Q4 2021 Forward Air Corp Earnings Call
Speaker 1: And thank you for joining Forward Air Corporation's fourth quarter 2021 earnings release conference call. Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the Investors Relations website.
And thank you for joining forward Air Corporation's fourth quarter 2021 earnings release conference call before we begin I'd like to point out that both the press release and webcast presentation for this call.
Festival on the investors relation.
Speaker 1: Relations section of Forward Air's website at www.forwardaircorp.com.
Relations section of forward Air's website at Www Dot with forward Air Corp Dot com.
Speaker 1: with us this morning, our CEO Tom Schmidt and CFO Rebecca Garbrick. By now you should have received the press release announcing our fourth quarter 2021 results, which was furnished to the SEC on Form 8K and on their wire yesterday after the market closed.
With us this morning are CEO , Tom Schmitt and CFO , Rebecca Heartbreak by now you should have received the press release announcing our fourth quarter 2021 results, which was furnished to the SEC on form 8-K and are there the wire yesterday after the market close.
Speaker 1: Please be aware that certain statements in the company's earnings press release announcement and on this conference call are.
Please be aware that certain statements in the company's earnings press release announcements and on this conference call are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 <unk>.
Speaker 1: within the meaning of the Private Securities Litigation Reform Act of 1995, including statements which are based on exemptions, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts.
Including statements, which are based on exemptions intentions.
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Speaker 1: conference call and the company's earnings press release contain forward-looking statements, which include, but are not limited to, statements relating to future operations and results, any statements of plans, strategies, and objectives of management for future operations, and any statements about future financial or operational targets and the likelihood of achieving
This conference call and the company's earnings press release contain forward looking statements, which include but are not limited to statements relating to future operations and our results any statements of plans strategies and objectives of management for future operations and any statements about future financial or operational Targa.
That's in the likelihood of achieving the same.
Speaker 1: statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
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For additional information concerning these risks and factors. Please refer to our filings with the Securities and Exchange Commission. The press release and webcast presentation related relating to this earnings call. The.
Speaker 1: for additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission, the press release and webcast presentation relating to this earnings call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or other...
The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise and now I'll turn the call over to Tom Schmitt CEO of forward Air. Please go ahead.
Speaker 1: And now I'll turn the call over to Tom Schmidt, CEO of Forward Air.
Thank you Brad and good morning to all of you listening in.
Speaker 2: Thank you, Brad, and good morning to all of you listening in. On our last earnings call in October , I said that 2022 will be our double-digit margins, double-digit annual revenue growth as we had committed in 2019, if you think back on our investor day in New York in June .
On our last earnings call in October I said that our 2022 will be our double double double digit margins double digit annual revenue growth as we had committed in 2019, if you think back on our Investor Day in New York in June .
Speaker 2: So I'm very grateful that my teammates and all of our independent contractors
I am very grateful that my teammates in all of our independent contractors decided actually that they are living one of our leadership imperatives.
Speaker 2: decided actually that they are living one of our leadership imperatives and decided they don't wait. So they pulled the double-double forward from 2022 to 2021. So the first year 2021 actually was like
Decided they don't wait so they pulled the double double forward from 2022 to 2021 last year 2021 actually was a double double easily on the revenue growth side and the adjusted operating margin actually came in at 10, 1% for the year.
Speaker 2: easily on the revenue growth side and the adjusted operating margin actually came in for 10.1% for the year.
Speaker 2: Our record fourth quarter with a $1.40 EPS helped us get there.
Our record fourth quarter with a $1 40, EPS helped us get there.
Speaker 2: So congratulations to all of our teammates, to our independent contractors. I'm so proud of pulling this double-double off in 2021.
So congratulations to all of our teammates to our independent contractors I'm. So proud of pulling this double double off in 2020 one.
Speaker 2: We took this momentum into 2022. January , we just finished, obviously, the first month of the year, had very, very strong LTL volumes, up almost 11% over January of 2021. And the revenue of that LTL volume was almost 34% up over last year's January .
This momentum into 2022.
January we just finished obviously the first month of the year had very very strong <unk> volumes up almost 11% over January of 2021, and the revenue off that <unk> volume was almost 34% up over last year's January so.
Speaker 2: So that gave us a lot of confidence, that strong month for our Q1, which led us to a guide of a record $1.17 at midpoint EPS for the first quarter.
That gave us a lot of confidence that strong months for our Q1, which led us to a guide of a record $1.17 at midpoint EPS for the first quarter.
Speaker 2: We also feel pretty strongly that we are ahead of the EPS target for 2023 at this point. We gave a 2023 full year target in our October earnings release. And again, at this point, we are ahead of pace for that target.
We also feel pretty strongly that we are ahead of the EPS target for 2023 at this point.
We gave a 2020, we fully our target in our October earnings release and to get at this point. We are ahead of pace for that target.
Speaker 2: Now we will keep the momentum going with more shipments in LTL both from our existing customer base and also through digital access to smaller medium sized businesses that we are going to be selling to more and more directly.
Now, we will keep the momentum going with more shipments and LPL, both from our existing customer base and also through digital access to small and medium sized businesses that we are going to be selling to more and more directly.
Speaker 2: We also will not just get more shipments in place with existing and new customers, we also are getting more real-time with dynamic pricing. So when we have slower periods, slower days, slower months, we can adjust pricing almost real-time.
We also will not just get more shipments in place with existing and new customers. We also are getting more real time with dynamic pricing. So when we have slower periods of slower days slower months, we can adjust pricing almost real time between more shipments with existing and new customers digital access and dynamic pricing.
Speaker 2: Between more shipments with existing and new customers, digital access, and dynamic pricing, we are very confident that we have a good chance of margin expansion in LTL, one and a half to two percentage points this year, one and a half to two percentage points next year also.
We are very confident that we have a good chance of margin expansion in the <unk>, one and a half to two percentage points. This year, one and a half to two percentage points next year also.
We also built a bit that growth.
Speaker 2: further expand our footprint. If you remember the last 18 months, we expanded our footprint primarily with more access points in secondary markets.
Further expand our footprint if you remember the last 18 months, we expanded our footprint primarily with that more access points in secondary markets.
Speaker 2: The second half of this year we're actually going to add second terminals in some of our primary hub markets, four or five for this year and further footprint expansion to come in the subsequent year.
The second half of this year, we're actually going to add second terminals and some of our primary hot markets four or five for this year and further footprint expansion to come in the subsequent years.
Speaker 2: Now this is not just a LTL show, this is the main show LTL, but our complementary businesses are doing their part also.
Now this is not just a LPL show. This is the main show LDL, but our complementary businesses are doing their part also.
Speaker 2: Truckload is tag-teaming tremendously well with LTL, both from a recruiting front and as well as a load coverage front.
Truckload is tag teaming tremendously well with LPL, both from a recruiting front end as well as a load coverage front.
Speaker 2: Final Mile is winning more awards from some of the most demanding retailers on earth. And those awards actually translate in getting awards for additional markets. We just launched Memphis and Richmond.
