Q1 2024 Forward Air Corp Earnings Call
Okay.
Operator: Welcome to the Forward Air First Quarter 2024 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2, so others can hear your questions clearly.
Welcome to the forward Air first quarter 2024 earnings conference call. At this time, all participants have been placed in a listen only mode and the floor will be open for your questions. Following the presentation.
Operator: Who'd like to ask a question at that time. Please press star one on your telephone keypad.
Operator: The point. Your question has been answered you may remove yourself from the queue type prescient started too.
Operator: So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.
Operator: We ask that you pick up your handset for best sound quality. Lastly, if you should require any operator assistance, please press star and zero. I would now like to turn the call over to Michael Hance, Chief Legal Officer.
Operator: Lastly, if you should require any operator assistance please press star zero.
Operator: I would now like to turn the call over to Michael Haines, Chief Legal officer.
Michael L. Hance: Good morning and thank you, Operator, and thank you everyone for joining the call today. Before we jump in, I just wanted to take a moment to thank our teammates, customers, and shareholders, many of whom are on the call today, for the incredible support over the last several months as I served as interim CEO. In particular, I want to acknowledge the employees, independent contractors, and drivers who have been and continue to work tirelessly to provide best-in-class service to our customers and make this combination that we're working on a success. I'm humbled by what you do, and I am so grateful for your hard work. Thank you.
Michael L. Hance: Good morning, and thank you operator, and thanks to everyone for joining the call today.
Michael L. Hance: Before we jump in I, just wanted to take a moment to thank our teammates customers and shareholders. Many of whom are on the call today for the incredible support over the last several months is that served as interim CEO in particular I want to acknowledge the employees and independent contractors and drivers who have been and continue to work tirelessly.
Michael L. Hance: Lee to provide best in class service to our customers and make this combination that we're working on our success.
Michael L. Hance: I'm humbled by what you do and I am so grateful for your hard work.
Speaker Change: Thank you.
Michael L. Hance: Last quarter, I told you that my mandate as interim CEO was to provide the appropriate leadership while our teams continued to work through the integration of Forward and Omni. At the same time, our board's dedicated search committee was focused on promptly identifying a top quality CEO to run the company during the next phase of our growth and development. That work is done, and I personally couldn't be more pleased with the outcome.
Michael L. Hance: Last quarter I told you that my mandate as interim CEO was to provide the appropriate leadership, while our teams continued to work through the integration of afford it omni at the same time, our board's dedicated search committee was focused on promptly identifying a top quality CEO to run the company during the next phase of our growth and development.
Michael L. Hance: That work is done and I personally couldn't be more pleased with the outcome.
Michael L. Hance: I'm thrilled to introduce you to Sean Stewart, who began his tenure as CEO of Forward on April 28th. The board and our advisors conducted a thorough search and are confident Sean is the right leader to drive Forward's future success. He knows this industry inside and out and has a demonstrated track record of successfully delivering growth, operational excellence, and profitability. As an 18-year veteran of Ford who cares deeply about the company's success, I'm personally committed to ensuring Sean hits the ground running as I return to my role as Chief Legal Officer and Secretary.
Michael L. Hance: I'm thrilled to introduce you to Sean Stewart, who began his tenure as CEO of Ford on April 28.
Michael L. Hance: The board and our advisors conducted a thorough search and are confident Sean is the right leader to drive forwards future success. He knows the industry inside and out and has a demonstrated track record of successfully delivering growth operational excellence and profitability.
Michael L. Hance: As an 18 year veteran of forward, who cares deeply about the company's success I'm personally committed to ensuring shone hits the ground running as I returned to my role as Chief Legal Officer, and Secretary and I know all of our teammates share that same commitment.
Michael L. Hance: And I know all of our teammates share that same commitment. I'll close by reiterating that we recognize these past few months have been bumpy as we navigate turbulence in the freight market and within our company. Our team is confident that this is behind us, and we are all united and energized by the opportunities ahead. With that, please allow me to turn it over to Sean for his remarks before Rebecca runs us through the numbers. Thank you, Michael.
Sean: I'll close by reiterating that we recognize these fast that past few months have been bumpy as we navigate a turbulent in the freight market and within our company.
Sean: Our team is confident that is behind us and we are all United and energized by the opportunities ahead.
Michael L. Hance: With that please allow me to turn it over to Sean for his remarks before Rebecca runs us through the numbers shot.
Shawn Stewart: Thank you, Michael, and thank you to those on the call who have provided a warm welcome and words of encouragement as I assume my new role a week from Monday. I won't go into more details about my background, as I'm sure you've all seen the press release.
Sean: Thank you Michael and thank you to those on the call who have provided a warm welcome and words of encouragement as I assume my new role a week ago Monday.
Sean: I won't go into more details about my background is I'm sure you've all seen the press release, but let me just say that I couldnt be more excited to join Ford at this critical juncture.
Shawn Stewart: But let me just say that I couldn't be more excited to join Forward at this critical juncture. The addition of Omni paves the way for the company to become a market leader in the global supply chain as we leverage the new capabilities while enhancing our best-in-class expedited LTL and other ground services. I'm going to pass the call to Rebecca in a moment to provide you with details about our financial results. Given that I've been here less than two weeks, I'm not going to speak too much except to say that these results are not indicative of what you will see from us the rest of the year.
Rebecca: The addition of harmony paves the way for the company to become a market leader in global supply chain as we leverage the new capabilities, while enhancing our best in class expedited LCL and other ground services.
Rebecca: I'm going to pass the call to rebekka in a moment to provide you with details about our financial results.
Rebecca: Given that I've been here less than two weeks I'm not going to speak too much except to say that these results are not indicative of what you will see from us the rest of the year.
Shawn Stewart: We are headed up and onward from this day. I also want to share my view about the context of the company's Q1 performance, which I think is important to keep in mind. Our first quarter results were negatively impacted by two really tough headwinds. First, these results were generated in a weak freight environment. Second, I'm convinced that these results reflect the impact of the distraction of the challenging circumstances leading up to the closing of the Omni transaction. I wasn't here.
Rebecca: We are headed up and onward from this day.
Shawn Stewart: I also want to share my view about the context of the company's Q1 performance, which I think is important to keep in mind.
Shawn Stewart: Our first quarter results were negatively impacted by two really tough headwinds first these results were generated in a weak freight environment.
Shawn Stewart: Second I'm convinced that these results reflect the impact of the distraction by the challenging circumstances, leading up to the closing of the omni transaction I wasn't here, but you don't have to ride a roller coaster to know that people riding the rollercoaster, probably arent focused on much else.
Shawn Stewart: But you don't have to ride a roller coaster to know that people riding the roller coaster probably aren't focused on much else. Since closing, Michael and the team have done a great job pushing forward with integrating two companies and capturing synergies, which you will hear more about later. But I think it's really unrealistic to think that the ups and downs of the months leading up to closing aren't reflected in our Q1 performance. Thankfully, that distraction is behind us now.
Shawn Stewart: Since closing Michael and the team have done a great job pushing forward with integrating two companies and capturing synergies, which you will hear more about later.
Shawn Stewart: But I think it's really unrealistic to think that the ups and downs of the months leading to closing aren't reflected in our Q1 performance.
Shawn Stewart: Thankfully that distraction is behind us now.
Shawn Stewart: As I mentioned, it is premature for me to start talking about forward numbers, but today I want to commit to two things. First, as I said earlier, we are headed up from here. When we are back on this call at the end of the second quarter, I believe we will be talking about different results that show significant improvement. I need a little bit more time before we are ready to give you targets, but I can tell you that in my first days with the team, we are focused on accelerating synergy capture and identifying opportunities to eliminate significant costs from our structure.
Shawn Stewart: As I mentioned it is premature for me to start talking about force numbers, but today I want to commit to two things first as I said earlier, we are headed up from here.
Shawn Stewart: When we are back on this call at the end of the second quarter I believe we will be talking about different results that showed significant improvement.
Shawn Stewart: I need a little bit more time before we were ready to give you targets, but I can tell you that in my first days with the team. We are focused on accelerating synergy capture and identifying opportunities to eliminate significant costs from our structure.
Shawn Stewart: We are going to aggressively and urgently address our profitability issues, and I fully expect us to be a category leader in our space with corresponding financial results. Second, we are going to enhance our investor communications to ensure that we are clear, transparent, and comprehensive with our data and communications. You should expect to see steady improvement in information flow over the next couple of quarters, providing you with the financial information that you need and want.
Shawn Stewart: We are going to aggressively and urgently address our profitability issues and I fully expect us to be a category leader in our space with corresponding financial results.
Shawn Stewart: We are going to enhance our investor communications to ensure that we are clear transparent and comprehensive with our data and communication you should expect to see steady improvement and information flow over the next couple of quarters, providing you with the financial information that you need and want.
Shawn Stewart: Starting with our second quarter earnings release, we will provide full year 2024 guidance and information about our path to achievement. Why am I confident about these commitments? Because I did my own diligence before accepting this forward opportunity.
Shawn Stewart: Starting with our second quarter earnings release, we will provide full year 2020 for guidance and information about our path to achievement.
Shawn Stewart: Why am I confident about these commitments because I did my own diligence before accepting the Florida opportunity and I found a number of things that I liked and I'm excited about first this organization has made a great people. During these first two weeks on the job I've been impressed with the quality and.
Shawn Stewart: And I found a number of things that I liked and I'm excited about. First, this organization is made up of great people. During these first two weeks on the job, I've been impressed with the quality and dedication of people I've met throughout the legacy Forward and Omni businesses. And I've been pleased to find that these businesses share a common DNA for providing excellent customer service. That will not change, and the quality and commitment of our people will serve as a strong foundation for our growth. Second, I can't stress this enough.
Shawn Stewart: <unk> of people I've met throughout the legacy forward in omni business and I've been pleased to find that these businesses share a common DNA are providing excellent customer service.
Shawn Stewart: That will not change in the quality and commitment of our people will serve as a strong foundation for our growth second I can't stress. This enough as a result of this combination forward now has an incredible and unique platform for long term growth and success and its current areas of underperform.
Shawn Stewart: As a result of this combination, Forward now has an incredible and unique platform for long-term growth and success, and its current areas of underperformance are very addressable. Let's talk about that platform.
Shawn Stewart: <unk> are very addressable.
