Alain Bédard - Chairman, President, Chief Executive Officer David Saperstein - Chief Financial Officer

Good morning, ladies and gentlemen, thank you for standing by. Welcome to TFI International’s, Second 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 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. Lastly, I would like to remind everyone that this conference call is being recorded on Tuesday, July 28, 2020. I will now turn the call over to Alain Bédard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir. Alain Bédard: Well, thank you very much up operator and I appreciate everyone joining our call this morning. Yesterday after the market closed we released our second quarter results and if you need a copy of the release, please visit our website. TFI International performed well during the second quarter generating solid financial results, while continuing to prioritize the health and well-being of our employees and customers. Indeed, we performed better than expected, despite incurring and absorbing various COVID related costs of doing business and saw several positive developments during the quarter that boards well for TFI’s performance going forward. As you may recall, we acted decisively when COVID-19 began to spread, and in recent months have continued to focus on the details of our business, while maintaining our emphasis on the fundamentals. You’ve heard me say it before, this involves optimizing our free cash flow and earnings per share, which we then use to expand our business and create long term shareholder value. We pursue…

[Operator Instructions] Your first response is from Ravi Shankar. Please go ahead.

Thanks. Good morning everyone. A couple of questions; David if I can start with you. Can just walk us through all of the puts and takes on the cost side related to COVID in the quarter. What kind of tailwinds did you have in terms of costs coming off that might be restored into 3Q and also any specific COVID related costs that you inquired in 2Q that will kind of go away in 3Q?

Okay, so if you look at Q2, what we've seen first of all is you know one of our costs is –besides all the sanitation and B2B and also in some instance some workers that don't want to show up for work, because they are scared of whatever that could happen and all that. Besides that, I mean if you run a network like we do in our B2B at the P&C sector. If I look at ICS for instance, if I look at TFIS, those two guys are 95%, 98% B2B. So we have a tremendous pressure okay when we had to shut down, because of the malls were closed, so most of our customers were down. So if you look at ICS and TFIS, April's revenue numbers, we were down 65% okay in that month, and you are still stuck with the employees that you have to furlough and all that. So these costs okay, we had to go through all of that. Our Canpar/Loomis operation in our P&C was not affected as badly. So if you look at in April, revenue was down about 35%. If you look at Canpar/Loomis today, the revenue is up year-over-year right now since June okay because of the B2C. Now ICS and TFIS where not really equipped at the time to really service the B2C, and this is something that we are working on right now okay, because we see more and more demand on the B2C side. So that's our P&C operation, but it’s also the same story with our LTL. If you look at the drop of revenue in our LTL, we run a network. It's unbelievable what happened to us, because on the Canadian side, I mean we've closed fast and we reopened very slowly Ontario, Quebec. Well…

Very helpful, thanks Alain. And just maybe as a follow-up to that. I mean your clearly laying out things that have started to normalize somewhat and come back to where they use to be. Has the M&A environment also normalized to the point where you guys can get back to looking for a big kind of consummative acquisition. I mean clearly you guys have been very active on the small tuck-in side this year, but do you think the market’s normalized where you can kind of go after a bigger deal? Alain Bédard: Well, you know M&A has been you know the engine of TFI, that's in our blood, that's what we do okay. I've got a fantastic team that runs operations. My job working with David and Jason is really M&A. So I mean we did a few small deals okay in Q2. I think that you know based on what we see today, based on our confidence, based on the solidity of our team, I think that something important can be reality within the next year, absolutely, maybe even shorter, we’ll see. I mean guys are working hard, okay, but like we always say, ‘you got to be cautious when you buy something.’ You do all the due deal in the world but, you know there is something that maybe you don't get. So you can’t do 25 deals at the same time, no, so you got to do one at a time. The small deal in Canada, for us it's easy, because we have a team that's second to none. It's easy for us to integrate a $30 million or $40 million or $100 million business in Canada. In the U.S. we’re beefing up the team. We have a much better team today than two years ago, okay. So that's why we're able to add CT and MCT and probably we'll see some more stuff in the U.S. down the road, absolutely. So I think that the environment for M&A okay, with about $1 billion in available funds, I think it’s the way to go for us. It’s in our blood, that's what we do for 20 years and more.

Pretty helpful. Thank you Alain Bédard: It’s a pleasure.

Thank you. Your next response is from Jack Atkins of Stephens.

Great! Good morning and congratulations on a great quarter. Alain Bédard: Thank you, Jack.

