Thank you for joining Forward Air Corporation's Fourth Quarter 2020 Earnings Release Conference Call. Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the Investor Relations section of Forward Air's website at www.forwardaircorp.com. With us this morning are CEO, Tom Schmitt; and CFO, Mike Morris. By now, you should have received a press release announcing our fourth quarter 2020 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after market closed. Please be aware that during this conference call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others about the effects of our business efforts on each of our businesses; the future plan of our Pool business; steps to expand our operations organically and inorganically; the company's outlook for first quarter and fiscal year of 2021, including expectations for revenues, tonnage, net income per diluted share, free cash flows and operating margins; the expected impact of growth and strategic initiatives; and those other forward-looking statements identified in the presentation. These statements are based on current information and our current expectations. As such, they are subject to risks and other factors that may cause actual operations and results to differ materially from the results discussed in the forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and to the press release and webcast presentation relating to this earnings call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'll turn the call over to Tom Schmitt, CEO of Forward Air.

Thank you, Grace and good morning to all of you on the call with us. I want to go with first things first and that's a heartfelt thank you to all of our teammates, drivers, customers and other business partners. You all celebrated the holidays this year a little bit differently from a normal. In actual fact you brought all of our business back from an invasive cyber-attack and made very certain that we still kept all of our customer commitments. So thank you for that and for customers and team Forward going side-by-side making for a clean entry ramp into 2021. Before I go into that 2021 entry ramp, just briefly back. Last time we were on this call in October, I made six commitments and talked about how we are keeping those commitments, around density more essential freight. In fact in December 20% of our new closed business in LTL was medical supplies; pricing actions, we took a number of temporary and permanent ones; organic expansion; number five was no pause in accretive M&A; and number six, was our precision execution with record service levels in a very tight holiday period. Let me take commitments this time and take that entry ramp into 2021 and share five observations with you that make me very, very confident for our journey towards our double-double; double-digit annual growth rate and double-digit margins. The first observation is a strong off-ramp. For you to have a strong on-ramp into 2021 you need a strong off-ramp off of 2020. If you look at our fourth quarter the first 10 weeks of that fourth quarter were clean. They were an operational beat. And that's the type of clean operations performance we are taking into 2021. Secondly, we have early momentum. January is very strong. We…

Thank you. The floor is now open for questions and comments. [Operator Instructions] And our first question is from Bruce Chan with Stifel. Please go ahead.

Tom, Mike, good morning, and really appreciate the format here. I want to start off with Pool. It's great to see the sale there. But when I think back to the acquisition of that business or of TQI, and I think some of the motivations and the outlook for diversification and growth was the same as maybe it is now for the Final Mile business. And I know it wasn't during your tenure, but when you think back to USA Carriers a Pool and when you think back to TQI, what were the differences with those businesses versus kind of what you're doing now with some of your other growth strategies in Final Mile? I know Tom you already addressed some of the asset-heavy nature of Pool. But is there anything that you learned with those acquisitions that you can kind of take and apply to lessons now in Final Mile?