Final mile is winning more awards from some of the most demanding retailers on Earth and those awards actually translate in getting awards for additional markets. We just launched Memphis enrichment into.
Speaker 2: Intermodal in 2022 will just keep doing what they're doing, which is consistent double-double performance.
Intermodal in 2022, they'll just keep doing what they're doing which is consistent double double of performance.
Speaker 2: And on the M&A side, in addition to the organic growth in LTL, TL, final mile intermodal, we will do more and possibly also bigger. We had tremendous success with our tuck-ins, specifically in intermodal. We had three tuck-ins last year building out our geographic footprint. We'll continue doing that.
And on the M&A side. In addition to the organic growth in <unk> TL final mile Intermodal, we will do more and possibly also bigger.
We had tremendous success with our tuck ins specifically in intermodal, we had three tuck ins last year building out our geographic footprint will continue doing that.
Speaker 2: And we also said that the J&P Hall in the LTL space last year was perhaps an appetizer, an amazing appetizer on the LTL acquisition front, and the main course may follow here also.
And we also said that the JMP haul in the LDL space last year was perhaps an appetizer amazing appetizer or on the <unk> acquisition front and the main course may follow here also.
Speaker 2: Brokerage, we're primarily building out our capabilities organically, however, as and if and when it makes sense for us to add to that organic build out inorganically, we certainly will be open to doing that.
Brokerage, we are primarily building out our capabilities organically, however, as and if and when it makes sense for us to add to that organic Buildout Inorganically, we certainly will.
There'll be open to doing that.
Speaker 2: So if you look at all of this together, we've got a ton of untapped upside. We're on it. And I feel extremely confident about the performance potential. And I'm very grateful about the performance reality that our teammates and independent contractors made possible. So we're on it. And we're gonna go straight to our Q&A. And Rebecca and I will tag team as always. So with that, Brad, let's open the lines for Q&A.
So if you look at all of this together, we've got a ton of untapped upside we're on it and I feel extremely confident.
About the performance potential.
I am very grateful about the performance reality that our teammates and independent contractors made possible. So we're on it.
And we're going to go straight to Q&A, and Rebecca and I will tag team as always so with that Brad let's open the lines for Q&A.
Speaker 1: Thank you. And the floor is now open for questions and comments. And ladies and gentlemen, if you wish to ask a question, please press 1 then 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1 then 0 command.
Thank you and the floor is now open for questions and comments and ladies and gentlemen at USAA ask a question. Please press one then zero on your telephone keypad.
May withdraw your question at any time by repeating the one that zero command, that's using a speakerphone. Please pick up your handset before pressing the numbers.
Speaker 1: If using a speakerphone, please pick up your handset before pressing the numbers. Once again, if you have any questions, please press 1 and 0.
Once again, if you have any questions. Please press one zero at this time.
One moment please for our first question.
And our first question comes from the line of Todd Fowler with Keybanc capital markets. Please go ahead.
Speaker 1: And our first question comes from the line of Todd Fowler with KeyBank Capital Market. Please go ahead.
Speaker 3: Hey, great, thanks, and good morning. Tom, on your comments about the 150 to 200 basis points of margin improvements that you're expecting in 22 and 23, you know, I guess when I look at where you came off of in 21, on the LTL side, you know, close to 300 basis points, it seems like that the pricing environment remains very strong.
Hey, great Thanks, and good morning.
Jim on your comments about 150 to 200 basis points of margin improvements that youre expecting in 'twenty, two and 'twenty three.
I guess when I look at where you came off of in 'twenty. One on the <unk> side close to 300 basis points. It seems like that the pricing environment remains very strong.
Speaker 3: Not trying to discount, obviously, you know, good margin improvement, but can you speak to maybe why it wouldn't be a little bit better than that, just given the pricing environment that we're in and kind of the return of tonnage that you're seeing?
Not trying to discount obviously, good margin improvement, but can you speak to maybe why it wouldn't be a little bit better than that just given the pricing environment that we're in and kind of the return of tonnage that youre seeing.
Speaker 2: Yeah, Todd, good morning. Thanks for asking. I mean, what we tend to do is obviously control what we control and then react to what's going on around us. There's a pretty good chance that the pretty
Yeah, Todd good morning, and thanks for asking I mean, what we tend to do is obviously control what we control and then react to what's going on around US there is a pretty good chance.
At the pretty overheated, perhaps a freight environment over the last 18 months is going to cool down.
Speaker 2: overheated perhaps freight environment of the last 18 months is going to cool down. That cool down is probably not going to happen this month or next, but more likely in the second half of this year. And 2023 is kind of a question mark there also. So you're absolutely correct with the type of tailwind that we had seen over the last 18 months.
Net cool down is probably not going to happen this month or next but more likely into the second half of this year and 2023 is kind of a question Mark. There also so you're absolutely correct that the type of tailwind that we had seen over the last 18 months.
Speaker 2: Those numbers may be on the conservative side, with a headwind, which we should be expecting. We still will see significant margin expansion, and those 1.5 to 2 percentage points we see this year, and then we see obviously another 1.5 to 2 percentage points next year. For a headwind environment, I think that would be quite remarkable. For a tailwind environment, you're absolutely correct, this is probably on the conservative side.
Those numbers may be on the conservative side.
With a headwind.
David which we should be expecting.
I don't see significant margin expansion and those one 5% to two percentage points. We see this year and then we see obviously, another one and a half to two percentage points next year for a headwind environment I think that would be quite remarkable for a tailwind.
<unk>, you're absolutely correct. This is probably another conservative side.
Speaker 1: And we do have a question from the line of Jack Atkins with Stevens, please go ahead.
And we do have a question from the line of Jack Atkins with Stephens. Please go ahead.
Okay, great. Good morning, everyone. Thanks for taking my questions.
Speaker 3: I guess, Tom, if we could maybe kind of start, I'd love to get a...
So.
I guess, Tom if we could maybe kind of start I'd love to get a sense for how do you think about back filling.
Speaker 3: You know, how do you think about backfilling the capacity that you've kind of...
Capacity that that you've kind of created the network over the last couple of quarters through.
<unk> really.
So all of the.
Speaker 3: sprayed out of there, you know, how much latent capacity would you say you've got in the network currently and, you know, as we kind of think forward over the course
Palletize sprayed out of there.
How much latent capacity would you say you've got the network currently in.
As we kind of think forward over the course of 2022.
Expect to kind of.
Refill the network by the time, we exited the year or is it going to take maybe a little bit longer than that.
Speaker 2: Yeah, good morning, Jack. Great, great point. Obviously, something that we're modeling the situation we had by late spring of last year was we were actually running into a capacity constraint in some of our major terminals. The cleansing gave us a, in essence, de facto 15 to 20% additional capacity just by unclogging the floor.
Yeah morning, Jack.
Great Great point, obviously, something that we are modeling.
The situation we had by late spring of last year was we were actually running into a capacity constrained in some of our major terminals the cleansing.
Gave us a in essence de facto 15% to 20% additional capacity just by Unclogging a floor.