So Alain, let's maybe start with what you're seeing more specifically within the U. S. truckload market. We certainly have seen – it feels like a fairly sharp recovery in activity here in the last 60, 75 days. Could you maybe talk about the opportunity within your U.S. truckload operations to begin to re-price some of the lower yielding freight within your customer list and sort of how you are thinking about that business over the course of the next three to four quarters, given what could be an upcoming rate cycle here? Alain Bédard: Yeah, a very good question Jack. So you know our guys have done a fantastic job through the pandemic. You know our average revenue per mile drop Q2 this year versus last year, just a few pennies at CFI, just a few pennies. Now you’re going to say well, if you earn 200 million, 300 million miles, just a few pennies is a lot of money. But you know for sure we saw some pressure in April, May, but now if I talk to Greg, he's going to tell me, ‘Alain, I'm over booked now.’ It’s like what's going on? Okay. So this is why I’m going back to my comments for the first caller is that, I said okay Greg, so let's bring back the new trucks in, okay. You know Greg was telling me that we've never seen so many good drivers show up at CFI TCA okay, because they see the future. I mean this CFI used to a diamond okay, and now people in the trucking world are starting to see, ‘Wow! CFI, well it’s a fantastic company.’ Now MCT is going to be managing now by our friend Greg and his team as a kind of specialty carrier within the CFI Group of Companies. So we see some very good quarters ahead of us. When we talk about customers and the economy in general in the U.S., and also maybe a little bit of this on-shoring that's been going on, maybe more freight coming out of Mexico, and as you know, a CFI is a very important carrier in Mexico. Every day we got about what? I don't know, 2,000, 2,500 trailers in Mexico. So now Mexico's going through some difficulties with the COVID thing there, yeah, okay but you know slowly they are like to reopening and doing better. So, you know Jack I see some good stuff. This is why TFI is so well positioned to grow into the next three, four, five quarters, both organically I think and through M&A.

Okay, that’s great to hear. And then I guess for my follow-up question, could you talk about what you are seeing in your business in July, specifically with regard to you know the B2B versus B2C trends. Are you starting to see your B2B customers come back online, began maybe shipping or even catching up, given the shut down and how are you thinking about the right mix of B2B versus B2C for the business as we look out over the next several quarters? Alain Bédard: Yeah. You know if I look at our B2B versus B2C business in Canada as an example, so if you look at my logistics and Last Mile, you know in the COVID, very like April, May and June, our revenue was up like 35% year-over-year, okay. And then – and now we're starting to see a little bit of a drop, but now instead of being at 35% now we are 20% to 25% and I think that this is where this is all going to stabilize, okay, because B2B is starting to reopening in Canada slowly okay, fine. Now if you look at my Canpar/Loomis operation, whereby those guys used to be, maybe 10% to 15% okay B2C and our approach has always been, we don't want to service the B2C guys and not provide the right service, because if you look at their service failure in Canada of a lot of those companies. I'm just going to give the example of Canada Post, I mean it's been a terrible for Puro. So our focus to us has always been, we grow, but we grow in making money, and also we grow in providing the right service. So not being all upside down and not being able to or service or deliver goods…

Thank you. Your next response is from Scott Group of Wolfe Research. Please go ahead.

Hey, thanks. Good morning guys. Alain Bédard: Good morning.

Alain, can you tell us how much of the wage subsidies are you assuming in the second half of the year, in the guidance? Alain Bédard: Very, very small, very small. I mean they’ve adjusted the program, because if there was no adjustment in the program, probably it would be like very close to maybe just a few million. Now you know in our forecast it’s very minimal. I's not even half of what it was in Q2. So it is a small and not really significant at this time.

So, went I look at the guidance for the back half, that's lower than the second quarter, is that – in the per quarter. Is the big change there just the wage subsidies going away or is there anything else that's causing third quarter… Alain Bédard: Well yeah, yeah you’re right, the subsidy is like kind of going away, number one, and also its – we’re very cautious about it. When you give guidance, I mean you got to be very cautious and you got to be very conservative. If we look at our model and you know what we always, our top guidance is always what we believe is our kind of – hopefully it doesn't happen. We do better than that.

Okay, and then just on that last question about the B2B and B2C, I guess I heard the update on B2C trends. Maybe just if you can give us a more specific update on B2B trends and how bad they were in April and May and maybe what you're seeing right now in July, because I just want to understand how B2B is picking up, yeah. Alain Bédard: Yeah, so if you look at our P&C that are really focus on B2B, which is ICS and TFIS. Those guys were down in April, about 65% of revenue. If you look at those guys today, they are still down about 15% of revenue. Why? Because Ontario, which is our biggest market has been really slow in terms of reopen. They have been very, very careful in Ontario. Toronto okay even more, and Toronto has been the largest market in Canada. So this is why those B2B guys are still like 10%, 15% down year-over-year in July okay, so that's the trend. Now what we think is going to happen is that there is a permanent impairment in B2B. Now we don't know how much is that. Is that 5%, is that 10%? Because of the shift to e-commerce, the stores that are closing and reopening okay, so maybe okay B2B will be permanently down 5% or 10% in the coming years, we don't know yet. What I could tell you is that we are now getting closer okay, and even at minus-15 or minus 10, we're doing better this year than last year’s bottom line. Because you know a storm like that, a pandemic, a financial crisis like we lived through in 2008, always good for TFI, because you know, yes we question every day what we do, how can we do better, but this crisis puts even more pressure on doing things that sometimes may be you know let's do it, and we’ve been very successful in terms of permanently doing more with less.

