some good levels, right now. So we believe that the quality of revenue for our USTL operations for 2021 will definitely improve.

But even more important lead for us, Allison, is always what can we do us to reduce our cost. So one significant thing that is one of our project for us in 2021, which we've put on hold in 2020 with the COVID, but it's back on track now is our TMS. Our guys are doing a fantastic job today with tools of the '80s [Phonetic] in terms of IT, OK. So the discussion that we had with Greg and the rest of the team there is that guys we need tools of the, the 21st century, but the -- not the 20th century, OK. So this is why we picked McLeod as a new TMS. And we're doing right now, the study phase, OK, Of all that, and we should be in a position according to what the guys are telling me to start looking at implementation sometimes in 2021. So that's one thing that's got nothing to do with the market, OK, but it's something that us we could do to have better tools to our management team to do a better job, OK. So, it brings better efficiency.

And the moto at TFI has always been, "Guys, we have to do more with less." So yes, I agree with you. I mean, we have a tailwind in 2021 with the quality or the revenue range should start to improve, but -- and the freight is there. We're always pre-booked. Every morning now we're pre-booked. We're -- six months ago, guys -- or a year ago guys were saying, "Well, we got drivers. We don't have the freight." Now, well, the problem is the opposite. We have more freight than we have drivers. So it may be a nice problem to have, but at the same time, as we say to our team, guys, we have to work on our cost basis, we have to be the Tiger. The Tiger is always the last one to survive in the jungle. So low cost, OK, always help the Company. So we have to bring and at the same time we're a Canadian Truckload. We're always working to bring our cost down and improve our efficiency. But 2021 for sure, like you said, tailwind for us in terms of pricing improvement.

Allison M. Landry -- Credit Suisse -- Analyst

Okay. Great. Just, maybe, in terms of capital allocation, great to see the dividend hike. Could you speak to how you're thinking about the buybacks going forward?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well, buyback is -- for us has always been seen as M&A, right. So it's either you buy something outside of TFI or you buy your own stock. So right now, it's always a balance between, OK, what -- it's adjusted return, OK. So what can we buy versus, OK. buying TFI. Right now, our pipeline is, like I said earlier, is full. We've got lots and lots and lots of opportunities. It's just which one can we do and which one has got the best return. So what we've been doing, if you look at earlier in 2020, when our stock dipped -- when the COVID thing hit and our stock dibbed, we bought back about 1.5 million shares at the time, OK. I think it was Q1 or early into Q2. So we took that opportunity at the time. So, OK, fine.

Right now, our focus is more on M&A, OK, but it's always a balance depending on what the stock reaction is going to be. I mean, like I said, we've got a CAD1.5 billion [Phonetic] in liquidity, OK. So yes, through the DLS transaction that's going to come down to probably CAD1.2 billion. But this is always the question. What is the best adjusted return? Is it buying back TFI's shares or investing and growing the Company through M&A? Right.

So it's a balance. It's always -- my Number 1 job as a CEO at TFI is to control the cash. And you control the cash by what's our policy on dividend, 20% to 25% of our free cash flow goes back to our shareholder, that's our policy, that's why we're able to increase it by 12%. And then you've got reduction of debt, which we did this year, OK. And then, M&A. So yes, we always invest about CAD200 million a year on M&A with small deals. And once every three, four years, we do something significant. DLS is important, significant. CFI was significant, because it was CAD500 million invested. DLS is important, but it's not CAD500 million. So for us, right now at TFI, if you want to talk a significant transaction, it's CAD500 million. And also DLS is important, but it's not the size of the big whale that we always talk about every three, four years.

Allison M. Landry -- Credit Suisse -- Analyst

Okay. Excellent. That was a helpful framework. Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

It's a pleasure, Allison.

Operator

And your next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

Scott Group -- Wolfe Research -- Analyst

Hey. Thanks. Good morning.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Scott Group -- Wolfe Research -- Analyst

So, Alain, I just wanted to check something on guidance. So CAD4 -- you've done, I guess, CAD3.10 or CAD3.11 year to date. Should we be expecting a drop-off in the fourth quarter as the subsidies go away or is there conservatism here? Just help us think about what this means for fourth quarter?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, we are very conservative, us at TFI. Our motto -- one of our motto is under promise and over deliver. So for sure, that's why we're seeing a minimum of CAD4. Now, you can say, well, if you see a minimum of CAD4 that means it's a minimum of about CAD0.90 for Q4, is that because the subsidy is going away. Subsidy is going away, absolutely. Subsidy for us in Q4 is probably like a few million dollars. But our CAD0.90, OK, if you say minimum CAD4 versus CAD3.10 is CAD0.90, compared to CAD1.20 something today, that means that we believe that this is going to drop like CAD0.20 to CAD0.30. Probably not, but we want to be conservative. Remember our last guidance was CAD3.40 to CAD3.60, right? And now we're saying CAD4. So, I mean, we always like to under promise and over deliver. So this is why we say a minimum of, so it could be CAD4, it could be for CAD4.10, it CAD4.15.

Now we know October, OK. We have an idea of what's going on in October. But we don't know anything about November and December. So this is why we're careful. And -- but we have confidence, because if we don't have any confidence in 2021, why would we raise our dividend. I mean we know our team is solid, we have a fantastic plan, OK, for now and into 2001, but we want to be conservative.

Scott Group -- Wolfe Research -- Analyst

Okay. It makes sense. So with DLS, just because it's the larger one, maybe, just help us a little bit more with just the strategic rationale here. I think it was a -- running around a 5% margin business, where you think you could tweak it, and then maybe just the granular plans for LTL in the U.S. would be helpful?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes. That's a very good question. First of all, when we look at DLS, 5% for sure. We believe that we could do better than that. Working with Tom and the team over time, it's not going up an overnight, OK. But over time, if one in the same kind of business as DLS is a 7% bottom line guy. Well, how -- why are we not 7%. Okay, so over time, we'll work with Tom and his team to get from 5% to 6% to 7%, and may be 7% to 8% or whatever. I mean, we don't really like being a 5% bottom line guys, but it is what it is today.

Now what we believe is good is that we know the LTL business in Canada inside out, OK. We know this business really, really well. We know the market. We know the players, etc., etc. Now this DLS acquisition help us understanding better, OK. The -- it will help us understand better, OK. The players in the U.S., the market in the U.S., because when we look at the USLTL market, for us, it's like a gold mine, and the Canadian LTL market is a sand mine. In Canada, you can't improve pricing, because there's too much overcapacity. It's a -- that's why our revenue is down every quarter, market is shrinking and our competition is not adjusting. So they're always chasing volume and trying to survive.