Speaker 2: With the types of growth rates that we see, we probably by the second half of this year will start being in a similar situation as we were in, in spring of last year, which means we're going to start running into some capacity constraints as we're heading into peak in a few of our major terminals, which is why we're actually adding second terminals in some of our major markets towards the second half of this year.
With the types of growth rates that we see we.
We probably by the second half of this year, they will start being in a similar situation as we were in in spring of last year, which means we're going to start running into some capacity constraints as we were heading into peak in a few of our major terminals, which is why we are actually adding second terminals.
In some of our major markets.
Towards the second half of this year.
We're gonna go ahead maximum possible speed. This is a high quality problem.
Speaker 2: We're gonna go at maximum possible speed. This is a high-quality problem. If we dial in many of those 8,800 prospects in the small, medium-sized business segment that are in the high-tech, industrial goods, medical devices.
<unk>.
Dial in many of those 8800 <unk> prospects in the small medium sized business segment that are in the high Tech industrial goods.
Medical devices parts automotive industries didn't obviously we.
Speaker 2: automotive industries, then obviously we hopefully get into a high quality problem faster where we run into capacity constraints even more than what we currently model. So yes, backfilling is happening. We have a strong sales force, a strong sales machine that's actually propelling that sales force.
Hopefully, we get into a high quality problem faster, where we run into capacity constraints, even more than what we currently model. So yes back filling is happening we have a strong sales force a strong sales machine.
That's actually propelling that sales force.
Speaker 2: selling both into our traditional customer base and then as I said before with
Selling bolt into our.
<unk> traditional customer base, and then as I said before with.
Speaker 2: brains, arms, and legs, as well as digital access more and more also into these small medium-sized prospects in those high-value industries I mentioned. So we will run into some constraints second half of this year, and if we actually are even more successful than we think we are backfilling, then we'll run into that constraint even more than what we currently model, and that's going to be a high-quality problem.
Brian's arms and legs as well as digital access more and more ultimately into these small medium sized prospects in dose.
High value industries I've mentioned so.
We've already into subsequent strained second half of this year and if we actually are even more successful than we think we are back filling then we'll run into a debt constrained even more than what we currently model and thats going to be a high quality problem.
Speaker 1: And we do have a question for the line of Scott group with Wolf Research, please go ahead.
And we do have a question for the line of Scott Group with Wolfe Research. Please go ahead.
Speaker 4: Hey, thanks. It seems like we're getting one, so I'll just combine a few into one. The 150 to 200 base points of margin, is that consolidated or was that just the expedited piece?
Hey, thanks.
It seems like we're getting one so I'll just combine a few into one.
The 150 to 200 basis points of margin is that consolidated or was that just.
The expedited and <unk>.
Speaker 4: Obviously, this huge mixed shift, how are you thinking about that from here? Is there more to go on that shift towards heavier weight, or are we sort of in a good place? And then, how are you thinking about pricing and GRI this year?
<unk>.
Obviously this huge mix shift how are you thinking about that from here or is there more to go on the on that shift towards towards heavier weight or are we sort of in a good place and then how are you thinking about pricing in <unk>. This year. Thank you.
Speaker 2: Okay. Hey, first of all, Scott, good morning. And by the way, just back to you, Todd, and to you, Jack, if there's any more back and forth, there's no constraint of one question per person at all, so we can go as long as it's helpful. Scott, to your specific points, on the
Okay.
First of all Scott good morning, and by the way.
It goes back to Utah and to you Jack if there is any more back and forth.
There is no.
Constrained of one one question per person at all so we can go as long as it's helpful.
Scott to your specific points on the.
Speaker 2: LTL, sorry, on the one and a half to two margin expansion points this year and then another one and a half to two next year, I was specifically talking about the LTL portion of our expedited freight segment. So that's an LTL number.
<unk> I'm, sorry on the one to one 5% to up.
Margin expansion points. This year and then another one and half to two next year I was specifically talking about the <unk> portion of our expedited freight segment. So that's an LTM number.
Speaker 2: Secondly, makeshift. Obviously, if you look at heavy trade containers or if you look at crates with medical devices in them, those are kind of some of the heaviest, densest freight.
Secondly mix shift obviously.
If you look at heavy trade containers or if you look at creates with medical devices in them. Those are kind of some of the heaviest densest freight.
Speaker 2: shipments that we have. And we are continuing upgrading towards that high end. So we are far from done. This is going to be a little bit like the Nike slogan of a race without a finish line. So we've seen a lot. We went from 600 plus pounds per shipment to 800 plus pounds per shipment over the last six months. So we're going to expand.
The shipments that we have and we are continuing upgrading towards that high end. So we are far from done this is going to be a little bit like the Nike slogan of our race without a finish line. So we've seen a lot. We went from 600 plus pounds per shipment to 800 plus pounds per shipment over the last.
Six months.
So we're going to expand on that.
Speaker 2: The more we get into this kind of sweet spot of what I just described as high-tech medical device, industrial goods.
The more we get into this kind of sweet spot of what I. Just described is high tech medical device industrial goods.
Speaker 2: trade show containers, the higher the rates will become. So we've made a big, big step and we're not done yet. On the pricing side, you saw us do a GRI last year of 7.5%. We had a very high capture rate. The Salesforce under Scott Shera did a tremendous job working with our customers to make sure we keep our commitments to them. We keep on time performance in a top environment. We invest in our drivers.
Tradeshow containers are the higher the Wakefield real cargoes in both the carbon. So we are we've made a big big step and we're not done yet on the pricing side.
So I do at Cri last year of seven 5%, we had a very high capture rate the salesforce under Scott Satterwhite did a tremendous job working with our customers to make sure we keep our commitments to them. They keep on time performance in a tough environment, we invest in our drivers.
Speaker 2: We had the biggest increase in our driver pay last week, $0.15 a mile.
We had the biggest increase in our driver pay last week 15 cents a mile increase that obviously puts us in a position. So that we can with the <unk> that we are commanding keep making the customer commitments better than anyone else out there and thats the type of expectation at our customers.
Speaker 2: That obviously puts us in a position so that we can.
Speaker 2: with the GRI that we are commanding, keep making the customer commitments better than anyone else out there, and that's the type of expectation that our customers have and should have. So my expectation this year, Scott, with the GRI, is very similar to last year, that there will be a very, very high take rate. There are a few, very, very little.
Happen should have so my expectation this year, but Scott visit with our Cri is very similar to last year that there will be a very very high take rate. There are a few very very little.
Speaker 2: contractual exemptions and exceptions, for the most part when we say 7.9 we mean 7.9.
Actual exemptions and exceptions for the most part when you say 790 mean seven nine.
Speaker 4: Great. And then just to your comment earlier about, you know, at some point, the free environment will slow. Right. Do you think that you can keep pushing the mix in your favor even in that kind of environment?
Okay, Great and then just to your comment earlier about at some point the freight environment will slow rate do you think that you can keep pushing the mix in your favor even in that kind of environment.