Thank you. Your next response is from Konark Gupta with Scotiabank. Please go ahead.

Thanks and good morning Alain, how are you? Alain Bédard: Hey I’m good, how about you?

Pretty good Alain, thanks. How you are keeping well and safe. Just wanted to dig into the free cash flow guidance you provided. So I mean looking at the first half of this year, you have already done almost $400 million in fee cash, sounds like I think that’s a give or take you have another $50 million coming in the second half. Is that decline in the free cash sequentially? I mean is that due to the tax payments that might have been deferred from the first half to the second half? Alain Bédard: Yeah, that's part of that okay, and it's also the additional CapEx that we're going to do okay, like I just talked about, because we're resuming our normal CapEx which is in a normal year for TFI is a net [Technical Difficult] that we are seeing. I mean we don’t want to over promise and under deliver. Us, we are trying to do the opposite.

Right. No, it makes sense. And then on the B2C side, you said that there’s some of the business that you have picked up in Q2 during the pandemic. You expect that to sustain. Can you share some more light on that? What kind of businesses is that and whether it's in the U.S. or Canada and any other details you can provide? Alain Bédard: Yeah, what we've seen so far guys is for us, on the – because in Canada we’re way more involved into B2C than in the U.S. for now, okay. Yes, U.S. we are doing a lot, but in Canada we're doing even more in a much smaller market. So what we've seen is, is the fact that because of the consumer, because of the lockdown and because of that, the consumer had to do – to buy in a different manner, so e-commerce was the solution. And us, we are not there with rates that don't make any sense, okay. So that's always been our focus and we are there also to deliver on time. We are not going to say okay, we're going to take 100 parcels and take a week to deliver. So we have a capacity that we've been growing, we've been adding, okay. So this is why we're going step by step in the right direction. Now, you'll see in Q3 and in Q4. I think that what we are seeing so far in July, okay, because now B2B is going to reopen okay, we are seeing that our Canpar/Loomis operations are still running 10% to 15% over last year in July, revenue wise. Now that's because B2B is still not back-up a 100%, but B2C has done a fantastic job for us. Hello?

Hello. Your next response is from Allison Landry of Credit Suisse.

Good morning. Thanks and great job on the quarter. Alain Bédard: Thank you.

So I just wanted to follow-up on the questions with respect to the B2C shift and you know the portion that you planned to keep. Maybe if I could just ask it in a different way and how you think that the – when you consider the portion that you're keeping, how do you think that both the long term mix of the segment, what do you think that will look like and particularly as B2B recovers? But what’s sort of the long term trajectory there? If you could just remind us what it has been historically. Alain Bédard: Yeah, yes so we've always been careful about B2C. You know we've always said you know, B2C got to be careful, because the coincidence of delivery is not the same. I mean B2C is one stop, one package, so we've always been careful about that. So pre-COVID if you look at TFI, our Canadian P&C operation for example was maybe at best 10% B2C combined, and we've always been careful about bringing new business with the B2C environment. Now our Last Mile operation, okay both U.S. and Canada, that's a different story, because that's our bread and butter. I mean those guys, they don't run a network, okay. They run very lean and mean, so for them it's a solution that’s similar to the Amazon Solution. Now that being said, if you go back to our P&C, what we're seeing is slowly, okay, we know that the B2B will suffer a permanent impairment, because stores won't reopen because of whatever reason. The brick and mortar guys are suffering. We don't know if it's going to be minus-5 or minus-10. So our approach to that has been guys, we have to replace and we have to grow, because if you're not part…

