Thank you for joining Forward Air Corporation's First Quarter 2022 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, Rebecca Garbrick. By now, you should have received the press release announcing our first quarter 2022 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after the market closed. Please be aware that certain statements in the company's earnings press release announcement and on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including 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. Forward-looking statements can be identified by the use of words such as anticipate, intend, believe, estimate, plan, seek, project, expect, may, will, would, could or should and the negative of these terms or other comparable terminology. This conference call and the Company's earnings press release contain forward-looking statements, which include, but are not limited to, statements relating to future operations and results, any statements of plans, strategies and objectives of management for future operations; and any statements about future financial and operational targets and the likelihood of achieving the same. These statements are not a guarantee of future performance and are subject to known and unknown risks, 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 webcast presentation relating to these earnings call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. During the call, there may be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release issued, which is available in the investors tab of our website. I would now like to turn the conference over to Tom Schmitt. Please go ahead.

Thank you, David, and good morning to all of you joining us on the call this morning. First things first, congratulations to all our drivers, teammates and our business partners for making our best quarter ever happen Q1 2022 and finishing the quarter with a March that was the best month in the history of our company. In March we also had in our core LTL business three of the highest tonnage weeks in the company's history, so lots of momentum. LTL inside our Expedited Freight segment was actually flirting with a 7 as the first digit of operating ratio ending up at 80.5. And we believe we will get to an OR in LTL that starts with a 7 later this year. Our freight selection pricing and cleanse network keep providing momentum to us and I want to give you a couple of observation points that show that momentum. The first one has to do with working with our customers and business partners to bring our events business back. Last year I said believe 2021 of the 15% to 20% of our LTL business at events based conferences, concerts, tours, cruise lines. Last year, we may have had about 20% to 25% of that. Rebecca Garbrick, our CFO and I we actually took one of our shareholders to our Atlanta terminal a few weeks ago, and I had not seen this much tradeshow business, whether it's Orlando based heading to Las Vegas, this much conference business, tradeshow business, and also concert business. I'm going to get to that in a moment. The other thing that's really encouraging, we introduced a guaranteed service last year and we actually found positioning perspective, position those containers close to the doors and we have a blue ribbon about around them. I had not…

Thank you. [Operator Instructions] We'll now go to Bruce Chan with Stifel. Please go ahead.

Hi, there. Thank you, David and good morning, Tom and Rebecca.

Good morning.

Great, great to hear about the events business and the direct channel, SMB opportunity, sounds like a lot of good potential there. You reaffirmed that 150 basis points to 200 basis point guide on the LTL improvement this year and next, and I just wanted to think through, maybe what percentage of that opportunity is market dependent and what percentage of that is completely within your own control?

Bruce, we believe that we control our actions, we control our outcomes. I mean very specifically, I mean, made to, we did this also in a presentation that's on our website, when you tend to sell direct to small, medium sized businesses, the margin opportunity goes to us entirely, versus having to split it rightfully so with our partners when you sell to an intermediary. So the profitability of the small-medium sized business is tremendous and the profitability also of the events business is tremendous. So as we make this, these lines of business $20 million, $50 million, $100 million plus over the next year or two, that will help us drive that 150, 200 basis points. So I do believe we control our destiny here.

Okay, no, that's very helpful. And then maybe just to hone in on that a little bit further, when you think about the risk to the macro conditions here, I mean what sort of assumptions underpin that opportunity? And I guess, more broadly, your guidance for the end of the year and next year?

Yes, so we actually, we're heavily focused on what we believe with our sales machine and sales efforts, the continuous improvement we're driving in terms of reach out to customers and prospects, conversion rates, which are getting better in terms of a lead getting to a close, and close getting to activation, that we actually assumed that we are driving our -- the success of our business in an environment which may or may not pull back. And we actually also believe that we, if I had mentioned this before Bruce, if we can't win, what I call a size of pie game, because there's less tailwind, we are determined, and we have the capabilities, and we have the untapped upside opportunity to win a slice of size game. So we actually did assume continued profitable growth based on what we control, because there's a lot of untapped upside in the high value freight market, even in a high value freight market that may be flat.

