Q2 2024 Forward Air Corp Earnings Call

August 7, 2024

Speaker Change: Please stand by. We're about to begin.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Forward Air second quarter 2024 earnings conference call. At this time, all participants have been placed on 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 one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two.

Speaker Change: so

Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the Forward Air Second Quarter 2024 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions following the presentation.

Stephanie Moore: Okay. So, I guess, I'm going to a different question here, so maybe a little bit more on the strategic side. Appreciate your color on kind of going from a go-to-market strategy on a product vertical basis. Are there any kind of incremental hiring needs to be made to kind of support this go-to-market strategy and kind of, you know, I understand running the two distinct sales forces, but any other kind of incremental changes?

Speaker Change: If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you please pick up your handset for best sound quality.

Operator: So others can hear your questions clearly, we ask that you please pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Mr. Tony Carino, Senior Vice President of Treasury and Investor Relations. Mr. Carino, please go ahead.

Speaker Change: Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Mr. Tony Carino, Senior Vice President of Treasury and Investor Relations. Mr. Carino, please go ahead, sir.

Shawn Stewart: I don't think so, Stephanie, not necessarily on a go-to-market basis. We've got, you know, as Jamie said earlier, we've got best-in-class people from both organizations. There are some great individuals all throughout the organization. So we are looking mainly internally as we move things around to, you know, promote and empower, step up people to take on new positions as we make this transition.

Tony Carino: Thank you, Operator, and good afternoon, everyone. Welcome to Forward Air's second quarter 2024 earnings conference call. Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the investor relations section of Forward Air's website at forwardair.com. With us this afternoon are Shawn Stewart, Chief Executive Officer, and Jamie Pierson, Chief Financial Officer.

Shawn Stewart: And if your question is, are there incremental capex dollars needed? No. Yeah, we're basically turning the organization on its side.

Tony Carino: Thank you, Operator, and good afternoon, everyone. Welcome to Forward Air's second quarter 2024 earnings conference call.

Tony Carino: By now, you should have received the press release announcing Forward Air's second quarter 2024 results, which was also furnished to the SEC on Form 8K. We have also filed a slide presentation outlining the second quarter 2024 earnings highlights and a business update. Please be aware that certain statements in the company's earnings release announcement and on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Stephanie Moore: Got it. And then lastly, for me, you know, maybe you could touch a little bit on the capital structure. Is it, you know, kind of at this point, what we should think about preferreds, minority interests, anything else? It's our understanding that you did vote on some of these changes, but, you know, kind of an update there would be helpful.

Jamie Pierson: Yeah, so at the shareholder meeting, I believe it was June 15th, they all voted to convert. But there's still some that are outstanding out there.

Speaker Change: Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com.

Speaker Change: With us this afternoon are Shawn Stewart, Chief Executive Officer, and Jamie Pearson, Chief Financial Officer.

Jamie Pierson: So on a fully diluted basis, I think it's going to be closer to $40 million. That election, Stephanie, is at the holders', I guess, behest. So it's nothing that we can force. I think it would just come in through time.

Tony Carino: By now, you should have received the press release announcing Forward Air's second quarter 2024 results.

Jamie Pierson: Okay, so we should still expect to kind of see some of those adjustments work for some time now. Yeah.

Stephanie Moore: Yeah, and again, there are numerous individual holders, and it's at their election when that would happen. But that's why I look at the fully diluted as-if converter basis at around 40 million shares.

Tony Carino: which was also furnished to the SEC on Form 8K. We have also filed a slide presentation outlining the second quarter 2024 earnings highlights and a business update.

Stephanie Moore: All right, I will turn it back over. Thank you. Thank you, and ladies and gentlemen...

Tony Carino: Please be aware that certain statements in the company's earnings release announcement and on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Tony Carino: This includes statements that are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts, including statements regarding our fiscal year 2024. These statements are not a guarantee of future performance and are subject to known and unknown risks. Uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and the press release and webcast presentation relating to this earnings call.

Operator: Thank you. And ladies and gentlemen, just a final reminder, Star One, please, for any further questions this afternoon. And gentlemen, it appears we have no further questions. Mr. Stewart, I'd like to hand things back to you, sir, for any closing comments. All right.

Tony Carino: Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Definitions and Reconciliations of these Non-Gap Measures to Their Most Direct Comparable Gap Measures are included in today's press release and webcast presentation. I will now turn the call over to Shawn.

Tony Carino: This includes statements which are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts, including statements regarding our fiscal year 2024.

Tony Carino: These statements are not a guarantee of future performance and are subject to known and unknown risks.

Tony Carino: uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Tony Carino: For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and the press release and webcast presentation relating to this earnings call.

Tony Carino: Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Definitions and Reconciliations of These Non-Gap Measures to Their Most Direct Comparable Gap Measures are included in today's press release and webcast presentation. I will now turn the call over to Shawn.

Tony Carino: Listeners are cautioned not to place undue reliance on these forward-looking statements.

Speaker Change: We'll speak only as of the date of this call.

Tony Carino: The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP.

Speaker Change: Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions.

Tony Carino: Definitions and reconciliations of these non-GAAP measures to their most direct comparable GAAP measures are included in today's press release and webcast presentation. I will now turn the call over to Shawn.

Shawn Stewart: Thank you, Tony, and good afternoon, everyone. Thank you for joining us on the call today. I would like to start by reiterating my excitement about the opportunity that lies ahead of us. We are in the nascent stages of taking two good companies and making them great as a single unified global logistics enterprise. We are building on their individual strengths and leveraging our global freight forwarding capabilities of the legacy Omni entities, while continuing our best-in-class domestic expedited LTL, truckload, and intermodal offload.

Shawn Stewart: All right, thank you so much. All right, so in closing, I want to personally thank everyone for their time and patience. As we bring out the best of Forward, as previously stated, there's still much to do, but we believe in the results, and we also believe that it'll be something we can all be proud of. So, we appreciate your time today, and we'll talk to you soon. Take care.

Operator: Thank you, Mr. Stewart. Ladies and gentlemen, that will conclude today's Forward Air Second Quarter Earnings Conference.

Shawn Stewart: Thank you Tony and good afternoon everyone. Thank you for joining the call today. I would like to start by reiterating my excitement about the opportunity that lies ahead of us.

Shawn Stewart: We are in the nascent stages of taking two good companies and making them great as a single unified global logistics enterprise.

Shawn Stewart: We are building on their individual strengths and leveraging our global freight forwarding capabilities of the legacy Omni entities, while continuing our best-in-class domestic expedited LTL, truckload, and intermodal offerings.

Shawn Stewart: Those legacy strengths are many, and I am proud to share that we are being recognized by objective third parties. For the fourth consecutive year, Forward has been recognized by Inbound Logistics Magazine as a top 100 third-party logistics provider, and our Omni team in Asia was honored with an award from SiriusLogic in recognition of the long-standing partnership, best-in-class customer service, and impeccable inventory accuracy we provide.

Shawn Stewart: Those legacy strengths are many, and I am proud to share that we are being recognized by objective third parties.

Speaker Change: For the fourth consecutive year, Ford has been recognized by Inbound Logistics Magazine.

Shawn Stewart: is a top 100 third-party logistics provider. And our Omni team in Asia was honored with an award from SiriusLogic in recognition of the long-standing partnership, best-in-class customer service, and impeccable inventory accuracy we provide.

Shawn Stewart: I'm incredibly proud of our associates who make our customers their first priority and treat them as an extension of our own family. It is because of them that we are able to receive such awards and retain and grow our customer base. Shifting gears for a second, I wanted to address some more holistic and strategic items before turning the call over to Jamie to report on the quarter's results.

Shawn Stewart: Shifting gears for a second, I wanted to address some more holistic and strategic items before turning the call over to Jamie to report on the quarter's results.

Shawn Stewart: First of all, the integration is progressing as planned and delivering the synergies and the cost savings as originally anticipated. The transaction closed a little over six months ago, and since that time, we have implemented certain initiatives. We expect these initiatives will reduce our operating expenses as well as reduce our real estate footprint and employee headcount, thus improving our operating leverage, which is expected to position us very well when the freight market returns to normal or improves from the current level.

Shawn Stewart: First of all, the integration is progressing as planned and delivering the synergies and the cost savings as originally anticipated. The transaction closed a little over six months ago, and since that time, we have implemented certain initiatives. We expect these initiatives will reduce our operating expenses, as well as reduce our real estate footprint and employee headcount, thus improving our operating leverage, which is expected to position us very well when the freight market returns to normal or improves from the current level.

Speaker Change: First of all, the integration is progressing as planned and delivering the synergies and the cost savings as originally anticipated. The transaction closed a little over six months ago, and since that time, we have actioned certain initiatives.

Jamie Pearson: We expect these initiatives will reduce our operating expenses.

Speaker Change: as well as reduce our real estate footprint.

Speaker Change: and Employee Headcount.

Speaker Change: thus improving our operating leverage.

Speaker Change: which is expected to position us very well when the freight market returns to normal or improves from the current levels.

Shawn Stewart: In terms of timing, we have already actioned all vital activities and expect to be at a full run rate savings basis by the end of the first quarter of 2025. Secondly, I want to discuss the undue concern over customer attrition. Did we lose some volume prior to and immediately after the transaction closed?

Speaker Change: In terms of timing, we have already actioned all vital activities and expect to be at a full run rate savings basis by the end of the first quarter, 2025.

Speaker Change: Secondly, I want to discuss the undue concern over customer attrition.

Speaker Change: Did we lose some volume prior to and immediately after the transaction closed? Yes, we did.

Shawn Stewart: Yes, we did. Very few, if any, companies in the world can go through a complex integration like the one we did and not experience some disruption. However, we have spoken to many of these customers and clarified our continued commitment to them, which aligns with our strategy. We have seen some of those volumes already return.

Speaker Change: Very few, if any, companies in the world can go through a complex integration like the one we did.

Speaker Change: and not experience some disruption.

Speaker Change: However, we have spoken to many of these customers and clarified our continued commitment to them, which aligns with our strategy.

Speaker Change: We have seen some of those volumes already return.

