Q3 2024 Forward Air Corp Earnings Call
The End
Please send by your program as about to begin.
Speaker Change: Welcome to 4-air's third quarter 2024 earnings conference call. At this time, I will offer to suspense heaven placed on a list and a limit, and the floor will be open for your questions following the presentation.
If you would like to ask a question at the time, please first start one on your telephone keypad.
If it didn't you point your question has been answered, you may remove yourself from the cue by pressing star 2.
Speaker Change: So, others can hear your questions clearly. We ask that you pick up your hands at for optimal sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Tony Carino, Senior Vice President of Treasury and Investor Relations, please go ahead.
Tony Carino: Thank you, operator and good afternoon everyone. Welcome to Over Dares, third quarter of 2024 earnings conference call.
with us this afternoon, our Shawn Stewart, Chief Executive Officer and Jamie Pierson, Chief Financial Officer.
By now you should ever see the press release announcing forward airs, third quarter of 2024 results.
which was also furnished to the SEC on Form A K. We have also filed a side presentation at Lying 3rd quarter 2024 results. Highlights and a business update.
But the press release and slide presentation for this call are accessible on the Investor Relations section at ForwardAirstwebsite at ForwardAirstwebsite at ForwardAirstwebsite.com.
Please be aware that certain statements in the company's manager release and assessment, and on the conference call are four-reliquen statements within the meaning of the private security's litigation reform at 1995.
Speaker Change: 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.
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 slide presentation relating to the earnings call.
Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this call.
Speaker Change: 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.
Speaker Change: During the call, there may also be a discussion of financial metrics, but 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.
Speaker Change: Definitions and reconciliations of these non-GAAP measures to their most direct comparable GAAP measures are included in today's press release and slide presentation.
Speaker Change: I will now turn the call over to Shawn.
Shawn: Good afternoon, everyone, and thank you for joining the call today.
Shawn: Forward Air's acquisition of Omni closed roughly nine months ago and since that time our team has been working diligently to combine their individual strengths into one combined logistics powerhouse.
Shawn: While it may seem that nine months is a long time.
Shawn: When you step back and think about it, we are a global enterprise providing many different services employing approximately 7,000 professionals and utilizing different back office and operational support systems.
Shawn: From my vantage point, I would say the integration of the domestic networks substantially complete and delivering on the savings as originally committed.
Shawn: With my first full quarter now complete, I have had the time to get my arms around the Ford and Omni integration. And with Jamie on board, I am turning my attention to the broader transformation.
Shawn: Our objective is to transform to be one company, one brand, and one go-to solution provider with services spanning from international freight forwarding to award-winning domestic expedited LTO ground service.
Shawn: Please remember that through the transformation we will not waver in our commitment to providing best-in-class solutions for our customers through our open freight network.
Shawn: We remain committed to providing all of our customers, including and especially our legacy freight forwarder customers with the same great service they have relied on for years to grow their businesses.
Shawn: To that end, we have recently established a Transformation Management Office to lead the process.
Shawn: The focus of this office will be to efficiently and effectively execute the transformation across all areas of the company.
Shawn: The transformation will include IT system rationalization and establishing the framework for us to go to market as a product focused and operations driven company.
Shawn: The result will be a vertically integrated company providing ground, air, ocean, contract logistics, and customs brokerage services around the world.
Shawn: We have a vision, and we know we can achieve it over time.
Shawn: While the broader transportation market and demand for our services remains challenging,
Shawn: We are availing ourselves of the time to do the heavy lifting, behind the scenes work that will position the company to take advantage of the demand when the market normalizes.
Shawn: that work ranges from integrating the 12 different companies that were omni and previously not integrated to moving from multiple TMS systems
Shawn: Enterprise Resource Planning Systems and different HRIS systems to one system for each tech stack.
Shawn: It also includes harmonizing a multitude of policies that will enable our workforce to think and act as one.
Shawn: not 12, not 2, but as 1, with the same goals, the same mission, the same values, and the same intent and dedicated focus on serving our customers.
Shawn: We expect that the magnitude and complexity of this integration will put us well into 2025 before it is substantially complete.
