Q4 2025 Forward Air Corp Earnings Call

February 23, 2026

Speaker #3: Please stand by. Your meeting is about to begin. Good afternoon, everyone. Welcome to Forward Air's fourth quarter and full year 2025 earnings conference call.

Operator: Please stand by. Your meeting is about to begin. Good afternoon, everyone. Welcome to Forward Air's Q4 and full year 2025 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. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero at any time. I would now like to turn the call over to Mr. Tony Carreño, Senior Vice President of Treasury and Investor Relations. Please go ahead, sir.

Speaker #3: At this time, all participants have been placed on 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.

Speaker #3: If at any point your question has been answered, you may remove yourself from the queue by pressing star two. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.

Speaker #3: Lastly, if you should require operator assistance, please press star zero at any time. I would now like to turn the call over to Mr. Tony Carreo, Senior Vice President of Treasury and Investor Relations.

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

Speaker #3: Please go ahead, sir.

Speaker #4: Thank you, Operator, and good afternoon, everyone. Welcome to Forward Air's fourth quarter and year-end 2025 earnings conference call. With us this afternoon are Shawn Stewart, President and Chief Executive Officer; and Jamie Pierson, Chief Financial Officer.

Tony Carreño: Thank you, operator. Good afternoon, everyone. Welcome to Forward Air's Q4 and year-end 2025 Earnings Conference Call. With us this afternoon are Shawn Stewart, President and Chief Executive Officer, and Jamie Pierson, Chief Financial Officer. By now, you should have received the press release announcing Forward Air's Q4 2025 results, which was also furnished to the SEC on Form 8-K. We have also furnished a slide presentation outlining Q4 2025 earnings highlights and a business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com. Please be aware that certain statements in the company during the release announcement and on this conference call may be considered forward-looking statements.

Speaker #4: By now, you should have received the press release announcing Forward Air's fourth quarter 2025 results, which was also furnished to the SEC on Form 8-K.

Speaker #4: We have also furnished a slide presentation outlining fourth quarter 2025 earnings highlights and a business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com.

Speaker #4: Please be aware that certain statements in the company's earnings release announcement and on this conference call may be considered forward-looking statements. 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.

Tony Carreño: 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 2026. 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 SEC and the press release and slide presentation relating to this 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 #4: Including statements regarding our fiscal year 2026. 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.

Speaker #4: For additional information concerning these risks and factors, please refer to our filings with the SEC, as well as the press release and slide presentation relating to this earnings call.

Speaker #4: 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.

Tony Carreño: 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 US 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-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation. I will now turn the call over to Shawn.

Speaker #4: 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.

Speaker #4: Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation. I will now turn the call over to Shawn.

Speaker #5: Good afternoon, everyone, and thank you for joining us. I really appreciate your interest in Ford Air Corporation. There are three main topics that I would like to cover on today's call.

Shawn Stewart: Good afternoon, everyone. Thank you for joining us. I really appreciate your interest in Forward Air Corporation. There are three main topics that I would like to cover on today's call. First, I will provide an update on our strategic alternatives review process. Second, I will review some key achievements in 2025. Third, I will share some thoughts on our 2026 priorities before turning the call over to Jamie. Regarding the strategic review, we have continued to make progress since our last update in November and believe we are nearing the conclusion. As we have said from the onset, this has been an extremely comprehensive review, an incredibly difficult logistics environment and broader economic backdrop, which has contributed to the length of the process. When we have updates to share on the review, we will.

Speaker #5: First, I will provide an update on our strategic alternatives review process. Second, I will review some key achievements in 2025. Third, I will share some thoughts on our 2026 priorities before turning the call over to Jamie.

Speaker #5: Regarding the strategic review, we have continued to make progress since our last update in November and believe we are nearing the conclusion. As we have said from the onset, this has been an extremely comprehensive review, an incredibly difficult logistics environment, and broader economic backdrop, which has contributed to the length of the process.

Speaker #5: When we have updates to share on the review, we will. Beyond that, we are going to remain focused on operating the company, preparing for the cycle to turn so we can take advantage when it does, and keep today's comments focused on the actual results.

Shawn Stewart: Beyond that, we are going to remain focused on operating the company, preparing for the cycle to turn, so we can take advantage of when it does and keep today's comments focused on the actual results. With that, let's turn to the second topic. For the full year 2025, we reported consolidated EBITDA, which is calculated pursuant to our credit agreement of $307 million, compared to $311 million in 2024. As we mentioned last year, we expected the quality of our earnings to continue to improve as historical performance and synergy savings roll off. That is exactly what has happened. To that point, adjusted EBITDA in 2025 improved $40 million year-over-year to $293 million, compared to $253 million in 2024.

Speaker #5: With that, let's turn to the second topic. For the full year 2025, we reported consolidated EBITDA, which is calculated pursuant to our credit agreement, of $307 million, compared to $311 million in 2024.

Speaker #5: As we mentioned last year, we expected the quality of our earnings to continue to improve as historical performer and synergy savings roll off. And that is exactly what has happened.

Speaker #5: To that point, adjusted EBITDA in 2025 improved $40,000,000 year over year to $293,000,000 compared to $253,000,000 in 2024. I am proud of our team for holding serve and focusing on what we can control and delivering these results while actively transforming the company and in the face of a multi-year freight recession.

Shawn Stewart: I am proud of our team for holding serve and focusing on what we can control and delivering these results while actively transforming the company and in the face of a multi-year freight recession. We remain focused on the customer and use this time to completely rebuild the management team, consolidate duplicative real estate, and reduce expenses to position the company to take advantage of the tailwinds in the industry when the broader market improves. Operationally, in 2025, we unified our US domestic operations with the with the creation of our One Ground network, aligning our business into a more cohesive, agile, and scalable operating model. This initiative consolidated all US domestic ground operations under a single leadership structure and integrated key service lines: line haul, pickup and delivery, truckload brokerage, and expedited services into one streamlined organization. Importantly......

Speaker #5: We remain focused on the customer and use this time to completely rebuild the management team, consolidate duplicative real estate, and reduce expenses to position the company to take advantage of the tailwinds in the industry when the broader market improves.

Speaker #5: Operationally, in 2025, we unified our U.S. domestic operations with the creation of our one-ground network, aligning our business into a more cohesive agile and scalable operating model.

Speaker #5: This initiative consolidated all U.S. domestic ground operations under a single leadership structure and integrated key service lines, line haul, pickup and delivery, truckload brokerage, and expedited services into one streamlined organization.

Speaker #5: Importantly, our sales channels will continue to operate independently, delivering the outstanding solutions, service, and customer relationships we always have. At the same time, our operations remain channel agnostic, executing consistently across the platform and delivering best-in-class on-time performance and industry-leading claims results.

Shawn Stewart: Our sales channels will continue to operate independently, delivering the outstanding solutions, service, and customer relationships we always have. At the same time, our operations remain channel-agnostic, executing consistently across the platform and delivering best-in-class on-time performance and industry-leading claims results. In 2025, we also unveiled our new Latin America regional structure, marking a significant step in strengthening our global logistics network. This regional platform spans Mexico, Brazil, Peru, Colombia, and Chile, and is anchored by our international freight station in Miami. The Miami gateway connects Latin America to global markets and enables us to deliver industry-leading import and export security, reliability, and service to our customers. During the year, we completed the corrective pricing actions at the Expedited Freight segment and shed some unprofitable freight from our network as a result.