The USLTL market is different. I mean, you've got some fantastic company, OK, that -- one of them is running a sub-80% OR [Phonetic], OK. And then you got others that family owned that probably run in the 80% to 90% ORs. You got some public one non-union that run 90% OR and you got guys, the unionized guys, OK. That's a different story. But not to say that Union is bad, because if you look at the largest trucking company in the world they're are unionized with the Teamsters, and they do a fantastic job. But I'm just saying us, we also use some of our operation in Canada is unionized, and we do very well. We work with the union, not a problem at all.

So -- one way, it's like we're going to school, OK. We're just trying to understand the different drivers, OK, in this USLTL market, because DLS is about 70% to 75% LTL, OK, and 20% Truckload, then the rest is freight forwarding. So it's like going to school. We want to understand this market better, because we believe that the LTL in the U.S., between you and me, is a much better business than the one in Canada, but, "Hey, too bad." That's where we started us. It's with the Canadian LTL business and we've been working day and night to improve this. But if you look at our results, yeah, revenue is down, bottom line is up though, even if you exclude the subsidy of CAD8 million in Q3, I mean, our revenue went down big time, but exclude the subsidy our bottom line is still up CAD2 million. And we're stuck with all kinds of fixed costs, the trucks, the terminal and all of that. So that tells you how efficient we can be, or we are.

Scott Group -- Wolfe Research -- Analyst

Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

You're welcome.

Operator

And your next question comes from the line of Walter Spracklin with RBC Capital Markets. Please go ahead.

Walter Spracklin -- RBC Capital Markets -- Analyst

Yeah. Thanks very much. Good morning, Alain.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Walter.

Walter Spracklin -- RBC Capital Markets -- Analyst

I'd like to focus a little bit on your margins here, because you brought back a lot of costs and still got the operating leverage, right? I mean, you brought back all your employees. A lot of other companies saw a lot of cost creep come in, but you were able to actually improve your margins as the volume came [Technical Issues]. So the operating leverage looks pretty attractive. I want to ask you, Alain, you gave us good color into the fourth quarter here, but when we go into next year, when -- if we back out the Q's impact, looking into next year, do you think that your margins for next year can hold in at the level that you did in 2019? And therefore with the acquisitions you've done, can you give us a little bit of indication as to kind of order of magnitude, the improvement that we could see next year? I don't know if you're prepared to give us directionally some guidance into next year or not, but that would be very helpful if you have it.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well you see Walter, we can't give guidance for 2021. But what I could tell you is, like I said earlier on the call is that, our P&C in 2021, which P&C the subsidy, like it was chicken ship. I mean, it was like very insignificant in a sense, yes, for ICS and TFIS, but Canpar Loomis, there was no subsidy at all. We believe that in 2021, excluding the subsidy, there is no subsidy for us I think in 2021 for our P&C, we're going to do better. We going to do better because even with our B2B down a bit, OK, because we're still going to do some catch up of our B2B in 2021. But our B2C is going to keep on growing, OK, at a reasonable rate not going crazy but at reasonable rate, OK, that we could sustain at the same time our bottom line.

Our Truckload in the U.S., there was never any subsidy, but our Canadian Truckload, most of our subsidy came to our special TTL, OK. And we're going to -- this will be probably eliminated in 2021, but we believe that we can sustain the margin, because some of the market that we've been affected badly are coming back and some of the small deals that we've done like the Keith Hall, OK, and others that we've done in Canada, OK, is going to help us beef up this margin, and we have some very, very nice project in Montreal, OK, with Contrans division there. We have some nice project in the Port of Hamilton with TTL. We have some nice project also with Gorski and, what's the name of that -- Gusgo, that we just bought about a few months ago. So I believe that even 2021, Steve and his team there are going to yield a fantastic 2021, even if you exclude this COVID subsidy there.

And then, if you think about our logistics, there is no subsidy there. Our logistics will be up big time at the bottom line, because of what I just explained. And then we're left with the LTL. So the LTL, that's why we were trying to buy this apps company but finally we can do it, LTL is an issue because we think that organically the LTL, OK, is negative in 2020 and into 2021. The market is shrinking. So we have to do something in M&A to help us support. The subsidy will probably go away sometimes in 2021. And the guys are working hard. We are in discussion, OK, right now for something significant in terms of a contract with a carrier, OK, that maybe could help our LTL business in Canada. It's still early in the game, maybe, we'll be in position to announce something sometimes before the end of the year, maybe into next year. But we -- the LTL in Canada will have to grow through M&A. If -- as we can do the deal, OK, we're working on Plan B right now.

Walter Spracklin -- RBC Capital Markets -- Analyst

That makes sense. And just a quick one on your M&A pipeline in the U.S. Any risk that gets affected by a U.S. election that sees, for example, a higher capital gains tax come in. Is there any risk around an election that would affect your U.S. pipeline at all?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

I don't think so, Walter, I mean, we don't know what's going to happen there in two weeks, but we believe that this U.S. economy is going to stay strong whoever runs the country. I mean, but -- we're no magician, I mean, our goal is that we adapt. So we adapt and we adjust and we work for the future of our shareholders. Don't forget TFI is in business Number 1 to create value for shareholder. That's our goal.

Walter Spracklin -- RBC Capital Markets -- Analyst

And just one more housekeeping for me, tax rate. You've been guiding us, I believe, at 25%. Is it still around that level we should...

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes, Walter. Yeah.

Walter Spracklin -- RBC Capital Markets -- Analyst

Thank you very much. Keep safe. Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Okay. Thank you, Walter. The same to you.

Operator

And your next question comes from the line of Tom Wadewitz with UBS. Please go ahead.

Thomas Wadewitz -- UBS -- Analyst

Yes, good morning.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning.

Thomas Wadewitz -- UBS -- Analyst

Wanted to -- Yeah. Wanted to go back a little bit to U.S. Truckload, I think, you were asked a little bit earlier about, kind of, pricing in 2021. It seems like the setup is pretty powerful. The biggest U.S. Truckload name said they expect double-digit pricing in 2021. So it's unusually strong framework. Where do you think the OR in your conventional U.S. Truckload business can be? I think, kind of, best-in-class is 80% -- high 70s, low 80s in a strong cyclical environment. Do you potentially get to that in 2021 or is that kind of a multi-year potential for your U.S. Truckload?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Very good question. So what we keep on saying is that you cannot be in the Truckload business if you don't run a 90% OR and better on average, OK, over 10 years. So that means that, if you have tailwind, like we will probably have in 2021, it's impossible to run a 90% OR. You get to run better than 90%. Okay, so if you look at what we've been doing in the last quarter, OK, we're running about 90% OR right now, 90%, 90 point something, OK, which is for sure, the guy will see while we've been affected with the equipment, OK. The profit and equipment has gone, because the market has not been so good. But now, OK fine.