Shawn: And certain work streams may continue into 2026, but we will not lose our focus on the customer and their needs.
Shawn: I am confident that this work is achievable with the current structure.
Shawn: We are excited about the opportunity to add value to the company along the way.
Shawn: Both companies have traditionally been known for their best-in-class customer service.
Shawn: Customers want service and solutions they can depend on along with competitive pricing.
Shawn: Our objective is to exceed their expectations with the many services we provide.
Shawn: Operationally and in the spirit of building best-in-class global supply chain solutions, during the third quarter we opened a new warehouse and freight station in Miami.
Shawn: This facility is strategically positioned for easy access to both Miami International Airport and the Port of Miami.
Shawn: This state-of-the-art facility ensures that our customers receive the highest level of import and export security and service.
Shawn: This location will serve as our gateway in Latin America, enabling us to offer direct air and ocean services into and out of South and Central America.
Shawn: This goes along with expanding our presence in South America with the opening of our offices in Santiago, Chile and Bogota, Colombia earlier this year.
Shawn: These expansions are examples of our commitment to providing logistic solutions worldwide.
Speaker Change: The Legacy Omni-Segment maintained a positive momentum and improved sequentially compared to the second quarter of 2024.
Shawn: A year-over-year decrease in revenue per hundredweight, excluding fuel surcharge, was primarily attributable to the customer mix and associated pricing and profitability thereof.
Shawn: In short, and to be direct, we were focused too much on class-based freight business and did not charge enough for the level of service that we provide.
Shawn: We are addressing this issue and are focused on getting the right mix of freight into the network.
Shawn: To execute a sales strategy that is befitting of a global diversified service provider that we now are.
Shawn: I am excited to announce that we expect to soon be onboarding a new chief commercial officer.
Shawn: who will be starting with the company in January 2025.
Shawn: The new CCO has over 20 years of experience on the global stage and is incredibly well versed with our customer base and the strategy that we have laid out.
Shawn: Adding this individual and others like him in key leadership around the world puts us in a best position for long-term growth once the freight market improves.
Shawn: With that, I'll give some closing comments at the end and will now turn it over to Jamie to go through the results for the quarter.
Jamie Pierson: Thanks, Shawn, and good afternoon, everyone.
Jamie Pierson: Beginning with the third quarter results, revenue for the quarter was $656 million and on a required GAAP reporting basis, it was a 92% or $315 million increase as compared to the third quarter of the prior year.
Shawn: The increase over the prior year was obviously largely driven by the Omni transaction. Since we did not own Omni in the third quarter of 2023, it is difficult to make a meaningful year-over-year comparison, so I'll focus our comparisons for the Omni segment to a sequential basis.
Shawn: To that point, and on a sequential and more comparative basis, consolidated revenue increased $12 million, or 2%, from $644 million last quarter to $656 million this quarter. Looking at revenue for our three reporting segments.
Shawn: expedited, intermodal, and omni were as follows.
Shawn: Revenue from expedited increased $6 million, or 2%, to $285 million from the previous year's comparable quarter of $279 million.
Shawn: The increase is primarily driven by a year-over-year increase in weight per shipment of 4.5%.
Shawn: The increase was partially offset by a 3.8% decrease in revenue per hundredweight, including fuel surcharge, and a 2.3% decrease in shipments per day compared to a year ago.
Shawn: Revenue from Intermodal decreased $5 million or 8% to $57 million from the previous year's comparable quarter of $62 million.
Shawn: The decrease is primarily driven by 8.7% less shipments compared to a year ago, as some customers began diverting freight ahead of the potential international longshoremen strike on the East Coast.
Shawn: The revenue increase from Omni's results, which were not included in the previous year's comparable quarter, was a full $335 million. On a sequential basis, third quarter revenue at the Omni segment increased $23 million, or 7%, compared to the $312 million reported in the second quarter of this year.
Shawn: Income from operations for the third quarter was $23 million compared to the $12 million a year ago.
Shawn: As for consolidated EBITDA, as defined in our credit agreement, we reported $77 million for the quarter.