Okay, that's really helpful. Thank you for that. Then you know I just wanted to ask about the three acquisitions that you did during the quarter and maybe if you could just you know speak to strategically how they pulled into the platform and then any comments that you could give on the broader as a landscape, that would be great. Thank you. A - Alain Bédard: Yeah, so if you look at Gusgo for instance, I mean we are running what we called internally, a company that’s called P&W. So the acquisition of Gusgo, okay, and the combination of P&W I mean is going to be a fantastic transaction. So we are looking right now into consolidating the two sides in Toronto, okay. So it was a strategic move to beef up what we do in this sector in Ontario. The CT and MCT was more like an opportunity for us to grow into the specialty truckload. So we've said okay, that if you look at our van operation in the U.S. okay, we feel good about what we have today. You know maybe a small acquisition is fine, but we feel pretty good. We want to build our specialty truckload, because if you look at our Canadian operation, our specialty truckload is second to none, we're doing so well. So slowly, I mean we're building this specialty truckload operation in the U.S. So we started with Hollick [ph] in Chile about a year and a half ago and now we’re adding CT and MCT. And you know you may see more of this in the coming quarters into TFI growing as U.S. specialty truckload operation, that's a focus of ours. Now, in terms of M&A, what we see in the future, like I said specialty TTL in the…

Thank you. Your next response is from Walter Spracklin of RBC Capital Markets. Please go ahead.

Thanks very much. Good morning Alain. A - Alain Bédard: Good morning Walter.

So I guess my first question is on the, your guidance for earnings. I was wondering if you could give us your revenue thoughts that underpin that earnings. I’m just trying to understand, is this an earnings guidance that assumes lower volume with a certain margin or higher volume as things rebound. Just curious your overall topline outlook that underpins that EPS guidance. A - Alain Bédard: Yeah, so if you look at the back end of the year, we don't see – right now we're what, minus-17 in the quarter. We don't see us being at par, okay. So there's no M&A in there, except where that’s been done, okay, so we're not back to where we were for the last six months of the year in terms of revenue. We still see a slow recovery okay in the back half of the year in terms of the revenue. So I would have to get back to you Walter to tell you exactly where we're at, but I think it's about minus-5 versus year-over-year.

Okay, that makes sense. And then for my follow-up, it's on acquisition. I know Mullen Group has taken all of their interest in expanding now out east and obviously their focus on LTL. How do you view that? Is that – I mean obviously Murray is a good competitor, rational player. If he's in also consolidating, does that make it more difficult for you or is this an area that you're not focused in and is there any kind of other angle that could occur between those two companies with regards to the LTL market and kind of trying to build the density that you mentioned that’s so important in that market here in eastern Canada. Alain Bédard: Well, I don't know what Murray's plan is. I mean, you know I don't mind competition, us, we love competition, so listen, I mean if you look at our track record I think it speaks for itself. Now, I can tell you Walter that us, for sure we want to talk. So you know just watch what's going to happen in the next six months and we'll see. Now, we've been doing that for 20 years. My friend Murray runs a great company you know, so fine, but us we have our own plan. We're really focused on what we've done for the last 20 years. As you know I was with the similar [ph] family in the M&A sector before that, that's what I've done all my life. So we’re really focused. We've got over $1 billion in liquidity. Our debt-to-EBITDA now runs about 1.6, 1.7 based on the way we do it with the banks. We got lots of potential. Our team is second to none. I mean we got a team that is fully, fully focused and dedicated. They…

Thank you, Alain. Alain Bédard: Pleasure.

Thank you. Your next response is from Brian Ossenbeck of JPMorgan. Please go ahead.

Hey, good morning Alain. Thanks for taking the questions. Alain Bédard: My pleasure Brian.

I wanted to come back to the B2C and e-commerce one more time. Just to get your thoughts, is it saying is this a permanent re-pricing of the value of B2C delivery now that demand has gone up so much and maybe it won't change – at least it won’t go back to the way it was before or do you believe this is really driven by density and being able to be selective, unless your comments were focused in environments in Canada, but also wanted to see if any of those dynamics applied to the last mile logistics considering you know they are certainly even more focused within e-commerce. Alain Bédard: Yeah, that's a very good question. You see Brian, we got to split our logistics last mile operation U.S. and Canada okay versus our P&C in Canada. So our logistics and last mile, both U.S. and Canada, we are second to none in terms of the solution that's comparable to an Amazon, okay. So we are growing more in Canada today than we are growing in the U.S. okay, but that's – you'll see a change over the next six months to 12 months. And what we've done okay, for example is that the Canadian sales team run by Dean, okay. Dean has done a fantastic job in Canada okay, selling this ecommerce solution. Our U.S. team was lagging behind. So what Kal has done okay, he said ‘hey Alain, what my plan is, is I'm going to have Dean okay, involved both in the U.S. and in Canada, because we have similar customers.’ So this is something that took effect about six months ago. So now we are selling an North American solution there our logistics and last mile okay through Kal as being our EVP and…

