Forward Air Corporation

Welcome to Forward Air's third quarter 2024 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 the time, 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. So others can hear your questions clearly, we ask that you pick up your handset 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.

Thank you, operator, and good afternoon, everyone. Welcome to Forward Air's third quarter 2024 earnings conference call. With us this afternoon are Sean Stewart, Chief Executive Officer of and Jamie Pearson, Chief Financial Officer. By now, you should have received the press release announcing Forward Air's third quarter 2024 results, which was also furnished to the SEC on Form 8K. We have also filed a slide presentation outlining third quarter 2024 results, 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's earnings release announcement and on the conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. This includes statements which are based on expectations, intentions, and projections regarding the company's future performance, anticipated advance 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 risk. 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. 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 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. Definitions and reconciliations of these non-GAAP measures to their most direct comparable GAAP measures are included in today's press release slide presentation. I will now turn the call over to Sean.

Good afternoon, everyone, and thank you for joining the call today. 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. While it may seem that nine months is a long time, 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. From my vantage point, I would say the integration of the domestic networks substantially complete and delivering on the savings as originally committed. With my first full quarter now complete, I've 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. 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 LTL ground service. 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. 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. To that end, We have recently established a transformation management office to lead the process. The focus of this office will be to efficiently and effectively execute the transformation across all areas of the company. 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. The result will be a vertically integrated company providing ground, air, ocean, contract logistics, and customs brokerage services around the world. We have a vision and we know we can achieve it over time. While the broader transportation market and demand for our services remains challenging, 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. That work ranges from integrating the 12 different companies that were omni and previously not integrated to moving from multiple TMS systems, enterprise resource planning systems, and different HRIS systems to one system for each tech stack. It also includes harmonizing a multitude of policies that will enable our workforce to think and act as one, not 12, not two, but as one with the same goals, the same mission, the same values, and the same intense and dedicated focus on serving our customers. We expect that the magnitude and complexity of this integration will put us well into 2025 before it is substantially complete. And certain work streams may continue into 2026, but we will not lose our focus on the customer and their needs. I am confident that this work is achievable with the current structure. We are excited about the opportunity to add value to the company along the way. Both companies have traditionally been known for their best-in-class customer service. Customers want service and solutions they can depend on along with competitive pricing. Our objective is to exceed their expectations with the many services we provide. 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. This facility is strategically positioned for easy access to both Miami International Airport and the Port of Miami. This state of the art facility ensures that our customers receive the highest level of import and export security and service. 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. 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. These expansions are examples of our commitment to providing logistics solutions worldwide. Turning to the third quarter results, I am not satisfied with the lateral quarter financially. The legacy Omni segment maintained a positive momentum and improved sequentially compared to the second quarter of 2024. Inversely, the expedited freight segment results fell short of expectations, primarily due to a pricing strategy put in place prior to the acquisition that focused more on volume than profitability. 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. 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. We are addressing this issue and are focused on getting the right mix of freight into the network. To execute a sales strategy that is befitting of a global diversified service provider that we now are, I am excited to announce that we expect to soon be onboarding a new Chief Commercial Officer who will be starting with the company in January 2025. 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. 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. With that, I'll give some closing comments at the end, and we'll now turn it over to Jamie to go through the results for the quarter.