Shawn Stewart: Let's talk about the platform.
Shawn Stewart: In OmniLegacy, we now have a true global supply chain network to add to our core LTL network. Remember, we run the best-in-class premium service LTL network in the U.S. With an on-time percentage of 98.6% and a Cargo Claims Ratio of 0.04%, we are starting to see the power of the revenue synergies of these assets. Because of our combined capabilities, we were recently awarded a substantial volume of business from a Fortune 500 global technology company. We are finalizing the contract now, and we expect the business to start in June.
Shawn Stewart: On the legacy business, we now have a true global supply chain network to add to our core LCL network ring.
Shawn Stewart: Remember we run the best in class premium service LPL network in the U S with the on time percentage of 98.6, and our cargo claims ratio of <unk>.
Shawn Stewart: Zero, 4%.
Shawn Stewart: We are starting to see the power of the revenue synergies of these assets because of our combined capabilities. We were recently awarded a substantial volume of business from a fortune 500 Global Technology company. We are finalizing the contract now and we expect the business to start in June we have.
Shawn Stewart: We have similar opportunities in the advanced stages of our sales pipeline. Additionally, we continue to gain new business wins from existing customers. As an example, we recently renewed a contract with one of our top 20 legacy Ford customers that will generate annualized revenue four times its historical trend. Additionally, in a tough freight environment, our intermodal team added 13 new logos in the first quarter. All this makes me optimistic about the rest of the year.
Shawn Stewart: Similar opportunities in the advanced stages of our sales pipeline.
Shawn Stewart: Also we continued to gain new business wins from existing customers. As an example, we recently renewed a contract with one of our top 20 legacy for customers that will generate an annualized revenue four times its just historical trends.
Shawn Stewart: Additionally, in a tough rate environment, our intermodal team added 13, new logos in the first quarter.
Shawn Stewart: All of this makes me optimistic about the rest of the year.
Shawn Stewart: Another point of strength is our broad and attractive customer base spanning our three distinct commercial channels. Let me pause to say thank you to all of our customers for your business and support. Under my leadership, we plan to drive growth in all three channels, but I want to be clear. We remain committed to our legacy Ford customers, including freight forwarders, airlines, and 3PLs. We are committed to continuing to provide them with our premium LTL services to enable them to grow their business.
Shawn Stewart: Another point of strength.
Shawn Stewart: Is our broad and attractive customer base spanning our three distinct commercial channels, let me pause to say thank you. So all of our customers for your business and support.
Shawn Stewart: Under my leadership, we plan to drive growth in all three channels, but I want to be clear, we remain committed to our legacy Ford customers, including freight Forwarders Airlines and three Pls, we are committed to continuing to provide them with our premium LCL services too.
Shawn Stewart: Enable them to grow their business.
Shawn Stewart: We have honored that commitment since closing, and we will continue to provide these key customers with that same great service. In my diligence review, I found that Omni has a strong track record with its customers and does a great job of providing them with solutions around the world. I'll name one.
Shawn Stewart: We have honored that commitment since closing and we will continue to provide these key customers with that same great service.
Shawn Stewart: In my diligence review I've found that omni has a strong track record with its customers and does a great job of providing them with solutions around the world all named one.
Shawn Stewart: Omni provides critical value-added warehouse services for NVIDIA. We are honored by the trust placed on us by customers like NVIDIA. In my view, there is much to be excited about at Forward. Those are my initial high-level thoughts, and I naturally will provide more detailed comments on next quarter's call. Right now, addressing business and financial performance will be the focus of all my energy and time. Rebecca will update you on some progress made so far this year, and I look forward to providing additional updates soon as we make even more headway.
Shawn Stewart: <unk> provides critical value added warehouse services for Namibia, we are honored by the trust placed on us by customers like Namibia and.
Shawn Stewart: In my view there is much to be excited about it forward.
Shawn Stewart: Those are my initial high level thoughts and I naturally will provide more detailed comments on next quarter's call right now addressing the business and financial performance will be the focus of all of my energy and time.
Shawn Stewart: Rebecca will update you on some progress made so far this year and I look forward to providing additional updates soon as we make even more headway.
Shawn Stewart: Hopefully, the slides we filed along with the press release demonstrate our renewed commitment to providing enhanced disclosure of our performance and integration of Omni. With that, let me turn it over to Rebecca to run through the quarter and provide an update on the Omni integration. Rebecca. Thanks, John.
Shawn Stewart: Hopefully the slides, we filed along with the press release demonstrate our renewed commitment to providing enhanced disclosure of our performance and integration of omni.
Shawn Stewart: With that let me turn it over to Rebecca to run through the quarter and provide an update on the omni integration Rebecca.
Rebecca J. Garbrick: Let's start by reviewing the force kernel results for 2024. I'm not going to read through slide by slide, but we'll reference certain slides by number when helpful. Before I dive into the numbers, I want to reiterate a point that Sean made in his remark. We do not believe that our first quarter results are indicative of what we expect for the remainder of 2024. Those numbers don't tell the full story about the potential earnings power of the combined company. Let me highlight a few of the reasons why, some of which Sean has already touched on. First,
Rebecca J. Garbrick: Thanks, John. And good morning, everyone.
Rebecca: Thanks, Sean and good morning, everyone.
Rebecca J. Garbrick: Let's start by reviewing the first quarter results for 2024, I'm not going to read Crazy slide by slide, but we'll reference certain slides by number one helpful.
Speaker Change: Before I dive into the numbers I want to reiterate a point that Sean made in his remarks, we do not believe that our first quarter results are indicative of what we expect for the remainder of 2024 those numbers don't tell the full story about the potential earnings power of the combined company. Let me highlight a few of the reasons why some of which John has.
Speaker Change: Already touched on first the first quarter is always the slowest quarter that'd be ear for business based on historical seasonal trend.
Rebecca J. Garbrick: The first quarter is always the slowest quarter of the year for business based on historical seasonal trends. Additionally, these results continue to be impacted by challenging market conditions that persisted throughout the quarter, particularly in the intermodal, truckload brokerage, and omni lines of business. These challenging market conditions led to decreased customer demand for those services, a pattern that we have seen since the second quarter of the prior year.
Rebecca J. Garbrick: These results continue to be impacted by challenging market conditions that persisted throughout the quarter, particularly in the intermodal truckload brokerage and omni lines of business that the challenging market conditions led to decreased customer demand for this service in a pattern that we have seen since the second quarter of the prior year.
Rebecca J. Garbrick: As we continue to execute our revenue growth strategies in the first quarter, we saw positive trends in our less-than-truckload business, with weight-first shipment growth of 7.4 percent and shipments-per-day growth of 1.4 percent over the same period last year. We have experienced solid retention levels with our legacy Ford customers, which has been positive for revenue growth. During the first quarter, we also saw a 0.7% increase in our revenue per shipment excluding fuel and a 6.2% decrease in revenue per hundred weight excluding fuel over the prior year period.
Rebecca J. Garbrick: We continue to execute our revenue growth strategies in the first quarter, we saw positive trends in our less than truckload business with weight per shipment growth of seven 4% in shipments per day growth of one 4% over the same period last year, we have experienced solid retention levels with our legacy customers, which has been positive.
Rebecca J. Garbrick: For revenue growth.
Rebecca J. Garbrick: During the first quarter. We also saw a 0.7 increase in our revenue per shipment, excluding fuel and a six 2% decrease in our revenue per hundred weight, excluding fuel over the prior year period. The decline in our revenue per hundredweight, excluding fuel was driven primarily by the shift in the in the business mix as we execute on the expansion of our door to door.
Rebecca J. Garbrick: The decline in revenue per hundred weight excluding fuel was driven primarily by the shift in the business mix as we execute on the expansion of our door-to-door solution. Finally, our Q1 results reflect minimal synergy impact, and we expect to see a steady increase in the subsequent quarters until the synergies are fully realized by the end of 2025. From a liquidity standpoint, at the end of March, we had a $340 million capacity on a revolver and $172 million of cash on hand. We are taking all actions to improve liquidity, and we do not foresee the need to draw on the revolver.
Rebecca J. Garbrick: Lisa.
Rebecca J. Garbrick: Finally, our Q1 results reflect minimal synergy impact we expect to see a steady increase in the subsequent quarters until the synergies are fully realized by the end of 2025.
Rebecca J. Garbrick: From a liquidity standpoint at the end of March we had a 340 million capacity on our revolver.
Rebecca J. Garbrick: $172 million of cash on hand.
Rebecca J. Garbrick: Taking all actions to improve liquidity and we do not foresee the need to draw on the revolver. We look forward to sharing more details about our path to deleveraging in the context of our 2020 for full year guidance during our second quarter earnings call.
Rebecca J. Garbrick: We look forward to sharing more details about our path to deleveraging in the context of our 2024 full-year guidance during our second quarter earnings call. Before we look at the numbers, I want to point out that the Omni results are reflected in our first quarter results from the closing of the acquisition, that would be January 25th through the end of the quarter.
Rebecca J. Garbrick: Before we look at the numbers I want to point out that the only result are reflected in our first quarter results from the closing of the acquisition that would be January 25th do they ended the quarter.
Rebecca J. Garbrick: Our first quarter revenue was $542 million, an increase of 52% for $184 million as compared to the first quarter of the prior year. This increase of $184 million over the prior year period was driven by $225 million of revenue generated by our OMRI segment and $4 million of incremental revenue generated by our expedited freight segment, partially offset by an incremental decline of $32 million from our intermodal segment. Our adjusted EBITDA was $29 million, a decline of 51% or $30 million as compared to the first quarter of the prior year.
Rebecca J. Garbrick: Our first quarter revenue was 542 million, an increase of 52% or 184 million as compared to the first quarter in the prior year. This increase of $184 million over the prior year period was driven by 225 million of revenues generated by our omni segment.
Rebecca J. Garbrick: And 4 million of incremental revenue generated by our expedited freight segment, partially offset by an incremental decline of $32 million from our intermodal segment.
Rebecca J. Garbrick: This decrease of $30 million was driven by an adjusted EBITDA loss in the augmented segment of $6 million, an incremental EBITDA loss of $7 million in our expedited freight segment, an incremental EBITDA loss of $8 million in our intermodal segment, and an incremental EBITDA loss of $9 million in other operations. For other operations, in the first quarter of 2023, we recorded a one-time benefit of $9 million from the substantial reversal of an accrual from an incentive plan established for employees in 2021. A similar benefit was not recorded in the first quarter of 2024.