Shawn Stewart: We believe the service we provide will be the ultimate driver of customer retention and growth, and everyone on this call, as well as our customers, are aware of the level of service this company has and continues to provide. To that end, we are starting to see the power of the synergy of our combined capability. Customers continue to see the value in the combination of our air import service paired with our LTL network.

Shawn Stewart: We believe the service we provide will be the ultimate driver of customer retention and growth. And everyone on this call, as well as our customers, are aware of the level of service this company has and continues to provide. To that end, we are starting to see the power of the synergy of our combined capability; customers continue to see the value in the combination of our air import service paired with our LTL network.

Speaker Change: We believe the service we provide will be the ultimate driver of customer retention and growth. And everyone on this call, as well as our customers, are aware of the level of service this company has and continues to provide.

Speaker Change: To that end, we are starting to see the power of the synergy of our combined capabilities.

Speaker Change: Customers continue to see the value in the combination of our air import service paired with our LTL network.

Shawn Stewart: We mentioned this last quarter. Another recent customer win stemmed from our ability to offer contract logistics, warehousing, LTL, and truckload service in combination. We do not believe that this would have been possible prior to the Omni acquisition.

Speaker Change: We mentioned this last quarter. Another recent customer win stemmed from our ability to offer contract logistics warehousing, LTL, truckload service in combination.

Speaker Change: We do not believe that this would have been possible prior to the Omni acquisition.

Shawn Stewart: Thirdly, going forward. We will be transforming from two separate companies to a product-focused and operations-driven company. We will be going to market on an incredibly focused vertical basis in ground, air, ocean, contract logistics, and customs brokerage services. Transforming two multi-billion dollar companies with almost 7,000 employees does not occur overnight.

Speaker Change: Thirdly, going forward,

Speaker Change: We will be transforming from two separate companies to a product-focused and operations-driven company.

Speaker Change: We will be going to market on an incredibly focused vertical basis in ground, air, ocean, contract logistics, and customs brokerage services.

Speaker Change: transforming two multi-billion dollar companies with almost seven thousand employees does not occur overnight

Shawn Stewart: But my years of experience in this industry led me to believe that building trustworthy relationships, customizing best-in-class solutions, and offering competitive pricing with great on-time service is what customers want, and that's what we intend to give them. We expect to enter 2025 as one unified company, having carried out all necessary activities to take advantage of the combined company strength and having harmonized the cultures of two very successful and proud companies. Going forward, we will share the same goals, mission, values, and, above all, an employee base that shares the same focus on customer experiences that are the best in the industry.

Speaker Change: But my years of experience in this industry leads me to believe that building trustworthy relationships, customizing best-in-class solutions, and offering competitive pricing with great on-time service is what customer wants. And that's what we intend to give them.

Speaker Change: We expect to enter 2025 as one unified company, having actioned all necessary activities to take advantage of the combined company strength and having harmonized the cultures of two very successful and proud companies.

Speaker Change: Going forward, we will share the same goals, same mission, values, and above all, an employee base that shares the same focus on customer experiences that are best in the industry.

Shawn Stewart: We still have a lot of work to do, like harmonizing IT systems, business rules, benefit plans, and compensation plans, none of which I take lightly and certainly not easily, but the most important. We intend to have our operations fully integrated with one exception. Our ground LTL will stay neutral as we remain an open network supporting our 3PL and Freight Forwarder customer base.

Shawn Stewart: We still have a lot of work to do, like harmonizing IT systems, business rules, benefit plans, and compensation plans, none of which I take lightly and certainly not easily. But the most important thing, we intend to have our operations fully integrated with one exception. Our ground LTL will stay neutral as we remain an open network supporting our 3PL and Freight Forwarder customer base.

Speaker Change: We still have a lot of work to do like harmonizing of IT systems, business rules, benefit plans, compensation plans, none of which I take lightly and certainly not easy.

Speaker Change: But the most important...

Speaker Change: We intend to have our operations fully integrated, with one exception.

Speaker Change: Our ground LTL will stay neutral as we remain an open network supporting our 3PL and Freight Forwarder customer base.

Shawn Stewart: This will allow us to take full advantage of our combined operational earning power by the end of the first quarter of 2025. In closing, on the first call, I was asked why I joined Forward. Today, I am more resolute in my decision than I was even three months ago. I believe in the combined power of this company. That is not to say that there will not be setbacks along the way, because there will be. But rather, the difficulty should be worth the effort.

Speaker Change: This will allow us to take full advantage of our combined operational earning power by the end of the first quarter in 2025.

Speaker Change: In closing, in the first call, I was asked why I joined Forward. Today, I am more resolute in my decision than I was even three months ago.

Speaker Change: I believe in the combined power of this company.

Speaker Change: that is not to say that there will not be set back along the way because there will be but rather the difficulty should be worth to effort and i am excited about where we are heading

Shawn Stewart: And I am excited about where we are heading. Another reason for my excitement is the arrival of Jamie, whose combined experience is helping me lead and drive the organization currently and into the future. With that, I will give some closing comments at the end, but I will turn it over to Jamie to go through the results for the quarter.

Speaker Change: Another reason for my excitement is attributable to the arrival of Jamie, whose collective experience is helping me lead and drive the organization currently and into the future.

Speaker Change: With that, I will give some closing comments at the end, but I will turn it over to Jamie to go through the results for the quarter.

Jamie Pierson: Thanks, Shawn, and good afternoon, everyone. Before jumping right in, I'd like to take a second and thank everyone for their warm wishes. I know it's barely been two months since I darkened the door, but everyone has been incredibly gracious, and I appreciate everyone's support to date and look forward to reconnecting with many of you from my past.

Jamie Pierson: Thanks, Shawn. And good afternoon, everyone. Before jumping right in, I'd like to take a second and thank everyone for their warm wishes. I know it's barely been two months since I darkened the door, but everyone has been incredibly gracious.

Jamie Pearson: Thanks, Shawn, and good afternoon, everyone. Before jumping right in, I'd like to take a second and thank everyone for their warm wishes.

Jamie Pearson: I know it's barely been two months since darkening the door, but everyone has been incredibly gracious and I appreciate everyone's support to date and look forward to reconnecting with many of you from my past.

Jamie Pierson: And before you ask what attracted me to this opportunity, let me answer in advance and say that the past 20 years of my experience have been preparing me for this very role. From my previous public company CFO roles, to my operating advisory days, to my transportation experience, they have all led me here today talking to you. Speaking selfishly and personally, let me say that I'm honored to be a part of this team and look forward to the great things to come. I'm also excited for the opportunity to work alongside Shawn.

Jamie Pierson: And I appreciate everyone's support to date and look forward to reconnecting with many of you from my past. And before you ask what attracted me to this opportunity, let me answer in advance and say that the past 20 years of my experience have been preparing me for this very role, from my previous public company CFO roles, to my operating advisory days, to my transportation experience. They have all led me here today to talk to you.

Jamie Pearson: And before you ask what attracted me to this opportunity, let me answer in advance and say that the past 20 years of my experience has been preparing me for this very role.

Jamie Pearson: From our previous public company CFO roles, to my operating advisory days, to my transportation experience, they have all led me here today talking to you.

Jamie Pierson: Speaking selfishly and personally, let me say that I'm honored to be a part of this team and look forward to the great things to come. I'm also excited for the opportunity to work alongside Shawn. He's a very skilled and proven leader, and his long-term sales and operating experience is very complementary to my finance acumen, and I'm confident in our collective abilities to get the job done. In terms of focus and priorities, out of the box.

Speaker Change: Selfishly and personally speaking, let me say that I'm honored to be a part of this team and look forward to the great things to come.

Jamie Pierson: He's a very skilled and proven leader, and his long-term sales and operating experience is very complementary to my finance acumen, and I'm confident in our collective abilities to get the job done. In terms of focus and priorities, out of the box. Notwithstanding the obvious performance, leverage, covenant compliance, and liquidity, it has been and will be for the foreseeable future, people, processes, and data. Specifically, upgrading and integrating the Finance and Accounting Team, instituting more rigorous and disciplined financial and accounting processes, and access to actionable data.

Speaker Change: I'm also excited for the opportunity to work alongside Shawn. He's a very skilled and proven leader, and his long-tenured sales and operating experience is very complementary to my finance acumen, and I'm confident in our collective abilities to get the job done.

Jamie Pierson: Notwithstanding the obvious performance, leverage, covenant compliance, and liquidity, it has been, and will be for the foreseeable future, a people business. So we have a ton of work to do here, and the product-specific focus that Shawn mentioned earlier will require yet another heavy lift. But we will get it done. In terms of the level of effort, I want to be very clear.

Speaker Change: In terms of focus and priorities out-of-the-box, notwithstanding the obvious performance, leverage, covenant compliance, and liquidity, it has been and will be for the foreseeable future people,

Speaker Change: Processes, and Data.

Speaker Change: Specifically, upgrading and integrating the finance and accounting teams, instituting more rigorous and disciplined financial and accounting processes, and access to actionable data.

Jamie Pierson: All of this should lead to an ability to run the business on a more predictive, data-driven basis and increase credibility through our ability to deliver on commitments and to better explain our results to you. As everyone knows, Omni was not a public company and consequently lacks the reporting and advanced analytics that I like to utilize and am accustomed to seeing. So we have a ton of work to do here.

Speaker Change: All of this should lead to an ability to run the business on a more predictive, data-driven basis and to increase credibility through our ability to deliver on commitments and to better explain our results to you.

Speaker Change: As everyone knows, Omni was not a public company and consequently lacks the reporting and advanced analytics that I like to utilize and am accustomed to seeing.

Jamie Pierson: And the product-specific focus that Shawn mentioned earlier will require yet another heavy lift. But we will get it done. In terms of the level of effort, I want to be very clear. Transformations of this size, magnitude, and complexity are never linear.

Speaker Change: So we have a ton of work to do here, and the product-specific focus that Shawn mentioned earlier will require yet another heavy lift, but we will get it done.

Speaker Change: In terms of level of effort, I want to be very clear.

Speaker Change: Transformations of this size, magnitude, and complexity are never linear.

Jamie Pierson: And for those of you who have been involved in one, actually on the front lines, then you know there are days when the rate of improvement is straight up; there are some days that are sideways, and there are even days that are down or backwards. What is important is creating the time and space to execute on the end goal and the associated timing to get there. Now that I've got all the words out of the way, let's turn to the numbers for the quarter.