Speaker 2: Absolutely. So we believe, and the numbers are a bit outdated, but we believe that there's a $50 billion plus LTL market in the U.S. alone. Of that $50 billion, Scott, about $10 billion is the type of high-value freight that we are the most compelling choice in. And we have, if you take our revenue base apart,
Absolutely so we believe.
Members are a bit outdated.
But we believe that there is a $50 billion plus <unk> market in the U S alone off that 50, Scott about 10 is the type of high value freight that we are the most compelling choice in and we have if you take our revenue base apart.
Speaker 2: And you go inside Expedited Freight, LTL revenue for us is shy of $1 billion.
You go inside the expedited freight <unk> revenue for US is shy of $1 billion. So we believe we have a 9% or 10% market share of the type of high value effect, we should be going after so if there is no increase in the pie at the levels that we had last year or the year before.
Speaker 2: So we believe we have a 9% or 10% market share of the type of high-value freight we should be going after. So if there's no increase in the pie at the levels that we had last year or the year before, then we just need to win the slice of pie game. When we have a 9% market share, I believe we have a lot of untapped upside, whether there's economy tailwind, as there was in the last year, year and a half, or economy headwind.
Then we just need to win the slice of pie game, when we have a 9% market share I believe we have a lot of untapped upside whether there's the economy tailwind as there wasn't a last year or year, and a half or economy headwind.
Speaker 2: If you can't play a slice of pie game, we'll win a slice of pie game.
If he can play a size of pie game will be in a slice of pie game.
Speaker 4: And then maybe just last thing if I can, then, you know.
Okay, and then maybe just last thing if I can then.
No.
Speaker 4: What about, are there any sort of cost opportunities that you're thinking about or looking at?
What about are there any sort of cost opportunities that you're.
Thinking about or looking at them.
Yes.
Speaker 2: So, we obviously are building a backbone across our business lines.
So we obviously.
Building, a backbone of across our business lines.
Speaker 2: where we use pretty expansive technology transformation rationalizing systems. In some cases we had four or five systems that we consolidated into one.
We use pretty <unk>.
Expensive technology transformation are.
Rationalizing systems in some cases, we had four or five systems that we consolidated into one.
Speaker 2: We also have on the customer service side, as an example, some of the level one, which are the most straightforward customer service functions, we actually outsourced to a lower cost environment.
We also have on the customer service side as an example, some of the level, one which are the most straightforward customer service functions, we actually outsourced.
A lower cost environment, we have very firm guidelines, what we expect corporate cost to be as a percentage of total revenue and that percentage number needs to keep coming down it has come down last year from the previous year and we expect it to come down further so we tend to be with positioning.
Speaker 2: We have very firm guidelines, what we expect corporate costs to be as a percentage of total revenue and that percentage number needs to keep coming down. It has come down last year from the previous year and we expect it to come down further.
Speaker 2: So we tend to be, with precision execution, equally rigorous.
Execution equally rigorous on the cost and efficiency side as we are on the top line expansion side.
Speaker 2: on the cost and efficiency side as we are on the top line expansion side.
Okay, great. Thank you guys appreciate it.
Thank you Scott.
Yeah.
Speaker 1: And our next question comes from the line of Jack Atkins with Stevens. Please go ahead. Okay, great. Thanks for letting me jump back in here, guys.
And our next question comes from the line of Jack Atkins with Stephens. Please go ahead.
Okay great.
Let me jump back in here guys, I guess, maybe Tom going back to the longer term outlook that you guys have put in place for 2023.
Feel like Youre running ahead of plan for that.
That longer term guidance include the terminal expansion.
Graham as well or would that be incremental to that if I remember correctly. It doesn't include M&A, but I just wanted to clarify on the terminal expansion opportunity.
Speaker 2: Yeah, so two things. One, you're absolutely correct. So the 630 to 670 numbers, the 630 is basically a continuation of the game plan that we've been on, which is organic growth and small tokens.
Yes, so two things one you're absolutely correct. So the 630.
<unk> hundred 70 numbers through 630 is basically a continuation of the game plan that we've been on which is organic growth and small tuck ins. If there is a more significant LTM or possibly brokerage acquisition that would stretch us beyond the 630.
Speaker 2: If there is a more significant LTL or possibly brokerage acquisition, that would stretch us beyond the 630.
Speaker 2: on the terminal expansion Minimum terminal expansion or a certain level is built in if we again if we grow faster and need more Footprint than we currently foresee that would be an untapped upside also Okay
On the terminal expansion minimum terminal expansion or a certain level is built in if we again, if we grow faster and need more footprint and we currently foresee that would be an untapped upside also.
Okay, Alright, that's helpful and then I'm curious, how you're thinking about the incremental margin opportunity within.
In your network business.
Yes.
You've been sort of.
In the fourth quarter Youre running at about a 30% incremental margin.
Last year.
You are running in the low <unk>.
What do you think the right range to think about incremental margins on incremental revenue growth and expedite LCL.
Do you want to take that.
Sure.
Hey, Jack we think how are you.
Speaker 5: How are you? You know, as we're thinking about those incremental margins, you know, we'll just kind of think about this Q1 for the moment. So that cleansing that we did didn't really start, you know, in the benefits we've reached.
Are you.
We're thinking about the incremental margins.
We will just kind of think about just Q1 for the moment so that cleansing that we did didn't really start.
And the benefits we have right.
We're in the latter half of last year. So we do believe that there is good opportunity for ion from an incremental margin standpoint into Q1. So.
We are thinking that it would be.
<unk>.
25 to two.
28, 29% range as we're thinking about the incremental margins.
Okay.
Yes.
That's really really.
That's pretty powerful for us.
Asset light model White like yourself, that's great great to hear.
I guess maybe.
One other question for me would be just on how we should think about seasonality within the business.
Yeah.
I understand there is seasonality.
Flows across.
The year and obviously you guys would see that in your business as well, but you also have these company specific things going on which should accelerate as we can.
Go through the year and you backfill the available capacity of your network you add capacity to the network.
Can you help us think about how you're thinking about seasonality internally what do you think.
This is maybe a little bit less seasonal than it's been in the past because of that.
Actions that you've taken or.
Or should we still expect to see kind of normal seasonal progression as we move through the year.
Speaker 2: Yeah, Jack. I mean, obviously, you know, the industry and our business extremely well and
Yes Jack.
Obviously, you know the industry and our business extremely well.
Speaker 2: kind of gave a part of the answer already. So with us cleansing the freight and going to more high value freight, there is actually a de-seasonalizing or de-peaking going on. Specifically, when we were super heavy in the lighter weight e-commerce space until we cleansed. Remember we talked about kayaks, we talked about rocks, we talked about carpet.
Kind of gave a part of the answer already so with us cleansing, the freight and going to more high value freight there is actually a.
Seasonal liza deep, peaking going on.
Specifically when.
When you were super heavy in the lighter weight ecommerce space until the clenched remember we talked about kayaks, we talked about drugs, we've talked about carpets.