Shawn: And as a reminder, on a comparable basis, we reported consolidated EBITDA of $55 million in the first quarter of this year and $81 million in the second quarter.
Speaker Change: As Shawn noted in his introductory comments, the decrease in consolidated EBITDA in the third quarter is primarily driven by the expedited segment, which we have subsequently addressed.
Speaker Change: Adding the $77 million for this quarter to the three previous quarters consolidated EBITDA for the last 12 months ending September 30, 2024 was $307 million.
Shawn: Turning to cash and liquidity, cash provided by operating activities for the third quarter increased $98 million from the previous quarter's $45 million loss to a positive 53 million this quarter.
Shawn: As illustrated on page 11 of the slide presentation issued with today's earnings release, approximately $22 million of cash was consumed this quarter from legacy transaction costs and professional fees and another $27 million from interest payments.
Shawn: Primarily as a result of the improvement from operating activities and increased cash therefrom, we ended the quarter with total cash of $138 million or a $33 million increase over the second quarter.
Shawn: Adding the $138 million to the $322 million of availability under our revolving credit facility, liquidity at the end of the quarter was $460 million, which is $15 million higher than what we reported last quarter.
Shawn: And as usual, I will leave you with a few parting shots for the quarter, the first of which is an update on the status of our integration.
Shawn: As everyone knows, we have been guiding to $75 million in annualized savings run rate, and I am pleased to report that we are tracking slightly ahead of plan and expect to reach that level by the end of the first quarter of next year.
Shawn: Point two is our continued focus on liquidity and more importantly the results of that focus.
Shawn: In the first half of 2024, most of the cash balance was consumed by transaction costs, integration expenses, debt principal paydown, and other expenses, none of which benefited the operations or was an investment in the company's future.
Shawn: As I discussed in the second quarter earnings call, we expected to be neutral to inflicting cash flow positive in the third or fourth quarter of this year.
Shawn: And as you can see, on the heels of improved operating cash flow and lower transaction-related expenses, we increased our cash balance by $33 million over the previous quarter and increased total liquidity to $460 million.
Shawn: Which should give us ample runway to continue on the transformational phase of our journey and position us well for any macro tailwinds when they occur.
Shawn: Thirdly, 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 was 5.4 times compared to a maximum covenant level of 6 times.
Shawn: This implies an approximate $32 million consolidated EBITDA cushion at the end of the quarter.
Shawn: Penultimately, while I have previously noted that transformations of this complexity are not linear, I would consider the third quarter to be one of stability and long-term planning as Shawn moves to fortify ourselves in operations proudness.
Shawn: Finally, with the third quarter behind us, we are updating our full year 2024 guidance. As everyone knows, the macro environment remains muted with no near-term catalysts.
Shawn: Consequently, we are updating our full year 2024 consolidated EBITDA guidance from the previous $310 to $325 million.
Shawn: to 300 to 310 million. And before you ask, we are not going to give 2025 guidance.
Shawn: There's too much going on, there's too much uncertainty in the macro environment, but would absolutely say that I see many more opportunities than risks ahead of us.
Shawn: With that is my five points of light and will now pass the mic back over to Shawn for closing comments before Q&A.
Shawn Stewart: Thank you, Jamie. We recently announced, in addition to the Board of Directors, with the appointment of Jerome Lorraine.
Speaker Change: Jerome has over 30 years of experience in the logistics and transportation industry.
Shawn Stewart: The board and I are extremely excited to have him join us.
Shawn Stewart: The company also announced that Craig Carlock decided to step down from the board effective October 15, 2024 after nine years. I want to thank Craig for his service to the company.
Shawn: Following these changes, the board will continue to be comprised of 12 directors, 11 of whom are independent, and 7 of whom have been appointed since the closing of the Omni transaction.
Shawn: I am energized by the quality and caliber of talent we are assembling at both the management and board levels.
Shawn: Execution remains a major focus, and I am confident that the team that I am fielding can deliver the results that we all know is possible through this combination.
Shawn: We will keep our focus on what we can control, and put it plainly, we have the plan, and we have the team identified. Now, we just need to execute against it.
Shawn: Finally, I want to acknowledge the recent investor activity and media speculation.