Yeah. I think Bruce, first of all, good morning, and good to have you with us. I think fundamentally, if you look at Final Mile, it's by itself a high growth business. Gartner actually says it's going to grow in the high-single-digits for many years to come. We are participating in that growth. We also, I think, do have a special sauce with Final Mile, where on the revenue capture side we're working with some of the best retailers. And we're going to make very certain Bruce, when you order that fridge that the kitchen floor will not be scratched. And we're going to maintain and enhance that customer relationship that you have with that world-class retailer. And they're paying us a premium for that. As long as we can do that -- and then operationally, we get synergies out of our local LTL team and Final Mile, which oftentimes they use the same buildings. Oftentimes they co-route. On a light installation day, you might sometimes see the installation crew picking up or dropping off a few LTL pallets. So, once you see that revenue capture at a premium level and once you see the operational synergies with the LTL business locally, you've got a secret sauce, where I say I like, those types of margins on an ongoing basis. So that's what's special about the Final Mile business. Truckload, by the way, same over the road synergies with our LTL business. One fleet, that's being recruited for two sets of services, sometimes an LTL drive out and a Truckload drive back. So lots of synergies there also. On the Intermodal trade side, a strong second leg, some back-office synergies SG&A; also some customer sharing where we actually cross-sell between Intermodal and some of the other services. And to be very blunt about Intermodal, I believe in terms of odds towards the double-double. I like the odds for the Intermodal team every single year, and it's a business that actually returns -- or brings a return to our shareholders way above our cost of capital. So, those are the things you have to look at. And Bruce, when you do a kind of good old-school micro-porter analysis in terms of customer pressure, supplier pressure, future of the brick-and-mortar retail industry, we have the best in the business. I do believe they will be growing successfully for an owner that's fully focused on it. There's still market share and untapped upside. But in terms of what I just talked about secret sauce, the risk/reward profile in double-digit territory and the asset lightness of our entire portfolio we got with a Pool business, that's something that fits the narrative, but did not fit the profile financially.

Okay, great. That's good color. And then, just to be very clear, you are keeping the Truckload business. That's getting integrated, and you're finding synergies there on the linehaul side. Are there other levers that you can pull to right-size and improve that business outside of the integration of the linehaul networks?

Yeah. So Bruce, to be very clear, the Expedited Freight business is a wonderful beautiful interplay more and more between, as I said, Final Mile and LTL, mostly locally; and Truckload and LTL, as you just said Bruce, over the road. On the recruiting side and on the selling side, TL and LTL, benefit from each other a lot. We are also getting more and more into the Truckload brokerage space, another hugely asset-light space with tremendous margin potential.

Okay, great. And then, just one last one here before I turn it back to the queue. Tom, really since you started at Forward Air, you've kind of made it, your mission or at least part of your mission to kind of move the notch up on pricing. You said to expect GRIs, like you expect Christmas and Easter. And that's been great. But certainly for a premium product Forward Air might be able to exact or extract even more pricing. So as you think about some of the new technology tools that you're implementing as you kind of wrap up with TCG, is there more opportunity to get even more aggressive there?

To use -- and I hope, I can do that legally without getting slapped on my hand, Nike's terms this is going to be, being excellent in pricing is going to be a race without a finish line. So we have gotten much better at -- Bruce you mentioned the tools. We also are hiring significant expertise by getting great experts in the LTL class space on our team. And so, between the tools and the people, we're getting better and better. If you take pricing LTL, over the last year we got much more sophisticated. Where does it take special handling? Which geographies are congested? And we need to make sure we get an extra premium to invest into drivers in that area. Then we also looked at specific customer segments, very different airport-to-airport door-to-door customer segments. Now, we're getting heavy into length of haul to make sure that we're actually equally competitively pricing no matter whether it's a short move or whether it's a move all across the country from Atlanta to Seattle Washington. So that type of ongoing consistent dynamic pricing discipline, we need to make sure we actually keep ramping up. Pricing is one of the core disciplines that we have to be perfect in or close to perfect. I was very, very fortunate going back to my FedEx days on the parcel side and then even my McKinsey days before that with some of the railroads, I learned about the horsepower and the absolute must of being terrific in pricing. We're getting better and better. But as I said, there's untapped upside and we're going to make sure we're going to tap that upside.

Okay. Great. Thank you for the time. I’ll hop back in queue.

Hey, thanks, Bruce, and thanks for the conference this week.

Thank you. And next we'll go to the line of Jack Atkins with Stephens Incorporated. Please go ahead.

Good morning, Tom and Mike. You've got Wade Schaller on for Jack this morning. Thanks for taking our question.

That's what I call an upgrade, Wade.

I won't tell him that. On the LTL network, I believe you mentioned at least six terminals this year. How many of those are new markets? How many of those are additions to bolster density in existing or underserved markets? And what do you expect the impact of those additions to be this year?