Okay, great. That's very helpful. And then just one final question here, maybe on the Intermodal side and when you think about the potential disruption on the west coast with upcoming labor negotiations, have you been seeing any signs of shippers diverting to East Coast ports or trying to secure kind of capacity there?

Bruce, I'm actually smiling. Yes, we all have. So it's one of those like, squeezing the balloon business or whatever the example of with like the hammer and the head coming out of the board, and then you hit it here then it pops up somewhere else. That's a bit what's happening with the ocean to land movements. Yes, so there was a shift over the last several months. You can see it in Charleston, you can see it in Savannah. Charleston and Savannah are high performing ports. So actually, we kind of like the idea of them coming where they -- where they're going now, which is more East Coast based. We also have a very strong presence in the Southern Carolina and Georgia markets, even the Jacksonville on top of that. So it's what -- what you're describing Bruce is happening and we like seeing it.

Excellent. Well, congrats on the results and thank you for the time as always.

Thanks, Bruce.

Thank you.

We'll now go to the line of Jack Atkins with Stephens. Please go ahead.

Okay, great. Good morning. Thanks for taking my questions.

Good morning, Jack.

So, I guess, maybe to start, I'd love to get an update on and I missed the very, very beginning of the call. I was kind of hopping between conference calls, but maybe an update on what you're seeing in April and is there any sense that some customers or maybe some in-market verticals are starting to maybe see a little bit of pressure from the macro, whether it's a consumer shift from goods to services or anything like that? Are you seeing any maybe cracks in terms of what your customers are telling you on the demand side? I know the events business is moving back up, and that's a positive, but would just be curious if you're seeing anything there and then just kind of broadly what you're seeing in April?

Yes, Jack. So my sense is on the appliance side. The kind of hyper growth that you've seen over the last two years has been leveling off. And on the e-commerce side, lightweight e-commerce, you do see a leveling off. Now having said this, and this is exactly why we are so confident in our strategy, those especially lightweight e-commerce, that's less relevant to us today than it was a year ago. Our shift towards palletized, high-value freight, and again any of our metrics point towards that happening successfully. Makes sense to some extent, a little bit less vulnerable to some of those e-commerce shifts or normalizations of, I call it kind of a home based economy back to more of an experience based or event based economy. So the downside of that shift, we see less with our current rate mix than what we used to see, and the upside of that service and experience and events economy kicking back in is fully ours to take.

Okay, all right, got it. And then I guess maybe shifting gears a bit, how are you guys thinking about the latent available capacity available to you in the network today? You know, sequential trends fourth quarter to first quarter in terms of the Expedited LTL business were certainly better than what we would have expected to see with normal seasonality. Do you feel like you're beginning to backfill some of that capacity that you opened up through the network changes in 2021? And I guess, maybe help us think about how much room you have to continue to grow with the capacity in the network today?

Yes, Jack, I mean, you saw us basically getting ready for some of those larger terminals in primary markets, which makes a ton of sense, obviously when you have a primary terminal that's 15 to 20 miles south of Atlanta. But there's a significant northern suburb market, you want to have a second terminal there. But you saw us having to being able to take a little bit of time getting ready for that and that's exactly what the cleanse enabled us to do in a de facto giving us 15% to 20% additional capacity without adding one single dollar of CapEx. So we definitely would have had to add more capacity to our system in fall of last year already if we hadn't done the cleanse. But we are getting to a point with the sales machine becoming more and more effective, our conversion rates becoming higher to small-medium sized business ramping up, the events business coming back at full force, that we do believe the capacity we're bringing on as we get closer to peak, Atlanta, Chicago are two of the examples that we are committed to, will be necessary. So we've kind of bought ourselves a year possibly having to add capacity fall off this year into peak season versus fall of season, fall of last year. So, but we are getting to the point where, again the sales machine and its effectiveness is asking us to add capacity this fall.