But for us in a tailwind situation, like we anticipate in 2021, I think there is no excuse to be running a 90% OR. You have to be focusing on something sub-90% OR, because on average, you're going to have maybe some bad years at a 93% OR. So when the good years are coming in, you got to be a sub-90% OR. Now, aren't seeing our plan or a budget for 2021, yet, OK. So Greg and his team are working on it, and we can't really provide guidance for 2021 so far. But I would be really disappointed to see a 90% OR in our plan for 2021.

Thomas Wadewitz -- UBS -- Analyst

Right. Okay. And then the second question is in logistics. So you're logistics margin improved pretty dramatically. Can you just give us a little perspective on what drove that and kind of the forward look you sustain at that level or how do you think about the margin looking forward as well? Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well, most of the improvement, OK -- so if you look at our improvement, there is about CAD4 million of bottom line improvement that came from Canada. Canada is small, OK. But the majority of the improvement came from our U.S. operation, OK, in the quarter and Q3. And you will see us improving in the U.S. even more as the time goes by.

What we've done a year ago -- if you remember what I said a year ago, I said, "Guys, we're making a change in leadership in the U.S." So what we're doing is, Kal, which is our EVP that was responsible for Canada, now oversees our U.S. operations since last summer 2019, OK. And we've been rebuilding the team. So the sales team now is under the leadership of Dean, OK. Dean is overseeing our North American, OK, Last Mile operation, both U.S. and Canada. So we just signed -- we just started, OK, servicing a CAD16 million account in the U.S. with some interesting and fair margin.

So our U.S. Q3 Last Mile operation had the majority of the improvement, absolutely. And you'll see that improving over Q4 and into 2021. Like I said earlier, the top line of our U.S. operation will probably not grow that much, because we're still replacing 3%, 4% bottom line guys with better margin, right? That's our goal. We're not in business to practice delivery. We're in business to create shareholder value. So a guy that gives me a 2% bottom line deal with someone else, because for 2% my shareholder will say, "Why would I buy TFI for 2% bottom line. I'm just going to buy shares of a North American bank, and I'll get a 3%, 4% or 5% dividend. So stupid." Right? So that's our goal.

And you'll see us in Q4, again. Now the average what DLS -- like we said earlier, DLS is adding a lot of revenue to our Logistics at only 5% margin. So, globally, it will reduce our percentage, but we'll work on that in the months and the quarters to come.

Thomas Wadewitz -- UBS -- Analyst

Right. Okay. Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Pleasure.

Operator

And your next question comes from the line of Jordan Alliger with Goldman Sachs. Please go ahead.

Jordan Alliger -- Goldman Sachs -- Analyst

Hi, Good morning, everyone.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Jordan.

Jordan Alliger -- Goldman Sachs -- Analyst

Good morning. A question for you. On the LTL, I know you mentioned you will need organic -- it will be organic growth, and you might need some M&As to support it. I'm assuming you're talking about the top line there. I'm just curious as your LTL margin even without the wage subsidy in the third quarter were quite good. So putting the top line aside, do you think you could hold or improve upon the efficiencies to the LTL margin?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, we still have plans, OK, to improve the margin Jordan. But the top line, like I said, without M&A is going to shrink. Yes. So dollar wise, I think that we could sustain the dollar wise even with some revenue leakage, OK, because of the market. But for sure, our approach is to do some M&A activities in Canada, OK, to beef up the top line, and it will also have an effect. But I'm not saying that without the topline growth, OK, it's not sustainable margin, no. Our margin are sustainable, because we still have some stuff that we could do to keep on improving what we're doing today.

Jordan Alliger -- Goldman Sachs -- Analyst

Great. And then just a bigger picture question. On M&A, if you guys have gotten larger as a company, I know historically that strategic deals where every three, four years apart. If there is a need to make them what you need or what you want to have them come more quicker as you've gotten larger, is that something that might need to happen?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

You know what, that's a good question, Jordan. This is based on the deep bench that we have. So, in Canada, we have a very deep bench, a team that's second to none. But the problem we have is, it's a small market, OK, and we're already really, really big. So our plan has been to beef up our U.S. team, because the future is in the U.S. for us to grow our business significantly. So that has been the focus of ours. So DLS, OK, will have -- will beef up our team in terms of market intelligence in the LTL, so if ever there is a transaction possible in the LTL in the U.S., I don't know maybe a company that becomes for sale or whatever.

So now, with DLS at least before buying an asset-based company, we will have some market intelligence. We have a team. It's the same story with our special TTL in the U.S. So what we've done so far is small acquisition. We bought 200 truck operation here, another 200 truck there, and now we're up to a little over 1,000 trucks. So if a deal that comes to us, let's say, for a 1,000 trucks, now we could do that easily.

And also, our strategy has always been small step, but I agree with you, the bigger we get, the larger the small steps becomes, right. So our focus really has got to be for us small deals in Canada, small nice tuck-ins, which we're doing now, and hopefully we could find the right transaction after DLS of size in the U.S. maybe be in the Specialty TL, maybe in the Last Mile, and we never know, maybe in the LTL, we'll see.

Jordan Alliger -- Goldman Sachs -- Analyst

Great. Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

You're welcome.

Operator

And your next question comes from the line of Mona Nazir with Laurentian Bank. Please go ahead.

Mona Nazir -- Laurentian Bank Securities -- Analyst

Good morning, Alain, and congrats on the fantastic quarter.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you, Mona.

Mona Nazir -- Laurentian Bank Securities -- Analyst

So I'm just going to keep it to one question, but when I'm thinking about your tenure at TFI, future performance in the legacy you want to leave, I'm just wondering what is your ultimate guiding principle or metric that is weaved into every decision you make or that mentally you keep reverting back to, and has it changed over time? I mean, just even on call -- yeah, go ahead.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well, Mona, our religion [Phonetic] is, like I said, for years and years, we're in business to create shareholder value. This has been Number 1 rule at TFI, OK, and how do we get this done is by focusing on free cash flow. Some of the guys say they talk about EBITDA, this EBITDA [Indecipherable]. As we say, OK, EBITDA fine. We understand that. But for us is, what's the free cash, what's left? Okay. Because you could have CAD100 million of EBITDA, but if you have CAD98 million of capex, OK, to sustain the business, well, there is not much to do.