Speaker #5: In 2025, we also unveiled our new Latin America regional structure marking a significant step in strengthening our global logistics network. This regional platform spans Mexico, Brazil, Peru, Colombia, and Chile and is anchored by our international freight station in Miami.

Speaker #5: The Miami Gateway connects Latin America to global markets and enables us to deliver industry-leading import and export security, reliability, and service to our customers.

Speaker #5: During the year, we completed the corrective pricing actions at the expedited freight segment and shed some unprofitable freight from our network as a result.

Speaker #5: Following these actions, the improvement in yield, along with aligning our cost structure with less volume in the network, resulted in this segment's full-year reported EBITDA margin improving by 110 basis points—from 9.8% in 2024 to 10.9% in 2025.

Shawn Stewart: Following these actions, the improvement in yield, along with aligning our cost structure with less volume in the network, this segment's full-year reported EBITDA margin improved by 110 basis points from 9.8% in 2024 to 10.9% in 2025. As we move into 2026, we expect the volume declines to begin moderating as we lap the corrective pricing actions. In closing out my comments on 2025, in pursuit of continuing to enhance the transparency of our business, we provided detail on revenue by product, foreshadowing how we plan to go to market and transition away from reporting by legacy and legal reporting structure. During the year, we also provided insight to our revenue by region around the world. More to come as we work out the reporting nuances, but I am extremely excited about this additional transparency.

Speaker #5: As we move into 2026, we expect the volume declines to begin moderating as we lap the corrective pricing actions. In closing out my comments on 2025, in pursuit of continuing to enhance the transparency of our business, we provided detail on revenue by product, foreshadowing how we plan to go to market and transition away from reporting by legacy and legal reporting structure.

Speaker #5: During the year, we also provided insight into our revenue by region around the world. More to come as we work out the reporting nuances, but I am extremely excited about this additional transparency.

Speaker #5: Moving to the third topic, as we enter 2026, our strategic focus remains on profitable long-term growth through the expansion of synergistic service offerings that enhance customer value and revenue quality.

Shawn Stewart: Moving to the third topic, as we enter 2026, our strategic focus remains on profitable, long-term growth through the expansion of synergistic service offerings that enhance customer value and revenue quality. Our growth is contingent upon having the right team in place, including rounding out our leadership team. In late 2025, we added Fabio Mindlinicas as the President of Latin America. Fabio brings over 30 years of experience in the business development and operations throughout Latin America and North America. Just last month, we added Joanna Xu to the leadership team as our President of Asia Pacific. Joanna brings a wealth of knowledge and 34 years of experience to the company, including working with two of the world's largest logistics companies. Most recently, we announced that Lance Sons has joined the company as our new Chief Information Officer.

Speaker #5: Our growth is contingent upon having the right team in place including rounding out our leadership team. In late 2025, we added Fabio, Mendenicas, as the president of Latin America, Fabio brings over 30 years of experience in the business development and operations throughout Latin America and North America.

Speaker #5: Just last month, we added Joanna Zhu to the leadership team as our President of Asia Pacific. Joanna brings a wealth of knowledge and 34 years of experience to the largest logistics companies.

Speaker #5: And most recently, we announced that Lance Sons has joined the company as our new chief information officer. With nearly 30 years of experience, Lance has held progressive leadership roles at a few of the largest tech-forward supply chain companies.

Shawn Stewart: With nearly 30 years of experience, Lance has held progressive leadership roles at a few of the largest tech-forward supply chain companies. I could not be more excited about the talent and industry experience Fabio, Joanna, and Lance bring to the company. I am confident that they will drive growth and success across the global enterprise as we enter 2026. A priority in 2026 is to continue the progress in upgrading our tech stack as part of our broader transformation. A key component of this effort is the One ERP initiative, which will consolidate multiple financial systems into a single integrated platform. By bringing these systems together, we should achieve standardized reporting, consistent processes, and a single source of financial data, driving greater efficiency and effectiveness across the company.

Speaker #5: I could not be more excited about the talent and industry experience Fabio, Joanna, and Lance bring to the company. I am confident that they will drive growth and success across the global enterprise as we enter 2026.

Speaker #5: A priority in 2026 is to continue the progress in upgrading our tech stack as part of our broader transformation. A key component of this effort is the One ERP initiative, which will consolidate multiple financial systems into a single integrated platform.

Speaker #5: By bringing these systems together, we should achieve standardized reporting, consistent processes, and a single source of financial data, driving greater efficiency and effectiveness across the company.

Speaker #5: The project is planned as a phased rollout with the first phase successfully completed earlier this month and the final phase to be completed by the end of this year.

Shawn Stewart: The project is planned as a phased rollout, with the first phase successfully completed earlier this month and the final phase to be completed by the end of this year. During the year, we also plan to consolidate a very decentralized global HRIS system across multiple countries into one worldwide system. This is a transformative step as we continue to rationalize our IT systems, improve the quality of our data, and decision-making. By prioritizing customer service, strong leadership, and careful cost management, we believe we are positioning the company for long-term success. As most of you are aware, we have made a great deal of progress and believe we are well-positioned once the freight environment improves. We are optimistic about a recovery and are committed to building on the momentum of our transformation that we have created.

Speaker #5: During the year, we also plan to consolidate a very decentralized global HRIS system across multiple countries into one worldwide system. This is a transformative step as we continue to rationalize our IT systems and improve the quality of our data and decision-making.

Speaker #5: By prioritizing customer service, strong leadership, and careful cost management, we believe we are positioning the company for long-term success. As most of you are aware, we have made a great deal of progress and believe we are well positioned once the freight environment improves.

Speaker #5: We are optimistic about a recovery and are committed to building on the momentum of our transformation that we have created. With that, I will turn the call over to Jamie to go through the detailed results of the fourth quarter and full year 2025.

Shawn Stewart: With that, I will turn the call over to Jamie to go through the detailed results of Q4 and full year 2025.

Speaker #1: Thanks, Shawn. And good afternoon, everyone. For the fourth quarter 2025, we reported another solid 75 million dollar consolidated EBITDA quarter. Actually, to be very specific, it was a 77 million dollar quarter and that is compared to 72 million in the fourth quarter a year ago.

Jamie Pierson: Thanks, Sean, good afternoon, everyone. For Q4 of 2025, we reported another solid $75 million consolidated EBITDA quarter. Actually, to be very specific, it was a $77 million quarter, compared to $72 million in Q4 a year ago. As you heard from Sean, for the full year, consolidated EBITDA was $307 million, which was in line with the $311 million for 2024. As usual, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on slide 31 of the presentation. Before you ask, because I know that you will, in Q4, our operating expenses were negatively impacted by a $20 million charge for the impairment of software implementation costs.

Speaker #1: As you heard from Shawn, for the full year, consolidated EBITDA was $307 million, which was in line with the $311 million for 2024. As usual, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on slide 31 of the presentation.

Speaker #1: And before you ask, because I know that you will, in the fourth quarter, our operating expenses were negatively impacted by a 20 million charge for the impairment of software implementation costs.

Speaker #1: Being a non-cash charge, as you would expect, the credit agreement allowed us to add these costs back. Regarding consolidated EBITDA, for the prior three quarters, we've adjusted the previously reported amounts by the actions we took in the fourth quarter to improve our cost structure.

