Forward Air Corporation (NASDAQ:FWRD) Q3 2023 Earnings Call Transcript

Tom Schmitt: Yes. So first of all, Bascome, I think you characterized this exactly the way we’re looking at this. The strategy has been very clear. To your point, the tactics over the last several months looked like they were shifting back and forth between 2 alternative approaches. The good news is those approaches don’t have to be alternative, some of them can be complementary and additive. The reason why, Bascome, I fully believe that we can go full steam direct now is at least twofold. The first one is we do have 2 years of experience, basically doing the direct selling in a small way with going after small-, medium-sized businesses that do not use forwarders. So we kind of know how to ask the qualifying questions, what the right high-value freight is.

And we started getting better with pricing for it. And again, there’s still untapped upside, as I said before. So that’s some experience that we can bring to bear. I think the second reason is — now that we — on August 10 announced that we are going after that entire direct space. I think we have a license to do it. We, in the past, almost felt constrained because as a company for 4 decades, all we did was working with great business partners, domestic forwarders, and that’s an essence all we did. And we started getting our toes into the water with small, medium-sized business. On August 10, we announced that we’re going to go after the entire direct market that does not use forwarders. So I think just announcing it, having the tough customer conversations gives us a license to do now what we never felt we had a license to do.

So I think that’s a mind share and mentality issue. The last thing I do want to mention, I mentioned before, the somewhat nerdy analytic old German mind. We do have a very, very strong Chief Commercial Officer with Nancee Ronning, who has the type of analytical structured thinking and approach that goes together in her case also with a great way of leading teams, developing teams and also having a great relationship kind of building mentality with customers. So I think between having started to doing the SMB, secondly, announcing we’re going to do it now for the entire direct market. And third, having the right leadership in place, we’ve got the ingredients now, Bascome, that we didn’t have 3 or 4 years ago.

Bascome Majors : Thank you for walking through that, Tom. I’m going to ask one more big picture question and then pass it on here. But — I mean it’s frankly been difficult for investors to keep up since early August. This war has kind of grown on several fronts, expanded to include your acquisition target itself late last week. I realized you can’t talk about the specific path forward given the myriad legal issues involved, but — if we were to go to sleep today and wake up in February to your 4Q release an initial ’24 outlook and everything has gone to plan from your perspective over those 4 months. What are your customers, employees and investors looking at for the company’s structure, strategy and go-forward outlook?

Tom Schmitt: Yes. So — and Bascome, I truly appreciate and I’m very grateful to our team and also to our business partners for having had support and patience over the last several months, all we were doing is pursuing our strategy of Grow Forward. We talked about this before. And yes, I think the fact that we were exploring different tactics getting to a larger customer and revenue-based direct cost a lot of emotional upheaval on multiple fronts. And I realize that I’m sorry for that, and I apologize for that because that’s obviously not what we intended to do here. We are doing the right thing. We are the best company in the high-value freight space, and we’re working through our Grow Forward strategy to get to provide that type of world-class service to more customers and business partners.