Rebecca J. Garbrick: Our adjusted EBITDA was 29 million a decline of 51% or 30 million, that's compared to the first quarter in the prior year. This decrease of $30 million was driven by an adjusted EBITDA loss in the RV segment of 6 million in incremental EBITDA loss of 7 million and our expedited freight segment and incremental.
Rebecca J. Garbrick: EBITDA loss of $8 million in our intermodal segment and incremental EBITDA loss of 9 million and other operation.
Rebecca J. Garbrick: For other operations in the first quarter of 2023 we recorded a one time bad instead of $9 million from the substantial reversal of an accrual from an incentive plan established for employees in 2020. One it's similar benefit was not reported in the first quarter of 2024.
Rebecca J. Garbrick: We saw adjusted operating income of $13 million, excluding acquisition amortization, compared to $47 million in the prior year. Acquisition amortization is the amortization related to the allocation of the purchase price of OMMI to intangible assets. We reported an adjusted net loss for diluted share on a continuing operations basis, excluding acquisition amortization of $0.64 compared to net income for diluted share on a continuing operation basis of $1.27 in the prior year. Operating cash flows for the first quarter were negative $52 million compared to a positive $61 million for the prior year period.
Rebecca J. Garbrick: We saw adjusted operating income of $13 million, excluding acquisition amortization compared to 47 million in the prior year.
Rebecca J. Garbrick: With this in amortization is the amortization related to the allocation of the purchase price of a me too and Haynesville asset.
Rebecca J. Garbrick: We reported adjusted net loss per diluted share on a continuing operations basis, excluding acquisition amortization of 64 cents compared to net income per diluted share on a continuing operation basis of $1 27 in the prior year.
Rebecca J. Garbrick: Our operating cash flows for the first quarter with a negative 52 million compared to a positive 61 million for the prior year period.
Rebecca J. Garbrick: Our operating cash flow for the first quarter included the payment of transaction and integration costs of $40 million. We consider the payment of transaction and integration costs to be one-time only costs that are not expected to reoccur in the second half of the year. We project our liquidity to be at a lower point in the first half of the year as a result of these one-time only costs. Looking ahead to April, our shipments per day increased approximately 4%, and our revenue per shipment excluding fuel increased 2% over the same period last year in our less than truckload line of business.
Rebecca J. Garbrick: Our operating cash flow for the first quarter included the payment of transaction and integration cost of 40 million, we consider the payment of transaction and integration cost to be one time only costs that are not expected to reoccur in the second half of the year.
Rebecca J. Garbrick: We protect our liquidity to be at a lower point in the first half of the year as a result of the want to these one time only costs.
Rebecca J. Garbrick: Looking ahead to April our shipments per day increased approximately 4% and our revenue per shipment excluding fuel increased 2% over the same period last year and our luxury chocolate Atlanta business. Additionally, in a consolidated basis. Our revenue grew sequentially from March to April by 6% a period that.
Rebecca J. Garbrick: Additionally, on a consolidated basis, our revenue grew sequentially from March to April by 6%, a period that historically has shown contraction versus growth based on seasonality. The 5.9 general rate increase we announced in December went into effect in February and will enable us to continue to serve our customers with the same precision execution in an environment with rising operating costs. The capture rate was higher than 2022, and the rate increase is comparable with the increase in operating costs expected for 2024.
Rebecca J. Garbrick: Eric lease shouldn't contraction versus grows based on seasonality.
Rebecca J. Garbrick: The 5.9 general rate increase we announced in December went into effect in February and will enable us to continue to serve our customers with the same precision execution in an environment with rising operating costs.
Rebecca J. Garbrick: The rate was higher than 2022, and the rate increase is comparable with the increase in the operating costs expected for 2020 four.
Rebecca J. Garbrick: Now, train for the integration of Omni. On slide six, we outlined some key metrics on Ford's business and on slide seven, on Omni's, which we hope is helpful historical context. But what we're really excited about is what these companies look like together and the opportunity for value creation we see from the emerging companies emerging from the combination. We are pleased with the progress we are making on integration. As you will see on slide 10, we have provided updated cost-energy targets.
Rebecca J. Garbrick: Now turning to the integration of Hanmi.
Rebecca J. Garbrick: Yeah.
Rebecca J. Garbrick: On slide six we outline some key metrics from fourth business and on slide seven.
Rebecca J. Garbrick: Armies, which we hope is helpful historical context, but what we're really excited about is what these companies look like together and the opportunity for value creation, we see from the emerging.
Rebecca J. Garbrick: Emerging from the combination we are pleased with the progress we are making on integration.
Rebecca J. Garbrick: As you will see it on slide 10, we have provided updated cost synergy targets. We now expect to deliver full run rate cost synergies of 73 million by the end of 2025, which is very much in line with the initial cost synergy targets provided in August 2023.
Rebecca J. Garbrick: We now expect to deliver full run rate cost synergies of $73 million by the end of 2025, which is very much in line with the initial cost-energy targets provided in August 2023. We have adjusted the initial estimate of $75 million by less than $2 million due to volumes associated with the LTL and PUD synergies.
Rebecca J. Garbrick: We have adjusted the initial estimate of 75 million by less than 2 million due to volumes associated with the L. T O N type synergies.
Rebecca J. Garbrick: We are pleased to report that we have already delivered synergies of $7.5 million in the first quarter, and we expect to realize $55 million on an annualized basis. We expect to derive the rest of the synergies of $18 million from incremental actions in the areas of network optimization, facilities consolidation, SG&A technology, and brokerage. With regard to our capital position, as you will see on slide 10, as of March 31, the combined entity had more than $512 million in liquidity.
Rebecca J. Garbrick: We are pleased to report that we've already delivered synergies of $7 5 million in the first quarter, we expect to realize $55 million on an annualized basis.
Rebecca J. Garbrick: We expect to derive the rest of the synergies the 18 million from incremental actions in the area of network optimization facilities consolidation SG&A technology and bread brands.
Rebecca J. Garbrick: With regards to our capital position as you will see on slide 10 as of March 31.
Speaker Change: So you had more than 512 million of liquidity.
Rebecca J. Garbrick: Last quarter, we outlined the relevant terms of our existing credit facilities, so I will not go into that detail again here, but I will highlight that we have headroom in our financial covenant as we continue to focus on our integration and realize the cost-energy opportunities. We remain in compliance with our bank covenants at the end of the first quarter. In terms of our capital allocation priorities, we are committed to de-risking our capital structure, and we are already undertaking several initiatives to de-leverage.
Rebecca J. Garbrick: Last quarter, we outlined relevant terms of our existing credit facilities. So I will not go into that detail again here, but I will highlight that we have headroom and our financial covenant. If we continue to focus on our integration and realized the cost synergy opportunities we.
Rebecca J. Garbrick: We remain in compliance with our bank covenants at the end of the first quarter.
Rebecca J. Garbrick: In terms of our capital allocation priorities, we are committed to derisking, our capital structure and we are already undertaking several initiatives figure libraries, we intend to return to net leverage of four five times by the end of 2025. He stops include a focus on profitability of the combined entity and a realization of the cost synergies.
Rebecca J. Garbrick: We intend to return to net leverage of four and a half times by the end of 2025. Key steps include focusing on profitability of the combined entity and the realization of cost synergies to generate cash from operations, as well as an accelerated portfolio review to identify potential divestitures. We are actively reviewing our portfolio and plan to take swift action to monetize those assets. With that, I'll now turn the call back to the operator to take comments and questions. Operator. Thank you. The floor is now
Speaker Change: Generate cash from operation.
Speaker Change: Well as an accelerated portfolio reviews to identify potential divestitures. We are actively reviewing our portfolio. We plan to take Swift action to monetize on those assets with that I'll now turn the call back to the operator to take comments and questions operator.
Operator: Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star and 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star and 2. Again, we ask that you pick up your handset when posing your question to provide optimal sound quality. Our first question is from Bruce Chan with Stiefel. Please go ahead; your line is open. Bruce, please make sure you're
Speaker Change: Thank you the floor is now open for questions. At this time, if you have a question or comment Please press star and one on your telephone keypad.
Operator: Yep. Sorry, guys.
Operator: If at any point your question is answered healing or remove yourself from the queue by pressing star and two.
Operator: Again, we ask that you pick up your handset when posing your questions provide optimal sound quality.
Operator: My first question is coming from Bruce Chan with Stifel. Please go ahead. Your line is open.
Operator: Yeah.
Jizong Chan: Bruce Please make sure your phone is muted.
Andrew Baxter Cox: Good morning. This is Andrew Cox on for Bruce. Sean, welcome to the forum. Hey, good morning.
Jizong Chan: Yep, sorry, guys.
Andrew Baxter Cox: Morning, guys. This is Andrew Cox on for Bruce Sean Good morning.
Andrew Baxter Cox: Sure.
Shawn Stewart: We know it's early, Sean, but we did want to square up what you feel your mandate here at Forward is. Why did you take this position? What do you bring to the organization? And what do you feel you can get done in relation to those areas of improvement you found to be very attainable through your diligence? Thank you.
Andrew Baxter Cox: Hey, good morning, or do we just we we are we know its early Sean but we did want to.
Shawn Stewart: Square up what you feel your mandate here at forward is why did you take this division what you bring to the organization and what do you feel you can get done in relation to those areas of improvement you found to be very attainable and your diligence. Thank you.
Shawn Stewart: Thank you, Andrew, for the question. Well, to be honest with you, I love this business, and when I looked at the opportunity of two great companies that I respected from my past coming together, I saw the true potential of that. Obviously, I also watched the bumpiness of the transaction. And secondly, Andrew, I love challenges. So for sure, it's going to be a great challenge, but one that I'm extremely excited about, and ready for, and I know we can bring this together and realize the true potential of this merger or acquisition together. And so that's why I took the opportunity.
Sean: Thank you Andrew for the question.
Shawn Stewart: Well to be honest with you I love this business and when I looked at the opportunity of our two great companies that I've respected from my past coming together.
Shawn Stewart: I solved the true potential of that obviously also watched the bumping as some of the transaction and secondly, Andrew I Love Challenge. So for sure it's going to be a great challenge, but one that I'm extremely excited about ready for and and I.