So if you look at our track record of 20 years, that's how we've been able to build. TFI is based on the focus of creating shareholder value. That's never change. Because don't forget, I am an important shareholder of TFI from day one. And also, how do we get there is through people, team, people and focus on free cash flow, and the payback. So someone comes to me and say, "Alain, we have to invest CAD1 million for this customer, and the return is going to be 1 point [Phonetic]." Well, find somebody else, because we're not in the business of 1 point, 2 point or 3 points. That's not us. So that's always been the focus at TFI. It's -- everything is about creating value for our shareholders. Yes, through servicing customer and focusing on the team, people, the right guy. We've built a fantastic team of EVPs. They are doing a great, great job, and we're beefing up the team. This acquisition of DLS is going to add another significant player to our team when we're really proud of that.

Mona Nazir -- Laurentian Bank Securities -- Analyst

Thank you. I'll leave it there.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good.

Operator

And your next question comes from the line of Sanjay Ramaswamy with Bank of America. Please go ahead.

Sanjay Ramaswamy -- Bank of America -- Analyst

Good morning, and thanks for taking my question. I'll keep it to one here. But maybe, just talking about B2C and the shift that we did see in 2Q, maybe how do we look at the right mix between B2B and B2C, maybe, over the next couple of quarters? And is there specific kind of business, whether it's in the U.S. or Canada that you prefer here, any other details would be great there?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah, very good question. So for us, B2B is really what can we do and how much can we do. So our focus always been to keep on growing B2B, but it's tough to do in the market environment, because our customers are being, I'll use the word, attacked by the e-commerce, OK. So we're trying always to protect our B2B and to try to grow the B2B, but we live in the world in 2021 that e-commerce is growing. So we got to be part of the solution, and that's what we're doing, OK. So we're growing.

Now in terms of the mix, is the mix 50-50, is the mix 60-40, I don't know, OK, what's the best mix is. But one thing I could tell you is that we're trying to protect and grow our B2B, because that is -- the coincidence of delivery is always more versus B2C, which is one-stop, one partial, normally.

Now we know that e-commerce is growing and B2B is not growing as much, so this is why we came with a solution that really focus on not just growing e-commerce everywhere and anywhere with any rates. Our focus has been, "Guys, let's grow where we can protect our margin and keep growing the revenue of the Company." And thus, if you look at our Q3, OK, this is what we've been able to attain. Now, if you ask me about future, probably in two to three to five years, we're going to see more, OK, of this growth in e-commerce B2C, then we're going to see in the growth of B2B. So, but we are also controlling the growth, OK, of our P&C Solution, OK, because we don't want to offer more capacity and come up with a 3% bottom line solution.

So our most efficient solution, OK, to the e-commerce is our Last Mile operation. And then this is what we've been growing, OK, in a very important way in Canada, not so much in the U.S. for now, OK, but that's going to be a real focus of ours in 2021 in the U.S. But in the U.S., like I said earlier, we still have some small margin account that needs to be adjusted or changed or replaced, and that's why we believe that in 2021, our top line in the U.S. is going to improve a bit, but most importantly, the bottom will keep on improving a lot.

And I don't know if this answers your question 100%, but our focus is bottom line, and how do we get that, right now we know that B2C is part of the solution.

Sanjay Ramaswamy -- Bank of America -- Analyst

No, I think -- no, that's great color. I did lie. Maybe, I'll ask one more follow-up question, just in terms of the freight side, obviously, we're seeing a very, very strong freight market right now in the U.S. Just potentially could you comment on how you're kind of navigating these driver shortages right now and maybe talk about the wage inflation you're saying, we're hearing a lot of truckers just really struggling to drive this, and the wage inflation is quite hectic. So could give some color on that?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes, well [Indecipherable] the problem with the trucking industry is that, a year ago, we had tons of drivers and not so much in terms of freight, now we have tons of freight, and it's tough to find the drivers. So for sure we came out with the salary review for our drivers, and that I think it took effect just lately, because it's a problem. So it's the same story all over again, OK, so freight is plenty, shortage of drivers. So this is what we're going through right now. It's the same story for us and the rest of the industry. It's always a battle.

What we tried to do in a situation like that, our experience in Canada has always been, when there is a shortage of driver, our approach in Canada, OK, over the last 15 years to 20 years, what I said to my guys, "Guys, how about if we buy a trucking company, OK, with 200 drivers." So you buy the company, you keep the good accounts and you get rid of the bad ones, and also that gives you a little bit better capacity. So that is, in our mind, a solution that we may start to think about the U.S. domestic market. So if I explain myself correctly, as you look at a 200 truck company, like we just bought MCT a few months ago, it's about 200 trucks, and I'm looking at the results of MCT, and it's very impressive what Greg and the team has done there. And maybe there is another MCT that we could buy in the next three months to six months to beef up our human capital, our driver fleet.

And in those small trucking company, they have some good accounts, but sometimes because they don't know what the market is they have some not so good account. And our approach has always been, what you do is you just get rid of the ones that are not good and then it leaves you capacity to service your good account in your existing business. I don't know if I'm explaining myself correctly? I don't know if you understand what I'm saying?

Sanjay Ramaswamy -- Bank of America -- Analyst

Yeah. No, that makes a lot of sense. [Speech Overlap] And I appreciate the color.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Okay.

Operator

And your next question comes from the line of Konark Gupta with Scotia Capital. Please go ahead.

Konark Gupta -- Scotia Capital -- Analyst

Thanks, and good morning, Alain. How are you?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning. I'm good. You?

Konark Gupta -- Scotia Capital -- Analyst

Perfect. Great, thanks. Hope you're keeping safe and healthy. Just a few quick ones for me, Alain. On the wage subsidy, I'm not sure if I heard you correctly, are you expecting the government to extend the wage subsidy into 2021?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, no, what I'm saying is that our wage subsidy for Q4 is going to be minimal to us, OK, because our revenue is coming back and slowly, OK. So I was saying that, in Q4, OK, our wage subsidy is going to be minimal, just a few million dollars, and for 2021, it's probably going to be zero for us.

