Forward Air Corporation (NASDAQ:FWRD) Q4 2022 Earnings Call Transcript

So that still leaves us to have to get at least $1.30 from the other initiatives. They break down roughly, Tyler, at 50-50 between the Forward, what we call Forward Force Growth initiatives, and I’m going to get a bit more specific in a moment and the Forward Game Shape initiatives, which are more about efficiency and effectiveness, including cost containment and cost management. The biggest items on the growth side would be doing more high-value freight with some of our core domestic forwarder airliner — airlines 3PL international forwarder customers. That gives us about $0.17. Selling more direct to small, medium-sized businesses that do not use our core customer forwarders, gives us about $0.07. You have more coming back on the trade shows and you have more Canada and Mexico.

So this is kind of stretching in existing areas because we are doing Canada and Mexico today and trade shows, obviously, that’s another $0.08. We do have a lot of brokerage ramp up with our new leader in brokerage under Nancee, . That gets us backhaul efficiencies, both from a cost perspective and MT miles perspective, that’s about $0.12. We’re growing our final mile integrated customers. Integrated means it’s more efficient for us to operate in a co-mingled system. That’s about $0.04. We have an intermodal drive to grow more with BCOs versus intermediaries. That’s about $0.12. And that’s adding up kind of the impact on the growth of Forward Force side. On the Game Shape side, the single biggest one is staying in single digit with outside brokered miles at a highly cost-effective basis, where we expect an $0.18 — sorry, a $0.37 delta between what we had last year and this year.

Remember, we had last year, Tyler, quarters where we were in the low to mid-20s of outside brokered miles. We’re in 3% to 4% territory today. And we expect the entire year to remain in single digits. Tremendously well managed by Tim Osborne, by Justin Lindsay, Chris Ruble’s team members. So that’s the single biggest block on the cost management side or on the Game Shape side. We do expect dimming and reweighing benefits and other technology enhancement benefits in our terminal system, that actually adds up to $0.37 between those two. Cost management, some of the ones I mentioned, travel, reduction in force. Initial wave got us to $0.11, and we may not be done there yet. And then we have surgical pricing efforts where we continue becoming more and more of a machine in pricing for the quality of the service where it’s relevant to the customer.

That surgical pricing gets us another $0.14. If you do the math between those, and again, we’re more than willing to open up and be very transparent because these are real growth and real cost management and Game Shape initiatives that collectively add up to the $0.93 economic slowdown and a $0.61 reduction on the fuel side, add up to that and slightly more. And again, so even if we fall a bit short, we still have the possibility of another tuck-in acquisition or two. So when we are saying we are targeting a year that’s actually up from last year, this is based on initiatives by our leaders, with their teams that add up on the growth side and on the Game Shape side and has a — and if the economic headwind is steeper and longer, we do have additional opportunities with, again, Land Air Express already on board.

You mentioned Chickasaw, and we also have — we typically always have a couple of tuck-in acquisitions that we don’t know at the beginning of the year which ones will come through, but they always come through.

Patrick Brown: Sounds to me like you were prepared for that question. It was extremely helpful. Real quickly on fuel, what is the estimate in there on the $0.60? Is it, call it, $4.50 fuel or lower?