Shawn Stewart: No we can bring this together and draw the true potential of this merger or acquisition together and so that's why I took the opportunity.
Rebecca J. Garbrick: Great, Sean. We look forward to seeing what you're capable of achieving here. And Rebecca, if I could just follow up with a quick one. I know you guys are within the realm of the debt covenants this quarter, but I just wanted to know if you've had any response from creditors, and how much runway they may be willing to give you moving forward. Thank you.
Speaker Change: Great John we look forward to St mature capable of achieving here and Rebecca if I could just follow up with a quick one I know.
Rebecca J. Garbrick: You guys are within the realm of the debt covenants this quarter, but I just wanted to know if you've had any response from creditors how much runway. They may be willing to give you looking forward. Thank you.
Rebecca J. Garbrick: Yeah.
Rebecca J. Garbrick: Yeah, Andrew, thanks for the question. You know, we've looked, and as we talked about, we'll come back in our second quarter and give full-year guidance for 2024. But, you know, we've talked about the levers we're going to pull in terms of, you know, profitability, in terms of cost reduction, in terms of asset divestitures. And so, when we look at all of that which is on the table, we believe that we'll continue to be within our bank covenants.
Rebecca: Yeah, Andrew Thanks for the question you know, we we've looked as we talked about will come back in our second quarter and give full year guidance for 'twenty 'twenty four but you know we talked about the levers we're going to pull in terms of you know profitability in terms of cost reduction in terms of asset divestitures and so when we look at all of that which is on the table you know we believe.
Rebecca J. Garbrick: That will continue to be within our bank covenants and so there'll be no need for us to go back in and talk with our creditors. So we just feel confident in the plan that we have in place and with now Sean on Board you know, where we're very focused on working through those levers and we believe that will help us in terms of having continuing to have the headroom for us.
Rebecca J. Garbrick: And so, there'll be no need for us to go back and talk with our creditors. So, we just feel confident in the plan that we have in place. And with Sean now on board, we're very focused on working through those levers. And we believe that will help us in terms of continuing to have the headroom from now until, you know, it becomes a maintenance covenant.
Rebecca J. Garbrick: Now until you know it becomes a maintenance covenant.
Andrew Baxter Cox: Okay, good to hear. I'll hop back in the queue. Thank you.
Speaker Change: Okay. Good to hear I'll hop back in queue. Thank you.
Operator: And we'll take our next question from Bascome Majors with Susquehanna. Please go ahead, your line is open.
Andrew Baxter Cox: And we'll take our next question from Visco majors with Susquehanna. Please go ahead. Your line is open.
Bascome Majors: Thanks for taking my questions. Can you talk a little bit about the results of the Omni Audit and anything you learned out of that, and did any of the historical figures change, and why? Thank you.
Bascome Majors: Yeah. Thanks for taking my questions can you talk a little bit about the results of the army order and anything you learned out of that and did did any of the historical figures change and why thank you.
Rebecca J. Garbrick: Yeah, Bascome, you know, great question. Good morning. In terms of the preliminary numbers that we talked about on our first, on our fourth quarter earnings call, as we mentioned, the audit was in progress at that time. We did not have any number changes from that preliminary estimate from our fourth quarter earnings call. It was more of getting through the audit process to get it complete.
Bascome Majors: Yeah, that's great.
Bascome Majors: Great question. Good morning, you know in terms of the preliminary numbers that we talked about them on our first one on fourth quarter earnings call. As we mentioned the audit was in progress at that time, we did not have any number of changes from that preliminary estimate from our fourth quarter earnings call. It was more of getting through the audit process to get it complete.
Rebecca J. Garbrick: Great.
Bascome Majors: And on the last earnings call, you talked about, I mean, yes, we can see the quarterly cash flow in the statement, but that there's a lot of noise from the deal and working capital there. On the last call, you talked about being cash flow positive relative to debt service for the first four or five weeks of ownership. How has that played out now that you're several months in? Are you pretty comfortable about that, and how much breathing room do you have?
Rebecca J. Garbrick: And on the last earnings call you talked I mean, yes, we can see the quarterly cash flow and the state remember that there's a lot of noise from the deal in working capital there on the last call you talked about being cash flow positive relative to debt service for the first four or five weeks of ownership.
Bascome Majors: How has that played out now that are now that your several months and are you pretty comfortable about that and how much breathing room, but you have thank you.
Rebecca J. Garbrick: Yeah, Bascome, you're right. We did talk a bit about the first four to five weeks of what we saw from a liquidity standpoint and being able to generate cash to service the debt. You know, as I talked about earlier, we have had quite a bit of one-time only costs in the first quarter. We expect there to be some additional one-time only costs in the second quarter, but when we look at the second half of the year, we believe that noise will be gone.
Speaker Change: Yeah, that's com as we you're right. We did talk a bit about you know first of four to five weeks of what we saw from a liquidity standpoint, and being able to generate conscious service begets you know as we you know as I talked about earlier, we have had quite a bit of one time only costs them you know in the first quarter, we expect there to be.
Rebecca J. Garbrick: B some additional one time only costs in the second quarter, but when we look at the second half of the year. We believe that noise. You know it will be gone and we got to a normalization and so I'm you know I do think that once you strip out those one time only costs you know I do think that we are you know free cash flow positive and we feel pretty good about that we just got it.
Rebecca J. Garbrick: And so, you know, I do think that once you strip out those one-time only costs, you know, I do think that we are, you know, free cash flow positive, and we feel pretty good about that. We just got to get some of these one-time costs behind us to get to the second half, so we can normalize.
Rebecca J. Garbrick: Some of these onetime costs behind us to get to the second half to have a normalization.
Bascome Majors: And I know you don't want to guide the second quarter at this point, but do you have any sense of the magnitude of those one-time costs and how they will compare as a cash flow drag to what you experienced in the last few months?
Speaker Change: And I know you don't want to guide the second quarter at this point, but do you have any sense of the magnitude of those one time costs and how they will compare as a cash flow drag to what you experienced in the last few months.
Rebecca J. Garbrick: Yeah, I certainly think you're right Bascome, we're not guiding to the second quarter, but I think, you know, the largest ones coming out of the closing of the acquisition are in the first quarter, so I think the height of them is in the first quarter, and they will taper down into the second quarter.
Speaker Change: Yeah. It certainly think youre right that is gone, we're not guiding to the second quarter, but I think you know there were the largest ones you know coming out of the the closing of the acquisition or in the first quarter. So I think the height of them are in the first quarter and they won't paper down into the second quarter.
Rebecca J. Garbrick: Yeah.
Bascome Majors: You talked about normal seasonality March to April typically being negative, so it's good to hear that that's headed in a more positive direction. Can you quantify that and just give a range around how super seasonal we are here?
Bascome Majors: You talked about...
Speaker Change: You talked about normal seasonality March to April typically being negative. So that's good to hear that that's headed in a more positive direction could you quantify that and just give a range around how super seasonal we are here.
Rebecca J. Garbrick: Yeah, I think it's, you know, from our standpoint, we know that it's positive. If you look back to last year, there was a bit of some noise in terms of where the market was in the second quarter from March to April of last year. So I think you can probably refer back to that in terms of where we are this year. It's a little more, you know, I would say normalization in terms of where the market conditions are.
Bascome Majors: Yeah, I think it's you know from our standpoint, when we you know we.
Rebecca J. Garbrick: We know that it's positive if you look back to last year. You know there was a bit if the noise in terms of where the market was in second quarter from March to April of last year.
Rebecca J. Garbrick: So I think he can probably reference back to there in terms of where we are this year. It's a little more you know I would say normalization in terms of where the market conditions are so we like to see this as a favorable in terms of the sequential growth from March to April given that you know those market conditions are now yeah somewhat the same between.
Rebecca J. Garbrick: So we like to see this as favorable in terms of the sequential growth from March to April, given that, you know, those market conditions are now somewhat the same between March and April. And so that gives us a lot of confidence in terms of, you know, our ability, as we talked about, to become profitable and have revenue growth and the synergy capture, you know, between the two entities.
Rebecca J. Garbrick: March and April and so that gives us a lot of confidence in terms of you know our ability you know as we talked about to become profitable and have the revenue growth in the synergy capture you know between the two entities.
Bascome Majors: And last for me, just to clarify that point you talked about revenue being super seasonal month over month with growth. Does operating income or profit follow that shape as well, or has that been different?
Speaker Change: And last for me just to clarify that point you talked about.
Bascome Majors: Revenue.
Bascome Majors: Super seasonal month over month with the gross operating.
Bascome Majors: Operating income or profit followed that shape as well or has that been different.
Rebecca J. Garbrick: Yeah, we're just not in a position, you know, on this call to be able to speak to the bottom line for that revenue. You know, generally, one would think that, you know, revenues are up in terms of being able to cover off those fixed costs. So generally, you would expect profitability to follow revenue. But we're not just in a position on this call to be able to address the numbers.
Rebecca J. Garbrick: Yeah, we're just not in a position to do it.
Speaker Change: Yeah, what we're just not in a position you know on this call to be able to speak to them, but you know the bottom line for that revenue you know generally one would think that you know revenues you know in terms of being able to cover off on those fixed costs, which are now you would expect for there to be the profitability to follow the revenue, but we're not just going to position on this call.
Rebecca J. Garbrick: To be able to choice, where I see the numbers.
Speaker Change: Thank you.
Rebecca J. Garbrick: Okay.
Operator: We'll take our next question from Scott Group with Wolf Research. Please go ahead, your line is open.
Rebecca J. Garbrick: Well take our next question from Scott Group with Wolfe Research. Please go ahead. Your line is open.
Scott H. Group: Hey, thanks. Good morning. Nice to speak with you, Shawn. So I just one thing I just want to clarify. The slides say that there's been 55 million in synergies realized to date, but it sounds like Rebecca, you're talking about a much different number. So could you just clarify that?
Scott H. Group: Hey, thanks.
Scott H. Group: Good morning, nice to speak with you Sean.
Scott H. Group: Rebecca.
Scott H. Group: So I guess, one thing I just want to clarify I wasn't following the slides say that theres been $55 million of synergies realized to date, but.
Scott H. Group: Sounds like Rebecca you were talking about a much different number so could you just clarify that.
Rebecca J. Garbrick: Yeah, sure, Scott. Good question.