Yeah. This is a math exercise to a large part. A lot of what you do in our Precision Execution business is a math exercise. So what we're doing here – so – and the answer Wade very specifically is it's going to be a combination of greenfield locations. Like last year, we had in Ontario Inland Empire, which is doing terrifically well. It's already up to a significant portion of our Southern California volume. And we're going to introduce some agency into own operation conversions. We're going to do some Final Mile LTL co-locations the way, I just talked about a few minutes ago. So if you think of 8 or 10 new locations this year, it's going to be a combination of those. Now, how do we get to them? It's also a math exercise. The first thing is our current customer base, especially telling us we have origin freight in the following locations where there's no Forward Air presence. Secondly, if you look left and right to some of the large-class freight LTL players, they have in some cases twice in some cases 2.5 times the number of access points that we have. There's certainly – sometimes you learn from people when you look left and right. Third, we do have access to LTL class freight data. So we know the flows across the US and across Canada. So we also know where we frankly are less present than we should be. And then once you see those shortfalls against current customer demands or against possibility of trade flows then you say, okay. Let's look around our own network. The easiest ones are the co-location with a Final Mile location. We have almost 100 Final Mile locations some of them in cities that – where we don't have an LTL terminal. So that's an easy add, because you basically utilize the space that's already there. Agency conversions tell you, how much volume we can actually start with. So that's another easy one. The greenfield ones like the Inland Empire in Fontana last year those are the ones that are a bit harder. But again, between those demand points from our current customer base and accessible freight data and our ease of implementation between agencies co-location with Final Mile terminals, it's a fairly easy to do math exercise. And the answer Wade back to your initial question is it's going to be a combination of those three things: agency conversions; co-locations with Final Mile; and thirdly greenfield.

Okay. Great. That's very helpful. I want to switch gears to Intermodal if I could, and dig in on Proficient and more broadly, I guess, the work that you've been doing over the last year on the Intermodal piece of the business. Could you speak to the strategic importance or value of a national intermodal drayage network and what sorts of scale benefits you derive from that?

Yeah. So Intermodal is for the most part a regional and a multiregional business. Some of our customers do ask us to be more nationally present. So you have a bit of that Wade where some of the decision-making is truly national and the more national presence helps. For instance in the Northwest is something, where we would love to be a bit more present and certainly are looking towards that, but fundamentally, the intermodal drayage business for us is very similar and very much a fit for the Forward DNA. When you talk about Forward DNA that's what I call precision execution for something that's bigger than a box. And what does that mean? It means fastest transit times. It means best sensitive handling and lowest damage ratios. Now, when you think about intermodal drayage, you may not initially think about those exact adjectives. But once you actually understand, these are premium products, we're hauling. And they came typically over the ocean, 14, 15, 16 days. And oops, it took two days longer this time. Then they sit in the port, wait for a few more days, get on the railcar, and you may end up being six days versus four. Once it gets into that rail head, all of the slack in that supply chain is more than used up. Those goods need to be going to the DCs and ultimately to the stores, because every extra day lost is another day lost in the selling season for that particular product. So, in that particular way our intermodal drayage is a premium service that fits that exact precision execution DNA for something that's bigger than a box, where those adjectives are actually required and frankly where customers are paying for that premium service, which is going back to what I said. The odds of that being an above capital cost ROIC business at a permanent double-double are tremendously high and that's our job to deliver that.

Awesome. That’s it from me. Thanks so much.

Okay. Thanks Wade.

Thank you. Next, we'll go to the line of Scott Group with Wolfe Research. Please go ahead.

Hey, thanks. Good morning.

Good morning, Scott.

I want to ask about the margins on the expedited business. So you're at I guess a 7% last year and you're saying, you can go to 10%. And you've got someone out there saying that, it should be closer to 20%. I know, there's been a lot of mix changes in the business from 10, 15 years ago. I guess, what do you think is possible here, in terms of where these margins can go? And maybe help us think about how the mix has changed and what that means for LTL margins, non-LTL margins within the business?