Okay, got it. And then I guess maybe for my last question before I turn it over, very encouraged to hear the bottom end of the 2023 guidance getting pulled into 2022 and the outlook for 670, being achievable even without additional M&A. But when I sort of think about the reiteration of the margin target improvement over the course of the next couple of years, it would seem like if you're able to see 150 basis points or more margin improvement this year or next year, in Expedited LTL, you should be able to significantly exceed 670. So our guess is the idea behind not taking that number up or walking that number up that we just don't know what the macro is going to give us over the next 12 to 18 months. And I guess, maybe I'm beating around the bush asking the question, do you feel like you can earn 670 regardless of what the macro or what the freight cycle throws at you, because that seems to be what's implied by the line item guidance you're giving?

Yes, in fact, I mean, you're probably about as math inclined as I am and we both can run the same numbers. So we do believe that with what we control, there is significant upside to the numbers that we put out. Now, having said this, we have seen pent up demand in the first quarter being unleashed, so there was some perhaps amplification that that you wouldn't necessarily see in every single first quarter, and there are some supporting tailwind items, fuel is one of them. That actually has been tremendously helpful to the entire industry. Having said all of that, if you do the same math we do, we tend to be doing better in the second quarter than in the first quarter. We didn't build a lot of that in yet. We tend to do better in the second half than we do in the first half. That's untapped upside we're going to go after. So it's my expectation that these numbers are achievable. It's my expectation that's in our control, to get past those numbers. And frankly, as we get deeper into the year, we might update some of those targets. But I like the momentum and I like the possibility of beating those numbers.

Well, same here. Thanks again for the time, and I'll turn it over.

Thank you, Jack.

We will now go to the line of Tyler Brown with Raymond James. Please go ahead.

Hey, good morning, guys.

Good morning, Tyler.

Hey, you know, just congrats on the momentum, obviously super impressive to see. I want to kind of come back to what we've been talking about here about, really about the durability of the results, because I still get the sense when we talk to investors that there's concern that once the market rolls you may have to move backwards on some of these freight characteristic initiatives. So again, I was just kind of hoping if you could talk about the stickiness or the durability around the changes that you've made it forward, and kind of how your go to market strategy would at all change if things do slow down?

I'm actually surprised Tyler that you would even consider for us to, and I mean this very non-judgmentally for us to walk our cleansing efforts backward. We will continue with an exclusive focus on high value freight, whether it's at the appliance business or final mile, or whether it's the LTL business with medical devices, industrial goods, spare parts, all of the things that he brought on, in addition to the events business that we talked about. So and frankly, we talked about that even on one of the earlier calls. This is an operational efficiency issue. It's also a safety issue. When you're 100% palletized everything can be done with a forklift, everything got done can be done with safety and health and safety first. A forklift driver only has to leave his forklift or her forklift when he or she needs to take a break, not to readjust some loose freight. It's a talent attraction and retention issue in a time of war of talent, where it's hard to recruit and keep people. I think I mentioned on one of the calls earlier, Chris Ruble our COO and I we got a standing ovation by our forklift drivers in California last week -- last year, the ones we actually improved the quality of the freight. And these people told us and they are wonderful teammates, that they are actually going to become great ambassadors for this being a better place to recruit into, so there's absolutely 100% certainty that we're going to take path one. Path one is, lets deeper penetrate to high value freight that we're owning now, we are in the most attractive space of what I believe are the three most valuable letters in U.S. ground transportation LTL and we are in high single digit market share. So the marching order for us is, all the energy positively towards deeper penetration in this goodness, and certainly not walking back to something that we fought together with our customers in a positive collaborative way to enhance last year. So that goodness we will propel and if I've got a choice between deeper penetration of goodness, or walking back, that's an easy call.

Yes, no, I love it. Thank you for that so much. I do have to ask about the 8-K that came out the other day about Scott Schara leaving the organization now, obviously commercial success has been key. Can you just talk about backfilling that role?