Rebecca: Yeah sure Scott. Good question, you know as we look at this slide I just want to maybe it's helpful to kind of walk through you know some of these numbers. So the 55 million you know is what we've already achieved that's the annualized run rate, we recognized $7 5 million in our P&L in the first quarter.
Rebecca J. Garbrick: You know, if we look at this slide, I just want to, maybe it's helpful to kind of walk through, you know, some of these numbers. So, the $55 million, you know, is what we've already achieved. That's the annualized run rate. We recognized $7.5 million in our P&L in the first quarter. So, that would be over, you know, 12 months. The $55 million in the 7.5 is what we recorded in the first quarter. For the first 12 months of this year, we expect that number to be $47 million. Does that help to clarify?
Rebecca J. Garbrick: So so that would be over you know 12 months as the 55 million in the seven and a half with what we recorded in the first quarter for the first 12 months of this year of 2024, we expect that number could be a 47 million.
Rebecca J. Garbrick: Does that help to clarify.
Rebecca J. Garbrick: Yes, that's helpful. So, I know we're not getting specific guidance, but do you think Omni gets back to positive EBITDA in Q2 as these synergies ramp and given the revenue uptick you're talking about?
Speaker Change: Yes, that's helpful. So I know we're not.
Speaker Change: Getting specific guidance, but.
Speaker Change: Do you think it gets back to positive EBITDA in Q2, as these synergies ramp and given the revenue.
Speaker Change: Uptick you're talking about.
Rebecca J. Garbrick: Yeah, you know, Scott, as you mentioned, we're not going to give guidance for Q2. But we are, you know, we recognize that this is a top priority for us. And we are focused, you know, on the levers that we can pull in terms of, you know, generating profitability for the combined entity, really focusing on revenue growth, focusing on, you know, the cost structure, and being able to align that cost structure.
Speaker Change: Yeah, you know Scott you know as you mentioned, we're not going to give guidance you know for Q2, but we are you know we recognize that this is a top priority for us and we are focused on the levers that we can pull in terms of you know generating profitability for the combined entity, you know really focusing on revenue growth focusing.
Rebecca J. Garbrick: You know the cost structure and being able to align our cost structure and so I think between those two as well as our synergies. So I think between the profitability of the <unk>.
Rebecca J. Garbrick: And so I think, you know, between those two, as well as our synergies, I think between the profitability, you know, of revenue, growth, I think, you know, looking at the cost structure, and as well as the synergies, those are all levers that we are actively working to be able to generate, you know, profitability, not only for AMI but also for the combined entity.
Rebecca J. Garbrick: Revenue.
Rebecca J. Garbrick: Gross I think you know looking at the cost structure and as well as the synergies I think those are all levers that we are actively working to be able to generate you know profitability not only for Ami, but also for the combined entity.
Speaker Change: Okay, maybe I'll I'll try to ask it a little differently. So you you said that you expect to stay within the covenants.
Scott H. Group: Okay, maybe I'll try to ask it a little differently. So you said that you expected to stay within the covenants.
Scott H. Group: And obviously, there's a lot of noise and a lot of ad backs. How much EBITDA do you need to generate in Q2 to stay under the six times cover?
Scott H. Group: Theres, obviously, theres a lot of noise and a lot of add backs.
Scott H. Group: Much EBITDA do you need to generate in Q2.
Scott H. Group: <unk>.
Scott H. Group: Within the state.
Scott H. Group: Stay under the six times covenant.
Rebecca J. Garbrick: Yeah, you know, Scott, I think, as we said, we're not going to, you know, give the guidance, but we've, you know, we'll give you more full-year guidance when we get on the second quarter call, but we've obviously projected out, you know, what we believe and we foresee the earnings potential of the combined NTDB. And so, you know, looking at those numbers and being able to run the calculation, we believe we'll still have headroom as we go into the second quarter.
Scott H. Group: Yeah. It's you know it's got I think as we said, we're not going to you know give the guidance, but we will give you more full year guidance when we get on our second quarter call that we obviously have you know projected out you know what we believe and we foresee you know the earnings potential of the combined entity to be.
Rebecca J. Garbrick: And so you know looking at those numbers and being able to run the calculation. You know we we believe we'll still have the headroom you know as we go into the second quarter and just as a reminder, the second quarter. It's the first time that we officially husky test for that financial Covenant.
Rebecca J. Garbrick: And just as a reminder, the second quarter is the first time that we officially have to test for that financial covenant. So only allow us, you know, access to that revolver, but we feel really, you know, we've run the numbers, and we feel like there's the headroom, and we'll be in compliance as we look ahead, and we look forward to sharing more about that full-year guidance on our next earnings call.
Rebecca J. Garbrick: It will only allow us access to that revolver, but we feel really you know we run the numbers and we feel like there's the headroom and will be in compliance as we look ahead and we look forward to sharing you know more about that full year guidance on our next earnings calls.
Speaker Change: Okay and then.
Scott H. Group: Okay, and then, um... The March to April commentary, is that, did you see that at? Expedited, Intermodal, Omni, where are you seeing the sequential improvement? Is it everywhere? Yeah, that was a good one.
Rebecca J. Garbrick: The March to April.
Scott H. Group: Commentary.
Scott H. Group: Is that did you see that it.
Scott H. Group: Expedited intermodal I mean, where are you seeing that the sequential improvement is it everywhere.
Rebecca J. Garbrick: Yeah, that's a consolidated number, but we have seen growth in all lines of business.
Speaker Change: Yeah that was a that's a consolidated number you know, but we have seen you know growth in our you know in all lines of business.
Rebecca J. Garbrick: Okay, and then maybe just last question so the way that.
Scott H. Group: And then maybe just last question, so the way that you guys reported today in terms of Omni as its own revenue and earnings line and then adding back the purchase amortization, which I think is something you haven't done before. Is this the new reporting structure just so we have for our models? Yeah, I think, you know, Scott, with Shawn on...
Scott H. Group: You guys reported today in terms of omni has its own revenue and earnings line.
Scott H. Group: And then adding back the purchase amortization. So I think it's something you haven't done before it is this the new reporting.
Scott H. Group: Structure, just so we have for our models.
Rebecca J. Garbrick: Yeah, I think, you know, Scott, with Shawn on board, we're certainly going to evaluate our segment reporting and, you know, as Shawn sees fit in terms of how he, you know, views the business, those segments potentially could change. We're not, you know, right now, we're not able to speak to what that may or may not look like. I will say from an acquisition amortization standpoint, we do plan to add that back, you know, going forward.
Speaker Change: Yeah, I think you know Scott we withdrawn on on Board you know, we're certainly going to evaluate our segment reporting and you know as Sean sees fit in terms of how he views. The business you know those segments potentially could change. We're not you know right now we're not able to speak to what that may or may not look like I will say from an app you know acquisition.
Rebecca J. Garbrick: Amortization standpoint, you know, we do plan to add that back you know going forward I think you can count that in your model, but I think in terms of the reportable segments. Those may arena, just depending on the house, Sean you know piece of the business on a go forward basis.
Rebecca J. Garbrick: So, I think you can count that in your model, but I think in terms of the reportable segments, those may or may not shift depending on how Shawn, you know, views the business on a go forward basis.
Rebecca J. Garbrick: Okay.
Speaker Change: Thank you mhm.
Rebecca J. Garbrick: Uh-huh.
Rebecca J. Garbrick: Yeah.
Operator: And we'll take our next question from Stephanie Moore with Jefferies. Please go ahead. Your line is open.
Rebecca J. Garbrick: And we'll take our next question from Stephanie Moore with Jefferies. Please go ahead. Your line is open.
Stephanie Lynn Benjamin Moore: Hi, good morning. Thank you. You know, Shawn, I wanted to touch on some comments that you made about some of the early revenue synergies captures that you're seeing and just the opportunity there. So maybe you could talk a little bit about the genesis of some of those synergies, the demand from your current customers, and just thoughts on the kind of revenue synergies now with you at the helm and, obviously, the integration in place. Thanks. Thank you, Stephanie.
Stephanie Lynn Benjamin Moore: Hi, good morning, Thank you.
Stephanie Lynn Benjamin Moore: Sean I wanted to I wanted to touch on a comment that you made about the some of the early revenue synergy capture that that you're seeing and just the opportunity. There. So maybe you could talk a little bit about the genesis of some of those synergies.
Stephanie Lynn Benjamin Moore: Demand from your current customers and just thoughts on kind of revenue synergies now with that I think that the.
Stephanie Lynn Benjamin Moore: The helm and obviously the integration in place thanks.
Shawn Stewart: Thank you, Stephanie. So, what I see here is obviously the legacy Omni business utilizing the asset of Forward as a big piece. And when you start looking at the potential future, you know, it's important when people look at it and they make decisions on whether you have your own assets or not. And so I would say there are two major segments here: the domestic forwarding moving into the network, and two, how we leverage or how we're leveraging our international business utilizing the network on a pre and post international business.
Speaker Change: Thank you Stephanie so so what I see here is obviously the.
Shawn Stewart: The legacy omni business utilizing the asset forward.
Shawn Stewart: Is a big piece and when you start looking at the potential future you know it's important when people look at and they make decisions on do you have your own assets or not and so I would say there is two major segments here of of the.
Shawn Stewart: The domestic forwarding moving into the network and to how we leverage our how we're leveraging our international business utilizing the network on a pre and post international business.
Stephanie Lynn Benjamin Moore: Got it. Thank you.
Speaker Change: Got it. Thank you I guess, maybe taking this out I guess, one point of clarification and maybe you said this before but I'm just trying to get a sense of it the historical monthly seasonality between March and April what does that normally.
Stephanie Lynn Benjamin Moore: I guess maybe taking this, I guess, one point of clarification, and maybe you said this before, but just trying to get a sense of it, the historical monthly seasonality between March and April, what is that normally? I don't know if it's one total company or tonnage or the best way for you to break that out. Yeah, I think.
Stephanie Lynn Benjamin Moore: Total company or tonnage or the best way for me to break that out.
Rebecca J. Garbrick: Yeah, I think, Stephanie, what we said in our earnings release is that if you just look at last year, it was a contraction, it was 15 percent, and that was on a pro forma basis between the two companies. So that wasn't just us buying AMI to increase that number; that was on a pro forma basis. So it was negative 15 percent last year versus 6 percent growth this year.