Jamie Pierson: Being a non-cash charge, as you would expect, the credit agreement allows us to add these costs back. Regarding consolidated EBITDA for the prior three quarters, we've adjusted the previously reported amounts by the actions we took in Q4 to improve our cost structure. If you will remember, the credit agreement also allows us to add back pro forma savings from these actions to be included in our historical consolidated EBITDA, and requires that we spread back in time to the period in which the expense would have been incurred. As such, we have appropriately adjusted the prior quarters to reflect the impacts of the cost savings. If you would, please reference page 12 of the slide presentation issued today, and you will be able to see what we reported in the past and updated for the most recent cost out and pro forma actions.

Speaker #1: If you will remember, the credit agreement also allows us to add back pro forma savings from these actions to be included in our historical consolidated EBITDA and requires that we spread back in time to the period in which the expense would have been incurred.

Speaker #1: As such, we have appropriately adjusted the prior quarters to reflect the impacts of the cost savings. If you would, please reference page 12 of the slide presentation issued today, and you will be able to see what we reported in the past and what has been updated for the most recent cost out and pro forma actions.

Speaker #1: Turning to the segments, expedited freight fourth quarter reported EBITDA improved to $25 million compared to $18 million a year ago. We also saw a significant improvement in year-over-year margin, which increased by 350 basis points to 10.1% in the fourth quarter of '25 compared to 6.6% in the fourth quarter of '24.

Jamie Pierson: Turning to the segments. Expedited Freight's Q4 reported EBITDA improved to $25 million, compared to $18 million a year ago. We also saw a significant improvement in year-over-year margin, which increased by 350 basis points to 10.1% in Q4 2025, compared to 6.6% in Q4 2024. For the full year, despite a challenging freight environment and a decline in tonnage, we focused on charging the optimal price for freight moving through our network and actively managing expenses. As you heard from Shawn, this strategy to focus on what we can control contributed to an improvement in Expedited Freight's reported EBITDA margin of more than 100 basis points to 10.9% for the year, compared to 9.8% in 2024.

Speaker #1: For the full year, despite a challenging freight environment and a decline in tonnage, we focused on charging the optimal price for freight moving through our network and actively managing expenses.

Speaker #1: As you heard from Shawn, this strategy to focus on what we can control contributed to an improvement in expedited freight reported EBITDA margin of more than 100 basis points to 10.9% for the year compared to 9.8% in 2024.

Speaker #1: At the Omni Logistics segment, we continue to reach new heights. In the fourth quarter, this segment achieved the highest revenue, the highest reported EBITDA, and the highest reported EBITDA margin, excluding the impairment of goodwill, since the acquisition in January of ’24.

Jamie Pierson: At the Omni Logistics segment, we continue to reach new heights. In Q4, this segment achieved the highest revenue, the highest reported EBITDA, and the highest reported EBITDA margin, excluding the impairment of goodwill, since the acquisition in January 2024. Reported EBITDA in Q4 2025 improved to $36 million, compared to $32 million a year ago. The reported EBITDA margin for Q4 2025 improved to 10%, compared to 9.8% in Q4 2024. Looking at the Omni Logistics segment's full-year results, reported EBITDA, again, excluding the impact of goodwill, almost doubled, increasing to $124 million in 2025, compared to $67 million in 2024.

Speaker #1: Reported EBITDA in the fourth quarter of '25 improved to $36 million compared to $32 million a year ago. The reported EBITDA margin for the fourth quarter 2025 improved to 10% compared to 9.8% in the fourth quarter of 2024.

Speaker #1: Looking at the Omni Logistics segment's full year results, reported EBITDA again excluding the impact of goodwill almost doubled. Increasing to 124 million in '25 compared to 67 million in 2024.

Speaker #1: Additionally, the margin increased significantly as well. Increasing 360 basis points to 9.2% in 2025 compared to 5.6% in 2024. At Intermodal, the market, especially port activity, remained challenging in the fourth quarter.

Jamie Pierson: Additionally, the margin increased significantly as well, increasing 360 basis points to 9.2% in 2025, compared to 5.6% in 2024. At Intermodal, the market, especially port activity, remained challenging in Q4. Trade-related softness among several core customers, along with typical seasonality, contributed to declining shipments and revenue per shipment compared to a year ago. In Q4, the Intermodal segment's reported EBITDA and margin were $7 million and 14.2%, respectively, compared to $10 million and 17.5% a year ago. On a full year basis, the Intermodal segment's 2025 reported EBITDA of $35 million was in line with the $37 million we reported in 2024. The margin remained stable as well, with a 15.1% margin in 2025, compared to 16% in 2024.

Speaker #1: Trade-related softness among several core customers, along with typical seasonality, contributed to declining shipments and revenue per shipment compared to a year ago. In the fourth quarter, the Intermodal segment's reported EBITDA and margin were $7 million and 14.2%, respectively, compared to $10 million and 17.5% a year ago.

Speaker #1: On a full-year basis, the Intermodal segment's 2025 reported EBITDA of $35 million was in line with the $37 million we reported in 2024.

Speaker #1: The margin remained stable as well, with a 15.1% margin in 2025 compared to 16% in 2024. Turning to cash flow, cash, and liquidity, cash used by operating activities in the fourth quarter was $23 million, which was the exact same amount as last year.

Jamie Pierson: Turning to cash flow, cash, and liquidity. Cash used by operating activities in Q4 was $23 million, which was the exact same amount last year. For the full year of 2025, we generated $44 million of cash from operating activities, compared to consuming $69 million of cash used in operating activities last year, which is a $113 million year-over-year improvement. As for liquidity, we ended the year with $367 million, comprised of $106 million in cash and $261 million in availability under the revolver. This compares to $105 million in cash and $382 million of liquidity at the end of 2024. As usual, I'd like to leave you with a few additional thoughts.

Speaker #1: For the full year of ’25, we generated $44 million of cash from operating activities, compared to consuming $69 million of cash used in operating activities last year, which is a $113 million year-over-year improvement.

Speaker #1: As for liquidity, we ended the year with 367 million comprised of 106 million in cash and 261 million in availability under the revolver. This compares to 105 million in cash and 382 million of liquidity at the end of '24.

Speaker #1: And, as usual, I'd like to leave you with a few additional thoughts. The first of which is our very consistent performance in the midst of the current backdrop.

Jamie Pierson: The first of which is our very consistent performance in the midst of the current backdrop. On a consolidated basis, we have been bouncing around between $73 to $79 million in consolidated EBITDA every single quarter of this year, which in turn leads to the continued strength of our liquidity position. When compared to our peers, as a percent of total assets and as a percent of total LTL revenue, we are above the industry average on both metrics, ending the year with $367 million in liquidity and no meaningful maturities for almost 5 years, gives us a ton of cushion and a ton of time to continue improving operations. As for my second point?...

Speaker #1: On a consolidated basis, we have been bouncing around between $73 million to $79 million in consolidated EBITDA every single quarter of this year, which in turn leads to the continued strength of our liquidity position.

Speaker #1: When compared to our peers, that's a percent of total assets and as a percent of total LTO revenue, we are above the industry average on both metrics.

Speaker #1: Ending the year with 367 million in liquidity and no meaningful maturities for almost five years, gives us a ton of cushion and a ton of time to continue improving operations.

Speaker #1: As for my second point, given the current amount of excess capacity in the domestic ground network and the cost-out initiatives put in place last year, every single additional shipment added to the system should have a disproportionate positive contribution to the bottom line.

Jamie Pierson: given the current amount of excess capacity in the domestic ground network and the cost out initiatives put in place last year, every single additional shipment added to the system should have a disproportionate positive contribution to the bottom line, and that has nothing to do with the increase in pricing that we're starting to see in the broader market. That is a long way of saying there is a significant amount of operating leverage in the domestic ground network. The final point is the continued prioritization and maniacal focus on cash generation. As you heard earlier, cash provided by operations improved $113 million in 2025 compared to 2024.