Alright, thank you for all that detailing. Maybe just one quick follow-up on July from the end market perspective. It sounds like June really was strong and you know what, that's continued in July. Are there any end markets in particular that you're excited about or more concerned about or are there any do you think it had been pulled forward. They are you know a little bit more of a catch up from the shutdown versus something that was sustainable. So any thoughts on how you're doing any of that, I would appreciate it? Alain Bédard: Well, I think that we feel really, really good about the last six months of the year when we look at July. But again, our guidance is always very conservative to us. I mean we're in business, you know in transportation. This is based on what we know today. But I feel really good about our Loomis/Canpar, our P&C guys are doing a fantastic job. LTL, I mean the market is still depressed, absolutely, so this is why an M&A transaction for LTL would be fantastic. We're working on the cost; we're doing very well on the cost side. We're bringing efficiency, we're bringing new technology in, etc., etc. But at the end of the day we're going to need some revenue and we're not going to chase revenue at 2% bottom line. So for us on our LTL in Canada, really the solution is find the right M&A, okay, nice fit. So that's going to bring more revenue in, do the sorting of the quality of the revenue and then keep whatever makes sense. So LTL, M&A is key to us and you know maybe partnership or whatever with some carriers that would make us a lot of sense. Truckload, our specialty truckload, I think those guys are going to be booming in the U.S. I was looking at our B2C June numbers and July so far. What those guys are doing there under Seabrook [ph] from Cameron. Cameron is our U. S. guy. He is really fantastic. What Greg is doing on the Van side, it’s really nice. TC's revenue is picking up because of all the planned closure that killed them in April, May and June. So we feel good about what we see in the USTL and the U.S. specialty TTL as well. So really the only areas of concern is always the same as people. We want our people to be safe, because this virus is still alive, it’s still there, so people is always you know the big nut that you got to make sure that's not going to crack, alright. And in terms of our balance sheet, I mean, very solid.

Thank you. Your next responses from Jason Seidl with Cowen. Please go ahead.

Thank you, operator. Hey Alain, hey team. Good morning. . Alain Bédard: Hi Jason.

Could you talk a little bit more on your, on the B2C side. I know we are still beating a dead horse, but can you talk a little bit about maybe changes in pricing. But as this shift seems permanent and as it continues to grow, how should we think about the need for maybe sort of changing some of the operations or maybe even some investments that you might have to make, not say this year, but say five years out. Alain Bédard: Yeah, in our logistics and last mile solution, I mean investment is not really important. I mean it's not really that much. It's really the sales team and the good people that's going to bring the opportunity. Also as the sales team that is able to have customer understand what these guys need to do to be more efficient into the distribution network. So most of the time, if we talk to for instance, I'm going to say the name Amazon, those guys they get it, I mean they understand what we're talking about, okay. So yeah, we cover right now a few markets for them in the U.S., just to plug some holes because of this COVID thing there. But what we're trying to do is educate our sales people to really understand, okay how can we deliver, okay, efficiently like Amazon is doing, okay, for them. So we're talking to a lot of those guys. So it's really the last mile logistics we have the solution, okay, it works really well in Canada. It's just that we have to get this solution more known into the U.S. market. This is like the TFI stock in Canada, its well-known. It’s not so well known in the U.S. that's what we're trying also to have people…

I'm glad to hear July trends are going well. In terms of Donnelly, do you think Donnelly can be sort of breakeven before the end of the year, as you shed costs? Alain Bédard: Jason, Donnelly is breakeven now.

Oh! Perfect. Alain Bédard: Oh yeah! No, no, no, no.

I mean, I want to shift a little bit to truckload. You know one of your larger U.S. competitors mentioned that they're starting to see year-over-year increases in contractual agreements here, early in 3Q. Just wanted to see what your experience has been in your current contractual environment? Alain Bédard: Yeah, yeah. So like I said earlier, Jason we saw pressure on the rates, okay, in Q2. Our average revenue per mile dropped a few pennies, and when Greg tells me, ‘hey Alain, I’m over booked now,’ okay. I've not heard Greg tell me that for at least since ’18, right. So it's just the notion of offering demand. So now the demand is probably more okay, than the offer, and that's why other carriers, smart carriers like the one you're talking about, those guys they're not stupid. They say, oh okay, like the shippers, the shippers are not stupid either. The truckers call, ‘oh! Too much capacity, put pressure on the rates.’ ‘Oh! Smart truckers, phone calls, because the shippers are calling, oh okay so less capacity, let's move some rates up.’ Hey, it’s a pendulum. So what these guys are seeing, okay us, we're starting to see the same thing. But those guys are much bigger than us, more spread out across the U.S. than us, but us, I'm telling you that we are right now overbooked for the first time really since ‘18.

Thank you. Your next response is from Mona Nazir of Laurentian Bank. Please go ahead.

Good morning, and congrats on the quarter. Alain Bédard: Thank you, Mona.