Stephanie Lynn Benjamin Moore: Yeah, I think Stephanie you know what we said in our earnings release is that if you just look at you know last year. You know it was a contraction it was a 15% and that was on a pro forma basis between the two companies. So that wasn't just you know I've buying hanmi to increase that number that like on a pro forma basis. So it's negative 15.
Rebecca J. Garbrick: Per cent last year versus a 6% growth this year.
Stephanie Lynn Benjamin Moore: And then just another one for me, you talked about the continued focus on a portfolio review. Any color there in terms of which assets within the business you think might not be helpful or not part of the strategic plan of the combined entity with the legacy expedited and omni business? Just a little bit more color on what might not be part of the long-term strategy.
Rebecca J. Garbrick: Got it and then just another.
Rebecca J. Garbrick: One for me you talked about the the.
Stephanie Lynn Benjamin Moore: The continued focus on our portfolio overview.
Stephanie Lynn Benjamin Moore: Any color there in terms of which assets wasn't a business you think might be.
Stephanie Lynn Benjamin Moore: No not not helpful or not part of the strategic plan of the combined entity with the legacy expedited isn't omni business, just a little bit more color on what might not be part of the long term strategy.
Michael L. Hance: Hey Stephanie, this is Michael. Great question. We are implementing a plan to divest non-core assets in 2024, but really, we can't give specifics beyond that. But we are working that plan aggressively.
Stephanie Lynn Benjamin Moore: Hey, Stephanie this is Michael Great question and we.
Michael: We are actioning a plan to divest.
Michael: Divest non core assets in 2024, but but really we can't give specifics beyond that but that we are working that plan aggressively.
Stephanie Lynn Benjamin Moore: Okay, but in 2024, got it, that's helpful. And then, you know, lastly for me, you know, I think it'll certainly be helpful to get some more color on 2024 guidance when you provide, when you report to Q. You know, that being said, at that point, we'll probably be, you know, or the point we will be, eight months into the year, and as you can imagine, we're all gonna be focused on 2025 as well, and in some respects, so any chance of updating maybe kind of the long-term potential, or not long-term, or provide a multi-year view of what the combined entity can be, or at least maybe update some of those original numbers that were provided when the acquisition was announced?
Stephanie: Okay, but in time 24, it got it that's helpful and then.
Stephanie Lynn Benjamin Moore: Lastly for me you know I think it will certainly be helpful ticket to get some more color on 2024 guidance. When you provide when you report to kill you know that being said at that point. It will probably be you know at that point, we will be at eight.
Stephanie Lynn Benjamin Moore: Eight months into the year and as you can imagine we're all we're all going to be focused on 2025 as well and in some respect so any chance of updated maybe kind of a long term potential are not long term provide a multi year view of what the combined entity can be or at least maybe update some of those original numbers that were provided when the acquisition was.
Stephanie Lynn Benjamin Moore: And al.
Rebecca J. Garbrick: Yeah, Stephanie, I think as Shawn mentioned in his remarks that, you know, we are looking to give transparency to the investor community. And so I think there, you know, there certainly could be an opportunity for us to be able to give a longer-term view, because you are correct, by that time, we'll be through a large portion of 2024. So it's certainly not off the table. And, you know, we want to give the right view to the shareholder and analyst community to better understand the value that we see in the combined entity.
Speaker Change: Yeah definitely you know I think as Sean mentioned and as you know in his remarks that you know we are looking at to give transparency to the investor community and so I think there you know there certainly could be an opportunity for us to be able to give a longer term view because you are correct yea by that time will be you know.
Stephanie Lynn Benjamin Moore: Got it; we'll leave it at that. Thank you.
Stephanie Lynn Benjamin Moore: The large portion of 'twenty 'twenty four so it's certainly not off the table and you know we want to give the right view to the shareholder and analyst community to better understand you know the value that we see with the combined entity.
Stephanie Lynn Benjamin Moore: Got it I will leave it at that thank you.
Stephanie Lynn Benjamin Moore: Yeah.
Operator: We'll take our next question from Christopher Kuhn with Benchmark. Please go ahead. Your line is open. Yeah, hi.
Stephanie Lynn Benjamin Moore: Well take our next question from Christopher Combe with benchmark. Please go ahead. Your line is open.
Christopher Glen Kuhn: Hi, good morning, thanks for taking the question, and Shawn, welcome to Forward. Thank you, sir. Rebecca, I think you said the historical EBIDTA figures didn't change, but it does look like maybe some of the adjustments might have from the presentation you gave last year to the presentation you have this morning. Can you just help me understand that?
Christopher Glen Kuhn: Yeah, Hi, good morning, Thanks for taking the question and Sean Welcome Bob.
Christopher Glen Kuhn: Going forward. Thanks.
Christopher Glen Kuhn: Sir.
Christopher Glen Kuhn: Rebecca.
Christopher Glen Kuhn: You said the historical EBITDA figures didn't change, but I mean, it does look like maybe some of the adjustments might have from that presentation. You gave last year or two of the presentation. You have this morning.
Christopher Glen Kuhn: Just help me understand that.
Rebecca J. Garbrick: Yeah, so maybe Chris, just to make sure that I understand, I think you're referring back to the presentation, the investor presentation we gave, you know, in August of 2023. Is that correct? Yeah, there's only just a handful of adjustments that were excluded from the presentation, more so to conform, you know, with non-GAAP reporting for a public company. And so there's just a handful. It's really just the pro forma EBAGA adjustments that were removed from that presentation and carried forward. Otherwise, everything is the exact same.
Rebecca: Yeah, So maybe Chris just to make sure that I understand I think you're referring back to the presentation. The investor presentation. We gave them you know in in 'twenty in August of 2023 is that correct mhm.
Rebecca J. Garbrick: Yeah, Theres only just a handful of adjustments either that were excluded from the presentation more so they conform with non-GAAP reporting for a public company and so there's just a handful of it it's really just the pro forma EBITDA adjustments that were removed from that presentation and carried forward otherwise everything is the exam.
Speaker Change: Sure thing.
Christopher Glen Kuhn: Okay, and to that end, there's $65 million of EBITDA adbacks in the quarter. You broke that out a little bit more in the quarter-to-date numbers. Can you maybe break out that $65 million so we can understand what's in there? I know that there are transaction costs, but maybe what's in that number?
Rebecca J. Garbrick: Okay.
Rebecca J. Garbrick: To that end.
Christopher Glen Kuhn: There's 65 million of EBITDA add backs in the corner you broke that out a little bit more than a quarter to date numbers court.
Christopher Glen Kuhn: Can you maybe break out that 65 million. So just we can understand what's in there.
Christopher Glen Kuhn: I mean, I know that there's transaction costs, but maybe what what's in that in that number.
Rebecca J. Garbrick: Yeah, that's right. The $65 million is really, it's broken out into two, you know, into two numbers. The largest of which, as you have pointed out, is going to be those transaction and integration costs. And then, you know, severance costs are the other piece that we have in there. So those transaction and integration costs would be, you know, anything that's related to, you know, this acquisition that the combined entity incurred during the quarter that's in our P&L. And then the severance costs obviously are, you know, reduction in force actions that were taken. And so it's the cost associated with those. We consider those to be, you know, one-time only, non-reoccurring costs.
Speaker Change: Yeah, that's right. It's a 65 million is really it's it's broken out and did you you know into two numbers I'm the largest of which as you have pointed out you know is gonna be those transaction and integration costs and then you know severance cost is the other piece that we have in there. So there's transaction and integration costs would be you know anything that's related to.
Rebecca J. Garbrick: Do you know this acquisition and that the combined it's T incurred during the quarter. That's in our P&L and then the severance costs. Obviously are reduction enforced actions that were taken and the cost associated with those we'd consider that used to be you know one time only non reoccurring costs.
Christopher Glen Kuhn: Okay, okay. And then just, I think, did you mention on the call how that core LTL network business did? I know the brokerage business and the intermodal business, you know, hurt the EBITDA, but I'm just wondering how the core LTL business did, or in terms of your expectations.
Speaker Change: Okay. Okay.
Rebecca J. Garbrick: And then just I think did you mention on the what how did you mentioned that during that during the call how that core.
Christopher Glen Kuhn: L. P M network isn't as good I know I know the brokerage business in the intermodal business, you know or hurt the EBITDA, but I'm just wondering how the core L. P. L business, good or in terms of your expectations.
Rebecca J. Garbrick: Yeah, certainly, you know, from our less than truckload line of business, our core business, as you call it, from an operating stat standpoint, we saw some favorability in terms of volume growth. And we certainly saw, you know, from a revenue per shipment standpoint, ex-fuel, we also saw some positive growth there. That would reflect, you know, a staggered GRI coming in, you know, to revenue throughout the quarter. But we did see some green sheets in our less than truckload line of business. So, you know, we feel really good about it in terms of the first quarter.
Speaker Change: Yeah, certainly you know from a from in our less than truckload line of business, our core business as you've called you know from a operating Scott standpoint, I'm. You know we saw some favorability in terms of the the volume grows and we certainly saw you know from a revenue per shipment standpoint ex fuel. We also saw some positive growth there.
Rebecca J. Garbrick: That would reflect you know staggered you know a staggered G. R. I come in and you don't see the revenue throughout the quarter, but we did see some green shoots in are less than truckload line of business. So I'm you know we feel really good about that in terms of the first quarter.
Christopher Glen Kuhn: Yeah, I'm just wondering about the EBITDA. I know you don't break that out, but I'm just wondering how the EBITDA did on that core business just based, you know, compared to your expectations.
Speaker Change: Yeah, I'm just I'm wondering about the EBITDA I know you don't break that out but I'm just wondering how long of a dogfight on that core business, you know compared to your expectations.
Rebecca J. Garbrick: Yeah, we didn't break that out. We talked about that from an expedited freight segment, but certainly, I think, Chris, just the... What we're seeing from a positive nature on the operating stats, I think, certainly would reflect, you know, the positivity from an EBITDA standpoint.
Speaker Change: Yeah, we didn't we didn't break that out when we talked about that from an expedited freight segment, but you know certainly I think Chris you know just a I think that's what we're seeing from a positive nature on the operating stats I think certainly would reflect you know the positivity from an EBITDA standpoint.