Yes. Scott, I think you summarized it quite well. Let me start and then, I'm going to ask Mike to tag team here with me. So, when you go back to like 15, 20 years ago, when our business was exclusively an Airport-to-Airport business, we had the types of margins that you're referring to. The TAM, the Total Addressable Market of Airport-to-Airport has actually gotten smaller over the last two decades, not bigger. Some of our core customers actually did a smart thing. They built out their own lanes where they were dense. And then there's also competitors that actually started showing up quite visibly in the Airport-to-Airport space. So that was a wonderful market and will always remain the core because, that's frankly where we trained that muscle of precision execution and that's where we still are shooting for the types of margins that you described. We're augmenting it with a door-to-door stretching into spaces, where our customers are asking us to go to, where we also believe double-digit margins are possible. To answer your question very specifically, LTL, I believe, and Mike you should either confirm or correct, should be a mid-double-digit or 15 percentage business for us. So we're actually getting better and better on value creation and value capture for those stretches beyond Airport-to-Airport because, we have a strong belief that in that $40 billion plus LTL market, there's at least 10% of that, $4 billion, probably more than that. That's the type of premium LTL that fits those criteria I talked about before; sensitive handling, faster transit times, lowest damage ratios. And those are the ones, we're stretching into with our grow-forward program that finds, keeps and expands beyond Airport-to-Airport in margin territory. That should get us to that 15% margin, I've been talking about. Mike, anything you want to add?

Yes. No. I mean, I think, you hit on it. Matt -- I mean Scott some of the math just to unpack it as we've done in the past. My career here LTL has been 14 -- 13.5-type percent margin business. Obviously, 2020 was rough with COVID. We ended 2020 rough with the cyber. But getting that back to a 15% and then looking north of 15% is really critical to hitting the double-double and getting Expedited Freight as a whole to a 10% margin. Truckload needs to get in the 5-plus percent margin range. And we feel like, Final Mile can be in that 7% to 10%, 8% to 10% margin range, which is where it's been. If you were to just doing some math, not making excuses just explaining, if you were to add back the effect of the cyber impact in the fourth quarter and the FSA earn-out accrual and try to look at a more steady-state Expedited Freight's margin would be 9% for the fourth quarter. Not there yet, a lot of work to do, but it does seem like something that we can certainly get to. And if you marry that up with Intermodal and if you stay safe which is where we have some of the insurance impacts in other operations then you can kind of have the whole thing add together for that second double.

Okay. That's helpful. I'd like to just stay on this because I think it's like -- I think it's the important thing right now. So you mentioned -- so LTL if -- is that -- where is that today? And where do you think that can go? Truckload you said you want to get to 5%, where is that today? Final mile 7% or 8%, where is that today?

I'm giving you a general sense of direction. Because we disclose these as one SEC segment, we don't break out the margins of the individuals. But in order -- in general direction, trending back where we've been historically on LTL getting there on Truckload to the numbers that I just described and probably closer if not already there on final mile if I can offer you that transparency.

Okay. And then just on the LTL side, can you -- is there a reason why we're talking about 14% or 15% for LTL and not that historical 20%? I understand the mix shift we've got more Truckload in final mile now. But why do you think the LTL business can't get back to the 20% that it used to be at?

Yes. Just to be clear that's kind of where we need to get to, to get to the next level. So once we're standing on that platform at a 15-ish percent margin then we kind of take the next step to the summit if you will. But I'm just trying to communicate it in terms of well what do you need to do to get Expedited Freight to 10%? Well I got to get it least here. That doesn't mean we have to stop there.