Speaker Change: And for those of you who have been involved in one, actually on the front lines, then you know there are days when the rate of improvement is straight up, there are some days that are sideways, and there are even those days that are down or backwards.

Speaker Change: What is important is creating the time and space to execute on the end goal and the associated timing to get there.

Speaker Change: Now that I've got all the words out of the way, let's turn to the numbers for the quarter.

Jamie Pierson: I know many of you all too well and know that you're not listening to a single word I'm saying, but you're scouring through the press release for the stats and the results, so I'll try to keep my comments short and tight so we can leave more time at the end for questions. Our second quarter revenue was $644 million, an increase of 93%, or $310 million, as compared to the second quarter of the prior year. The increase over the prior year was obviously largely driven by the Omni-Trans Act.

Speaker Change: I know many of you all too well and know that you're not listening to a single word I'm saying, but you're scouring through the press release for the stats and the results, so I'll try to keep my comments high and tight so we can leave more time at the end for questions.

Jamie Pierson: Our second quarter revenue was $644 million, an increase of 93%, or $310 million, as compared to the second quarter of the prior year. However, revenue from Intermodal decreased $5 million, or 8%, to $59 million from the previous year's comparable quarter of $64 million.

Speaker Change: Our second quarter revenue was $644 million, an increase of 93%, or $310 million, as compared to the second quarter of the prior year.

Speaker Change: The increase over the prior year was obviously largely driven by the Omni transaction.

Jamie Pierson: More germanely, it would be to look at the revenue from our three reporting segments, Expedited, Intermodal, and Omni, which were as follows. Revenue from expedited shipments increased $22 million, or 8%, to $291 million from the previous year's comparable quarter of $269 million. The increase is primarily driven by small yet consistent gains across all revenue operating KPIs, namely a 1.4% increase in shipments per day. 2.5% higher weight per shipment and, most importantly, higher revenue per shipment ex-fuel by 3.7% Revenue from Intermodal decreased $5 million, or 8%, to $59 million, from the previous year's comparable quarter of $64 million.

Speaker Change: More germanely, would be to look at the revenue from our three reporting segments.

Jamie Pierson: The decrease is primarily driven by 4.8% fewer shipments for the comparative quarter and 3.2% lower revenue per shipment as the industry normalizes from the post-pandemic exuberance winding down in the second quarter of 2020. However, the revenue increase from Omni's results, which were not included for the previous year's comparable quarter, was the full $311 million.

Speaker Change: Expedited, Intermodal, and Omni which were as follows

Speaker Change: Revenue from Expediti to increase $22 million, or 8%, to $291 million from the previous year's comparable quarter of $269 million.

Speaker Change: The increase is primarily driven by small yet consistent gains across all revenue operating KPIs.

Speaker Change: namely a 1.4 percent increase in shipments per day

Speaker Change: 2.5% higher weight per shipment, and most importantly, higher revenue per shipment X fuel at 3.7%.

Jamie Pierson: The decrease is primarily driven by 4.8% fewer shipments for the comparative quarter and 3.2% lower revenue per shipment as the industry normalizes from the post-pandemic exuberance winding down in the second quarter of 2020. I believe it is equally as important to note that this is a non-cash charge. On page 9 of that same presentation, and based on our gross debt balance at the end of the quarter, and after netting domestic unrestricted cash, our net debt to consolidated LTM EBITDA covenant was 5.2 times compared to a maximum covenant level of six times, implying an approximate $40 million cushion against consolidated EBITDA for the quarter.

Speaker Change: Revenue from Intermodal decreased $5 million, or 8% to $59 million, from the previous year's comparable quarter of $64 million.

Speaker Change: The decrease is primarily driven by 4.8 percent less shipments for the comparative quarter and 3.2 percent lower revenue per shipment as the industry normalizes from the post-pandemic exuberance winding down in the second quarter of 2023.

Speaker Change: The revenue increase from Omni's results, which were not included for the previous year's comparable quarter, was the full $311 million.

Jamie Pierson: Turning to income or loss from operations, it is incredibly important to note that we incurred an impairment charge in the amount of $1.1 billion related to our Omni Reporting Unit that negatively impacted the quarter. For those of you that care, we are simply following accounting guidance as it is customary to revalue goodwill based on current market conditions as indications warrant, but no less than on an annual basis. On a pre-impairment basis, the loss from operations would have been $3 million.

Speaker Change: Turning to income or loss from operations, it is incredibly important to note that we incurred an impairment charge in the amount of $1.1 billion related to our Omni Reporting Unit that negatively impacted the quarter.

Speaker Change: For those of you that care, we are simply following accounting guidance as it is customary to re-value goodwill based on current market conditions as indications warrant, but no less than on an annual basis.

Speaker Change: On a pre-impairment basis, loss from operations would have been $3 million.

Jamie Pierson: I believe it is equally as important to note that this is a non-cash charge. Again, we're simply following accounting guidance on a non-cash charge and are moving forward on integrating two companies to form a singular global logistics powerhouse. As for Consolidated EBITDA, as defined in our credit agreement, we reported Consolidated EBITDA for 2Q24 of $81 million. Since we did not own Omni in the second quarter of 2023, it is difficult to make a meaningful year-over-year comparison, so we will focus our comments on a sequential basis. The $81 million represents a $26 million increase in consolidated EBITDA as compared to the first quarter of this year.

Speaker Change: I believe it is equally as important to note that this is a non-cash charge.

Speaker Change: Again, we're simply following accounting guidance on a non-cash charge and are moving forward on integrating two companies to form a singular global logistics powerhouse.

Speaker Change: As for Consolidated EBITDA, as defined in our credit agreement, we reported Consolidated EBITDA for 2Q24 of $81 million.

Speaker Change: Since we did not own Omni in the second quarter of 2023, it is difficult to make a meaningful year-over-year comparison, so we will focus our comments on a sequential basis.

Speaker Change: To wit, the $81 million represents a $26 million increase in consolidated EBITDA as compared to the first quarter of this year.

Jamie Pierson: Our cash used by operations in the second quarter of 2024 was $45 million compared to a cash consumed by operations of $52 million in the first quarter of this year. As illustrated on page 11 of the Earnings Presentation Uploaded Chart website, approximately $34 million of cash was consumed this quarter from legacy transaction costs and professional fees and another $46 million from interest payments. On page nine of that same presentation, and based on our gross debt balance at the end of the quarter, and after netting domestic unrestricted cash, our net debt to consolidated LTM EBITDA covenant was 5.2 times, compared to a maximum covenant level of six times, implying an approximate $40 million cushion against consolidated EBITDA for the quarter. We have also included a quarterly consolidated EBITDA reconciliation in the append I thought you guys would appreciate that.

Speaker Change: Our cash used by operations in the second quarter of 2024 was $45 million, compared to a cash consumed by operations of $52 million in the first quarter of this year.

Speaker Change: As illustrated on page 11 of the earnings presentation uploaded to our website, approximately $34 million of cash was consumed this quarter from legacy transaction costs and professional fees and another $46 million from interest payments.

Speaker Change: on page 9 of that same presentation.

Speaker Change: And based on our gross debt balance at the end of the quarter, and after netting domestic unrestricted cash, our net debt to consolidated LTM EBITDA covenant was 5.2 times compared to a maximum covenant level of 6 times.

Speaker Change: implying an approximate 40 million dollar cushion against the Consolidated EBITDA for the quarter.

Jamie Pierson: We have also included a quarterly consolidated EBITDA reconciliation in the appendix to help you build your models and track our progress. I thought you guys would appreciate that. Turning to liquidity, we ended the quarter with total cash of $105 million. After adding that $105 million to $340 million of availability under our revolving credit facility, our liquidity was $445 million at the end of the quarter.

Speaker Change: We have also included a quarterly consolidated EBITDA reconciliation in the appendix to help you build your models and track our progress. I thought you guys would appreciate that.

Jamie Pierson: Turning to liquidity, we ended the quarter with total cash of $105 million. After adding that $105 million to $340 million of availability under our revolving credit facility, our liquidity was $445 million at the end of the quarter. For those of you who know me from my previous quarterly calls, you will remember that I generally try to leave you with a couple of additional points of color every quarter. Holding on to that tradition, I will try to do the same here, as there is no shortage of things to talk about.

Speaker Change: Turning to liquidity, we ended the quarter with total cash of $105 million.

Speaker Change: After adding that $105 to $340 million of availability under our revolving credit facility, liquidity was $445 million at the end of the quarter.

Speaker Change: For those of you who know me from my previous quarterly calls, you will remember that I generally try to leave you with a couple of additional points of color every quarter.

Jamie Pierson: Holding on to that tradition, I will try to do the same here as there is no shortage of things to talk about. First of all, I would like to address the status of our integration. If you will refer to page 7 of the presentation, you will see the stages we have mapped out inclusive of forecasted or anticipated savings. For reference, we have been managing expectations to approximately $75 million in annualized savings.

Speaker Change: Holding on to that tradition, I will try to do the same here as there is no shortage of things to talk about. First of all, I would like to address the status of our integration.

Jamie Pierson: First of all, I would like to address the status of our integration. If you refer to page 7 of the presentation, you will see the stages we have mapped out, inclusive of forecasted or anticipated savings, for reference. We have been managing expectations to approximately $75 million in annualized savings. The good news is that we now expect to reach that run rate earlier than previously communicated and have increased the anticipated amount of savings.

Speaker Change: If you will refer to page 7 of the presentation, you will see the stages we have mapped out inclusive of forecasted or anticipated savings.

Speaker Change: for reference.

Speaker Change: We have been managing expectations to approximately $75 million in annualized savings.

Speaker Change: The good news is, we now expect to reach that run rate earlier than previously communicated and have increased the anticipated amount of savings.

Jamie Pierson: Now, we expect to reach that level by the end of the first quarter of 2025 and have added an approximate $20 million of additional annualized headcount savings from actions already taken in June of this year. Point two.

Speaker Change: Now, we expect to reach that level by the end of the first quarter of 2025 and have added an approximate $20 million of additional annualized headcount savings from actions already taken in June of this year.