Yes, so first of all, Scott did a tremendous job here over the last two years, tag teaming frankly with me and many of his sales and marketing professionals, making this place kind of more robust and getting more of a sales machine in place. It is in Scott's background and in his DNA, it's in my background and my DNA. We tag teamed here and I will definitely keep working with the sales and marketing professionals the same way he and I did over last two years. We want to be known as a company that attracts great people, stretches great people mostly internally. And then sometimes we have the high quality problem, where unfortunately or fortunately, that next great opportunity for someone is external. Scott got a great opportunity where he can combine his two passions of leading a sales force, and leading a brokerage business. And, again, I want to be known as a company that stretches the professional franchise of our talent and because that's when people see that, that people advance inside Forward Air and sometimes they advance to the next opportunity somewhere else, they're going to point to us and say like, that's the place I want to be part of because they're stretching people. And they actually are not putting hurdles in the way of their people that actually are encouraging and cheering people when they actually get a chance to stretch a professional franchise. So the short answer is, I'm happy about people stretching, sometimes it's a high quality problem that their next stretch happens to be outside and still I want to be known for that. To the specific point that you made about how are we going to succeed here? I'm working directly with sales, marketing, pricing, communication, sales support leaders. We've got a tremendous set of leaders in this place and these spaces. And in those next few weeks, we'll get a pretty clear picture, that next commercial, Chief Commercial Officer, whether she or he need to have a digital access bent, where we actually go more digital SEO SEM looking for business, or should have a more data driven kind of sales machine bend. Working with those leaders, even more directly than I didn't last two years, puts me in a very good position over the next few weeks to really get the specs for that success profile as close to perfect as possible.

Okay, extremely helpful. That's very helpful. But your asset light model is kind of an interesting part of this cycle. So your expedited gross margins, if I just look at revenue less PT, I think they were the best since 2019, when things were a bit looser. Is it right to think that were the Truckload market to continue to cool, that you might actually see some gross margin expansion from that, that could offset any weakness as well?

Tyler, well put. This is a puts and takes game. Obviously, that particular part, which is purchase transportation, going down we had seen $3.20 a mile, even $3.30 a mile. Now we're starting to see something that starts with a $2 and something, not $3 and something. So clearly, this is also why I'm so bullish about kind of the numbers we put out and the upside on top of those numbers, because we actually even in a loosening market have puts and takes that actually are on the positive side of the ledger for us, like the one you just talked about.

Okay. Okay, great. And my last one, Rebecca, can you just refresh us on where you think CapEx will shake out this year, just for modeling purposes?

Sure, Tyler. So I think it's going to shake out around 40 million this year. It's up a little bit. But and I think the breakout of that would be about a third would be with equipment, about a third for technology, and a third for kind of our Columbus facility, which we just announced and moved into. So most of the Columbus has already been spent, but the remainder of those other two will come out for the rest of this year.

Okay, perfect. Thank you so much. Great quarter.

Thanks, Tyler.

Our next question will come from the line of Todd Fowler with Keybanc Capital Markets. Please go ahead.

Hey, great, thanks and good morning.

Good morning, Todd.

Good morning, Tom. I want to come back to Jack's question around the guidance. And I guess, you know, I'm a little bit unclear kind of what the messaging is, both about the second quarter and the second half of 2022. Through your prepared remarks, the commentary is very, very positive, certainly what you saw in March and into April, not a lot of movement into the second quarter. So is the message here that you're really just trying to be conservative and you think that there's upside? Is there something else that's holding you back? And I guess, I'm just trying to understand what you're trying to set expectations for both for 2Q and the second half?

Yes, Todd, I mean, I'm looking at this perhaps similar to the way you are where we are getting better and better with precision execution, ramping up the type of high value freight that we're going after exclusively. You are absolutely correct. I mean, the first quarter was spectacular and everything we see would tell us that our momentum is continuing. So as and even when this does, we might come back and say, you know what, these numbers were conservative, we can actually opt them. If you remember last time, and when we had our call, we said like we have one or two months into 2022, that may not be the time to update and upgrade some of those targets yet. Clearly, in the release yesterday, and as we're talking right now, we have updated some of our expectations with the pull forward of the fixed story to 2022. Everything we're doing would indicate to me, momentum is still there. We like what we see. More and more importantly, we like what our teams do and there's upside to what we put out there.

