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

Thomas Schmitt: Yes. I mean, so roughly speaking, the number you used $6 million, $7 million for this year is absolutely correct. What we’re doing is we have a company that is now part of us that has some of the same DNA. They did airport to airport line haul extremely well. They were a formidable competitor, now they’re part of us. Now we are in a compact way together with them doing our go-forward story very, very quickly. What took us 2 to 3 years, we’re going to try to do here within a year or so, which means upgrade the freight to more high-value freight, operating in what we call a cleansed operating environment, which means all palletized, making sure we’re pricing accordingly for the high-value freight and then also tapping into a larger customer base.

A lot of that, including synergies, where, in some cases, we have duplicates in terms of buildings, we can consolidate some of them. We do get — as I pointed out, we have five new origins and destinations in our network based on Land Air Express, Waco, Boise, Topeka, Springfield and Abilene, Texas. But — so you probably see a ramp-up of the synergies throughout Q1, 2, 3, 4, and some of it will probably spill over into next year. So if you look at this Land Air Express, we said we think we’re going to retain between $74 million and $94 million of the revenue. So just make that for argument sake $85 million and do assume that from a Game Shape perspective, that Forward Air and Land Air standards will be very similar in the year. So take a 15% margin to be conservative.

Then you talk certainly more about a $13 million or so run rate impact from that acquisition versus perhaps half of that this year.

Operator: And next, we can go to Todd Fowler with KeyBanc Capital Markets.

Todd Fowler: Great. So maybe a similar thought on what you’re just talking about with Tyler on the fuel side. The $0.90 headwind that you have coming from the economy. Can you break that down a little bit as far as how you get to the $0.90 headwind? Maybe how much of that’s tonnage? What would be the assumption on the OR side for the environment that you’re thinking about maybe on the expedited freight side? Just some thoughts on the $0.90 headwind.

Thomas Schmitt: Yes. So what we did do was we — and we modeled this basically, again, with some macroeconomic assumptions. Some of the reports, frankly, that you and some of your analyst colleagues put out are helping us with kind of validating and kicking the tires on some of those assumptions. So we finished the year with 13% down year-over-year in tonnage per day. So we took some of that, and we started actually even with a higher number down 15% to 16% for the first couple of months. And then we looked at that number getting somewhat better throughout the rest of the year, but we took a very, very steep double-digit year-over-year tonnage decline as the base case and then we build those forward force initiatives, the Land Air Express acquisition and some of those impact of effective kind of running off our system, including cost management or dimming and reweighing on top of that.