Jamie Pierson: Everyone is fully aware of our need to de-leverage. To that end, since inception, we have commissioned a full portfolio review of all of our operations with a particular focus on those we deem non-core to our strategy. Thirdly, is cash consumption. In our first quarter call, we did not do a very good job explaining the decrease in cash. In an effort to be transparent, please refer to page 11 of the posted presentation. Literally 100% of the cash consumed in the first quarter was consumed by transaction costs. Integration expenses

Jamie Pierson: Everyone is fully aware of our need to de-leverage. To that end, since inception, we have commissioned a full portfolio review of all of our operations with a particular focus on those we deem non-core to our strategy. And before you ask, let me say in advance that we will not publicly comment on which operations those are. Asset dispositions aside, the most important thing we can do to deliver is to operate and generate cash.

Speaker Change: Point two.

Speaker Change: Everyone is fully aware of our need to de-lever. To that end, since starting, we have commissioned a full portfolio review of all of our operations with a particular focus on those we deem non-core to our strategy.

Speaker Change: And before you ask, let me say in advance that we will not publicly comment on which operations those are.

Speaker Change: Asset dispositions aside, the most important thing we can do to deliver is to operate and generate cash.

Jamie Pierson: Since it is a net-debt calculation, shrinking the numerator while simultaneously growing the denominator will do wonders for our leverage profile. Thirdly, there is cash consumption. In our first quarter call, we did not do a very good job explaining the decrease in cash. In an effort to be transparent, please refer to page 11 of the posted presentation. Literally 100% of the cash consumed in the first quarter was consumed by transaction costs and integration expenses. Debt Principal Paydown, Interest Payments, and Earnouts in Purchase Price Adjustments from Previous Transactions In the second quarter.

Speaker Change: Since it is a net-debt calculation, shrinking the numerator while simultaneously growing the denominator will do wonders for our leverage profile.

Speaker Change: Thirdly, is cash consumption.

Speaker Change: In our first quarter call, we did not do a very good job explaining the decrease in cash.

Speaker Change: In an effort to be transparent, please reference page 11 of the posted presentation.

Speaker Change: Literally 100% of the cash consumed in the first quarter was consumed by transaction costs,

Speaker Change: Integration Expenses

Speaker Change: Debt Principled Paydown, Interest Payments, and Earnouts in Purchase Price Adjustments from Previous Transactions.

Jamie Pierson: Very similar, albeit on a much more scaled down basis. As previously stated, approximately $34 million of the cash consumed this quarter was from legacy transaction costs and professional fees, and another $46 million from interest. With the transaction expenses winding down, going forward, we anticipate being neutral to inflecting cash flow positive in the third or fourth quarters of this year. And for my final point, while I have only been here for a little over two months.

Speaker Change: In the second quarter, very similar, albeit on a much more scaled-down basis,

Speaker Change: As previously stated, approximately $34 million of the cash was consumed this quarter was from legacy transaction costs and professional fees, and another $46 million from interest payments.

Speaker Change: With the transaction expenses winding down, going forward, we anticipate being neutral to inflecting cash flow positives in the third or fourth quarters of this year.

Jamie Pierson: And for my final point... I see opportunity around just about every corner. Please do not misunderstand me; culturally, we have a considerable list ahead of us.

Speaker Change: And for my final point, while I have only been here a little over two months,

Jamie Pierson: I see opportunity around just about every corner. Please do not misunderstand me; culturally, we have a considerable lift ahead of us. Operationally, we have two very good companies who just got distracted during a fairly tumultuous period of time, and 7,000 very hardworking employees that have recently joined forces as one. I do not want anyone thinking that we have all the answers; far from it. But we are almost literally working around the clock to build a robust, consolidated reporting organization that will partner with sales and operations to take full advantage of the opportunity we have been given.

Speaker Change: I see opportunity around just about every corner. Please do not get me wrong, culturally, we have a considerable list ahead of us.

Jamie Pierson: Operationally, we have two very good companies who just got distracted during a fairly tumultuous period of time, and 7,000 very hardworking employees that have recently joined forces as one. I do not want anyone thinking that we have all the answers; far from it. But we are almost literally working around the clock to build a robust, consolidated reporting organization that will partner with sales and operations to take full advantage of the opportunity we have been given.

Speaker Change: Operationally, we have two very good companies who just got distracted during a fairly tumultuous period of time and 7,000 very hard-working employees that have recently joined forces as one.

Speaker Change: I do not want anyone thinking that we have all the answers. Far from it.

Speaker Change: But we are almost literally working around the clock to build a robust, consolidated reporting organization that will partner with sales and ops to take full advantage of the opportunity we have been given.

Jamie Pierson: To date, there hasn't been anything that I have not seen before, and on one very, very rare occasion where I speak for Shawn and the extended leadership team, we are most concerned with putting points on the board versus hyperbole or press releases. So I would not look for us to say much, but we will spend our time, energy, and effort on the task at hand in improving results. I will now pass the mic back over to Shawn for a closing comment before Q&A.

Speaker Change: To date, there hasn't been anything that I have not seen before, and in one very, very rare occasion where I speak for Shawn and the extended leadership team, we are most concerned with putting points on the board.

Speaker Change: versus hyperbole or press releases.

Speaker Change: So, I would not look for us to say much, but we will spend our time, energy, and effort on the task at hand in improving results.

Speaker Change: I will now pass the mic back over to Shawn for a closing comment before Q&A.

Shawn Stewart: All right. Thank you, Jamie.

Shawn Stewart: All right, thank you, Jamie. As promised on the first quarter call, I committed to giving full year 2024 guidance. While the external macro environment has remained challenging, and the integration itself introduces a level of volatility into the result, I will share with you that I believe that we will end 2024 with consolidated EBITDA, as defined in our credit agreement, of somewhere between $310 to $325 million. As I've already shared, we have a lot of work to do. While we cannot declare victory yet, I am confident in this team's ability to deliver, and I'm honored to lead this team. I will now turn the call over to the operator to take questions.

Shawn Stewart: As promised on the first quarter call, I committed to giving full year 2024 guidance. However, the external macro environment has remained challenging, and the integration itself introduces a level of volatility into the result. I will share with you that I believe that we will end 2024 with consolidated EBITDA, as defined in our credit agreement, of somewhere between $310 and $325 million. As I have already shared, we have a lot of work to do. While we cannot declare victory yet, I am confident in this team's ability to deliver, and I am honored to lead this team. I will now turn the call over to the operator to take questions.

Shawn Stewart: al right thank you jamie

Shawn Stewart: As promised on the first quarter call, I committed to giving full year 2024 guidance.

Shawn Stewart: While the external macro environment has remained challenging and the integration itself introduces a level of volatility into the results.

Shawn Stewart: I will share with you that I believe that we will end 2024 with consolidated EBITDA as defined in our credit agreement of somewhere between $310 to $325 million.

Speaker Change: As already shared, we have a lot of work to do. While we cannot declare victory yet, I am confident in this team's ability to deliver, and I am honored to lead this team.

Speaker Change: I will now turn the call to the operator to take questions. Operator?

Operator: Thank you very much, Mr. Stewart. Ladies and gentlemen, at this time, if you would like to ask a question, please press star one on your telephone keypad, and you may remove yourself from the queue at any time by pressing star two. Once again, star one for questions. We go first this afternoon to Bruce Chan of Stiefel.

Speaker Change: Thank you very much Mr. Stewart. Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your telephone keypad, and you may remove yourself from the queue at any time by pressing star 2. Once again, star 1 for questions. We go first this afternoon to Bruce Chan of Stiefel.

Bruce Chan: Yeah, thanks, operator. And, you know, good afternoon, gents. Really good to have you on the call. Certainly appreciate the time here. A bunch of questions. Maybe I'll just, you know, keep it to a few and then jump back, jump back in line here.

Shawn Stewart: You know, maybe to start off on the class rate sales side, I know that had been one of the key strengths of the legacy Omni business. I'm wondering if you've seen any significant departure or attrition there just in terms of the sales force. And, you know, do we still feel like that high growth organization is intact there?

Bruce Chan: You know, maybe to start off on the class rate sales side, I know, you know, that had been one of the key strengths.

Speaker Change: for the legacy Omni business. Wondering if you've seen any significant departure or attrition there just in terms of the sales force and do we still feel like that high growth organization is intact there?

Shawn Stewart: Yeah, good afternoon, Bruce. It's good to talk to you. Um, yeah, we've seen no real attrition, to be honest with you. I would say the biggest impact is just being able to sit down with a team and explain the vision to them of where we're going. They've been very invigorating in the last several months, and even better things to come than probably legacy before I arrived. So, yes, still very, very excited about our future with that Omni sales team on the direct side. And we see the pipeline increasing. We see high, high achievement rates in converting that pipeline. And they're moving extremely fast. So there is more to come.

Speaker Change: Yeah, good afternoon, Bruce. Good to talk to you. Yeah, we've seen no real attrition, to be honest with you. I would say the biggest impact is just being able to sit down with a team.

Speaker Change: explain the vision to them of where we're going.

Speaker Change: They've been very invigorating in the last several months and even better things to come than even probably legacy before I arrived of what was said.

Speaker Change: So, yes.

Speaker Change: still very very excited about our future with that omn sales team on the direct side and we see the pipeline increasing we see high high achievement rates on converting that pipeline

Speaker Change: and they're moving extremely fast. So more to come.

Jamie Pierson: Okay, great. That's super helpful. And then, you know, really appreciate the color on the 2024 guidance and, you know, sticking to your promise there, Shawn. Obviously, there are some moving parts in terms of how the EBITDA is tabulated. Maybe if you could offer any color on, you know, what the revenue and OR assumptions that are used to kind of underpin that guidance might be helpful.

Speaker Change: Okay, great. That's super helpful. And then, you know, really appreciate the color on the 2024 guidance and, you know, sticking to your promise there, Shawn. Obviously, some moving parts in terms of how the EBITDA is tabulated.

Speaker Change: Maybe if you can offer any color on, you know, what the revenue and OR assumptions that are used to kind of underpin that guidance might be helpful.