Shawn: We addressed this in our press release on October 7th, so we are not going to comment on any rumors or speculation during the Q&A portion of the call.
Shawn: We would ask that you be respectful of that as you formulate your questions. I will now turn the call to the operator to take questions. Operator?
Shawn: Rebecca Garbrick, Jamie Pierson, Unknown Executive
Speaker Change: Certainly, the floor is now open for questions. At this time, if you have a question or comment, 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.
Shawn: Again, we ask that you pick up your handset when posing your question to provide optimal sound quality. Thank you. Our first question is coming from Bruce Chan with CFO. Please go ahead.
Speaker Change: Transcription by CastingWords
Bruce Chan: Hey, thanks, operator. And good afternoon, guys. You know, Shawn, appreciate your appreciate your disclaimer on the rumor.
Speaker Change: Commentary, but you know figured I'd take a stab at maybe some of the portfolio changes that
Speaker Change: you know, had been discussed prior to that announcement, you know, just given where you've
Speaker Change: Managed to take your balance sheet and and your you know cash position any updates on you know potential sale of any individual pieces You know given your current liquidity position
Speaker Change: Hey, Bruce, it's Jamie. Yeah, I'll take that.
Speaker Change: The analysis piece of that, you know, there's 12 companies that was Omni.
Speaker Change: prior to the transaction. We're still working through that. It's too premature to say that there's anything to announce that we've given say differently, too premature to say that there's anything that we have decided to that we could announce on a public basis.
Speaker Change: Are we still undergoing the analysis for those that are non-core to the future of this business? Absolutely. If and when we get to a point to where we're going to decide to sell one of those groups or divisions or assets, we'll certainly let you know, but right now it's too premature.
Speaker Change: Okay, that's fair enough. And then maybe just for my follow up here, if you could walk us through the puts and takes of the yield progression in Network LTL. I know you talked about the class-based pre-program that was put in place before the acquisition.
Speaker Change: Sounds like you're maybe in the process of unwinding that, if you could just maybe give us some color on what that process looks like and how long you expect that to take.
Speaker Change: Yeah, Bruce, so we've been, we've been, you know, I became first aware of it in the end of Q2.
Speaker Change: really did the due diligence of studying this impact in Q3 and ultimately came to the conclusion that we will still offer a class-based rate.
Speaker Change: However, we're not going to do that on a like-for-like traditional LTL price-reduced basis.
Speaker Change: So, we have customers that need that tariff and we're willing to do so.
Speaker Change: Really what we're doing here is adjusting that basis back to the quality of the service that we provide them, and not on a traditional LTL basis where they're getting 3-4 day service on a price of 7-10 day service.
Speaker Change: So, I guess when we think about the fourth quarter, are we still expecting a pretty material headwind from that from that program?
Speaker Change: about I would say Bruce around 50-50 if I had to give it a percentage just based on the the changes in the execution of those changes with those customers.
Bruce Chan: Okay, great. Thank you.
Bruce Chan: Thank you. We'll take our next question from Stephanie Moore with Jeff. Please go ahead.
Speaker Change: Hey, good afternoon, Shawn and Jamie. This is Joe Hafling on for Stephanie Moore. Nice catch full of a quarter. I wanted to ask a question, maybe what you're seeing across maybe your various segments. And in particular, I wanted to ask,
Speaker Change: We've been hearing from some of the air freight operators that customers are trading down choosing more economical options. And I was wondering how to think about this in respect to your business in the sense that it's premium freight, but it's a discount and more economical package to traditional kind of over the air.
Speaker Change: Network. So I was wondering what you were seeing from customers, you know, on that airport to airport move and, you know, any additional color you can give on the, you know, pull forward a demand or anything at Omni would be helpful as well. Thank you.
Speaker Change: Well, let me process maybe your question a little bit more because I was sitting here ready to comment on international air freight and you just threw me for a loop. So why don't you ask your question again because I don't think you're talking about international air freight.
Speaker Change: Yeah, I mean, we had heard, you know, just, you know, shippers.
Speaker Change: freighting down kind of tightening the belt. And I was curious how to think about that with respect to your business in terms of you know, you offering a solution.