Christopher Glen Kuhn: Okay, and then just lastly, you talked about the freight market being weak in the first quarter, but what if that persists into the rest of the year? How do you feel comfortable in terms of your covenants and, you know, reducing the leverage and, you know, hitting your cost-energy targets?
Speaker Change: Okay, and then just lastly.
Christopher Glen Kuhn: Talked about the great market being weak in the first quarter, but what if that persists into the rest of the year, how you feel comfortable in terms of your covenants.
Christopher Glen Kuhn: You know reducing the leverage.
Christopher Glen Kuhn: You know hitting your cost synergy targets.
Rebecca J. Garbrick: Yeah, so certainly, Chris, as we're, you know, thinking ahead to those covenants, certainly, you know, what we can speak about is what we can control, and so what we can control is, you know, taking out, you know, cost, and so kind of right-sizing the cost for the combined entity. You know, we can control, in some respects, the right kind of asset dispositions, and then obviously, you know, continuing to grow from a revenue profitability.
Rebecca J. Garbrick: Yeah, so certainly Chris is.
Speaker Change: Yeah, So certainly Chris's, where you know thinking ahead, you know Gee those covenants certainly you know what we can speak about is what we can control and so what we can control or you know taking out cost and so kind of right thinking that costs for the combined entity.
Rebecca J. Garbrick: You know, we can control and in some respects right kind of asset disposition and then obviously you know continuing to grow from a revenue profitability. It is as you pointed out you know it will be a bit difficult from the revenue profitability in this environment, but you know we've seen already you know April being positive we now have Sean that's onboard.
Rebecca J. Garbrick: It is, as you pointed out, it will be a bit difficult from the revenue profitability perspective in this environment, but, you know, we've seen already April being positive. We now have Shawn that's on board, and so we see all of that as being some good signs as we head into the second quarter.
Rebecca J. Garbrick: And so we see all of that has been some good signs as we head into the second quarter.
Speaker Change: Okay. Thank you.
Operator: And as a reminder, if you'd like to ask a question today, please press the star and one keys on your telephone keypad. We'll take our next question from Bruce Chan with Stiefel. Please go ahead.
Rebecca J. Garbrick: And as a reminder, if you'd like to ask a question today. Please press the star and one key on your telephone keypad.
Operator: Take our next question from Bruce Chan with Stifel. Please go ahead.
Jizong Chan: Hey, team. Thanks for letting me squeeze back in here. It's Andrew again.
Jizong Chan: Hey, Tim Thanks for letting me squeeze back in here, it's Andrew again, I just wanted to address attrition both on the customer side and on the omni Salesforce side last quarter. You said you guys aren't seeing any material customer attrition and I just wanted to know if anything has changed there and then also you know what's the attrition been like at Omnicell.
Andrew Baxter Cox: I just wanted to address attrition both on the customer side and on the Omni Salesforce side. Last quarter, you said you guys weren't seeing any material customer attrition. I just wanted to know if anything has changed there. And then also, you know, what's the attrition been like at Omni Salesforce? And what's the plan to integrate the team? And then, as a follow-up, Shawn, what are some of the things that you can bring and what you can do to defend against both customer attrition and employee attrition in the Omni Salesforce?
Andrew Baxter Cox: Forrest and what's the plan to integrate the team and then as a follow up Sean what are some of the things that that you can bring in what you can do to defend against those customer attrition and attrition of the omni sales force. Thank you.
Michael L. Hance: Hey Andrew, I'm happy to answer.
Andrew Baxter Cox: Hey, Andrew Happy to answer this is Michael I'll start and then pass it to Sean.
Michael L. Hance: This is Michael. I'll start and then pass it to Shawn. I'm pleased to report that the answers on customer attrition and salespeople attrition is still positive. I mean, I've had, you know, many interactions with our customers over the past several months and as Shawn said on the call in his opening remarks, you know, they are looking for us to continue to provide them with, you know, the same great service that enables them to win and we are committed to doing that and have continued to do that and so we have not seen, you know, customer attrition and with respect to the sales team, you know, we have a great sales team and they are laser focused on winning in this tough environment and we're grateful for that.
Michael L. Hance: I'm pleased to report that the answers on customer attrition and salespeople attrition is still positive I mean, I've had you know.
Michael L. Hance: Many interactions with our customers over the past several months and as Sean said on the call in his opening remarks, you know they are looking for us to continue to provide them with the same great service that enables them to win and we are committed to doing that and has continued to do that and so we have not seen.
Shawn Stewart: Yeah see customer attrition and with respect to the sales team you know we have a great sales team and.
Michael L. Hance: They are laser focused on winning in this tough environment and we're grateful for that and there are as part of one of our integration work streams is sort of working out how to integrate from a commercial side and sales side and that's you know fully engaged in ongoing and I think with Sean that with the hail Kobe.
Michael L. Hance: And as part of one of our integration work streams, we're sort of, you know, working on how to integrate from a commercial side and a sales side, and that's, you know, fully engaged and ongoing, and I think with Shawn now at the helm, he'll be speaking into that and directing it and steering it, and you'll hear more about that in the days ahead, but Shawn, I'll pass the mic Yeah, so thanks for the question, Andrew.
Shawn Stewart: Speaking into that and directing it and steering at and you'll hear more about that in days ahead, but Sean I'll pass it back to you on that yeah. So thank you for the question Andrew.
Shawn Stewart: Look, in full transparency, if you're not growing, you're dead in this business, and I like to spend a large majority of my time personally involved with customers. So Obviously, I've got a lot of work to do ahead of me with the team to get the most optimal out of this venture quickly, but I will segment my time over this next quarter to split those time capsules, if you will, between direct interaction with customers, with the sales team, to ensure that we continue to give that confidence and listen to understand what solutions we can bring to their supply chain throughout this combined network.
Shawn Stewart: In full transparency, if you're not growing you're dead in this business and I like to spend a large majority of my time personally involved with customers.
Shawn Stewart: So.
Shawn Stewart: Obviously I've got a lot of work to do ahead of me with the team to get the most optimal out of this Vince your quickly, but I will segment my time over this next quarter or.
Shawn Stewart: Two to split those time capsules, if you will between our direct interaction with customers with.
Shawn Stewart: With the sales team to ensure that we continue.
Shawn Stewart: Continue to give that confidence and listening to understanding what solutions, we can bring to their supply chain throughout this combined network.
Shawn Stewart: Andrew, if I could just jump back in, I'm not doing justice because I've had the great pleasure of sitting with our sales leaders and working with them closely over the past several months, and I just can't tell you how impressed I am with them and how dedicated they are to delivering that great service to our customers. I've been in so many meetings where they get kudos from the customers because our people are just so committed.
Speaker Change: Andrew if I could just jump back in I'm, not doing justice because I've had the great pleasure of of sitting with our sales leaders and working with them closely over the past several months and I just can't tell you how impressed I am with them and how dedicated they are to deliver.
Shawn Stewart: You're delivering that great service to our customers I've been in so many meetings, where they get you know kudos from the customer because our people are just so committed so I think that that is a great asset for us and something that as Sean said in his remarks, you know that great people are the foundation for which we're going to build on and so I'm just worth calling out.
Shawn Stewart: So I think that is a great asset for us and something that, as Shawn said in his remarks, our great people are the foundation for which we're going to build on. And so I just want to call that out specifically and say thank you again to those folks who are listening on the call.
Shawn Stewart: It out specifically and say thank you again to those folks who are listening on the call.
Speaker Change: Thank you.
Shawn Stewart: We will take our next question from Tyler Brown with Raymond James. Please go ahead. Your line is open.
Shawn Stewart: Hey, good morning.
Michael L. Hance: Good morning. Hey, Tom. Hey.
Speaker Change: Good morning, Hey, Tom Hey, I'm a bit back in so just so I have it on the EBITDA calculation for the debt Covenant is it basically you just take the last four quarters of pro forma EBITDA and then they add kind of the run rate synergies is that effectively correct.
Operator: Yeah, Tyler, on our deck, we did give, in the appendix, a reconciliation for the trailing 12 months. But you're right in terms of just the performance of the last four quarters. And then there are, you know, adjustments that we add back, the largest of which would be, you know, our due diligence transaction integration costs. But then you're right on the run rate of the cost synergies. So that's right. It is the 75 million, obviously adjusted for any that we realize within our RN, P&L, or ones that we've achieved. But in simple terms, that's correct. Okay, so.
Michael L. Hance: Yeah, Tyler in our on our deck, we did give out in the appendix. We gave a reconciliation for the trailing 12 months, but youre right in terms of just the performance of the last four quarters and then there's you know adjustments that we add back the largest of which would be you know our due diligence transaction and integration costs, but then your.
Operator: Right on the run rate of the cost synergies. So that's right. It is the 75 million obviously adjusted for any of that we realized within our R N P&L or wins that we've achieved but in it.
Operator: Sick terms that's correct.
Tyler: Okay, so if I come back to Scott's question, in a different way, but... What was the bank applicable pro forma EBITDA in the second half of 23? Do you have that by chance, maybe for Q3 and Q4, because it's very hard to do the calculations.
Speaker Change: Okay. So if I come back to Scott's question, even kind of another different way right.
Tyler: What was the bank applicable pro forma EBITDA in the second half of 'twenty three.
Tyler: Do you have that by chance, maybe for Q3 and Q4, because it's very hard to do the calculation.
Rebecca J. Garbrick: Yeah, we just provided the, you know, the bank's calculation is on a trailing 12 months, and so we wanted to be, you know, transparent in terms of what that looked like, and so, you know, we provided the trailing 12 months versus breaking it out between, you know, the quarters to get there.
Speaker Change: Yeah, Yeah. We just provided the you know the banks calculation is on a trailing 12 months and so we wanted to be transparent in terms of what that looked.
Rebecca J. Garbrick: It looked like and so yeah. We've we provided the trailing 12 months versus breaking it out between you know the quarters to get there.
Tyler: Okay, well, obviously cash flow is going to be super important here, and based on the comment Again, because I think on the last quarter call, you said that February was cast for a positive, which implies that March was a big burn. Can you commit to having positive operating cash flow in Q2, or are you just not ready to do that?
Rebecca J. Garbrick: Okay, well, yeah, obviously cash flow was going to be super important here and based on the comments again, because I think on the last quarter call. You said that February was cash flow positive, which implies that March was a big Brown I.
Tyler: I mean can you commit to having positive operating cash flow in Q2 or are you just not ready to do that.