Speaker #1: And that has nothing to do with the increase in pricing that we're starting to see in the broader market. That is a long way of saying there is a significant amount of operating leverage in the domestic ground network.

Speaker #1: And the final point is the continued prioritization and maniacal focus on cash generation. As you heard earlier, cash provided by operations improved 113 million dollars in '25 compared to '24.

Speaker #1: On page 23 of the earnings presentation, you will see that on a non-GAAP basis, we generated $32 million in operating cash flow in the fourth quarter and $209 million for the full year of 2025.

Jamie Pierson: On page 23 of the earnings presentation, you will see that on a non-GAAP basis, we generated $32 million in operating cash flow in Q4 and $209 million for the full year of 2025. In closing, I would say for the continued and highly speculated industry recovery, I am not an economist, nor am I a speculator. As we ended 2025, I did not see any meaningful positive signs. That being said, since the end of the year, the recent spike in TL spot rates and the same on the tender rejections do give me hope that we're reaching an inflection point. Before declaring victory, we're gonna need to see sustained PMI above 50 and continued increase in spot rates and rejections. I will now pass the call back to Shawn for closing comments before Q&A.

Speaker #1: In closing, I would say for the continued and highly speculated industry recovery, I am not an economist nor am I a speculator. As we ended '25, I did not see any meaningful positive signs.

Speaker #1: That being said, since the end of the year, the recent spike in TL spot rates and the same on the tender rejections do give me hope that we're reaching an inflection point.

Speaker #1: Before declaring victory, we're going to need to see sustained PMI above 50 and a continued increase in spot rates and rejections. I will now pass the call back to Shawn for closing comments before Q&A.

Speaker #2: Thank you, Jamie. In closing, we finished the year with momentum despite economic headwinds and a significant ongoing organizational transformation. Performing under these conditions underscored the resilience of our business and the strength of our team.

Shawn Stewart: Thank you, Jamie. In closing, we finished the year with momentum despite economic headwinds and a significant ongoing organizational transformation. Performing under these conditions underscored the resilience of our business and the strength of our team. I am incredibly proud of their unwavering commitment to our customers and their disciplined execution. Their ability to operate with precision while maintaining rigorous cost control has meaningfully strengthened our performance and enhanced our flexibility. This focus has not only delivered results in a challenging environment, but also positioned us well to capture opportunities as the market conditions improve. I am highly confident in the foundation we are building. We are entering the next phase of the business from a position of strength, well equipped to drive sustainable long-term growth and to continue delivering meaningful, measurable value to our shareholders. We believe we are well positioned to benefit as freight markets stabilize and recover.

Speaker #2: I am incredibly proud of their unwavering commitment to our customers and their disciplined execution. Their ability to operate with precision while maintaining rigorous cost control has meaningfully strengthened our performance and enhanced our flexibility.

Speaker #2: This focus has not only delivered results in a challenging environment, but also positioned us well to capture opportunities as the market conditions improve. I am highly confident in the foundation we are building.

Speaker #2: We are entering the next phase of the business from a position of strength. Well-equipped to drive sustainable, long-term growth, and to continue delivering meaningful, measurable value to our shareholders.

Speaker #2: We believe we are well-positioned to benefit as freight markets stabilize and recover. As we move into Q&A, we ask that the questions focus on the state of the industry and the business.

Shawn Stewart: As we move into Q&A, we ask that the questions focus on the state of the industry and the business. Thank you in advance. I will now turn the call over to the operator to take questions. Operator?

Speaker #2: Thank you in advance. I will now turn the call over to the operator to take questions. Operator?

Speaker #3: Certainly. Thank you, Mr. Stewart. Ladies and gentlemen, at this time, if you do have any questions, please simply press star one on your telephone keypad.

Operator: Certainly. Thank you, Mr. Stewart. Ladies and gentlemen, at this time, if you have any questions, please simply press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you please pick up your handset when posing your questions to provide optimal sound quality. We'll go first today to Bruce Chan with Stifel.

Speaker #3: If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you please pick up your handset when posing your questions to provide optimal sound quality.

Speaker #3: We'll go first today to Bruce Chan with Stifel.

Speaker #4: Yeah, thanks, operator. And good afternoon, gents. Congrats on all the progress that you've seen so far. Maybe just to start here, it's been a while since we've had an upcycle, and you've obviously had a lot of change to the expedited freight segments since then.

Bruce Chan: Thanks, Operator, and good afternoon, gents. Congrats on all the progress that you've seen so far. Maybe just to start here, it's been a while since we've had an upcycle, and you've obviously had a lot of change to the Expedited Freight segment since then. Maybe you can just remind us of how your model performs in a recovery scenario, especially, you know, if there's a big truckload supply element, as you talked about, Jamie. You know, just trying to get a sense here of how we should be thinking about, you know, maybe gross margin squeeze and Expedited, and then in, you know, brokerage versus truckload and, you know, maybe where you're at in terms of third-party PT line haul miles.

Speaker #4: So maybe you can just remind us of how your model performs in a recovery scenario, especially if there's a big truckload supply element, as you talked about, Jamie, just trying to get a sense here of how we should be thinking about maybe gross margin squeeze and expedited, and then in brokered versus truckload, and maybe where you're at in terms of third-party PT linehaul miles.

Jamie Pierson: Well, Bruce, that was about five questions in one sentence, so let me...

Speaker #5: Well, Bruce, that was about five questions in one sentence. So let me see.

Shawn Stewart: It's good, it's good to hear from you, Bruce.

Speaker #2: It's good to hear from you, Bruce.

Speaker #5: Yeah. Yeah. Well, I guess.

Jamie Pierson: Yeah. Yeah, well, I guess...

Speaker #2: Before we pick those apart.

Shawn Stewart: Good way to pick those apart. Yeah.

Speaker #5: Yeah. Let me see if I can start from the top down. So in terms of how we perform in, I guess, a squeeze environment, I would say if you go back and look at the last probably five, maybe going on six or seven years, we outperform the space given the flexibility of our operating model.

Jamie Pierson: Let me see if I can start from the, from the top down. In terms of how, how we perform in, in, in a, I guess, a squeezed environment, I would say if you go back and look at the last probably 5, maybe going on 6 or 7 years, we outperform the, the space given the flexibility of our operating model. I say this because we're, you know, fixed in the, the terminal side and incredibly variable on the PT, which is one of your questions. We can add capacity, that being defined by drivers, tractors and trailers, probably faster than just about anybody in the space. If I went back and looked at it on a quarterly, maybe even an annual basis, we might positively comp to the industry average EBITDA margin, but not by much.

Speaker #5: And I say this because we're fixing the terminal side, which is incredibly variable on the PT—which is one of your questions. So we can add capacity—that being defined by drivers, tractors, and trailers—probably faster than just about anybody in the space.

Speaker #5: So if I went back and looked at it on a quarterly, maybe even an annual basis, we might positively comp to the industry average EBITDA margin but not by much.

Speaker #5: We don't. But there is a time of volatility to where at least on the ground side, we will probably outperform. Now, that doesn't say anything about warehouse, which is probably pretty flat, air in the ocean, which is given today's announcements, anybody's guess.