And let me just add to that, Scott. It takes -- so it is what we're shooting for. That's the next level as Mike talked about. Double-double is a milestone not a destination. If you define double-double as 10, that's an interim step. But to be very clear it takes a lot of precision, execution work by customer segment stretches by door-to-door as a longer line -- longer haul. If you do the math and say we like the Airport-to-Airport 18% margins when it was a $350 million business, we multiply it by six and all we do is that that's not going to work. So we have to stretch and still then capture the size of the value that we are creating that has the same type of premium profile that the core Airport-to-Airport business always has and will have for us. So -- but clearly, Scott, what you're aspiring to is where we're heading towards. And that's again 10% for Expedited Freight and for the company overall is a milestone not a final destination.

Okay. Great. And then just my last one. So pricing is certainly going to help. What about on the purchase transportation side, is -- that's where you've seen the biggest sort of margin pressure over time. What if anything are you going to do differently on the PT side, or is there -- or is there another driver of the margin expansion on the cost side?

So those are two questions at the end. So yes, there are other drivers on margin expansion. PT is a big one though Scott and you know this as well as I do. So just to be very clear over the last several years, purchase transportation with the exception of 2018 which was a small spike up, I just talked yesterday with our Chief People Officer Kyle Mitchin about the stats. Over the last several years, we were in either single-digit territory or in low -- in the low teens. Why is that? Because we actually make every single day, driver appreciation day. What I mean by that is we engage them. We manage for their priorities like predictable home times like short distance wait -- short dispatch wait times when they call. And we make this like a great professional home which helps tremendously for our driver traction and our driver retention. With the exception of Southern California and California overall, we're still in single-digit territory for purchase transportation. We need to make sure we get fully compensated for the congestion and the difficulty of getting drivers in California. We're all over that. But at the same time, the big steps that we have made with the Driver Board -- and I mentioned this before, there's like 12 representative drivers who represent thousands of our independent contractors. We meet with them regularly. The next meeting is next week. We listen to their concerns. We did a survey with 4,000 of them a couple of years ago. And we are managing towards the things that matter most to them. Every day is driver appreciation day. So, the PT is in the single-digit territory and has to be for that margin expansion to become a reality that we talked about. And we are on a very good path there. The team has done a tremendous -- this is from operations to safety to -- our people team has done a tremendous job making this a first-class professional home for our drivers.

Okay. Thank you for the time guys. I appreciate it.

Yeah. Thank you, Scott.

Thank you. And next, we'll go to the line of Tyler Brown with Raymond James. Please go ahead.

Hey. Good morning guys.

Good morning, Tyler.

Hey, so I agree with Scott. It does feel like margins are the key here. So -- and I just want to be clear. But when we try to build that bridge to the mid-teens -- so the drivers are really one managing PT. Two probably going through another robust year of pricing. Then you mentioned some other things. Can you give a little more detail there, when we try to build that bridge?

Yeah. I think if you look where the costs are going to numerically popup. So it's not in things like utilities and whatnot. Operating safely and having more technology and data-driven decision-making around safety, at the front-end, recruiting, coaching, informing, because in our history some of the margin pressure has been related to incidents. When I joined, we had a $0.5 million SIR, Self-Insured Retention. I think it was lower prior to that. It's $10 million right now. And that's the insurance market. That's not our decision. We would love to buy the type of insurance we used to be able to buy. And so that hits our P&L, and not an insurer's P&L. That has been a big number. We don't like non-GAAP it or anything, because it's our responsibility. But nonetheless, that's an important component. Also an important component is some of the integrations that we've described. The LTL fleet grew by the Truckload fleet. And the Truckload fleet grew by the LTL fleet, when they became one. The degrees of freedom that that offers us, not only in terms of avoiding outside miles, but in terms of recruitment and retention, and operating efficiency. Yeah, these are -- we are able to give our drivers, points of flexibility that they may not find elsewhere and that helps us recruit and retain them. And Tom gave an example, LTL out Truckload back. There's lots of ways we're using that. We saw that in COVID. We were able -- we didn't have loads for drivers in Truckload. And in LTL, and we were able to give them Truckload. Brokerage kind of, playing a role along with core line-haul right, at the number one cost lever that we've been talking about on PT. The Final Mile, we are co-mingling pickup and delivery, in 15 markets currently. That's growing rapidly. That gives us the opportunity to kind of have the best of both, on LTL and Final Mile pickup and delivery. As we have more terminal cohabitation, you're able to spread the fixed cost of that terminal between, the two modes. That helps lower unit costs for both. These are some of the other things operationally, which are happening in the world. And that's why we report this segment as we did, because it is how the business is being run. We are treating this and operating this, as an integrated combination, but the benefits of these should inure to LTL, given the greater variable cost model of the other modes.