Speaker 2: that some of some of the e-commerce business was the loose freight and palletized that some of our customers could not upgrade together with us and they actually left our system which means we tend to have less of a e-commerce peak and then therefore also less of a
That some of some of the E Commerce business was the loose freight and palletize that some of our customers could not upgrade together with us and they actually left our system, which means we tend to have less off eight E. Commerce peak and then therefore also less of a coming down off of that peak in January now.
Speaker 2: coming down off of that peak in January now, compared to previous years. So I expect us overall to be a little bit less peaky and less seasonal than we were in the past, just based on the shift of the mix.
Compared to previous years, so I expect us overall to be a little bit less peaky and less seasonal than we were in the past just based on that.
Shift of the mix.
Speaker 2: Having said that, we still are a transportation company that has some of the same patterns that other transportation companies have. A January will typically not be a September .
Having said that we still are transportation company that has some of the same patterns that other transportation companies have January will typically not be September .
Speaker 2: and that's less pronounced than in the past, but there's still some of that. Now, having said that, when I mentioned in my remarks.
And and that's that's less pronounced than in the past, but theres still some of that now having said that when I mentioned in my remarks, as becoming more real time with more dynamic pricing there are mechanisms, including dynamic pricing, where we can obviously buy it by adjusting price.
Speaker 2: us becoming more real-time with more dynamic pricing. There are mechanisms, including dynamic pricing, where we can obviously, by adjusting price levels on a day-by-day basis, we can actually, to some extent, counter the natural kind of highs and lows of the season, of the week, of the month. And we are intending to do that. So yes, we will be seasonal. We will be less seasonal than in the past.
Levels on a day by day basis, we can actually to some extent counter.
The natural kind of highs and lows of the.
Off the season of the week of the month and we're intending to do that so yes, we will be seasonal it will be less seasonal than in the past.
Speaker 2: and we have some good countermeasures in place to actually attack some of those highs and lows. Dynamic pricing is the number one lever in that space.
And we have some good countermeasures in place to actually attack. Some of those are highest and lowest dynamic pricing is the number one lever in that space.
Okay. Thanks, again for the time guys I'll jump back in queue.
Jack.
And our next question comes from the line of Todd Fowler with Keybanc capital markets. Please go ahead.
Speaker 1: And our next question comes from the line of Todd Fowler with KeyBank Capital Markets.
Speaker 3: Hey, great, thanks. Thanks for taking the follow-up as well. So, Tom, I just want to clarify in your comments, you know, on being ahead of pace to the 2023 targets. Are you talking about, you know, being above the high end of what you laid out or that you're, you know, on pace to be, you know, well within that range? Just trying to want to get a sense of how you're, what you're really saying about 23. And then at what point would you possibly consider revisiting those targets, you know, if you're running ahead of them?
Hey, great. Thanks, Thanks for taking the follow up as well.
So Tom I, just wanted to clarify on your comments.
On being ahead of pace to the 2023 targets are you talking about.
Above the high end of what you laid out or that you're on pace to be well within that range. Just trying to wanted to get a sense of how youre, what youre really saying about 'twenty three and then at what point would you, possibly consider revisiting those targets if youre running ahead of them.
Speaker 2: Yeah, so let's let's simplify the math, Todd, and so if we say.
So, let's let's simplify the math Todd and so if we say.
Speaker 2: take the range and make it more simple and say the 630 is actually the number that's that's equivalent to us keep running the business with some of the same parameters which means we have strong organic growth and we have some talking acquisitions. That's what gets us to 630 as we announced in October .
Take the range and make it more simple than say the <unk> is actually the number.
Equivalent to keep.
Keep running the business with some of the same parameters, which means we have strong organic growth and we have some tuck in acquisitions, that's what gets us to <unk> 30, as we announced in October .
Speaker 2: If I look at the month of January , and that's one out of 24 data points in that 22-23 journey, I believe there's several cents that we are ahead of that pace.
I look at the month of January and that's one out of 24 data points in that 'twenty. Two 'twenty three journey I believe there are several sense that we are ahead of that pace.
Speaker 2: Now, again, that's where you and I can run math and say, well, if it's $0.10, that's pretty powerful. If it's $0.03, then obviously multiplying that by $0.24 is not giving you quite that much. But I do believe if we keep doing what we've done, even in those six weeks that we are into 2022,
Now again, Thats, why you and I can run the math and say like well if it's 10 cents that's pretty powerful if it's <unk> then obviously multiplying that by 'twenty four is not giving you a quite that much but I do believe if we keep doing what we've done even in those six weeks that we are into 2022.
Speaker 2: Yes, you can assume that there's a few cents every month that we should be ahead and again, in a tailwind economy, I like my odds of being able to add quite a bit to 630. What I would suggest is we are going to be driving our business, get a few months under our belt.
Yes.
You can assume that there is a few cents every month that we should be ahead.
Again in a tailwind economy I like my odds of <unk>.
Being able to add quite a bit to 630, but I would suggest is we are going to be driving our business get a few months under our belt and if February March April continue the trend that we've seen in January we should absolutely revisit that number but the 124th into the 2000.
Speaker 2: And if February , March, April continue the trend that we've seen in January , we should absolutely revisit that number. But we're one twenty fourth into the twenty, twenty two, twenty, twenty three journey. And I, I feel obviously fact based and correct saying that with that one twenty fourth in we're ahead of pace. I feel a bit more comfortable if there are three or four twenty fourth into that journey to revisit those targets.
22, 2023 journey and I've I.
I feel obviously fact based and correct, saying that with at 124th in we're ahead of pace I feel a bit more comfortable if there are three or $4 24th into that journey to revisit those targets.
Speaker 3: Good. Okay, that's good context, Tom. And then just as a follow-up, can you talk to your appetite at this point for acquisitions? I mean, it feels like that there's a lot of momentum within the existing business. You've got a good footprint right now. So, you know, how eager are you to look to do something? I understand, you know, tuck-ins probably make some sense, but something, you know, larger or, you know, more sizable, just kind of given how the performance is in the core business at this point. Thanks for the time.
Good Okay. That's good context, Tom and then just as a follow up.
Can you talk to your appetite at this point for acquisitions I mean, it feels like that there is a lot of momentum within the existing business you've got a good footprint right now.
So how eager you to look to do something I understand tuck ins, probably make some sense, but something larger or.
A more sizeable just kind of given how the performances in the core business at this point thanks for the time.
Speaker 2: Yeah, Todd, I mean, this is one of those where we have quite a bit of experience. If you think about the last five, six years we did, they were not big ones, but we did 14 or so acquisitions.
Yes, Todd.
This is one of those where are we.
We have quite a bit of experience. If you think about the last five six years, we did.
They were not big ones, but we did 14 or so acquisitions.
Speaker 2: And we have a pretty spotless track record. Every single one of them actually was value accretive. So when we grade acquisition targets.
And we have a pretty spotless track record every single one of them actually voice value accretive.
Great.
Decision targets.
Speaker 2: We feel pretty comfortable that even if an acquisition target is
Feel pretty comfortable that even if.
The acquisition target is three or four times the size of what we typically have in terms of size of acquisition that the grading scheme that our M&A team under collar. It gets some Michael hance apply applies to those like three or four times the size of the acquisitions also so again, we used to see.