Konark Gupta -- Scotia Capital -- Analyst

I see. It makes sense. Thank you. And on free cash flow guidance, so the minimum you announced today a CAD600 million. Obviously, that implies relatively less cash generation in Q4. I'm curious as to if it's all pertaining to capex and tax payment, perhaps?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Well, capex is going to be more important for us in Q4. Like I said it, net capex is probably going to be in the CAD50 million to 55 million, OK, because we have to do some catch-up because of Q2 was light and even Q3 was light, OK. And then, yes, you're right, we've got some tax payment. But like I said, this is a minimum of, OK, it's like on the EPS. It's a minimum of CAD4 that I saw. What is it exactly we don't know, but we see it's a minimum of CAD4. So it could be, maybe, it's CAD4.5 -- not CAD4.5, but let's say CAD4.05, CAD4.15, we'll see. It's the same thing with the free cash. So it's a minimum of CAD600 million, so it could be CAD650 million or it could be CAD675 million, it all depends, but at least, this is a minimum.

Konark Gupta -- Scotia Capital -- Analyst

Right. No, I understand that clearly. And then I think not a lot of discussion on Package and Courier, so just want to kind of dig in a few things there. There was, I think, a margin contraction in Q3 versus last year despite volumes being almost flattish and pricing being quite positive. What led to that margin deterioration? And then is there any room for margin improvement from where you are today?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah, there has been -- if you look at our adjusted EBITDA as percentage of revenue, I mean, there was no real margin issues. But what is affecting us, like I said, is ICS, OK, and our TFIS, Specialty P&C guys, which are mostly B2B. The revenue is still down, excuse me, year-over-year. So ICS is down 5%, 6% and TFIS is down like 15% to 20%, and this is high-quality margin business, OK, that we're now.

This -- if you look globally, our P&C revenue is up a bit, OK, because we replaced those B2B revenue lost, OK, because the customers are still not completely reopen for whatever reason, OK, by B2C with our Canpar Loomis operation, OK. And if you look at most of the e-commerce business, OK, and you listen to what's going on. Guys are always having pressure on the margin. We were able to do it at a, kind of, similar kind of margin like we used to do with our B2C. So that's what we're seeing. We're saying also that e-commerce in our Package and Courier business will keep on growing, and we're in business to protect our margin. So we've got lots of demand. I mean, we could grow way more than what we're doing now, but we are controlling our growth through our capacity offering to our customers.

Konark Gupta -- Scotia Capital -- Analyst

Right. That makes sense. Thanks. And last one from me, before I turn it over. All the acquisitions you have closed or announced this year, they add up to almost call it a CAD1 billion in revenue, maybe you optimized some of those businesses, right, but what kind of margins do these businesses on a cumulative basis generate today, and where can they be in a year?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah, well, the biggest one is DLS that we're going to be closing in November. So yeah, DLS is $550 million, so if you convert that into Canadian dollars, it's about, let's say, CAD700 million, and that is a 5% bottom line company today. We believe that 5% is OK, but is only average, and we're not in the business of average kind of return. So we believe that over time, this 5% will become 6% and maybe 7% and 8%. It's still very early to say, but we look at peers, and we have peers at 7% right now.

So one will be talking with Tom, our leader there, says, "Hey Tom, if the peers are at 7%, what can we do to get closer to 6% and then 7% and maybe get better than 7%?", but it will take time. It's not going to happen overnight. Now the other small ones, like Keith Hall, like Gusgo, OK, like the DSN, all those small, the CCC that we bought in the U.S., the MCT, those guys are running -- some of them in 92% OR, some of them in 98% OR, and the proof is in the putting. If you look at our track record, I mean, over time, these guys will get closer to on the Specialty TL and 85%, but it takes time. It takes time, absolutely.

So I mean, we don't give guidance for 2021, because our budget planning is not completely done for 2021. But as soon as possible, we'll give guidance for the way we think 2021 is going to be. But I could say my first feel about 2021 is we're going to do better than 2020, even without the subsidy.

Konark Gupta -- Scotia Capital -- Analyst

Sounds perfect. That's all from me. Thanks. Thanks so much, Alain. Stay safe.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

And your next question comes from the line of Jack Atkins with Stephens. Please go ahead.

Jack Atkins -- Stephens Inc. -- Analyst

Hey, Alain. Good morning. Thanks for taking my question.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Jack.

Jack Atkins -- Stephens Inc. -- Analyst

So just kind of going back to the P&C business for a moment, we're certainly hearing about quite a bit of pricing power from the large U.S. parcel peers. I mean, when you think about that, especially as we go into 2021 with B2B hopefully recovering back to more normalized levels, there's obviously going to be sustained B2C demand. How are you guys thinking about the pricing power in your business there and just sort of normalizing for the the subsidies, is it right to maybe think about it a real step function change in profitability from a margin perspective in P&C next year?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, you're absolutely right, Jack. For sure, I mean we're following in the steps of the big guys like the FedEx and the UPS. So for sure, the only difference between us and them is that those guys were ahead of the game and us, we're following them. So us, it will take effect only in November, OK, which is next week absolutely. But I agree with you. B2B is slowly coming back. So that's going to help us in 2021. Now, are we going to be back to the same level as we were pre-COVID on B2B? It's hard to say. Probably not. Okay, but also our B2C is also improving in terms of demand and the name of the game in transportation has always been density, OK? You have to build density and the more density you have so on e-commerce, because one stop is one parcel at 99.9% of the time.

What you have to do in order to get the density is to pick the zipcode, pick the right zipcode. So I'll give you an example. If you want to do B2C in the smaller northern town of Ontario, 20 miles north of Sudbury, you want to have a lot of density there, right? So our option, us, has been, well, let's pick the right zipcode like the GTA, the Greater Toronto Area, the same thing with Vancouver, same approach with Montreal, etc., etc. And that is the way to create density in an environment where one stop is one parcel. So you say one stop is one parcel. That's true, but if you deliver into it, a downtown condo tower in Toronto, OK, where there is about 300 apartment. Well, maybe one stop is not going to be one parcel there. Maybe, one stop is going to be 15 parcel because there's 300 apartment, but a tower with 300 apartment in Sudbury, there is none, right? So this is why our approach has been Vancouver, Calgary, Montreal, Toronto, Ottawa. Those city where we could do more density, OK, first stop, OK, even in the e-commerce world.

Jack Atkins -- Stephens Inc. -- Analyst

Okay. That makes a lot of sense. Maybe just one quick last one for me. How are you thinking about your available capacity to be able to grow with the market there in 2021? Do you need to maybe add some capacity or the margin within the P&C segment?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes, yes. What we're doing, Jack, is we're increasing our capacity at Loomis Canpar on a monthly basis, but we are not going to be like Canada Post or others in Canada that are just growing out of control. Us, we are growing in control, because we don't want to come up to our shareholders, OK in Q1 or in Q2 next year and say, well, guys, we've grown P&C 15%, but the bottom line is down 20%. No. No, no, no, we don't want to do that. That's why us, we go ahead and we grow top and bottom line accordingly. So that's the focus. So when I talk to Brian and his team, guys. Absolutely. I mean, we got a full pipeline of customers I want to deal with us on the e-commerce, but we got to go step-by-step. We're going to pick and choose the right customer, the right zipcode and where it fits. And we don't want to blow out on the top line and a disaster on the bottom line.