Jamie Pierson: Hey Bruce, it's Jamie. Yeah, we're not going to give you any guidance on anything other than what we did already. In terms of where we are, you know, there's still a lot of volatility in the numbers. So our perspective is really running the business between now and the end of the year and doing better than, you know, obviously what we're trying to commit to here. So we're going to stick to the guidance that we've given.

Speaker Change: Hey Bruce, it's Jamie. Yeah, we're not going to give you any guidance on anything other than what we did already in terms of where we are

Speaker Change: There's still a lot of volatility that's in the numbers, so our perspective...

Speaker Change: is really running the business between now and the end of the year and doing better than, you know, obviously what we're trying to commit to here. So we're going to stick to the guidance that we've given and then in terms of the pieces...

Speaker Change: There's still some of the segments in between that are going to, some will contribute more than others, but we're going to change or intend to change the reporting segments again by the end of the year, the way that Shawn said during his prepared remarks.

Jamie Pierson: And then in terms of the pieces, you know, there's still some of the segments in between there; some will contribute more than others. But, you know, we're going to change or intend to change the reporting segments again by the end of the year, the way that Shawn said during his prepared remarks. It's absolutely the right thing to do, Bruce, especially for the long-term success of this company and the business. But it's going to add another level of granularity to how we run this business. But We're not prepared to report on anything other than what we have already been given.

Speaker Change: It's absolutely the right thing to do, Bruce, especially for the long-term success of this company and the business, but it's going to add another level of granularity in how we run this business, but we're not prepared to report on anything other than what we've already given.

Jamie Pierson: Okay, that's fair. And then maybe just, you know, a last one here on the topic of granularity. I know you said you're still working on that, but if I'm to think through the volume performance in the quarter, especially on the legacy forward air side of the house, any kind of commentary that you can give as far as, you know, how the revenue progression and specifically volume trended between, you know, the kind of classic A to A business and some of the other lines?

Speaker Change: Okay, that's fair. And then maybe just, you know, a last one here, you know, on the topic of granularity. I know you said you're still working on that, but if I'm to think through the volume performance in the quarter, especially

Speaker Change: You know, on the legacy forward air side of the house. Any kind of commentary that you can give as far as, you know, how the revenue progression and specifically volume trended between, you know, the kind of classic A to A business and some of the other lines?

Jamie Pierson: Yeah, it is in terms of where I've been here briefly, literally, it's, you know, not even three months, two and a half months, not prepared to go into that just yet. What I would say is, from our perspective, you see small marginal gains across the entire segment for the quarter. Pounds are up, shipments are up, revenue per hundredweight is up, and revenue per shipment x fuel is up. From my perspective, we'll get more granular once we get into the segment pieces. But right now, I'm just focusing on the overall segment as opposed to the individual pieces. Okay.

Speaker Change: Yeah, it is, in terms of where I've been here, Bruce, it's literally, you know, not even three months, two and a half months, not prepared to go in that just yet. What I would say is

Bruce Chan: Okay, I got it. Appreciate the time, and I'll hop back.

Speaker Change: From our perspective, you see the small marginal gains across the entire segment for the quarter. Pounds are up, shipments are up, revenue per hundredweight is up, revenue per shipment x-fuel is up.

Speaker Change: From my perspective, we'll get more granular once we get into the segment pieces, but right now I'm just focusing on the total segment as opposed to the individual pieces.

Speaker Change: Okay, got it. Appreciate the time and I'll hop back in queue.

Bascome Majors: Thank you. We go next now to Bascome Majors at Susquehanna.

Speaker Change: Thank you. We go next now to Bascome Majors at Susquehanna.

Bascome Majors: Good evening. And as we look forward to your opportunity to reach that neutral to cash flow positive sometime in the second half of this year, can you walk us through some of the assumptions to get there? I guess we have your EBITDA guidance, which implies you do maybe, on average, 10 million or more per quarter in 3Q and 4Q than you did in the second quarter. But what else is happening in the cash flow model to get you to that bridge? Thank you. Yeah, absolutely.

Bascome Majors: Good evening.

Bascome Majors: As we look forward to your opportunity to reach that neutral to cash flow positive sometime in the second half of this year,

Bascome Majors: Can you walk us through some of the assumptions to get there? I guess we have your EBITDA guidance, which implies you do maybe

Bascome Majors: On average, $10 million or more per quarter in 3Q and 4Q than you did in the second quarter. But what else is happening on the cash flow model to get you to that bridge? Thank you.

Jamie Pierson: Yeah, so there are two primary assumptions going there, which is really turning down these one-time items as it pertains to legacy transactional and integration costs, it goes with that, and any cash payments that related to Bascome, things that occurred in 2023 that we're having to pay for in 2024. Things like earnouts from previous deals, working capital true-ups from previous dispositions. So the assumption to get there is really not that great, candid

Jamie Pierson: Yeah, absolutely. Bascome, it's good to finally meet you and talk to you.

Speaker Change: Yeah, absolutely, Bascom. Good to finally meet you and talk to you. Yeah, so there are two primary assumptions going there.

Speaker Change: is really turning down these one-time items as it pertains to legacy, transactional, and integration costs. It goes with that.

Bascome Majors: and any cash payments that related to things that occurred in 2023.

Jamie Pierson: 33 million of the cash consumption in this quarter of the 68 was from those kinds of one-time items. Other than that, covering debt service at $46 million, we don't have to improve the operations that much to actually become cash flow break-even, if not positive, on a levered basis. So I think you'll see small improvements, the assumption is small improvements on the expedited, especially in the truckload side, intermodal, just holding serve to their performing well, you can see here in the press release, and then the continued increase in performance on the Omni side.

Speaker Change: that we're having to pay for in twothousandandtwenty i'm orry happen in twenty three we're payingfor in twenty four

Speaker Change: Things like earnouts from previous deals, working capital true-ups from previous dispositions. So the assumption to get there is really not that great, candidly. $33 million of the cash consumption in this quarter of the 68 was from those kind of one-time items.

Speaker Change: Other than that, covering debt service at $46 million, we don't have to improve the operations that much.

Speaker Change: to actually actually become cash flow breakke even it's not positive on a levered basis

Speaker Change: so i think you'll see small improvements asmption are small improvements on the excise exexpperedited especially in the truckload side intermodal just holding serve to the performing well you can see here inthe press release and in the continued increase in performance

Jamie Pierson: If you look at the first quarter of this year, Omni reported negative $6 million, and EBITDA, this quarter, was positive $20 million. So I'm really focused on the sequential improvement in Omni and continued small improvements in the other aspects of our business, and turning down those one-time transactional expenses that will get us to that magical break-even point.

Speaker Change: on the Omni side.

Speaker Change: If you look at the first quarter of this year, Omni reported negative $6 million and EBITDA this quarter positive $20 million.

Speaker Change: So I'm really focused on the sequential improvement in Omni and continued small improvements in the other aspects of our business and turning down those one-time transactional expenses that will get us to that magical break-even point.

Jamie Pierson: And extending that, you're at 5.2 times the leverage ratio on your Covenant calc right now. As you get into the back half of the year, where do you expect that headroom, based on your forecasting, to stay? And do you have full access to the liquidity on your revolver in this condition? Yeah, so the answer.

Speaker Change: and

Speaker Change: Extending that, you're at 5.2 times leverage ratio on your covenant calc right now. As you get into the back half of the year, where do you expect that headroom based on your forecasting to stay and do you have full access to the liquidity on your revolver in this condition? Thank you.

Jamie Pierson: Yeah, so the answer in backwards order: yes, we still have full access. We're in compliance, and we have $445 million of liquidity since we are in compliance. So one thing that we kind of skip past in some of the prepared remarks is that having a little less than a half a billion dollars in liquidity, $445 million, to be exact, is a good spot to be in. In terms of where we're going to go through the back half of the year, if you look at the appendix, I know Bascome, we've not given you much time to do this, but we're trying to be more transparent.

Speaker Change: Yes, the answer is in backward order. Yes, we still have full access. We're in compliance.

Speaker Change: And we have $445 million of liquidity since we are in compliance. So one thing that we kind of skipped past in some of the, I guess, prepared remarks

Speaker Change: is that having a little less than a half a billion dollars in liquidity.

Speaker Change: $445 million to be exact.

Speaker Change: is a good spot to be in.

Speaker Change: In terms of where we're going to go through the back half of the year, if you look at the appendix, I know, Bascom, we've not given you much time.

Bascom: to do this, but we're trying to be more transparent. If you think about where we are, or where we ended this quarter at $325 million in LTM consolidated EBITDA, the guidance that we just gave you is really sideways.

Jamie Pierson: If you think about where we are or where we ended this quarter at $325 million in LTM consolidated EBITDA, the guidance that we just gave you is really sideways. And so there is not a tremendous amount of improvement that we're forecasting in the business. And the step down in the covenant goes from six today to five and a half at the end of the year. So we're still forecasting to be in compliance at 5.2.

Speaker Change: And so there's not a tremendous amount of improvement that we're forecasting in the business. And the step down in the covenant goes from six today to five and a half at the end of the year. So we're still forecasting to be in compliance at 5.2 times.

Bascome Majors: And lastly, for me, you made a comment in your prepared remarks, Jamie, about just giving yourself the time and space to execute on the strategy and deliver on the transformation. And, you know, you've made some pretty pointed comments on the lender and cash flow constraints and risk. And I think that gives the market a lot more comfort on that, you know, on your list of what could go wrong or be a setback, you know, outside of just the cyclical downturn. What do you think about what keeps you up at night about not being able to deliver the plan as you see fit?

Bascom: And lastly for me, you made a comment in your prepared remarks, Jamie, about just giving yourself the time and space to execute on the strategy and deliver on the transformation and

Jamie Pearson: You know, you've made some pretty pointed comments on the...

Speaker Change: The lender and cash flow constraints and risk, and I think giving the market a lot more comfort on that. You know, on your list of what could go wrong or be a setback, you know, outside of just cyclical downturn, you know, what do you think about what keeps you up at night on not being able to deliver the plan as you see fit?

Jamie Pierson: You know, what keeps me up at night, Bascome, is the fact that we're working 24-7. So, very little sleep as we work through this. But in terms of the creation of the time and space I'm talking about, it really is two or three things.

Speaker Change: You know, what keeps me up at night, Bascome, is the fact that we're working 24-7. So, very little sleep as we work through this.