So Tom, if we think about the upside versus your initial guidance for the first quarter, is there a way to bucket how much of that was a better freight environment? Fuel, you know, kind of what drove the difference between your initial expectations and your -- where you ended up for 1Q?

Yes, so let me give you a couple of numbers. The first one is, if you, in a very rough sense say the upside that we saw Q1 this year over Q1 of last year, and you put this into three buckets, one is in the widest sense volume related, one is pricing actions, and one is fuel as a percentage of the cost of freight. The first two are larger than the third one in terms of impact. So the majority, not the vast majority, but the majority of our impact is actually earned. It's tonnage and the ability to actually capture the fair value of that opportunity and that value that we create i.e. pricing. But there's 30% to 40% or so of that upside that comes from fuel. One different way that I think put it, I put it a half an hour ago, if you said, let's take fuel all the way back to first quarter of last year's levels, and we just assume hypothetically that's the fuel level that we would have had in the first quarter of this year, we still would have exceeded the top end of our Q1 guidance. So we are very, very grateful for the tailwind we're getting and at the same time, the majority of the impact we are actually achieving on the basis of actions that we are taking.

Yes, got it. All of that's helpful. I'm just trying to, you know, I think on one hand it's helpful to have guidance that's realistic, but not overly conservative, and so just trying to get a sense of the things that are different versus your initial expectations, so that helps. Just one last clarification on the margin improvement that you're talking about, the 150 to 200 basis points annually, is that just for the LTL business within Expedited Freight or is that for the entire Expedited Freight segments on a consolidated basis?

That's LTL specific, Todd.

So Tom, do you have a number that you could share for the Expedited Freight segment what you'd expect the margin improvement there to be?

We haven't, I mean, obviously, we do have calculations and we have a Forward 23 model that tells us like how we get all of our businesses to be better. So we haven't itemized the Truckload to Final Mile, Intermodal drayage numbers. All of these margins we expect to go upward. That's, for certain. They may not go upward quite as intensely as we expect the LTL to go upward.

Yes, okay. So yes, it's a little bit tough, because we don't see the individual line items, we just see that consolidated piece. So maybe sharing that could be something that would be helpful going forward. Thanks for the time.

Okay, thank you, Todd.

We'll now go to the line of Scott Group with Wolfe Research. Please go ahead.

Hey, thanks. Good morning.

Good morning, Scott.

Can you just share, can you share the monthly tonnage trends and what you're seeing in April?

We have some initial numbers, obviously, because we're almost through the month. April is up as we had expected it. Now, the one thing you do have to see and I'm going to turn it over to Rebecca here in a moment, last year in April, we still had all the low weight, loose, non-palletized e-commerce freight in our business. So the TAs will be back filling this with higher value freight. We expect more of that to come as we get into spring even more, but tonnage in April is up year-over-year.

Yes and then, Scott, just to give you some specific numbers, so January, our tonnage was up daily tons up 5.5%. February was about 16.5% and March was about 5% and we're seeing the same trend in April that we saw in March.

Okay, so April is up in that mid single digits?

That's right.

Yep.

Okay, great. You talked about the events business. I apologize if you've given this before, but can you just put some perspective? What percentage of the total revenue is that business today and where was it so we have a sense of where it can get to?

Yes, it can be -- my -- in my estimate and it is an estimate, this sounds bizarre Scott. The reason why it's an estimate, we do a lot of business, obviously, the vast majority through intermediaries. They have to classify some of the business to us, especially if it's like hazmat, but they don't have to classify most of the other business. Now, we obviously when we look at the containers, we have a pretty good sense. My estimate is events based business can be 20% of our portfolio, that's an estimate. And last year, we had only about 20% to 30% of that and this year we expect to have about 70% of that.

And when you say 20%, you're talking about the total revenue or are you talking about a 20% of what?

Of roughly speaking the $1 billion LTL business that we have.

Okay, so 20% of the LTL, okay.

And so that's what it was, that's what it can be, and last year we probably only had 20% plus of that number, so call it $40 million and these are estimates. And this year we should have 70% off those numbers, call it 140.