Speaker Change: That is more economical, you know, versus over the air and your traditional LPL business. And, you know, are you seeing customers, you know, gravitate towards that offering as they're trying to look for more economical shipping offerings?
Speaker Change: Yeah, so I guess the best way to say it is our offering is still very unique to the marketplace.
Speaker Change: They're getting a premium expedited service on the ground that otherwise would need to be serviced by air. However, the capacity domestically is just not there to service that and hasn't been.
Speaker Change: for quite some time actually since.
Speaker Change: 9-11.
Speaker Change: So...
Speaker Change: When you look at, you know, really for us, the customer base that's looking for our services is more higher-end, high-tech.
Speaker Change: telecom computing, high value, just in time to market. And we continue to see just as much need in that service as
Speaker Change: as any time prior to this market disruption, if you will. So, the demand is still there. What happens, overall, when you see the volume go down, the volume is just, really, I would put it back to...
Speaker Change: the situation with the confidence in consumer spending. So it's not that we're losing market share, it's more that just the overall volume demand is down for all.
Speaker Change: And then yeah, it did. And then I get on the international forwarding piece. Is there any thoughts on framing, you know, how much of a pull forward and demand, you know, had an impact in the three Q and how much of just, you know, on the game?
Speaker Change: It's, there's not a whole lot of pull forward in demand that I see. You know, there is more of a demand right now that the international air freight market is probably at it's peak.
Speaker Change: Best it's been in quite some time. And with all the different disruptions on ocean freight, the demand for air freight is up right now.
Speaker Change: So that's really what we see, but nothing on a pull-forward basis. I think we'll start to see a lot more traction.
Speaker Change: early to mid 25.
Speaker Change: is I think we'll see a little bit more forward stocking and more of a shift of inventories in the greater North America, if you will.
Speaker Change: Hey Joe, this is Jamie. I'll add to the, your first question, which is, you know, in terms of, I think you said shippers freighting down to something more economical. You know, we haven't seen it, but man, I hope you're right. Because that would be us.
Speaker Change: If they're going from air to an expedited ground that at the same time, sometimes maybe even better, then we're going to be very well positioned if that's a shift that you're seeing in the market.
Joe Hafling: Got it. Appreciate you, fellow guys.
Speaker Change: Thank you. We'll take our next question from Scott Group with Wolf Research. Please go ahead.
Scott Group: Hey, thanks. Afternoon, guys.
Scott Group: Jamie, help us with the fourth quarter EBITDA ramp, decent step up from Q3. Is that?
Scott Group: It's hard to know what normal seasonality is for this business. So is that a view of just normal seasonality? Is that synergies ramping? Is that volume or data getting better just?
Scott Group: What are the moving pieces to get us to that implied Q4 EBITDA?
Jamie Pierson: Yeah, it's just normal seasonality, Scott. You know this business as well as anybody else on this call. October is traditionally our best month. We're not forecasting anything what I would consider herculean in the back half of November, December. It's just that seasonal push that we usually see in October and November.
Jamie Pierson: And I know you're twitching to ask the question about then how's October we haven't even closed it Scott So I can't even begin to speculate how it's shaping up
Scott Group: But for the fourth quarter, we all can do the math and see what the hill it is to climb. But there's nothing that is unique to the quarter that we're forecasting looking at other than normal seasonality.
Scott Group: Okay, that's helpful. And then, Jamie,
Scott Group: What explain that? How do we think about depreciation going forward? And then on the cash flow side, you know, looks like a decent working capital tail winning in the third quarter. How should we think about the sustainability of this free cash inflection we just got in Q3?
Jamie Pierson: Yeah, so on the DNA, I think around 37 million, probably on a more normalized basis, there's still so much noise, Scott, going through there from the Goodwill Impairment, from the Omni Acquisition, there is, you know, another true up even this quarter, you'll see it when you get the chance to dig into the numbers.
Jamie Pierson: This is one of those things, Scott, that is what we should have always been doing, is actively and professionally managing our balance sheets.
Scott Group: So you'll see the improvement in cash from AR. You'll see the improvement from cash in AP.