Speaker Change: But in terms of creation of the time and space I'm talking about, it really is two or three things. One is, Bascome, we have to prioritize.

Jamie Pierson: One is, Bascome, we have to prioritize. You know, in my prepared remarks, I talked about opportunities around every corner. There are so many opportunities for us to improve on the edges that we need to focus on those that move the needle or the lever the most. So, and this is a challenge because we all want to perform well and do well, but we can't go after everything all at once. So, being disciplined about going after the bigger items first would be, you know, part of that time and space.

Bascom: You know, in my prepared remarks, I talked about, you know, the opportunities around every corner. There are so many opportunities for us to improve around the edges that we need to focus on those that move the needle or the lever the most.

Speaker Change: It's a challenge because we all want to perform well and do well, but we can't go after everything all at once. So, being disciplined about going after the bigger items first.

Jamie Pierson: And then the other thing that keeps me up at night is just making certain that we can complete the integration and increase sales at the same time. It's a little bit of a triple Lindy, if you will, but there is a balance that we have out there that we've got to take advantage of and avail ourselves of the cost-saving opportunities that we have in a $2.5 billion organization and, at the same time, make certain that we continue to service the customer like we always have and keep that claims ratio low. When people go through times of distress and turmoil like this, it's easy to take your eye off the needle.

Speaker Change: would be, you know, part of that time and space.

Speaker Change: And then the other thing that keeps me up at night is just making certain that we can complete the integration.

Jamie Pearson: and Increased Sales at the same time. It's a little bit of a triple Lindy, if you will, but there is a balance that we've got there that we've got to take advantage and avail ourselves.

Jamie Pearson: of the cost-saving opportunities that we have in a two and a half billion dollar organization. At the same time, making certain that we continue to service the customer like we always have and keep that claims ratio low. When people go through times of distress and turmoil like this,

Jamie Pierson: And I'm not talking about anybody in the four corners of this building; I'm talking about out there on the front line. So, not many things keep me up at night other than the fact that we're literally working around the clock to make this thing the best thing that we have. And Bascom, to expand on that a little bit, I constantly challenge the group.

Speaker Change: It's easy to take your eye off the needle, and I'm not talking about anybody in the four corners of this building. I'm talking about out there in the front lines.

Jamie Pierson: So, not many things keep me up at night other than the fact that we're literally working around the clock to make this thing the best thing that we have. And Bascom, to expand on that a little bit, I constantly challenge the group.

Speaker Change: So, not many things keep me up at night other than the fact that we're literally working around the clock to make this thing the best thing that we have. And Bascome, to expand on that a little bit, I constantly challenge the group. Everything in this environment is important.

Shawn Stewart: Everything in this environment is important, but the key is what is vital. And we are separating the difference between important and vital. And we're going after all of the vital things and putting in the top priority important things to execute on a daily basis.

Bascome Majors: but the key is what is vital and we are separating the difference between important and vital and we're going after all of the vital things and putting in the top priperty important things to execute on a daily basis

Speaker Change: Thank you both.

Scott Group: We'll go next to Scott Group of Wolf Research.

Bascome Majors: Thank you.

Speaker Change: We'll go next now to Scott Group of Wolf Research.

Scott Group: Hey, thanks, guys. So I want a lot of numbers just trying to work our way through all of it. I just, you know, there's a pretty big delta between a $3 million Adjusted Operating Income Loss and $81 million of Adjusted EBITDA. I just want to sort of understand the pieces there. So like all the transaction costs and severance costs, are those being included or excluded from the operating income loss?

Scott Group: Hey, thanks afternoon guys. So, I want to, there's a lot of numbers just trying to work our way through all of it. I just, you know, there's a pretty big Delta between a three million

Speaker Change: adjusted operating income loss and 81 million of adjusted EBITDA. I just want to sort of understand the pieces there. So like all the transaction costs and severance costs, are those being

Speaker Change: included or excluded from the operating income loss.

Jamie Pierson: So no, they're included, that's why it's negative three million for all intents and purposes. If I could, Scott, get you to focus on page 15 for a second.

Speaker Change: So no, they're included, that's why it's negative three million for all intents and purposes. If I could, Scott, get you to focus on page 15 for a second.

Jamie Pierson: This is where I'm trying to be more transparent, give you guys a little bit more granularity, not only in terms of those categories that you're asking for right now, but also giving you more time and transparency in a backwards look. If you look at page 15, we've actually broken it out by the type of ad back that the credit agreement allows for. You know, you have transaction costs, you have severance, and then you get the normal add-backs as you get to EBITDA.

Speaker Change: This is where I'm trying to be more transparent, give you guys a little bit more granularity, not only in terms of those categories that you're asking for right now, but also giving you more time and transparency of a backwards look.

Speaker Change: So if you'll go through, if you'll just look at page 15, we've actually broken it out by the type of ad back that the credit agreement allows us.

Bascome Majors: You know, you've got the transaction costs, you have severance.

Speaker Change: Then you've got just the normal add-backs as you get to EBITDA. Then you have a couple of transaction expenses, our ability to add back.

Jamie Pierson: Then you have a couple of transaction expenses, our ability to add back the cost synergies on a pro forma basis. And then the very last one, we get the opportunity to add back what is quoted as a pro forma event in the senior notes document that allows us to take an LTM advantage of an action or an event as if we had had it for the last 12 months. So, let me be very specific.

Speaker Change: The Cost Synergies on a Proforma Basis, and then the very last one is we get the opportunity to add back what is quoted a proforma event.

Speaker Change: in the senior notes document that allows us to take an LPM advantage of an action or an event as if we had had it for the last 12 months. So let me be very specific.

Jamie Pierson: The June 15th reduction in force that we took, that garnered us an additional approximately $20 million in run rate EBITDA, we got to take that into the calculation as if we'd had it for the last 12. So if you just think about operating income, add back your garden variety, interest, DNA, and taxes. And then what I've tried to do here is kind of open up the kimono a little bit and show you where we're able to add back the other items under the credit agreement.

Speaker Change: The June 15th reduction in force that we took that garnered us an additional approximate $20 million in run rate EBITDA, we got to take that into the calculation as if we'd had it for the last 12 months.

Speaker Change: So if you think about operating income, add back your garden variety, interest, DNA, and taxes, and then what I've tried to do here is kind of open up the kimono a little bit and show you where we're able to add back the other items under the credit agreement.

Scott Group: So if I understand this right, if you implement new cost reductions in Q3 of this year, you get to restate prior quarter EBITDA numbers and add whatever cost savings you have going forward to backward as well.

Speaker Change: So if I'm understanding this right, if you...

Speaker Change: implement new cost reductions in Q3 of this year, you get to restate prior quarter EBITDA numbers and add whatever cost savings you have going forward backward as well.

Jamie Pierson: Yeah, I'd say a little bit differently, but you're on the right track, Scott. If we don't restate the past, the past is the past. But on the current, let's say the third quarter that you're using as an illustration, we would get the benefit of it as if it had been in place for the last 12 months. That is correct.

Speaker Change: Yeah, I'd say a little bit differently, but you're on the right track, Scott, is we don't, we're not going to restate the past, the past is the past, but on the current, let's say the third quarter that you're using as an illustration, we would get the benefit of it as if it had been in place for the last 12 months. That is correct.

Jamie Pierson: But so what we're seeing on this slide 15, right now, these numbers are

Scott Group: But so what we're seeing on this slide 15, right now these numbers are We shouldn't have additional numbers that the ad backs for pro forma cost synergies and June headcount reductions. We shouldn't see similar numbers in Q3 because they're now embedded in the actual operating.

Speaker Change: but what we're seeing on this slide fifteen right now these numbers

Speaker Change: are

Speaker Change: We shouldn't have additional.

Speaker Change: numbers, the add-backs for pro forma cost synergies and June headcount reductions, we shouldn't see similar numbers in Q3 because they're now embedded in the actual operating results.

Jamie Pierson: That's right; you'll see those roll off and become actual results.

Speaker Change: that you'll see those roll off and become actual results

Scott Group: Okay, okay. There are a lot of moving parts there.

Speaker Change: Correct.

Speaker Change: ok ok a lot of mo parts there okay and then just i want to quire by one thing the free cash flow did you say positive to neutral cashroomfrom hops or a positive mutual free cash f i just want to understand the

Jamie Pierson: Okay. And then I just want to clarify one thing, the free cash flow. Did you say positive to neutral cash from operations or positive to neutral free cash flow? I just want to understand that. Yeah, in total, Scott, so not from operations, just cash. I don't want to say I don't care where cash comes from, because you know I do, but I think we all on this call care that we're generating cash so that we can net it against the debt, not only for covenant purposes, but it also speaks to the improvement in the base or the underlying performance. And then just last one more fundamental any color on July tonnage revenue trends you could share?

Speaker Change: make sure we yeah total scot to not from ops just i don't want that don't

Speaker Change: I don't care where cash comes from, because you know I do, but I think we all on this call care that we're generating cash so that we can net it against the debt, not only for covenant purposes, but also speaks to the improvement in the base or the underlying performance of the company.

Speaker Change: And then just last one, more fundamental, any color on July tonnage revenue trends you could share?

Jamie Pierson: Yeah, no, we're not going to give intra-quarter guidance at this point, Scott. We're stretching our necks out there right now to do what we did in terms of the full year. You know, we're going to reevaluate that next quarter, but right now, we're going to prioritize and focus on integrating the networks, and to the extent that we get more comfortable with, I like to say, more than two at-bats, two at-bats being two months under our belts, we'll reevaluate that, but right now, we're going to stick with what we've given.

Speaker Change: Yeah, no, we're not going to give intra-quarter guidance at this point, Scott. We're stretching our necks enough out there right now to do what we've done in terms of the full year. You know, we're going to reevaluate that next quarter. But right now, we're going to prioritize and focus on integrating the networks.

Speaker Change: And to the extent that we get more comfortable with, I'd say more than two at-bats, two at-bats being two months under our belts, we'll reevaluate that, but right now we're just going to stick with what we've given.

Scott Group: Thank you, guys. I appreciate it.

Scott Group: thank you guys appreci it thanks cot

Christopher Kuhn: Thank you. We go next now to Christopher Kuhn at Benchmark.