Okay, helpful. And then you had a comment that there's puts and takes of spot rates falling, and but the net of it should be positive for you. And I just wanted to get your perspective, because clearly, if you look in a really tight market you guys have seen a headwind from PT, but overall been a pretty clear benefit for you. So what gives you the confidence that a loosening market ends up being positive as well? How do you get positive on both sides?

Yes, we love and that's a service proposition in support of our customers. First and foremost, we love using our independent contractors for the vast majority of our moves. They know our customers, they know us. Our service levels are better. Their damage ratios go down because we can rely on these people. They've been working on our behalf for a long time. If you remember, Scott, we had in 2019, we had single digit purchased outside miles, like third party miles, PT miles and those numbers went up all the way into the high 20s. So service levels, cost damages, everything, that's on our KPI list get significantly better in a loosening market. And by the way, also with our recruiting team doing a phenomenal job attracting and keeping drivers. We believe our churn rate of drivers is half of the industry and we are on track this year to a growing fleet. We are ahead of -- we have more seated drivers and seated trucks now than we had at the beginning of the year. That was not the case last year. So the confidence I'm having is the service confidence, cost confidence, PT in the high single digits, third party miles or low teens is a huge benefit, service wise and cost wise.

Okay, and then just last thing, I think you've addressed this talking about like the full year guidance commentary, but your 2Q guidance of margins that may be come down a little bit from 1Q that you would just say that that's conservative and you think you'll do better than that?

That's one person's opinion and that's, that's my opinion, but it's somewhat experience and fact based, yes.

Okay. Okay, great. Thank you, guys. I appreciate it.

Thank you, Scott.

We'll now go to the line of Bascome Majors with Susquehanna. Please go ahead.

Yes. Thanks, Tom. I wanted to go back to the sales questions from earlier. Can you talk a little bit about where you are in the evolution of your sales incentives? And as far as, you know, how far along you are is giving the profit driven incentives into the system and what's left to go on that? And maybe tie in, what skill sets or any other sort of thing you're looking for in the next leader in that group to kind of take you to the natural evolution of what you've done here? Thank you.

Yes. Bascome, two things. One is on the sales side specifically and this was not externally communicated, but it's worth pointing it out, in sales one of our long-standing 23 years, he corrected me recently, serving for our company, Lance Small, he was our Senior Sales Officer working for and on Scott Schara's team, as did the Head of Marketing or the Head of Communications, or the head of Sales Support. Lance Small just retired. And, but here's the beautiful thing, on sales execution, think of that as kind of getting a salesforce.com based machine in place where we have a book of business, we have call cycles, we track kind of conversion rates, close rates, activation rates. We help each other in peer to peer discussions. All of these our sales leaders over the last two or three years, with the sales support team led by Keith Karczewski, have done a beautiful way kind of getting better and better at this. So that's what I talk about when I talk about getting the sales machine to be more precise and to be more effective. We have sales leaders that know, after the last two of this we know extremely well how to do that. Lance Small is handing off the baton to our next sales leader, who actually is on our team already. We have tremendous kind of next generation sales leaders. We stretch our people. We -- one of our leadership imperatives is, we enable our teammates to move forward. So we have the sales head on the team already and over the next few weeks, we're getting Lance Small's successor in place. The second question is the one that I think Bascome, you are referring to across all of the commercial dimensions, the Chief Commercial Officer that…

Extending the sales discussion at the presentation that you referenced a few weeks back, you put out some numbers basically suggesting that you were earning 10%, 15% better margins on this much smaller pie of SMB business that you're growing very quickly compared to your traditional 3PL business, that's the bulk of what you do in LTL. Can you talk a little bit about, I mean I think the number you said was that was only $10 million or so revenue? Can you give some context on how big that pie is and how big it can be, you know, six, 12, 18 months out if you hit the targets you're shooting?