And Tyler let me just add.

Yeah.

And then back to you in a moment. But -- so we mentioned, -- or you mentioned actually, purchase transportation big lever pricing. And I cannot overstate the importance of making sure we capture a slice of the value that we're creating for our customers. And this is going to be that race without a finish line. Mike, you added safety, obviously, because it's the right and the first and the most important thing to do. It also has not only human, which is the first job, but also financial consequences. Operations efficiency and you got to some of that by the co-mingling. We talked about the co-routing on the Final Mile and the LTL side locally. Operations efficiency is something that we are always stepping up on inside our buildings and across the road. It does help that we have a team. Chris Ruble is our COO and they're very, very seasoned team that knows how to go after these efficiencies. Personally I've got a background in this at my previous employer. We ran a global goal for performance operations enhancement program that ended up making the contract logistics unit there the most profitable and fastest-growing of the large ones in the world. So we do have to pull that lever obviously also as a race without a finish line. So -- but you mentioned the first two and then I would just add too in addition to purchase transportation and pricing safety and operations efficiencies.

Okay. And then you talked about integration. So is Towne adequately integrated?

Yeah. I mean, there isn't the Towne anymore.

No, I know. But does it feel like that got fully completed?

Sure.

Okay. Okay.

Yeah, I mean, it's Forward Air. It's been Forward Air for a while.

And as the example Tyler the best example is actually Final Mile. Towne came with a few Final Mile locations, which are very much part of the -- of our Final Mile business today. No one would actually even -- I mean, historically some people know, but no one would even think of these locations as Towne locations versus other Final Mile locations. It's one business.

Okay. Okay. That's helpful. And then I do want to talk about the cohabiting. I know you're doing an expansion in Columbus. You're adding facilities. But I am curious about the network from a door pressure perspective. I mean, particularly as you trend back over four million shipments a year, do you feel that you're door-constrained? Maybe said another way, how much latent capacity do you think you have in the real estate? And then does the co-locating -- if you're ring-fencing let's say the end of the dock on the traditional Airport-to-Airport terminal, does that cause more door pressure in the existing Expedited LTL -- or the existing Airport-to-Airport business?

Well on the last one, the cohabitation is kind of done eyes wide open, where there is sufficient capacity between the two modes in a particular territory, where they can make the conscious decision to join together. If you think of the evolution, maybe we'll use Savannah as an example. In Savannah Final Mile is the PUD point for LTL freight selling into a dozen-or-so ZIPs around the terminal and able to pick up some business that really Final Mile is essentially an agent for LTL on even though we're all in the same umbrella. I mean the goal there is actually to create some pressure for Final Mile so they can kick us out and we can go get our own terminal in Savannah. Maybe you stand it up as an agent until it gets to like $1 million a year type of revenue. And then if you're lucky you take that agent over perhaps. So the asset-light model offers an ability to kind of dial up and down your degree of intensity. Fontana in Southern California that was a no-brainer. Like we're going to go in with max intensity there and sign a lease and set up a terminal. But depending on the market, you can kind of go light, go medium, go heavy in terms of how much intensity around the cohabitation. There is pressure in tight logistics areas driven by e-commerce and we tend to be in a lot of those office parks, so Chicago and Atlanta. There are places some in the Northeast where it's just in general a real estate-constrained situation. But we are operating and we have room to grow. Sometimes it's not so much the terminal itself. It's like do you have enough parking for the drivers. Sometimes it's some softer stuff.…

Okay. Okay. I've got a couple more. Just quickly obviously 2020 there are a lot of things out of your control. But I am curious though if you looked at it -- if you looked at the freight book pre-COVID, how much of the book was call it cruise lines conferences concerts? And in a holistic sense, does that extremely high-service vertical carry an above-average margin profile?