Speaker Change: Thank you. We go next now to Christopher Kuhn at Benchmark.

Christopher Kuhn: Yeah, hi, good afternoon, guys. Thanks for taking my question. So just double checking here, I think it makes sense, but that $55 million adjusted EBITDA that you have on slide 15, that's up from the reported 1Q. That's the adjustments that you talked about in the previous press release about the changes, right?

Christopher Kuhn: Yeah, hi, good afternoon, guys. Thanks for taking my question.

Speaker Change: Thank you.

Speaker Change: so i just double checking here i think it makes sense but the fifty five million just the ebitda that you have slide fifteen that's up from reported one q that's the adjustments that you you talked about it in the previous press release about about the changes

Jamie Pierson: Yes, well, what we gave in the previous press release was an update for the total LTM period. It wasn't just the last quarter. Yeah, that's right. That's right. But some of that is in that adjustment for one cue.

Speaker Change: Right.

Speaker Change: Yes, well, what we gave in the previous press release was an update for the total LTM period.

Jamie Pierson: It wasn't just the last quarter. Yeah, that's right. That's right. But some of that is in that adjustment for one cue.

Speaker Change: It wasn't just the last quarter. Yeah, that's right, that's right. But some of that is in that adjustment for 1Q.

Christopher Kuhn: And then maybe just a big picture, some of the volumes that left in the quarter and then came back. Maybe just can you help us understand why the volumes left and why, more importantly, why they might have come back?

Speaker Change: That is correct.

Speaker Change: Okay.

Speaker Change: and then maybe just a big picture some of the Shawn you mentioned some of the volumes left in the quarter and then came back maybe just can you help us understand why the volumes left and why more importantly why they might have come back?

Christopher Kuhn: Well, say that one more time, Chris. I didn't understand the question.

Christopher Kuhn: Sure. You talked about, you know, during the... transition, some volumes left.

Speaker Change: Well, say that one more time, Chris.

Christopher Kuhn: Yeah, yeah, the network and then some of it came back. Can you just briefly run through why they might have left and then why they came back?

Chris: You know, transition, some volumes left the network and then some of it came back. Can you just briefly run through why they might have left and then why they came back?

Shawn Stewart: Yeah, so Chris, I would just share, you know, in my conversations with customers, just the uncertainty, the non-clarity of where the organization was going with this acquisition. You know, unsure of the strategy, clarity, do you want me, do you need me, are you keeping the network open, we see you're building a direct sales force, we're not comfortable with that, and we're mainly talking about, Chris, the legacy forwarders, freight forwarders, and 3PLs. I've been traveling a lot, seeing as many of them in person, and this is the feedback I'm getting.

Speaker Change: Yeah, so Chris, I would just share, you know, just in my conversations with customers, just the uncertainty, the non-clarity of where the organization was going with this acquisition.

Shawn Stewart: You know, unsure of the strategy, clarity, do you want me, do you need me, are you keeping the network open, we see you're building a direct sales force, we're not comfortable with that, and we're mainly talking about, Chris, the legacy forwarders, freight forwarders, and 3PLs. So I've been traveling a lot, seeing as many of them in person, and this is the feedback I'm getting

Speaker Change: um

Speaker Change: you know unsure of the strategy

Speaker Change: Clarity, do you want me? Do you need me? Are you keeping the network open?

Speaker Change: We see you're building a direct sales force. We're not comfortable with that. And we're mainly talking about, Chris, the legacy forwarders.

Chris: Freight Forwarders, and 3PLs.

Speaker Change: So, I've been traveling a lot, seeing as many of them in person, and this is the feedback I'm getting. So, first and foremost,

Shawn Stewart: So, first and foremost, there is no more direct selling in the legacy forward air. We shut down that entity in Q2. There are just indirect sales, that is, the airline partners, the 3PLs, and the freight forwarders. There is only direct selling in the combined organization on the Omni side. So, we're running two sales channels, indirect on the legacy forward, and direct on the legacy Omni, and that brings clarity, and then, obviously, being very clear that we will remain an open LTL network for not just ourselves, but for those legacy customers in those three categories.

Shawn Stewart: First and foremost, there is no more direct selling in the legacy forward air. We shut down that entity in Q2. There are just indirect sales, that is, the airline partners, the 3PLs, and the freight forwarders. There is only direct selling in the combined organization on the Omni side. So we're running two sales channels, indirect on the legacy forward, and direct on the legacy Omni. And that brings clarity, and then, obviously, being very clear that we will remain an open LTL network for not just ourselves, but for those legacy customers in those three categories that we mentioned.

Chris: there is no more direct selling in the legacy forward air we shut down that entity in q two there's just indirect cells that meaning the airline partners the three ps and the freight forers

Chris: There is only direct selling in the combined organization on the Omni side.

Chris: So, we're running two sales channels indirect on the Legacy Forward, direct on the Legacy Omni, and that brought clarity, and then, obviously, being very clear that we will remain an open LTL network.

Speaker Change: for not just ourselves but for those legacy customers in those three categories.

Shawn Stewart: Those three categories that we mentioned, and we are going to do that in a very neutrality driven, morally and ethically sound, full nondisclosure agreements with these customers, not to back solicit, made it clear we don't need to do that, and so we are good stewards of growing our own business, but also supporting those customers in growing theirs. So that's, that's to be honest, is what I would attribute to why those volumes came back.

Shawn Stewart: And we are going to do that in a very neutrality-driven, morally and ethically sound, full nondisclosure agreements with these customers, not to back solicit, make it clear we don't need to do that. And so we are good stewards of growing our own business but also supporting those customers and growing theirs. So that's, that's to be honest, is what I would attribute to

Speaker Change: that we mentioned.

Speaker Change: and we are going to do that.

Chris: in a very neutrality driven, morally and ethically sound, full non-disclosure agreements with these customers, not to back solicit.

Chris: made it clear we don't need to do that and so we we are we are good stewards of growing our own business but also supporting those customers and growing theirs.

Chris: So that, to be honest, is how I would attribute to why those volumes came back.

Christopher Kuhn: Yeah, no, that's fair. And I know you didn't want to get too specific, but just overall, when you think about portfolio reshaping and you think about the impact it might have on maybe some of the cross-selling, bundled selling, or whatever you want to call it. I mean, how do you think about portfolio reshaping in the context of, you know, selling multiple services to customers?

Speaker Change: Yeah, no, that's fair. And I know you didn't want to get too specific, but just overall, when you think about the portfolio reshaping and you think about the impact it might have on maybe some of the, you know,

Shawn Stewart: you know.

Speaker Change: cross selling a few ...

Speaker Change: Thank you.

Speaker Change: bundled selling or whatever you want to call it. I mean how do you think about

Speaker Change: Portfolio reshaping in the context of, you know, selling multiple services to customers.

Shawn Stewart: Yeah, so if you just look, I mean, let me let me let me finish the comment here. I didn't I didn't make a comment on everything I just told you.

Speaker Change: Yeah, so if you just look, I mean, let me finish the comment here. I didn't make a comment on everything I just told you. We are still a fantastic and best-in-class service business on both legacy companies.

Jamie Pierson: We are still a fantastic and best-in-class service business on both legacy companies, and we are going to continue to honor that and even enhance that. So when you go back to some people call it cross selling, I call it really synergy selling. So when you look at the product-based verticals that we're going to, in air, ocean, ground, many of which are the legacy forward, Contract Logistics Warehousing, which we do a lot of on the legacy Omni side, and then Customs Brokerage, you really want to draw those synergies sellings in between. So that really is the strategy.

Speaker Change: And we are going to continue to honor that and even enhance that. So when you go back to...

Speaker Change: Some people call it cross-selling. I call it really synergy selling.

Speaker Change: so when you look at the product based verticals that we're going to an airr ocean ground of which many of that is the legacy forward

Shawn Stewart: Your most sticky situation is when you have customers' inventory, i.e., the contract logistics space in your warehouses. And the second most important is Customs Brokerage. You know, there's a phrase out there that says you date your forwarder, and you marry your broker. And so those are the two stickiness. But when you look at bringing these two companies together, having the legacy air freight, global air freight in the Omni side with the best in class LTL distribution of pre and post positioning of your international for pushing your exports into a consolidation gateway to go outbound or deconsolidating your imports for distribution and delivery on the inbound. Having that network is the best in class, and we fully intend to utilize that. So those are just some examples. I hope that answers your question.

Speaker Change: Contract Logistics Warehousing, which we do a lot of on the Legacy Omni side, and then Customs Brokerage.

Shawn Stewart: you really want to draw those synergy selling points in between. So that really is the strategy.

Speaker Change: you really want to draw those synergy sellings in between so that that really is the strategy your most stickiness is when you when you have customers' inventory either contract logist space in your warehouses and the second most important is the custod broker

Shawn Stewart: Your most sticky business is when you have customers' inventory, i.e., the contract logistics space in your warehouses. And the second most important is the customer's brokerage. There's a phrase out there that says you date your forwarder, and you marry your broker. And so those are the two stickiness. But when you look at bringing these two companies together, having the legacy global air freight in the Omnicide with the best-in-class LTL distribution of pre- and post-positioning of your international for pushing your exports into a consolidation gateway to go outbound or deconsolidating your imports for distribution and delivery on the inbound, having that network is the best-in-class. And we fully intend to cross-utilize that. So those are just some examples. I hope that answers your question. Thank you.

Speaker Change: You know, there's a phrase out there that says you date your forwarder and you marry your broker. And so, those are the two stickiness.

Speaker Change: But when you look at bringing these two companies together...

Speaker Change: having the legacy air freight, global air freight, in the Omnicyde.

Speaker Change: with the best-in-class LTL distribution of pre- and post-positioning of your international

Speaker Change: for pushing your exports into a consolidation gateway to go outbound, or deconsolidating your imports for...

Speaker Change: for distribution and delivery on the inbound, having that network is a best in class and we fully intend to cross-utilize that. So that's just some examples. I hope that answers your question.