Jamie Pierson: We don't. But there, there is a time of volatility to where, at least on the ground side, we will probably outperform. Now, that doesn't say anything about warehouse, which is probably pretty flat, air and ocean, which is, given today's announcements, anybody's guess. I think that, you know, given where we are right now at 10% EBITDA margins relative to the industry's 20%, I would suspect that we would make up a lot of that ground. That was a terrible witty in a lot of that ground. That was a double entendre. It was not intended.

Speaker #5: But I think that, given where we are right now at 10% EBITDA margins relative to the industry's 20%, I would suspect that we would make up a lot of that ground.

Speaker #5: That was a terrible way to end it. A lot of that ground. That was a double entendre—it was not intended.

Speaker #2: That's a good one. Okay, that's super helpful. And maybe for my second or sixth question here, on the obviously performing a lot better than expected, can you maybe just help us to get a sense of what an appropriate midterm margin should look like there, and what seasonality should look like there?

Bruce Chan: That's a good one. Okay, that's, that's super helpful. Maybe for my, you know, I guess, second or sixth question here, you know, Omni obviously performing a lot better than expected. Maybe just help us to get a sense of, you know, what an appropriate midterm margin should look like there and what, you know, seasonality should look like there?

Speaker #4: Yeah. So, Bruce, as you know, it's a pretty diverse portfolio. So when you look at whether it be, obviously, ground feeding or the contract logistics, air and ocean, customs brokerage.

Shawn Stewart: Yeah. Bruce, as you know, it's a pretty diverse portfolio. When you look at, you know, whether it be, obviously ground feeding into the network or, you know, the contract logistics, air and ocean, and customs brokerage. It's really our focused growth in all of those areas and really play into the advantages of that diversification so that when one is up or one is down, the other one's up, et cetera. That's really what we've seen in the success of 2025 and what we really intend to continue to push through 2026 and beyond. We've got the right leadership with the right experience, with the right focus in each one of those areas, moving forward.

Speaker #4: So, it's really our focused growth in all of those areas, and really plays into the advantages of that diversification, so that when one is up or one is down, the other one's up, etc.

Speaker #4: So that's really what we've seen in the success of 2025, and what we really intend to continue to push through 2026 and beyond. We've got the right leadership with the right experience, with the right focus in each one of those areas.

Speaker #4: Moving forward. And the other complement, I would say, is I call it synergy selling. But it's looking at customers that have a wallet share in one of those areas, but not in the others.

Shawn Stewart: The other, the other compliment I would say is, you know, I call it synergy selling, but it's looking at customers that have a wallet share in one of those areas, but not in the others. We have a very robust team focused on that wallet share across the product offerings to continue to have the organic growth and, and further diversifying customer portfolios across those, those, those offerings. That's really what's, what's happening here within the Omni area.

Speaker #4: And we have a very robust team focused on that wallet share across the product offerings to continue to have the organic growth and further diversifying customer portfolios across those offerings.

Speaker #4: So that's really what's happening here within the Omni area.

Speaker #2: Okay. But there's nothing in customs brokerage or bonded warehousing or something that should lead us to believe that you were over-earning in this period or something like that?

Bruce Chan: Okay, there's nothing in, you know, customs brokerage or bonded warehousing or something that should lead us to believe that, you know, you were overearning in this period or something like that?

Speaker #4: No. Not significantly. I mean, obviously, yeah, duty drawback on the customs brokerage side is huge right now with all the tariff stuff. But it's not significant revenue streams.

Shawn Stewart: No, not, not significantly. I mean, obviously, yeah, duty drawback on the, on the customs brokerage side is huge right now with all the tariff stuff. It's not significant revenue streams. It's just an uptick. No, nothing, nothing in particular, to your point, other than just growth, and organic growth across the portfolio of those customers.

Speaker #4: It's just an uptick, but no, nothing in particular to your point other than just growth and organic growth across the portfolio of those customers.

Bruce Chan: Okay. Very good. Thank you.

Jamie Pierson: Yeah, if you look at page 30 of our earnings presentation, Bruce, you'll see our margins in the Omni segment are pretty strong. What Shawn said about growth, it couldn't be more spot on.

Speaker #5: Yeah. If you look at page two.

Speaker #2: Okay. Very good. Thank you.

Speaker #5: Earnings presentation—Bruce, you'll see our margins in the Omni segment are pretty strong. So what Shawn said about growth, it couldn't be more spot on.

Speaker #2: Got it. Perfect. All right. Thanks. I'll hop back in queue.

Bruce Chan: Got it. Perfect. All right, thanks. I'll hop back into you.

Speaker #4: Thank you, Bruce.

Shawn Stewart: Thank you, Bruce.

Speaker #3: Thank you. We'll go next now to Stephanie Moore with Jefferies.

Operator: Thank you. We go next now to Stephanie Moore with Jefferies.

Speaker #4: Hi, Stephanie.

Shawn Stewart: Hi, Stephanie.

Speaker #6: Great. Good afternoon. Thanks, everybody. I appreciate all the color and appreciate maybe the commentary you provided on the state of the underlying market as the year has progressed thus far.

Stephanie Moore: Great. Good afternoon. Thanks, everybody. You know, appreciate all the color and appreciate maybe the commentary you provided on the, on the state of the underlying market as the year has progressed thus far. Maybe, you know, it would be helpful if you could provide any additional commentary in terms of what your customers are saying, especially with this most recent ISM print, inflecting positive for the first time in a long time. I mean, are customers actually sounding more up- upbeat? And obviously, any differentiation you can make amongst, whether it's the LTL or Omni customers, the likes, would also be helpful. Thanks.

Stephanie Moore Wissink: Great. Good afternoon. Thanks, everybody. You know, appreciate all the color and appreciate maybe the commentary you provided on the, on the state of the underlying market as the year has progressed thus far. Maybe, you know, it would be helpful if you could provide any additional commentary in terms of what your customers are saying, especially with this most recent ISM print, inflecting positive for the first time in a long time. I mean, are customers actually sounding more up- upbeat? And obviously, any differentiation you can make amongst, whether it's the LTL or Omni customers, the likes, would also be helpful. Thanks.

Speaker #6: So maybe it would be helpful if you could provide any additional commentary in terms of what your customers are saying, especially with this most recent ISM print inflecting positive for the first time in a long time. I mean, are customers actually sounding more upbeat? And obviously, any differentiation you can make amongst whether it's the LTL or Omni customers, the likes, would also be helpful.

Speaker #6: Thanks.

Speaker #4: I think, Stephanie, from me—and I'll let Jamie chime in here—I think from our customers, experience with us on a consistent basis has given them comfort, whether you're talking about the legacy Ford Air Freight Forwarder 3PLs.

Shawn Stewart: I think, Stephanie, from me, and I'll let Jamie chime in here. I, I think, you know, from our customers' experience with us on a consistent basis has given them comfort, whether you're talking about the legacy Forward Air freight forward or 3PLs, we've been very consistent with them and very active and transparent with them. Then there's the consistency on the Omni side of our solutioning and cross-functional service offerings over the last two years, with all the changes we made. To me, it's no differently than any of us. When we're buying a service, we want to go to the best and very consistent, and that'll keep us coming back for more. That's really our recipe that's working for us. So n- no real secret other than that.

Speaker #4: We've been very consistent with them, and very active and transparent with them. And then there's the consistency on the Omni side of our solutioning and cross-functional service offerings.

Speaker #4: Over the last two years, with all the changes we made—and to me, it's no different than any of us—when we're buying a service, we want to go to the best and be very consistent.

Speaker #4: And that'll keep us coming back for more. And that's really our recipe that's working for us. And so no real secret other than that.