So, the latter question Tyler first, the answer is yes. Imagine, I mean, if you take an extreme example, setting up a Taylor Swift concert probably gets you better margins than delivering salt to a retailer if you're doing your job halfway competently and we do. So it does. The answer to your mathematical question is in our numbers in essence. 25% to 30% and it was our most profitable business LTL. That's to your point about margins went temporarily to sleep in May of last year. Our company, because, again, we have a grow forward program that a gentleman who did a similar program together with me at my previous employer his lead Stefan Buschmeir [ph] where we find, keep and expand other SIC codes other verticals. So that's a program we had before COVID broke out. So we couldn't foresee something called COVID. In fact you and I couldn't spell it. But we were prepared for accelerating and dialing up what's today called essential freight. I mentioned the example, medical supplies makes up 20% of our closes in December. So when you fast forward to a year or two from now, this company Forward Air will be a better company, because we will help those customers bring back over time what you just mentioned Tyler those cruise lines events conferences trade shows. And in some cases by the way the same customers that we also now are getting essential freight from they just have a business unit that does those types of events. So we keep the strong customer relationships, we bring that back. You will have a much more stronger multi-legged Forward Air where we were a bit of a one-trick pony 15 years ago, and now we're getting premium freight in more spaces. And what COVID did was, it was -- and I'm not trivializing the human tragedies around it. It was a huge accelerator of a great program that we had in place anyway to find, keep and expand within grow forward additional legs. So I love where we are going to be heading. I wish it would have been a bit less painful in 2020 for all of us to kind of make that path even faster, but I love that multi-legged stool that we're creating as a company.

Yes. Okay. Great. And then my last one here and Mike we can maybe go kind of quickly here on this one but on the earn-outs. So how much was the earn-out? Was it in the other OpEx line? And do you think any additional accruals are over? Are we done there?

Are you talking about the Final Mile earn-outs?

Sorry, Final Mile. Correct. Yes.

Yes. That was inside of the -- it was inside of expedited freight. It was not below in other operations. The amount of the accrual in the current quarter was $2.6 million. It is the end of that. But one of the things I'll note is that in the prior period, because of the kind of pre-COVID fluctuations of this business, we actually had an earn-out release relative to an accrual. So the period-over-period swing is actually like $3.5 million. But it is maxed out contractually. It can't go any higher. And it settles in April and it's over.

Okay. And then on the Pool earn-out, so what's the marker there? Do you – what do you have to hit to get that earn-out? And is that a onetime earn-out, or is it – it's called like a multiyear earn-out?

It's a – we'll provide a lot more disclosure in the K about this transaction, which closed at 12:01 in the morning. But it is a one-year earn-out and that is when its mark is determined. So one thing, I'll mention is with that earn-out as long as it exists, would mean that we would continue way at the bottom of the P&L to keep a disc ops, even though the business is not ours anymore. Because the earn-out is still an open thing any of its fluctuations per the GAAP rules would have to go through disc ops. So way at the bottom we're just going to have this little disc ops number, which is any change in the value of the earn-out. We also have a six-month TSA to help Ten Oaks get stood up from a back-office perspective.

Okay. All right, guys. Very generous of your time. Thank you

Hey, Tyler, look forward to your conference in a couple of weeks.

Thank you. And next we'll go to the line of Todd Fowler with KeyBanc Capital Markets. Please go ahead.

Hey, great. Thanks and good morning. I think that Tyler and Scott were kind of on the right vein with some of the questions around the margin profile. And maybe just one last one from a history lesson standpoint. How much do you think the mix of business within the Airport-to-Airport business is impacting the margins? And I think historically that was a business that a lot of flat screen TVs pretty easy to handle. As you've shifted to more of e-commerce and some of the bulky-sized items that are moving through the network, how much impact has that had on the margin profile in Airport-to-Airport?