Thanks. So I'm just wondering, if I'm looking at your quarterly performance and the response to COVID, in order to achieve your targeted cash for 2020, I'm wondering what does TFI look like? I mean you spoke about the Canadian wage subsidy expectation for the back half of the year, you spoke about the B2C shifting reject. But if I'm thinking about further right sizing or business combination or anything else, is there an aspect that we need to think through that could impact future performance? Alain Bédard: If I look at the LTL, really no, because we've done most of the combination that needs to be done. The only thing that we're doing right now is we are moving Quik Track, okay, that was part of the Quik X Group which is intermodal okay, truck load to the west out of Montreal and Toronto. We are moving that to our intermodal specialist okay, which is Bob McGonigal’s group okay at the end of this month. From Rick Hashie’s group, which Rick Hashie is mostly over the road, so that was this last part of track or rail that was in Rick Hashie group. So it’s small, its small, but it makes a lot of sense to do that. In terms of our truck loading in Canada, I mean our specialty truckload under Steve, I mean we're doing a lot of consolidation in our footprint real-estate. We just bought a new terminal in Woodstock where we are going to be able to consolidate all of Steve's operation there. And we bought this one and we're going to be selling two or three smaller sites in the Woodstock area, so that we can consolidate the operation and be more efficient cost wise. So it’s the same thing also that we're doing under Steve in our specialty TTL. Greg on the USTL is doing the same thing, with TC and CFI and now MCT. You know it’s all over. I mean if you look at the number of sites that we shut down in the U.S. through the acquisition of Donnelley, I think we shut down 26 sites that we've combined in okay and this is why those guys were losing money. As I said to Jason now, I mean our acquisition of Donnelley is not losing money anymore, because we did all this clean-up of real-estate, equipment, customer that didn't make any sense for us. It’s always ongoing Mona. There is always project within TFI to be better to do more with less. It’s a religion.

That's very helpful. And just lastly, and very quickly for me, last quarter on the call you provided a snapshot of revenue by division for the first two of weeks of April, and if I’m reading from the MD&A, for example P&C volume seem to rebound for the June period after being down over 25% for the first two months. So I appreciate your comments for revenue in the back half of the year being down. I think you said a 5%, but just generally speaking, can we expect that trend, the overall trends from Q2 to continue, albeit the contraction not as extreme perhaps. Alain Bédard: What we are seeing so far Mona, when we look at April, May and June and then now July is what we're seeing is like it’s been really difficult for us in April and May in terms of the revenue, okay, we were down big time and now if I talk about the U.S., the reopening of the U.S. has been way faster. So this is why we've not been affected as much in the U.S. as we've been affected in Canada. What we believe is that now that way we are reopening in Canada slowly, because if you look at Ontario, they have been really slow, [inaudible] has been really slow at reopening, fine. But what we're seeing now is that we feel pretty good about the end of the year, okay, both U.S. and Canada. But you know there was a big question when I was talking to the Board Members yesterday about guidance. So they say, hey Alain, I mean these are very difficult time to predict what's going to happen, because we don't know, is there going to be a second wave, is there going to be a this,…

Thank you. That's very helpful.

Thank you. Your next response is from David Ross of Stifel. Please go ahead.

Yes, good morning Alain. Alain Bédard: Hey. Good morning, David.

Hey, I wanted to talk a little bit of the truckload segment, specific to the special TTL, you're looking to grow that out in the U.S. Is there a preference in the M&A strategy for company drivers versus owner operators? Alain Bédard: Yeah, that's a very good question. I mean if you look at what we're doing in Canada, I mean we love a mix of 60% to 65% steel core asset versus 30% to 35% non-asset. We don't have that okay in our USTL operation right now, although our owner operated fleet has grown lately, okay. So what we're trying to do is in that neighborhood okay, but key to us is really how is the fit? So if you look at the city, okay the flatbed operation that we bought. I mean the fit is fantastic for us, because most of the customers of CT are customers of ours in Canada. So I mean we're well known, although if you think about TFI in the specialty world of flatbed in the U.S., who are these guys? Well when we talk to the CT customers, they say ‘oh TFI, oh sure we know those guys, we deal with them in Canada.’ Okay so that one for instance was more focused on, oh customer fit, good fit, small, not too big, a good base, solid base to grow, okay let's do the deal, all right. But we really love, for sure we love stainless steel. So if you look at our Canadian operation is stainless steel with no subsidy, okay, that rubbers [ph] that runs in our content stainless steel operation did better than last year in Q2 with no subsidy, stainless steel, so we love stainless steel. We, you know our dump operation in Canada is the one that suffered the most, and our flat bed in Canada, we did better this year than last year with no subsidy. So really our subsidy came in support of our bulk operation, in our specialty TTL in Canada and in our western Canadian operation as well.