Speaker 2: three or four times the size of what we typically have in terms of size of acquisition, that the grading scheme that our M&A team under Kyle Ricketts and Michael Hance apply, applies to those like three or four times the size acquisitions.
Speaker 2: So again, we use the same rigor. We use the same grading scheme. If it grades out positively with a 14 and 0 track record over the last 14 acquisitions, I believe my odds of the 15th one also grading out positively and turning in the way we expected for it to turn in are pretty good.
I'm rigor we use the same grading scheme, if it great solid positively with a 14 and the old track record over the last 14 acquisitions I believe my odds of the 15th one also creating out positively in turning in the way we expect it to turn out pretty good so rest assured.
Speaker 2: So rest assured, size by itself will not make us deviate from the same kind of rigor that we applied in the past.
<unk> by itself will not make us deviate from the same kind of rigor that we applied in the past, but it'd be great solid positively, we like who we have confidence that we can make it work whether it's.
Speaker 2: But if it grades out positively, we like, we have confidence that we can make it work, whether it's three or four times the size of what we typically do, or whether it's the same talking size that we typically do. Got it.
Three or four times the size of what we typically do or whether it's the same tuck in size that we typically do.
Got it okay. Thanks again.
Thank you Todd.
And our next question comes from the line of Bruce Chan with Stifel. Please go ahead.
Speaker 1: And our next question comes from the line of Bruce Chan with Stifel. Please go ahead. Hi, good morning, Tom. Good morning, Rebecca.
Hi, Good morning, Tom Good morning, Rebecca.
Morning.
Speaker 1: Tom, you mentioned the events business. I'm just, you know, maybe to start curious what you're seeing there in terms of recovery as we, you know, kind of come out of Omicron here and how much of that is built in there with respect to, you know, your first quarter guide.
Tom You mentioned the events business I'm, just maybe to start curious what youre seeing there in terms of recovery as we kind of come out of omicron hearing and how much of that is built in there with respect to.
Your first quarter guide.
Yes so.
Speaker 2: And I'm talking rough terms here. So some of our most profitable LTL business went temporarily asleep in March almost two years ago now.
Im talking rough terms here. So some of our most profitable <unk> business went temporarily asleep in March almost two years ago now.
Speaker 2: If I had to put it, and this was 10 to 15% of our LTL business and was some of the most profitable.
If I had to put it.
This was 10% to 15% of our <unk> business and what are some of the most profitable.
Speaker 2: Last year, we probably saw, and most of that was Q3, we saw perhaps 20% of that come back. When I went through our terminals, I did see trade show containers, that's much less than we typically see.
Last year, we probably saw and most of that was Q3 we.
We saw perhaps 20% of that come back.
Been through our terminals I did see trade.
Cho containers, that's much much less than we typically see.
Speaker 2: If we talk to our business partners who are in the event space and some of our customers, they would probably say this year we expect about 60 to 70 percent to be back.
If we talk to our business partners, who are in the event space and some of our customers. They would probably say this year, we expect about 60% or 70% to be back.
Speaker 2: And next year, again, this is people.
Next year again this is people.
Speaker 2: looking ahead with obviously not having 100% certainty of what's going on around us. But next year, forecasts pretty much say we should be back to pre-pandemic levels.
Looking ahead, with obviously, not having 100% certainty of what's going on around us, but next year.
Forecast pretty much say, we should be back to pre pandemic levels.
Speaker 2: So, if it's 20% last year, 60 to 70% this year, and then 100% next year, that would be wonderful. And some of that could be upside to what we put into our numbers.
So if it's 20% last year, a 60% to 70% this year and then a 100% next year.
That would be wonderful and some of that could be upside to what we are what we put into our numbers.
Speaker 2: We feel very confident that we have a sales machine underway, that if we get 60-70% that's terrific. If we don't get it, I think we have other ways to get to those types of numbers.
Feel very confident that we have a sales machine underway that if we get 60, 70% Thats terrific. If we don't get it.
I think we have other ways to get to those types of numbers, but this is clearly upside.
Speaker 2: But this is clearly upside that we are together with our customers all over making sure we
We are together with our customers all over making sure b.
Speaker 2: we make happen. I mean, take a good, one last observation point. I mean, take the example of your own conference that we just finished.
We make happen I mean take a good one one last observation point I mean take take the example of your own conference that we just finished.
Speaker 2: We went virtual one more time, so we're not 100% yet.
Virtual one more time, so we're not 100% yet.
Speaker 2: At the conferences, go in person, concepts are taking place.
Other conferences go go in person conflicts are taking place.
Speaker 2: So, that's why I say 60 to 70 percent is probably quite a good, it's probably a reasonable estimate. And again, we listen a lot with two ears to our business partners and they believe two thirds or so is a good number for this.
So that's why I say, 60% to 70% is probably quite a bit is probably a reasonable estimate and again, we listened a lot with.
Two years.
Our business partners and they believe two thirds or so is a good number for this year.
Speaker 3: Got it. Now, that's very helpful, Colin. I certainly hope that we're back in person next year, but, you know, maybe a sort of similar question on the top line for final mile. Looks like growth is kind of leveling out there. I'm wondering if that's more of a function of underlying demand trends in that business. You know, maybe people, you know, bought all the fridges they need, or is that more due to, you know, some of the supply chain congestion coming into the West Coast ports?
Got it now that's very helpful color and I certainly hope that we're back in person next year.
And sort of similar question on the topline for final mile. It looks like growth is kind of leveling out there I'm wondering if that's more of a function of underlying demand trends in that business, maybe people bought all the fridges they need or is that more due to some of the supply chain congestion coming into the west coast ports.
Speaker 2: I actually think it's mostly, between those two, it's probably the former more than the latter. The concession has been going on for quite a while, and still the numbers were pretty crazy for most of last year. I do think, when you talk about...
I actually think it's mostly the mix between those two it's probably the former more than the latter the congestion has been going on for quite a while.
And still the numbers were pretty crazy for the board for most of last year.
I do think when you're talking about.
Speaker 2: a home-based economy versus an events-based economy. The last 18 months, very much for many people in our lives, was a home-based economy, not an events-based economy.
Our home based economy versus an event based economy. The last 18 months very much for many people in our lives north of home based economy, not an event based economy and I think <unk> you start seeing that goes back to the conversation. We just had you see some of that turning.
Speaker 2: And I think you start seeing, that goes back to the conversation we just had, you see some of that turning. And yes, the way you put it is probably quite accurate, there's only so many fridges you can buy.
And that's the way you put it is probably probably quite accurate. There is only so many fridges you can buy and at some point you've got them. So we see some of that happening is having said that goes back to what I said in my opening remarks.
Speaker 2: and at some point you got them. So we see some of that happening. Having said that, it goes back to what I said in my opening remark.
Speaker 2: If there's no size of pie game to be won, then let's win a slice of pie game. As long as we are at the top of the scorecard.
If theres no size of pie game to be one then let's win a slice of pie game.