Yeah. Good morning, Todd and great question. So as I said before, like 10 minutes or so one thing we cannot afford to do – this – we have to be good kind of thought partners and drivers of a smart action plan. If you just took the – almost like early e-commerce or to some extent in pre e-commerce Airport-to-Airport business and you like the margins and they say okay multiply them by six and just do six times as much that's not going to work. So – because some of the e-commerce that you just mentioned obviously has dominated the Airport-to-Airport segment in some of the SIC codes. So we have seen revenue-per-shipment challenges. We have seen weight challenges. And this is again where – what we are doing and need to be doing is looking at all available premium LTL freight. Airport-to-Airport is the core always will be and then the door-to-door stretches. That fits those profiles that we love, the profiles that we all are referring to the profiles that we – that actually generate those types of margins that Mike just talked about a few minutes ago that we're going to get back to beyond the 10% and 15%. But yes the weight going down; the e-commerce domination going up certainly has tremendously impacted the margin profile of that Airport-to-Airport business. But that to us is a challenge, because again there's a big sea of profitable LTL that's looking for the requirements that we are the best at providing. All we need to be doing is being extremely surgical in our Precision Execution to go after capture it, and then again get our fair slice of that value. But it is something that like everything in business has probably gotten harder not easier. And you just have to be at your best being extremely surgical and again – and do the work and that's what the team is doing.

Yeah. Got it. No that makes a lot of sense and that's helpful context there. Just a couple of quick follow-ups on a few things. First with the January tonnage, is some of that some catch-up from December, or can you speak to maybe some of the strength that you're seeing within – in January? And then, how do you expect that to continue? Tom, you made the comments about not seeing a big wall around, the Chinese New Year. So can you talk a little bit about your expectations for tonnage in 1Q and the drivers behind that and how -- your strength in the conviction that that's going to persist?

Yes. Todd, the January tonnage is January tonnage. I think, our type of freight is -- doesn't have the luxury of -- if you don't move it on December 22, you'll move it on January 4. So, it really is January tonnage. And then, the second point and perhaps equally or more important, we see that momentum continuing. I think, somehow Todd, it almost seems like between the slowing freight environment in 2019. If you remember go back, 2018 was a boom year, 2019 slowed down, second half of 2019 really slowed down. Then you go into COVID, spring of 2020. Somehow, it almost feels like between the slowing down of the economy and the freight economy in 2019 and COVID, you got a very contracted recession in a very short amount of time. We're out of that. A whole bunch of pent-up demand unleashed in the second half of 2020. And it seems like, 2021 is boom times. It's more like 2018. And what we're seeing right now, January, February makes me believe that even more.

Got it. Okay. And then maybe just my last one. Mike, with the additional cost for the additional IT around the cyber attack that you've got in your first quarter guidance, is your expectation that that's going to be something that continues through the year, or is that kind of an amount for 1Q? And once you've incurred that expense, you're going to be able to put that behind you and move forward?

Yes. No, that -- it's the latter. We're just calling it out only because, it relates to that event. Obviously, beneath that, we continue to make IT investments and those -- some of those are related to enhancing cyber. But this is more focused on closing out that event from an IT perspective. We're up and running and whatnot, but as IT wraps up, the postmortem on that and feathers that into the road map going forward, those are just related to that.

Forensics that have an endpoint and that endpoint is clearly in Q1.

Okay. It's not a higher run rate. It's just some additional costs that you incurred related to everything in December?

Yes.

Okay guys. Thanks so much for the time this morning.

Thank you, Todd.

Thank you. I have no further questions in queue. That concludes Forward Air's Fourth Quarter 2020 Earnings Call. Please remember that this webcast will be available on the Investor Relations section of Forward Air's website at www.forwardaircorp.com shortly after this call. You may now disconnect.