Yes, so a couple things. I did say earlier Bascome, that this could be -- this is going to be still a very small business right now, because we literally just started getting into this last year, so expecting somewhere around $20 million or so in high profitability revenue this year. Now, what's possible here, and this is where we believe there's $10 billion plus in high value freight LTL out there that we should be the most compelling provider for. Of that, about 30% we estimate or expect to be in the SMB space. So there's clearly multiple billions, 2 to 3 billions of potential there, so the upside is huge. Now, what we're still doing as part of our Forward 23 effort, is putting specific multiyear targets in place, how we get from zero a year ago to $20 million this year to a kind of high growth kind of outcome. So I said in my remarks, [indiscernible] this call, I expect this to be $100 million dollar plus businesses in the next one to three years. But the sky's the limit here. SMB as part of high value freight is probably about 30% of the total high value freight market, and therefore we're talking several billion dollars. So, and the margin expectation matches our reality of what we see and what we're seeing so far. And Bascome, it makes logically sense, right? I mean, if you believe take Old Dominion as a first class company in our space, they just put a Q1 out there, I think they were hours around 72, you guys probably are watching it even more closely than we are watching it. That is our experience. When you sell directly to people, you have the opportunity of a 30% margin or a 70 OR. And if you obviously sell to intermediaries who are first class job working with us and our customers, you somehow have to take that 30% opportunity and split it somewhere in the middle, 50% for the intermediary and 15% for us. So clearly, Old Dominion as a data point, more importantly our own reality so far is telling us there's a 30% opportunity when you can actually work with those customers directly. So significant upside, still to be quantified what we expect over the next several years, I do believe that should be $100 million plus LTL business in the short to medium term future, i.e. less than three years and there is significantly more opportunity on top of that. I will do everything possible together with this team to tap into this at maximum possible speed.

Thank you for that, Tom. You know, just one last one, I'd be remiss if we didn't ask about opportunities to both grow the part of the portfolio acquisitively that you're leaning into particularly in LTL, you've talked a little bit about adding to the footprint. And I'm just curious how that process is going and if it's changed as freight market expectations have shifted in the last couple of months. And number two, you may be conversely, is there an opportunity to simplify the story by potentially monetizing some assets that are less a part of the transition that you've made so successfully over the last couple of years?

Yeah, that's completely fair, fair questions obviously, and you know us increasingly well. So the first thing is, we're playing this game for the long haul. So building out the footprint is something that we know for a fact if you're going for a significant leadership share of a $10 billion plus LTL of the high value freight market, we need a bigger footprint. So I said last year, the JMP haul acquisition may be an appetizer, there should be a main course, that's still the case. But we're obviously doing the right thing at the right time, for the right price. And frankly, with the right company, the right partner, but I still expect there to be the possibility of inorganic LTL on top of organic LTL, i.e. Atlanta, Chicago coming up in the next few months. In terms of the flip side of that, we believe at this point, there's a tremendous collaboration on the operational side between Final Mile and LTL. Co-locating we have 20 locations where we actually run both businesses out of the same location. Call routing, there's tremendous collaboration I mentioned 94% of LTL customers are now also buying TL and helps us with backhaul, helps us with recruiting. So we believe that the portfolio we have right now is a good combination. Now, having said this, we're with our Board together consistently reviewing our portfolio as and if and when we believe that somebody is not core anymore to helping the main show, which is LTL, then it may be graduation time. We had graduation of a great retail support business, because frankly, we did not see the pull business to be essential to making our LTL business better. And the main show here is we are the best expedited high value LTL company in the business. We have significant upside here. And it's the main show, and LTL needs to get supported by the other business lines. As long as they do that in a way where they actually contribute significantly, they are a good member of our portfolio.

Thank you for the thoughtful answer, Tom.

Thank you, Bascome.

There are no further questions.

Well, David, I think it's time to wrap up. I want to be respectful of everybody's time. Thank you to all of the business partners for playing great mental ping pong with us. As I said, we like our untapped upside and we like our odds of being charged in charge of our control and with the possibility of even beating the numbers that we put out. So, thank you, David. I think you can close the call. Rebecca Garbrick Thank you.

Okay, thank you. That concludes Forward Air's first quarter 2022 earnings call. Please remember that this broadcast will be available on the Investor Relations section of Forward Air's website at www.forwardaircorp.com shortly after this call. Thank you again. You may now disconnect.