Scott Group: Obviously, you know, since that came this quarter, we're going to have to hold the line next year.
Scott Group: But that's one thing that I'm confident in our ability to do is, is again, as opposed to just accepting the balance sheet as it comes at us, we're actively managing it for the first time in probably many years.
Speaker Change: So is there more to go there that could be an incremental source of cash?
Speaker Change: There is, Scott, but I wouldn't say that we would be a repeat of the third quarter. The gains from here on out...
Speaker Change: are going to be hard fought in a Pete Rose way, singles, legging it out every step of the way. Every day of AR is $7 million in cash.
Speaker Change: I'm not done in terms of, you know, I guess, treating our money like it's our own on those two particular fronts. But again, I'm not anticipating a repeat of the third quarter. The gains from here now are going to be much more de minimis than what we saw this quarter.
Speaker Change: Thank you, guys.
Speaker Change: Thank you. And as a reminder, it is star one for your questions. We'll take our next question from Besco Majors with
Speaker Change: Rebecca Garbrick, Jamie Pierson, Unknown Executive
Speaker Change: Please go ahead.
Besco Majors: A bit of room on the covenant with respect to EBITDA. I think you said $32 million cushion.
Speaker Change: Is that at the current rate of the leverage ratio, or is that assuming...
Speaker Change: The reduction you see in 4Q and you know, how do you feel about your cushion as that accordion starts to get a little bit tighter into next year and the ratio comes down? Thank you. Yeah, the cushion, the cushion, Vascom is on an LT on basis as of the end of this quarter.
Speaker Change: So that's not a projection. That's not guidance. That's not a forecast. That was actually at the end of the third quarter.
Speaker Change: Now, how to look at it in terms of the step down, you call it the accordion, but the step down, if you will, you know, let me, you know, begin by saying that, you know, we're always keeping a close eye on our covenants.
Speaker Change: You guys know my background. I have probably more experience in this area than anybody else in the industry.
Speaker Change: And if you ever need to, look, we'll explore ways to proactively provide that flexibility. We need to ensure that we've got the headroom to navigate not only the current macro environment, the freight softness, whatever you want to call it, but also transform the company.
Speaker Change: When I started, gosh, I think it was five months ago at this point, I instituted a rolling 12-month forecast process, which gives me more confidence.
Speaker Change: in our forecasting capabilities every single month as it goes by. I'm not saying we're there by any stretch of the imagination, but we're infinitely better than we were just, you know, five months ago. But to be clear, like, I revisit our performance.
Speaker Change: and Covenants and our compliance every 30 days. So, you know, we're in compliance today. We had we had the cushion and we intend to stay in compliance.
Jamie Pierson: Thank you for that, Jamie. Very long-winded answer to your question. Sorry about that. Just one follow-up, maybe extending Scott's question from earlier.
Speaker Change: You've got a ton of information on the mix of business at Omni, seasonality. Can you help us understand a little better the mix between maybe traditional...
Speaker Change: Ocean and Air International Freight and Customs and Value-Added Services just thinking about cyclical exposures in the next year and making our own views about the opportunities and risks there. Thank you.
Speaker Change: Yeah, so the mix of business that's going is wide.
Speaker Change: As you know, Omni was a collection of 12 companies providing different services across the logistic spectrum. Whether it be forwarding, whether it be brokerage, ocean, air, ground, we have warehouse, value added services, we have customs, brokerage.
Speaker Change: So it's hard to pin Omni to any one particular set of KPIs, which is why it's so important.
Speaker Change: that as we stand this company on its side and moving into the first quarter of 2025, we intend to actually change the reporting structure so that we can answer that very question.
Speaker Change: Customers of Brokerage Logistics. Those last two or three we might add into an other category, but the mix of business in Omni is across the entire spectrum of the logistics space.
Speaker Change: Thank you.
Speaker Change: And we'll take our next question from Christopher Kuhn with Benchmark Company. Please go ahead.
Christopher Kuhn: Yeah, hi, good afternoon. Thanks for taking my question. Shawn, last quarter you talked a little bit about the change in the strategy for the legacy forward customers.
