Forward Air Corporation

Welcome to the Forward Airs first quarter 2025 earnings conference call. At this time, all participants have been placed in 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 the star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2. So others can hear your questions clearly, we do ask that you pick up your handset to provide best sound quality. Lastly, if you should require operator assistance, please press star and zero. I would now like to turn the call over to Tony Carreno, Senior Vice President of Treasury and Investor Relations.

Thank you, Operator, and good afternoon, everyone. Welcome to Forward Air's first quarter 2025 earnings conference call. With us this afternoon are Shawn Stewart, Chief Executive Officer, and Jamie Pierson, Chief Financial Officer. By now, you should have received the press release announcing Forward Air's first quarter 2025 results, which was also furnished to the SEC on Form 8K. We have also furnished a slide presentation outlining first 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. Please be aware that certain statements in the company's earnings release announcement and on this conference call are forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. 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 2025. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause extra results to differ 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 this earnings call. Listeners are cautioned not to place undue influence on these forward-looking statements which speak only as of the date of the 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 directly comparable GAAP measures are included in today's press release and slide presentation. I will now turn the call over to Shawn.

Good afternoon, everyone. Before I get into the substance of today's call, I want to take a moment to thank our customers for their trust and loyalty during this unprecedented time in the global logistics market. We have always prided ourselves in solving our customers' problems and is during these times when we can add the most value to their supply chains. So with that, thank you. I appreciate you entrusting us with your business. I also want to thank our employees around the world for their dedication to meeting our customers' needs on such a consistent basis. Our employees set the industry standard for exemplary service and commitment to best-in-class service. To our shareholders and lenders, thank you for investing your time and money in our company. We communicate with you on a regular basis and I sincerely appreciate your belief in our team and in the transformation journey that we are on. As you have heard from us in the past, we are committed to increasing transparency into our business. We are excited to share our new investor slide presentation that matches how we view the new combined business, which also provides direction on how we intend to report on the business by the end of the year. Continuing on the theme of transparency, As we look to the remainder of 2025 and into 2026, we expect to have fully integrated the two legacy companies and be progressing down the path of transforming the company from a tangled web of global legal entities with multiple and sometimes duplicative technology systems to a more streamlined entity with the appropriate level of support and simplicity to grow the business. With this backdrop, our goal is to double the business over the next five years going from the $2.5 billion revenue entity that it is today to $5 billion. Obviously, that assumes that we return to a normal freight environment and the macro headwinds do not persist for an extended period. While we are in uncertain times, what is certain is the tremendous opportunity we have ahead of us. It is an exciting time to lead our company as we continue to transform Ford Air into a global logistics leader. With that, I want to cover three topics on today's call. First, review our first quarter consolidated results. Second, share an update on the actions to improve the expedited freight segment. provide an overview of our sales by service and by region before turning the call over to Jamie to cover the financial results in more detail. Starting with the results, we had a solid quarter and reported a consolidated EBITDA of 69 million compared to 63 million a year ago. On a sequential basis, the results are consistent with the 69 million we reported in the fourth quarter of last year. With the year-over-year improvement, the last 12 months consolidated EBITDA was $313 million. Importantly, we generated positive free cash flow during the first quarter and increased liquidity by $11 million to $393 million. Second, a key area of emphasis has been on correcting the previous pricing strategies at the expedited freight segment that focus more on growth than profitability. As previously communicated, We began taking corrective pricing actions during the fourth quarter of 2024 and finished implementing the improvement strategy in February of this year. We're pleased to share that in the back half of the quarter we began to see the improvement that we were anticipating. As expected and shared on the last earnings call, We shed some of the poorly priced freight from our network as a result of our pricing actions, which leads to some additional capacity in our network. What is incredible was the team's ability to cut costs in line with the decrease in volume on an almost real-time basis, which led to a 10.4% reported EBITDA margin for the quarter, up almost 400 basis points from last quarter. I have been very clear that it usually takes months to rectify a single poor pricing decision and shedding unprofitable freight is part of the process. While we all know that there was additional opportunity in the expedited freight segments margin, I am very proud of how our team reacted and handled a very difficult situation, especially when you consider the incredible volatile environment in which they did it in. This quarter's results affirm my view that the fundamentals are intact. The expedited freight segment includes one of the largest expedited LTL networks in North America and is an industry leader in serving time-critical and high-value freight. We believe the quality of service we provide will be the driver of customer retention, growth, and ultimately pricing and profitability. The third topic is providing additional detail on our revenue both in terms of service provided and customer region. With the first year as a combined company behind us, we plan to go to market and eventually transition to reporting our financial results by service as we move away from the legacy legal reporting structure. The four main products consist of ground transportation, air and ocean forwarding, intermodal dredge, Warehousing, and Value Added Services. Based on our 2024 consolidated revenue, approximately 70% of our business was attributable to ground transportation business in North America across our legacy Ford and Omni businesses. This includes less than truckload, pickup and delivery, truckload brokerage services. Approximately 12% of our 2024 revenue was from air and ocean forwarding with another approximately 9% from our intermodal drayage business. The final product category is warehousing and value-added services, which also is approximately 9%. Supplementing these products is our customs brokerage that we're able to integrate as needed. You can see the summary of the product breakout on pages 7 and 8 of the slide presentation issued today. As for our revenue by region, utilizing 2024 calendar year customer billing data, we estimate that approximately 88% of our revenue is attributable to customers billed in the United States. Another estimated 7% of our revenue is from customers billed in Asia Pacific region, While approximately 4% is from customers billed in North, Central, and South America, excluding the United States. Finally, less than 1% of our revenue is from customers billed in Europe, the Middle East, and Africa. You can see a summary of the estimated revenue by region on page 9 of the slide presentation. Please note that we do not have information on our customer shipments' points of origin, especially as it pertains to our intermodal segment. In pursuit of continuing to improve the transparency of our disclosures, I hope you find the additional information helpful to your understanding of what is combined business is capable of. When you combine the services we offer with our global reach, we believe Forward Air is uniquely positioned and that separates us from the competitors and sets the stage for growth. We have more than 250 facilities in 21 countries and can offer our customers one stop shopping and single point of contact with end-to-end international services for specialized products. As we look ahead, I am very excited about our sales opportunities to drive growth and margin expansion. With that, I will now turn the call over to Jamie to go through the results for the first quarter.