Jack Atkins -- Stephens Inc. -- Analyst

Okay. That makes a lot of sense in my book. Thanks again for the time.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you, Jack.

Operator

And your next question comes from the line of David Ross with Stifel. Please go ahead.

David Ross -- Stifel Nicolaus -- Analyst

Yes. Good morning, Alain. Happy Friday.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you, David. Good morning.

David Ross -- Stifel Nicolaus -- Analyst

So when you talk about the Logistics and Last Mile division, specifically as you trade up in customer accounts to get more profitable business, yes, where are those -- you call them like 3-point, 4-point accounts going. Are they able to find somebody else to hold it at those low prices or any of them coming back to you and paying the margin that it takes to run that business?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

It's a mix. It's a mix, Dave. They say in transportation, there is a sector born every minute, right? So there is always someone stupid enough to say, oh, I'm going to do it for this kind of money, but our focus us, is that we've got so much capacity growth for our Last Mile in the U.S. with e-commerce at good margin. Why don't we going to service this guy like payless something? If this guy sells asset for pay less, for sure, he wants to pay less for freight too, right? So that's not my top -- that's not my cup of tea. So us, we've got so much demand right now in the U.S. with the e-commerce. So what I'm saying to Kal and his team, those guys. I mean, let's bring this new e-commerce business.

As I said, we are just starting to do business with one customer that's going to be CAD16 million for us on a yearly basis. And OK, take this guy on, but get rid of those 2%, 3% guy now. Some of them are, I would say no, no, no, we can't find another sucker, OK. So we'll stay with you guys. Can we do it for 8% bottom line. So we say, OK, we'll live with that. But the guy comes back to us with can we do it for 3.5%. I say no, no, get out.

David Ross -- Stifel Nicolaus -- Analyst

And just quickly on the trucking side of things, given that it's tight, but also rates are up, are you -- do you expect that CFI and TCA to have any organic truck growth next year, or is any of the growth in the Truckload segment in the U.S. likely to be M&A?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

All right. That's a tough question. I mean, for sure, the freight is there. The freight is there. The issue that Greg and his team have is the same as everybody else has, is people, is driver, right? So what do you do? Okay, in a situation like that is like I said to David and the team is the guys, can we find a company, OK, that's got asset, which is people and they don't know what to do with it. So this is why we bought from is this guy that was under the protection of the court, Comcar. We bought MCT from him. We bought CT from him. And we bought Ccc from him. So we got assets, people, OK. And with that, we'll be in a position to create value to our shareholders.

As I was saying to Greg the other day, I say, Greg, yes, we're busy, OK. Yes, we're trying to hire driver, but is there a small company in your neighborhood? Is there something of size, which for us is 200, 300, 400 trucks that we could buy, and those guys are not bankrupt, but those guys are OK, but we can improve them through cost and through quality of revenue, because it's very hard because every transportation company is looking for driver. So -- and it takes time, and it costs money. So what we're saying is guys, how about if we buy a small -- and that's what I've done for 15, 20 years in Canada is when the shortage was there, oh, let's buy a company and the company, it's not that expensive, if we could strike the right deal, OK. Perfect. So we beefed up the team like that. So this is -- it has been like a little bit under the radar, Dave, is when we bought those three company from Comcar, OK, we didn't get a lot of good quality rates from customers, OK, because there's reason, those guys were bankrupt or under the protection of the court, but we got the good asset, which is the people. And now, we're working with customers and market, and we are improving. So this is why we're seeing MCT. What the guys have done there is fantastic. I mean, Grammer, Ccc, CT is still an ongoing process, but it's going to be the same story.

So it's going to be hard to grow organically, OK, through trying to find the drivers, but if we could drivers, but if we could find the right company, OK, small. That's how we get the drivers.

David Ross -- Stifel Nicolaus -- Analyst

Makes sense. Thank you.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

You're welcome, Dave.

Operator

And your next question comes from the line of Brian Ossenbeck with J.P. Morgan. Please go ahead.

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

Hey, good morning, Alain. Thank you for taking the questions.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Hi, Brian.

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

So just a couple of quick ones here. I understand you're using DLS kind of the foothold, similar blueprinted done in the past to scale to new businesses in the US, get some market intelligence as well. Would you consider bolstering just overall brokerage platform more so to the TL side or are you primarily focused on LTL, and we've typically seen a higher level of investment, especially from the technology side and brokerage just overall. I understand LTL obviously have the same sort of drivers, competition behind it, but how do you think just the level of investment, and what type of platform on the asset-light side that you're looking to deal with DLS.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, DLS, if I listen to Tom and people that are talking to the guys, I mean, we could grow that fast, but our message to Tom and the team there is going to be guys, the focus is number one. Yeah, we want to grow the top line, mostly on LTL absolutely. But the most important thing to us, like I said on the call, is that we have to bring this 5% bottom line company closer to 6% and to 7% and maybe to 8%. To us, it's more important to grow the bottom line than to grow just the top line, but we believe that as an example, OK, when we talk to Tom, OK, at DLS, I say, hey, Tom, do you guys focus on transborder LTL? He said no. Oh, well, that's a new thing for you guys. That's something that Tom and your team have to focus because the rates, the quality of the revenue on transborder freight between U.S. and Canada and U.S. and Mexico is even better than the U.S. domestic rates. So guys, that's a new area of focus of those, OK. So that's where that we think that Tom and his team could immediately start to focus on.

So we believe that DLS will grow the top line over these, for example, OK. We believe that DLS can grow the top line with -- in Comcar with our truckload operation in the US, OK. We could do probably better with that. And absolutely, that's the way to go for us. I mean -- and it gets us market intelligence in the LTL market, which is something that right now today, we know the Canadian market really, really well. But the U.S. one, we know it through our partners, OK, but only on the transborder freight, but when we look at the other LTL company, I mean, some guys are doing a fantastic job in the US, a fantastic job. And there is way more consolidation that's has been done in the U.S. on the LTL side than in Canada. In Canada, there is still way too many small players, not about making money. Now that's a big difference, if you compare that with our truckload market.