Christopher Kuhn: Maybe the attrition there. Can you talk about some of the trends you saw in the quarter for those customers and some of them that left the network and they come all back?
Shawn Stewart: So I went into a listen mode, helping them understand as I see things, hoping to get alignment, which I think we got very much alignment with the existing Forward Air customers.
Shawn Stewart: And ultimately, we saw quite a significant amount of trust and volume coming back in. I would say the real deficit, if you will, on a year-over-year basis,
Shawn Stewart: is more about their overall volume being depressed as well in this current market. So it has less to do with just the overall confidence.
Shawn Stewart: and lack of trust to more of just overall volumes down. So a lot of confidence there, a lot more strategy sessions that we've had even in Q3 with them.
Shawn Stewart: around further opportunities for us to I wouldn't say add a service but to enhance a service and or to enhance a whether it be cut times in a particular market to open it up to a little bit more
Shawn Stewart: I would say free-flowing, non-palletized freight on short hauls versus long hauls, etc. So we're exploring even more opportunities directly with them to think outside the box as long as it's a good match for them and a good match for us without exposing too much of the core of what we do and how we do it inside of our network. So I would say all in all, I'm pleased with where we stand today.
Shawn Stewart: I still would like to see even more time of confidence and trust building between our relationship moving forward.
Speaker Change: and that's great thanks and then just as you change the strategy in the expedited LPL business I know you talked about the revenue per hundredweight exfuel how should we think about the weight
Speaker Change: And the revenue per shipment up at XFUEL, those were both actually up year on year. So how should we think about those going forward as you ship the strategy there?
Speaker Change: Yeah, I think you'll continue to see that same trend. Obviously, you know, I don't know in direct...
Speaker Change: How much the change in what I'm what I'm calling right now a call to action on this class-based rate Mainly the czar lot rate based tariff So like I said earlier, we will continue with class, but we won't continue with those those reduced rates
Speaker Change: So, I don't know what impact that will have in the mix on that weight per shipment overall, but I'm thinking it will continue to go up actually. So I don't think that particular strategy will have a negative impact there.
Speaker Change: Okay. Appreciate the question.
Speaker Change: Thank you. We'll take a follow-up from Scott Group with
Speaker Change: will free search, please go ahead.
Scott Group: Hey guys, thanks for the follow-up. Just any color you can give on the monthly tonnage trends and I know October books aren't closed but you know just a
Shawn Stewart: Update on October tonnage.
Speaker Change: Yeah, Scott, you know, we don't give intra-quarter guidance.
Shawn Stewart: So we haven't even closed the books yet. So October is going to be an important month for us, I think for everybody in this space given what we're coming out of.
Shawn Stewart: pretty challenging exogenous market and.
Shawn Stewart: Combine that with a $2.5 billion merger, and we've got an even more challenging crystal ball. So we're working through it as best we can, and we'll be back to you soon with the results.
Speaker Change: And what about just the trends throughout Q3, though, in terms of the monthly tonnage?
Speaker Change: Yeah, we don't give intercourter guidance, you know, and right now we're focused, and I would say differently, Scott.
Shawn Stewart: We still don't give intracorporate guidance. And I would say what we're focused on is on completing the integration. We're going to start the transformation and start prioritizing and piping that shift in the product and the reporting from the legal entities to the product and service base.
Shawn Stewart: We'll revisit the guidance in the future, but not until we get those three more important things addressed.
Shawn Stewart: Unknown Speaker
Speaker Change: All right. Thank you, guys.
Speaker Change: Thank you and there are no further questions at this time. I'll turn the call back to Mr. Stewart for any closing remarks.
Shawn Stewart: All right. Thank you.
Shawn Stewart: So listen, I want to personally thank everyone for joining the call today and I look forward to getting back on the phone with everyone after the end of the year and updating you on the transformational activities that are going to take place.
Shawn Stewart: So until then I want to wish each and every one of you a blessed holiday season and a happy new year And look forward to talking to you next year. Thank you
Speaker Change: Thank you and this concludes Forward Air's 3rd Quarter 2024 Earnings Conference Call. Please disconnect your line at this time and have a wonderful evening.