Speaker #4: That's what we're seeing.

Shawn Stewart: That's what we're seeing.

Speaker #6: And I guess maybe oh, go ahead.

Stephanie Moore: Can I get maybe-. Oh, go ahead.

Stephanie Moore Wissink: Can I get maybe-. Oh, go ahead.

Speaker #5: Yeah, I just wanted to say—and I think I said it in my comment—is looking at the ISM print, and especially focusing on new orders.

Jamie Pierson: Yeah, Stephanie, what I'd say is, and I think I said it in my comments, is looking at the ISM print, especially focused on new orders. That's why I think everyone gets super excited about seeing the new orders pop. If you look at it, I mean, it has been 3 months over the last 36 that it's been even marginally positive over 50. The most recent print of 1, obviously, doesn't make a trend. We're going to need to see a consistent trend, at least a report over 50 for at least 2, if not 3 or more months, to see that that's sustainable and it's not an aberration in the actual results.

Speaker #5: That's how I think everyone gets super excited about seeing the new orders pop. But if you look at it, man, there's been three months over the last 36 that it's been even marginally positive over 50.

Speaker #5: And the most recent print of one, obviously, doesn't make a trend. We're going to need to see a consistent trend—at least a report over 50—for at least two, if not three or more, months to see that that's sustainable.

Speaker #5: And it's not an operation in the actual results.

Speaker #6: Absolutely. I think that's helpful. And then, maybe sticking with Omni, I think the performance, as you noted and we could all see, has been very strong.

Stephanie Moore: Absolutely. I think that's helpful. Then maybe sticking with, sticking with Omni, I think the performance, you know, as you noted, and we could all see, has been very strong. Do you find that this is more so a function of your own kind of company-specific actions, or do you think that, you know, you're seeing some green shoots within the underlying market? Maybe just any kind of parsing out of that there as well. Then my third question, just to throw it out there, and then I'm done, I promise, would be: Do you think you're starting to see any of the synergies of the, of kind of offering the two services starting to form in 2026?

Stephanie Moore Wissink: Absolutely. I think that's helpful. Then maybe sticking with, sticking with Omni, I think the performance, you know, as you noted, and we could all see, has been very strong. Do you find that this is more so a function of your own kind of company-specific actions, or do you think that, you know, you're seeing some green shoots within the underlying market? Maybe just any kind of parsing out of that there as well. Then my third question, just to throw it out there, and then I'm done, I promise, would be: Do you think you're starting to see any of the synergies of the, of kind of offering the two services starting to form in 2026?

Speaker #6: Do you find that this is more so a function of your own, kind of, company-specific actions? And/or do you think that you're seeing some green shoots within the underlying market? Maybe just any kind of parsing out of that there as well?

Speaker #6: And then my third question, just to throw it out there, and then I'm done. I promise would be, do you think you're starting to see any of the synergies of kind of offering the two services starting to form in 2026?

Shawn Stewart: I wouldn't say any green shoots, you know, other than our commercial organization has been rebuilt by Eric Brandt. I would say we've got our swagger back. We've got a detailed focus. We know what we want to do and how we perform well, and we know what we're not, and we're not going to offer those offerings. We're staying really laser-focused on selling solutions that are in our wheelhouse. I would say to your second point, Stephanie, we're really not offering the two. The two are really one. Although we have an indirect and a direct channel on the sales side, but operationally, and what I mentioned in my openings around One Ground, that is the legacy Forward Air network.

Speaker #4: I wouldn't say any green shoots. Other than our commercial organization has been rebuilt by Eric Brandt. I would say we've got our swagger back.

Speaker #4: We've got a detailed focus. We know what we want to do and how we perform well. And we know what we're not. And we're not going to offer those offerings.

Speaker #4: So we're staying really laser-focused on selling solutions that are in our wheelhouse. And I would say, to your second point, Stephanie, we're really not offering the two.

Speaker #4: The two are really one. And although we have an indirect and a direct channel on the sales side, operationally—and what I mentioned in my opening around One Ground—that is the legacy Forward network.

Speaker #4: Everything in ground on the Omni side has rolled over into the legacy Ford side, if you will. And I don't even like to use 'the legacy this' or 'the legacy that,' but for this call, we will.

Shawn Stewart: Everything in ground on the Omni side has rolled over into the legacy Forward side, if you will. I don't even like to use the legacy this or the legacy that, but for this call, we will. We just talk about, you know, really focused on the customer experience with our assets and solutions holistically, but always respecting the sales channels and making sure we don't have conflicts.

Speaker #4: But we just talk about really focusing on the customer experience with our assets and solutions holistically, but always respecting the sales channels and making sure we don't have conflicts.

Speaker #6: Thanks for the time, as always.

Harrison Bauer: Thanks for the time, as always.

Stephanie Moore Wissink: Thanks for the time, as always.

Speaker #4: Thank you.

Shawn Stewart: Thank you.

Speaker #3: We'll go next now to Scott Group with Wolf Research.

Operator: We'll go next now to Scott Group with Wolfe Research.

Speaker #7: Hey. Thanks. Afternoon, guys. So I know you don't want to say too much on the process. I just want to make sure we're getting the message right.

Scott Group: Hey, thanks. Afternoon, guys. I know you don't want to say too much on the process. I just want to make sure we're getting the message right. I think last quarter you said it's taking a while, and there's maybe a churn of interested parties, maybe less interest from some and new interest from others, if I understand what you were trying to say last quarter. Maybe just an update on that. Are we still seeing that churn, or is there some other reason why this is taking so long?

Speaker #7: I think last quarter, you said it's taking a while and there's maybe a churn of interested parties, maybe less interest from some and new interest from others.

Speaker #7: If I understand what you were trying to say last quarter, maybe just an update on that. Are we still seeing that churn, or is there some other reason why this is taking so long?

Speaker #4: Yes, Scott. I can't say any more than I said. But I feel confident that we are coming to a conclusion here. And more to come as that rounds itself out.

Shawn Stewart: Yeah, Scott, you know, I can't say any more than I said, but we're, I feel confident that we are coming to a conclusion here, and more to come as that rounds itself out.

Speaker #7: Okay. I guess we're now Jamie, your comment, we're getting more optimistic since the year started. I guess we're about two-thirds of the way through Q1 now.

Scott Group: Okay. I guess we're now, Jamie, your comment, we're, we're getting more optimistic since the year started. I guess we're about two-thirds of the way through Q1 now. Can you give us some update on sort of what you're seeing in the business? Like LTL tonnage, I think, was down 10, 11% per day in Q4. What are you seeing, January, February?

Speaker #7: Can you give us some update on sort of what you're seeing in the business? LTL tonnage, I think, was down 10, 11 percent per day in Q4.

Speaker #7: What are you seeing January, February?

Speaker #5: Yeah. Scott, we don't give guidance on that. And always appreciate you asking, at least there's one consistency amongst the calls. But what I would say is it's probably just normal seasonality.

Jamie Pierson: Yeah, I know. Scott, you know, we don't give guidance on that. I always appreciate you asking. At least there, there's one consistency amongst the calls. What I would say is it's probably just normal seasonality. You know, we're, we're not going to comment on change in tonnage or price at this point in time, but if you just look over the, the last probably 2 years, it's probably not, not that much different in Q1 than what you would have anticipated.

Speaker #5: We're not going to comment on change in tonnage or process point time. But if you just look over the last probably two years, it's probably not that much different in the first quarter than what you would have anticipated.