As long as we are at the top of the scorecards with some of the best retailers in the world.
Speaker 2: with some of the best retailers in the world, we should be getting more market shares and more awards for more markets for them. Specifically, Home Depot just awarded us with the Appliance Business Partner of the Year
Should be getting more market shares and more award more awards for more markets for them, specifically home depot, just awarded US with the appliance business partner of the year and as a consequence of that we actually won two additional markets with Richmond, and Memphis and dose I'll, probably not the last one is coming our way so yes.
Speaker 2: And as a consequence of that, we actually won two additional markets with Richmond and Memphis.
Speaker 2: and those are probably not the last ones coming our way. So yes, this is leveling off in terms of size of pie or growth of pie.
This is leveling off in terms of size of pie or growth of Pi.
Speaker 2: And then we are going to win a slice of pie game by just being the best partner in support of those retailers.
And then got it.
A slice of pie game by just being the best partner in support of those retailers.
Speaker 1: Okay, terrific. And then maybe just one last one here. You know, if you think about the fleet and how that develops over the course of the years, what are your expectations there as far as, you know, outside power versus your owner operators?
Okay terrific and then maybe just one last one here as you think about the fleet and how that develops over the course of the years what are your expectations there as far as.
Outside power versus your owner operators.
Speaker 2: Yeah, so last year was a difficult one. I once heard Bruce and I probably, I mean, from just talking to many of our competitors and peers.
Yeah. So last year was a difficult one I once heard Bruce and that probably I mean from just talking to many of our competitors and peers.
Speaker 2: It's probably a good stat. Of the top 100 ground transportation companies in the U.S., 98 of those 100, the fleet actually shrank. The number of trucks that they actually had seated shrank last year. We were one of those 98. Our fleet went down. Now we're doing a tremendous effort.
It's probably a good stat off the top 100 transportation ground transportation companies in.
In the U S 98 of those 100, the fleet actually shrank the number of trucks that they actually had ceded shrank last year. We were one of those 98, our fleet went down.
Now we are doing a tremendous effort.
Speaker 2: to really make Forward Air a great professional home for those independent contractors. I said many times before, we do driver engagement surveys, we listen to them. We know how predictable home times are super important to them. We give our drivers an app where they can run their business, go for the next load, make sure they understand how much revenue they made, push a button at the end of the year so that actually tax support material gets generated.
To really make.
Forward Air.
Great professional home for those independent contractors I said many times before we do driver engagement surveys, we listened to them.
No how predictable home times are super important to them, we give to our diverse and app, where they can run their business Gulfport next load make sure. They understand how much revenue that may push a button at the end of the year, so that actually tax materials.
Tech support material that gets generated.
Speaker 2: And when they apply for a home weekend because their grandchild turns five, we're going to do everything possible to make sure that they're home for that weekend. And they appreciate that. The driver board, which is 12 seat owners and drivers representing the thousands of them, blast out those types of actions we take in support of them to the rest of the driver community. So that's why our retention rates are probably about twice as good as the industry average.
They apply for a home a home weekend because deck ranch all turns five we're going to do everything possible to make sure that their home for that weekend and David. They appreciate that the driver board, which is 12 heat illness and drivers representing thousands of them.
Last out those types of actions we've taken in support of them through the rest of the driver community. So that's why our retention rates I'll, probably about twice as good as the industry average and I do see us reversing the trend that we had last year. We're only six weeks as I've mentioned before we are kind of little.
Speaker 2: And I do see us reversing the trend that we had last year. We're only six weeks, as mentioned before, we are kind of.
Speaker 2: bit more than 1 24th into the forward 23 journey. We're only six weeks into 2022. But Kyle mentioned and the HR team working with the ops team and safety team have done a tremendous job and we are actually growing our fleet. Our fleet right now has about 50 seated trucks more than we started and I believe 2022 will be a
A little bit more than one vault into the forward 2000 <unk> journey.
We're only six weeks into 2022.
Carl mentioned.
<unk> HR team working with the ops team and safety team have done a tremendous job and we are actually growing our fleet our fleet right now.
About 50 seated trucks more than we started the year with.
I believe 2022 will be a year off the operator.
Speaker 2: year of the operator as our COO Chris Ruppel said, but it will also be a year of a growing fleet for Forward Air.
Your Crystal ball say expanded relatively a year of a growing fleet for forward air.
Okay, great well. Thank you I appreciate the color as always.
Speaker 2: I was incomplete in my answer, the last part you were talking to. So as a consequence of what I just said, it's going to be a year of a growing fleet. I do expect the outside miles as a percentage of total miles to come down from the 20s to probably the high teens. So we're making our way down again below a 20% number. Perfect. Even better.
Oh, sorry.
I was incomplete and my answer the last part you were talking to.
So as a consequence of what I, just said, it's going to be a year of a growing fleet I do expect the outside miles as a percentage of total miles to come down from the 22, probably to low to high teens. So we've been making all way down again, it would be below a 20% number.
Perfect using better.
And our next question comes from the line of basketball majors with Susquehanna. Please go ahead.
Speaker 6: Yeah, Tom, could you talk a little bit about the cleansing and the sales incentives you had to drive that, and as we look forward, how you're changing your sales incentives to drive the outcomes you're looking for over the next two to three years?
Yes.
Tom could you talk a little bit about the cleansing.
The sales incentives to drive that.
And as we look forward, how you're changing your sales incentives to drive the outcomes you're looking for over the next two to three years.
Speaker 2: Yeah. So, Bascom, first of all, welcome to our team and to our great group of thought partners. So, I mean, this is where we operate as one. It's also one of our leadership imperatives, as is We Don't Wait. The sales team did something last year that was tremendously tough to do. They basically were compensated on the incentive side with revenue attainment, and they consciously drove revenue away.
Yeah, So bascom first of all welcome to our.
Our team and to our Great group of thought partners.
So I mean, this is where we operate as one and it's also one of our leadership imperatives. As is we don't wait the sales team did something last year that was tremendously tough to do they basically.
Compensated on the incentive side.
With revenue attainment and consciously drove revenue away. So this is.
Speaker 2: So this is hats off to all of them for doing the right thing. I mean, Lance Small, the whole team did a tremendous job basically doing the right thing for the company and at the same time, basically getting revenue off of their books that they otherwise would be compensated for.
Hats off to all of them for doing the right thing I mean land small the whole team did a tremendous job basically doing the right thing for the company and at the same time basically getting revenue off of their books that they otherwise would be compensated for.
Speaker 2: Now, fortunately, Scott Schara and the team actually have done a tremendous job over the last year designing a Salesforce compensation system, which we implemented this year. So it's actually active now.
Now Fortunately Scott.
Scott Your IRA and the team actually have done a tremendous job over the last year designing a salesforce compensation system, which we implemented this year. So it is actually active now.
Speaker 2: that rewards sales professionals not only for revenue growth, but also for the profitability of that revenue. This is not rocket science, but it's something that we had to do, and I think we feel very, very strongly about doing, which is...
To reward sales professionals not only for revenue growth, but also for the profitability of that revenue. This is not rocket science, but it's something that.