And as you look across the U.S., between TCA in CFI mainly, what's the breakdown of spot versus contract now. How do you want that to be a longer term? Alain Bédard: Well spot, Greg Orr is not a big fan of spot, okay. So we’ve been mostly running a – now in Q2 we had more spot than even, because you know some of our customer were in either shut down or shipping less. So we had a little bit more of a spot at the time, but not fantastic rates as you know. But now spots are starting to grow, but our share, we have been very conservative, so spot is not the nature of the TCA CFI. I mean it’s always been very small, normally.

Thank you. Your next response is from Tom Wadewitz of UBS. Please go ahead.

Yeah, good morning. Alain Bédard: Good morning, Tom.

Yeah, thanks for the question here. I think you talked about this a couple of times on the call Alain, but I wanted to ask a little bit further on logistics. You know in the P&C you did see the big step-up in B2C business, but it seems like you didn't see that and I know you talked about kind of U.S. logistics and sales efforts. What’s the mix of B2B and B2C in your overall logistics and you think it's reasonable to see a point in the near term when that growth would really step up, because it just seems like it should be you know a very good environment for your Last Mile business to grow, given that big step up in demand for B2C. Alain Bédard: Yeah, you are absolutely right Tom. You know the problem that we have faced is that our Canadian team on the B2C, on the e-commerce side has done a way, way better job than our U.S. team. For two reasons; number one reason is that in the U.S. we've acquired some companies that are fixer upper. So we’ve acquired Donnelley, we’ve acquired BeavEx, we've acquired Dicom. So the guys really were focusing on integration of these companies over the last year and a half to two years. But also the sales force was not really focused doing the right thing, growing this e-commerce. So ops guys were focused in digesting all these acquisitions, okay, and this is when last year, the summer of last year okay, we made a change in the U.S. so that Kal is our new EVP responsible for the U.S. Kal has done a fantastic job with the Canadian team and to growing our e-commerce solution big time in Canada. So Kal, we are going to do…

Okay, so it sounds like you got a lot of optimism, but it's not like next quarter, it's over kind of multi-quarter basis that you expect to see stronger growth out of US Logistics. Alain Bédard: I think so, I think so. You know it's a culture change in the U.S., okay. You know guys, we are not Jack of all trade, master of none. This is our focus. This is the area that we have to sell, etc., etc. So it’s a change of culture, it's also change a culture that you know guys, when we bought Dynamic’s like six, seven, eight years ago, the culture was oh, 2% is great. Well no, it’s not great. So if you look at the possibility of the U.S. a year ago, it was better than 2%, but it was not 10%. Okay, so we've improved Kal and his team over a year, even adding revenue of poor profitability that we have to improve, we've improved the bottom line by about 30% to 35%, but we're still not at 10%, but we're going to get to 10% and at the same time we're going to grow this e-commerce business, which can be very profitable in our key force logistics model.

And your next question comes from the line of Cameron Doerksen with National Bank.

Thanks, good morning. Alain Bédard: Good morning, Cameron.

So just one very quick one from me. I’m just wondering given you know the strong free cash flow performance, good liquidity, leverage ratio, you're very low, just how you're feeling about the NCIB these days. Alain Bédard: Well, the NCIB, we've done a little bit of NCIB in Q2, and NCIB has always been balanced with M&A and debt and free cash flow. So free cash flow is very strong, debt is low, so normally NCIB should be very important for us, unless there's some significant transaction on the M&A side. So this is why I said guys, stay tuned – excuse me, stay tuned during the course of the next six months. I mean you'll see if there's no big whale, there's probably going to be more of NCIB.

Okay, well that’s great color. Thanks very much. Alain Bédard: Pleasure Cameron.

And your next question comes from the line of Sanjay Ramaswamy from Bank of American.

Great! Alain, just maybe talking about your confidence in the earnings power moving to ’21, maybe can you just talk about the duration that you say that the U.S. is starting cycle can take from here, and maybe perhaps how long you say the kind of tightening, all that truckload capacity and inflation in pricing lasting. Alain Bédard: Well what we've seen so far, I mean it's a little bit of a surprise, okay. What we've seen you know in June and so far in July and when Greg called me and say ‘Alain, we have to get the CapEx back, because we feel really, really good about the way the market is going.’ You know, this is when we're talking to some of the guys in April and May in our P&C, even if you look at UPS's comment, well this is Christmas in the summer or in the spring right, because they have so much volume. On the USTL side, it seems like there's more demand, but also the offer has come down a little bit. I don't know if it's because people don't have the capacity to add trucks. Is it because there's some people that just because it's too – they feel it’s too dangerous to be a driver. Okay, they just said I'm going to stay home and get the $600 okay of the unemployment, additional to unemployment. There is probably a little bit of shrinkage of capacity at the same time little bit more demand, maybe a little bit of in the effect of more on-shoring to Mexico or to the U.S., but our policy is really what's going on, okay. It seems like, wow, it was unforeseen. If you asked me six weeks ago, okay you think that you guys are going to be booming in the USTL, I said no. No, I think that we will stick probably like minus-5, minus-10. But now really, I mean the pressure is on and the guys are busy.