The truckload market in Canada is way more consolidated than the one in the US, OK. But the LTL is different. The LTL is the guys, it's a much better market in the U.S. and in Canada. So this is why for us, when we look at DLS, it's fantastic in the sense that, oh, this is going to give us the opportunity to really understand what's going on there, what are the drivers? And then, like I said earlier on the call, we've got CAD1 billion to invest, OK. So we could -- it could be a special TTL. It could be another Last Mile. It could be -- maybe, one day, it could be an LTL company in the US. We don't know, OK? We're working on something important in all those sectors, OK, but we'll see, but at least on the special TTL, we've done many small deals that now give us what the market is all about in the US, OK.

On the van side through CFI TCA, we have a good understanding on the market. Now, on the LTL with DLS over time, we'll get a great understanding on the market. Fantastic. And then, we can start growing because in Canada, we're such a huge player. That's something of size tough to do, tough to do for us.

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

And just in terms of the technology investment, is there -- we typically hear that with brokerages, LTL, maybe not as much, you think you need to do just from a visibility perspective or anything on the tech investment side as you bring DLS on both?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes. Yes, yes. Yes, yes. Yes, when we talk to Tom for sure, OK. Right now, if I remember correctly, they're using MercuryGates and SAP. Us, we run Oracle, so first step for us is going to move, because we have a TSC agreement for a year. So, step one is to move those guys from SAP to Oracle. TFI will use Oracle. And then, the next discussion is going to be around MercuryGates. I mean, is that the right tool for growing this division or do we have to do something else? I don't know. It's too early to say, but absolutely, that's one area that we want to invest is tools for our people to do a better job, like I said, for our Truckload guys. We're in the phase. We're looking at McLeod, OK. We're doing the study right now, the first phase.

And then, probably the implementation will take effect in 2021. So we need our people to have the right tools to be even more efficient, same story with our LTL. Our LTLs, we're looking at TMW, OK. So if you look at our LTL operation of West mostly run on TMW. In the East, we have Quik X now. That's running on TMW. We're going to be probably moving TST CF on TMW in 2021. It's all about the tools. We have a team that is second to none in Canada, but we can always improve the results by giving those guys better tools. And that is the goal for us.

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

Understood. One last quick follow-up on the driver market in the [Indecipherable] more inclination to buy assets to get drivers. With MCT and CT, it sounds like it's going pretty well so far. What's the -- what's your ability to hang on to the people when they come over in the market is tight and you need to perhaps call some of the freight to bring up the profitability. Are you seeing kind of historical levels of turnover and retention? And does that make you more or less confident to do more of these in the future?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah. Not so much, Brian. Not so much. I mean, I know it's always been an issue in the U.S. that you buy a company in after a year, all the drivers are gone. I mean, our approach has been quite good. I mean, if you look -- if you would talk to Greg at MCT, he would tell you that, no. There was no real turnover. The same thing at CT with Steve and the team there, not an issue, but we don't come in there and say, well, you guys have to change. This is the recipe, and this is the way to go for the future. No, we don't do that. I mean, the way our approach is, hey, guys, let's keep on doing what we're doing and thus, we're working with the customer just to make sure that the rates are fair, that the rates are market.

Also if you look at the stuff that we bought from Comcar, I mean, the trucks were terrible in some of the division. So we're investing in capex. We're buying the equipment, so that the guys could be proud of their equipment and their company. So I mean, we've been very, very successful in Canada. And if you look at what we've done so far in the US, it's working well.

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

All right. Thanks for your time, Alain. Appreciate it.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Pleasure, Brian. Take care.

Operator

And your next question comes from the line of Cameron Doerksen with National Bank Financial. Please go ahead.

Cameron Doerksen -- National Bank Financial -- Analyst

Thanks. Good morning.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Cameron.

Cameron Doerksen -- National Bank Financial -- Analyst

Yeah. So just a quick one for me, let's say, I guess, I wanted to just get your thoughts around M&A in the specialty truckload area in the US. You've talked about that, but I'm just wondering if there's any sort of specific sub-segments of specialty to TL that are more attractive. I mean, I guess, flatbed versus dry bulk versus versus liquids, is there anything there that is better from an operations point of view or from a competitive landscape point of view that you would like to focus on one of those three?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yeah, yeah. That's a very good question, Cameron. So flatbed, I mean CT is a flatbed company. So it's really the first transaction that we do in the flatbed world, OK. So it's probably not going to be something for us important in 2021 in M&A, but in terms of bulk, OK, with the stainless steel, OK, everything that relates to chemicals or food, OK, that's very important to us. So CCC is like that. When we bought Schilli, when we bought Aulick, absolutely for us, really the tanker world is for us priority Number 1. We are the largest player on the food grade stuff, hauling whatever wine, juice, sugar, etc, etc. So we believe that for us on the special TTL food grade, chemicals; on the bulk side, liquid and dry OK, not so much the cement. Cement is OK in some areas of North America, but it's really the focus of ours. Flatbed, it's, yes, we did CT. It was a good opportunity, and we will keep on looking at that, but really our focus on the specialty is more in the tanker world.

Cameron Doerksen -- National Bank Financial -- Analyst

Does that include petroleum products?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

No, no, no, no, no, no. Petroleum is no, not for us.

Cameron Doerksen -- National Bank Financial -- Analyst

Okay. You don't do much of that in Canada anyway in the specialty truckload side.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

No, very, very small. I mean, this came to us, it's a small operation. We have in Montreal about 15 trucks. On the petroleum, it's mostly for the ships. When the dock [Phonetic] in Montreal, they need energy. So yeah, it's for the ship. It's a specialty petroleum business that we have that is very small, but absolutely not. I mean, if a company was up for sale, let's say with, I don't know CAD300 million revenue holding petroleum products, no, not for us. We'll leave it to the other guys. Us is more food, chemicals. Yes, we're in.

Cameron Doerksen -- National Bank Financial -- Analyst

Okay, makes sense. Thanks very much.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you, Cameron.

Operator

And your next question comes from the line of Kevin Chiang with CIBC. Please go ahead.

Kevin Chiang -- CIBC -- Analyst

Thanks for fitting me in here. Alain, I know it's been a long call, maybe just a follow-up on a -- on the DLS acquisition. And you mentioned, I know you have a lot of cross-border partnerships. I think one of them with TST CF is say, just wondering as you think of DLS longer term, would you look to eventually in-house all your cross-border LTL, I guess your cross-border LTL network or -- and eventually these partnerships?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

No.