Jamie Pierson: John Christian, if I can add to that, there's something that Shawn really impressed on me, and we had a recent good customer win that I don't think that we would have gotten individually as a company. It's only because of the combined services that the two companies provide that we're able to get this win. So we have a very good win on the international inbound side, and then once it hits the ground here in North America, we're able to get it to the final destination. I'm not so sure that we would have been able to get that win in terms of cross-selling our services across both companies had we not been as one.

Jamie Pierson: John Christian, if I can add to that, there's something that Shawn's really impressed upon me, and we've had a recent good customer win that I don't think that we would have gotten individually as a company. It's only because of the combined services that the two companies provide that we're able to get this win. So we, we have a very good win on the international inbound side, and then once it hits the ground here in North America, we're able to get it to the final destination. I'm not so sure that we would have been able to get that win in terms of cross-selling our services across both companies had we not been as one.

Speaker Change: I'm curious if I can add to that. There's something that Shawn's really impressed upon. I mean, we had a recent good customer win.

Shawn Stewart: that I don't think that we would have gotten individually as a company. It's only because of the combined services that the two companies provide.

Shawn Stewart: that were able to get this win. So we have a very good win.

Speaker Change: on the international inbound side, and then once it hits the ground here in North America, we're able to get it to the final destination. I'm not so sure that we would have been able to get that win in terms of cross-selling our services across both companies had we not been as one.

Christopher Kuhn: Okay, I'll stop there. Thanks for the time, guys.

Speaker Change: Okay, I'll stop there. Thanks for the time, guys.

Operator: And ladies and gentlemen, just a quick reminder, star number one, please, for questions. We'll go next to Stephanie Moore at Jeff.

Speaker Change: i just

Speaker Change: And ladies and gentlemen, just a quick reminder, star 1 please for questions. We'll go next now to Stephanie Moore at Jefferies.

Unknown Speaker: Hi, good afternoon. Good to meet you, Jamie. And thanks for all the color. No, I wouldn't do that.

Stephanie Moore: Hi, good afternoon. Good to meet you, Jamie. And thanks for all the color.

Stephanie Moore: Hi, good afternoon. Good to meet you, Jamie, and thanks for all the color.

Stephanie Moore: Absolutely Stephanie, I'm looking forward to talking to you.

Stephanie Moore: Absolutely. So, I wanted to maybe go back to a couple of questions on just the reported EBITDA now, just so I have this clear. So, maybe using the first quarter as an example, understood that you're now calculating EBITDA under your pursuant to the credit agreement, that's fine. So, the first quarter, you know, now calling that $55 million; the prior calculation definition got you to a 1Q EBITDA of $29 million. So, the simple math would imply a $26 million difference. Is that about the same differential that we could apply to 2Q if we were doing that same kind of pre and post-calculation? No, I wouldn't do that.

Jamie Pearson: Absolutely, Stephanie. Looking forward to talking to you.

Stephanie Moore: Absolutely. So I wanted to maybe go back to a couple questions on just the reported EBITDA now, just so I have this clear. So maybe using the first quarter as an example, understood that you're now calculating EBITDA under your pursuit of credit agreement, that's fine.

Speaker Change: The first quarter, you know, now calling that $55 million. The prior calculation definition got you to a 1QE of $29 million. So the simple math would imply a $26 million difference. Is that about the same differential?

Speaker Change: that we could apply to QQ if you were doing that same kind of pre- and post-calculation.

Jamie Pierson: No, I wouldn't do that, Stephanie, and here's why. In the first quarter, we didn't have the benefit of the headcount rejections in June. So the comparable number that you should be basing what you're trying to bridge is 49 million, not 55. That's the first point. But also, we went back, and I think it's important to note, Stephanie, that we went back. But it wasn't all in the first quarter. It transcends the entire four-quarter period. I can tell by your silence that I didn't answer your question. I just don't see you using the first quarter as an extension of what you could expect in the future.

Speaker Change: No, I wouldn't do that, Stephanie, and here's why. In the first quarter, we didn't have the benefit of the headcount rejections in June . So the comparable number that you should be basing what you're trying to bridge is on 49 million, not 55.

Unknown Speaker: Right, no, I think that's fair. But okay, so again, going off of

Jamie Pierson: But also, we went back, and I think it's important to note, Stephanie, that we went back. We tore the credit agreement apart with counsel, with our accountants, with management, and we did a complete 365-day historical review. So it wasn't just in the first quarter, and I'm so thankful that you asked and I'm able to explain, it goes back over the last 12 months in total, not any one particular quarter, and there are items that we just, candidly, Stephanie, we missed.

Speaker Change: That's the first point, but also, we went back, and I think it's important to note, Stephanie, that we went back.

Speaker Change: tore the credit agreement apart with counsel, with our accountants, with management.

Speaker Change: and we did a complete 365 historical review.

Speaker Change: So it wasn't just in the first quarter, and I'm so thankful that you asked and I'm able to explain.

Speaker Change: is, it goes back over the last 12 months in total, not any one particular quarter, and there are items that we just candidly, Stephanie, we missed.

Jamie Pierson: Some of the things were severance that we didn't add back that we should have. There were some purchase price adjustments that we didn't avail ourselves of that we caught in the review, and even some due diligence and transaction costs.

Speaker Change: Some of the things were severance that we didn't add back that we should have, there's some purchase price adjustments that we didn't avail ourselves of that we caught in the review, and even some due diligence and transaction costs.

Jamie Pierson: But it wasn't all in the first quarter. It transcends the entire four-quarter period. I can tell by your silence that I didn't answer your question. I just don't see you using the first quarter as an extension of what you could expect in the future.

Speaker Change: But it wasn't all in the first quarter. It transcends the entire four-quarter period.

Speaker Change: okay that's helpful in the inter i can tell i didn't answer your question i just talk using thetheir first quarter as an extensionof what you could expect in the future

Stephanie Moore: Right, no, I think that's fair. But okay, so again, going off of Is, then, if you're going off of a trailing 12-month basis, do you have the delta between how it is being calculated now, in your opinion, more accurate way versus how it was before? So if $26 million in the first quarter is not the right run rate, what's the trailing 12-month differential?

Speaker Change: Right, no, I think that's fair, but okay, so again, going off of...

Speaker Change: is then, if you're going off of a trailing 12-month basis, do you have the delta between how it is being calculated now per, you know, in the, in your opinion, more accurate way versus it was before? So if 26 million in the first quarter is not the right run rate, what's the trailing 12-month differential?

Speaker Change: I'm not following your question.

Speaker Change: It's fine. I can.

Speaker Change: Okay. So, I guess, going to a different question here, so maybe a little bit more on the strategic side. Appreciate your color on...

Speaker Change: You know, kind of going from a go-to-market strategy from a product vertical basis. Are there any kind of incremental hiring needs to be made to kind of support this to-go-to-market strategy and kind of, you know, I understand running the two distinct sales forces, but any other kind of incremental changes?

Speaker Change: I don't think so, Stephanie. Not necessarily in a go-to-market basis. We've got, you know, as Jamie said earlier, we've got best-in-class people from both organizations.

Speaker Change: There is some great individuals all throughout the organization, so we are looking mainly internally as we move things around to, you know, promote and empower step-up people to take on new positions as we make this transition.

Jamie Pearson: Yeah, if your question is, is there incremental CapEx dollars needed? No. Yeah, we're basically turning the organization on the side.

Speaker Change: Got it. And then lastly for me, you know, maybe you could touch a little bit on the capital structure.

Speaker Change: Is it, you know, kind of at this point how we should think about preferreds, minority interests, anything else?

Speaker Change: It's our understanding that, you know, you did vote on some of, you did make some of these changes, but, you know, kind of an update there would be helpful.

Speaker Change: Yeah, so at the shareholder meeting, I believe it was June 15th, they all voted to convert. There's still some that are outstanding out there, so on a fully diluted basis, I think it's going to be closer to $40 million. That election, Stephanie, is at the holders, I guess, behest.

Stephanie Moore: So, nothing that we can force, I think it would just come in through time.

Unknown Speaker: Okay, so we should still expect to kind of see some of those adjustments work for some time now. Yeah.

Stephanie Moore: Okay so we should still expect to kind of see some of those adjustments work for some time now.

Jamie Pierson: Yeah, and again, there are numerous individual holders, and it's at their election when that would happen. But that's why I look at the fully diluted as-if converter basis at around 40 million shares.

Stephanie Moore: Yeah, and again, there are numerous individual holders and it's at their election. It's impossible to predict when that would happen, but that's why I look at the fully diluted as-if converter basis around 40 million shares.

Unknown Speaker: All right, I will turn it back over to you. Thank you.

Stephanie Moore: Okay.

Speaker Change: al right i will turn it back up thank you

Operator: Thank you. And ladies and gentlemen, just a final reminder, Star 1, please, for any further questions this afternoon. And ladies and gentlemen, it appears we have no further questions. Mr. Stewart, I'd like to hand things back to you, sir, for any closing comments. All right.

Speaker Change: Thank you and ladies and gentlemen just a final reminder star one please for any further questions this afternoon.

Speaker Change: And gentlemen, it appears we have no further questions. Mr. Stewart, I'd like to hand things back to you, sir, for any closing comments.

Jamie Pierson: I'm not following your question.

Shawn Stewart: All right, thank you so much. All right, so in closing, I want to personally thank everyone for their time and patience. As we bring out the best of Forward, as previously stated, there's still much to do, but we believe in the results, and we also believe that it will be something we can all be proud of. So, we appreciate your time today, and we'll talk to you soon. Take care.

Mr. Stewart: All right, thank you so much. All right, so in closing, I want to personally thank everyone for your time and patience.

Mr. Stewart: As we bring out the best of Forward can be, as previously stated, there's still much to do.

Mr. Stewart: But we believe in the results, and we've also believed that it'll be something worth, that we can all be proud of. So, appreciate your time today, and we'll talk to you soon. Take care.

Stephanie Moore: It's fine. I can, I can certainly ask this offline.

Operator: Thank you, Mr. Stewart. Ladies and gentlemen, that will conclude today's Forward Air second quarter earnings conference call. Again, we'd like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.

mr stew: mr stew ladies and gentlemen that will conclude today's forward air second quarter earnings conference call again 'dliketo thankyou so much for joining us

Speaker Change: and wish you all a great remainder of your day. Goodbye.

Speaker Change: but

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