We had to do and I think we feel very strongly about doing which is.
Speaker 2: uh... incentivizing sales professionals by the profitability of their book of business not just by the size of their book of business
Incentivizing sales professionals by the profitability of their book of business not just by the size of their book of business.
Speaker 2: So, in that sense, what they did last year actually would be a good thing and they would actually be compensated for driving some of the inefficient freight out of the system and getting more efficient high-value dense freight into the system. So that's aligning the operating model in support of our customers.
So in that sense, what they did last year actually.
It would be a good thing and they would actually be compensated for driving some of the inefficient freight out of the system and getting more efficient high value dense freight into the system. So that's aligning the operating model in support of our customers with the way, we incent sales professionals now in place.
Speaker 2: with the way we incent sales professionals now in place.
Speaker 2: And, again, hats off to the sales team that they actually did the right thing even when the incentive system was not aligned yet last year. Now, fortunately, them doing the right thing and incentive to do so are aligned.
And again hats off to the sales team that they actually did the right thing even when the incentive system was not aligned yet last year now Fortunately them doing the right thing and incentive to do so are aligned.
So the Providence, which just started Jan one.
Yeah.
Speaker 2: For the variable sales compensation, yes. Now, just to be also very clear, we have individual objectives across all of our, every single frontline individual as well as.
Florida sales compensation.
Sales to variable sales compensation, yes now.
Has to be also very clear.
Individual objectives across all of our every single frontline individual as well as Rebecca on media in the room and most of our individual objectives.
Speaker 2: Rebecca and me here in the room, and most of our individual objectives and incentive compensation as a company, and as individuals in that company are obviously tied to the profitability of what we do. The variable component of the Salesforce compensation, specifically only as of January this year, started having a profitability dimension.
Incentive compensation as a company and as individuals in that company up obviously tied to the profitability of what we do the variable component of the sales force compensation, specifically only as of January this year started having.
Our profitability.
I mentioned to it.
Okay.
Speaker 6: You know, thank you for that, and combining it with your other comments about maybe starting to hit capacity in parts of your network in the second half of this year, you know, when you've freed up 15 to 20 percent of the network by seeking denser freight, is that comment intended to say that, you know, 15 percent more shipments can be in the network in six to nine months? Or is that more about certain points in the network that will reach capacity before the
Thank you for that and combining it with your other comments about maybe starting to hit capacity in parts of your network in the second half of this year when you freed up 15% to 20% of the network by by seeking denser freight.
Is that comment intended to say that.
<unk> more shipments can be in the network in six to nine months or is that more about certain points in the network that will reach capacity before the network does yes.
Speaker 2: Yeah, it's a basket. It's a ladder. I mean, like when when we when we were hitting the wall, so to speak, love in spring of last year in we were hitting the wall of capacity in some of our major terminals and some of our hubs.
Basketball, it's the latter I mean like when when we when we were hitting the wall. So to speak lie in spring of last year, we were hitting the wall of capacity in some of our major terminals in some of our hubs and that's where.
Speaker 2: And that's where, and we do need those hubs, the way we efficiently route our shipments. And so for some of those places, we're going to be at that point again in the second half of this year. So about 15 months later, with some of the growth that we are driving, we will, despite the cleansing, get in some of the hubs to the same capacity constraint points that we were about a year ago.
And we do need those hubs.
We efficiently route our our shipments and so forth some of those places we're going to be at that point again in the second half of this year. So about 15 months later with some of the growth that we're driving we will despite the cleansing get in some of the hubs to the same capacity constraint points that we were.
About a year ago.
Speaker 2: So it's less of a complete network topic, it's more of an individual hub topic.
So it's less of a complete network topic, it's more of a individual hop topic remember when we last year did a project called E. Coli. We did look at the efficiency of routing and we want to make very certain that we don't let.
Speaker 2: Remember, when we last year did a project called Eagle Eye, we did look at the efficiency of routing, and we want to make very certain that we don't let constraints in our terminals drive us towards inefficient routing. We did a good job between the operations team and with all the environment support externally.
Strains in our terminals.
Drive us towards inefficient routing, we did a good job between the operations team and with Oliver Wyman support externally to really validate what the top three most efficient.
Speaker 2: to really validate what the top three most efficient routing lanes are for specific shipments, and we want to make sure every single shipment we actually have in our system.
Routing routing lanes are for specific shipments and we want to make sure every single shipment we actually.
Happening our system is at least on the podium of top three most efficient routing guidelines.
Speaker 2: is at least on the podium of top three most efficient routing guidelines.
Speaker 6: Last one from me, you made some comments earlier about seasonality smoothing a bit with the free cleansing. Certainly there are some people looking at your historic seasonality and trying to extrapolate one cue out to something in the, call it $6 implied range for the year. Can you talk about where you get excited about that kind of opportunity and where we might be getting ahead of ourselves?
Last one for me you made some comments earlier about seasonality smoothing a bit with the FERC cleansing.
There are some people looking at your historic seasonality and trying to extrapolate <unk>, if there's something in the call it $6 implied range for the year.
Can you talk about where you get excited about that kind of opportunity and where we might be getting ahead of ourselves.
Speaker 2: So, Pascal, I think that's a bit tied to what we had this exchange a little bit before.
So basketball I think that's a bit tied to what we.
We had this exchange a little bit before.
Speaker 2: I mean, I could do math off of one month and multiply it by 12 for 2022, or multiply it by 24 for 23. I just believe it's more responsible to do these multiplications off of three or four months for a year versus off of one month. We do see significant upside based on what we had in one month, but again,
I could do math off of one month in 2000 and multiply it by 12 for 2022 O multiply by 24 423, I just believe its more responsible.
To do this now.
Implications off of three or four months four year versus off of one month, we do see significant upside based on what we had in one month, but again.
Speaker 2: The 630 destination is a 2023 destination, and we're 124th into that journey. So far, we like what we see. And I mean, you can run those types of math exercises, Pascal, you just ran. I just frankly would rather our team excel, do the job that we are capable of doing, and revisit those goals a few months in versus one month in. Thank you, Tom. Good to be here. Glad to have you.
630 destination is a 2023 destination and we have 120 falls into that journey. So far we like what we see and I mean, you can run those types of Mad exercises basketball as Ryan Icos, frankly would rather our team excel to do their job that we are capable of doing.
And revisit those goals with a few months in versus one month in.
Thank you Tom good to be here.
That'll have you. Thank you.
And at this time there are no further questions in queue.
Well thank you.
And ladies and gentlemen that concludes forward Air's fourth quarter 2021 earnings Conference call. Please remember that this webcast will be available on the Investor Relations section of <unk>.
Speaker 1: And ladies and gentlemen, that concludes Forward Air's fourth quarter 2021 earnings conference call. Please remember that this webcast will be available on the Investor Relations.
Speaker 1: Forward Air's website at www.forwardaircorp.com shortly after.
<unk> Air's website at Www Dot forward Air Corp, Dot com shortly after this call.
You may now disconnect.
Yeah.