Kevin Chiang -- CIBC -- Analyst

And or no? Okay, OK, OK.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

No, no, no, no. I mean, what we're saying to DLS is that the transborder business is huge and you guys, you're doing a good job on the domestic side. Hey, how about if you start looking at the transborder business, which is something that those guys never really looked at. But no, we're really proud of our partnership with Saia right now and for sure, we would never do something like that. I mean, this would be very unprofessional on our part. So, no, no. The relationship we have at Saia is we want to protect that, and we want to grow it, but it's got nothing to do with DLS. And as matter of fact, between you and me, Kevin, DLS deals with Saia in the U.S. on the domestic side, yeah.

Kevin Chiang -- CIBC -- Analyst

Perfect. Well, you and me and everybody else on this call. Thank you for the clarification. And congrats on a good quarter.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Thank you, Kevin.

Operator

And your next question comes from the line of Benoit Poirier with Desjardins. Please go ahead.

Benoit Poirier -- Desjardins Securities -- Analyst

Hey, good morning, Alain.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Good morning, Benoit.

Benoit Poirier -- Desjardins Securities -- Analyst

And congrats for the results and glad to see that Kal's efforts are paying off on U.S. Last Mile.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes.

Benoit Poirier -- Desjardins Securities -- Analyst

So, Alain, looking at Last Mile, a great network in the US. There has been a lot of investment, if we think that Shopify [Indecipherable], just wondering whether you see some opportunity to partner with some warehousing fulfillment companies as you don't want to go through real estate. So I'm just wondering, if you see some opportunities due to partner up with some guys eventually.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Well, that's a good question, Benoit. So far, I mean, no. Okay, but we're having a lot of discussion. This is like the drone thing there. I mean, are you guys thinking about that? Yes, we are. Okay. It's a same thing with this partnering with someone that's got the coverage, OK. Because like you said, I mean, we're not in the real estate business, and we don't want to be in the real estate business, industrial real estate at all. So yes, but right now, we have so much demand without going through that, OK that right now, Kal's team in the U.S. are really focused on just answering the demand that we're getting. It's unbelievable, OK. But we're going to do it step-by-step. One step at time, and we're getting on board a CAD16 million [Phonetic], like I said earlier, right now. Okay, it's fine, OK. But CAD16 million [Phonetic] in the U.S. is big, but it's not that big.

So we're testing also with another customer in California right now or very soon. And this could be just for California another CAD15 million [Phonetic] account. So huge potential for us in the US, but a year ago, Kal's mission in the U.S. was guys, we cannot build, if the foundation are not solid, OK. So, step one, let's make sure that our foundation in the U.S. is solid, which now, OK, we can say, yes, give me all of those 2% guys, OK, step number two, OK. Let's build a sales team that is North American. It's done with Dean. Okay, fine. And then let's start growing organically with the e-commerce solution that we have, which is fantastic lean and mean solution that today, we're growing big time in Canada, but not so much in the US, because we are replacing those 2% guys with better quality revenue, right. So we've got hands full right now, Benoit.

Benoit Poirier -- Desjardins Securities -- Analyst

Okay. Okay, that's great color. And the other question I had was around the TL market. We are all aware about the positive market condition. Obviously, the biggest question is around the duration of the cycle, but when we look at the Class 8 orders, yes, they pick up over the last three months, but we are still well below the historical average. I'm looking also at the implementation of the driver's license Drug and Alcohol Clearing out that remove almost 30,000 drivers.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes, yes.

Benoit Poirier -- Desjardins Securities -- Analyst

You also have the ALP [Phonetic] implementation that will be mandatory in June 2021 [Speech Overlap].

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Yes, in Canada. Yeah.

Benoit Poirier -- Desjardins Securities -- Analyst

[Speech Overlap] will be upcoming. So do you see some long-term tailwind or structural changes that might make this positive cycle may be longer than usually?

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

I think so. And also, the leadership in the Truckload world in the U.S. like the good companies like Knight and Heartland and Warner and all those good companies in the US, they have a great influence now about, hey guys, this is how we could sustain this growth, OK. And we're in business to serve customer, yes. But we're in business to make money as well. So I think that market -- the macro is changing to the advantage of the trucking company right now. Okay, fine. How long this is going to last? Maybe, like you said, longer than ever before because of the clearinghouse because also, it takes a lot of capital now to -- OK, interest rates are low, but still, I mean, it's not as easy to buy a truck like it was like 10 years ago maybe. And also, customers are getting pressure to be more, I would say, professional in the sense that you can't give a load to a non-professional driver anymore. It looks bad. So I think that you're right.

Now, we are -- things are changing, slowly changing to be more professional. Yeah, it may cost a little bit more money. But we are in business for -- to create value for our shareholder, but we have to do it in a safe manner, OK. We have to be safe on the road, OK, with drivers are safe, right, as an industry. So this is why I agree with you probably a little bit more stronger tailwinds than we've ever seen before.

Benoit Poirier -- Desjardins Securities -- Analyst

That's great color. Alain, thanks very much for the time.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Pleasure, Benoit.

Operator

And there are no further question at this time. I will turn the call back over to Alain for closing remarks.

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Okay. Well, thank you very much operator for facilitating our Q&A session. I also want to thank everyone for spending time with us this morning. You can rest assure that everyone at TFI International will continue working hard for our shareholders, creating and unlocking value and returning excess capital whenever possible. I hope everyone stays safe, and I look forward to providing you -- to providing another update on our next call. In the meantime, please don't hesitate to reach out. If you have any questions, have a great day and a wonderful weekend, and thank you again.

Operator

[Operator Closing Remarks]

Duration: 97 minutes

Call participants:

Alain Bedard -- Chairman of the Board, President and Chief Executive Officer

Ravi Shanker -- Morgan Stanley -- Analyst

Jason H. Seidl -- Cowen and Company -- Analyst

Allison M. Landry -- Credit Suisse -- Analyst

Scott Group -- Wolfe Research -- Analyst

Walter Spracklin -- RBC Capital Markets -- Analyst

Thomas Wadewitz -- UBS -- Analyst

Jordan Alliger -- Goldman Sachs -- Analyst

Mona Nazir -- Laurentian Bank Securities -- Analyst

Sanjay Ramaswamy -- Bank of America -- Analyst

Konark Gupta -- Scotia Capital -- Analyst

Jack Atkins -- Stephens Inc. -- Analyst

David Ross -- Stifel Nicolaus -- Analyst

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

Cameron Doerksen -- National Bank Financial -- Analyst

Kevin Chiang -- CIBC -- Analyst

Benoit Poirier -- Desjardins Securities -- Analyst

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