Speaker #7: Okay, maybe I'll ask one more. Maybe we've got an answer here. Give us some puts and takes on cash flow for this year—how you're thinking, how should we think about capbacks?

Scott Group: Okay. Maybe I'll ask one more. Maybe we can, maybe we can answer here. Give us some, put some takes on, on cash flow for this year. How should we think about CapEx? Then I think the leverage covenant starts to get a little bit tougher each quarter this year. Just any thoughts on, on where you think you'll end the year on, or how you're thinking about progress on, on deleveraging this year?

Speaker #7: And then I think the leverage covenant starts to get a little bit tougher each quarter this year, just any thoughts on where you think you'll end the year on or how you're thinking about progress on de-leveraging this year?

Speaker #5: Yeah. So what's great about 2025, Scott, is we reached that inflection point. So if you look at the statement of cash flow when we filed the K, you're going to see that we spent about $166 million in interest, another $25 million, plus or minus, in financing leases, and another— is it $27 million?—in capex.

Jamie Pierson: Yeah. What's great about 2025, Scott, is we, we reached that inflection point. If you, you look at the statement of cash flow when we file the K, you're going to see that we spent about $166 million in interest, another, you know, $25 million ± in financing leases and another, is it $27 million in CapEx? Once we reach that inflection point, every incremental dollar over that amount actually starts to fall straight to the bottom line in terms of, in terms of cash. We reached that point in 2025. We generated, and I know it sounds like small, but it's, it's not the fact that it's only $1 million in, in increase in cash from 2024 to 2025.

Speaker #5: So once we reached that inflection point, every incremental dollar over that amount actually starts to fall straight to the bottom line in terms of cash.

Speaker #5: So we reached that point in '25. We generated—I know it sounds like a small number, but it's not—the fact that it's only a $1 million increase in cash from '24 to '25.

Speaker #5: It's the fact that we dug out one hell of a hole in '24 to actually accomplish that in '25. So we're going to continue to focus on improving or increasing sales while actually holding the operating leverage that the team has built over the last 18 months.

Jamie Pierson: It's the fact that we dug out one hell of a hole in 2024 to actually accomplish that in 2025. We're going to continue to, you know, focus on, you know, improving or increasing sales while actually holding up the operating leverage that the team has built over the last 18 months.

Speaker #7: So but similar in terms of capex and all that for this year?

Scott Group: Similar in terms of CapEx and all that for this year?

Speaker #5: Yeah. We might have a little bit more in capex, but as a percent of revenue, I don't see it's going to be that demonstrably different than the past.

Jamie Pierson: Yeah, we might have a little bit more in CapEx, but as a % of revenue, I don't see it's going to be that demonstrably different than the past.

Speaker #7: All right. Thank you, guys.

Scott Group: All right. Thank you, guys.

Speaker #4: Thank you.

Shawn Stewart: Thank you.

Speaker #3: We'll go next now to Harrison Bauer with Susquehanna.

Operator: We'll go next now to Harrison Bauer with Susquehanna.

Speaker #8: Great. Thanks for taking my question. You emphasized the importance of volume driving incremental margins this year in your expedited business. It sounds like you view volume as having a higher profit contribution, rather than your price-cost outlook for 2026.

Harrison Bauer: Great. Thanks for taking my question. You emphasized the importance of volume driving incremental margins this year in your expedited business. It sounds like you view volume as having a higher profit contribution, you know, rather than your price cost outlook for 2026. Can you maybe speak to the directional outlook, particularly within Expedited Freight, you know, for pricing this year as you begin to lap prior pricing actions? You know, as weight per shipment improves, would you expect any, you know, mix-related pressure on net yields?

Speaker #8: Can you maybe speak to the directional outlook particularly within expedited freight for pricing this year as you begin to lap prior pricing actions? As weight per shipment improves, would you expect any mix-related pressure on net yields?

Jamie Pierson: Again, Harrison, probably three different questions in there, but I think what you're getting at is incremental shipments and having a disproportionate, positive contribution, if, if I'm following that correctly. Is that right?

Speaker #4: Again, Harrison, probably three different questions, and I think what you're getting at is incremental shipments and having a disproportionate positive contribution, if I'm following that correctly.

Speaker #4: Is that right?

Speaker #8: Yeah. You got it. And just generally what pricing within that business, what you expect if you expect volumes to be the bigger contributor to incrementals.

Harrison Bauer: Yeah, you got it. Just generally, what, you know, pricing, you know, within that business, what you expect if, you know, you expect volumes to be the bigger contributor to incrementals?

Speaker #4: Yeah. Well, right now, we're focused more on increasing and improving the density of the network and the resulting profitability margin that comes out of it.

Jamie Pierson: Yeah. Well, right now, we're focused more about increasing and improving the density of the network and the following, you know, profitability margin that comes out of it. I say that is everybody knows on this call, including you, that there is a trade-off between price and volume. Given the decrease in tonnage that we've seen over the last 1 or 2 years, we've created excess capacity within the ground network. With all the cost out actions, all the synergies, all the closings of the facilities and the headcount rationalization, we have created an incredibly strong model with operating leverage, whereby all else being equal, assuming price is the same, if you drop in 1 incremental shipment into the network, it is much more profitable than the previous shipment.

Speaker #4: And I say that, as everybody knows on this call—including you—there is a trade-off between price and volume. And given the decrease in tonnage that we've seen over the last one or two years, we've created excess capacity within the ground network.

Speaker #4: And with all the cost-out actions, all the synergies, all the closings of the facilities, and the headcan rationalization, we have created an incredibly strong model with operating leverage, whereby all else being equal, assuming price is the same, if you drop in one incremental shipment into the network, it is much more profitable than the previous shipment.

Speaker #4: So we've got probably it's hard to say because capacity is defined by the lowest common denominator of four or five different metrics, whether it be terminals, doors, drivers, tractors, trailers.

Jamie Pierson: We've, we've got probably, it's hard to say, 'cause capacity is defined by, you know, the lowest common denominator of 4 or 5 different metrics, whether it be terminals, doors, drivers, tractors, trailers. You add 1 more shipment on that trailer that's already dispatched, and you've already incurred the cost for it, it's going to be much more accretive than the prior shipment. Again, all else being equal. Obviously, if price takes off, then that's just, that's free margin for all intents and purposes. Shawn, anything to add to that?

Speaker #4: But you add one more shipment on that trailer that's already dispatched, and you've already incurred the cost for it, it's going to be much more accretive than the prior shipment.

Speaker #4: Again, all else being equal. And obviously, if price takes off, then that's free margin for all intents and purposes. Sean, anything to add to that?

Harrison Bauer: Thank you. Thank you, Tom. Maybe just a follow-up along the, you know, sticking with pricing. In intermodal, in your drayage business, can you maybe help us understand the driver behind the notable change in the revenue per shipment this quarter? You know, that inflected negative, you know, pretty different from the recent trends that you had in that business.

Speaker #8: Thank you.

Speaker #4: Thanks.

Speaker #8: And then maybe just a follow-up, sticking with pricing. In intermodal, in your drayage business, can you maybe help us understand the driver behind the notable change in the revenue per shipment this quarter? That inflected negative—pretty different from the recent trends that you had in that business.

Speaker #4: Yeah. This one is an easy one, Harrison. I think this is a simple supply and demand. The port volumes are down. Somewhere between 5 to 10 percent.