Right, that's helpful. And maybe just going on from that point there you mentioned the effective on-shore and you mentioned Mexico a couple of times. Can you just remind us of what kind of exposure you guys you do have to Mexico, outside the U.S. and Canada and in which business that rate comes with it? Alain Bédard: Yeah, our exposure to Mexico is through CFI, a little bit TC, but mostly CFI through our logistics company that is based in Mexico, although very small. And you know we run also about 20%-some, 20%, 25% of our revenue at CFI is with the international trade between U.S. and Mexico. But we are not heavy into the automotive business. I mean we do some of that, okay, but we're not that heavy in that type of business.

And your next question comes from the line of Michael Goldie with Bank of Montreal.

Hey Alain and the team. Thanks for taking my call. Alain Bédard: Pleasure.

Can you give us a bit more color on LTL demand month-by-month throughout the quarter and where it kind of stands in July, particular to Jim? Alain Bédard: Yeah, so we are doing better in July than in Q2, but it’s still down okay, and I think that there is – in LTL there is a permanent impairment that comes from our customers that are in the mall, the brick and mortar guys. So what we're seeing with the B2B in the P&C is less, much less than the LTL. Don't forget that the industrial LTL that exists in the U.S., I mean in Canada industrial LTL is like wow, it’s been 20 years now that we don't have much of that. I mean most of the plants are already closed. So it's mostly retail in our LTL world and the retailer has been affected badly by e-commerce. So this is why the way we see the LTL in Canada is that unless we do some M&A, our revenue is going to shrink organically, absolutely because of this e-commerce that is really taking a bite at the brick and mortar guys, alright. So that's why we put a plan a year ago, two years ago we bought NFF. those guys were $80 million when we bought those guys, but they were losing eight. So today NFF’s revenue is about half of what it was, but they're not losing money, they are making more than 10 points on the revenue that’s left. So that's what has been the culture. So we have to feed our Canadian LTL. So we're having discussions, okay with a lot of people about how can beef up our Canadian LTL, and maybe within the next six months you'll see some positive news okay about the LTL. But one thing is for sure, in my mind if you don't do anything, okay, the LTL market is shrinking in Canada because of the e-commerce.

Okay, perfect. And can you also give us some color on the three acquisitions, kind of annualized revenue and EBIT run rate if possible, that you did in June. Alain Bédard: Yeah. So Gusgo is small, it’s only $3 million, okay, and the U.S., the two U.S. ones okay coming out of Concord are about the same; it's about 200 trucks each in USD. So it's very small, okay, but Gusgo, the beauty of Gusgo is that we see a lot of synergies with our P&W operation that we run today. So Mark has done a fantastic job at P&W, but now adding the Gusgo in the family is going to be a fantastic combination. We see a lot of synergies there. It’s going to take us a little bit time, but the potential there is huge. The two U.S. one, I mean CT I said it, it’s fantastic, because we have common customers between U.S. and Canada. So although we're not known in the flatbed business in the U.S., but most of the customers within CT knows us, because of the Canadian operation. So we see a lot of potential. This was a company that was going to bankruptcy court thing there. The price was very attractive for both assets and I think we're going to do well. MCT was an hybrid dry van and reefer. The early discussion that we're having with Greg is that the intention is to have more MCT, more in a specialty kind of reefer carrier. So we bought in that deal a location in Florida, in Sanford Florida which is the base of this kind of reefer operation, because we do greenery there. So it’s going to be a nice addition to CFI when they sit down with the customer to have this kind of specialty division. If you look at one of the best carriers, truckload carriers in the U.S., the offer both dry and reefer to their customer. Those guys have done a fantastic job. So I mean, us, we always look at the best, okay and in our USTL okay, we believe that the MCT acquisition for CFI is going to be something of a nice diamond in the rough that Greg and his team will have to polish.

And at this time there are no further audio question. Alain Bédard : Okay. Well, thank you very much operator for helping with the call and thank you everyone for being with us this morning. We at TFI International very much appreciate your interest and all of us will continue to work hard to create value, unlock it for our investors and whenever possible, return excess capital to shareholders. So I look forward to updating you soon and if you have any questions, please do not hesitate to reach out. Thank you again and have a great day and stay safe. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.