Rebecca J. Garbrick: Yeah, I don't think we're ready to, you know, speak to really Q2, but Tyler, I can assure you that this is, as you've said, a top priority for the company. We are very focused on, you know, liquidity, and we are very focused on, you know, deleveraging. You know, we will acknowledge that there are some, you know, one-time only costs in the second quarter as we have some lingering expenses to be paid from this acquisition. But once you get to the second half of the year, you know, it's more in a normalized environment.
Speaker Change: Yeah, I don't I don't think we're ready to you know to speak to really Q2, but Tyler I can I can assure you that this is as you've said this is a top priority for the company. We are very focused on liquidity and we're very focused on you know deleveraging you know, we we will acknowledge that there are some one time only costs.
Rebecca J. Garbrick: You know in the second quarter as we have some lingering expenses to be paid them from this acquisition, but once you get to the second half of the gear you know it's more in a normalized environment are you know we also believe that these synergies that we've talked about we've already proven that seven and a half million or in our P&L for the first quarter and we believe that.
Tyler: You know, we also believe that these synergies that we've talked about, we've already proven that $7.5 million is in our P&L for the first quarter, and we believe that there is more yet to come in the second quarter and in the second half of the year. So, also, you know, as we talked about in the cost, you know, reduction, we have some programs that are underway as we speak. We'll give you more clarity on those on our second quarter earnings call, but all the actions that we are taking set us up to be, you know, cash flow positive, as you have asked in your question, and that's what our focus is, and that's what we're working on, to be able to provide you on our second quarter earnings call. But hopefully, that gives you just some context about how we're viewing liquidity and the action steps that we're taking.
Tyler: I am there is more yet to come in in the second quarter and then the second half of the year. So.
Tyler: Also you know as we talked about in the cost reduction we have some programs that are underway as we speak we'll give you more clarity of those in our second quarter earnings call, but all the options that we are taking sets us up to be able to be cash flow positive as you have as you know in your question and that's what our focus is and that's what we're worth.
Tyler: King you know to be able to provide you on our second quarter earnings call that hopefully that gives you just some context about how we're viewing liquidity and the action steps that we're taking.
Rebecca J. Garbrick: Okay, a couple more. So, I think on the cash flow statement, you also paid out a $12 million earn out. What was that for?
Speaker Change: Got a couple more so I think on the casual segment you also paid out a $12 million on that what was that for them yes.
Tyler: Yes, that's right. It's down in the financing section. There was a legacy omni-acquisition where an earn-out was earned and due and payable, and it was split between Q1 and Q2. So the $12 million that you see down in the financing section is one piece of it. There will be a second piece in the second quarter.
Speaker Change: Yes, that's right it's down in the financing section there was a a legacy army acquisition.
Tyler: Where we were a earn out was earned and due in payable and it was split between Q1 and in Q2. So the 12 million that you see down in the financing that you know one piece of it there'll be a second piece you know in the second quarter.
Rebecca J. Garbrick: Okay, equal signs.
Speaker Change: Okay equal size.
Tyler: No, it's just smaller. A larger portion was paid in the first quarter, so it's a smaller portion in the second quarter.
Rebecca J. Garbrick: No and its a smaller or larger portion was paid in the first quarter. It's a smaller portion in the second quarter, Okay and my last one so on the leverage ratio calculation I thought that the cash cap with say $50 million. It seems like you were at it you were able to add back of 155 in the cap this quarter am I just misunderstanding how to.
Rebecca J. Garbrick: Okay, and my last one, so on the leverage ratio calculation, I thought that the cash cap was, say, $50 million. It seems like you were able to add back $155 in the calculation this quarter, or am I just misunderstanding how the calculation's done?
Rebecca J. Garbrick: Calculation is done.
Tyler: No, Tyler, after, you know, after a further review, we are able to add back unrestricted cash, which essentially is our domestic cash. And so that is correct. That's why the 155 doesn't tie back to our balance sheet because we were able, you know, to take a larger portion of that as long as it's not restricted cash to the debt. It's netting against the debt. Okay.
Speaker Change: No Tyler you know after you know after a further review them you know we are able to add back unrestricted cash, which essentially is our domestic cash and so that is correct. That's the way. The 155 does it tie back to our balance sheet, because we are able to.
Tyler: To take a larger portion of that as long as it's not restricted cash to the Doc netting against the debt.
Rebecca J. Garbrick: Okay. All right. Thank you.
Speaker Change: Okay alright, thank you.
Rebecca J. Garbrick: Yeah.
Operator: And next, we'll take another question from Bascome Majors on Susquehanna. Please go ahead, your line is open.
Rebecca J. Garbrick: And next we'll take another question from <unk> majors with Susquehanna. Please go ahead. Your line is open.
Bascome Majors: Thanks for the follow-up time here. Just to go back to Tyler and Scott's angle... As we look at the trailing 4Q, Linder E, but... You're going to lose the second quarter of last year, which will obviously be challenging even with sequential improvement versus the first quarter of this year. Is there any way to frame the lender number of EBITDA on an adjusted basis for the second quarter of last year just so we can think about the risk of losing that going forward?
Bascome Majors: Yeah. Thanks for the follow up time here just to go back to Tyler and Scotts angle.
Bascome Majors: As we look at the trailing four two lender EBITA.
Bascome Majors: So you're going to lose the second quarter of last year, which will obviously be challenging even with sequential improvement versus the first quarter of this year is there any way to frame.
Bascome Majors: The lender number of EBITDA on an adjusted basis for the second quarter of last year. Just so we can think about the risk of losing that going forward.
Rebecca J. Garbrick: Yeah, I think, you know, Bascome, you know, again, we, you know, you're right that we will drop off, you know, as we move into the second quarter. You're right, we'll drop off, you know, by one quarter. I think it's, you know, as we've kind of started the call, I'll, you know, kind of go back to what we had both said is that, you know, we just don't believe that the first quarter is really representative of the remainder of the year.
Speaker Change: Yeah, I think you know basketball and you know again, we you know you're you're right that we will drop off you know as we move into the second quarter, you're right will drop off you know one quarter I think it's you know as we've kind of started the call Oh, you know kind of go back to what we had John and I. Both have said is that you know we just don't.
Rebecca J. Garbrick: Believe that the first quarter is really representative for the remainder of the year and so while we do we will drop off that quarter. As you mentioned I think as we think ahead to second quarter I think it's a misnomer to believe that Q1 will be you know reflective of Q2 results and you know we have actions that are underway in terms of all the things that we've talked about.
Rebecca J. Garbrick: And so, while we do, we will drop off that quarter, as you mentioned, I think, as we think ahead to the second quarter, I think it's a misnomer to believe that Q1 will be, you know, reflective of Q2 results and, you know, we have actions that are underway in terms of all the things that we've talked about. And so, with that, you know, we do believe that we'll be, you know And so, even with dropping off in the last quarter and picking up, you know, our second quarter results.
Rebecca J. Garbrick: And so we've got you know we do believe that will be you know in compliance and so even with dropping off of last quarter and picking up you know our second quarter results.
Rebecca J. Garbrick: Okay.
Bascome Majors: OK. And Shawn, maybe from you, I know you've been here days, not months, quarters, or years, but you spent a career at a business that was acquired and then owned by, in a highly leveraged state for a long time. Can you talk a little bit about... sort of the, you know, kind of. Leverage crisis-type experience that you learn from that and, you know, how that skill set of both running a business while managing a challenging debt load and cash flow situation has led you to this opportunity here at Forward Air and, you know, what you've learned from that that will enable you to create value for equity holders here over the next few years. Thank you. Sure, I appreciate the question. I would say, just a moment.
Rebecca J. Garbrick: And Sean maybe from you I know you've been here days not months quarters or years.
Speaker Change: Yours, but.
Bascome Majors: You spent a career at a business that was acquired and then owned by a highly leveraged state for a long time could you talk a little bit about.
Bascome Majors: Sort of the you know kind of <unk>.
Shawn Stewart: Leverage crisis type experience that you learned from that and.
Shawn Stewart: You know how that skill set are both running our business, while managing a challenging you know debt load and cash flow situation has led you to this opportunity here at Ford Air and and and and you know what you've learned from that that will enable you to create value for equity holders here.
Shawn Stewart: The next few years. Thank you.
Shawn Stewart: Sure, I appreciate the question. I would say at just a maybe a high level what I learned is that you don't win the game playing defense. And you don't win the game just playing offense. It's how you play both of them at the same time to turn a situation that's not so good into something that's really positive. And so my approach to this opportunity of being here is that we're completely focused on both of those at the same time, and that will take us to the optimal situation that we need to be in at the quickest rate.
Shawn Stewart: Sure I appreciate the question.
Shawn Stewart: I would say it just a maybe a high level.
Shawn Stewart: What I learned is that you don't win the game playing defense and you don't win the game just playing offense. It's how you play both of them at the same time to bring a bring a situation that's not so good into something that's really positive and so my approach to.
Shawn Stewart: To this opportunity of being here is that we are.
Shawn Stewart: Completely focused on both of those at the same time and that will take us to the optimal situation that we need to be in at the quickest rate.
Speaker Change: Thank you for the time.
Speaker Change: Thank you.
Operator: And that will end our Q&A session. And this will conclude today's Forward Air First Quarter 2024 Earnings Conference Call. Please disconnect your lines at this time and have a wonderful day.
Speaker Change: And that will end, our Q&A session and this will conclude today's forward Air first quarter 2024 earnings Conference call. Please disconnect. Your lines at this time and have a wonderful day.
Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??
Operator: Yeah.
Operator: Hum.
Operator: Uh huh.
Operator: Hum.
Operator: [music].
Operator: Hum.
Operator: Okay.
Operator: [music].
Operator: Hum.
Operator: Mhm mhm.
Operator: Hum.
Operator:
Operator: Uh-huh.
Operator: [music].
Operator: Mhm.
Operator: Hum.
Operator: Hum.
Operator: Uh huh.
Operator: Oh.
Operator: [music].
Operator: Uh-huh.
Operator: [music].
Operator: Hum.
Speaker Change: [noise] [noise].
Operator:
Operator: Hum.
Operator: [music].
Operator: Hum.
Operator: Okay.
Operator: Uh huh.
Operator: Hum.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Operator: Hum.
Operator:
Operator: Hum.