Jamie Pierson: Yeah, this one is an easy one, Harrison. I think this is the simple supply and demand. You know, the port volumes are down, you know, somewhere between 5% to 10%. It's not like the ground or the LTL network. It's much more, I guess, volatile in terms of the supply falling off. You know, which is to say that it's much more elastic pricing in Intermodal than it is probably in the line haul business.

Speaker #4: And it's not like the ground or the LTL network. It's much more I guess volatile in terms of the supply falling off, which is to say that it's much more elastic pricing in intermodal than it is probably in the line haul business.

Speaker #3: And I would say, Harrison, there's two major revenue streams there. We have quite a few storage depots what we call depots around the country.

Shawn Stewart: I would say, Harrison, there's two major revenue streams there. We have quite a few storage depots, what we call depots, around the country. You know, you, you have the dray move lesser to the Intermodal over the rail. And, and, you know, your other major revenue stream outside of just normal port drayage or rail drayage, is the storage of the container in our depot yard. It just depends on what that mix is per quarter. I would say that, that also helped us with the slowdown of the port drayage in Q4. We had some decent revenues on the storage side. That's, that's what supports the margin as well.

Speaker #3: And so you have the dray move lesser to the intermodal over the rail, and your other major revenue stream outside of just normal port drayage or rail drayage.

Speaker #3: It's the storage of the container in our depot yard, so it just depends on what that mix is per quarter. And I would say that also helped us with the slowdown of the port drayage in Q4.

Speaker #3: We had some decent revenues on the storage side. So that's what supports the margin as well.

Speaker #8: Great. Thank you for the time today.

Harrison Bauer: Great. Thank you for the time today.

Speaker #3: Thank you. And ladies and gentlemen, just a quick reminder, questions this afternoon, please press star one at this time. We'll take a follow-up question now from Bruce Chan at Steeval.

Operator: Thank you. Ladies and gentlemen, just a quick reminder, questions this afternoon, please press star one at this time. We'll take a follow-up question now from Bruce Chan at Stifel.

Speaker #7: Yeah, appreciate the follow-up, guys. Looking through the deck, I'm reminded that you have some nice data-centered exposure in contract logistics through one of the legacy Omni OPCOs.

Bruce Chan: Yeah, appreciate the follow-up, guys. You know, looking through the deck, I'm reminded that you have some nice data center exposure, in contract logistics through one of the legacy Omni opcos. Can you just maybe give us a sense of what that looks like, as a % of revenue and maybe what growth has looked like there recently?

Speaker #7: Can you just maybe give us a sense of what that looks like as a percent of revenue and maybe what growth has looked like there recently?

Speaker #4: I think one of the slides depicts the percentage. Yeah. It shows hold on one second, Bruce. If you look at page 7, it breaks up what we're when Sean said, "Hey, we're going to be cutting this thing in terms of our products." We've updated this slide to show the percentage of the revenue in terms of the total for the entire physical year of 2025.

Shawn Stewart: I think, one of the slides depicts the-

Jamie Pierson: Yeah

Shawn Stewart: percentage, doesn't it?

Jamie Pierson: Yeah, it shows. Hold on one second, Bruce. If you look at page 7, it breaks, you know, what we're What-- when Sean said, Hey, we're going to be cutting this thing in terms of our products, we've updated this slide to show the percentage of the revenue in terms of the total for the entire fiscal year of 2025. You'll see the contract logistics is about 15%, but that's global.

Speaker #4: So you'll see the contract logistics is about 15%, but that's global.

Speaker #3: But Bruce, this major concentration is in North America and Asia-Pacific. So that's the majority where our contract logistics revenue comes from.

Shawn Stewart: Bruce, this-

Bruce Chan: And then what-

Shawn Stewart: major concentration is in North America and Asia Pacific. That's the majority where of our contract logistics revenue come from.

Speaker #7: Okay. So fair to assume there's a good chunk of that data center and high-tech exposure in there.

Bruce Chan: Okay. Fairly assuming there's a good chunk of that data center and high tech exposure in there.

Speaker #3: Say it again, Bruce.

Shawn Stewart: Say it again, Bruce.

Speaker #7: So, it's fair to assume that there's a good chunk of data center and high-tech exposure in there?

Bruce Chan: It's fair to assume that there's a good chunk of data center and high tech exposure in there?

Shawn Stewart: There-- it's in there, but I wouldn't say it's a, it, it's a... it is a good portion of our business, obviously, but it's not the only thing in there. You're gonna see, you're gonna see textiles in there. You're gonna see tech outside of data center. You're gonna see some automotive. It's, it's, it's-- I would say it's not just in that area.

Speaker #3: It's in there, but I wouldn't say it's a it is a good portion of our business, obviously. But it's not the only thing in there.

Speaker #3: You're going to see you're going to see textiles in there. You're going to see tech outside of data center. You're going to see some automotive so it's I would say it's not just in that area.

Speaker #7: Yeah. And I know you haven't had a chance to read it yet, Bruce, but we've been talking about, under that vertical, tech, data, medical, and then kind of a complex, high-value in-market.

Jamie Pierson: Yeah, I know you haven't had a chance to read it yet, Bruce, but we even talked about under that vertical about being tech, data, medical, and then, you know, kind of a complex, high value, end market.

Speaker #7: Okay. Great. And then what is the growth look like in that data center business? Has that been scaling with all the activity that we've been seeing in that space?

Bruce Chan: Okay, great. What does the growth look like in that data center business? Has that been scaling with, you know, all the activity that we've been seeing in that space?

Speaker #3: Yeah, for sure. I mean, we're scaling with it. There's a lot of players in the space, but we're there and we're taking every wallet share we can grab.

Shawn Stewart: Yeah, for sure. I mean, we're scaling with it. There's a lot of players in the space, but we're there, and we're taking every wallet share we can grab. We're pretty good at it. You know, with the high value, high risk area of this business, going from our world-class warehouses on the contract logistics side into our trucks, into the clean rooms of the data centers, we're very good at this service, and we continue to gain momentum there.

Speaker #3: We're pretty good at it. And with the high-value high-risk area of this business, going from our world-class warehouses on the contract logistics side into our trucks, into the clean rooms of the data centers, we're very good at the service, and we continue to gain momentum here.

Speaker #7: All right. Great. Thank you.

Bruce Chan: All right, great. Thank you.

Speaker #3: Thank you. And gentlemen, it appears we have no further questions today. Mr. Stewart, I'd like to turn things back to you, sir, for any closing comments.

Operator: Thank you. Gentlemen, it appears we have no further questions today. Mr. Stewart, I'd like to turn things back to you, sir, for any closing comments.

Speaker #4: All right. Well, thank you so much. We really appreciate your interest and your support of us. It was a great year, and we remain extremely confident in our strategy and look forward to updating you on our progress next quarter, or if something happens between then.

Shawn Stewart: All right. Well, thank you so much, and we really appreciate your interest and your support of us. It was a great year, and we remain extremely confident in our strategy and look forward to updating you on our progress next quarter, if something happens between then. Appreciate the time today, and if you have any follow-up questions, please reach out to Tony, and we'll be in touch. Thank you. Have a great week.

Speaker #4: So appreciate the time today. And if you have any follow-up questions, please reach out to Tony, and we'll be in touch. Thank you. Have a great week.

Speaker #3: Thank you, gentlemen. Again, ladies and gentlemen, this concludes Forward Air's fourth quarter and full year 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.

Operator: Thank you, gentlemen. Again, ladies and gentlemen, this concludes Forward Air's Q4 and full year 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day. Goodbye.

Q4 2025 Forward Air Corp Earnings Call

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